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The key market of the Adval Tech Group, the automotive industry, finds itself in the midst of sweeping changes. Technical, social and economic developments have fundamentally altered demand and the buying behavior of market participants. In this challenging environment, the Adval Tech Group once again achieved a healthy result last year with an EBIT margin of 5.8%. Adval Tech was once again able to secure several significant long-term orders in 2019.
Total income and net turnover
In 2019, the Adval Tech Group posted total income of CHF 178.9 million (previous year: CHF 198.2 million). The decline is due in part to the sale of Adval Tech Thailand in August 2018, but also to the general decline in demand in the automotive industry.
Net turnovers of Swiss subsidiary Adval Tech (Switzerland) AG were encouraging, especially sales of transfer presses (technology business). So too were those of Hungarian subsidiary Adval Tech (Hungary) Kft., which produces plastic parts and assemblies as a direct supplier to auto manufacturers.
Profitability
EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to CHF 18.4 million in the year under review (previous year: CHF 20.7 million). The EBITDA margin was 10.3% (2018: 10.5%). EBIT (earnings before interest and taxes) amounted to CHF 10.3 million (previous year: CHF 12.4 million), corresponding to an EBIT margin of 5.8% (2018: 6.2%). Adjusted for currency effects, the EBITDA margin was 10.3% and the EBIT margin 5.8%. The biggest contribution to the operating result came from Adval Tech (Switzerland) AG, Niederwangen,
Adval Tech (Hungary) Kft. and Adval Tech (Malaysia) Sdn. Bhd. Net profit for the Group came to CHF 8.7 million (2018: CHF 8.8 million).
Investments and net current assets
In 2019 the Adval Tech Group invested CHF 8.1 million (2018: CHF 10.4 million) primarily for stamping presses, injection molding machines and the expansion of the production area in China. Cash flow from operating activities amounted to CHF 4.2 million in 2019 (2018: CHF 13.7 million), operative free cash flow to CHF 3.8 million (2018: CHF 11.3 million) and free cash flow to CHF -4.0 million (2018: CHF 12.5 million). Operating net current assets (trade accounts receivable, inventories and trade accounts payable) stood at CHF 34.7 million at the end of December 2019 (December 31, 2018: CHF 26.0 million). Operating net current assets accounted for 20.2% of total income (December 31, 2018: 18.1%).
Equity ratio and dividend payout
The Adval Tech Group improved its equity ratio from 68.8 % at the end of 2018 to 77.8 % at the end of 2019. At the Annual General Meeting on May 14, 2020, the Board of Directors will propose a dividend of CHF 2.70 per share.
Outlook
The economy is severely affected in many areas around the world due to the coronavirus. This is particularly the case in the automotive industry. It is not yet possible to predict the medium and long-term consequences of this crisis. The Adval Tech Group is not giving specific guidance on total income and EBIT in 2020.
Measures in connection with the coronavirus
The Executive Management of the Adval Tech Group is monitoring the situation regarding the spread of the coronavirus very carefully, and is constantly re-evaluating the effects on the Adval Tech Group and the order situation. Its top priorities are the health and safety of employees and the ability to deliver to customers. Adval Tech is temporarily closing down its production activities at several sites until further notice. The sites in Niederwangen (Switzerland) and Endingen (Germany) are operating at a minimum production level. Adval Tech has brought in short-time working at some companies, operations and departments. The Board of Directors, the Executive Management and the managing directors of the Adval Tech subsidiaries have taken a voluntary fee and pay cut as of April 2020 to show their solidarity with the employees who are working reduced hours. The Adval Tech Group has taken all the necessary measures to overcome the crisis to the greatest possible extent and to ensure liquidity.
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Key figures
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2019
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2018
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Change
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Total income (CHF million) 2)
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178.9
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198.2
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-9.7%
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Net turnover (CHF million)
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173.6
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191.3
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-9.3%
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Operating earnings before depreciation EBITDA (CHF million) 2)
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18.4
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20.7
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-11.1%
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Operating earnings EBIT (CHF million) 2)
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10.3
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12.4
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-16.9%
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Net profit (CHF million)
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8.7
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8.8
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-1.1%
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Cash flow from operations (CHF million)
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4.2
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13.7
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-69.3%
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Number of employees on December 31
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1179
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1288
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-109
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Dividend (CHF)1)
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2.701)
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4.20
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1) Proposed by the Board of Directors
2) Alternative Performance Measure, see Annual Report 2019, pages 78 and 79, Note 3
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