New classing business in additional cotton growing regions, Uster

21 Jul '10

5 min read

Uster Technologies Ltd, the leading high technology instrument manufacturer of products for quality measurement and certification for the textile industry, received many positive signs from the markets reflecting a change in mood and a general improvement in overall economic conditions in the first half of the 2010 financial year.

The Group delivered a strong top- and bottom-line performance as the market steadily recovered. Gross sales grew to CHF 62.4 million, an increase of 24.5% compared to the previous year (H1 2009: CHF 50.1 million). EBITA reached CHF 15.9 million (H1 2009: CHF 13.2 million), keeping the margin at the high level of 25.5% (H1 2009: 26.3%). The net result amounted to CHF 4.0 million (H1 2009: CHF 0.8 million) whilst net debt was further reduced to CHF 98.2 million demonstrating the Group's strong cash generation ability.

After a challenging 2009, the textile industry currently finds itself switching over to a growth track again. The major growth driver was the renewed investment appetite of textile producers who began to buy new equipment aiming to enhance efficiency and profitability. This positive development was in response to increased demand for new yarn production as producers had worked off their excess stocks in the previous year. A third important factor was the improvement in credit and trade financing for the Group's customers in all major markets.

Geographically the center of the textile market is in Asia with a strong focus on China. In particular, the Chinese local textile market is growing fast. It is currently switching from labor-intensive manual production to automated production technology, thereby powering the business of foreign producers that are well positioned in this important growth market.

At the same time, the mid-Asian markets including India, Turkey, Bangladesh and Pakistan recovered from the economic instability of previous years, which led to an improved investment climate. Whilst the Indian market is growing again, albeit not as fast as the dynamic Chinese market, order levels in Turkey, Bangladesh and Pakistan have stabilized and are expected to increase towards the end of the year or, at the latest, at the beginning of 2011.

Overall, sales in the Asian markets contributed 66.2% of total gross sales (H1 2009: 69.0%, H2 2009: 73.3%), Europe and Americas generated 22.2% and 11.6% respectively (H1 2009: 14.7% and 16.8% respectively, H2 2009: 16.3% and 9.9%).

In the cotton classing business Uster Technologies Ltd deepened its strong relationship with the China Fiber Inspection Bureau (CFIB) and United States Department of Agriculture (USDA) and continued to support their ongoing expansion and replacement plans. Additional business for the HVI cotton classing systems was secured in other cotton growing regions, including India, Africa and Central Asia and further diversified the customer base in the classing business.

In the laboratory yarn and fiber testing business, greater interest from manufacturers in efficiency improvements and cost reductions resulted in new demand for USTER products. In addition, the Group profited from stabilized market conditions in the mid-Asian markets as well as from the strong local business in China.

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