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Cicor Group (SIX Swiss Exchange: CICN) has continued to grow significantly in the first half of 2024, advancing into the top tier of European electronics manufacturers. Net sales reached CHF 231.3 million, an increase of 16.1% compared to CHF 199.2 million for the first half of 2023. Despite negative one-off effects from acquisitions, the operating margin remained constant at 10.7%, while EBITDA rose by 15.9% to CHF 24.7 million (first half of 2023: CHF 21.3 million). Net profit grew disproportionately, resulting in earnings per share of CHF 2.69 (first half of 2023: CHF 1.74). The outlook for the second half of the year remains positive despite the challenging environment.

In the first half of the year, newly acquired companies contributed 22.1% to sales growth, while currency effects had a -1.5% impact, and organic sales decreased by -4.4%. This decline was due to weak demand in the industrial electronics market and delays in a major aerospace and defence project, partly offset by growth in medical technology and transport segments.

Cicor Group's order backlog remains at around one year's worth of sales, influenced by large, acyclic orders in aerospace and defence and normalization of order horizons in Germany post-material shortages. New orders totaled CHF 201.1 million, down from CHF 221.4 million in the first half of 2023, with a book-to-bill ratio of 0.87 compared to 1.11 last year.

Following Swiss GAAP FER, Cicor offsets goodwill from acquisitions against equity. Intangible assets from acquisitions are capitalized and amortized over their useful lives. This accounting change is applied from 1 January 2024, with prior periods adjusted accordingly.

Operational excellence improved, boosting EBITDA and EBIT margins before acquisitions despite lower organic revenue. Acquisitions diluted overall margins due to lower margins of acquired companies and had a one-time negative impact of CHF 1.7 million on EBITDA and EBIT. Nonetheless, the EBITDA margin remained at 10.7%, and the EBIT margin slightly declined to 6.5% from 6.7%.

The depreciation of the Swiss franc since 31 December 2023 positively impacted the financial result. A lower tax rate of 23% (down from 28.3%) contributed to a net profit increase of 53.9% to CHF 11.9 million, with earnings per share rising by CHF 0.95 to CHF 2.69.

Net working capital improvements, especially reduced inventory levels, led to a free cash flow before acquisitions of CHF 21.1 million, up from CHF 5.2 million. Investments of CHF 51.0 million in three acquisitions resulted in a negative free cash flow after acquisitions of CHF -30.0 million.

As of 30 June 2024, Cicor's balance sheet remains solid. Despite high net results and increased free cash flow before acquisitions, equity slightly decreased to CHF 131.1 million due to goodwill offset. The equity ratio fell to 31.4% from 38.2%, and leverage increased to 1.50 from 0.96 due to recent transactions.

Progress in Strategy Implementation

Cicor's focus on strategic customer relationships in high-entry-barrier markets has paid off, enabling organic market share gains in a contracting market. Recent acquisitions have elevated Cicor into the top tier of European electronics manufacturers, significantly strengthening its strategic position. The acquisition of STS Defence Ltd in January 2024 enhanced Cicor's market share and development expertise in the UK aerospace and defence (A&D) sector. The acquisition of TT Electronics IoT Solutions Ltd. in March 2024, with locations in the UK and China, made Cicor the leading electronics manufacturer in the UK and the top A&D provider among European EMS companies. This acquisition also expanded Cicor’s geographic footprint with a facility in China, enabling local customer support. The integration of Evolution Medtec Srl in Bucharest doubled Cicor's development resources in the medical technology sector, reinforcing its position as a leading development partner.

EMS Division – Growth Driver with Leading Profitability.

Cicor's EMS Division is a key growth driver, with sales up 16.5% to CHF 208.5 million in H1 2024. Acquisitions contributed significantly, while organic revenue declined slightly. The EBITDA margin improved to 11.6%, driven by operational excellence and the positive impact of STS Defence. Management is focused on integrating acquired companies and aligning TT Electronics IoT's margin with Cicor's target.

AS Division – Technology Leader with Regained Strength

The Advanced Substrates Division had a strong performance in the first half of 2024, with organic sales growth of 14.3% and a 15.7% increase in overall sales to CHF 23.9 million. A multi-year excellence programme in printed circuit board manufacturing significantly strengthened the Boudry, Switzerland site (Cicorel SA), increasing the EBITDA margin to 14.4% (first half of 2023: 11.8%). Cicor's management is committed to leveraging growth opportunities and improving profitability in the AS Division.

Outlook for the Second Half and Full Year 2024

Cicor expects higher sales and profits in 2024, raising its guidance to CHF 470-510 million in revenue and CHF 50-60 million in EBITDA. This is due to increased order intake, sales growth in existing businesses, and the successful integration of newly acquired companies. They aim to become a leading European provider of high-end electronics development and manufacturing services, focusing on the medical technology, industrial electronics, and aerospace & defence sectors.

Editor：Lulu

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