Feintool makes good progress with acquisitions strategy in first half of financial year

In the first six months of the 1999-2000 financial year, the companies constituting Feintool International Holding increased their consolidated net sales by 46.5% to CHF 194.9 m compared with the same period in the previous financial year (1st half 1998-99: CHF 133.1 m). Operating income improved over the same period by 41% to CHF 14.6 m (CHF 10.3 m) while net income jumped by 39.2% to CHF 13.1 m (CHF 9.4 m).

About 71% (90.1%) of Group sales were generated by the Fineblanking/Forming division. The Assembly/Automation division, which, in addition to the Baltec Group, now also includes the activities of IMA Automation GmbH (acquired with effect from January 1, 2000), contributed 14% of consolidated sales. The Plastic/Metal Components division, created by the acquisition of Mühlemann AG on May 1, 1999, contributed 15% of total sales.

Ambitious end-year targets confirmed
In the light of the first-half results for 1999-2000 and the order book at March 31, 2000, good results can be anticipated for the financial year as a whole. Taking into account all the changes to the scope of consolidation,
a 30-35% increase in net sales to CHF 390-410 m, an operating margin of approximately 7.5% and an improvement in consolidated net profit of 15-25% are being targeted. Now that the first phase of the acquisition strategy has been successfully implemented, emphasis is being placed in the coming months on integration of the new companies and an improvement in operating margins to within a bandwidth of 10-12%.

Market leadership in the fineblanking/forming division strengthened
In its core division fineblanking/forming , Feintool is a systems supplier that provides customers with complete fineblanking and forming systems, including presses, tools, service and support. Feintool factories in Europe, the USA and Japan supply components and assemblies to customers in a wide range of industries. About a fifth of the 15.2% rise in year-on-year sales to CHF 137.8 m was due to organic growth. The balance – i.e. 80% of the increase – is attributable to the first-time consolidation of Heinrich Schmid AG, Jona. This company, which, like Feintool Technologie AG, markets fineblanking presses worldwide, was integrated into the Feintool Group with effect from October 1, 1999. With more than 80% of the market, the Feintool Group is well placed to steadily grow the fineblanking/forming business.

The component business in Lyss, which was established as an independent profit centre two years ago, has benefited from its strategy geared to high volume, precision component fabrication. Both of the German facilities (Ettlingen and Jena) are also enjoying very good capacity utilization. On the other hand, capacity at Feintool's third and most recently opened manufacturing facility in the USA – the Nashville (Tennessee) factory, commissioned in October 1999 – is not fully utilized despite a highly satisfactory order intake. The same applies to the factory in Japan, though it too will be able to operate profitably in the medium term as a result of strategic repositioning. Overall, the performance of the Fineblanking/Forming division has met expectations in the first half of the financial year. Slightly higher volumes and similar margins are forecast for the second half.

Assembly/Automation division registering rapid growth in telecoms industry
In addition to the Baltec Group, the Assembly/Automation division now also includes IMA Automation GmbH and mhk Montagekomponenten Vertriebs-GmbH (both acquired with effect from January 1, 2000). With IMA and mhk, the Feintool Group has gained additional competencies in
the assembly of components and the automation of production processes while also enhancing its capability as a systems supplier. In the first half of the year, Assembly/Automation posted net sales of CHF 27.5 m (previous year CHF 13.5 m).

The Baltec companies upped their net sales in the riveting business by 10.4% year-on-year. Baltec's success hinges on strong, customer-focused marketing organizations such as those built up some years ago in the USA and Britain. This accounts for the establishment of Baltec (Deutschland) GmbH last year and the acquisition of the Swiss agents Limatec Automation AG in Grenchen as of April 1, 2000.

IMA Automation GmbH started the new year on a successful note with a large order from a major mobile-phone parts supplier for 13 identical machines. Approximately half of IMA's rising sales in the current year will come from the booming telecommunications industry.

Plastic/Metal Components division expanding into overseas markets
The Plastic/Metal Components division was established through the acquisition of Mühlemann AG in Biberist on May 1, 1999, thereby integrating new plastics-metal combinations expertise into the Feintool Group. Net sales of CHF 29.7 m were posted in the first half-year. After a slower first quarter, output was considerably improved in the second.

Mühlemann supplies composite plastic/metal components, primarily to the automobile industry. In future, it will position itself increasingly as a competent supplier of complex assemblies in the electronics industry, where its skills in plastic molding of conductive elements can be fully exploited. Electronics applications – a growing segment in many industries – will enable Mühlemann to achieve its growth target of 15% per annum on average. Mühlemann is aiming for expansion in the North American market via the existing Feintool platform. On October 1, 1999, Mühlemann U.S. Operations, Inc. was founded in Nashville, Tennessee. Production facilities for Mühlemann products are presently being installed at Feintool's Tennessee factory so that the manufacture of plastic/metal components for the North American market can commence in the summer of 2000.