Improved results for Tornos but still feeling recession effects
1 min read
The Tornos Group has emerged from the three-year recession which had affected it since the start of 2008. The cyclical low point was reached in mid-2009 and the upturn began in the first quarter of 2010, and gradually gathered speed throughout the year, which ended with activity at close to its pre-recession level.
Orders booked in 2010 are 2.5 times higher than those booked in 2009. Unfortunately, given the time lag between receipt of the order and invoicing, the impact of the economic revival on the Group's financial results only became apparent at the year end. In those circumstances, results for full-year 2010 were sharply negative. Sales rose by 40% from CHF 114.4 million in 2009 to CHF 160.1 million in 2010. However, in absolute terms and on a like-for-like basis, sales for the year barely exceeded half the pre-crisis level. Hence, from a financial viewpoint, the first three quarters were still dominated by recessionary conditions.
It was only the fourth quarter which began to feel the benefits of the economic recovery and produced a marginally positive earnings before interest and taxes (EBIT). Thanks to this upturn in activity, the gross margin began to recover, increasing from 23% in 2009 to 27% in 2010. The EBIT margin was boosted by the increased volume of activity, but it remained heavily negative, at -8.4% compared to -26.7% in 2009. The result for the year was a loss of CHF 18.1 million, against a 2009 loss of CHF 29.6 million. As at 31 December 2010, shareholders' equity stood at CHF 111.5 million, representing 53.0% of the balance sheet total of CHF 210.5 million. On the same date, the Group's net debt stood at CHF 38.7 million.
The medical sector, less affected by the recession, reverted to normal conditions at the start of the year. In the automotive sector, the already satisfactory level of activity in the first quarter accelerated strongly in the subsequent ones. The electronics and micro-technology markets, especially watch making, only recovered around the end of the year. Thus, the year under review ended on a generally positive economic note. The only negative point was the movement in exchange rates which cannot be fully passed on in prices expressed in foreign currency.
While the order flow in recent months and the large number of projects now under discussion provide grounds for a certain optimism, the strength of the Swiss franc together with economic instability in Europe still demand a degree of caution. Assuming that economic growth stabilises at the end-2010 level, Tornos has set a sales target in the CHF 250 - 300 million range.
