Orell Füssli: progress at the operating level and slightly higher sales

Business environment remains difficult – progress in operational results in all divisions – lower profits – positive outlook

Zurich, April 12, 2011 - Orell Füssli reported sales of CHF 317.7 million in the 2010 financial year; this corresponds to an increase of 4% compared to the previous year, or as much as 9% after adjustment for currency translation effects and changes in the scope of consolidation. Operating earnings of the Orell Füssli Group declined to CHF 14.1 million (CHF 23.1 million, including CHF 8.5 million of extraordinary income, in 2009). However, Orell Füssli reported a significant improvement in results at the operating level compared with the previous year: EBITDA increased from CHF 24.3 million to CHF 31.3 million and cash flow from operations based on internal assessment criteria rose by as much as 41%, to CHF 30.8 million. Net profit was CHF 10.6 million (CHF 14.7 million in 2009). 

Atlantic Zeiser reported an 18% increase in sales revenues expressed in euros (9% in CHF), to € 57.8 million in 2010. Sales growth was achieved both in the classical market for numbering systems (banknote printing) and with digital printing systems for industrial applications, which have been further developed in the past two years. Despite considerable upfront investment in new products and development of the relevant markets, operating earnings improved significantly. The slump caused by the economic crisis therefore seems to have been overcome.

In security printing the postponement of production of the new Swiss banknotes was partially offset by the reprint of the existing 8th issue. Major orders for printing foreign banknotes were secured as a result of intensified marketing efforts. This resulted in sales revenues of slightly over CHF 100 million (CHF 85 million in 2009). However, margins were depressed due to price competition and the unfavourable exchange rate trend for Swiss manufacturers. 

Demand remained subdued in book retailing while the physical trade migrated to the Internet. Lower prices, due also to the steep depreciation in the euro, also had an impact on sales (average price reductions of 5% year-on-year). Sales revenues declined from CHF 123.6 million to CHF 119.9 million. Cost-related improvements enabled the decline in sales to be offset at the earnings level. 

In publishing, Photoglob AG was deconsolidated after the majority holding was reduced to a minority holding through sale to the General Manager. In-house publishing activities were at the previous year’s level. 

The balance sheet is still extremely sound, with an equity ratio (including minority interests) of 70.0% (61.6% in 2009). Orell Füssli is therefore well equipped to pursue a growth policy with appropriate projects. 

Dividend proposal to the Annual General Meeting
The Board of Directors will propose to the Annual General Meeting on May 10, 2011, that an unchanged dividend of CHF 2.50 per share should be disbursed. This exceeds the notional figure in line with our long-term dividend policy, which foresees the distribution of one-third of the net profits. However, this is intended to underline our confidence in the further development of the business. 

Change to Swiss GAAP FER
The Board of Directors has decided to change from IFRS to Swiss GAAP FER reporting standards with effect from June 1, 2011. The decisive factor behind this move was the continuous growth in the number of new regulations under IFRS, which increase the effort involved for the company without bringing any additional benefits for the shareholders or the company. Transparency will not suffer as a result of this change, which is also unlikely to influence the company’s access to the capital market. 

Changes in the Board of Directors
Rudolf W. Hug and Rudolf Rentsch will retire from the board in compliance with statutory term limits. Dewet Moser (Alternate Member of the Governing Board, Swiss National Bank), Gonpo Tsering (Member of the Executive Board of DKSH), Andreas S. Wetter (Chairman of Orange Switzerland) and Dieter Widmer (independent management consultant) will be proposed to the Annual General Meeting for election as directors. The number of directors is being increased in the context of the renewal of the board which was already initiated last year. This will bring a wider spectrum of experience to the board and is also in line with the wishes of major shareholders. 

Outlook
Orell Füssli foresees increasing demand for new digital printing solutions for industrial applications in 2011. In security printing the company expects good levels of capacity utilisation comparable to those achieved in 2010, although the production of the new Swiss banknotes is only planned towards the end of the year. In book retailing Orell Füssli aims to offset the decline in physical sales of books as far as possible with other products, while consolidating and expanding its existing positions on the Internet. Sales- and cost-related efforts mean that the prospects for sustained earnings improvements are favourable, but are unlikely to be fully reflected in results before 2012.

Key figures for Orell Füssli 

1) Proposed by the Board of Directors to the Annual General Meeting on May 10, 2011. 

Orell Füssli is an international industrial and trading group focusing on the core businesses of banknote & security printing, industrial systems used in the individualisation of security documents and branded products, and book retailing. The book publishing business is the traditional basis for the Zurich-based company – since 1519. Orell Füssli generates sales of some CHF 320 million with about 1 000 employees at locations in 10 countries and is listed on the Swiss Stock Exchange. 

Annual Report
The Annual Report for 2010 (comprising abridged and detailed reports) will be published with today’s date and can be ordered from The Secretary to the Executive Board (phone +41 44 466 7273, investors[at]orellfuessli.com) and accessed on the Internet at www.orellfuessli.com/AR10. 

Agenda
Annual General Meeting of Orell Füssli Holding Ltd
May 10, 2011, 3:30 p.m., Zurich
Press release, half-year results 2011
August, 2011

Contact
Michel Kunz, CEO Orell Füssli
Phone +41 44 466 7273
ceo[at]orellfuessli.com