Letter to the Shareholder

Dear Shareholder,
Dear Customers,
Dear Readers,

The year 2024 was a turning point for RUAG International, full of challenges and promising developments. With the sale of our Lithography division to ZEISS SMT and the remaining RUAG Aerostructures site in Emmen to Pilatus Flugzeugwerke AG, we have taken important steps in the reporting year in line with the strategy of our owner, the Swiss Confederation. The successful divestments allow us to focus entirely on our core competence as an innovative supplier to the global space industry. 

The space market has been undergoing an unprecedented transformation for several years. What was once the exclusive domain of government organizations is rapidly developing into a dynamic ecosystem of commercial players who have initiated a new era of space exploration and utilization. The market is developing at an above-average rate compared to other industries, with growth rates between 15 and 20 percent.

The space segment of RUAG International with its Beyond Gravity brand has positioned itself optimally as an agile and innovative partner. We are concentrating on strategic customer partnerships, profitable projects and future-oriented business areas, particularly in the New Space sector. We place particular emphasis on quality, adherence to delivery dates, and the intelligent use of resources in an increasingly competitive environment. In concrete terms, this means consistently continuing the transformation of our business processes and digital infrastructure, optimizing and expanding our global production capacities and developing technological innovations that enable the next steps in space travel.

In addition, Beyond Gravity operates in an environment where technological challenges and the high complexity of large space missions always carry risks. Ensuring robust processes, the highest quality standards and continuous innovation is critical to proactively managing these risks and ensuring the success of our missions.

In the face of inflation and geopolitical tensions, the space industry has demonstrated resilience and dynamism in the reporting year. Our teams delivered outstanding achievements in 2024, with significant contributions to major space missions that highlight our technological expertise.

The sales of business units in 2024 and 2023 limit the comparability of the key figures in this annual report with the previous year. As a result of the divestments, the number of employees at RUAG International fell from 1,989 to 1,813 as of the end of 2024 compared to the previous year.

Net sales, 88% of which came from civil activities, amounted to CHF 494.9 million (previous year CHF 620 million). EBIT amounted to CHF 19.9 million (previous year CHF 28.1 million). However, this result includes portfolio effects of CHF 102.2 million from the sale of business units.

The operating result was impacted in particular by the ramp-up of the new production facilities and necessary product improvements based on new findings from ongoing missions in the Launchers division. The transformation of Beyond Gravity's business processes and digital infrastructure also incurred additional costs.

Free cash flow amounted to CHF 114.3 million (previous year: CHF 88.5 million). This includes cash inflows from divestments of CHF 130.7 million. Excluding the proceeds from divestments, operating free cash flow amounted to CHF -16.4 million (previous year CHF -79.9 million). This was mainly due to the high level of investment required for the expansion of the space business. The order backlog amounted to CHF 860 million as of 31 December 2024 and highlights the company's strong market position.

At the end of 2023, Mubea successfully completed the acquisition of the aerostructures division of RUAG International in Germany and Hungary. At the beginning of 2024, we were also able to find a new owner for the last remaining business unit of RUAG Aerostructures at the Emmen site. Pilatus Flugzeugwerke AG – a longstanding partner and customer – will gradually take on all of the approximately 230 employees and all the machinery of RUAG Aerostructures Switzerland Ltd by the end of 2025. We have thus succeeded in finding attractive follow-up solutions for all Aerostructures divisions. These are in line with the strategic objectives of our owner, offer employees promising prospects for the future and ensure continuity for our customers.

Two legal proceedings are currently underway regarding the aerostructures business: General Atomics is suing RUAG Deutschland GmbH in connection with the acquisition of RUAG Aerospace Services GmbH, while RUAG Aerostructures Switzerland Ltd is involved in arbitration proceedings. RUAG International looks forward to the further course of the two proceedings with confidence.

With the sale of the Lithography division to Carl ZEISS Semiconductor Manufacturing Technology (SMT) announced in September 2024, Beyond Gravity has taken a significant strategic step. After a smooth transition phase, the change of ownership was successfully completed at the beginning of December 2024. Until the very end, the employees showed a high level of commitment to achieving the annual targets.

ZEISS SMT, with around 7,500 employees and seven sites worldwide, is continuing the business at the sites in Zurich (Switzerland) and Coswig (Germany). For the more than 200 employees, this means stability and new development opportunities with a leading provider of production technologies for the semiconductor industry.

In the reporting year, the division once again demonstrated its strong market position and further filled its order book. One example of this is the major order won by the Satellites division in September 2024 from the Canadian satellite manufacturer MDA Space for the delivery of on-board computers with integrated navigation receivers. The order is the result of cross-site collaboration between three teams and positions us well for follow-up orders. It combines high-performance components with high reliability, short delivery times and an attractive price. MDA is planning to use our computers in various satellite constellations, including the 198 satellites in the Lightspeed constellation of Telesat.

In the Launchers division, we reached important milestones for various rocket programs in 2024. The two new launch vehicles Vulcan Centaur (USA) and Ariane 6 (Europe) had their successful maiden flights in the reporting year. By providing key products, Beyond Gravity plays a significant role in both launch technologies. These projects will ensure a significant order volume for the coming years and underpin our position as a leading global supplier to the space industry. The same applies to the satellite dispenser systems that we are developing and manufacturing for Amazon's Kuiper constellation. When complete, the constellation will comprise 3,236 satellites and help provide affordable Internet access in under-served regions worldwide.

In order to provide the production capacities needed for the orders for the Kuiper constellation, we opened two new production plants in the reporting year. After several years of planning and construction, the facilities in Decatur (USA) and Linköping (Sweden) were successfully opened in the summer and fall, respectively. They are equipped with the latest technology for manufacturing payload fairings and satellite dispenser systems in a partially automated series production process. The facilities are currently in the start-up phase. The goal is to reach full production output in the first half of 2025. This will enable us to create the infrastructure we need to meet the growing global demand for space technologies, particularly in the commercial sector.

Alongside the expansion of our production capacities, we are also pressing ahead with the transformation of our business processes and our digital infrastructure with the ‘EZYone’ project. What sounds like a technical merger is actually a leap in efficiency: we are creating a common digital core for Beyond Gravity that intelligently connects our global locations and enables leaner, faster production processes and more efficient resource allocation. After the launch in Lisbon in December 2024, our corporate services in Switzerland and the two sites in Sweden follow in the first quarter of 2025.

The Beyond Gravity Innovation & Digital Hub in Portugal opened in 2023. In October 2024, our colleagues moved into the new, permanent offices in the Entrecampos district of Lisbon. The hub brings together key functions including engineering, IT, finance and supply chain. With more than 100 employees by the end of 2024 and a planned expansion to up to 200 employees by the end of 2025, Beyond Gravity is establishing itself as the largest space company based in Portugal.

With the opening of the new production facilities and the site in Portugal, we significantly strengthened our staff in the reporting year. We also invested in further improvements of the work environment at all of our 13 sites. With the new employer brand rolled out in May, based on the motto ‘Challenge the Impossible’, we have created the basis for continuing to attract and retain the right talent for Beyond Gravity in the future. In addition, we have further developed our performance management and introduced a new curriculum for managers.

Environmental, social and governance (ESG) principles are becoming increasingly important in the space sector, from climate change and space debris management to launch vehicle reusability and cybersecurity. ESG criteria are also increasingly becoming a decisive factor in project tenders. We recognize this trend and see social responsibility not only as an obligation, but also as a driver of innovation and new business opportunities. We plan to significantly reduce CO2 emissions from our own operations by 2026. To achieve this goal, Beyond Gravity published its first Sustainability Report and Decarbonization-Roadmap last year.

Iván González Vallejo has been strengthening our Executive Board as the new Chief Transformation & Strategy Officer since September 2024. In this role, he is responsible, among other things, for implementing the transformation of our business processes and digital infrastructure. To do so, he will draw on his extensive experience in the strategic development and implementation of complex transformation projects. He takes over this role from Caroline Schmitt, who left the company at the end of May. Following the acquisition of our Lithography division by Carl ZEISS SMT, Dr. Oliver Kunz took over the management of Carl Zeiss SMT Switzerland AG at the beginning of December and thus resigned from the Beyond Gravity Executive Board.

As of the end of the year, the Executive Board consists of André Wall (CEO), Oliver Grassmann (EVP Satellites Division), Paul Horstink (EVP Launchers Division), Angelo Quabba (CFO), Laura-Katrin Seitz (Chief People Officer) and Iván González Vallejo (Chief Transformation & Strategy Officer).

After the Swiss Federal Council reiterated its goal in November 2023 of privatizing Beyond Gravity by the end of 2025, the Swiss National Council Security Policy Committee launched a motion in May 2024 to keep the company in federal ownership. The National Council adopted the motion during the autumn session. At the beginning of November, the Swiss Security Policy Committee of the Council of States also decided to support the motion. As a result, the privatization process was suspended. During the winter session, a further motion was introduced in the Council of States. This motion maintained the privatization but included additional conditions.

After the Council of States also approved the motion for a complete halt to privatization in the spring session of 2025, it is clear that the privatization of Beyond Gravity can no longer be pursued. The Federal Council will now define the new framework, create a legal basis for federal ownership and determine which administrative body will be responsible for Beyond Gravity in the future. Meanwhile, our daily work remains unaffected: We continue to fulfill our obligations to our customers and strengthen our business based on our strategy. We are also consequently continuing the transformation that is taking place at various levels.

The space market will continue to grow strongly in the coming years, both in the institutional and private sectors. Increasing commercialization and the demand for technological innovation will drive this development, while increasing efficiency requirements will shape the competition.

Our precision-engineered products have made a significant contribution to the advancement of space travel in 2024 and will continue to do so in the future. We owe this success to the dedication of our employees and the trust that our owner, customers and suppliers place in us. Their partnership is the gravitational force that keeps our vision in orbit – we are deeply grateful and look forward to continuing our journey together.

RUAG International Holding Ltd.

sig. Dr. Remo Lütolf Chairman of the Board of Directors

sig. André Wall CEO RUAG International and Beyond Gravity