ALEXANDER VON WITZLEBEN
Dear shareholders, ladies and gentlemen,
Feintool has continued on its course for growth in 2016 and successfully overcame the challenging demands in the last financial year. The clear strategic and international orientation towards fineblanking and forming and continued positive market conditions have resulted in positive overall result.
Sales in the Feintool Group increased by 8.5 % to CHF 552 million. Adjusted for currency effects, this corresponds to growth of 5.9 %. The Group result amounted to CHF 32.1 million and an equity ratio of 43.3 %. The Board of Directors will therefore propose to the Annual General Meeting that it approve a dividend of CHF 2.00 per share.
Challenging general conditions
Feintool was only minimally affected by the difficult political and economic developments of last year. The planned exit of the UK from the European Union had almost no impact on us. We did, however, notice the emissions manipulation in diesel cars in the USA, but the reduced orders were compensated for by the higher demand from other customers. However, the significant increase in the price of steel has put additional cost pressure on our production.
Developments in the currency environment also had a long-term influence on Feintool's sales and results. In the reporting period, the locations in Switzerland were still fighting the effects of the strong appreciation in the Swiss franc against other currencies in January 2015. Although the introduced measures are beginning to bear fruit, the results are still burdened by costs relating to the focus of the Swiss locations, and associated relocation of around 140 customer orders with higher manual activities to other production locations.
On the other hand, the Swiss franc weakened slightly against almost all currencies in 2016. For the first time in years, this resulted in a positive translation effect. Finally, the low valuation of the euro against almost all other currencies helped the German car manufacturers to achieve first-class sales figures, in many places even with record results. As their supplier, Feintool also benefited from this development.
The growth driver was the System Parts segment, which was able to profit, especially in Europe and China, from the sustained boom in the automobile industry (in particular in the middle and premium segment that is crucial for Feintool), by far the largest buyer of Feintool products and services.
The capital goods business with presses and systems likewise recorded a light increase in sales despite difficult conditions. Feintool was basically able to assert its position on the market. The strategic positioning of the segment for the future is planning for the increase in the proportion of added value in the overall fineblanking process. This includes the enhancement of the press range focusing on customer requirements, the expansion of the range of tools, and additional service provisions.
Prepared for a change of course in the automobile industry
Unlike in recent years, in 2016, the voices in the automobile industry were unmistakably saying that the industry must and will undertake a notable change of course in the coming years. Alternative drives (electric, hybrid, fuel cells) to the previously conventional combustion engine are on the rise, and, according to various studies, should take over a significant share of the overall market in the medium term.
Feintool sees additional market opportunities in these changed circumstances and has reacted to the development. Fineblanking and forming applications in vehicles with new or alternative drives are being expanded. Development projects are under way for alternative drives and new applications for vehicles, as well as for new vehicle applications, such as for the undercarriage or chassis. We are convinced that we can successfully shape this structural change in the market, as we have done in the past.
In tandem we will, of course, serve the growing demand for components for the drivetrain of conventional combustion engines that support, in particular, the on-going trend towards energy efficiency and CO2 reduction. The demand from the automobile industry for fineblanking and forming components will also grow in the next few years and remain a highly competitive core business for Feintool.
New location in Eastern Europe
Feintool is prepared for this development. Now that the extensive relocation within our European System Parts locations has been virtually completed, we are expanding our capacities in Eastern Europe. Most (Czech Republic) was chosen as the location for a new plant that will serve both Feintool segments as a future production location. The construction work begins this financial year, and the start of operations are planned for mid-2018.
With the development projects introduced for alternative drives for cars, the expansion of production capacities in the Czech Republic, the advancement of vertical integration of follow-on operations in the fineblanking and forming process of our plants and the further penetration of these technologies on the international markets, Feintool has created a promising strategic basis for further growth.
This growth requires a more sophisticated form of company organization. Bruno Malinek, successor of Heinz Loosli as CEO since September 2016, has therefore expanded the existing matrix organization at Feintool. This measure, signed off by the Board of Directors, creates new global positions for sales and purchasing on a group level. The functions of research & development and production are planned for a later stage.
We are generally expecting positive performance for Feintool in 2017, however in market conditions that are shaped by political uncertainty. Without the influence of the latest acquisition of the Chinese forming plant, we expect sales of around CHF 580 million and an EBIT margin of 7.5 % - 8 %.
We are grateful to our customers, suppliers and shareholders. The trust shown in us motivates us to continue together on Feintool's road to success. We would also like to thank the Feintool employees for their huge commitment. They continuously support our plans to enhance the company in line with our claim of "expanding horizons".