Electronics Production | November 03, 2008

Economic downturn affects prospects for 2008 as a whole for Cicor

Cicor Technologies faces a slow down of its economic environment. For 2008 as a whole the group still expects a sales growth, but the economic downturn will have a negative effect on the net profit of the year which will below the previous year’s result.
Cicor concluded the sale of its operational site in Boudry (sale and rent back transaction) and of a non-operational building in La Chaux-de-Fonds. These transactions strengthen the group's balance sheet and resilience and increase its capacity to meet the challenges of a difficult business environment.

Cicor Technologies expects a net profit for the year 2008 which will be below the previous year’s result due to the economic slow down. As well as strengthening its balance sheet, the company has consolidated its activities and successfully integrated the ESG Group, which has greatly accelerated the utilization of the Asian economic region as a key production and procurement location. Cicor Technologies is therefore in a good position to meet the challenges of the current difficult and volatile economic environment. The company was early to anticipate the economic downturn and immediately initiated cost reduction measures. The measures already partly became effective in the third quarter 2008 and will be fully effective at the end of the first quarter 2009.

Within the PCB Division, the expected upturn in orders by the semi-conductor industry has failed to materialize so far, and the volume of orders, amongst others from the automotive industry, is declining slightly. The order book is still very healthy at the ME Division, which is on course to meet its sales growth target. It should also improve its margin compared with the half-year results. Finally, within the EMS Division client business is slowing down more sharply than expected. This decline is being compensated in part by higher than expected growth in Asia.

Provided the operating environment does not deteriorate any further, Cicor Technologies expects to report year-on-year growth in overall sales. However, the significant slowdown in economic activity seen in recent months will make it impossible to achieve the original targets of an increase in operating result (EBIT) in all segments.

The net revenue of approximately CHF 13 million generated by the sale of the property in Boudry and of a non-operational property in La Chaux-de-Fonds will strenghten the group's balance sheet. As a result of these transactions, the group's equity ratio increases to more than 60%, while its net debt ratio (net debt/EBITDA) is falling significantly to below 1.3. This healthy capital base increases the company's financial flexibility in a weakening business environment, allowing it to exploit any opportunities for growth that appear on the market.

In parallel to the sale of its property in Boudry to an independent public sector company, a long-term rent agreement to use the building for its operations was signed. Therefore the worldwide activities can be further strengthened and expanded from its Boudry base.


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