Group business performance
Pandemic-related decline in revenue and result
On a comparable basis, net revenue was down 16.2% on the previous year. A gain of CHF 48.1 million resulted from the divestment of Schmid Rhyner in context of the announced focus on Bystronic. The adjusted operating result without this one-off effect was CHF 1.8 million. The measures introduced to mitigate the impact of the pandemic showed their first results. Following the end of the comprehensive lockdowns, customer activities increased again toward the end of the reporting period.
The half-year 2020 results, with a 25.2% decline in revenue compared to the previous year and an operating result (EBIT) of CHF 49.9 million, are strongly impacted by both, the effects of the coronavirus pandemic and the divestitures of the Glass Processing segment at the end of March 2019 and the Schmid Rhyner business unit at the end of February 2020. The disposals resulted in a loss of contributions to revenue and earnings. However, the transactions resulted in divestment gains of CHF 30.6 million in the first half of 2019 and CHF 48.1 million in the first half of 2020. On a comparable basis, i.e. adjusted for the changes in the scope of consolidation and at constant exchange rates, the Group’s net revenue in the first half of 2020 was 16.2% below the previous year. The adverse effects of changes in the scope of consolidation amounted to CHF 38.9 million and those from currency effects to CHF 30.3 million.
The coronavirus pandemic and its effects were the dominant topic for most of the reporting period. In the Bystronic and FoamPartner business units, various production facilities had to temporarily suspend operations, and in the Mammut business unit the physical sales channels, which are dominant in terms of revenue, remained closed for around 40 days. Business performance largely followed the staggered course of the pandemic in the regions relevant for Conzzeta. After the lockdowns were lifted in various markets, activities recovered rapidly, but only partially overall. In China, Bystronic’s order intake and FoamPartner’s net revenue in June were up on the previous year.
The measures initiated by the Group in March under the heading of “Cash, Cost, Complexity” to mitigate the economic consequences include a cost savings program with a contribution to the operating result of around CHF 40 million by the end of 2020. Depending on the area of activity and business model, the business units, but also the Group staff, are affected by the pandemic in different ways. Accordingly, the individual measures were defined for each specific unit. Initial savings were already realized in the second quarter. Thanks to this and excluding the divestment gains, the adjusted operating result for the reporting period amounted to CHF 1.8 million (previous year: CHF 59.9 million) with an EBIT margin of 0.3% (7.6%). The Group result for the first half of 2020 was CHF 46.6 million (CHF 78.2 million), with minority interests of CHF 1.2 million (CHF 6.4 million). The earnings per class A registered share were CHF 21.96 and as such 36.8% down on the previous year.
The cash inflow from the disposal of the Schmid Rhyner business unit was CHF 71.2 million. The Group retained its important initiatives thanks to its extensive liquid assets and high capital base. Investments in property, plant and equipment and intangible assets amounted to CHF 20.2 million (CHF 18.6 million). Mainly due to the lower level of business activity in the first half of the year due to the pandemic on the one hand, and to prudent procurement planning to ensure ability to deliver and to delayed deliveries on the other, free operating cash flow of CHF –40.2 million was below the previous year (CHF –10.0 million). After the distribution of an unchanged ordinary dividend for the 2019 financial year and excess cash from the disposal of Schmid Rhyner totaling CHF 86.8 million, Conzzeta held cash and cash equivalents of CHF 238.2 million at mid-year with an equity ratio of 72.2%.