Dear shareholder

The Komax Group again witnessed strong growth in 2018 – with regard to both order intake and revenues – and was able to use this growth to further expand its leading market position. To ensure that it continues to grow and shape the industry on the technology front, Komax placed a strong focus on investment: in research and development, in digitalization, and in several projects aimed at capacity expansion. Implementation of the 2017–2021 strategy is progressing.

As in past years, Komax outstripped growth in the market in 2018. Order intake increased by 10.4% to CHF 496.7 million (2017: CHF 449.7 million), while revenues rose by 17.4% to CHF 479.7 million (2017: CHF 408.5 million). The growth in revenues comprises a very high level of internal growth (+13.9%), acquisition-driven growth (+1.7%), and the positive impact of foreign currencies (+1.8%). Growth remained high throughout the year. Order intake dipped slightly towards the end of the year and was consequently higher in the first six months (first half 2018: CHF 256.0 million, second half 2018: CHF 240.7 million). Given the extremely strong order backlog, this did not impact revenues, which were marginally higher in the second half of the year (first half 2018: CHF 236.9 million, second half 2018: CHF 242.8 million). The book-to-bill ratio was 1.04 at the end of 2018.

Strong growth in all regions

In 2018, Komax again benefited from having the broadest product portfolio and being able to offer customers a wide spectrum of automation solutions along the value chain. This produced strong growth in all regions. Africa saw the highest rate of growth (+49.8%), as the trend witnessed last year in the region continued: a number of harness manufacturers expanded their presence in North Africa due to the difficulties encountered in securing sufficient personnel in Eastern ­Europe. Despite this shift, Europe – Komax’s strongest region by far with 44.7% of revenues – also recorded growth of 3.0%. ­Business expanded strongly in North/South America (+29.0%) and Asia (+26.5%). While Asia continued to build on the growth trajectory witnessed over previous years, North/South America recovered from the temporary weak spell in 2017 (–2.1%), when investment activity in the United States in particular was very low over the first six months.

Increasing profitability

Komax not only posted strong growth in 2018, it also secured a sharp rise in profitability. Operating profit (EBIT) was up 22.1% to CHF 67.3 million (2017: CHF 55.1 million) and the EBIT margin increased from 13.5% to 14.0%. This increase is notable in that the impact of foreign currencies was significantly lower than in the previous year. Whereas in 2017 positive foreign currency effects pushed up the EBIT margin by 1.0 percentage points, in 2018 the rise amounted to only 0.2 percentage points. The impact was substantially more positive in the first six months of the year, at +1.3 percentage points.

Komax also increased Group profit after taxes (EAT), which was up 23.0% to CHF 51.8 million (2017: CHF 42.1 million) despite a financial result of CHF –5.2 million (2017: CHF –0.8 million). More than 50% of this financial result is attri­butable to unrealized book losses on currencies of emerging markets (including Brazil and Turkey) in which Komax has production operations. Basic earnings per share increased to CHF 13.52 (2017: CHF 11.05).

Komax’s financial base continues to be very robust: as at 31 December 2018, shareholders’ equity totaled CHF 281.6 million (2017: CHF 258.2 million), while the equity ratio stood at 60.8% (2017: 62.3%). Free cash flow amounted to CHF –4.3 million (2017: CHF –7.6 million) and net debt was CHF 39.4 million (2017: CHF 10.5 million).

Additional unique selling propositions

The automotive industry, Komax’s most important market segment at over 80% of revenues, is currently in a state of upheaval. Amid this upheaval, themes such as e-mobility, ­autonomous driving, and digitalization are an opportunity for Komax to develop additional unique selling propositions. This is why Komax is currently carrying out a high level of proactive investment, with expenditure of CHF 41.1 million (2017: CHF 36.7 million) in research and development in 2018. This corresponds to 8.6% of revenues and is therefore within the strategic bandwidth of 8%–9%. In order to effectively channel the growth that is becoming apparent for the coming years, Komax is expanding its capacities at four production and development sites – one in Switzerland, one in Hungary and two in Germany. Construction activity has been underway at these four sites since 2017/2018 and will be completed on a staggered basis by the end of 2019. Given that certain delays were experienced, some investments originally planned for 2018 were rescheduled for 2019.

Komax’s objective in investing such significant amounts in research and devel­opment is to enable customers to continually increase their level of automation in wire processing. Independently of the number of vehicles manufactured each year, customers are experiencing substantial pressures to increase automation. The key factors behind this are rising wage costs, a lack of staff availability, miniaturization in cables, and the need for traceability of individual process steps for quality assurance reasons.

Attractive dividend yield

Based on the pleasing result for 2018, the Board of Directors is proposing to the Annual General Meeting of 16 April 2019 a dividend increase from CHF 6.50 to CHF 7.00 per share. This corresponds to a payout ratio of 52.0%. Despite the currently very high level of investment in planned capacity expansion, Komax is achieving its strategic target of a payout ratio of 50%–60%. Of the CHF 7.00 per share, CHF 0.80 will be distributed from capital contribution reserves and will therefore be tax-free for natural persons domiciled in Switzerland who hold the shares as part of their private assets. The dividend yield (calculated on the basis of the 2018 year-end closing price of the Komax share) amounts to an attractive 3.0%.

Changes in the Board of Directors

After 14 years on the Board of Directors, the last five of which as Vice-Chairman, Daniel Hirschi has decided not to stand for re-election at the 2019 Annual General Meeting. The Board of Directors and Executive Committee wish to thank him most sincerely for his many years of commitment to Komax. The Board of Directors is proposing to the Annual General Meeting that Dr. Mariel Hoch be appointed as a new member of the Board. Dr. Mariel Hoch’s primary area of specialization is M&A transactions, and she advises listed companies on corporate and regulatory matters.


The Komax Group remains on track in the implementation of its 2017–2021 strategy and is confident that it will achieve its ambitious targets. 2019 is set to be a very challenging year, however. A variety of economic and political factors in the individual regions are currently fuelling substantial uncertainty in the automotive industry. This is causing customers to put off a number of investment decisions and means that we are not able to benefit from our well stocked project pipeline at present. Given that the pressures to increase automation continue unabated, our expectation is that this dip is temporary and that the situation will improve over the course of the year. Consequently, despite this temporary phase of weakness, in 2019 we will continue to invest significant amounts in research and development as well as in digitalization. In light of the unexpectedly weak order intake in the first two months of 2019, we anticipate a result for the first six months of the year that is markedly lower than the record result witnessed in the first half of 2018.


Yours sincerely,

Dr. Beat Kälin
Chairman of the Board of Directors

Matijas Meyer

7 March 2019

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