The Comet Group proved robust in the first half of 2020 amid a weak economic environment. This resilience was due mainly to the strength of the semiconductor industry, which was able to decouple from the global economic trend. By contrast, IXM and IXS, the two divisions that provide x-ray technology, felt the downturn in the automotive, aerospace and security end markets, which was partly structural and partly COVID-19-related.
Overall, the opposing trends resulted in sales growth of 3% to CHF 182.3 million, from CHF 177.0 million in the same period last year. The higher sales, a favorable product mix and a lower cost base led to a disproportionate increase in EBITDA, which rose to CHF 18.8 million from the first half of the prior year (H1 2019: CHF 8.5 million). The EBITDA margin expanded to 10.3% (H1 2019: 4.8%). Net income was CHF 6.5 million, after a net loss of CHF 3.1 million in the year-earlier period.
The consolidated equity ratio of 49.2% and cash and cash equivalents of CHF 48.7 million underscore the Comet Group’s sound financial footing. Even in the current challenging economic environment, this financial stability allows the company to invest in the projects of strategic significance for the future as planned and without appreciable cutbacks.
PCT: Profit at EBITDA level increased six-fold thanks to high demand from semiconductor industry – Key projects well on track
After a pronounced low in demand in the prior year, the semiconductor market strongly continued the upswing that began in the final quarter of 2019. Sales of the Plasma Control Technologies (PCT) division rose 33% year-over-year to CHF 96.9 million (H1 2019: CHF 73.1 million). Driven by the high sales growth and advances in productivity, the division increased EBITDA almost six-fold to CHF 18.6 million (H1 2019: CHF 3.2 million). Its EBITDA margin surged from 4.3% to 19.2%.
Much of the strong result reflected significant operational improvements at all manufacturing sites. In Flamatt, despite the sharp rise in production volumes for vacuum capacitors, efficiency was greatly improved and capacity expanded by about 50%. PCT also made good progress in the implementation of key strategic projects. Thus, the installation work at the new production site in Penang, Malaysia, has been completed, so that the manufacturing of impedance matching networks (also known as matchboxes) can begin in the fourth quarter. At the site in Aachen, Germany, preparations progressed for the scheduled production start of the new radio frequency generator in 2021. In matchboxes, further groundbreaking projects were won with the largest customers.
Indications for unbroken high semiconductor demand in the second half of 2020 are good and should mean a continuing positive trend for PCT (barring disruptive macroeconomic events).
IXS: Realignment guided by strategy is in full swing – Business slowed by structural weakness in end markets and COVID-19
Business in the X-Ray Systems (IXS) division was hit hard by the in some cases pronounced weakness in the important end markets of automotive, aerospace and security. This was due both to the spreading pandemic, and to the structural challenges that had already been affecting the automotive industry for some time. Relative to the first half of 2019, the division’s sales declined by 20% from CHF 67.3 million to CHF 53.7 million. In EBITDA terms, IXS registered a loss of CHF 2.1 million, compared to earnings of CHF 3.5 million in the same period last year.
The trajectory of the first six months shows the importance of the adopted focus strategy, under which IXS is focusing on the promising semiconductor and electronics sectors in order to achieve sustained improvements in sales and profitability. In addition to the intensified cultivation of these two markets, IXS is also working consistently on the development of modular standardized systems and the renewal and streamlining of the product portfolio.
New orders at IXS have steadied at a low level in the first weeks of the second half of the year. Whether this stabilization will be a lasting one depends largely on the further course of global economic activity. The division will proactively adapt to the uncertain environment through further cost reductions.
IXM: Sales and margins down for market reasons – New product families launched – Transfer of microfocus tube business from IXS to IXM
Similar to the IXS division, the X-Ray Modules (IXM) business also experienced a market-driven setback. The division’s dependence on the cyclical core markets of non-destructive testing and security inspection led to a sales decline of 18% to CHF 30.2 million (H1 2019: CHF 36.8 million). EBITDA decreased by 46% to CHF 4.2 million, compared to CHF 7.8 million in the first half of 2019, and the EBITDA margin fell accordingly from 21.1% to 13.9%.
IXM made significant advances through the introduction of its new product ION which enables new applications in non-destructive examination and in security inspection, respectively. In addition, the transfer of the open microfocus x-ray sources from IXS to IXM was started; it is to be completed in early 2021 and will give IXM wider access to the electronics market going forward.
EBT: Well-advanced process to exit ebeam – Costs cut in half – EBITDA improved
The decided-upon disposal of the ebeam business (EBT) is at an advanced stage. Thanks to tight cost management, the EBITDA result improved markedly to a loss of CHF 0.3 million in the period under review (H1 2019: loss of CHF 3.0 million).
The driving forces for continued dynamic growth in the semiconductor industry are intact. In its latest outlook, the SEMI industry association expects investment in wafer fab equipment to increase by nearly 12% from a 2020 level of USD 63.2 billion to approximately USD 70.5 billion in 2021. Unlike the semiconductor market, the near-term trend in the global economy is much more difficult to forecast due to the COVID-19 pandemic and geopolitical turbulence. Despite current headwinds, the Comet Group believes it is ideally positioned in the medium to long run to benefit from the continuing trend towards digitalization.
In order to achieve its long-term goals, the Comet Group management team, completed by CEO Kevin Crofton (from September 1) and CFO Lisa Pataki (from October 1), will concentrate on vigorously driving forward the focus strategy and the Boost initiatives to increase sales and efficiency.
For the second half of 2020, from today’s perspective, the Comet Group expects continued robust growth in the semiconductor business and a continuation of the current business environment in the X-Ray Systems and X-Ray Modules markets. In view of the numerous uncertainties, Comet is refraining from issuing quantitative guidance for fiscal year 2020.
Publication of half-year results
Due to the restrictions imposed by COVID-19, the Comet Group is not physically holding its usual media and analyst conference.
Instead, the detailed half-year figures will be presented on August 13 in two conference calls by Heinz Kundert, Chairman of the Board of Directors and CEO, and Nicola Rotondo, Vice President, Group Controlling. A conference call in German will be held at 10:00 a.m. CEST and a call in English will follow at 4:15 p.m. CEST.
+41 (0) 58 310 50 00 (Europe)
+44 (0) 207 107 0613 (UK)
+1 (1) 631 570 5613 (USA)
Other countries: https://media.choruscall.ch/documents/Attended_DI_numbers.pdf
German, 10:00 a.m. CEST:
English, 4:15 p.m. CEST:
Investor Day on November 26, 2020
The Comet Group will host its Investor Day on November 26, 2020, in Zurich. A separate invitation will follow in due course.