Half-Yearly Report 2011 |
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Dear Shareholders, During the first half of 2011, net sales generated within the Interroll Group slightly increased by 0.3 %, from CHF 136.8 million in the first six months of 2010 to CHF 137.2 million in the period under review. In terms of local currency, sales revenue rose significantly by 14.3 %. Almost without exception, every product group and region delivered a contribution to this favourable outcome. In comparison with the same period last year, order intake rose by 6.4 % from CHF 144.6 million to CHF 153.9 million; expressed in local currency, this corresponds to an increase of 20.9 %. As at 30 June 2011, the book-to-bill ratio (new orders in relation to sales) stood at 1.12, compared to 1.06 as at 30 June 2010. Owing to the steep rise in the Swiss franc against all major currencies since the first half of last year, the consolidated financial statements compiled in CHF scarcely reflect these gains in turnover and order intake. To some extent, Interroll has been able to pass on the rising cost of materials to sales prices or absorb such rises through productivity increases. Earnings before interest, taxes, depreciation and amortisation (EBITDA) exceeded the previous year's value (CHF 15.2 million) by 35.2 % to stand at CHF 20.5 million at the end of June 2011. Comparing the two half-year periods, earnings before interest and taxes (EBIT) also rose sharply, from CHF 7.5 million to CHF 13.2 million. Net profit for the period almost doubled from CHF 5.3 million to CHF 9.9 million. Interroll succeeded in further improving customer value in the period under review thanks to the technical enhancement of products; new designs have also made products easier to install and more user friendly. As the iF Product Design Award 2011 and other distinctions and certificates have shown, the market is increasingly coming to regard Interroll as an innovation partner in the field of internal logistics. Alongside innovation, Interroll also pushed ahead with strategic projects such as the implementation of SAP during the reporting period. Financial position The latest figures confirm the financial stability of the Interroll Group. The equity ratio reached close to 60% as at 30 June 2011. Total assets amounted to CHF 219.3 million as at 30 June 2011, compared to CHF 211.3 million as at 31 December 2010. Investment in non-current assets stood at CHF 9.3 million in the period under review; this was mainly attributable to additional preparations for the introduction of SAP, final expansion work at the Centre of Excellence for conveyor rollers and the replacement of production facilities. Current assets also increased as a result of the rise in sale revenue and the significant order backlog (work in progress), which contributed to the increase in net debt from CHF 12.9 million (at the end of 2010) to CHF 16.2 million. Comparing the two half-year periods, net cash from operating activities rose from CHF 4.4 million to CHF 5.8 million. As Interroll announced on 22 October 2010, the business units were disbanded at the start of financial year with the introduction of a new Group structure, and the Group management was adapted accordingly (see also Interroll Annual Report 2010, section on Corporate Governance). The focus has now shifted to the revenue of product groups rather than business units. Capital expenditure and personnel resources will be devoted solely to the strategic product groups on the basis of market potential. Segment reporting includes revenue by product group and by region/country in line with IFRS 8. "Drives" product group The Drives product group (motors and drives for conveyor systems) performed very well in the first half of 2011, with revenue amounting to CHF 50.2 million (compared to CHF 46.3 million for the same period a year ago). Order intake rose 4.5 % year on year, from CHF 49.5 million to CHF 51.8 million. The Synchronous Drum Motor and the RollerDrive EC310 - new products with newly developed intelligent control units - both gained market share during the reporting period. The RollerDrive EC310 won the MM Logistik Award at the world-leading CeMAT logistics fair in Hanover in May 2011. Drum motors also made encouraging market share gains in the American food processing industry. "Rollers" product group Revenue generated from the sale of Conveyor Rollers rose from CHF 40.9 million in the comparable period of last year to CHF 42.1 million; expressed in the reporting currency, order intake remained largely unchanged at CHF 42.0 million. The new design of the conveyor rollers - which facilitates higher conveyor speeds and maximises running smoothness thanks to optimised concentricity - has already gained a strong foothold on the market. The dirt-resistant surface provides extra customer benefit by reducing the need for cleaning. The Group also saw an expansion in the field of applications in which conveyor rollers were deployed, including the packaging industry. Furthermore, Interroll made considerable progress with preparations for the launch of a new conveyor roller set - aimed specifically at light goods - in the second half of 2011. "Conveyors & Sorters" product group Revenue generated within the Conveyors & Sorters product group stood at CHF 21.8 million at the end of June 2011 (against CHF 23.8 million). Order intake rose by an outstanding 19.4 % on the same period last year, from CHF 24.2 million to CHF 28.9 million. The Group is looking to conclude a cooperation agreement with a Japanese systems integrator for a significant volume of powered conveyor modules. In April, Interroll was nominated by Siemens as a Top Supplier for 2011; thirty of around 1,200 key suppliers received the award this year in recognition of close cooperation and excellent performance. In the first half of 2011, Interroll businesses in the US served the growth market of airport security by fulfilling major orders for conveyor modules, which are designed to increase the flow of passengers through security checks. "Pallet & Carton Flow" product group In the area of dynamic storage, a persistent reluctance to invest remained apparent in the first six months of 2011; revenue totalled CHF 23.1 million (CHF 25.9 million last year). Having said that, order intake rose by 10.5 % in half-yearly comparison, from CHF 28.1 million to CHF 31.0 million. Interroll also received a major order relating to dynamic storage solutions - encompassing some 20,000 pallet positions for the consumer goods group Procter & Gamble; the order will be fulfilled in partnership with Spanish company Mecalux. Procter & Gamble is aiming to expand the capacity of an existing distribution centre in Germany through this project. Another dynamic storage order was placed by a Swiss wholesale distributor. At the CeMAT fair in Hanover in May, Interroll showcased technology designed to raise productivity at distribution centres. The company presented dynamic storage innovations that included the new wear-resistant speed controller (for which a patent application has been filed). This world-first solution, which utilises completely new technology, raises throughput volume as much as fivefold, which in turn enables customers to handle products at greater speed. Overview by region Sales in Europe increased by 8.4 % in local currency terms in the first half of the year as Interroll gained significant market share in European countries. All product areas contributed to the growth, with the exception of palletising warehouse logistics. During the first six months, Interroll made preparations to establish a sales base within the emerging Turkish market - which offers highly promising opportunities and projects - in the second half of the year. Interroll is also pursuing a number of interesting projects in South Africa that should impact on order intake for the second six months. Interroll succeeded in expanding its North American market share significantly in the reporting period, especially in the product areas of Drives and Conveyors & Sorters; the company was awarded two follow-up orders from the online retailer Amazon and managed to raise the profile of its drum motors in the food processing industry. Interroll also concluded a sorter contract with a leading courier business. In South America, the recently established Interroll branch in Brazil received its first sorter contract; a crossbelt sorter will be deployed in the sales and distribution centre of a textiles firm. In Asia, Interroll China secured the biggest order so far for belt curves in this region during the first half. The belt curves will be utilised by a service provider for courier and postal services. Interroll's branch in China has also taken up residence in a much larger factory with a production area of over 10,000 square metres; the new facility will be officially opened in September. Interroll appointed successor managers for its companies in South Korea and Japan; the current general managers of these firms are due to retire this year. Interroll opened a sales office in Jakarta during the first six months of this year with the intention of securing a larger share of the rapidly expanding Indonesian market. Innovation In May 2011, Interroll unveiled new and enhanced key products for internal logistics at the worldleading CeMAT logistics fair in Hanover. Interroll produces solutions that save energy and space, utilise decentralised intelligent control and promise high levels of user friendliness as well as quick returns on investment (two years on average). Interroll products also offer fast, easy and safe installation. New solutions unveiled included the aforementioned wear-resistant speed controller, which facilitates much higher pallet throughput in dynamic storage systems. The new cassette solution with drum motors also makes conveyor belts easier to install in checkout systems. During the first six months of 2011, Interroll carried out the final tests on other solutions in the field of electronic control systems for motors; they are to be launched in the second half. Offering fast installation and flexible conversion, these control units will increase the productivity of material flow systems considerably. Outlook Given the volatility of raw material prices, the persistent reluctance to invest within key user markets and continuing currency fluctuations, Interroll is conservative in its outlook for the near future; the significant uncertainty that continues to underpin global economic trends shows no signs of abating. To consolidate our market position and ensure we are able to utilise market potential in both the short and the long term, we are purposely expanding our global network and promoting innovation at every opportunity. We are confident that this approach, allied with our years of expertise, will provide us with the basis on which to sustain success in the future. Geographically speaking, we are also expanding our activities in Asia and the USA. Consistently stringent cost management, further productivity increases and a strong financial basis will remain critical factors in the steady implementation of our long-term growth strategy.
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