Datwyler signals seals-plant relocation amid first-half gains

ERJ staff report (PR)

Altdorf, Switzerland – Datwyler Group has reported a “stable” first-half performance for its sealing solutions division, and signalled plans to relocate one of the unit's manufacturing lines to India.

In a first-half results statement, Datwyler said it is now considering plant relocations to better align its production sites to customer needs. This includes earmarking a one-off restructuring charge of CHF15-20 million to outsource a “fast-growing product line” from a US plant to India. 

"The relocation concerns the sealing solutions division and involves [production] for the generics market," a Datwyler spokesman said in a written reply to ERJ's enquiry about this project.

The statement did not specify any location, though the group's main US plant is based in Pennsauken, New Jersey and manufactures pharmaceutical rubber closures and aluminum seals.

The news accompanied first-half results showing sales of CHF346.6 million (€285.9m) at the sealing unit - about level with the prior-year period - and operating earnings (EBIT) up 14.3 percent to CHF57.7 million. Margins, so, increased to 16.6 percent from the prior-year 14.5 percent.

The performance contrasted with that of the Swiss group’s technical components division, which reported difficult trading conditions in its electronic equipment and systems markets.

Profitability in the sealing solutions unit was helped by lower raw material prices and the merger of former sub-divisions, said the group's 14 Aug results announcement.

In the automotive market, the Altdorf-based seals supplier reported “dynamic growth” in emerging Asian economies and strong growth in North America.

In the civil engineering sector, a restructuring of the Swiss group’s product portfolio caused a sharp decline in sales, but improved margin and profitability.

The healthcare market saw moderate demand, though a withdrawal of FDA certification forced several customers to stop production in India.

Elsewhere, Datwyler highlighted important new projects in the consumer goods segment, while a Nespresso sealings order “continued to progress well.”

For the group as a whole, Datwyler’s net sales fell 2.3 percent to CHF654.4 million in the first six months of 2014, about the level with the prior-year period. The fall, though was primarily due to negative currency effects.

Net earnings of CHF48.3 million left the adjusted earnings (EBIT) margin down just slightly at 11.3 percent - despite difficult conditions in the group's distribution business.

And, despite the moderate start, Datwyler expects to achieve its EBIT target range of 10-13% before one-off items for the year as a whole.

For the automotive and consumer goods markets, Datwyler said it was confident about the second half of the year but uncertain with regard to demand in the healthcare sector.