Mar 05, 2019 / 6:00 CET/CEST
Bad Ragaz/Switzerland, March 5, 2019
Softening sales dynamics in last quarter
As announced in October 2018, INFICON (SIX Swiss Exchange: IFCN) did not reach the prior year's (record-high USD 102.1 million; -7.7%) nor the third quarter 2018 figures (USD 101.4 million; -7.1%) in its last quarter. Sales declined in all target markets compared with the previous year's and the preceding quarter's results. A positive contribution from acquisitions (+1.2 percentage points) and negative currency effects (-1.1 percentage points) practically offset each other, leading to an organic decline of 7.8%.
Semi & Vacuum Coating remained the largest target market with sales of USD 40.6 million. The sales decreased compared with the respective prior-year (-6.7%) and the preceding third quarter of 2018
(-8.4%). Following the boom of the last quarters, the demand for components for new OLED manufacturing capacities cooled off. The traditional semiconductor business developed stably for INFICON, supported by a robust demand from the end-user market. INFICON, however, sees the upcoming quarters as challenging, given the lower capital investment levels seen in the OLED market and the prevailing uncertainties regarding international trade and tariffs.
Year over year, sales to the Refrigeration, Air Conditioning & Automotive market slipped 2.6% to USD 18.4 million. Compared with the third quarter sales, the decline was 13.6%. INFICON expects for the coming months a stable trend in the classic refrigeration and air conditioning business and rising shipments of instruments to test automotive components and E-mobility batteries for their leak tightness.
Sales in the General Vacuum market developed steadily in the closing quarter of 2018. Compared with the preceding quarter, sales declined marginally by 1.1%, while the year-over-year comparison reveals a minus of 4.8% to USD 27.8 million. The prospects for this broad, directly and indirectly served market are intact, as the global economy remains fairly robust despite the uncertainties in the international trade and business environment. In addition, the interest in INFICON's newly developed products for the food packaging industry and market share gains further support this trend.
The sales development in the Security & Energy market continues to be primarily dependent on large public sector orders and their timing, and is thus hard to predict. Compared with the same prior-year quarter, the USD 7.4 million in sales were 29.5% lower, while the minus was 3.9% compared with the third quarter.
Lower margins in the fourth quarter
Various factors weighed on the margins for the fourth quarter: The lower sales and their underlying product and margin mix as well as some difficulties on the procurement market, constrained the gross margin from 51.6% to 47.5%. These impacts as well as acquisition related higher research and development costs resulted in a lower operating income of USD 14.9 million after USD 22.2 million a year ago. This yields an operating income margin of 15.8% down from 21.7%. The net profit for the quarter was USD 13 million after USD 21.5 million for the same quarter a year ago. This translates into earnings per share of USD 5.35 after USD 8.83.
Year-end results 2018
INFICON increased its sales in 2018 by 9.9% to USD 410.4 million. Excluding currency effects (+1.5 percentage points) and the sales contribution from acquisitions (+0.3 percentage points), the organic growth for the year was 8.0%. Year over year, INFICON grew clearly in all target markets and world regions. In the Semi & Vacuum Coating market, sales rose by 10.5% to a record-high USD 184.6 million; this represents a 45% share of the total sales. In the Refrigeration, Air Conditioning & Automotive market, sales grew by 7.0% to USD 81.5 million. Sales to customers in the General Vacuum market picked up by 9.9% to USD 115.3 million. Security & Energy posts a sales increase of 13.7% to USD 29.0 million. The sales composition according to regions reveals the strongest gain for Europe with 18.7%, while Asia (5.3%) and North America (7.0%) grew less dynamically.
The gross margin for the full business year 2018 is 49.9% (prior year: 50.5%). After 12.4% higher expenses for research and development and sales, general, and administrative costs that have developed under-proportionately compared with the sales trend, the operating income amounts to USD 81.5 million, up 10.8% compared with the prior-year figure. The operating income margin increased from 19.7% to now 19.9%. After tax, net income was USD 64.2 million, up from USD 59.5 million recorded for 2017. This translates into a net profit margin of 15.6%. Earnings per share for the business year 2018 rose to USD 26.40 after USD 24.57 at the end of 2017.
Cash flow and balance sheet
In its fourth quarter, INFICON generated with USD 10.2 million a lower cash flow from operations than in the third quarter (USD 22.5 million). For the whole year, INFICON's cash flow from operations amounts to USD 52.3 million after USD 61.4 million in the year before. INFICON closed the year 2018 with liquid assets of USD 62.3 million (2017: USD 85.0 million). As a result of the strategically increased stock levels, the inventory turns slowed down from 4.2 times in 2017 to now 3.5 times by year end. The working capital thus rose considerably to 29.1% (prior year 22.4%). The debt-free balance sheet features an ongoing solid equity ratio of 75.9 % at year-end.
Proposed distribution to shareholders and Annual General Meeting
The Board of Directors proposes to the Annual General Meeting scheduled for March 28, 2019, to distribute CHF 22 per share for 2018: CHF 5 out of capital reserves and CHF 17 as ordinary dividend. The Annual General Meeting takes place at the Sorell Hotel Tamina, Am Platz 3, Bad Ragaz, on March 28, 2019 at 11.00 a.m. The invitation including the full list of agenda items and the proposals of the Board of Directors is now available online at https://ir.inficon.com/shareholder-services/annual-meeting. Today, it will also be sent to registered shareholders by mail and published in the Swiss Official Gazette of Commerce.
Outlook
INFICON expects sales for 2019 of around USD 400 million and an operating income margin of around 19%.
Media/Analyst conference
INFICON will discuss its fourth quarter and year-end 2018 results today, March 5, 2019, in more detail at a German-language media and analyst conference scheduled for 09:30 a.m. at Zunfthaus zum Rüden, Limmatquai 42, 8001 Zürich. The respective presentation is available from 07:00 a.m. in the Investors section of the INFICON website www.inficon.com.
Annual Report 2018
INFICON's Annual Report 2018 is now available in the Investors section on www.inficon.com or directly at the following link: http://bit.ly/IFCN_IR_publications.
Communication Calendar 2019
INFICON will publish its first quarter results on April 17, 2019, by issuing a press release at 07.00 a.m. followed by an English-language conference call which will be recorded and archived. INFICON continuously updates its communication calendar which is available online at http://bit.ly/IFCN_calendar.
E-mail Alerts
To automatically receive notification via e-mail of the latest financial information from INFICON, sign up for e-mail alerts in the Investors section of the INFICON website or following this link http://bit.ly/IFCN_Alerts.
Corporate Contact
Matthias Tröndle
Chief Financial Officer
+423 388 3510
matthias.troendle@inficon.com
Inficon CH0011029946 MUL CH en-US tag:xml.newsbox.ch,2019-03-05:41.687.digest