RUAG: A Satisfactory Financial Year in 2008, Strategic Investments Made
06 May 2009
The RUAG technology group posted a satisfactory business result for 2008. Net sales grew by 9% to CHF 1.5 billion, while EBIT stood at CHF 57 million. Startup costs for future projects and structural changes led to a 25% decline.
The acquisition of Saab Space and Austrian Aerospace was a milestone in RUAG's history. RUAG is now a major supplier of products for the European space industry, with sites in Switzerland, Sweden and Austria. In projects such as Galileo, RUAG can now offer customers more services from a single source, thus considerably reinforcing its competitive position. However, the acquisition had only a partial effect on the 2008 business result.
In 2008 RUAG's sales in aerospace and technology and in defence and security rose by 9% to CHF 1.537 billion (in 2007 it was CHF 1.409 billion). The business areas of space, land systems and small-calibre ammunition all contributed to the sales increase.
Earnings before interest and taxes (EBIT) amounted to CHF 57 million (from CHF 76 million). The 25% decline compared with the previous year can be attributed to startup costs for future projects, the currency situation with the US dollar, increased raw material and energy prices, the downturn in the automotive and semiconductor industries and, in particular, structural changes in the simulation business.
Accounting for 36% of total sales (the previous year it was 34%), the DDPS and thus the Swiss armed forces remained RUAG's largest single customer. Almost 90% of RUAG's turnover was generated in Switzerland and Europe.
At 54% (from 49%) and 46% (from 51%) respectively, the defence and civilian businesses remained roughly equal in their share of total sales.
Research and development expenditure has risen continuously over the past few years, amounting to CHF 123 million last year, an increase of 46% over 2007 (CHF 85 million).
In 2008, RUAG employed an average of 6,310 staff, 4% more than in the previous year. Trainees accounted for almost 10% of RUAG's workforce in Switzerland.
Despite unfavourable currency effects on the balance sheet date, the technology group's balance sheet remained healthy, with a solid equity ratio of 48% (from 56%) and a return on equity of 7% (from 10%).
RUAG: Outlook for 2009
On the whole, RUAG has a good starting foundation for 2009 thanks to a strong order book and its broad base in various markets with differing cycles. The economic slowdown is having isolated effects on RUAG's civilian business, namely aero engine structure manufacturing, civil aircraft maintenance and components for the automotive and semiconductor industries. The military and government agencies market and the space market appear largely stable.
