BERN --- At its meeting of May 27, 2020, the Federal Council took note of the annual report drawn up by the board of directors of RUAG Holding AG. In the 2019 financial year, the group achieved the majority of the strategic objectives set by the Federal Council. Important financial goals such as profitability and the amount allocated to the payment of dividends, however, have not been achieved.
The Federal Council sets four-year strategic objectives for companies linked to the Confederation. Based on a report from the board of directors, it examines, once a year, whether these objectives have been achieved.
In 2019, the RUAG group achieved most of its strategic objectives. However, it did not reach essential financial goals such as profitability and the amount allocated to the payment of dividends. Net sales certainly increased in 2019 to reach 2003 million francs compared to 1998 million in 2018; however, a net loss of 25 million was recorded.
With a negative operating margin (-0.3%), the profitability of the company is well below the range of 6 to 8 percent defined by the Federal Council. This poor result was the result of specific measures, including corrections to the production costs of the Dornier 228 aircraft and a reassessment of provisions for the pension fund, as well as the unbundling of the group, which resulted in costs.
Given the poor accounting results and the potentially devastating consequences of the coronavirus pandemic, the Federal Council accepted the proposal to waive the payment of dividends.
The RUAG group has achieved its other objectives; in particular, it was able to provide all the maintenance services agreed for the benefit of the Swiss Army.
Dissociation and creation of two independent companies
In 2019, the highest priority was given to the separation and development of the RUAG group. The Federal Council has decided that the financial holding company BGRB Holding SA will constitute two independent companies. RUAG International is to become an aerospace group and will be privatized in the medium term. As for the areas providing maintenance for the Swiss Army, they have been grouped within the company RUAG MRO Switzerland (MRO meaning maintenance, repair and overhaul).
The Federal Council welcomes the efforts made by the board of directors of RUAG Holding SA; they enabled the dissociation in 2019 so that the organizational split into two subgroups could take effect on January 1, 2020.