Result of the Mikron Group for the 2009 financial year. Major loss for crisis year.

Different trends in the two segments
The Machining segment, which primarily comprises customers in the European automotive supply industry, was particularly hard hit by the downturn. As a result it bore the brunt – CHF -16.8 million – of the total EDITDA-level loss of CHF -19.5 million. By contrast, the Automation segment profited from business volumes from the medtech and pharmaceutical industries that were on a par with the previous year, and was thus able to limit its loss to CHF -0.4 million.

After taking account of non-operating income of CHF 1.1 million and a loss owing to the financial result, likewise totalling CHF 1.1 million, the Group’s net earnings amounted to a loss of CHF -32.8 million.

Positive cash flow
Cash flow from operations in 2009 was positive at CHF 1.4 million, compared with a cash outflow of CHF -8.2 million in 2008. This was achieved by substantially reducing current assets.

Investments were restricted to only the most important innovation projects and remained on a very small scale, at CHF -2.0 million. As a result, cash outflow before financing activities was limited to CHF -0.6 million.

Secure financing
The balance sheet total fell from the previous year’s CHF 259.0 million (restated) to CHF 210.9 million, due principally to the corporate loss incurred and the reduction in current assets, but also to revaluations resulting from the changeover in accounting and reporting standards. The equity ratio remained unchanged at a high 67.1%. The steps taken by the company succeeded in keeping net cash virtually unchanged at CHF 25 million (CHF 26 million in 2008).

Machining segment
This is the segment in which Mikron produces machines and cutting tools for processing small to medium-sized metal parts. The automotive supply industry and writing instruments industry account for a significant part of its business volume. Virtually no new machines were sold during the first five months after automotive production came to a virtual standstill at the beginning of the year. Things only started to pick up slightly in the second half.

The sizeable loss of CHF -16.8 million incurred at EBITDA level is the consequence of the severe, extremely rapid slump in business volume. Despite the drastic steps taken, the reduction in personnel costs failed to keep pace with the decline in added value. Following initial job cuts at the start of the year, short-time working was the main measure used to achieve a temporary adjustment in capacity to match the low business volume. Towards the end of the year it became clear that the new machine business cannot be expected to improve soon, making a long-term reduction in the workforce necessary. The decision to eliminate around 100 full-time positions will start to have an effect as planned in the second quarter of 2010. The corresponding restructuring costs were charged to the 2009 income statement. In the second half, the division succeeded in reducing its loss before restructuring costs.

Outlook
Mikron Machining expects a slightly improved business environment in 2010. The first to profit from this revival will be the tools business and service field, where signs of an upturn were already appearing in the fourth quarter of 2009. In view of the excess capacity on the market and the uncertain economic outlook, growth in the volume of new machine-driven capital goods business is expected to be hesitant. Recovery in the new machine business is essential to achieving break-even EBITDA. The rising number of quotes being issued as 2009 drew to a close marked a first positive signal. Furthermore, the Asian market is currently offering interesting opportunities and has been given high priority.

Automation segment
This is the segment in which Mikron produces systems for assembling small to hand-sized products and develops automation solutions for production subprocesses. Customers in the medtech and pharmaceutical industries account for the largest share of business volume. In the healthcare sector, the trend towards self-medication remained unbroken. This market segment has thus proven robust in the difficult economic environment.

At the EBITDA level, earnings fell just short of a break-even result (CHF -0.4 million) despite early implementation of corrective action. Cost-saving efforts were unable to keep pace with the accelerating, sharp decline in sales – the result of a slump in volume from non-medtech customers – in the second half of the year. Although the main site at Boudry contributed a substantial positive result, the sites in the United States and Asia reported losses.

Outlook
Mikron Automation anticipates a slightly improved business environment in 2010, with sales in the medical/pharma and personal care market segment expected to match 2009 figures. Although the order backlog rose again somewhat in the fourth quarter thanks to a good order intake, the introduction of short-time working at Boudry will prove inevitable from January 2010. Further staff cuts will be avoided wherever possible in order to retain employee know-how. If sales remain steady, the division anticipates a return to a healthy positive result in 2010. The aim is to achieve an EBITDA which, thanks to cost adjustments, is well into the black. Mikron Automation is putting all its energies into further developing its products, focusing on reducing costs and utilizing new technologies. Efforts to expand the Asian market are being accelerated. The newly launched EcoLineTM assembly platform is an ideal basis for achieving this goal.

Additional information
Please contact Corporate Communications Patrick Brisset, Telephone: +41 32 843 12 64

--- END press release Result of the Mikron Group for the 2009 financial year. Major loss for crisis year. ---

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