Bloomberg News

Oerlikon Raises Profit Forecast as Efficiency Measures Take Hold

August 03, 2012

OC Oerlikon AG (OERL), the world’s largest maker of textile machinery, said profitability will rise more this year than it previously anticipated, as efficiency measures take hold at its textile and drive systems divisions.

Earnings before interest and taxes, excluding a one-time gain from the disposal of property at the textiles unit, will advance by half a percentage point to about 11.5 percent of sales this year, Chief Executive Officer Michael Buscher said. Buscher had said in April that profitability at the Pfaeffikon- based manufacturer may improve, without providing a number.

Second-quarter earnings before interest and taxes increased by 24 percent to 115 million Swiss francs ($116 million), Oerlikon said today. Sales were little changed at 990 million francs. The operating margin increased by 2.3 percentage points to 11.7 percent.

Buscher has pledged to continue streamlining Oerlikon to boost margins as a slowdown that started last year crimps new orders at the textile unit, which accounted for just under half of Oerlikon’s 4.2 billion franc 2011 sales.

“There will still be some potential to contribute to even higher return on capital employed,” Buscher said in an interview. Closing a production facility in Italy and shifting purchasing to lower-cost countries helped to raise the margin in the second quarter, Buscher said.

Sales at the natural fibers division, part of the textiles unit, dropped from the preceding quarter. Buscher said sales there are not extending their decline, and he expects the business to level out in 2012.

Oerlikon’s outlook contrasts with competing Swiss textile- maker Rieter Holding AG (RIEN), which lowered its sales forecast for 2012 on July 25, saying it expects a weaker trend in the second half as customers delayed equipment deliveries into 2013.

Oerlikon, whose biggest shareholder is Russian billionaire Viktor Vekselberg, said in March that it expected an operating margin target of about 11 percent and forecast like-for-like sales and order intake would decline by as much as 5 percent.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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