Infranor Inter AG : 13.12.11 - Infranor growth slows

After the first six months of its 2011/12 financial year, ending 31 October, the industrial automation specialist Infranor Group increased its sales by 5 per cent to 23.2 million CHF compared to the same period of the previous year. New orders, on the other hand, fell from 25.6 million CHF to 21.9 million CHF. Infranor maintained its EBIT figure of 1.6 million CHF (corresponding to 6.7 per cent of consolidated sales) and closed the first half of the year with a profit after taxes of 0.4 million CHF (previous year 0.7 million CHF). For the current financial year, Infranor expects to achieve sales of 46 million CHF (virtually unchanged on the previous year's figure of 49.2 million CHF) and a net profit of 1.1 million CHF.

Consolidation
At the start of the financial year on 1 May 2011, the Group's sales continued at the same rate at which they had ended the previous year. The first signs of a slowdown in growth became apparent from July onwards, both in mature economies and emerging countries. Six months later, new orders had fallen by 14 per cent, from 25.6 million CHF a year earlier to 21.9 million CHF. Bolstered by orders placed at the end of the previous financial year, sales bucked this trend and increased by 5 per cent to 23.2 million CHF (previous year: 22 million CHF).

The gross margin remained unchanged at 13.1 million CHF. Expressed in relative terms, it registered a sharp fall of 3.1 points, from 59.7 per cent as at 31 October 2010 to 56.6 per cent a year later, due on the one hand to the rise in the price of raw materials and on the other to the appreciation of the Swiss franc, most notably against the Chinese currency. By applying strict controls to operating expenses, which rose by 0.2 million CHF to 10.7 million CHF, the Group was able to focus on profitability. Only personnel expenses, which were set at the start of the financial year with a view to recording a considerable increase in sales, rose slightly.

With depreciation and amortisation remaining unchanged at 0.8 million CHF, the Infranor Group thus maintained a considerable EBIT figure (earnings before interest and taxes) of 1.6 million CHF, corresponding to 6.7 per cent of sales, compared to a figure of 1.9 million CHF as at 31 October 2010 (8.5 per cent of sales). Finance costs (1.0 million CHF) remained unchanged, despite a loss of 0.3 million CHF resulting from unfavourable exchange rates (first half of previous year: 0.2 million CHF). The first half of the financial year ended with a profit after taxes of 0.4 million CHF, virtually identical to the figure recorded on the same date in the previous year (0.7 million CHF).

In the six months from 30 April 2011, total assets decreased from 34.5 million CHF to 33.6 million CHF. Current assets remained stable, falling only very slightly from 25.2 million CHF to 25.0 million CHF. This difference can essentially be explained by the fact that investments (especially in terms of intangible assets) were kept at a low level, resulting in a decrease in fixed assets from 9.4 million CHF as at 30 April 2011 to 8.6 million CHF six months later.

On the liabilities side, current and non-current liabilities due to banks were cut by 0.3 million CHF from 9.4 million  CHF as at 30 April 2011 to 9.1 million CHF. Total net debt, which stood at 17.1 million CHF six months earlier, was reduced by 6 per cent to 16.1 million CHF.

Divisions return varied performance
The Infranor Division (accounting for 61 per cent of total sales) greatly increased its profitability. However, a number of major clients - mainly in Germany but also, to a lesser extent, Switzerland and Spain - forecast a temporary stagnation in their own markets from the summer onwards, leading to a slowdown in orders. New orders have therefore fallen 17 per cent year-on-year, from 15.7 million CHF to 13.1 million CHF. Sales, for their part, bucked this trend, increasing by 12 per cent from 12.7 million CHF to 14.2 million CHF, while general expenses and depreciation and amortisation were kept in check during the first half of 2011/12 (7.6 million CHF as against 7.3 million CHF at the same stage last year). At 1.9 million CHF, or 13 per cent of the Infranor Division's sales, the EBIT figure virtually doubled compared to 31 October 2010 (1.1 million CHF or 8.5 per cent of the division's sales).

Given its positioning in a 'vertical' market segment where it is essentially dependent on the worldwide trend in infrastructure investment, the Cybelec Division (accounting for 39 per cent of total sales) experienced a slowdown in growth across all of its global markets. New orders therefore fell by 11 per cent during the first half of the financial year, to 8.8 million CHF (previous year: 9.9 million CHF) while sales decreased gradually, by 5 per cent to 8.9 million CHF (previous year: 9.4 million CHF). The EBIT margin remained virtually unchanged (previous year: 1.0 million CHF), as a result of the weak increase in the gross margin, attributable to the appreciation of the Swiss franc and its damaging effects - especially on Cybelec's Chinese entity - on the one hand, and in the pressure on purchase prices exerted by emerging markets on the other.