Business Report

Oerlikon is a leading global technology and engineering Group providing market-leading solutions and services for surfaces and manmade fiber production in diverse industries. The Group is structured in two Divisions: Surface Solutions and Manmade Fibers. Each Division offers technologies and solutions under well-established industry competence brands and adopts strategies specific to customers’ needs and requirements in the respective market.

Oerlikon delivered a resilient performance in a highly challenging environment driven by COVID-19. The Manmade Fibers Division sustained a stable and steady performance. The Surface Solutions Division’s end markets were impacted by the pandemic, particularly aerospace. In the second half of 2020, gradual recovery was noted in the automotive and tooling industries.

In 2020, Group order intake, including a 4.9% adverse currency impact, was CHF 2 241 million. Compared to the previous year, order intake decreased by 13.5% from CHF 2 590 million. Order backlog slightly decreased by 0.5% to CHF 581 million at year-end 2020 versus CHF 583 million at year-end 2019. Group sales were 12.9% lower in 2020 at CHF 2 258 million, compared to CHF 2 593 million in 2019. At constant exchange rates, sales were CHF 2 371 million.

Group operational EBITDA margin was 14.2%, which was 0.9% points lower than the 15.1% in 2019, reflecting the impacts from cost actions. Operational EBITDA was CHF 320 million, versus CHF 393 million in 2019. Operational EBIT margin was 5.2% (CHF 116 million), compared to 7.4% (CHF 193 million) in the previous year.

Group unadjusted EBITDA decreased 21.3% to CHF 288 million, or 12.7% of sales, while Group unadjusted EBIT was CHF 73 million, or 3.2% of sales. In 2019, unadjusted Group EBITDA was CHF 366 million, or 14.1% of sales, and EBIT was CHF 164 million, or 6.3% of sales.

The Oerlikon Group’s income from continuing operations in 2020 was CHF 38 million, compared with CHF 110 million in 2019, a decrease of 65.5%. As there were no effects from discontinued operations in 2020, net profit amounted to CHF 38 million in 2020, or earnings per share of CHF 0.11, versus CHF -66 million or earnings per share of CHF -0.21 in 2019. The tax expense for 2020 was CHF 22 million, while in 2019, it was CHF 39 million.

A Globally Balanced Business

A portfolio and filled pipeline of innovative technologies, a global presence and industry-leading scope of comprehensive services continue to be key components of Oerlikon’s strategy. The Surface Solutions Division generated 53% of total Group sales in 2020, while the Manmade Fibers Division accounted for approximately 47% of Group sales.

With a global footprint serving customers in close proximity, Oerlikon operates 179 sites in 37 countries, with 79 sites in Europe, 57 sites in Asia-Pacific and 43 sites in the Americas. Asia-Pacific continued to account for the largest proportion of Group sales in 2020. Sales in Asia-Pacific slightly increased to CHF 1 208 million, or 53% of Group sales, versus CHF 1 203 million, or 46% of Group sales, in 2019. Europe was the second-largest regional contributor to Group sales in 2020, with sales totaling CHF 716 million, or 32% of sales, compared with CHF 897 million, or 35% of sales, in 2019. Group sales in North America totaled CHF 271 million, or 12% of Group sales, in 2020, versus CHF 394 million, or 15% of Group sales, in 2019. Sales in other regions decreased to 3% of Group sales in 2020 with sales of CHF 62 million, compared to CHF 99 million in 2019.

Solid Balance Sheet Strength With Equity Ratio of 40%

As of December 31, 2020, Oerlikon had total assets of CHF 3 340 million, compared to CHF 3 647 million at year-end 2019. The Oerlikon Group had equity (attributable to shareholders of the parent) of CHF 1 324 million, representing an equity ratio of 40%. The decrease in total assets is attributed to lower cash and cash equivalent position and an increase in contract liabilities.

Operating Cash Flow

Cash flow from operating activities before changes in net current assets decreased 37.3% in 2020 to CHF 202 million, compared with CHF 322 million in 2019. Net working capital, defined as trade and trade note receivables plus inventories minus trade payables and current customer advances, totaled CHF -86 million in 2020, versus CHF 70 million in 2019.

Capital expenditure (CAPEX) amounted to CHF 118 million, compared to CHF 179 million in 2019. Excluding amortization of acquired intangible assets, the CAPEX-to-depreciation ratio was 0.9 times.

Cash flow from investing activities was CHF -108 million in 2020, compared with CHF 416 million in 2019, which was impacted by CHF 549 million from the disposal of the Drive Systems business, net of cash disposed. Cash flow from financing activities amounted to CHF -432 million in 2020, compared with CHF -760 million in 2019. Oerlikon reported a change in cash and cash-equivalent position at the end of 2020 of CHF -244 million compared with CHF -201 million at the end of 2019.

Commitment to R&D

Oerlikon continued to invest more than 4% of its revenues in research and development (R&D). In 2020, R&D expenses for the year were CHF 118 million, or 5.2% of Group sales, compared with CHF 127 million, or 4.9% of Group sales, in 2019.

Acquisitions and Divestitures

In the first quarter of 2020, the Manmade Fibers Division took over the majority stake in the joint venture, Teknoweb Materials S.r.l., to extend the nonwoven production system portfolio for disposable nonwovens. This move strengthened the Division’s position in the nonwoven market, which was marked by significantly higher demand in 2020 as a result of the pandemic-drivenneed for face masks.

Dividend Payout

Oerlikon believes that a dividend payout is an important means of returning value to shareholders. Thus, the Board of Directors will recommend an ordinary dividend payout, consistent with the previous three years, of CHF 0.35 per share at the 48th Annual General Meeting of Shareholders on April 13, 2021.