Information on business progress
The uncertainty of the markets caused by the global financial crisis is now also affecting the business progress of our company. Although some of our customer groups are still experiencing good capacity utilisation, in various customer segments that are important for our sales, demand has weakened massively in the last few weeks. The most strongly affected of these segments are the automobile and components supply areas.
The customers have responded to this development by running down stocks, as well as reducing, cancelling and delaying orders. To adjust our capacities to the lower demand resulting from the currently difficult market conditions, we have implemented, or plan, partial reductions in production at our works. The reductions are being handled mainly through compensation of overtime/flexible working hours, utilisation of holiday entitlements, and reductions in borrowed and temporary workers. Depending on the development of the market situation, which we are following closely, we may take further measures such as the introduction of short-time working.
Unfortunately, the lower production volumes relative to the budgeted quantities will also have an effect on our financial results for the current year. A further significant negative factor are the recently further fallen, and also volatile, prices for raw materials and alloying elements. Depending on how these develop, they could cause a need for a corresponding value adjustment at the end of the year. For the Swiss companies, the increased value of the Swiss franc relative to the euro is also exerting a negative impact on the income situation.
Based on the currently known facts, for 2008 we expect sales revenue to be slightly below last year's value. On the earnings side, we anticipate a reduction of at least 25% in EBITDA compared with 2007, depending on how raw materials prices and sales volumes develop between now and the end of the year. In view of the poor visibility, we also do not expect a significant improvement in the market situation for at least the first half of 2009.
Pleasingly, in this difficult market environment, the strengths of our Group are showing. Thanks to the broad product diversification and wide geographical spread, we can absorb some of the negative effects. In addition, we are now increasing internal supplies of products of our own manufacture to our processing and distribution companies. Some of the negative market influences can also be compensated by strictly controlling costs.
Contact persons for further information are:
Benedikt Niemeyer, CEO, phone +41 41 209 50 40
Dr. Marcel Imhof, COO, phone +41 41 209 51 82
Axel Euchner, CFO, phone +41 41 209 50 35