Conzzeta has to adapt to the market environment

• The Conzzeta Group’s machinery and systems engineering businesses are facing massive declines in incoming orders of up to 60%, as already reported in the interim report as of April 30, 2009.
• The development of the businesses affected by the economic crisis has shown no improvement since then, and there is no recovery in sight. Conzzeta therefore sees itself with no alternative but to reduce its capacities to the lower level of demand.
• In the Sheet Metal Processing Systems (Bystronic), Glass Processing Systems (Bystronic glass), Automation Systems (ixmation) and Foam Materials (FoamPartner) business units, Conzzeta regrettably has to cut around 400 jobs worldwide, about half of them in Switzerland.
• No job reductions are necessary in the Sporting Goods (Mammut Sports Group), Graphic Coatings (Schmid Rhyner) and Real Estate (Plazza Immobilien) business units.
• Implementation of the planned measures should for the most part be completed by the end of 2009. The extraordinary costs of around CHF 30 million will be recognized in the 2009 financial statements.
• Thanks to its solid fundamentals, the Conzzeta Group is able to react to the slump in these markets with a sense of proportion. The geographical market coverage will be maintained and all business units will continue to work intensively on innovation projects. The Group will also continue to develop selected growth markets.

Zürich, June 24, 2009. – Conzzeta is active in the machinery and systems engineering sector through its companies Bystronic, Bystronic glass and ixmation. The global economic crisis is having a powerful impact on these businesses. Compared with this time a year ago, the volume of incoming orders has fallen by two-thirds, with corresponding effects on revenues and earnings. Since the end of 2008, the FoamPartner business unit has also seen a substantial decline in sales. In response to these developments, Conzzeta took action already at an early stage, with temporary capacity adjustments and measures to reduce costs.

There has been no improvement in the development of the businesses. The machinery and systems engineering markets continue to be difficult, also because of the tightening of financing facilities in many countries. There is no prospect of a sustained recovery before 2011, and when it comes, it will be slow. Therefore, the Conzzeta Group has to adjust to a significantly lower order intake for a prolonged period. The cost reduction measures and capacity adjustments introduced up to now are not sufficient.

In order to maintain the competitiveness of its businesses, Conzzeta sees itself with no alternative but to adopt further measures to adjust capacities to future market trends. Conzzeta is basing its planning on the assumption that sales will be higher in the coming years than currently in 2009, but significantly lower than in 2007/2008.

The capacity adjustments will affect the machinery and systems engineering businesses (Bystronic, Bystronic glass and ixmation) and to a lesser degree the Foam Materials business unit (FoamPartner). No adjustments are necessary in the Sporting Goods (Mammut Sports Group), Graphic Coatings (Schmid Rhyner) and Real Estate (Plazza Immobilien) business units.

The planned program of capacity adjustments will result in the loss of around 400 jobs (approx. 11%). Despite increased short-time working, the reduction of temporary personnel, retirement and natural fluctuations in staffing, lay-offs are unavoidable. In Switzerland, this will mean an estimated 200 employees being laid off. Employee representatives will be involved in the upcoming consultation process. Conzzeta intends to make the necessary job reductions as socially compatible as possible. The business units concerned have severance schemes in place or are working on them. These schemes include guidance on finding new work and other measures to help the employees affected.

Conzzeta aims to implement the program of capacity adjustment measures for the most part by the end of 2009. The extraordinary costs of around CHF 30 million will be recognized in the 2009 financial statements. The interim report for April 30, 2009, already announced a consolidated loss for fiscal 2009. The package of measures will lower the cost base of the Conzzeta Group by about CHF 60 million.

Continuing investment in development projects and growth markets

According to Robert Suter, Chief Executive Officer of the Conzzeta Group: “We are very concerned that the slump and the subdued outlook for the period ahead leave us with no alternative but to cut numerous workplaces in the affected business units. Unfortunately, these measures are unavoidable if we are to maintain our competitiveness and innovation potential.”

The Board of Directors and Executive Board are confident that the Group’s present structure and geographical market coverage are appropriate and will enable Conzzeta to maintain a good market position in readiness for the next upturn. The market coverage remains unchanged and market development will basically continue in the present form. Conzzeta is intent on maintaining its innovation potential and therefore continues to invest intensively in development projects. We will also continue to build up our presence in key growth markets, such as China, and in the service business.

The sharp decline in orders continues to dampen Conzzeta’s business performance. However, as Group CEO Robert Suter says: “We are confident that Conzzeta will emerge all the stronger from the present crisis.”

 

For further information, please contact:
Carlo Menotti, Head of Corporate Services
Phone +41 44 468 24 84, media(at)conzzeta.ch

 

Impact on the individual business units

As reported, the Sheet Metal Processing Systems business unit (Bystronic) reported a massive decline in demand for the first four months of 2009, affecting all market regions and product groups. Net revenues in local currencies fell by 43.1% year on year. With no significant upturn in sight, Bystronic has to make adjustments to existing capacity. The Swiss subsidiary at Niederönz (BE) will also be affected by these measures, with 87 job cuts planned. Regardless of the capacity adjustments, Bystronic is maintaining its presence in all markets and continues to work intensively on development projects.

The Glass Processing Systems business unit (Bystronic glass) likewise saw sales slump across all market regions and product groups during the first four months of 2009, owing to a lack of incoming orders. In local currencies, the decline was 42.5% compared with the same period of last year. Existing capacities have to be adapted to the changed order situation. The Swiss subsidiary at Bützberg (BE) will also be affected by these measures, with 50 job cuts planned. Among other systems, Bützberg makes machinery for the processing of automotive glass.

The Automation Systems (ixmation) has been badly affected by the economic crisis, above all in Switzerland. In addition, the market for production automation systems is changing. As a result, ixmation will in future focus on the manufacture of assembly automation systems. It will cease production of automation systems for the machine tool industry. One result of this decision is that ixmation will close the Swiss production plant at Pieterlen (BE), with the loss of 54 jobs. Pieterlen specializes in the manufacture of handling systems for machine tools and production automation systems. The Swiss subsidiary is currently seeking ways of continuing some of the manufacturing activities through customers, suppliers or employees. The sales and services departments and part of ixmation’s divisional management will remain in Switzerland.

The Foam Materials business unit (FoamPartner) is also having to make capacity adjustments, resulting in the loss of five jobs at the Swiss plants in Wolfhausen (ZH) and Gontenschwil (AG).

The Sporting Goods (Mammut Sports Group), Graphic Coatings (Schmid Rhyner) and Real Estate (Plazza Immobilien) business units are not planning any capacity adjustments.