Annual Report

Commentary on the Financial Report
Order intake and net sales
Broad-based growth in terms of market segments and technologies
led to a significant increase in HUBER+SUHNER’s
volume of business in the reporting year. Order intake increased
by 30.2% to CHF 847 million (previous year CHF
650 million), and net sales by 26.7% to CHF 800 million
(previous year CHF 631 million). The organic growth in
net sales amounts to CHF 168 million. The positive effect
of the copper was neutralised by negative foreign currency
effects (CHF 22 million in each case).
The real growth driver was the Low Frequency Division
which was able to significantly increase net sales by 50.4%
to CHF 419 million (previous year CHF 279 million).
The “Solar,” “Railway,” and “Automotive” markets made
substantial contributions to this increase. The Fiber Optics
Division grew net sales by a considerable 11.0% to CHF
134 million (previous year CHF 120 million), and the
Radio Frequency Division has also pleasingly returned to a
path of growth. Its net sales increased by 6.4% to CHF 247
million (previous year CHF 232 million).
Regional development of net sales again showed striking
growth of 54% in the Asia-Pacific region, with the
other two regions of EMEA (Europe, Middle East &
Africa) and the Americas (North and South America)
each recording growth of 15%. China is developing into
HUBER+SUHNER’s largest end-customer market with
net sales of CHF 183 million (previous year CHF 126
million).
Operating result, EBIT and EBITDA
As the result of a combination of various positive factors
in the reporting year, HUBER+SUHNER achieved the
highest operating result in its history, of CHF 101.8 million
(previous year CHF 53.2 million). The EBIT margin
of 12.7% (previous year 8.4%) even exceeds the long-term
defined target band, which was increased from 8%–10% to
9%–12% in the reporting year.
The most important of these factors is the exceptionally
high growth in net sales and the net sales mix which
led to high utilisation of production capacities and significantly
contributed to an increase in the gross margin
to 37.6% (previous year 35.6%). An additional results
driver was the under-proportional increase in operating
expenses, which initially remains below net sales development
during periods of strong growth. In the reporting
year, operating expenses amounted to 25.2% of net sales
(previous year 28.1%). Non-recurring special effects were
recorded, both in 2009 at CHF –2.4 million (restructuring
costs and income from the sale of land), and in 2010 at
Commentary on the Financial Report
HUBER+SUHNER Annual Report 2010 · Part 2
CHF –4.0 million (special depreciation for ERP consultancy
services).
Due to the massive growth, the Low Frequency Division
realised a genuine leap in profitability with an EBIT of
CHF 61.3 million (previous year CHF 32.7 million) and
achieved an EBIT margin of 14.6% (previous year 11.7%).
As a result of the modified costs structure, the Radio Frequency
Division was able to substantially increase the EBIT
from CHF 10.9 million to CHF 27.0 million and again to
achieve a double-digit EBIT margin of 10.9% (previous
year 4.7%). The Fiber Optics Division also improved the
EBIT from CHF 16.1 million (EBIT margin 13.3%) to
CHF 20.1 million (EBIT margin 15.0%).
The EBIT of CHF –6.6 million recorded under Corporate
(previous year CHF –6.4 million) consists of Group costs
for management, finances, Board of Directors, general
meeting of shareholders, and of individual Group income
and expenses which cannot be attributed to the three divisions
adequately.
The amount of depreciation and impairments in value in
respect of property, plant, equipment and intangible assets
of CHF 40.0 million (previous year CHF 29.9 million) is
commensurate with the investments made of CHF 39.5
million (previous year CHF 35.8 million). The EBITDA
reached CHF 141.8 million or 17.7% of net sales (previous
year CHF 83.2 million, 13.2%).
Financial result
In 2010, the Swiss franc appreciated considerably in
value compared with most important trading currencies.
As the result of the high value added in Switzerland, the
strengthening of the Swiss franc causes negative currency
effects. Thanks to systematic hedging and a forced
“natural hedging,” it was possible to limit the negative impact.
This unfavourable foreign currency development for
HUBER+SUHNER resulted in a net currency loss of CHF
–4.2 million (previous year net currency gain of CHF 1.3
million). The overall financial result amounts to CHF –2.7
million (previous year CHF 3.4 million).
Income tax and income tax rate
The recorded income tax expense of CHF 20.2 million
(previous year CHF 8.3 million) yields a taxation ratio of
20.3% (previous year 14.6%) in relation to consolidated
profits. This increase is attributable to increased profits, the
cessation of positive tax credits and tax rate amendments
in respect of deferred tax items in the previous year and to
higher taxation rates in the Chinese Group companies.
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