Financial Report

AFG
Annual Report
2011
Commentary on the Financial Figures
104
After a good start, AFG ended the 2011 financial year clearly short of
expectations, even though there are some good reasons for this. Mention
must be made of the challenging currency situation caused by the
strong Swiss franc, which not only disadvantaged the divisions and business
units that export out of Switzerland (Steel Technology, Surface
Technology) but also increased the import pressure on products manufactured
abroad under euro conditions (Kitchens). Economic growth
weakened over the course of the year, leading to 2011 being regarded
as a year of two very different halves. While AFG posted growth of 6.2 %
adjusted for currency and acquisition effects in the first six months of
2011, it recorded a 5.0 % decline over last year in the second half, despite
this period traditionally being stronger. The withdrawal of investment
grants in Germany undoubtedly played a part in this trend. Once again,
it became clear that human resources cannot adapt quickly enough to
changes in sales and production volumes despite flexible working hours
and short-time working. Coupled with the strong Swiss franc, this led to
high personnel costs. The programmes designed to cut material costs
and other operating expenses helped to somewhat compensate for the
increased pressure on prices and margins in these categories.
During the 2011 financial year, EBITDA fell to CHF 100.2 million (2010:
CHF 121.1 million), or 7.4 % of net revenue (2010: 8.6 %). Even without
the one-time factors, there was only a slight improvement to CHF 102.4
million (7.6 % of net revenue). With the aforementioned impairments in
the Heating Technology and Sanitary Equipment, Steel Technology, and
Surface Technology Divisions and in Corporate Services, EBIT amounted
to CHF − 34.3 million (2010: CHF 47.5 million). Adjusted for one-time
factors, EBIT stands at CHF 40.9 million or 3.0 % of net revenue, coming
in right at the bottom of our expected range.
Net financial expenses rose slightly over last year, due mainly to the payment
for the full year on the CHF 200 million debenture bond. Financial
result was also adversely affected by the strength of the Swiss franc in
the 2011 financial year. Tax expenses increased as a result of the many
companies reporting loss carryforwards, with question marks remaining
regarding their future utilisation.