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© ruag Business | March 18, 2016

RUAG increases profits despite difficult year

Despite the appreciation of the Swiss franc and export embargoes, RUAG increased its earnings before interest and taxes (EBIT) substantially in 2015, bringing the total to CHF 137 million (previous year: CHF 113 million).
All five divisions operated profitably and contributed to the positive Group result. Owing to the strong Swiss franc, the international technology group's sales decreased slightly to CHF 1,744 million (CHF 1,781 million). In local currencies, sales growth of 2.5 percent was achieved. Civil business accounted for 55 percent of net sales, while the foreign component of sales came to 62 percent.

Annual report 2015 details

In 2015 RUAG succeeded in largely offsetting the effects of the Swiss franc appreciation and the moratorium on arms exports to the majority of Middle Eastern countries. At CHF 117 million, RUAG generated the highest net profit in its history. Earnings before interest and taxes (EBIT) were increased substantially from CHF 113 million to CHF 137 million even though net sales declined to CHF 1,744 million (CHF 1,781 million). The CHF 37 million decrease in sales was due primarily to foreign exchange factors in the international business. Factoring these out, sales would have increased from the previous year. In local currency terms, sales grew by 2.5 percent.

At the Annual Press Conference, Group CEO Urs Breitmeier had the following to say about the strong result: "RUAG has initiated a swift response to the extraordinary events of 2015: we have opened up new markets, optimized our purchasing and scrutinized our costs at every level. Furthermore, we have launched a number of Group-wide programmes to enhance our productivity." RUAG had already initiated a Group-wide optimization programme in 2014; this was accelerated after the appreciation of the Swiss franc in January 2015.

Mr. Breitmeier added: "Another important point was that around 1,000 employees working in export-focused areas in Switzerland worked extra hours without pay. After all, RUAG exports goods and services out of Switzerland worth over CHF 400 million. This extra effort is something we appreciate hugely. At the end of 2015 RUAG paid a bonus to all these employees as a token of its appreciation."

The proportion of defence-related business rose slightly from 43 to 45 percent of net sales. The Federal Department of Defence, Civil Protection and Sport (DDPS) remains RUAG's largest and most important single customer; its share of sales rose in 2015 from 30 to 32 percent. These year-on-year changes were mainly due to the strength of the Swiss franc.

Cash flow from operating activities came to CHF 145 million in 2015 (CHF 135 million). Free cash flow increased to a respectable CHF 64 million (CHF 57 million). Both order intake, at CHF 1,828 million (CHF 1,785 million), and the order backlog, at CHF 1,378 million (CHF 1,370 million), posted gains compared with the previous year, allowing the Group to go into 2016 with a confident outlook.

Outlays for research and development rose to a total of CHF 146 million (CHF 140 million). This corresponds to the target figure of around 8 percent of total sales. The Group's total headcount increased slightly to 8,163 as at 31 December 2015 (8,114).
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