The Metall Zug Group posted a significantly higher operating result in the first half of 2021

The Metall Zug Group generated net sales of CHF 302.8 million in the first half of 2021 (H1 2020: CHF 509.7 million, or CHF 248.2 million without the V-ZUG Group, which was spun off on June 25, 2020). Net sales in local currency were up 18.0 % after adjusting for the contribution made by the prior first-half year's sales of the V-ZUG Group and factoring in the acquisition effect of CHF 13.5 million (5.4 %) and the currency effect of CHF - 3.5 million (- 1.4 %). The increase reflects the noticeable recovery of the relevant markets, an adaptation to the effects of the pandemic and a certain catch-up effect. This applies not only to the market for medical devices and the automotive industry, but also and above all to the US market. Customers are making more investments and building up inventory again, which had run low at the end of last year.

The operating result (EBIT) for the reporting period came to CHF 16.9 million (H1 2020: CHF - 1.7 million, or CHF - 14.6 million excluding the V-ZUG Group's EBIT contribution of CHF 12.9 million). The operating result was positively affected above all by the significant rise in sales in the Wire Processing and Medical Devices Business Units. These Business Units experienced a sharp increase in EBIT compared to the same period of the previous year.

At CHF 33.3 million, cash flow from operating activities continued to develop favorably in the first half of 2021 (H1 2020: CHF 40.4 million, or CHF 15.0 million without the V-ZUG Group). This is primarily attributable to the improvement in the operating result.

The financial result amounted to CHF 12.9 million (H1 2020: CHF - 0.6 million) and includes the pro rata net income of the V-ZUG Group, in which Metall Zug holds a 30 % stake. Net income climbed to CHF 22.3 million (H1 2020: CHF - 5.4 million, or CHF -16.6 million excluding the contribution of the V-ZUG Group).

The net cash position (cash and cash equivalents and securities less short- and long-term financial liabilities) came to CHF 85.6 million as at June 30, 2021, and was therefore CHF 18.0 million higher than at December 31, 2020 (CHF 67.6 million), despite the distribution of a cash dividend of CHF 7.8 million. The Metall Zug Group still has a solid balance sheet, with shareholders' equity of CHF 505.4 million. This translates into an equity ratio of 72.2 %.

The income statement is now presented according to the income statement by function method (previously: income statement by nature method). The previous year's figures have therefore been restated accordingly.

Infection Control: Stable Development

The Infection Control Business Unit (Belimed Group) generated net sales of CHF 78.3 million (H1 2020: CHF 78.1 million). The negative foreign currency impact amounted to CHF 1.0 million.

As most projects in the Equipment business were completed on schedule even during the COVID-19 crisis, currency-adjusted net sales of the Equipment business were only slightly lower than in the first half of 2020. The market is undergoing a noticeable recovery, and customers are once again making investment decisions. This is reflected in the growth in order intake, especially in China and the US, where Infection Control succeeded in strengthening its market position over the last 12 months.

The other two segments, Service and Consumables, performed well. More surgical procedures were carried out than at the start of 2020 when hospitals were performing only those operations that were strictly necessary, with some even suspending surgery altogether. But even compared to pre-COVID times, the Consumables business is again experiencing double-digit growth rates.

At CHF - 2.1 million, the operating result (EBIT) for the first half of 2021 is slightly negative and thus below the prior-year level (H1 2020: CHF 1.1 million). However, the result for the same period of the previous year included net one-time effects of CHF 0.8 million. Without these one-time effects, the decline comes to CHF - 2.4 million. The positive contributions of the year-on-year increase in sales were partly offset by higher expenses, especially for R&D, Marketing and Sales.

On the product side, SmartHub 2.0 was successfully introduced. SmartHub 2.0 operates as a data turntable that collects data from connected devices. SmartHub 2.0 processes the data and makes it available in a dashboard that provides customers with important information such as the duration, progress of cleaning and sterilization programs and their process steps. In addition, a Global Planning & Design Team was established to provide hospitals with professional support at an early stage in their planning and setting up of a Central Sterile Supply Department (CSSD).

Belimed also completed its ERP rollout; this means a harmonized system is now in use throughout the group, apart from the Chinese subsidiary.

Medical Devices: Impressive Recovery of Net Sales and EBIT

In the first half of 2021, the Medical Devices Business Unit (Haag-Streit Group) posted much higher net sales of CHF 101.5 million (H1 2020: CHF 76.6 million), thus returning to pre-COVID levels. Adjusted for currency effects of - 1.6 % and acquisition effects of 8.3 %, organic growth came to 25.9 %.

Whereas in 2020, Haag-Streit's sales activities were severely affected by cancelled congresses and trade fairs, there has been a noticeable upward trend in the current year, accompanied by a discernible market recovery, especially in the US and Great Britain. This is reflected not only in the sharp rise in sales, but also and above all in the significantly higher order intake. Following the acquisition of VRmagic, sales of training and simulation equipment (especially surgical simulators) surpassed expectations. VRmagic also succeeded in acquiring a landmark order from Genentech for simulators in May 2021, which will positively impact net sales over the next few months.

The operating result (EBIT) came to CHF 13.7 million in the first half of 2021 (H1 2020: CHF - 6.5 million). Therefore, Medical Devices has clearly returned to the profit zone. This is attributable not only to the increase in sales, but also to improved margins as a result of higher capacity utilization and to lower costs. The operating result also contains the income from the partial release of a provision for pension benefit obligations at a subsidiary in Great Britain amounting to CHF 3.7 million (H1 2020: expense of CHF 1.8 million).

Lenstar Myopia, a combination of the Lenstar LS 900 biometer and a software application that enables precise measurements for the early detection of myopia (short-sightedness), was successfully launched. In addition, the product comes with state-of-the-art myopia management software that provides graphical visualizations which help to inform patients, predict the course of the disease at an early stage and monitor the success of initiated treatment measures.

With the Eyestar 900, Haag-Streit is opening a new chapter in measuring, imaging and diagnosing of the human eye. The device enables precise measurement and topographic assessment of the front and back corneal surface and the anterior chamber, including the lens, as well as imaging of all clinically relevant structures.

Wire Processing: Higher Net Sales and EBIT

The Wire Processing Business Unit (Schleuniger Group) posted net sales of CHF 98.8 million in the first six months of 2021 (H1 2020: CHF 66.7 million), which equates to an increase of 48.2 % on the same period of the previous year. Adjusted for currency effects of - 1.4 % and acquisition effects of 10.6 %, the organic growth in sales came to 39.0 %.

The automotive industry experienced a noticeable upswing in the first half of the year, especially in the US as customers started to make previously deferred investments.

Moreover, thanks to the acquisition of the material operating activities of Cirris Systems Corp. in September 2020 through the newly established Cirris Inc., Schleuniger was able to round out its existing range of testing solutions by adding easy to use and operate standard testers, adapters and accessories, thus almost doubling sales in this segment. At the same time, the transaction broadened Schleuniger's clientele for applications outside the automotive supplier industry.

Technological progress in relation to high voltage applications and data cables, plus the increasing production volume of hybrid and battery electric vehicles (NEVs), and further automotive connectivity are all driving demand. This can be seen in the significant rise in order intake and subsequently also in the order backlog. The latter also benefited from customers' increasing need for greater automation of their production processes.

Temporary delivery bottlenecks on the procurement and transport side meant that parts of the order backlog could not yet be converted into sales, especially in the US and China.

At CHF 6.7 million, the operating result (EBIT) was much higher than in the prior-year period (H1 2020: CHF - 7.7 million) and is now clearly back in the positive zone. In addition, lower costs for administration (consulting / IT expenses) contributed to the improved operating result.

The defined 'Best in Test' strategy has got off to a good start. The integration of Cirris Inc., USA, in the 'Schleuniger Testing Alliance' is proceeding as planned. The 'Schleuniger Testing Alliance', consisting of Cirris, adaptronic and Schleuniger Test Automation, offers customers worldwide a broad range of products from simple standardized cable testers to customer-specific testing systems and automated testing platforms for a variety of industries. Schleuniger is benefiting from the trend among customers to make ever-higher requirements on their products in terms of quality and safety.

Technologycluster & Infrastructure: Development of Tech Cluster Zug Gathers Speed

The Technologycluster & Infrastructure Business Unit's operating result (EBIT) came to CHF 0.4 million in the first half of 2021 (H1 2020: CHF 2.6 million). The reasons for the decline are the lower property management income from V-ZUG following the conclusion of two new construction projects and preliminary planning activities, higher costs for ground remediation work and for competitions to conduct studies.

After SHL Medical signed a letter of intent for the construction of the SHL Südtor building, an architectural design competition was completed, planning for the preliminary project begun and the rental contract concluded. A letter of intent was also signed by VZ Depository Bank for the construction and sale of eastern tower CreaTowers I. An architectural design competition is due to be held in fall 2021, in parallel with that for CreaTowers II.

Furthermore, Westhive will open a flexible workspace with 2 000 square meters of office space on the Tech Cluster Zug site in late summer 2022. To this end, a long-term tenancy agreement has been concluded with Westhive.

Construction work on the Mobility Hub Zug parking garage is proceeding according to plan and on budget. The architectonically impressive footbridge over the Zug/Baar bypass is finished.

The preliminary planning project for the wooden high-rise Pi is expected to be completed in the third quarter of 2021.

Work has commenced on the construction of the Multi Energy Hub at the ZUGgate high-bay warehouse. The demolition phase is over, civil engineering work has begun, and tender negotiations are underway.

Reporting Segment 'Others'

Belimed Life Science, Gehrig Group AG and Corporate (i.e. Metall Zug AG) are grouped together in the 'Others' reporting segment. The reporting segment posted net sales of CHF 27.9 million in the first half of 2021 (H1 2020: CHF 32.0 million) and an operating result of CHF - 1.8 million (H1 2020: CHF - 4.0 million).

At Belimed Life Science, net sales in the first half of 2021 were slightly down on the previous year due to the lower order intake in the first half of 2020 and the lengthy project throughput times. However, both order intake and order backlog were significantly higher in the first half of 2021 than in the same period of the previous year. This reflects the increase in demand from the pharma industry as a whole, and for tests and vaccines in particular. Through a clear focus on profitable projects, improved project management and operational excellence, Belimed Life Science succeeded in lifting its operating result (EBIT) into positive territory. Belimed Life Science will continue to focus on steadily improving its operational excellence and expanding its retrofit business.

Gehrig Group AG offers solutions for professional kitchens in the hotel and catering industry. Due to the government-imposed closure of hotels and restaurants in Switzerland, net sales were down on the prior-year period. This led to a negative operating result for the first half of the year. However, strict cost management and short-time working helped limit the negative financial impact.

Sustainability @ Metall Zug

The Metall Zug Group has defined mid-term sustainability targets in four focus areas.

Climate & Energy: The Metall Zug Group aims to achieve a global net zero emissions target by pursuing a strategy based on transparency and innovation. Metall Zug's production sites in Switzerland have already achieved CO2-neutrality in Scope 1 (heating and operating power, own vehicles), Scope 2 (electricity) and Scope 3 (business air travel) by reducing and compensating. The Technologycluster & Infrastructure Business Unit is leading the way in this respect. It is seeking to achieve CO2-neutrality through sustainable construction projects (building with wood), a CO2-free energy supply and a mobility concept that rewards employees who come to work by public or non-motorized transportation while charging a fee for those who use their own motorized form of transport.

Employees: Metall Zug wants to develop and secure a skilled workforce long term. The main activities here are to step up promotion and succession planning, strengthen the leadership culture, boost satisfaction among employees and take more preventive health and safety measures.

Products & Services: Metall Zug intends both to retain its leading role in long product lifetimes, the availability of spare parts and competent customer service and to build on it by moving toward a closed-loop economy. One of the first goals is to see packaging material produced from renewable materials only.

Society & Value Creation: Metall Zug makes a contribution to society by creating jobs locally, playing a role in quality urban development and helping provide affordable housing.

On the whole, Metall Zug follows its own agenda regarding sustainability. Its main aim is not simply to tick off the checklists drawn up by sustainability experts. Instead, it wants to play a pioneering role, based on the deeply rooted principle of fair business practices and with innovative ideas.

Strong Industrial Group with Leading Positions in Attractive Markets

Metall Zug holds an interesting portfolio of technologically strong companies with above-average growth and value added potential, and is essentially active in the two growing markets of medical technology and wire processing. Through Haag-Streit, Belimed and Schleuniger, Metall Zug is very well positioned in the relevant market segments with strong brands, leading products and services, strong customer relations and opportunities regarding digital businesses and processes.

The Technology Cluster in Zug also gives Metall Zug a site of some 60 000m2 in the heart of the city of Zug. Metall Zug aims to leverage this development potential over the next few years through innovative and sustainable projects.

Thanks to its strategic shareholding of around 30 % in V-ZUG Holding AG, Metall Zug additionally benefits from the potential of V-ZUG.

Due to the current positive economic environment and the high order backlog, Metall Zug expects business to develop favorably in the second half of the year.

Key Figures of Metall Zug Gruppe

1)  As part of the changed presentation of the income statement to the income statement by function method (previously: income statement by nature method) the definition of net sales was revised. The previous year's figure has been restated accordingly.

2)  The full-time equivalent number of employees (FTE) includes impacts due to short-time work and further personnel measures due to COVID-19.