Despite the automotive industry's difficulties in 2019, the Adval Tech Group performed well, almost maintaining its EBIT margin despite lower total income than in the previous year. Total income was CHF 178.9 million (2018: CHF 198.2 million, -9.7%), EBITDA totaled CHF 18.4 million (2018: CHF 20.7 million, -11.1%), and EBIT came to CHF 10.3 million (2018: CHF 12.4 million, -16.9%), giving an EBIT margin of 5.8% (2018: 6.2%). Net profit for 2019 amounted to CHF 8.7 million (2018: CHF 8.8 million, -1.1%).
Adval Tech had set itself the following targets for 2019: accomplish the planned relocation in China smoothly, get its numerous newly acquired production projects right first time, strengthen the cooperation between the facilities in Germany and Hungary, broaden the base for the Grenchen location and intensify the sale of high-speed presses from Switzerland to offset the volatility of the automotive market. Adval Tech met all these targets in the year under review.
Market development and market success
The shift in the automotive industry and its associated uncertainties continued to beset suppliers in 2019. Factors inhibiting demand included global trade policy disputes, uncertainties over the future of various engine systems and, not least, lower overall demand for new cars. Five megatrends are becoming ever clearer in the automotive industry: electric vehicles, networked and self-driving cars, shared mobility, digitalization and lightweight construction. Each of these developments will bring new market opportunities for the Adval Tech Group.
In the past few years, Adval Tech secured several large orders which will ensure capacity utilization at individual sites for years to come. Again in 2019 the Adval Tech Group made important headway, particularly in the metal segment. For example, Adval Tech won several contracts for a major automotive manufacturer – the orders were acquired in Switzerland, the production tools will be manufactured in Germany, and the components will then be produced in Hungary.
Significant increase of turnover through sales of high-speed presses
Overall, in 2019 the Adval Tech Group's total income was down at CHF 178.9 million (previous year: CHF 198.2 million). This 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. The Adval Tech Group's currency-adjusted total income for 2019 is some 7% below the previous year's figure. Net turnover from the sale of components (2018: CHF 157.3 million) fell to CHF 128.6 million in 2019. The Adval Tech Group was able to compensate for most of this decline through sales of high-speed presses from Switzerland. Net profit for 2019 came to CHF 8.7 million (2018: CHF 8.8 million).
Change in the Board of Directors
After eight years as Chairman of the Board of Directors, Willy Michel will not be standing for re-election at the 2020 Annual General Meeting. However, he will continue to work to advance the interests of the Adval Tech Group as the main shareholder. Roland Waibel, member of the Board of Directors since 2005, will also not stand for re-election. The Board of Directors will propose to the Annual General Meeting of Adval Tech that CEO René Rothen and Jürg Schori, COO of Techpharma Management AG, Burgdorf, be elected as new members of the Board. René Rothen would also take over as Chairman of the Board of Directors.
Outlook
The economy is currently 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) and the two production facilities in Hungary will continue to operate at a minimum production level. Adval Tech has brought in short-time working at some companies, operations and departments, or will do so in the near future. The Board of Directors, the Executive Management and the managing directors of the Adval Tech subsidiaries will take 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.
