Dear Shareholders, Dear Sir/Madam,
Despite the challenging market environment, Feintool only recorded a slight decline in net sales of 1.6 percent in the first half of the 2019 financial year. The decline in the ongoing production and equipment business and negative currency effects were largely offset by additional net sales from the acquisition of the electro lamination stamping business and ramp-ups of new parts orders.
Business in the System Parts segment, which specializes in the high-volume production of high-precision components, grew slightly, but fell short of expectations compared to the previous year’s figures. The capital goods segment, which comprises presses and equipment, saw a significant decline in orders received. This reflects the general market situation, which is seeing a reluctance on the part of manufacturers to invest in capital goods.
Uncertain market environment
Whereas 2018 was still a record year for Feintool, economic and political uncertainties are now increasingly weighing on the market environment. More stringent environmental requirements and associated test cycles are delaying deliveries/market launches of new vehicle models. Changing trade flows and discussions about the future of the internal combustion engine, hybrid technology, electric vehicles, and mobility in general are having an impact on the development of the industry and the behavior of market participants. All of these factors are having different effects on sales in the company’s most important regions. For example, according to the German Association of the Automotive Industry (VDA), sales in the passenger car market fell worldwide in the first half of 2019. In Europe and the United States, the number of vehicles sold declined year over year by three percent and two percent, respectively. Sales in the Chinese market even dropped by 14 %. The machinery market followed this trend with low investment confidence around the world. Feintool is closely monitoring the market situation and has initiated measures adapted to the individual regions. As such, Feintool is taking advantage of current market conditions and optimizing its locations to meet the respective challenges, while at the same time driving innovation forward.
As a partner for precise and high-volume fineblanking, forming, and electro lamination components, Feintool continues to be very well positioned in all relevant applications compared to its competitors. This particularly includes drivetrain and seat mechanism applications. The Feintool portfolio is broadly diversified, particularly in the drivetrain segment, with components for automatic transmissions, dual-clutch transmissions, and all-wheel drive. In addition, thanks to the acquisition of a company that manufactures stamped electro lamination for electric motors, Feintool is well prepared for changes in the market. The expected regulations will give complex hybrid vehicles a boost. These contain several components such as a dual clutch, electric motor, and all-wheel drive. Electric vehicles and the growing trend towards automatic transmissions in connection with autonomous vehicles are also having a positive impact on long-term demand for fineblanked and formed parts and electro lamination components.
Fineblanking technology: research and development
During the first half of the year, Feintool made further advancements to the FB one hydraulic press generation and will add further models to the series. In the future, we will be able to supply all sizes from 4 000 kN to 11 000 kN from our own press manufacturing facility in Jona, Switzerland. The new press series contains a variety of highly complex innovations that must be tested extremely thoroughly. In order to avoid taking any risks with customers, the originally scheduled rollout was postponed to the second half of the year. This has not affected our strategy, however – Feintool is still pushing ahead with the expansion and enhancement of our Press Competence Center. The XFT 2500speed press series’ sales figures also speak to the success of Feintool presses developed entirely in-house – the company successfully shipped its fiftieth press to a customer during the first half of the year.
With regard to research and development projects, Feintool was able to make considerable progress in the project to manufacture bipolar plates for use in fuel cells. Since then, the company has succeeded in proving its feasibility and developing a production concept. The visit to an exhibition for electro lamination stamping and hydrogen/fuel cells in China generated a great deal of interest.
System parts: advancement and expansion
Through integrating upstream or downstream production steps, Feintool not only improves its business processes, but also ensures its long-term business success. Vertical integration not only optimizes the value and supply chains, but also creates competitive advantages thanks to a high level of expertise at all stages of the value chain. One example is our forming plant in Ohrdruf, Germany. Here the company invested heavily in its own component hardening process. As a result, the plant not only manufactures formed parts, but can also process them directly on site and deliver them to the customer ready for assembly. Since the end of last year, various hardening processes have been in operation using the latest equipment.
The growth at our latest European location in Most, Czech Republic, has been quite encouraging. The fineblanking plant, which was only opened about a year ago, currently employs 50 people, who continuously operate the plant. The first mass-produced parts will be shipped from this plant this year and additional sample parts have been placed at customers’ disposal for approval before entering series production.
In mid may, Feintool presented its FeinClutch technology at the CTI Symposium in Novi, Michigan. This will meet the growing demand for lightweight, ready-to-install drive components for automated transmission. The technology makes it possible to produce clutch plates both at the speed of conventional stamping and with the quality of a fineblanked component.
Outlook
Due to the existing political and increasing economic uncertainties, Feintool expects these to have a depressive impact on the anticipated net sales in all regions and markets. The extent and duration of these negative influences are currently difficult to assess, therefore Feintool is refraining from issuing a quantitative outlook for the financial year 2019 for the time being. Feintool expects the market situation to remain difficult in the second half of 2019, but nevertheless expects to generate sustained positive net result for the 2019 financial year. Feintool expects further growth in all regions in the coming years, due to customer projects and new market share acquired in the current financial year.
Alexander von Witzleben
Chairman of the Board of Directors
Knut Zimmer
Chief Executive Officer