ISRA Vision releases half-year financial results

JUNE 2, 2009--The company shows a moderate decline in revenues in the first half-year but a recent increase in order bookings.

Jun 2nd, 2009

JUNE 2, 2009--ISRA Vision (Darmstadt, Germany; www.isravision.com, a supplier of industrial image-processing (machine vision) and surface inspection systems, says with its half-year outlook that it "was able to noticeabl[y] outperform the industry as a whole."

While revenues declined precipitously in many sectors of the German plant construction, mechanical engineering, and software industries during the first half of 2009, ISRA?s revenues dropped off only slightly in the first six months of fiscal year 2008/2009 (Oct. 1, 2008 to Sept. 30, 2009). Specifically, the ISRA Group's net sales amounted to EUR 28.4 million, a decline of only 5%. Despite significant economic drag factors, the gross margin (total output minus production costs) remained stable.

The company reports that it took a number of measures to keep costs down, such as capacity adjustments, personnel costs, and production optimizations. These resulted in charges in the first half of the year. EBT amounted to EUR 4.2 million (PY: EUR 5.3 million). The EBT margin temporarily narrowed to 13%. This is still within the expected profitability range, however, since the company's management expects profits to improve again in the second half of the year thanks to lower interest expense and efficiency enhancements already made. ISRA's per-share result for the first six months amounted to EUR 0.67/share (PY: EUR 0.83/share). During the same period, cash flow from operating activities rose by EUR 6.6 million to EUR 7.5 million. The equity capital ratio also improved, from 51% at the end of the prior financial year to 56%. Given its current cash assets and available lines of credit adding up to double-digit millions of euros, ISRA says it is solidly financed.

Looking toward the future, the strongest growth for this business unit is expected to come from Asia and South America. In addition, ISRA plans to secure new local markets, mainly in Asia and Eastern Europe. A new branch operation has already been established in India. The Glass Business Unit's order backlog suggests that its business continues to improve. Management also expects a sustained growth impetus from the solar industry. A recently concluded frame agreement with a leading manufacturer in photovoltaic production lines is an anticipated source of growth.

The volume of orders received showed signs of renewed vigor in May 2009, with a value totaling in the high single-digit millions of euros. This is expected to show up in the third quarter of the current fiscal year. Recent trade fairs in Asia tend to confirm this trend, says the company. ISRA is presently tendering bids worth several hundred millions of euros. Given an order backlog of more than EUR 31 million (PY: EUR 35 million) and assuming the uptrend proves sustainable, corporate management expects revenues of roughly EUR 60 million for FY 2008/2009 as a whole. In the process, external expansion will remain a key component of the overall growth strategy. A number of relevant projects are currently in development.

Following the successful integration of the group's various acquisitions in recent years, efforts to improve profitability are now focused on the optimization of production. In this context, ISRA's personnel adjustments and location optimizations resulted in "extraordinary charges" during the first half of the year; however, these measures are expected to have a favorable impact on future profitability. Decreased interest expense will also help improve the current financial result over the previous year. The company intends to stick to its original profitability target for the ISRA Group: an EBT margin stabilized at or close to 15% (PY: 15%) over the short term and increasing from there over the medium term.


-- Posted by Carrie Meadows, Vision Systems Design, www.vision-systems.com

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