Interroll posts record year

Consolidated net sales rose by 11.3% in the reporting currency to CHF 401.5 million (+ 10.4% in local currencies), which is also a company record. All regions and product groups contributed to this growth, albeit to varying degrees. The integration of the business units acquired from Ortner GmbH in Kronau, Germany, in December 2016 contributed 0.1% to growth.

Product groups

Interroll manufactured record volumes of conveyor rollers and RollerDrives in financial year 2016. The good development of the «product group Rollers» is reflected in both sales and order intake in 2016. Consolidated sales of CHF 93.5 million (2015: CHF 93.4 million) and order intake of CHF 93.7 million (2015: CHF 91.9 million) were slightly higher than the previous year's record levels.

The sales of the «product group Drives» (motors and drives for conveying systems) amounted to CHF 123.6 million in total, an increase of 12.1% over the previous year (CHF 110.3 million). Consolidated order intake rose to CHF 124.4 million compared to CHF 111.5 million in the prior-year period.

The high demand for RollerDrives, driven conveyor rollers, necessitated an increase in capacity at the Wermelskirchen site in Germany, where Interroll is investing a total of EUR 8 million in 2016 and 2017.

The «product group Pallet & Carton Flow» offers products and solutions for pallets and parcel packaging based on the FIFO (First In, First Out) or LIFO (Last In, First Out) principles.

At the end of financial year 2016, Interroll increased its consolidated sales by 27.5% in this product group to CHF 63.5 million compared to the same period of the previous year (CHF 49.8 million). Consolidated order intake fell only slightly to CHF 61.1 million (previous year: CHF 61.4 million).

In financial year 2016, the «product group Conveyors and Sorters» generated consolidated sales of CHF 120.9 million, thus surpassing the prior-year period (CHF 107.2 million) by 12.8%. Brazil Post received first crossbelt sorters in the reporting year. Order intake rose by 4.8% to CHF 126.0 million compared to CHF 120.2 million in the previous year.

Following its successful launches in Europe and Asia, Interroll brought its Modular Conveyor Platform to the North and South American markets in spring 2016.

Interroll also continued its strategy of near-market production by acquiring Ortner GmbH in Kronau, Germany's sheet metal processing business, including its employees, machinery and premises. This new Group site located near the existing plant in Sinsheim will be expanded to become the Regional Competence Center for Belt Curves in Europe, Middle East and Africa (EMEA).

Regions

The positive growth of the previous year in the «EMEA region» continued in 2016. Order intake rose by 10.5% compared to the previous year, reaching a total of CHF 244.0 million (previous year: CHF 220.9 million). Sales were CHF 245.4 million, 14.5% higher than in the same period of last year (CHF 214.3 million).

All European markets developed positively. Significantly higher performance was achieved in Italy and Spain, despite their generally difficult economic circumstances, as well as in Germany, France and Scandinavia, in particular.

Since this year, Interroll has also focused its activities on the Tire & Automotive industry. A newly created international key account team serves customers in Europe and overseas and at the same time is opening up new markets. Great interest is being shown in Interroll in this segment and the business trend in the first financial year was very positive.

In the «Americas region», the market positions which had increased sharply in the two previous years were maintained in the reporting year 2016. At CHF 99.9 million, sales were almost 2.3% higher than in the previous year (CHF 97.6 million). Order intake fell only slightly by 1.2% from CHF 107.2 million in the previous year to CHF 105.9 million

Demand remains high in the North American market in the areas of e-commerce, foods and distribution centers.

In the year under review, Interroll paid tribute to the strong growth dynamics in Central America by founding a sales and service company in Mexico City. From here, Interroll intends to further develop the logistics hub Mexico as well as the neighbouring countries, which are growing dynamically due to e-commerce, food distribution and the automotive industry, and hold great business potential.

At the end of the financial year, sales in the «Asia-Pacific region» amounted to CHF 56.1 million, an increase of 15.0% over the prior-year figure (CHF 48.8 million). Order intake declined by 2.9% from CHF 57.0 million the previous year and reached a total of CHF 55.3 million.

The previous year included a large project in Korea in the Pallet and Carton Flow area that was invoiced in the reporting year. Towards the end of 2016, for the first time in the history of Interroll, a large dynamic storage project in the Philippines valued at more than CHF 4 million was booked as an order following intensive preparatory work and tests.

Innovation
The global introduction of the innovation MSC 50 was particularly successful in the year under review. This is a purely mechanical speed regulator from Interroll that ensures a controlled speed on slopes with conveyor weights in the range of 0.5 kg to max. 35 kg. Market acceptance is very high. Interroll equips the end points of the sorter with it and is integrating the MSC 50 into the range of the Modular Conveyor Platform. Existing systems can also be retrofitted with it.

Net profit also reaches its peak

Driven by higher net sales, strict cost and investment discipline, and Group-wide productivity gains, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 12.9% to CHF 65.7 million (previous year: CHF 58.2 million) in 2016. The EBITDA margin was 16.4% (previous year: 16.1%).

Earnings before interest and taxes (EBIT) were also higher. After CHF 39.8 million in the previous year, they rose by 20.4% to CHF 47.9 million in financial year 2016. The EBIT margin reached 11.9% (previous year: 11.0%).

Net profit rose by a significant 23.6% compared to the previous year from CHF 29.3 million to CHF 36.2 million. The net profit margin climbed to 9.0% (previous year: 8.1%).

Balance sheet development reflects growth

As at 31 December 2016, the balance sheet total rose to CHF 324.8 million, 10.9% above the value at the end of 2015 (CHF 293.0 million). Besides customer receivables, inventories also increased somewhat. The Interroll Group's intensive project activity with system integrators in the reporting year illustrates this development.

The higher net income also influenced the equity capital, which increased to CHF 233.1 million as at 31 December 2016. This was thus 12.3% above the value of CHF 207.6 million as at 31 December 2015. Driven by higher net profit, the return on equity rose to 16.4% (previous year: 14.4%).

Free cash flow continues to rise

Operating cash flow decreased slightly compared to the previous year, mainly due to higher customer balances, and reached CHF 36.8 million (previous year: CHF 40.2 million). Gross investments totalling CHF 19.5 million were lower compared to the previous year (CHF 24.3 million). Among other reasons, this was due to the fact that the construction project Interroll Academy in Baal, Germany, no longer figured in in the year under review.

Due to the lower investments, even despite the acquisition, free cash flow improved by CHF 0.7 million from CHF 17.3 million in the previous year to CHF 18.0 million in the year under review.

A dividend increase of one third proposed

Because of the good net result of CHF 36.2 million, the Board of Directors will propose a dividend of CHF 16.00 per share for the past financial year to the Annual General Meeting on 12 May 2017. Last year, a dividend of CHF 12.00 per share was paid. The pay-out is therefore increasing by one third.

Responsible corporate management strengthened further

Interroll's first global employee survey in the summer of 2016 showed that the company provides a productive environment for its employees and executives, and the willingness to perform is very high worldwide. As part of the "Culture for Growth" programme, a special training programme was launched which will further enhance the potential of some 200 executives and specialists in the Group. The commitment to responsible corporate governance was underscored even further in December by joining the UN Global Compact. Interroll will seek to increase its competitiveness in the long term by continuing to strengthen its compliance management system.

Outlook

By posting record incoming orders, the Group has gotten off to a good start into financial year 2017 in all regions, but expects growth in profit to flatten out in the current financial year.

Interroll will pay particularly close attention to the development of raw material prices and devote more resources to research and development. Its solid financial condition allows for an additional approx. CHF 4-5 million to be spent on the development and expansion of promising industrial applications and trends in 2017 and 2018.

Innovative new products and solutions will thus contribute to the further growth of the Interroll Group in the long term and sustainably strengthen its global position.

Contacts

Paul Zumbühl Daniel Bättig

Chief Executive Officer Chief Financial Officer

+41 91 850 25 24 +41 91 850 25 44

Jens Karolyi

Senior Vice President Corporate Marketing & Culture

Via Gorelle 3 │ 6592 Sant'Antonino │ Switzerland

+41 91 850 25 21