VIENNA, Austria—The Semperit A.G. group of companies is planning to make about $78 million in capital investments in 2016 as it looks to bolster its operations.
Finding new markets that fit with its industrial sector and expansion of its medical operation are high on the company's agenda, as are expansion and optimization of existing production capacities, according to CEO Thomas Fahnemann.
Its medical operation will profit from the commissioning of new production capacities at the firm's plant in Kamunting, Malaysia, this year and beyond, he said.
Fahnemann said the firm's medical operation will focus on boosting glove production in Malaysia in addition to more production optimizations, efficiency enhancements and marketing activities.
Semperit expects no significant changes in terms of the market conditions it experienced in 2015.
It said the generally low demand for products on the industrial side of its business experienced in 2015 is expected to continue in 2016 due to the poorer economic conditions in some of the regions the operation serves.
The firm cited some locations, particularly Eastern Europe and Russia, where an economic recovery is not expected anytime soon.
Semperit is coming off a relatively strong first quarter in which the Vienna-based business posted a slight increase in sales. Its earnings after taxes, however, decreased compared to those it recorded in the first period of 2015.
Sales rose to $246 million in the quarter from $244 million last year, while the group's EBITDA jumped 22.3 percent to $30 million, and EBIT increased 22.2 percent to $21 million.
Earnings after taxes amounted to $11.3 million in the first quarter, down from $14.1 million in the first period of 2015.
The decline primarily was due to negative foreign currency effects as well as higher interest expenses, the company said.
Despite a declining market, Semperit's industrial operation—made up of its Semperflex, Sempertrans and Semperform businesses—recorded a 6 percent sales increase to $149.7 million, while its EBITDA rose 13.7 percent to $28.1 million.
Looking forward within the segment, Fahnemann said the industrial capital investment cycle shows no signs of an upturn, especially in China.
Semperit's medical operation—the company's large Sempermed business—had sales of about $96.2 million, down 6 percent from the year-earlier quarter, while the operation's EBITDA improved by 27 percent to $6.8 million.
Fahnemann said demand in the medical sector is expected to develop steadily with market growth of 5 percent or 6 percent.
“In the first quarter of 2016, we showed a positive performance contrary to the weak market,” he said. “This was due to a continuing improvement of our global presence as well as the capacity expansion in all segments. Even our additional capacities are well utilized thanks to our focused sales strategy, which had a positive effect on profitability.”
Despite all the negatives, according to Fahnemann, Semperit still expects largely stable development in 2016 compared to 2015. He said in the first few months of the year, the company has seen a continuing good order situation due to the firm's intensive marketing and sales activities in the industrial sector.