Q1 2010 results confirm positive trends since H2 2009

Orders received for the Oerlikon Group's continuing operations were up 64 percent year- on-year from CHF 571 million in Q1 2009 to CHF 937 million in Q1 2010. Orders received also showed an increase of 33 percent in comparison to Q4 2009, thus confirming the positive trend that has set in since the businesses stabilized in the second half of 2009. Orders on hand as of 31 March, 2010 amounted to CHF 1 202 million vs. CHF 1 124 million at 31 March, 2009 (+7 percent). Sales increased by 11 percent year-on-year to CHF 705 million in the first quarter of 2010 (Q1 2009: CHF 634 million). In the same period, the Group's book-to-bill ratio improved from 0.9 to 1.3.

Compared to the prior year's first quarter, the majority of Oerlikon's segments experienced a steady inflow of new orders. Oerlikon Textile and Advanced Technologies more than doubled their orders received, while Oerlikon Coating, Vacuum and Drive Systems posted significant growth rates. In the absence of large orders for end-to-end solutions, Oerlikon Solar received a few after-sales orders as expected.

In a year-on-year comparison, the positive development of Group sales was predominantly driven by Oerlikon Textile, which increased its sales to third parties by approx. 48 percent compared to Q1 2009. The remaining operations of the Oerlikon Advanced Technologies segment achieved growth in sales to third parties of 44 percent, while sales at Oerlikon Coating and Vacuum grew by approx. 12 and 20 percent respectively. Although Oerlikon Drive Systems is recovering from a low level and recorded its second consecutive quarter of improving sales, sales in Q1 2010 were still 20 percent below the Q1 2009 level. Based on the percentage-of-completion accounting method, Oerlikon Solar recognized some sales on existing contracts with its customers Hevel and Heliosphera, as no major shipments were scheduled. "We are benefiting from a broader recovery of global textile markets, combined with an overall improvement in the market environment for manufacturing industries. However, we still have a considerable way to go before Oerlikon will operate again in a satisfying profitable manner", says COO Thomas Babacan.

EBIT improved from CHF -114 million in Q1 2009 to CHF -14 million in Q1 2010. With the exception of Oerlikon Drive Systems, all of Oerlikon's segments were able to improve their operating result. As a consequence of the decrease in sales, Oerlikon Drive Systems posted a loss at EBIT level of CHF -5 million, compared to a small positive EBIT of CHF 1 million in the same period in the previous year. "Overall, we believe we are well on our way to reaching operational profitability before restructuring costs at Group level in the second half of the year," says CEO Hans Ziegler.

The Group's quarterly net loss of CHF 104 million was mainly impacted by net financial expenses of CHF -86 million (prior year CHF -21 million). The increase in net financial expenses was due to higher debt levels compared to the previous period, higher interest rates as a result of the amendment of the existing credit facilities in June 2009 as well as one-time write-offs of previously capitalized fees in the amount of CHF 29 million, which related to the existing syndicated loan facilities, as a consequence of the agreed financial restructuring. The Group's net loss was further impacted by income taxes of CHF -5 million (prior year CHF -5 million) and a small positive contribution from discontinued operations of CHF 1 million (prior year CHF -27 million).

Operational restructuring: In the first three months of 2010, Oerlikon continued to focus on the implementation of the initiated operational restructuring measures. CHF 1 million of restructuring costs were charged to the income statement in Q1 2010 and more than CHF 18 million were paid out of provisions set up in the financial year 2009. As previously announced, further restructuring costs in the range of CHF 50-70 million are expected to be booked in the current year to finalize the ongoing programs. The Group's headcount remained almost unchanged at 16 386 full-time equivalents, compared to 16 369 as of December 31, 2009. The Oerlikon Textile, Vacuum and Solar segments further reduced their workforce by a total of about 100 employees. In contrast, Oerlikon Drive Systems selectively increased its workforce to a similar extent, predominantly through temporary positions in India. "In some business areas capacities still need to be aligned with the changed market environment. This requires the continued and disciplined implementation of our operational restructuring measures", says COO Thomas Babacan.

Capital management: Stringent capital management continued throughout the first quarter of 2010. Capital expenditures remained significantly below depreciation levels. The Group's net working capital increased by around CHF 80 million due to lower factoring activities and selective inventory build-ups to support expected further growth.

--- END press release Q1 2010 results confirm positive trends since H2 2009 ---

  OC Oerlikon Management AG, Pfäffikon (company entry)