Burckhardt Compression results for the first half of 2009: Order intake down - solid operating performance

The uncertainty that was observed during the final quarter of the past fiscal year persisted during the first six months of the current fiscal year. Orders received declined by 17% to CHF 163.6 million during the first half of 2009 compared to the first half of fiscal 2008. The effect of exchange rate movements was minimal. Orders for new machines were down 20% to CHF 109.4 million, while incoming orders in the service business stabilized at a slightly lower level of CHF 44.2 million (-4%). In the compressor components business, disclosed separately for the first time, orders received amounted to CHF 10.0 million (-25%). Only a slight decline in sales thanks to high order backlog Thanks to the high order backlog Group sales declined by 12% to CHF 182.5 million during the period under review. Gross profit declined by 7% to CHF 62.6 million, which corresponds to a gross profit margin of 34.3%. Sales and administrative expenses were stable compared to the first half of 2008 (+1.4%). Operating income in the first half amounted to CHF 35.0 million, a 19% decline from the year-ago figure, resulting in an EBIT margin of 19.2% (20.9% in the previous year period). Net income declined by 21% to CHF 26.3 million and earnings per share were down by 20% to CHF 7.82. As of the end of September, Burckhardt Compression had 919 employees on its payroll.

Package of measures implemented

As Burckhardt Compression does not expect its markets to recover in the near future, management decided to take various measures to adjust capacity and lower costs. In Winterthur 54 jobs will be shed, for which a social plan has been drawn up. Provisions for the related costs were already set aside in the first-half accounts. In addition, short time work was introduced at various departments at the Winterthur location beginning in October. In addition to these cost- reduction measures, pro-active measures were initiated on the sales front and in product development. These included strengthening our sales front by transferring staff from other areas with customer contact, bringing forward product development projects and strengthening development teams to shorten the development times of projects already in progress.

Outlook

Due to the obvious deterioration in the general market environment and the limited visibility, reliable statements regarding future order intake cannot be made. Sales for fiscal 2009 as a whole should reach approximately CHF 350 million and enable an EBIT margin of well over 15%.