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2006-03-30 News Headlines

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Quadrant Plastics division helps 2005 net profits double

Good business outlook and financial structure remains healthy for Quadrant with the larger division Plastics accounting for some 80 percent of consolidated sales.

Substantial expansion of Quadrant AG, Zurich, Switzerland, doubling net profit were the salient features of the 2005 financial year. Net sales increased by 26% to 591.7 million Swiss francs (vs. 470.0 million Swiss francs in 2004), 5% of which was attributable to organic growth. While Ebitda (profit from operations before depreciation, amortization of goodwill and badwill) was maintained at 70.7 (vs. 70.0) million Swiss francs, consolidated net profit rose to 32.6 (vs. 16.2) million Swiss francs. Shareholders' equity amounted to 249.0 (vs. 174.9) million Swiss francs, equivalent to an equity ratio of 36% (vs. 35%). Net debt totalled 217.5 (vs. 141.9) million Swiss francs. Even after the second-largest acquisition in its history, the debt-financed purchase of Poly Hi Solidur (PHS), which was acquired in 2005, Quadrant's financial structure thus remains healthy. With the global reinforcement of its business platform, the company's prospects for the future are better than ever before.

As expected, the continuing steep rise in raw material and energy costs caused a slight contraction in operating profit margins in 2005, as price increases are only passed on to customers after a time lag. This phenomenon, which occurs during periods of rising raw material costs, was therefore largely responsible for a decline in gross margins from 55.3% to 52.9%. If there is now a lasting stabilization of the raw material markets, margins are likely to recover again. The general economic environment was also not particularly stable in 2005. Despite these adverse external market influences and the non-recurring costs of corporate expansion, Ebitda, Ebit, net profit and cash flow from operations exceeded the previous year's already good figures.

Find information about Quadrant AG.

The amended IFRS accounting rules governing the treatment of goodwill had a positive impact on the net profit figure for the first time. Amortization of remaining goodwill is no longer permitted. In addition to this, the revaluation of net assets acquired with PHS and JGC produced negative goodwill of 4 million Swiss francs, which had to be taken to income. This negative goodwill underlines the appropriateness of the purchase price paid. However, a lower tax charge and lower financial expenses, despite the increase in the bank loan, also contributed to the doubling of net profit.

The acquisitions accounted for total acquisition costs of 107 million Swiss francs. The fact that the increase in net debt remained modest despite the debt-financed acquisition of PHS was again due not least to strong cash flow from operations of 48.1 (vs. 45.7) million Swiss francs. Free cash flow amounted to 19.4 million Swiss francs. The decline compared with the previous year (33.9 million Swiss francs) was due mainly to the increase in capital expenditure, which totalled 29.2 (vs. 14.0) million Swiss francs in 2005.

Future prospects better than ever
By virtue of their diverse performance and substitution features, the future for high-performance thermoplastic polymers remains promising. As young materials in terms of their development history, they have considerable growth potential. Furthermore, customers in the capital goods industry and also their customers have to remain innovative, launch new products and cut their own production costs in order to remain successful in their markets. Quadrant's high-quality products help them to achieve these objectives.

Quadrant's latest strategically and industrially valuable acquisitions of the globally established Poly Hi Solidur group and of JGC, which operates in the Far East, provide the company with further reinforcements for its global business platform. The main focus of attention in-house is on the integration of these two companies, which is progressing on schedule. High-Performance Plastics (the larger division, accounting for some 80% of consolidated sales) is likely to grow faster than Plastic Composites / Cable Protection Systems, which has the greatest growth potential in geographical terms in North America and the Far East and in product terms in new lightweight composites such as SymaLITE.

Plastic cable protection conduits
Symalit in Lenzburg / Switzerland produces and distributes pipes, shaped parts and special components, mainly for the Swiss cable protection market. With highly efficient manufacturing facilities and a comprehensive product range, Symalit is clear market leader.

The market is showing keen interest in this innovative material, which is why a second manufacturing unit is currently being established in Guelph (Canada), which will start to supply the North American markets at the end of 2006. The group is planning investments in tangible fixed assets on the order of 40 million Swiss francs in 2006 in order to exploit market potential more effectively and extend its market lead further. Quadrant expects organic growth in consolidated sales in 2006 to be of a similar magnitude to the previous year, and this is underlined by the good results in the first two months of the current year. Poly Hi Solidur and JGC will also contribute a full year of sales and profit for the first time, so that consolidated sales on the order of 750 million Swiss francs can be expected.

Quadrant, a global leader in high-performance polymer materials in the form of semi-finished and finished products with locations in 18 countries, generates annual sales of some 750 million Swiss francs. The speciality engineering thermoplastics and composites manufactured and marketed by more than 2 000 employees worldwide are superior in performance to metals and other materials and are used in a growing number of applications, primarily in the capital goods industry. Together with leaders in a wide range of customer markets, Quadrant is continuously developing new areas of application. Thanks to its clear strategic orientation and focus, Quadrant has generated substantial added value for customers and shareholders since it was established in 1996 and is well prepared to continue expanding its market leadership in future.

Quadrant will report on the first quarter of 2006 on April 28, 2006.

Read a recent Quadrant AG press release; 'Recent acquisitions, along with products and applications in high performance plastics, contribute to ongoing growth for Quadrant while reinforcing its market leadership.'

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