COMET Group has record year – Further strong growth expected

The COMET Group's growth strategy 2020 is leading to success. The investment of the past years in expanding customer relationships, the intensified market development and the tapping of new applications proved effective. In 2016 the COMET Group accelerated its growth from the pace of recent years to deliver its best-ever performance, growing significantly in its core regions and its established segments. Consolidated net sales expanded to CHF 332.4 million, surpassing the prior year by 18%.
Thanks both to consistent execution of the operational efficiency initiatives and to higher volume, Group earnings grew substantially. Operating income, despite expenses for high strategic investment in future growth, jumped by 43% to CHF 36.5 million. Group net income rose markedly to CHF 27.3 million (2015: CHF 17.1 million). The primary reasons for this record profit, besides the higher sales, were revised pricing and a significant improvement in operating efficiency. On the currency front, the strong US dollar was a positive driver for net income. Economic profit - or profit after the 9% cost of capital - also increased sharply, more than doubling to CHF 11.0 million (2015: CHF 4.8 million). With an equity ratio of 51%, the balance sheet of the COMET Group remains very robust.

PCT: Another record year - Market position and technology leadership in semiconductor market were expanded
The past years of investment in development once again paid off for Plasma Control Technologies (PCT) in 2016. With its high-end solutions for the semiconductor market, PCT was optimally able to meet the growing demand of this industry's suppliers for innovative, powerful impedance-matching networks. The PCT segment achieved continuous growth in every consecutive quarter and, with sales up 22.9% for the year to CHF137.6 million, posted its fourth record year in succession. The collaboration with existing customers was deepened and new, promising contacts were made in the Chinese semiconductor market. An important milestone was the development of the cito Plus radio frequency generator, which assures maximum process stability even at top dynamic loads. After excellent results in customer tests, the new generator is now entering serial production. PCT also improved its efficiency and flexibility. This not only helped it optimally deal with the strong demand but, together with the high sales, PCT also boosted its profitability in terms of gross margin. Operating earnings at EBITDA level rose from CHF 22.5 million to CHF 30.9 million, with an improvement of 2.4 percentage points in EBITDA margin to 22.5%.

IXS: Strong sales growth - Investment in metrology as a new application
The X-Ray Systems segment (IXS) had a strong 2016. The increased efforts to develop selected market segments paid off, as did the reinforced position in the space for computed-tomography (CT) solutions, which allow the ever more complex components in industrial processes to be imaged and inspected three-dimensionally. IXS rounded out its portfolio for the electronics industry with a complementary, easy-to-operate inspection system. This enabled it to additionally gain a foothold in the price-sensitive non-premium market segment, particularly in China. These successes with x-ray systems in the electronics market and the effective marketing of large CT systems in the aerospace and Labs/R&D segments resulted in sales growth of 19.8% to CHF 121.4 million.
Executing the Strategy 2020, the segment invested in expertise, new functionalities and the creation of a test environment for the further development of metrology as a new application. A major milepost was attained with the IXS segment's new release of CT systems that offer customers unprecedented image resolution thanks to the new nanofocus tube. Additionally, IXS prepared for a collaboration with Hexagon in 2017 in a significant market segment. These additional investment expenditures and a higher proportion of project business in the sales split led to an EBITDA margin decrease to 9.4% (2015: 12.7%).

IXM: Profitable sales growth through innovative, tailor-made solutions
With growth in sales and a significant improvement in EBITDA margin, the x-ray sources business, operating as the Industrial X-Ray Modules (IXM) segment since January 2016, had a positive year. The main growth drivers were the non-destructive testing market and the security sector. With its innovative, made-to-measure product portfolio, IXM more than held its own in the core business of non-destructive testing and significantly expanded its sales in security inspection. IXM's sales rose by 7.5% to CHF 69.6 million. With the completion of the new generation of the iVario™ family of generators, IXM marked an important milestone in its forward strategy, which is aimed at offering complete modules with coordinated components. After very good results in field tests, the market launch is set for 2017. Improved operating efficiency and higher capacity utilization drove a 34.9% rise in EBITDA earnings to CHF 16.5 million. The EBITDA margin improved by 4.8 percentage points to 23.7%.

EBT: Tetra Pak on track - Promising prototypes for new applications in food and printing - Strong growth expected for 2017
In its first year as a separate operating segment, ebeam Technologies focused on the integration of its US subsidiary and the expansion of capacity for Tetra Pak. The arranging of the supply chain to produce higher volumes for Tetra Pak is progressing to plan. In 2016 the manufacturing cell for ebeam lamps that was installed in the prior year was enlarged in preparation for the increased demand. To help drive the planned strong growth, the segment ramped up its investment in food and digital printing applications. With success: At the end of 2016, after just a short development lead time, a prototype for the inactivation of bacteria on granular dry foods was presented jointly with Bühler and tested on more than 20 different foods. Another signal achievement was the segment's introduction of the ebeam Inkjet Dryer, a novel product that permits the food-safe, individualized printing of packaging. To bring it to market, strong partners are being sought in 2017 in the areas of printing machine, print heads and inks. In printing machine manufacturer UTECO, the EBT segment has now won the first long-term partner for advancing the commercialization of this new product.
The investment expenses for these business development projects were reflected in an EBITDA deficit of CHF 9.1 million (2015: deficit of CHF 9.7 million). The postponement of large orders in the ebeam systems business resulted in a sales decrease to CHF 16.9 million (2015: CHF 18.1 million). The high order backlog for 2017 existing at year-end, however, validates the segment's growth strategy.

Going from strength to strength
The disciplined execution of the Group strategy is producing tangible rewards. The COMET Group has cemented its position as a leading global innovation partner with key accounts and expanded its portfolio in core markets. Its success is clearly reflected in the profitable sales growth of 55% since 2012 (achieved despite a considerably stronger Swiss franc) and the significant gain in company value over this time.
With cutting-edge innovations such as the pilot system developed with Bühler for the chemical-free treatment of dry foods and the ebeam Inkjet Dryer for food-safe, individualized digital printing, the Group has further opened the way for promising new applications. Moreover, the COMET Group has physically and financially prepared the ground for future growth: It started construction for the expansion of production capacity in Flamatt and, to finance the building project, successfully issued its first bond. In the pursuit of operational excellence, the supply chain preparations were made for the increase in production to support the planned growth.

Strategy 2020 for continuing vigorous growth
The Strategy 2020 picks up seamlessly from the forward strategy of the previous years. Under the motto "Exploit & Explore", the Group places its strategic focus on strengthening the core business and at the same time leveraging the three core technologies of x-ray, radio frequency power and ebeam to utilize new opportunities for growth through innovative solutions, new applications and close partnerships. With its clear strategy, the COMET Group will continue to gain in strength by taking advantage of global market trends. Rich potential for the Group is seen especially in the Internet of Things, in the trends toward 3D technologies and highly functional materials and in the demand for resource-conserving, efficient processes. Propelled by these driving forces, it intends to expand sales to about CHF 500 million and widen the EBITDA margin to 16-18%.

Changes in senior management
The COMET Group has further strengthened its Board by gaining Mariel Hoch and Franz Richter as new Board members and has reinforced the Executive Committee by bringing in Detlef Steck as President of X-Ray Systems (from April 2016) and Thomas Polzer as Chief Operating Officer (from August 2016). In May 2017, René Lenggenhager will assume the position of Chief Executive Officer from Ronald Fehlmann to lead the company in its further growth.
The Board of Directors thanks Ronald Fehlmann very sincerely for his strong commitment over the past six years. During this time he has strategically positioned the Group very auspiciously for success and made it significantly larger and more profitable. The associated confidence of shareholders is evident in a stock price about five times higher than it was a good six years ago.

Positive outlook for 2017
The COMET Group is on track. The Board and management are convinced that in the years ahead the COMET Group will consistently continue to generate value-added and, in annual steps of varying size, will reach its growth target for 2020. With this goal in mind, the Group will continue to invest heavily in strategic growth areas. For 2017 it expects sales growth to CHF 370-390 million with an EBITDA margin of 13-15% and a further significant rise in economic profit.

Higher distribution of CHF 12 per share
At the Annual Shareholder Meeting on April 20, 2017 the Board of Directors will propose a distribution of CHF 12.00 per share from distributable paid-in capital (2015: CHF 11.00), exempt from Swiss anticipatory tax. This represents a payout of 34% of net income.

Ten-for-one stock split proposal
The stock price of the COMET Group has risen strongly in the past several years. In 2016 it increased by 44% and for the first time surpassed CHF 1,000 per share. In order to boost the liquidity and marketability of the stock, the Board will propose at the next Annual Shareholder Meeting to conduct a ten-for-one stock split.

Analyst and media conference
The annual report 2016 with the detailed consolidated results of the COMET Group will be presented today, March 15, 2017, at 10:00 a.m. at the analyst and media conference in Zurich (location: SIX Swiss Exchange, Convention Point, Selnaustrasse 30).

Media Relations
Ines Najorka
Corporate Communications
T +41 31 744 99 96
ines.najorka@comet.ch

Key dates

COMET Group
The COMET Group is a globally leading, innovative Swiss technology company with a focus on the x-ray, radio frequency and ebeam businesses. With premium high-tech components and systems, we enable customers in numerous industries to both enhance the quality of their products and make their manufacturing more efficient and eco-friendly. Our innovative solutions under the COMET, YXLON and ebeam brands are in demand for applications such as materials testing and security inspection, the coating and treatment of surfaces, and non-contact sterilization.
Based in Flamatt, Switzerland, the COMET Group has a presence in all world markets. We employ about 1,200 people worldwide, including approximately 440 in Switzerland. Besides production facilities in China, Denmark, Germany, Switzerland and the USA, we maintain various subsidiaries in the USA, China, Japan and Korea. COMET's stock (COTN) is listed on the SIX Swiss Exchange.