Dear shareholders,

In 2018, Cicor continued the rate of growth of the previous year. With CHF 248.1 million, sales increased after an extremely strong second half-year by 14.5 percent compared with the previous year (2017: CHF 216.7 million). The gains in market share achieved in a flagging economic  environment are due to important new projects and customers plus improved delivery capabilities in the second half-year. This was in spite of the factory move in Arad (Romania) and the shortage of certain electrical components. New orders valued at an astonishing CHF 277.8 million (2017:  CHF 235.5 million) reflect both the strength of Cicor and the fact that customers are ordering to meet their needs further into the future. With a book-to-bill ratio (order intake in relation to sales) of 1.12, business is expected to remain good in 2019. Thanks to further increases in employee  productivity, only moderate increases in overheads and better capacity utilization overall, the operating profit at EBIT level has grown by 45.0 percent to CHF 15.2 million (2017: CHF 10.5 million), corresponding to an EBIT margin of 6.1 % (2017: 4.8 %). At a slightly lower level, i.e. by 44.9  percent, net profit has grown to CHF 9.6 million (2017: CHF 6.7 million), which is mainly due to a greater tax burden.


    Cicor, Switzerland’s leading electronics service provider, is focusing on markets with highest technological and quality requirements. Its main markets are industrial, medical, aerospace and defence. Sales achieved in these markets has grown disproportionately by 18.7 %, corresponding to a sales share of 77.0 percent (2017: 74.4 percent). This means that these applications – which represent a major potential differentiation advantage for Cicor – are once again the growth drivers for the Group. As for the other markets, sales grew only slightly by 2.2 %. However, Cicor sees potential in special applications such as motor vehicles, communication devices, high-frequency substrates and assemblies for 5G mobile networks.

    Whereas growth in 2017 was still mainly in America and Asia, in 2018 Cicor grew particularly in Switzerland and Europe. Switzerland, the domestic market, grew disproportionately strongly, with a sales share of 27 percent (2017: 25 percent), like the rest of Europe with a share of 45 percent (2017: 43 percent). Overall, therefore, shipments to Switzerland and the rest of Europe has grown by 22 % compared with the previous year. By way of contrast, the contribution to sales from America and Asia hardly changed at all, which led to a fall in America’s sales share to 8 percent (2017: 9 percent) and Asia’s share to 20 percent (2017: 22 percent).


    While in 2017, the Advanced Microelectronics and Substrates Division (AMS) was still at a turnaround stage. AMS was able to realize its full potential in 2018: technological leadership and professional market development activities have enabled sales growth by 18.9 % to CHF 63.0 million,  further increasing the share of Group sales to 25.4 percent (2017: 24.4 percent). The operating profit at EBIT level has grown by 81.8 % to CHF 7.6 million (2017: CHF 4.2 m), brought about by improvements in production processes and increased factory capacity utilization. The EBIT margin  increased to 12.1 % (2017: 7.9 %) which clearly demonstrates the margin potential of these hi-tech businesses.

    The supply agreement reached in December 2018 for the manufacture of thin-film substrates with a renowned European aerospace company, with a total volume of over CHF 20  million for the 2019 to 2024 period, confirms the top technological position of the AMS Division in the market. Investments in technological development and the production site are to extend the company’s market lead, improve production processes and eliminate capacity bottlenecks. The lack of availability of qualified personnel in all areas has an obstructive effect, which in turn has prevented even greater growth at the four sites in Switzerland and Germany.

    The further strategic development of Cicor in the field of advanced microelectronics and substrates will continue to be very significant in the future, especially since Cicor can make material contributions here to advances in medical, sensor, satellite, and communication technology.


    Implementing major strategic projects whilst at the same time achieving two-figure growth against a background of electronic component shortages had a clear effect on the Electronic Solutions Division. This balancing act between conflicting requirements was very successful, which is  reflected in the positive operating performance: after a significant acceleration in the second half-year, ES increased sales in the reporting year by 13.0 % to CHF 185.2 million (2017: CHF 163.9 million). This was helped by the company’s ability to continue shipments to customers during the  factory move in Arad (Romania) with hardly any changes to delivery volumes and also by the acceleration of business in Asia in the second half-year. As for the operating profit at EBIT level, the decline in the first half-year was more than compensated for. An increase by 10.3 % to CHF 9.9  million was achieved (2017: CHF 9.0 million). The EBIT margin declined because of lower-than-expected project costs for the move to the new building in Arad (Romania), only by 0.1 percentage points to 5.4 % (2017: 5.5 %).

    A highlight for the ES Division in 2018 was the move into the new building in Arad (Romania). This means that significantly increased capacities are now available with ideal processes which, in conjunction with the recently (2016) constructed site in Bronschhofen (Switzerland), represent the most modern electronics contract manufacturing facility in Europe.

    A further step toward a globally best-in-class electronics manufacturing facility is represented by the expansion of the Batam site (Indonesia) to become a competence center for precision plastic injection molding. Merging the plastic injection molding facilities, currently in Singapore and Batam  (Indonesia), to one site in Batam (Indonesia) whilst at the same time investing in increasing precision and component finishing bolsters the position of Cicor as a supplier of electronic and electromechanical assemblies, especially in the field of medical technology. With the launch of SAP at the  Batam site (Indonesia) in the first half of 2019, more than 90 percent of the division’s future sales will be managed via a modern integrated IT platform.

    Thanks to major efforts by the purchasing team, problems caused by the shortage of electronic components were effectively cushioned overall.  roduction stoppages at customers could be avoided – which is always the first priority. To achieve this level of supply reliability, the company decided consciously to accept slightly higher material costs, and especially to build up higher stocks of raw materials. Customer service is top  priority for Cicor and we are convinced that this attitude will pay dividends for the company.


    Customers clearly recognize the progress made by Cicor in recent years. Today, Cicor is being recognized in a dynamic market environment as an agile and customer-orientated supplier of top-level technology and maximum quality. Operating performance was still improved further. Sales per  employee has grown in the reporting year by a further 10 %, which represents a cumulative production progress in the last three years of 35 %.

    Cicor’s status as a leader in technology is being acknowledged for the future as a material differentiating characteristic when compared with the  competition. As DenciTec® is regarded as printed circuit board technology with the smallest possible structural dimensions, Cicor is now pressing ahead into the market for printed electronics. As the first service provider in Europe and one of the first in the world, Cicor in Bronschhofen  (Switzerland) is constructing an application laboratory for aerosol jet printing (AJP), which will be ready for operation in just a few weeks. With AJP, it is possible to print miniaturized structures with a wide variety of metallic, non-metal, and even organic or biocompatible materials on a broad  range of substrate materials. Interest in the market for this new service, which represents an ideal addition to Cicor’s services hitherto, is extremely high and the first series projects are being


    Net working capital (NWC) has grown significantly in 2018 by 19 % to CHF 68.8 million (2017: CHF 57.8 million), which was essentially because of a rise in receivables from customers after the extremely strong final quarter and as a result of higher stock levels to ensure supply capability in a  market affected by component shortages. Because of this, it was not possible to finance the very high new investments of CHF 19.4 million (2017: CHF 8.4 million) for the new building in Arad (Romania) fully from operational cash flow. A negative free cash flow of CHF –6.6 million (2017: CHF +2.7 million) was the result.

    Even so, net debt in relation to the operating profit at EBITDA level was kept to the low figure of 1.1 – practically unchanged from the previous year (2017: 1.0). Cicor Group equity has grown by 9 % to CHF 75.1 million (2017: CHF 68.7 million). The balance sheet total has grown by 15 percent to CHF 194.2 million (2017: CHF 169.0 million). This led to a slight reduction in the equity ratio to 38.7 % (2017: 40.7 %).


    On the basis of the significantly increased results in the 2018 business year, the healthy balance sheet profile and the positive future business prospects, the profit distribution is to be considerably increased compared to the previous year in order to allow Cicor shareholders to share in the profit through tax-exempt distributions from reserves of capital contributions. For this reason, the Board of Directors will propose to the General Meeting scheduled for 16 April, 2019 that a distribution be made from the reserves of capital contributions amounting to CHF 1.00 per share (2017:  CHF 0.70 per share). This represents 30 percent of the Group’s net profit.


    Cicor made a good start in the new business year. Because of the high level of orders at the beginning of the year, the Group expects sales to grow slightly in 2019, even though the global economy is slowing significantly.

    In the medium term, Cicor aims to achieve annual sales growth in excess of the growth in global electronics production. This growth is to be achieved predominantly in the target markets of industrial, medical, aerospace and defence, even if additional input from communications technology, with the launch of 5G mobile networks, and from automotive  technology, with the increased use of complex sensory technology, is anticipated.

    The long-term EBIT margin target of Cicor Group lies in the 6–8 % bandwidth, as already stated. In 2019, growth beyond the EBIT margin achieved in the 2018 reporting year is expected. This is also due to the  elimination of the one-off expenses from the site relocation in Arad (Romania) and also due to the anticipated operating progress to be made by Cicor Asia.

    On behalf of the Cicor Board of Directors and Group Management, we thank everyone for their valuable contributions to the successes in  the 2018 business year and we thank our employees for their major commitment, our customers for their loyalty, and our shareholders and business partners for their trust.