Research Dynamics
Report on Schaffner Holding AG by Research Dynamics: Company Update (news with additional features)
DGAP-News: Research Dynamics / Key word(s): Research Update Accelerated implementation of strategy measures Expected loss in H1 – Performance to improve from 2017 onwards Schaffner announced that it is likely to report a loss at the operating level in H1 FY15/16. The company previously had already stated that the fiscal year had started with an about 9% drop in new orders. We believe the weak economic environment in important markets such as the US, Germany and China, along with the appreciation of the Swiss franc, has hurt the company’s performance. Schaffner stated that it has accelerated its efforts on operational restructuring, which is likely to lead to additional one-off costs of CHF 4mn in FY15/16, though we do not expect the company to record the full amount in the first half. Under this program, the company is looking to sustainably reduce material costs and streamline fixed cost structures, with a target of achieving CHF 5mn of savings on an annual basis. Estimates lowered on announcement We have lowered our estimates on the company post the announcement. Despite the operational loss in H1 FY2015/16, we expect the company will be profitable for the full-year. We expect revenues to be mostly flat in FY2015/16 at CHF 204mn (FY2014/15: CHF 201.8mn). We have also lowered our operating profit expectation for the full year to CHF 5.5mn, compared to CHF 8.8mn the company achieved in FY2014/15. We expect Schaffner’s financials to improve significantly from 2017 onwards, as its operational restructuring initiatives start to pay off. The company expects to achieve its target of an 8% EBITA margin, defined in the “Strategy 2020”, over the next 24 months. However, given the current sluggish global economic scenario, we believe this is a challenging environment for the company to attain its 2020 strategy targets. Power Magnetics: Management change Eduard Hadorn, the Head of the Power Magnetics division, will be stepping down from his position as well as the executive committee with effect from March 31, 2016. He will take charge of developing Schaffner’s business in India. CEO Alexander Hagemann will head the PM division on a temporary basis, until a successor is appointed to manage the division. Valuation Post the estimates’ revision, Schaffner is trading at a premium to its peers based on 2016 estimates. However, we believe comparing the company to peers based on 2016 earnings estimates is not justified as it is currently in the process of restructuring its operations. Based on 2017 estimates, post the company’s restructuring efforts, Schaffner trades at a 31%, 14% and 10% discount to its product peers on an EV/EBITDA, EV/EBIT and PE basis, respectively. Compared to its industry peers, it trades at a discount of 39%, 29% and 35% on an EV/EBITDA, EV/EBIT and PE basis, respectively. +++++ Additional features: Document: http://n.eqs.com/c/fncls.ssp?u=TWJTDVVWLJ Document title: Schaffner_Company Update_11_03_2016
2016-03-11 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |