Quadrant High Performance Plastics Division the driving force

Despite a less than robust economic environment, the High Performance Plastics Division of Quadrant contributed to the highest net profit reported in the company’s history.

Quadrant, a global leader in high performance polymer materials, thermoplastic composites and a successful high end plastics processor, looks back on a financial year that remained stable despite insecure economic parameters and ended with a consolidated net profit of CHF 39.6 million (2006: CHF 36.1 million). This is the highest net profit reported in the company’s history and represents a gain of 10% over the previous year. While net sales varied by region due to different economic conditions, total sales increased slightly by 1% to CHF 811.8 million (2006: CHF 804.3 million), and all relevant figures grew faster than sales. EBITDA rose by 4% to CHF 98.4 million (2006: CHF 94.7 million) and EBIT by 10% to CHF 65.4 million (2006: CHF 59.3 million). Thanks to the free cash flow – which was again positive – of CHF 36.4 million (2006: CHF 37.7 million), net debt continued to fall to CHF 143.3 million (2006: CHF 175.0 million) which together with the higher equity ratio of 43% (2006: 37%) further increase Quadrant’s growth potential.

As in the prior year, the High Performance Plastics division (QEPP/QCMS) was the driving force in the Quadrant Group’s development. QEPP more than offset weaker performance in North America with continued expansion in Europe and Asia. QCMS resumed its growth track. While in the Quadrant Plastics Composites / Cable Protection Systems (QPC/QCPS) division, Quadrant Plastics Composites (QPC), as expected, continued to contend with subdued development in the automobile supplier industry. QPC consequently decided to abandon the weakest profit contributors which, in addition to the introduced cost-cutting measures, led to improved profitability. The development of the Cable Protection Systems business (QCPS), which focuses on the Swiss market, was positive and maintained the outstanding results reported a year ago. In terms of world regions, group sales, including joint ventures, were distributed as follows: Europe 46%, America 31%, Asia 20%, and other 3%. In total, Quadrant’s sales with customers in the automobile industry amounted to 17% (2006: 20%).

Due to continued optimization of its global activities, Quadrant was able to raise profitability despite a less than robust economic environment, which is reflected in the EBITDA margin of 12.1% (2006: 11.8%). This resulted in a higher operating cash flow of CHF 64.6 million (2006: 62.8 million) before changes in net working capital. As a result of lower sales growth compared to the previous year, capital expenditure volume was reduced to CHF 22.8 million (2006: CHF 35.5 million). Due to flexibility in investment activity, Quadrant’s free cash flow grew by 56% to CHF 45.2 million (2006: CHF 28.9 million) when allowing for the postponement of already reported supplier payments amounting to CHF 8.8 million to the first week in January 2007. RONOA amounted to 13.9% (2006: 13.1%).

Quadrant feels confident concerning 2008
Although the full effect of the U.S. credit crisis on the economy remains unclear, overall Quadrant expects sales growth in local currencies to remain moderate for 2008 and profit margins stable assuming that further economic turbulences can be avoided. Even if inflationary tendencies could slightly weaken the operating margin, it is likely that the EBITDA margin will remain within the range seen in 2006 and 2007. Since the High Performance Plastics division, which represents about 82% of group sales, proved to be resistant in the 2002/2003 recessionary phase, we expect the division to continue its stable development during the current year. In the QPC/QCPS division, efforts in the plastic composites activities will continue to focus on decreasing the division’s dependence on the automobile supplier industry. The division is pinning its hopes on the marketing of the promising new MultiQTM product that has been enjoying sound interest from the construction industry. Due to the usual project lead time, QPC is expected to return to growth from 2009/2010.

Since investments are budgeted within the parameters of depreciation, free cash flow will continue at the level seen over past years. The amortization of the CHF 28.0 million syndicated bank loan planned for 2008 will again significantly reduce net debt and continue to expand our financial scope for growth. Quadrant feels more confident than ever concerning the future.

Appointment to the board of directors
At the Annual General Meeting of Shareholders scheduled for 6 May 2008, Quadrant will propose the appointment of Prof. Ulrich W. Suter to the board. Prof. Suter is head of the Institute for Polymers at the Federal Institute of Technology in Zurich and commands great experience in the structural characteristics of polymers and in functional polymer materials.

Quadrant’s 2007 Annual Report has been published and is available on the company website (Quadrant Group/Investor Relations/Annual Reports), including the Financial Performance and Structure Report.

Quadrant reports on the 1st Quarter 2008 on May 6, 2008.

If you're an employer looking to fill a job opening, click here to find out about posting your job listing through Jobwerx.com.

American Management Online Certification Programs

Certificates In General Management - 'Leadership'
First Level Leadership: Supervising in the New Organization, Second Edition
CEU Credits: 2 (Choose 5 or 6 program courses for a total of 10 CEU's)
Course Objective - Learn how to plan and manage organizational change in a way that enhances adaptability and ensures continuous learning.
Get Started Today!

Find out how to protect your network from hackers, malware, and other malicious attacks with No.1 Ad-Aware Plus!

Read the Top Headlines.

We will be happy to receive feedback and ideas for new articles! Click Here