Sales and Margins Impacted by Weak End Markets; Focusing on Cost Containment and Strong Technology Pipeline; Long-Term Demand Drivers Intact

Key figures for the Oerlikon Group as of September 30, 2023 (in CHF million)

Order intake

567

764

-25.8%

1 905

2 327

-18.2%

Sales

623

742

-15.9%

2 061

2 174

-5.2%

Operational EBITDA1 

98

127

-23.3%

324

376

-13.8%

Operational EBITDA margin1 

15.7%

17.2%

-150 bps

15.7%

17.3%

-160 bps

Operational EBIT1 

44

75

-40.7%

162

213

-24.0%

Operational EBIT margin1 

7.1%

10.0%

-290 bps

7.9%

9.8%

-190 bps

1 For the reconciliation of operational and unadjusted figures, please see tables I and II on page 2 of this news release.

Pfaeffikon, Schwyz, Switzerland – November 2, 2023 – “Our quarterly results reflect the weakness in key end markets and the continued currency headwinds. In the near term, we are performing a review of operational and strategic actions to strengthen the resilience of the company,” said Michael Suess, Executive Chairman, Oerlikon.

“Our innovation pipeline for the coming quarters is filled with solutions that will increase customer value. Notwithstanding the cyclical weakness of Polymer Processing Solutions, its underlying fundamentals remain strong, and the long-term demand drivers for both our businesses are intact. This makes us confident about the future growth potential of our company,” added Michael Suess.

Q3 Performance

Group order intake decreased by 25.8% to CHF 567 million, attributed to weak demand in Polymer Processing Solutions. Sales decreased by 15.9% to CHF 623 million. At constant exchange rates, Group sales decreased by 10.9%.

Operational EBITDA for the third quarter decreased by 23.3% to CHF 98 million, and the operational EBITDA margin was 15.7%. The margins are attributed to the lower demand in Polymer Processing Solutions, higher input costs and currency impacts. Q3 operational EBIT was CHF 44 million, or 7.1% of sales (Q3 2022: CHF 75 million; 10.0%).

Group Q3 unadjusted EBITDA was CHF 95 million, or 15.3% of sales (Q3 2022: CHF 126 million, 16.9%), and EBIT was CHF 41 million, or 6.6% (Q3 2022: CHF 73 million, 9.8%). The reconciliation of the operational and unadjusted figures can be seen in the tables below.

Table I: Reconciliation of Q3 2023 and 9M 2023 operational EBITDA and EBITDA1

In CHF million

Q3 2023

Q3 2022

9M 2023

9M 2022

Operational EBITDA

98

127

324

376

Income/expenses related to restructuring

0

0

0

0

Expenses related to discontinued activities2

-1

-1

-2

-7

Expenses related to acquisition and integration costs

-1

-1

-2

-6

EBITDA

95

126

319

363

Table II: Reconciliation of Q3 2023 and 9M 2023 operational EBIT and EBIT1

In CHF million

Q3 2023

Q3 2022

9M 2023

9M 2022

Operational EBIT

44

75

162

213

Income/expenses related to restructuring

0

0

0

0

Impairment charges

0

0

0

0

Expenses related to discontinued activities2

-2

-2

-5

-9

Expenses related to acquisition and integration costs

-1

-1

-2

-6

EBIT

41

73

155

198

1 All amounts (including totals and subtotals) have been rounded according to normal commercial practice. Thus, adding up the figures presented may result in rounding differences. 2 Includes costs from discontinued operations (Russia and inline ePD). Q3 2022 and 9M 2022 restated due to the termination of the inline ePD business.

Division Overview

Surface Solutions division

Key figures for the Surface Solutions division as of September 30, 2023 (in CHF million)

9M 2023

9M 2022

∆

Order intake

367

346

6.2%

1 144

1 070

6.9%

Sales (to third parties)

368

347

6.3%

1 130

1 026

10.1%

Operational EBITDA

63

60

5.6%

185

184

1.0%

Operational EBITDA margin

17.1%

17.2%

-10 bps

16.3%

17.8%

-150 bps

Surface Solutions increased order intake by 6.2% to CHF 367 million and sales by 6.3% to CHF 368 million. Adjusted for FX, sales increased 11.9%, thereof 11.1% is related to the Riri acquisition. The organic FX adjusted sales growth of 0.8% was impacted by weakening manufacturing activity as reflected in the manufacturing PMIs.

The Q3 operational EBITDA margin was stable at around 17%, representing an improvement in sequential margin (Q2 2023: 16.1%) that is attributable to the positive impact from cost and pricing actions. The margin continues to be impacted by higher input costs and the strengthening Swiss franc. Operational EBIT was CHF 27 million, or 7.3% of sales (Q3 2022: CHF 24 million, 7.0%). The division’s unadjusted Q3 EBITDA was CHF 63 million or 16.9% of sales (Q3 2022: CHF 59 million, 16.9%). EBIT was CHF 26 million, or 7.1% of sales (Q3 2022: CHF 23 million, or 6.5%).

Polymer Processing Solutions division

Key figures for the Polymer Processing Solutions division as of September 30, 2023 (in CHF million)

Order intake

199

418

-52.3%

760

1 257

-39.5%

Sales (to third parties)

255

395

-35.5%

931

1 147

-18.9%

Operational EBITDA

28

65

-56.4%

127

188

-32.4%

Operational EBITDA margin

11.1%

16.4%

-530 bps

13.7%

16.4%

-270 bps

Polymer Processing Solutions saw a decrease in orders and sales in the quarter. This was attributed to the persistent weakness in the filament market and lower demand for staple fiber and nonwovens, driven by customers prioritizing cash preservation as inflation and prevailing economic uncertainties. Furthermore, flow control solutions were transitorily impacted by automotive customers delaying the launches of new car models. The division’s order intake decreased by 52.3% to CHF 199 million, and sales declined by 35.5% (FX adjusted: -30.8%) to CHF 255 million.

Q3 operational EBITDA declined by 56.4% to CHF 28 million, or 11.1% of sales. The margin was impacted by a lower sales volume, unfavorable currency developments and input costs. During the quarter, the division continued to execute its announced cost actions with initial positive impacts expected to phase in during Q4. Operational EBIT was CHF 16 million or 6.2% of sales (Q3 2022: CHF 51 million, 12.9%). The division’s unadjusted Q3 EBITDA was CHF 28 million, or 11.1% of sales (Q3 2022: CHF 65 million, 16.4%), and EBIT was CHF 16 million or 6.1% of sales (Q3 2022: CHF 51 million, 12.8%).

Oerlikon will present its results during a conference call today beginning at 10:30 CET. To participate, please click on this link to join the webcast.

To ask questions in the Q&A session, please dial in.

Country 

Local toll call numbers

Switzerland

+41 58 310 50 00

UK

+44 207 107 06 13

USA

+1 631 570 56 13

The media release can be found at www.oerlikon.com/pressreleases and www.oerlikon.com/ir.