Download report - Metalor

Neuchâtel, 5 May 2011
Report for the unaudited three months ended 31 March 2011
Metalor Technologies International SA
For the three months ended 31 March 2011 the Metalor Technologies International SA
group (“Metalor”, the “Group”) achieved Net Sales of CHF 91.5 million (2010: CHF 78.6
million), up 16% on the same period last year, and up 23% on a like-for-like basis
excluding sales of the Watch and Jewellery division closed in May 2010. The first
quarter was exceptionally strong for both the Refining and Electrotechnics divisions
whose Net Sales were up 29% and 25% respectively, while Advanced Coatings showed
strong 8% growth.
EBIT was CHF 26.9 million, up 117% versus the CHF 14.5 million of the previous year.
The Watch and Jewellery division had incurred EBIT losses of only CHF 0.5 million in
2010, and all three divisions contributed to this the strong growth as Gross Margins
were increased while Selling, Legal and General and Administrative expenses remained
flat versus Q1 2010.
Net Profit was CHF 34.6 million (CHF 26.3 million) and included, within Non Operating
Items, gains of CHF 20.1 million from completion of the disposal program of certain
reserves of platinum group metals.
� The Refining Division performed very strongly, allowing the division’s Net Sales to
reach CHF 33.9 million (CHF 26.2 million), up 29% thanks to high precious metals
prices, strong and sustained refining volumes and careful metal and inventory
control. Refining division’s EBIT margin was excellent as the sales performance
could be leveraged into EBIT through careful cost control both in production and
administration.
� Advanced Coatings Division year to date Net Sales were 8% higher than last year
at CHF 20.6 million (CHF 19.2 million), supported by strong performance in Europe
while Asia performance was flat versus last year2010 due to a somewhat slower
electronics sector demand, and in the latter part of March the first impact of the
Japanese earthquake on electronics production in Asia. While none of Metalor’s
customers were directly impacted, there has been considerable overall supply chain
disruption.
� Electrotechnics Division continued to experience very strong demand combined
with very high silver prices, and Net Sales increased from to CHF 37.9 million (CHF
30.4 million), up 25%. The Americas activities acquired in January 2010 continued to
grow both Net Sales and contribution to EBIT. The remainder of the division had
just returned to modest profitability during the first quarter 2010, and the combination
of very strong metal margins and carefully controlled manufacturing and
administration costs allowed the division to increase EBIT to 20% of Net Sales, a
333% increase on the prior year period.
Strong trading combined with high precious metals prices put particular pressure on the
Group’s working capital, in particular trade receivables increased CHF 54.9 million to

CHF 175.6 million, although there was no deterioration in any of the divisions’ days
sales outstanding ratios. Inventory fell from CHF 92.5 million to CHF 63.6 million
including platinum group metal sales of CHF 30.1 million at book value (and CHF 51.2
million cash inflow), while trade payables remained steady. In view of high copper
prices the Electrotechnics division could achieve significant purchasing savings by
providing its suppliers with copper on a pool account basis, and as part of this initiative
at 31 March 2011 the Group had an CHF 8.2 million copper position within inventory.
Cash and equivalents less short-term borrowings plus net pending hedges were CHF
135.4 million (31 March 2010: CHF 140.6 million), and the small decline was due to the
significant investment in working capital, and accounts receivable in particular, in the
last twelve months due to growth in both the business and metal prices.. This increase
reflected cash consumed by operations offset by cash from strategic metal sales.
We continue to actively pursue opportunities to grow the business, both organically and
through acquisition. On 1 April 2011 the Group completed the acquisition of the
Coatings business of N.E. Chemcat Corporation. The acquisition cost will be financed
20% out of own cash and 80% using a term acquisition facility. The acquired business
brings in excess of CHF 50 million Net Sales per annum to the Group including Japan
and Korea as new markets, and has a similar EBIT margin to our existing Advanced
Coatings division. Integration, in its early phases, proceeds smoothly to date.
Scott Morrison Daniel Templeman
CEO CFO