'Our quarterly results reflect, on the one hand, strong growth in our Surface Solutions Division despite slowing industrial production and persistent negative FX impacts.
On the other hand, we see an extremely difficult market backdrop in our filament business,' said Michael Suess, Executive Chairman, Oerlikon.
'Taking into account the economic slowdown in China, the strong Swiss franc and persistent inflation, we updated our full-year financial guidance. Our pricing and announced cost measures will gain traction in the second half of 2023 and support margins. While macro conditions remain uncertain in the short-term, we will continue to execute on our mid-term growth strategy in both divisions,' added Michael Suess.
Second Quarter Results Reflect Market Challenges
Group orders decreased by 15.0% to CHF 657 million and Group sales decreased slightly by 4.4% to CHF 702 million, driven by postponements in Polymer Processing Solutions' filament orders. At constant exchange rates, Group sales increased by 3.6%, including 5.9% from Riri.
The operational EBITDA for the second quarter declined by 13.8% year-over-year to CHF 111 million, corresponding to a margin of 15.8%. The decline was driven by the Polymer Processing Solutions Division. Operational EBIT for Q2 2023 was CHF 55 million, or 7.8% of sales. Q2 2023 EBITDA was CHF 110 million or 15.6% of sales, and EBIT was CHF 54 million, or 7.7% of sales.
Oerlikon Group 2023 Half-Year Overview
In the first half of 2023, the Group's order intake decreased by 14.4% year-over-year to CHF 1 338 million, and sales were stable at CHF 1 437million. Operational EBITDA for the half year amounted to CHF 227 million, corresponding to a margin of 15.8%. Operational EBIT was CHF 118 million, or 8.2% of sales. EBITDA was CHF 224 million, or 15.6% of sales, and EBIT was CHF 113 million, or 7.9% of sales.
Update on 2023 Outlook
For 2023, Oerlikon continues to expect a mid-single-digit percentage organic sales decrease at constant currencies, driven by postponement of customer investment decisions in Polymer Processing Solutions. Taking into account the actual currency exchange rates and the consolidation of Riri as of March 1, total Group sales of CHF 2.75 - 2.8 billion are expected in 2023. The operational EBITDA margin is expected to be around 15.5% (previously 16.0%-16.5%), considering mix impacts, FX developments and higher input costs. Oerlikon's ongoing pricing and cost actions will gain traction in the second half of the year and support margins.
The Surface Solutions Division increased Q2 order intake by 13.3%. Adjusted for FX, orders increased by 21.9%, including 12.7% from acquisition (Riri). The division's sales improved by 11.6%. Adjusted for FX, sales increased by 20.1%, with Riri contributing 12.3%. FX-adjusted organic growth (+8% for Q2 2023; +10% for 1H 2023) was supported by higher demand in aviation, general industries, luxury and energy.
Second-quarter operational EBITDA was stable at CHF 63 million, corresponding to a margin of 16.1%. The margin was impacted by product/service mix, adverse FX movements and higher input costs (mainly personnel and energy). Q2 operational EBIT was CHF 24 million, or 6.2% of sales (Q2 2022: CHF 25 million; 7.1%). Q2 EBITDA was CHF 62 million or 15.8% of sales and EBIT was CHF 23 million, or 5.7% of sales.
The Polymer Processing Solutions Division saw decreases in Q2 orders (-33.0% FX adjusted) and sales (-11.6% FX adjusted), attributed to the postponement of orders in the filament end market, particularly in China. FX adjusted sales in non-filament markets were fairly stable. Lower demand for carpet yarns and nonwovens, due to some customers delaying orders and preserving cash, was counteracted by solid demand in industrial yarn, staple fibers and flow control solutions.
Second-quarter operational EBITDA decreased by 32.6% to CHF 44 million, or 14.2% of sales, due to sales mix, operating leverage and higher input costs. Q2 operational EBIT was CHF 31 million, or 10.1% of sales (Q2 2022: CHF 51 million, 13.3%). Q2 EBITDA was CHF 44 million, or 14.2% of sales, and EBIT was CHF 31 million or 10.0% of sales.
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About Oerlikon
Oerlikon (SIX: OERL) is a global innovation powerhouse for surface engineering, polymer processing and additive manufacturing. The Group's solutions and comprehensive services, together with its advanced materials, empower customers by improving and maximizing the performance, function, design and sustainability of customers' products and manufacturing processes in key industries. Pioneering technology for decades, everything Oerlikon invents and does is guided by its passion for supporting customers' goals and fostering a sustainable world. Headquartered in Pfaeffikon, Switzerland, the Group operates its business in two Divisions - Surface Solutions and Polymer Processing Solutions. It has a global footprint of more than 13 000 employees at 205 locations in 37 countries and generated sales of CHF 2.9 billion in 2022.
Disclaimer
OC Oerlikon Corporation AG, Pfaffikon together with its affiliates, hereinafter referred to as 'Oerlikon', has made great efforts to include accurate and up-to-date information in this document. However, Oerlikon makes no representation or warranties, expressed or implied, as to the truth, accuracy or completeness of the information provided in this document.
The contents of this document, including all statements made therein, are based on estimates, assumptions and other information currently available to the management of Oerlikon. This document contains certain statements related to the future business and financial performance or future events involving Oerlikon that may constitute forward-looking statements. The forward-looking statements contained herein could be substantially impacted by risks, influences and other factors, many of which are not foreseeable at present and/or are beyond Oerlikon's control, so that the actual results, including Oerlikon's financial results and operational results, may vary materially from and differ from those, expressly or implicitly, provided in the forward-looking statements, be they anticipated, expected or projected. Oerlikon does not give any assurance, representation or warranty, expressed or implied, that such forward-looking statements will be realized. Oerlikon is under no obligation to, and explicitly disclaims any obligation to, update or otherwise review its forward-looking statements, whether as a result of new information, future events or otherwise.
This document, including any and all information contained therein, is not intended as, and may not be construed as, an offer or solicitation by Oerlikon for the purchase or disposal of, trading or any transaction in any Oerlikon securities. Investors must not rely on this information for investment decisions and are solely responsible for forming their own investment decisions.
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