Pandemic and exceptional expenses weigh heavily on results of RUAG International

Overall, the Group generated net sales of CHF 1,181 million, a decrease of 14.9% compared to the previous year. Adjusted for exchange rate effects, the decline amounts to 12.4%. Order intake decreased by 5.2% to CHF 1,214 million and the volume of orders declined by 4.9% to CHF 1,169 million. The operating result (EBIT) amounted to CHF -224 million and the net loss to CHF -219 million, while cash flow from operating activities was still slightly positive at CHF 19 million. The negative change is mainly due to a decline in sales of around 30% in the aviation businesses RUAG Aerostructures and RUAG MRO International, which were severely impacted by the pandemic, and a subdued market outlook in the aviation sector for the coming years. The pandemic also had a negative impact on business in all other segments through travel restrictions, lockdowns and project postponements. The company has responded to the challenges with comprehensive cost-cutting programmes, short-time working hours and early restructuring initiatives.

Special write-downs and provisions
In 2020, the operating business developed differently in the divisions - although the effects of the pandemic could be felt in all business segments. Special write-offs and provisions amounting to around CHF 160 million were the consequence and these weighed heavily on the company's results. Due to the completely changed market situation and because it must be assumed that it will take years for air traffic to return to pre-pandemic levels, RUAG Aerostructures had to make extraordinary value adjustments and provisions amounting to CHF 84 million. Added to these was a book loss of CHF 50 million in connection with the sale of the aviation activities in the RUAG MRO International business unit at the Oberpfaffenhofen site. General Atomics Europe GmbH, a strategic investor, has taken over by end of February 2021 the maintenance, repair and operations activities for business aircraft and military helicopters as well as the production of the Dornier 228 at the Oberpfaffenhofen site and all 420 employees.

The corporate result was further impacted by the recognition of restructuring provisions in the amount of CHF 20 million for organisational measures initiated at RUAG Space and the global support functions. RUAG International had to set aside a further CHF 7 million for the usual revaluation of pension fund provisions due to lower interest rates in Germany and Sweden.

RUAG Space, RUAG Aerostructures and RUAG MRO International posted negative EBIT as a result, with net sales declining. Encouragingly, RUAG Ammotec again succeeded in increasing both sales and EBIT in 2020 and proved extremely robust even in the COVID-19 crisis.

RUAG International generated 81% of all sales outside Switzerland

As at the end of December 2020, the company employed 6,299 people at 50 sites worldwide (previous year: 6,492). RUAG International's share of sales to the DDPS (Swiss Federal Department of Defence, Civil Protection and Sport) remained at 13% and includes in particular services from the RUAG Ammotec and RUAG MRO International business segments. RUAG International generated 81% of all net sales outside Switzerland in the first half of the year. 

The Board of Directors proposes that the dividend payment be waived due to the negative corporate result.

Outlook

RUAG International has decided to adjust its strategy due to the longer-term effects of the COVID-19 pandemic and will no longer focus on forming an Aerospace Group. Instead, the individual business segments will be developed individually and subsequently privatised. According to André Wall, CEO of RUAG International: "The pandemic has fundamentally changed the international economic environment and led to our decision to stop building an aerospace group. Instead, in consultation with the owner, we have decided to develop the business segment individually to their best advantage. The economic starting position remains extremely challenging."

For RUAG Space, the aim is to successfully seize the market opportunities offered by major space programmes worldwide in the coming months and years. RUAG Aerostructures must align itself to a completely changed market situation together with its customers. MRO International continues to focus on the step-by-step divestment of the remaining business segments. RUAG Ammotec will continue to press ahead with the divestment plans approved by the Swiss Federal Council and is aiming for a sale by the end of 2021.

Based on a solid order intake in 2020, only 5% below prior year, the company expects comparable net sales for the coming year and a negative corporate result in the low double-digit million range, with an improved COVID situation in the second half of the year.site an