Metall Zug Group: SAP-related costs at V-ZUG and provisions for soil remediation work at the Zug site impact on result

Zug, June 7, 2019 – Costs and lost income resulting from the SAP roll-out at V-ZUG, as well as provisions for soil remediation work at the Zug site of around CHF 14 million, are negatively affecting operating income (EBIT) for 2019. The Metall Zug Group expects a break even result for operating income (EBIT) in the first half of the year.

As part of the preparations for construction work at the main V-ZUG site in Zug, extensive contamination investigation was carried out in consultation with the Canton of Zug Environment Office. These investigations identified various areas that require remediation. According to the Environment Office, it should be possible to rectify these areas at the same time as the planned construction work. Given the legal remediation obligation and the advanced planning stage for some construction plots, provisions of around CHF 14 million must be recognized for related remediation costs. Any further remediation costs will depend on whether additional buildings are implemented on the site in Zug.

Ongoing costs and income losses in connection with the roll-out of SAP at V-ZUG are also weighing on the result.

For the above reasons, the Group is expecting an operating income (EBIT) in the first half of 2019 of around CHF 0 million compared with operating income (EBIT) of CHF 36.4 million in the same period of the previous year.

When it published its annual results for 2018 on March 21, 2019, the Metall Zug Group was observing a difficult and uncertain environment. Based on this assessment and the impact of a diverse and overlapping range of strategic projects – such as digitization, the transformation of the V-ZUG production sites, and new product development – the group refrained from giving any guidance on 2019 operating income. Business performance visibility remains limited due to the uncertain situation of the global economy and a number of key industries for the Metall Zug Group.

Although the Metall Zug Group traditionally generates higher operating income in the second half of the year compared with the first half, it must be assumed that it will not be possible to make up the shortfall vs. the previous year.