In a demanding market, Schaffner lays the foundation for growth to come – Fiscal 2019/20 remains challenging

Luterbach, Switzerland – 5 December 2019 – In fiscal year 2018/19, the weakening of the global automotive market and the slowdown in world economic growth as a result of the trade tensions between the USA and China were primary negative drivers for the Schaffner Group’s business. The exchange rate situation, too, was a downside factor. The record sales of the prior year could not be repeated. The sales reduction involved all divisions, with Automotive seeing the largest decrease. In fiscal 2018/19, the Schaffner Group booked new orders of CHF 200.7 million (PY: CHF 223.5 million); the book-to-bill ratio was 1.02 (PY: 1.01). Gross margin was 27.9% (PY: 28.4%). Free cash flow improved significantly to CHF 6.3 million (PY: CHF 0.5 million). Schaffner continues to invest in the development of new, high-margin growth segments, putting 8% of net sales into research and development in 2018/19, as in the prior year.

Business is broad-based

The Schaffner Group’s businesses continue to be supported by a broad geographic base. Europe’s share of Group sales in the fiscal year grew slightly to 47% (PY: 45%). The decreased sales share of the Asia region, at 32% (PY: 35%), reflected especially the slowing market growth in China. The Americas accounted for 21% of sales (PY: 20%). In terms of its sectoral end markets as well, the Schaffner Group is on a solid footing. The market for energy-efficient drive systems, at 23% as in the prior year’s sales split, again generated the largest portion of the Group’s revenue. Despite the weakness in the global automobile industry, automotive electronics remained the second largest sales sector in fiscal 2018/19, at 19% (PY: 22%). The sales share earned with products for power supplies of electronic devices was 15% (PY: 14%). Rail technology once again made up 13% (PY: 13%), and the machine tools and robotics sector also brought in a steady 13% (PY: 13%) of the Schaffner Group’s sales.

EMC division

The EMC division, the leader in the global market for EMC filters, operating in an increasingly demanding environment especially in the second half of the year, generated new orders of CHF 104.3 million in fiscal 2018/19 (PY: CHF 116.7 million). Its net sales were CHF 106.9 million (PY: CHF 115.9 million); the book-to-bill ratio was 0.98 (PY: 1.01). The EMC division had segment EBIT earnings of CHF 15.2 million (PY: CHF 17.8 million) and its EBIT margin remained attractive at 14.2% (PY: 15.3%). The share provided by the EMC division’s Power Quality business unit grew somewhat in the year under review.

Power Magnetics division

The Power Magnetics division, which completed its restructuring in fiscal 2018/19, recorded net sales of CHF 52.0 million in the year (PY: CHF 56.6 million). The segment EBIT loss was halved to CHF 3.3 million (PY: CHF 6.8 million). With new orders of CHF 56.9 million (PY: CHF 57.8 million), the book-to-bill ratio was 1.09.

Automotive division

On the back of the sharp downturn in the global automotive market at the end of 2018, combined with the expiration of projects, net sales of the Automotive division in fiscal 2018/19 contracted significantly from the prior year to CHF 38.5 million (PY: CHF 49.0 million). Segment EBIT earnings fell markedly to CHF 2.6 million (PY including one-time effects: CHF 11.3 million) and the EBIT margin declined to 6.6% (PY: 23.1%). New orders were CHF 39.4 million (PY: CHF 49.0 million). The book-to-bill ratio in the fiscal year came to 1.02 (PY: 1.0).

Outlook

Owing to the continuing subdued sentiment in world markets, Schaffner expects the business environment in fiscal 2019/20 to remain demanding; given the high volatility and limited visibility in the Group’s markets, Schaffner chooses not to issue quantified guidance. In particular, the Automotive division expects this fiscal year to still be a challenging one, as the short-term order pipeline heralds a subdued trajectory. Subsequently, from fiscal 2020/21, the new major orders from various big-name automobile manufacturers for the latest-generation antennas for keyless authentication systems should have a positive impact on earnings. The Group’s strategic projects are progressing to plan and, in the medium term (assuming macroeconomic and currency stability), Schaffner’s targets are unchanged at organic sales growth averaging about 5% per year and an EBIT margin in the range of 8% to 10%.

Annual report

The complete Schaffner annual report 2018/19 is available at:

www.schaffner-ir.com/reports

Presentation

The presentation of the 2018/19 financial results is available at:

www.schaffner-ir.com/news-presentations/presentations

Webcast

The webcast of the presentation of Schaffner’s full-year results for 2018/19 is available from 5 December 2019, 10:30 a.m. (CET), at

https://78449.choruscall.com/dataconf/productusers/schaffner/mediaframe/33468/indexl.html

Financial calendar

Schaffner – Shaping Electrical Power

The Schaffner Group is a global leader in solutions that ensure the efficient and reliable operation of power electronic systems by shaping electrical power. The Group’s portfolio includes EMC filters, power magnetic components, power quality filters and the related services. For the automobile industry, Schaffner develops and manufactures components for antennas for keyless authentication systems, and filter solutions for hybrid and electric vehicles and their charging infrastructure. Schaffner components are also deployed in electronic motor controls, rail technology applications, machine tools and robots, electrical infrastructure, power supplies for electronic devices, and wind power and photovoltaic systems. Headquartered in Switzerland, Schaffner serves its customers globally through its engineering and manufacturing centers in Asia, Europe and North America.

Key financials of the Schaffner Group

¹ Subject to approval by the Annual General Meeting on 14 January 2020.