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Economic downturn affects EMS business

Oct '19
Centre console handle with ambient lighting for the Mercedes GLE. Pic: EMS Group
Centre console handle with ambient lighting for the Mercedes GLE. Pic: EMS Group
The EMS Group, with its companies combined in the EMS-Chemie Holding AG and globally active in the business areas high performance polymers and specialty chemicals, achieved net sales of CHF 1,674 million (1,770) in the first nine months of 2019. The third quarter of 2019 saw further weakening post progressive slowing during the first half of the year.

"Unresolved and repeated trade conflicts between major powers lowered consumers' and companies' confidence and global supply chains were unsettled. Subsequently, a significant worsening of the consumer and investment mood became apparent especially in China and Europe, while first signs of uncertainty in the US could also be noticed. Particularly during the summer months, companies along the whole supply chain reduced production and inventory stocks. The automotive industry in China continued to show a substantial decline. As a result of this uncertainty, the Swiss Franc, as "Safe Haven", became stronger, in particular compared to the euro," EMS said in its third quarter analysis.

However, EMS prepared particularly early and consistently for a slowing of the economy. Already at the beginning of 2018, comprehensive efficiency programmes were drawn up and fully implemented. Along with on-going development projects, EMS also launched a fast-track programme for additional new business. Employees in research, development and sales voluntarily increased their working hours. Thus, due to innovative new business with its strong speciality products and its early and decisive actions, EMS was able to secure net operating income.

In the main business area of high performance polymers, EMS continued to achieve growth with specialty products. New products were launched successfully onto global markets and innovative applications were realised, providing customers with cost and weight savings as well as lower CO2 emissions. "With the implemented acceleration programme in research, development and sales, EMS is now taking customer requirements for rapid and cost-efficient solutions even more consistently into account," the company said.

In terms of future outlook, EMS continues to expect a further restrained economic development. However, thanks to business with innovative, high-margin specialty business, continual expansion of global market positions, high liquidity and a strong equity ratio, EMS sees itself in good shape to realise opportunities independently, quickly and flexibly. Overall for 2019, EMS continues to expect net operating income (EBIT) at the same level as previous year.

Fibre2Fashion News Desk (RKS)

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November 2019

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