Machinery industry Oerlikon: Lower sales and orders in the third quarter

The industrial group Oerlikon also had to contend with a difficult environment in the third quarter. Both sales and incoming orders were down. The sales forecast for the year as a whole has been lowered, while the margin forecast has been raised.

Sales fell by 6.9% to CHF 538 million compared to the same quarter of the previous year. Adjusted for currency effects, there was an organic decline of 5.2 percent, as the company, which is active in surface technology and manmade fiber mechanical engineering, announced on Monday.

The larger Surface Solutions division recorded an organic decline in sales of 1.4 percent to 356 million Swiss francs. The smaller Polymer Processing Solutions division, which is geared towards the textile market and which Oerlikon is planning to divest, saw sales fall by a good 10 percent to CHF 224 million.

At CHF 538 million, incoming orders at Group level were a good 5 percent below the previous year's figure. According to Oerlikon, this decline was due to a temporary weakening of the end markets for Surface Solutions. Orders in the Polymer Processing division stabilized further in the third quarter compared to the previous year.

The decline in sales also had a negative impact on profits. Operating profit before depreciation and amortization (EBITDA) fell by 7.3 percent to CHF 98 million compared to the same period in 2023. However, the corresponding margin was just maintained at 16.9%.

Executive Chairman Michael Süss is quoted in the press release as saying that robust profitability was achieved thanks to a strong focus on the quality of implementation in difficult end markets.

Oerlikon's results fell short of analysts' expectations in terms of sales and order intake, but the operating profit and margin were better than forecast.

Outlook adjusted

The previous forecasts for the year as a whole have been adjusted. An organic decline in sales in the high single-digit to low double-digit percentage range is now expected, making the company somewhat more defensive in this respect. The forecast for the EBITDA margin, on the other hand, has been raised to around 16% (previously 15.5-16.0%).

Oerlikon believes it is well on track with the planned spin-off of the manmade fibers business (Polymer Processing Solutions division). "The implementation of our Pure Play strategy is proceeding according to plan", says Michael Suess.

Measures have been initiated to merge the organization of the headquarters with that of Surface Solutions, which is to take effect from January 2025. As part of the preparations, the support functions at headquarters will therefore be reduced. The Polymer Processing division will also be set up as an independent organization, which is a prerequisite for a subsequent spin-off.

Various options for the spin-off are also being examined with the aim of achieving the greatest possible benefit for all parties involved.

SDA