The COMET Group acquitted itself well in the demanding environment of fiscal 2015. The elimination of the euro / franc minimum exchange rate of CHF 1.20, the lackluster economy in Asia and slowing demand as a result of low commodity prices did, however, make it difficult to maintain the strong organic growth. On the other hand, a positive factor for sales was the acquisition of PCT Engineered Systems LLC. In 2015 the COMET Group achieved the second strongest results in its history. Consolidated net sales were CHF 282.3 million (2014: CHF 287.9 million) and EBITDA operating earnings came in at CHF 35.7 million (2014: CHF 39.8 million). Net income, in line with expectations, was CHF 17.1 million (2014: CHF 26.3 million) as a result of one-time effects. Despite high investment in the ebeam business, the Group successfully continued to generate a return on capital employed in excess of capital costs and fully eliminated the net debt thanks to a strong operating cash flow of 12.6% of sales (2014: 10.6%). With an equity ratio of 63.4%, the COMET Group also possesses a strong balance sheet.
Mixed market trends
In 2015 the COMET Group experienced heterogeneous trends in its different markets. The Plasma Control Technologies (PCT) segment was able to expand its business with large customers in the semiconductor and flat panel display market, posting record sales of CHF 111.9 million (2014: CHF 105.8 million). However, the ending of the minimum exchange rate of CHF 1.20 to the euro, the lackluster economy in Asia and slowing demand amid low commodity prices were downside factors for the continuation of growth in the other segments. X-Ray Systems (IXS), besides being affected by the appreciation of the Swiss franc, was hurt especially by the slump in the Chinese tire market. The segment's sales declined to CHF 101.4 million (2014: CHF 124.7 million). X-Ray & ebeam Technologies (XET), with the high Swiss proportion of its manufacturing, was also affected by the strong Swiss franc. Additional drag for this segment came from the low investment activity in areas like pipeline inspection due to the depressed oil and gas prices. Thanks to the acquisition of US systems producer PCT Engineered Systems LLC, sales of the XET segment grew to CHF 81.6 million (2014: CHF 74.1 million); however, excluding the acquisition (17%) and currency translation effects (– 4%), sales eased by 3%. Overall, the COMET Group's sales decreased by 1.9% to CHF 282.3 million. The positive difference made by the acquisition was 4.4%. The strengthening US dollar (+ 2.7%) only partly offset the effect of the negative movement in the EUR / CHF rate (– 4%).
Continued generation of value; acquisition cost affects earnings
The overall operating earnings situation of the COMET Group was robust. PCT pushed up its EBITDA margin from 17.3% to 19.3%. IXS further improved its gross margin and held its EBITDA margin steady at 12.9%. At XET the main factor besides negative currency effects was the high investment in ebeam, including the acquisition. The EBITDA margin declined from 9.9% to 3.7%. The Group closed with EBITDA operating earnings of CHF 35.7 million (2014: CHF 39.8 million) and an EBITDA margin of 12.7% (2014: 13.8%). Before currency effects (1.0%-points) and acquisition (– 1.9%points), the EBITDA margin was 13.6%,or nearly constant year-over-year. Net income in 2015 decreased to CHF 17.1 million (2014: CHF 26.3 million). The non-recurrence of positive prioryear tax effects of CHF 6.1 million, in combination with 2015's one-time currency translation losses of CHF 2.4 million and one-off acquisition-related costs of CHF 3.5 million, outweighed a non-recurring tax credit of CHF 1.5 million in 2015. With a return of 11.7% on capital employed, the Group continued to generate a ROCE that more than covered its capital costs. Excluding the acquisition and current and prior-year tax effects, the economic profit of CHF 5.6 million was at the prior-year level.
Strategy on track – important foundation laid for the future
The COMET Group has grown strongly since 2012. In constant-currency terms it achieved its objective, set in 2012, of growing 40% by 2015 to sales of CHF 300 million. New customers were won and existing customer relationships deepened. In the technology group Bühler and metrology vendor Hexagon, strong partners were gained for potential further growth. The investment in the marketing of innovative products and technologies bore fruit: The gross margins of IXS and PCT were improved, new products launched and markets developed with greater focus. Key milestones were also achieved in the Group's ebeam business. Tetra Pak, rolling out inline ebeam sterilization of beverage packaging, presented the first market-ready, ebeam-equipped filling machine at the Fispal Technology trade show. With Bühler, COMET forged a strategic partnership to develop new applications in the inactivation of dehydrated food. By acquiring PCT Engineered Systems, COMET expanded its product portfolio and gained direct access to end customers. To ensure the capacity for sustained strong future growth, COMET applied for the construction permit for a major building expansion in Flamatt. The new space, estimated at an investment of CHF 60 million, is to be ready for occupancy in the middle of 2018.
Acceleration of investment in strategic initiatives will temporarily weigh on margins
Under its Strategy 2020, the COMET Group continues to focus on strong, profitable growth, which it plans to derive from new applications, the combining of existing competencies, and even closer and broader collaboration with major partners. The key is to take timely and effective advantage of the attractive business opportunities in the areas of ebeam, the Internet of Things and metrology. By 2020, the COMET Group's objective is to reach sales of CHF 500 million and an EBITDA margin of 16–18%. For 2016 the Group expects continuing challenging market conditions. The Board and management have therefore decided to accelerate work on the most promising strategic initiatives and bring planned capital expenditures forward. At the top of these strategic priorities are new ebeam projects in the food and digital printing sectors, and additional investment in the Group's product portfolio with regard to various highpotential applications. In parallel, a multi-point program to enhance operational excellence is being stepped up, especially in the supply chain. With these aims in mind, the COMET Group has also recruited more staff and thus intends to rapidly create the right conditions to successfully execute the Strategy 2020 and achieve its strategic goals. This suite of initiatives will entail a temporary 2%-point reduction in the 2016 EBITDA margin. For 2016, against this backdrop, the Group is thus projecting sales growth to CHF 300 – 320 million and an EBITDA margin of now 11 – 13%.
At the next Annual Shareholder Meeting the Board of Directors will propose a distribution of CHF 11.00 per share from distributable paid-in capital (2014: CHF 11.00), exempt from Swiss anticipatory tax. This represents a payout of 50% of net income.
Board changes and expansion
Besides the re-elections, there are pending changes in the Board membership of COMET Holding AG. Hans Leonz Notter is not standing for re-election. In the past 26 years he has made an exceedingly valuable contribution to the development of the COMET Group. We thank him sincerely for his long and dedicated service. We are pleased to propose Dr. iur. Mariel Hoch as a new member of the Board of Directors and of the Nomination & Compensation Committee. Ms. Hoch, a lawyer and partner at Bär & Karrer in Zurich, has extensive knowledge of business law and personnel matters. In order to best utilize the Group's attractive potential and do justice to the growing complexity of its businesses, the Board believes it is important to expand its membership. It will therefore propose to increase its size by one seat from 2016 by electing Dr. Franz Richter as an additional Board member. He brings with him a profound understanding of the semiconductor industry, a sector increasingly important to the COMET Group.
We sincerely thank our shareholders, business partners, customers and suppliers for the good collaboration in this demanding time. A special thank-you goes to our employees, whose committed hard work continually moves the Group ahead.