Review of 2020

Review of 2020

Comet results exceed expectations.

In the year of the Covid-19 pandemic, the Comet Group proved robust and flexible. By rapidly deploying pre-emptive measures, we protected the health of our employees. We maintained the undiminished ability to serve our customers on time. The Group grew sales and significantly improved its operating income. We also made good headway in the implementation of our strategic initiatives.

2020 financials in 90 seconds.

Accelerated digitalization reflected in sales growth – Plasma Control business more than makes up for headwind faced in other markets

In 2020, the Group benefited from the vibrant strength of the semiconductor and electronics market. The pandemic accelerated an already robust demand for cloud services, video conferencing, gaming, 5G, and other tech solutions. This boosted demand for semiconductor chips and helped to offset the structural and pandemic-related slump in the automotive, aerospace and security sectors.

Reflecting these industry trends, the Plasma Control Technologies division contributed the largest share of the Group’s sales of CHF 395.8 million. By realizing its opportunities in the semiconductor market, the division generated sales growth of 48.1% to CHF 224.7 million. The x-ray businesses, meanwhile, experienced clear adverse impacts of the pandemic. On the plus side, demand for non-destructive inspection solutions in the automotive, aerospace and security markets stabilized toward the end of 2020, and Comet also saw early commercial success with its new products launched in both the X-Ray Systems and X-Ray Modules business lines. Even with that stabilization, the market slump in the aerospace, automotive and security sectors hurt the performance of the two x-ray divisions. X-Ray Systems recorded a 23.5% decline in sales to CHF 106.4 million and X-Ray Modules’ sales fell by 21.4% to CHF 61.4 million. In the ebeam business, the focus in 2020 was on its divestiture to Tetra Pak; sales were CHF 14.6 million.

Net sales in CHF million

EBITDA in CHF million

Profitability strengthened, net income doubled, positive economic profit

Management’s consistent focus on cost control and efficiency gains has yielded results. Comet increased its EBITDA by 46.5% from CHF 40.0 million to CHF 58.6 million, an impressive performance in view of the difficult environment. The lion’s share of the EBITDA gains came from Plasma Control Technologies (PCT). In line with the Boost initiatives, processes were streamlined, automated and made more efficient. With double-digit sales growth, the PCT division’s operating earnings at EBITDA level more than tripled from CHF 15.4 million to CHF 49.3 million. As mentioned, the x-ray businesses had a more difficult year due to market conditions. Thanks to proactive cost-cutting measures, X-Ray Modules still achieved EBITDA of CHF 9.0 million, compared with CHF 21.7 million in the prior year. X-Ray Systems was harder hit by the effects of the pandemic. In response to the adverse market environment the X-Ray Systems business implemented prompt countermeasures. The division limited the EBITDA loss to CHF 1.0 million, following a profit of CHF 12.0 million in 2019. In order to improve profitability the division redirected its focus on most of its R&D efforts to accelerate its position in the semiconductor and electronics sector. The ebeam business closed with an EBITDA profit of CHF 3.3 million due to its sale, after a loss of CHF 6.2 million in the previous year.

The Comet Group’s net income grew strongly from CHF 12.0 million to CHF 27.7 million, to which the sale of the ebeam business to Tetra Pak contributed CHF 3.5 million. Free cash flow also rose significantly, primarily due to effective accounts receivable management and higher prepayments from customers in the systems business; FCF increased from CHF 30.1 million to CHF 41.6 million. The cash flow from the sale of the ebeam business, which brought in CHF 7.5 million, was offset primarily by the cash outflow of CHF 8.4 million for the acquisition of the Canadian software developer ORS. Economic profit – the profit in excess of the 9% cost of capital – improved from the prior year’s deficit of CHF 6.3 million to a positive CHF 11.3 million. ROCE rose to 13.6%.

Comet Group key consolidated financial results

Strategy execution on track – Efficiency and growth initiatives under Boost program put into action

In 2020, Comet implemented its strategy to focus on its core markets (primarily semiconductor, automotive, aerospace and security), and core technologies (plasma control and x-ray). Thus, in November, it completed the sale of the ebeam business to Tetra Pak. In addition, Comet clearly repositioned the X-Ray Systems business in alignment with the prevailing market conditions in the automotive and aerospace sector, and streamlined the divisional cost structure. With the acquisition of Canadian software developer ORS, a leading provider of solutions for data analysis, artificial intelligence and machine learning, the Group expanded its competencies as an important prerequisite for a future digital service offering. Comet made progress on all three fronts of its Boost improvement program: Growth, Efficiency and Culture.

Successful product launches as drivers of future growth: Comet launched three new products in the x-ray business, which open up an additional served available market of CHF 120 million by 2025. These new products have already achieved rapid market adoption, and even repeat orders. In addition, successful field testing of the new radio frequency (RF) generator at customer sites is bringing initial sales in the USD 650 million generator market within reach for 2021.

Ready to go thanks to expanded production capacity and more flexible structures: Comet’s PCT division rapidly ramped up production capacity to be able to meet the rising RF power product demand regardless of geopolitical shifts and market volatility. The new site in Malaysia was commissioned and certified within a year. In Aachen, Germany, Comet moved into a larger, state-of-the-art facility for the manufacturing of the new RF generator product line. In Flamatt, Switzerland, the company significantly increased productivity through lean measures in the IXM and PCT division. As a result, production capacity has increased by nearly 50%.

Expanded presence in Asia: With the opening of the new facility in Taiwan (in addition to the centers in the USA, Korea, Japan, China and Malaysia), Comet is now strategically located in all of the major global hotspots of the semiconductor and electronics industry. In addition, the demonstration center in Korea was expanded and provides advanced development services directly for customers throughout Asia, including China.

Comet expanded its global footprint and capacity

Strengthened culture and organization: Comet is on a journey of creating a high-performing company. Our long-term vision is to refine the framework of roles and responsibilities across businesses, functions and regions. In addition, in 2020, seventy promising talents throughout all levels of the organization were exposed to, and trained in the implementation of, the changes required by the Boost initiatives, as part of a joint program with IMD Lausanne – a journey that will continue in 2021.

Management team reinforced

Comet’s realignment was initiated by Heinz Kundert as Chairman of the Board and interim Chief Executive Officer. In September 2020, he passed the CEO baton to Kevin Crofton, who has more than 30 years of leadership experience in the semiconductor industry. The management team was completed with the addition of Lisa Pataki as Chief Financial Officer in October and Keighley Peters as Chief Information Officer at the end of December. The succession process for the President of X-Ray Systems, Thomas Wenzel, who has decided to leave the company for personal reasons effective the end of April 2021, is well underway.

Dividend

At the Annual Shareholder Meeting on April 22, 2021, the Board of Directors will propose a dividend of CHF 1.30 per share (prior year: CHF 1.00). This represents a distribution of 37% of the Group’s net income (prior year: 65%).