Heraeus concludes financial year 2012 with satisfactory results

(PresseBox) (Hanau, ) .
- Sales and earnings declined as expected from 2011's exceptional levels
- This was due primarily to the collapse of the photovoltaics market and one-off expenditures for restructuring
- Extensive investments and numerous acquisitions in conjunction with stable liquidity ensure the future company's success
- Market orientation measures introduced
- Outlook for the current financial year is cautiously optimistic

The Hanau-based precious metals and technology group Heraeus closed out financial year 2012 with satisfactory results overall. This was announced by the Heraeus Holding GmbH Board of Management at a press conference on annual results held in Frankfurt on May 7. The collapse of the photovoltaics industry around the world-which affected several Heraeus business groups-and one-off expenditures for restructuring led to a decline in sales and earnings for the entire group. All-time highs like those achieved in financial year 2011 were not reached. Heraeus had total product revenue of €4.2 billion (13 percent less than in 2011). Adjusted for precious metals price effects, the decline is equal to 5 percent. The company is holding its ground in its submarkets, some of which have been marked with ongoing high degrees of uncertainty. In 2012, Heraeus earned operating results (EBIT) of €365 million, which corresponds to a decrease of 25 percent from 2011. With the lower demand for platinum, gold, and silver over the last financial year, precious metals trading revenue fell to €16 billion, despite higher prices for precious metals.

"Developments in the photovoltaics industry last year left a mark on our business. 2011 was an exceptional year, and in 2012 it was essential to hedge the results at a high level. We succeeded thanks to our broad base, which allowed us to face the global economic challenges from a position of strength," stated Dr. Frank Heinricht, Chairman of the Board of Management of Heraeus Holding GmbH, summarizing the economic development.

High level of investment and numerous acquisitions ensure business development

Investments in property, plant, and equipment totaled €126 million in 2012, well above the previous year's level (2011: €105 million). "Our investment activities support future organic growth in promising business segments and attractive regions," explained Dr. Frank Heinricht.

In addition, Heraeus gained strength by making several acquisitions during the past financial year: The precious metals business group took over US specialty chemicals manufacturer Daychem, which produces chemicals for the semiconductor and display industries. The dental business group acquired Sweden's Biomain AB, thereby expanding its position in the CAD/CAM technology sector. The sensors business group added to its activities in the field of measurement, monitoring, and control of metal melting processes by purchasing US firm Midwest Instrument Company.

An additional acquisition was initiated in 2012 and will be completed in 2013. The specialty light sources business group bought US firm Fusion UV Systems Group. The company's product portfolio complements the business group ideally and enables comprehensive market development. Jan Rinnert, CFO of Heraeus Holding GmbH and Vice Chairman of the Board of Management explained the company's acquisition strategy: "Appropriate acquisitions, accompanied by stable liquidity, form the basis for profitable growth and sustainably successful areas of operations."

In the current financial year, the Heraeus Group also divested: In April the company announced that it would sell the dental products business group to Japanese chemical group Mitsui. This was due largely to fundamental changes to the global dental market that distanced it from Heraeus's core business.

Innovation and employees are the basis for success

As of December 31, 2012, Heraeus employed a workforce of 13,615 worldwide, an increase of 292, or 2 percent, over the same period the year before. Of that, 166 new jobs were created in Germany, and 126 at Heraeus companies outside Germany.

With more than 5,900 current patents and patent applications, Heraeus is a global innovator. In the 2012 financial year, 123 new basic patents were added, about 5 percent more than in the previous year (117). In addition, every patent is filed in four to five countries on average. The Group invested some €84 million in the development of new products and technologies.

All business groups achieve positive operating results

The Heraeus Group's business groups experienced varied results over the course of financial year 2012. Strong demand for bonding wires as well as for sensors for steel production was a positive force. In addition, the markets for bone cements and optical fibers for the telecommunications industry remained good. Relevant markets such as photovoltaics, the semiconductor industry, and the economic development of the automotive industry led to decreased revenues in some business groups. Because of long-term changes to the basic conditions of some of the company's submarkets, Heraeus began a restructuring program in 2012. The dental products and materials and technologies business groups each introduced appropriate measures that will be continued into 2014.

The business groups developed as follows:

The reduced demand for photovoltaics products lowered product revenue for the Heraeus Precious Metals business group by 25 percent. Other activities with more positive development, such as the recycling business, could not compensate for the business group's decrease in revenue.

Revenues for the Heraeus Materials Technology business group likewise fell, by 6 percent. This is due largely to a general drop in demand from the cyclical business with products from the automotive and hard-drive industries. Strong demand for bonding wires was a positive force.

Despite a significant slump in the steel market in the last year, the Heraeus Electro-Nite sensors business group stabilized its activities and recorded growth of 2 percent over 2011, which is underpinned in part by demand from Asia and the acquisition of Midwest Instrument Company.

Product revenue in the Heraeus Dental business group held steady at the level of the previous year. The business group aligned itself with the market's demands by adding two new divisions: dental materials and digital prosthetics.

The Heraeus Medical biomaterials and medical products business group continued on its successful course, achieving record numbers for the fifth time in a row with a revenue increase of 8 percent. Ongoing positive development in the core markets along with the development of new markets in Asia and Africa and the market for biomaterials in orthopedics contributed to this.

Revenues fell by 9 percent from the previous year for the Heraeus Quarzglas business group because of the cyclical downswing in the semiconductor market and lower demand from the photovoltaics industry. The continued strong demand for optical fibers for telecommunications in China and the US compensated for the loss to some degree.

Revenues also declined for the Heraeus Noblelight specialty light sources business group, falling by 10 percent from 2011. A key reason for this is likewise the negative economic development of the photovoltaics industry. In contrast, the arc and flash lamp business for laser and non-laser industries exhibited positive development.

Outlook: Financial risks remain, but initial signs point toward cautious optimism

There is every likelihood that the uncertain overall economic situation the Heraeus Group navigated in 2012 will continue in finaincial year 2013. The first quarter results highlight this. On the other hand, initial predictions indicate an economic recovery in submarkets and in regions where Heraeus is active. "We remain cautiously optimistic for the current financial year," according to Jan Rinnert, who is taking over for Dr. Frank Heinricht as the CEO of Heraeus Holding, effective June 1, 2013.

Heraeus continues to rely on the automotive electronics, telecommunications, medicine, steel, semiconductors, and renewable energy industries. "The company's innovative strength, once again supported by a high volume of investment, and appropriate acquisitions paired with stable liquidity create a solid foundation for profitable growth," affirmed Rinnert regarding plans for 2013.

Kontakt

Heraeus Holding GmbH
Heraeusstr. 12-14
D-63450 Hanau
Bettina Lichtenberg
Heraeus Holding GmbH
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