OC Oerlikon (OERL) Q2 2024 earnings summary

Executive summary

• Raised 2024 guidance after strong H1 execution and robust Q2 orders, with the separation of Polymer Processing Solutions progressing as planned.

• Surface Solutions delivered improved profitability and higher organic sales, driven by aviation demand, despite soft industrial activity.

• Polymer Processing Solutions saw sequential and year-over-year order improvements, but sales declined due to subdued filament demand; margins remained robust.

• Group operational EBITDA margin improved to 16.0% in H1, with operating free cash flow rising to CHF 105 million.

• Continued execution on strategic priorities, including efficiency, innovation, and advancing the pure-play strategy.

Financial highlights

• Q2 order intake up 1% year-over-year at constant FX to CHF 651 million; group sales declined 10% at constant FX to CHF 616 million, mainly due to lower filament orders.

• Surface Solutions achieved higher organic sales and improved operational EBITDA margin by 230 basis points to 18.7%.

• Polymer Processing Solutions sales declined 26% year-over-year in Q2 at constant FX, with operational EBITDA margin at 11.7%.

• H1 operating free cash flow improved to CHF 67 million from negative CHF 141 million last year; cash flow from operating activities was CHF 105 million.

• Net result for HY2024 was CHF 39 million, down from CHF 75 million in HY2023.

Outlook and guidance

• Full-year operational EBITDA margin guidance raised to 15.5%-16.0% (previously 15%-15.5%).

• Group sales expected to decrease high single-digit percent; Surface Solutions sales expected to be flat year-over-year with EBITDA margin at ~18%.

• Polymer Processing Solutions sales expected to decrease in the low 20s% with EBITDA margin expected to exceed 11%.

• Second half expected to be significantly more cash generative.

• Mid-term target of >20% operational EBITDA margin in Surface Solutions confirmed.