RUAG stages a strong return to profit in the 2010 financial year
In the 2010 financial year, international technology group RUAG boosted net sales by 6% to just under CHF 1.8 billion and thus moved firmly back into profit with EBIT of CHF 98 million and net profit of CHF 92 million.
This result is the consequence of a consistent tightening of focus and minimization of risks in the company's core Aerospace and Defence businesses. Four out of five operating divisions are making a profit. 52% of sales were generated in civil and 48% in military applications. RUAG invested 10% of its sales in research and development.
In total, RUAG’s net sales increased by 6% to CHF 1,796 million (previous year: CHF 1,696 million). The Aerospace market segment accounted for 54% of total sales (49%). Most of this growth can be attributed to acquisitions in the space business, to the military aircraft maintenance business for the Swiss Air Force and international customers, and to Aerostructures. The Defence market segment accounted for 38% (43%) of total sales. This segment did not record any growth in 2010 because of cuts in the defence budget and delays in the delivery of the Kodiak armoured engineer and mine clearance vehicles for the Swiss Army. The Services segment generated 8% (8%) of total sales. This segment includes Real Estate and IT.
With 52% (47%) and 48% (53%) in civil and military applications respectively, sales remained well balanced, with 5% of growth in civil applications due to acquisitions. The Swiss Federal Department of Defence, Civil Protection and Sport (DDPS) remained the single most important customer, accounting for 35% (36%) of total sales. 43% of total sales were generated in Switzerland (45%), 43% in Europe (43%) 9% in the United States (7%) and 3% in Asia-Pacific (3%). The remaining countries contributed 2% (2%). This included South America, the Middle East and Africa.
The company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of CHF 194 million (CHF 38 million) for 2010. Earnings before interest and taxes (EBIT) amounted to CHF 98 million compared to CHF -113 million the previous year. Excluding one-time effects, the consolidated EBIT amounted to CHF 93 million compared to CHF 45 million the previous year. The EBIT margin stood at 5.3%.
The Group generated net profit of CHF 92 million (previous year loss of CHF -107 million). Net cash flows from operating activities amounted to CHF 130 million (CHF 131 million).
Currency developments in the euro and the US dollar had a negative impact on all divisions in 2010. However, this negative currency effect was limited by stable operating results and existing hedges.
Expenses for research and development rocketed up by 27% in 2010 to CHF 190 m (CHF 149 m) owing to acquisitions. RUAG thus invested 10% of its sales in research and development. In 2010, the number of employees rose by more than 2% to 7719 (7534). Roughly 10% of the around 4500 employees in Switzerland are trainees. Orders received and orders on hand, which must be viewed in terms of the long-term trend, were stable at the end of 2010 but subject to slight fluctuations compared to the previous year.
RUAG Space generated net sales of CHF 283 million in 2010. The post-merger integration of Oerlikon Space AG, which was acquired in mid-2009, is largely completed. Today, with a restructured and refocused portfolio of products for use on board satellites and launch vehicles, the three national Space subsidiaries in Switzerland, Austria and Sweden are able to compete more effectively in the global market as Europe's largest independent supplier of space technology. Key orders in 2010 included assemblies worth EUR 35 million for the European Galileo satellite navigation programme. Moreover, RUAG was able to expand its customer base in the USA and Asia. The division generated EBIT of CHF 9 million.
RUAG Aviation boosted net sales by 6% to CHF 471 million. The division's core business is military and civil aircraft MRO and providing specific products, subsystems and components to a broad clientele in the aviation sector. Using its solid foundation in Switzerland as a basis, the proportion of sales generated by Military Aviation has also grown well internationally. Among Aviation's major successes was the maiden flight of the prototype for the upgrade programme for the Swiss Air Force's TH-89 Super Puma/Cougar helicopters and strategically important Super Puma maintenance contracts from Slovenia and Finland. Considerable progress was made in turning round Business Aviation, which came under pressure in 2009 as a result of the economic crisis, and a substantial improvement was achieved. Currently, the site network is being streamlined and specific competencies concentrated at particular locations. Aviation reported EBIT of CHF -11 million. This includes one-time charges of CHF 30 million in the form of impairment losses and restructuring provisions. Capacity adjustments have been made at the Aviation site in Oberpfaffenhofen (Germany) in the light of cuts in the German defence budget and delayed sales successes of the Do 228NG.
RUAG Technology boosted net sales by 8% to CHF 273 million in 2010. The division manufactures and processes subassemblies and high-quality components and provides special services to customers in the aviation, semiconductor, energy, automotive and recycling industries. The turnaround that began in 2009 is well underway. A series of restructuring measures considerably improved the foundations of Technology's business in 2010. This was achieved by focusing on high-value, profitable specialist products and niche applications on the one hand and minimizing risks on the other. In autumn 2010, RUAG strengthened its long-standing partnership with Airbus by signing new contracts with an expandable annual order volume of CHF 85 million. Business and currency risks were also minimized. In addition, a recovery in the semiconductor industry, for which RUAG manufactures large precision parts, also contributed to an improvement in the situation. Despite various efforts, it was not possible to sustainably return the Plan-les-Ouates site to profit. The site will be closed in June 2012 unless its activities can be successfully spun off by then. Technology achieved EBIT of CHF 21 million in 2010. This figure includes a net amount of CHF 35 million in positive one-time effects from the reversal of write-downs on inventories and of provisions.