Adval Tech increases operating earnings

The Adval Tech Group has achieved the targeted improvement in results in the first half of 2012 and a turnaround in the EBIT figure. With total income of CHF 144.9 million (1H 2011: CHF 143.4 million), Adval Tech reported EBIT of CHF 0.7 million for the first half of 2012 (1H 2011: CHF -1.7 million). In particular, the extraordinary expenses for restructuring measures in China led to a negative net result of CHF -7.7 million (1H 2011: CHF -7.1 million). For the year as a whole, the Group still expects to achieve a positive EBIT figure and an improvement in net profit over 2011.

Compared with 2011, the Adval Tech Group can look back on a good six months: with total income of CHF 144.9 million (1H 2011: CHF 143.4 million) the Group generated operating profit before interest, tax, depreciation and amortization (EBITDA) of CHF 9.9 million, corresponding to an increase of 25% year-on-year (1H 2011: CHF 7.9 million). Although the weak euro and US dollar continued to impact negatively on total income and EBITDA, the cost-cutting measures that have been introduced had a positive effect on results. Operating profit before interest and tax (EBIT) amounted to CHF 0.7 million (1H 2011: CHF -1.7 million). The Adval Tech Group is confident that it will achieve a turnaround at the EBIT level for 2012 as a whole.

Net profit of CHF -7.7 million (1H 2011: CHF -7.1 million) includes extraordinary expenses for restructuring programs in China to the tune of CHF 1.6 million. Higher free cash flow of CHF 0.5 million (1H 2011: CHF -7.4 million) reflects amongst others the improvement in the operating business.

Strategy implementation

Thanks to innovative technologies and an above-average range of products and services along the entire value chain, Adval Tech currently has great potential for development in all of its areas of activity worldwide. However, owing to the Group's global orientation and discerning clientele in highvolume business, all business areas require substantial investments. Adval Tech is not in a position to make such investments in all fields at the same time. The Group has therefore decided to reduce the scope of its business and focus its efforts on selected fields of activity with a global reach. As already communicated, the Board of Directors of the Adval Tech Group has now decided to focus in the future on mold-making and on selected activities in the components business. Adval Tech is looking for possible cooperation opportunities for its deep drawn metal parts (automotive industry) business and for its components activities in the medical technology sector. Talks with interested parties are under way.

The Board of Directors has also simplified the Group's structure. The former divisions have been dissolved so that the Group companies can operate in closer proximity to the market and be managed more directly. The Group now comprises the Components (series parts) and Molds Segments.

Segment results

In the Components Segment (metal and plastics), total income for the first half of 2012 amounted to CHF 110.8 million, which is virtually unchanged from the year-back period (CHF 109.6 million). The Adval Tech Group increased EBITDA in this segment to CHF 7.0 million (1H 2011: CHF 2.6 million).

As a further measure to simplify structures, the Xiamen plant in China will be closed. Production will be moved to the Suzhou site between October 2012 and January 2013. Adval Tech is thus focusing its plastics component production in China at the Suzhou plant.

Total income for the Molds Segment in 1H 2012 came to CHF 37.2 million, below the 2011 figure of CHF 40.6 million. EBITDA of CHF 2.3 million was 25% lower than the year-back figure of CHF 3.1 million. The decline is due primarily to the losses generated by AWM Mold Tech Ltd in Muri (Canton Aargau). Additional savings measures have therefore been introduced there and will begin to take effect as of July 2012. The sales and profit figures at the group company FOBOHA GmbH in Haslach, Germany, are still encouraging. The Board of Directors of the Adval Tech Group has decided to integrate AWM gradually into the FOBOHA GmbH structure. Moreover, in the future, AWM will produce molds on behalf of FOBOHA at the Muri plant. The Group will merge the two mold-making plants in Shanghai and Suzhou in Suzhou towards the end of the year in a drive to exploit additional synergies. This will result in further savings potential. Preparatory work is under way.

Outlook

The sales targets communicated in April 2012 with planned growth of 4-7% year-on-year are still ambitious. In view of the planned start-up phases for large-scale projects in the automotive business, the Adval Tech Group is confident that it can achieve these sales targets. At the EBIT level, the costcutting measures have already begun to bear fruit but the full effect will only be felt after 3Q 2012.

The Adval Tech Group is still confident that it can achieve a turnaround at EBIT level for this year, barring any further negative developments. Taking the previous year's substantial loss as a starting point, the Adval Tech Group expects to see an improvement in the company's result, even if a profit is not yet on the cards. The lower financial expenses will contribute to this.

Adval Tech will publish the detailed 2012 semi-annual report on August 29.