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Excerpt Half - Yearly Report 2008
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Dear Shareholder,
Dear Business Associate!
The first half of 2008 got off to a vigorous start for Interroll, with the company completing major projects from the prior year and gaining additional market share in the growth
markets including Eastern Europe, Russia and Brazil. In Germany the new Centre of Excellence for Drum Motors was officially opened, and in Japan Crossbelt Sorters were presented
to a wide range of industry experts. The market for raw materials had a dampening effect however. The rise in the price of steel proved exorbitantly high and was indeed much more
pronounced than originally anticipated. This will continue to have an impact into the second half of 2008. Massive increases in the price of commodities and rising freight costs
can be passed on to customers only partially and following a delay. Nevertheless, Interroll succeeded in achieving a solid result in the first half of 2008 compared to what was
undoubtedly an above-average performance in the same period a year ago.
Expressed in local currency, sales were up by 10.4 %. At CHF 187.5 million, sales calculated on the basis of Group currency rose by 6.7% year on year (CHF 175.8 million in the
first half of 2007). Total Output in local currency was up slightly from CHF 184.5 million to CHF 186.9 million (+1.3%), while representing a decrease of 2.3 % in the Group
currency.
Numerous projects in the period under review once again confirmed that customers worldwide are increasingly putting their trust in Interroll and choosing the particular benefits
of our core products for materials handling and logistics. Yet again, Interroll captured additional market share in all the relevant areas.
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Kurt Rudolf
Chairman of the Board of Directors
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Paul Zumbühl
Chief Executive Officer
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Operating profit remains stable
Earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at CHF 30.5 million at the end of June 2008, with a margin of 16.9 %, and were therefore slightly
down on the same period a year ago with its above-average performance (June 2007: CHF 32.0 million, margin 17.3%). Earnings before interest and taxes (EBIT) during the period
under review increased significantly from CHF 21.1 million to CHF 23.3 million. The EBIT margin thus rose from 11.5 % to 12.9%.
Significant increase in net profit
Net profit grew by 28.2% to CHF 17.9 million from CHF 13.9 million in the first half of 2007. Free Cash flow stood at CHF 13.4 million as at 30 June 2008, remaining stable year on
year.
Solid balance sheet
Investment in new technologies (such as new processing technologies) and enhanced infrastructure amounted to CHF 7.3 million in the first half of 2008. The balance sheet total at
the end of June 2008 was CHF 259.9 million, with an equity ratio of 49.6 %.
Components segment
In local currency, the Components segment delivered an increase in sales of 1.7 % in the first half of 2008; revenues of CHF 116.8 million expressed in the Group currency were
largely maintained at the level of the prior period (2007: CHF 119.2 million). EBITDA decreased as a result of expansion of the international sales network, strategic investment
in new products and higher prices for raw materials. EBIT increased year on year from CHF 16.4 million to CHF 17.2 million.
A temporary decline in the field of roller conveyors compared to record output in the first half of 2007 was more than compensated for by new products in the field of Drum Motors
and RollerDrives (motorized rollers). At CeMat, the world's leading fair for materials handling, in Hanover (Germany) in May 2008 Interroll presented new key products for
materials handling equipment.
The RollerDrives range was expanded further. RollerDrives and roller conveyors are connected via
V-belts to form the high-performance Poly-Vee solution, which significantly lowers energy consumption and costs for conveyor systems. On 22 April 2008 the new Interroll Centre of
Excellence for industrial Drum Motors opened in Baal (Germany), meeting with a positive response both in general and from trade experts.
Overall, the sales regions were stable or enjoyed positive growth in the first half of 2008. China was able to more than double its revenues. As a result, plans to expand the
manufacturing plant are being considered.
In the period under review, promising projects for new conveyor applications in food processing and other sectors were launched. International product management was also
reinforced and will be expanded further in the course of this year.
Subsystems segment
In the first half of 2008, the revenues generated by the business units in Interroll's Subsystems segment - Dynamic Storage and Automation - increased by 24.8% to
CHF 70.7 million (2007: CHF 56.6 million).
EBITDA grew from CHF 6.8 million to CHF 7.5 million, which represents an increase of 11.4 % compared to the same period a year ago.
In the area of Dynamic Storage sales and order intake were very encouraging. Eastern Europe and Russia captured considerable additional market share. Following a dynamic beginning
in Q1 2008 North America experienced a slowdown in business, which will impact on the second half of 2008. Due to increased activity and high demand in Asia, in the first half of
2008 Interroll Dynamic Storage initiated the construction of a new facility in Thailand where dynamic storage production for Asia is to be concentrated. The facility is expected
to open in Q1 2009.
Dynamic storage business in South Africa stepped up significantly. Following the launch of Flex Flow products for flexible picking on assembly lines at the CeMAT show in Hanover
(Germany) in May 2008, Dynamic Storage boosted sales for this product range.
The new base in Brazil, which opened in February 2008, had already received a new order by the end of June 2008, which significantly exceeded expectations.
At Interroll Automation the level of order intake increased overall in the first half of 2008 despite an accumulation of special projects over the last year. Crossbelt Sorters
continued to establish themselves well in the international market. Reference projects such as Crossbelt Sorters at the Schweizer Post mail sorting centre in
Zürich-Mülligen (Switzerland) - the world's most advanced facility of its kind - offer excellent opportunities for Interroll. Several large-scale projects
are set to take shape in the second half of 2008.
In February 2008, Interroll presented its Crossbelt Sorters to an audience of experts at a press conference in Japan.
At the CeMAT trade show the new Interroll Belt Curve was also unveiled, which delivers crucial benefits for systems integrators and users such as postal or airport services. For
example, it enables a belt to be changed in a third of the time required for earlier types of belt curve. In North America, sales structures have started to be reorganised and
expanded. The order intake for Interroll Automation in Asia did not live up to expectations due to delayed or cancelled projects. By contrast, the Intelliveyor conveyor modules
for zero-pressure unit load handling gained further market share in the first half of 2008.
Outlook
Due to the increasingly volatile state of the markets for raw materials, in the second half of 2008 Interroll anticipates the economic climate to remain subdued. This may impact
on future business. Experts predict further rises in steel prices, with freight costs also rising due to the price of oil. Further productivity gains across all business units,
rigorous cost management and strategic procurement will be leveraged more effectively to maintain and boost profitability.
In terms of our long-term growth strategy, we will increase our level of innovation and continue to apply our brand strategy in order to further strengthen Interroll as the
preferred brand worldwide for core products in the fields of materials handling and automation. Thus, we aim to use our current global market position as a solid basis for
further, long-term growth. Interroll is ideally placed.
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Kurt Rudolf
Chairman of the Board of Directors
Paul Zumbühl
Chief Executive Officer
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The complete Half - Yearly Report 2008 as well as other financial reports are available as PDF Files for downloading. Download Financial Reports
 Half - Yearly Report Key Figures 2008 |
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