Electronics Production | March 29, 2010

Cicor to lay off 45 in EMS division

Cicor decided to streamline operational processes in the EMS Division further and to concentrate production at the Bronschhofen (Switzerland) and Arad (Romania) sites in Europe, as well as in Asia, in Singapore, Vietnam and Indonesia. This involves the planned move of Systel SA's production in Quartino (Switzerland) to the other locations.
Despite the immediate measures taken throughout the group to adjust its cost base to the changed market situation, Cicor Technologies posted a loss for the year. During 2009, the group focused its strategy and organisation firmly on the new challenges presented by the market and also strengthened its capital base and management. By integrating the ESG Group, Cicor Technologies also expanded its presence in the future key market Asia.

Sales fell by 23.2 % during the 2009 financial year to CHF 160.1 million (previous year: CHF 208.4 million). Operating profit before depreciation and amortization (EBITDA) was CHF 4.6 million (previous year CHF 20.8 million), while operating profit (EBIT) came to CHF minus 4.5 million (previous year CHF minus 17.6 million after a goodwill impairment of CHF 28.0 million). The overall loss was CHF minus 7.7 million (previous year CHF minus 21.6 million after goodwill impairment).

This figure includes one-off restructuring costs of CHF 1.2 million from the merging of activities at two sites within the EMS Division. Following the successful capital increase of November 2009, the group's equity ratio rose to a solid 59.1% (previous year 57.9%).

Measures taken by the Board of Directors and Group Management to adjust the cost base to lower market demand created a platform for improved operating earnings in the second half of 2009. Management also moved ahead with expansion in America and Asia: important because close partnerships with customers increasingly depend on having a comprehensive global footprint. With the integration of ESG Group, which it took over completely in March 2010, Cicor Technologies Ltd. secured a bridgehead in Asia with production sites in Singapore, Indonesia and Vietnam.

Owing to the importance of the company's presence in this high-growth, high-potential region, the Board of Directors has appointed Mrs. Gim Hong Sng, Managing Director of ESG Group and Head of the new Asia Division, as a member of Group Management from 1 April 2010.

PCB Division: slight increase in sales in second half-year
In 2009, the PCB Division generated sales of CHF 29.6 million (previous year CHF 49.6 million) and operating profit (EBIT) of CHF -6.0 million (previous year CHF minus 5.6 million after goodwill impairment of CHF 8.9 million). Sales and EBIT were slightly higher in the second half-year than in the first.

In a difficult market environment, the test systems, telecommunications and watchmaking sectors were particularly badly affected by cautious consumer sentiment. By contrast, in the second half of 2009 the automotive, medical and aerospace markets managed to reverse some of the year-on-year decline.

ME Division: solid performance well above market average
The ME Division generated sales of CHF 32.6 million (previous year CHF 35.3 million) and operating profit (EBIT) of CHF 3.4 million (previous year CHF 4.0 million), contributing significantly to the stabilization of Cicor Technologies Group during the year under review. Thanks to intensive work in promising niche markets, and the acquisition of several new projects, the division was able to compensate for most of the market-driven decline in sales.

Turnover was only down by 7.6% on the record level reported in 2008, confirming the Division's good performance compared with the market as a whole, which saw sales fall by between 20 and 25%. A good first half-year was followed by a disappointing third quarter, though the markets stabilised again towards the end of the year. Most sales were generated with customers in the manufacturing, telecommunications and aerospace/defence sectors.

EMS Division: positive operating result despite lower sales – concentration of production in Europe on two sites
The EMS Division's sales in the 2009 financial year fell by 20.7% to CHF 98.0 million. Despite these lower sales and exceptional restructuring costs of CHF 1.2 million, the EMS Division generated a positive operating profit (EBIT) of CHF 0.6 million (previous year CHF minus 13.7 million after goodwill impairment of CHF 19.1 million).

The concentration of Swisstronics Contract Manufacturing AG (Swisstronics) activities at the Bronschhofen site led to one-off costs of CHF 1.2 million. Without these restructuring costs, EBIT would have been CHF 1.9 million (previous year CHF 5.4 million before goodwill impairment).

The Board of Directors and Group Management decided to streamline operational processes in the EMS Division even further, and to concentrate production at the Bronschhofen (Switzerland) and Arad (Romania) sites in Europe, as well as in Asia, in Singapore, Vietnam and Indonesia. This involves the planned move of Systel SA's production in Quartino (Switzerland) to the other locations.

By reducing headcount by around 45 full-time posts, Cicor Technologies hopes to secure the site's future. Employees have been informed and consultation with the social partners has begun. This change does not affect Systel SA's sales, project management or technical support operations. These will continue to work on anchoring the company in European markets as it expands its global presence.

Strengthening the shareholder base and capitalization
In March 2009, HEB Swiss Investment AG purchased a stake of 29% in Cicor Technologies Ltd. This new anchor shareholder will support the group for the long term while also ensuring a stable shareholder base. In November 2009, Cicor Technologies Ltd. carried out a capital increase with subscription rights for existing shareholders in order to finance the group's development.

The successful completion of this transaction provided the company with cash funds of CHF 9.4 million. At the same time, Cicor Technologies Ltd. extended its credit agreement with a consortium of banks to secure its funding until the beginning of 2013.

Outlook: return to positive operating results
Despite the current challenging market situation, Cicor Technologies continues to follow its growth strategy. The group aims to increase market penetration by intensifying existing customer relationships, and to widen the customer portfolio by adding clients in new segments. Management is also examining opportunities to extend the current range of products and services, and to broaden the company's markets, especially in the Printed Circuit Boards (PCB) and Microelectronics (ME) sectors.

Continued strict cost management is a high priority in financial year 2010. Overall, the Board of Directors and Group Management assume that the economy as a whole bottomed out in mid-2009. Hard work on the markets and the rigorous internal measures taken should therefore ensure that the group achieves positive operating results in 2010.
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