Friedhelm Päfgen, Chairman of the Board of Management of SURTECO SE, reports on some dramatic collapses last year among the Group’s international clientele at this year’s Annual General Meeting in Munich. The leading global specialist in surface technologies ranks among the major suppliers to the construction and furniture industry, and the Group has succeeded in improving competitiveness and continuing to expand its already strong market position despite these setbacks. The company has risen to the challenge posed by the crisis more successfully than many competitors. This is mainly due to the fact that a comprehensive range of measures was launched as early as autumn 2008 designed to cut costs and increase efficiency. This action led to action geared to optimization in all operating areas – for example the entire melamine edging production was concentrated within Germany – and this resulted in a planned annual savings effect of € 10 million.
The strategic harmonization measures initiated and implemented at an early stage assisted SURTECO in passing the “toughness test” of the past year entailing a 15-percent drop in consolidated sales as a result of the economic slowdown to € 341.1 million. While foreign sales fell by 18 % in 2009, a drop of 11 % was recorded in the German market. The strategic Business unit Plastics, in which SURTECO markets products including edgebandings, closed the business year with sales of € 210.0 million. This corresponds to a decline of 18 %. The paper segment (including decorative prints and flat foils) generated € 131.1 million (-12 %).
More cash flow – fewer debts
The operating result amounted to € 54.3 million and despite a 4 % decline SURTECO SE succeeded in increasing free cash flow by € 41.5 million to € 59.3 million in 2009. In line with expectations, the company continued to reduce net debt and brought this parameter down significantly by € 48.5 million to € 122.8 million. This significantly improved the gearing ratio from 95 % to 64 %.
SURTECO share with good yield figures
Consolidated net profit for 2009 increased by 37 % to € 9.2 million, and 48 % of this profit is to be distributed to shareholders. The Annual General Meeting agreed to the proposal to increase the dividend by
5 cents to 40 cents per share by comparison with the previous year. This also clearly demonstrates that this share continues to remain attractive even through times of crisis on account of its performance over the long term: For example, anyone who purchased SURTECO shares for the equivalent of 10,000 euros in 1994 would have had 27,130 euros in their fund account by the end of June of this year. Including the dividends booked in this period, this constitutes an annual return of more than 20 %.
Strength for development
This payout ratio gives shareholders a reasonable share in the results of the past business year and it also provides SURTECO SE with the strength to consistently pursue the strategic development of the company “in order to return to the company’s track record of dynamic growth after the crisis has come to an end”, in accordance with the stated intention of the Chairman of the Board of Management. In line with the approach already adopted by SURTECO SE, the investment in a dedicated sales company in Moscow provides an indication of the strategic approach being taken to future markets. A further demonstration of the forward-looking approach taken by SURTECO is the agreement with ‘impress decor GmbH’ in Aschaffenburg, which will cease production and sales of fully impregnated flat foils and edgebandings at the end of June. SURTECO is anticipating additional sales revenues amounting to annually approximately € 15 million as a result of the takeover of the “refining business” of ‘impress decor’.
2010 with modest sales growth
During the first quarter of this year, both business units of the SURTECO Group benefited from a recovery in foreign business that experienced a tangible upturn. Accordingly, the proportion of foreign business had increased by 4 percentage points to 65 %. The second quarter looks set to continue the rather more positive business development encountered during the first three months of this year. Even if the orders booked indicate a rather weaker second half year, the Group is anticipating modest organic sales growth overall for 2010. However, this remains predicated on SURTECO SE not being subject to significant volatility in the foreign-exchange and raw-materials markets – at present the Group is contending not just with price increases but also with volume quotas – and the macroeconomic conditions achieving a stable level.
