Oerlikon Group’s EBITDA Decreased by 21% in Q4 2023
Oerlikon Group published its operating earnings before interest, taxes, depreciation and amortization (EBITDA) report for Q4 2023. Group operating EBITDA decreased by 21.0% to CHF 100 million in Q4 2023, representing 15.8% of sales. For 2024, Oerlikon forecasts a high single-digit percentage decline in organic sales adjusted for currency effects and an operating EBITDA margin of 15.0-15.5%.
Group operational EBITDA decreased by 13.4% to CHF 444 million, versus CHF 513 million in 2022. The operational EBITDA margin was at 16.5% versus 17.6% in 2022, due to lower sales, higher input costs, adverse currency impact and unfavorable mix effects. The operational EBIT margin was 8.7% (CHF 235 million) compared with 10.4% (CHF 301 million) in the previous year.
Group unadjusted EBITDA decreased by 8.2% year-over-year to CHF 384 million, or 14.2% of sales (2022: CHF 418 million, or 14.4% of sales). Group unadjusted EBIT was CHF 105 million, or 3.9% of sales (2022: CHF 176 million, or 6.0% of sales).
Oerlikon Group realized 7% organic sales growth in Surface Solutions in constant currency. It plans to take the final strategic step to become the global market leader in Surface Solutions in the next 12-36 months. Expects growth in Surface Solutions to be offset by Polymer Processing Solutions.
The Group’s net result was impacted by the decline in Polymer Processing Solutions and the previously mentioned cost actions. It amounted to 93 million Swiss francs in 2022 and 23 million Swiss francs in 2023. Earnings per share amounted to 0.10 Swiss francs in 2023 (0.27 Swiss francs in 2022).
Oerlikon Division’s 2023 Order Intake Increased by 6.8% to CHF 1 514 million
For 2024, Oerlikon expects a high single-digit percentage decrease in FX-adjusted organic sales, and an operational EBITDA margin of 15.0-15.5%. Oerlikon anticipates growth in Surface Solutions to be offset by the downturn in Polymer Processing Solutions.
Surface Solutions improved orders and sales, despite facing contracting manufacturing PMIs. The division’s 2023 order intake increased by 6.8% to CHF 1 514 million (including an FX effect of -6.4%, an impact from the Riri acquisition of +8.9% and organic growth of 4.3%). In Q4 2023, order intake increased by 6.4% year-over-year (incl. an FX effect of -6.8%, an impact from the Riri acquisition of +9.5% and organic growth of 3.7%). Division sales of CHF 1 521 million in 2023 were 9.9% higher than in the previous year and includes an FX effect of -6.5%, an impact from the Riri acquisition of +9.4% and organic growth of 7.0%. In Q4 2023, sales increased 9.3% (including an FX effect of -6.9%, impact of +8.6% from the Riri acquisition and organic growth of 7.6%), supported by equipment sales and higher demand in the energy and automotive sectors.
To strengthen its resilience, operational actions were taken in 2023. The division is optimizing its footprint in Germany for surface coatings and discontinuing its U.S. thermal spray coating services. Operational EBITDA for 2023 improved by 4.2% to CHF 262 million, or 17.1% of sales. The margin was impacted by higher input costs, the strengthening Swiss franc and an unfavorable mix.
“Our Swift and Decisive Strategic Actions, Strengthened Our Foundation for Growth and Profitability”
“In 2023, we managed short-term market headwinds and adverse currency effects (CHF -174 million on 2023 sales) and executed on our strategy,” said Michael Suess, Executive Chairman, Oerlikon. “Our swift and decisive strategic actions, particularly in Q4, streamlined our existing business and strengthened our foundation for growth and profitability.”
“Today, we announce our final strategic step to become a pure-play leader in the broad surface solutions markets with attractive organic and inorganic growth opportunities. We will further leverage our technology leadership to drive growth and profitability by expanding regionally and into new applications and end markets,” added Suess. “The board and management will evaluate options for the separation of Polymer Processing Solutions with the aim of optimizing value for all stakeholders.”
Oerlikon Filed 78 Patent Applications in 2023
With the final step, Oerlikon will become a pure-play leader in the Surface Solutions’ attractive end markets. The division serves a broad base of customers in diverse industries – from automotive, aerospace and energy to luxury, medical and semiconductors. Oerlikon will drive profitable growth by delivering innovative technologies that help customers achieve greater efficiency and productivity, while using less energy and producing less waste and fewer emissions. Oerlikon will continue to leverage its core competencies to grow and expand into Surface Solutions’ broad end markets. This includes exploiting new applications, markets and geographies.
Oerlikon confirms its mid-term target of 4-6% organic sales growth (at constant FX) for Surface Solutions. Disciplined cost management and the application of the strengthened capital allocation framework will support the division to achieve its mid-term operational EBITDA margin target of 20%+.
R&D In 2023, Oerlikon filed 78 patents and continued to invest in innovation, spending 3.8% (CHF 103 million) of 2023 Group sales on R&D to develop new, improved and sustainable technologies designed to meet customer needs and demands.