Annual Report 2009 - Von Roll

2 Letter to shareholdersDear ShareholdersThe main feature of 2009 was the global recession. Even Von Roll was not able to escape theeffects of the economic downturn. After a record year in 2008, we had to deal with a decline inbusiness development: At CHF 549.4 million, Group sales were 23 % below the level of the previousyear. Adjusted to take into account exchange rate and copper price and copper quantity effects,sales amounted to CHF 638 million, which corresponds to a decline of 10 %. The operating EBITtotalled CHF 0.6 million. Taking into account non-recurring restructuring costs, EBIT was reducedto CHF – 8.5 million. Net income totalled CHF – 11.3 million, compared with CHF 29.8 million in theprevious year.Stabilisation in the second half of the yearThe business segments Insulation and Composites were particularly hard hit by the economic crisis.The sharpest decrease in demand was for products which are used in the automotive industry,construction and consumer goods, which are dependent on the state of the economy. Many customersfrom these sectors cancelled orders and cut their inventories. In the long-term cyclical energysupply and transport business, on the other hand, demand remained largely stable, althoughsome major power station projects were also postponed during the credit crunch.The fall in demand had a significant effect on our order volumes, although a return to a stabilisationwas already noticeable in the second half of 2009: As a result of the decrease in inventories amongmany customers and a generally more optimistic mood, the order intake gradually recovered towardsthe end of the year.Cost savings programme takes effect, financial basis solidVon Roll also reacted in a decisive manner to the deterioration in the general economic conditions.We promptly set up a restructuring programme, in order to adjust our capacities to the alteredmarket situation. As a result of the decreasing demand, it was absolutely essential to streamline ourorganisation. We pooled duties both in production and administration, enabling us to cut just under500 jobs in the process. Von Roll takes its responsibility as a social employer very seriously andoffers those affected support wherever possible. As of the current year, the restructuring programmewill result in permanent cost savings totalling at least CHF 15 million, in comparison with aone-off expense of CHF 8.6 million.The development of sales and results in financial year 2009 remained below our expectations. Wewere pleased, however, that Von Roll was able to maintain its ability to generate cash despite theadverse environment. Cash flow from operating activities totalled CHF 29.5 million. In associationwith an equity ratio which has risen by 3 percentage points to 72 %, this clearly shows that Von Rollhas a solid financial basis.With regard to the solid capital basis the Board of Directors proposes payment of a dividend of CHF0.10 per share for financial year 2009.Market position secured, transformer business convincesIn both of the traditional business segments Insulation and Composites, Von Roll was able to holdon to its leading market position despite the difficult market environment. Our new, third companypillar, Von Roll Transformers, experienced a spurt in growth with an increase in sales of 27 % to CHF92.0 million. The growth drivers were primarily capital expenditure for the replacement of obsoleteelectricity structure, more efficient energy use, as well as new energies. And the positive trendlooks set to continue. Our capacities are working almost at capacity until the end of 2010 and thereare extensive orders in place for 2011 and 2012. In order to be able to exploit the potential of thisgrowth market even better in the future, we are planning to expand our production capacity.