The first six months of 2014 showed positive momentum for HUBER+SUHNER. Net sales at CHF 366.8 million were, as expected, 5.4% lower compared to 2013. In organic terms, before taking currency and copper effects into consideration, sales were almost at the same level (-0.7%) as in the previous year. At the same time, order intake (+16% on CHF 408.9 million) picked up significantly, primarily in Fiber Optics as well as in Radio Frequency. EBIT increased to CHF 33.8 million (+14.9%). Profitability grew markedly in the first half-year with an EBIT margin of 9.2% surpassing the medium-term target range.
The pleasing increase in order intake was mainly based on the LTE roll-outs related to the introduction of the 4G mobile communication standard. The HUBER+SUHNER customer base for this application is now broader in geographical terms. The market segment railway also grew compared with the equivalent period of the previous year and has a substantial volume of projects in the pipeline. Furthermore, a strong boost was seen particularly in Asia, with China, India and Australia currently achieving the highest growth rates.
As expected, net sales of CHF 366.8 million in the first half-year lagged behind the strong equivalent period of the previous year (-5.4% recorded, -0.7% organically), but increased noticeably in comparison with the second half of 2013. The key influencing factor for this was the base effect of the FTTA (Fibre to the Antenna) wave in North America in the first half of 2013. By contrast, the positive trend in the market segment railway continued, supported by large-scale projects in China and Europe and the generally increasing importance of communication technology in trains.
The three main markets of HUBER+SUHNER developed quite differently in the first half of 2014. In Communication, sales decreased by 5.7%. Nevertheless, the 42% higher order intake shows a very positive momentum in the first six months. In Transportation, sales picked up by 4.8%, whereas in Industry sales decreased by 16%.
Net income increased thanks to a higher gross margin and a lower tax rate. The EBIT margin of 9.2% in the first term outperformed the mid-term target range with a pleasing profitability in all three divisions. The free operating cash flow was slightly negative, mainly due to the purchase of a building in Pfäffikon to set up a new European logistics centre.
The number of employees rose worldwide during the first half-year compared with the end of 2013 by 217 permanent employees (up 6.2%). This was mainly due to the expansion of capacities in China and Tunisia to meet growing business volumes. The number of employees in Switzerland remained stable.
The strong increase in order intake in the first half-year and the noticeably higher level of orders on hand compared with the previous year make us optimistic for the second semester. For 2014 as a whole, HUBER+SUHNER expects growth in net sales of 2-4% with an EBIT margin slightly exceeding the target range of 6-9%.