Marked rise in income for Phoenix Mecano during the first half of 2003: Well on track

Monday, 11. August 2003 07:30

Whereas sales corrected for differences in foreign-exchange rates
were down 1.2%, the value of orders received was 171.2 millions of
EUR, corresponding to a book-to-bill ratio of 103%. All income
indicators have improved markedly. Said Benedikt Goldkamp, CEO and
Delegate of the Board of Directors of Phoenix Mecano: "We will
continue to exploit the market's current weakness systematically,
switching the emphasis in our product ranges to high-yield items and
optimising our cost base", thereby confirming the ongoing pursuit of
the previously communicated strategy. This in preparation for any
economic recovery that should not only push up sales, but also
generate another overproportionate increase in income.

The 65% rise in the Group's operating profit (EBIT) to 15.7 millions
of EUR means that its operating margin for the first half-year is
back to an attractive 9.4%. The reasons for this striking improvement
in the Group's results despite the slight drop in sales have to do
with clearly reduced costs and the fact that depreciations were some
2 millions of EUR down on the previous year. Specifically, the
effects of curbed goodwill depreciations and a lower rate of
investment in tangible assets over the last 18 months or so are
making themselves felt. Having sufficient capacity, the Group intends
to continue investing below its depreciation rate in the near future.

The Group's operating cash flow (EBDIT) is up 17.7%, from
22.6 millions of EUR in the equivalent period during the previous
year to 26.7 millions of EUR. During the period under review, its
operating cash flow margin was 16%. Net income soared by 84% from
5.1 millions of EUR to 9.4 millions of EUR.

Development of the Group's individual divisions

The Enclosure Technology division managed to hike its sales by 1% to
59.4 millions of EUR. Despite the fact that the climate for
investment in the Group's main markets of mechanical engineering and
industrial electronics remained depressed, Phoenix Mecano succeeded
in bucking the market trend and achieving growth, thanks to its
Systems Technology Initiative. Accordingly, its EBIT rose by 13% to
11.4 millions of EUR.
The Electrotechnical Components division achieved growth of 10%, with
sales totalling 21.2 millions of EUR, entirely in keeping with the
set budget rate. Some of the major projects during the first half of
2003 involved white goods and the automotive industry. The division's
EBIT rose from 0.2 millions of EUR to 1.8 millions of EUR.

Sales by the Mechanical Components division dipped by 9% to
61.9 millions of EUR, owing partly to the depressed mechanical
engineering market and partly to the situation in the European
furniture industry, which suffered from general consumer hesitancy
and the unusually warm, dry weather. However, following the launch of
some new, innovative products for the furniture sector at the end of
the calendar year, the Group also expects a turnaround here, though
the anticipated improvement will probably only be reflected in its
results in early 2004. Moreover, there is reason to believe that
investments by customers, which slacked off in 2002 and 2003, will
start picking up again in 2004 and underpin Phoenix Mecano's growth
in this area. Continued optimisation measures led to a 75% rise in
the division's operating result.

During the period under review, sales in the Electronics Contract
Manufacturing (ECM) division fell by 11% to 23.2 millions of EUR. The
division's operating losses totalled 1.3 millions of EUR, compared
with 1.2 millions of EUR the previous year. Restructuring measures at
the Italian subsidiary OMP, which is primarily a supplier of
equippers of mobile phone infrastructure, are due to come to an end
in the third quarter. Increased customer demand in this area and the
division's improved cost base mean that both sales and earnings
should improve during the second half of 2003. Siemens has selected
OMP as a key supplier for the worldwide development and production of
racks for mobile phone base stations. This collaboration is due to be
stepped up further in the coming months.


Despite the persistently gloomy global business climate, the Phoenix
Mecano Group is expecting its results for 2003 on the EBIT, EBDIT and
net profit level - to improve significantly on those of the previous
year. Only sales cannot be expected to pick up further yet.
The Board of Directors and management are cautiously optimistic about
the future, in light of the anticipated fruits of rationalisation,
the Group's already encouragingly stable income situation compared
with its rivals in the sector, and the considerable potential for
boosting profits associated with the expected economic recovery.

By 30 September 2003 the Group's half-yearly report for 2003 will be
available for downloading as a PDF file from

Results for the first half of 2003
(key figures in millions of EUR)

1 to 6/2002 1 to 6/2003 in %

Orders received 178.9 171.2 -4

Sales 173.1 166.3 -4

broken down per division:

Enclosure Technology 59.0 59.4 1

Electrotechnical Components 19.3 21.2 10

Mechanical Components 68.0 61.9 -9

ECM 26.1 23.2 -11

Other 0.7 0.7 0

Operating cash flow
(EBDIT) 22.6 26.7 18
Margin 13.1% 16.0%

Operating result
(EBIT) 9.5 15.7 65
Margin 5.5% 9.4%

broken down per division:

Enclosure Technology 10.1 11.4 13
Margin 17.2% 19.2%
Electrotechnical Components 0.2 1.8 +++
Margin 0.9% 8.5%
Mechanical Components 3.0 5.2 75
Margin 4.4% 8.4%
ECM -1.2 -1.3 -9
Margin -4.4% -5.4%
Other -2.6 -1.5 45

Net income 5.1 9.4 84
Margin 2.9% 5.6%

The media release can be downloaded from the following link:
View document
For further information, please contact:
Phoenix Mecano Management AG
Benedikt Goldkamp/CEO
Lindenstrasse 23
CH-8203 Kloten
Tel.: +41 (0)43 255 4 255
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