Oerlikon wants to limit itself to surface technology in future
Published: Tuesday, Feb 20th 2024, 08:40
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In future, Oerlikon will focus on the surface solutions business. The company intends to divest the textile business of the Polymer Processing Solutions division and thus almost half of its sales.
The Polymer Processing Solutions division, i.e. the machines for spinning textile fibers, will be spun off, as Oerlikon announced on Tuesday. Whether the division will be sold or another solution found is still open. "We are examining various options," said CFO Philipp Müller during a conference call.
Oerlikon will thus become significantly smaller in the future. With around 3,800 employees, the Polymer Processing division contributed slightly less than CHF 1.2 billion to Oerlikon's sales last year, or around 43 percent. It has 11 production and research sites worldwide as well as 35 contact points for sales and service.
Due to the economic downturn in the textile industry, Oerlikon had already announced cost-cutting measures at the end of 2022. Around 800 jobs were cut globally, mainly in Germany. These job cuts have now been completed and the division is well positioned for the lower demand, explained Müller. He is forecasting an EBITDA margin of around 11 percent for the division in the current year, compared to 14.5 percent last year.
No hurry with the replacement process
One of the reasons he gave for the planned separation of Polymer Processing was the lack of synergies between the two divisions. However, Oerlikon intends to take enough time for the separation process. It is to be implemented over the next 12 to 36 months. The exact timing will depend on the cyclical recovery of the filament business.
According to Müller, in the event of a possible sale, the inflow of funds would most likely be used for the organic and acquisitive growth of the Surface Technology division (Surface Solutions).
Oerlikon generated sales of over CHF 1.5 billion with surface solutions in the 2023 financial year. Here, too, Oerlikon is making adjustments to its organization. For example, the additive manufacturing (3D printing) business was strategically realigned and production was concentrated in the largest growth market, the USA.
No more major job cuts planned
To strengthen the division's resilience, Surface Solutions is also optimizing its coating sites in Germany and discontinuing its thermal spraying services in the USA. According to Müller, however, this does not involve any major job cuts, either in Switzerland or elsewhere. It is merely a matter of streamlining the organization.
Of the original five Oerlikon divisions, only one will remain in the future. The Group had already downsized to two divisions in 2014. Thanks to its strong focus on one market and technology leadership, Oerlikon expects this final step to lead to more growth and profitability.
Once the spin-off is complete, Michael Suess intends to end his dual mandate as Executive Chairman.
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