Tornos: low point may have been reached

Order flow stabilizes
The Tornos Group booked total orders of CHF 20.3 m in the third quarter of 2009 (2008: CHF 53.4 m), a volume comparable to that of the previous quarter (CHF 19.9 m). After five consecutive quarters of falls, orders now appear to be stabilizing at an extremely low level. This suggests that the bottom of the cycle may have been reached, particularly as the third quarter is traditionally the weakest of the year in view of the adverse impact of the summer holiday period on business activity. Cumulative orders for the first nine months of the year were therefore CHF 63.3 m, a fall of 67.4% compared to last year (CHF 193.9 m).


Further fall in sales, negative profit and solid equity base
Sales declined once again in the third quarter, totalling CHF 19.4 m (2008: CHF 55.4 m) – a broad reflection of the average volume of orders for the year to date. The figure for the first nine months of the year was CHF 78.8 m, a reduction of 60.8% compared to the same period last year (CHF 201.1 m). Use of the Group’s installed capacity is below 30% and, despite the numerous measures taken to reduce costs, the fall in volume has produced distinctly negative results. The third quarter saw a loss of CHF 6.3 m, bringing the total for the first nine months of the current year to CHF 21.7 m. This is in contrast to 2008 when the figures for the same periods were profits of CHF 2.7 m and CHF 8.3 m respectively. The Group’s net debt increased by CHF 4.7 m during the quarter under review, totalling CHF 20.9 m on 30 September 2009. In that context it should be borne in mind that the Group signed a CHF 50 m three-year bank credit agreement at the end of September 2009. At that time, equity of CHF 132.7 m accounted for 68.4% of the balance sheet total of CHF 193.9 m and is testimony to the Group’s robust financial situation.

Outlook
Given the current macroeconomic situation, the Group has decided not to publish detailed forecasts. On the one hand, business levels appear to be stabilizing, while on the other certain markets are actually seeing the onset of a revival in activity, which could lead to an improvement in the economic situation over the next few months. However, signs of a recovery are still extremely fragile and it would be premature to expect any significant upturn in the short term. The Group is not predicting any substantial improvement in the order book before the middle of 2010, and is pressing ahead with its policy of widespread recourse to short-time working, thereby avoiding any permanent loss of its industrial and commercial capabilities.

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