Focused Datwyler portfolio has higher earning power
Following the major changes to its portfolio in the previous year, the Datwyler Group accelerated growth in 2013 thanks to acquisitions. Unaudited net revenue grew 16.5% to CHF 1,382.0 million (previous year: CHF 1,185.9 million). The companies acquired in the second half of 2012 - Nedis, Zhonding Sealtech and Hankook Sealtech - contributed CHF 150.0 million to this growth. The positive exchange rate effects came to CHF 15.6 million. Adjusted for the effects of acquisitions and exchange rates, the Datwyler Group achieved organic growth of 2.6% with its continuing operations. All comparisons with the prior-year period refer to the continuing operations without the Cabling Solutions division.
Operating earning power in higher target range
The reported figure for operating profit (EBIT) grew 24.7% to CHF 136.0 million (previous year: CHF 109.1 million). Net result came to CHF 120.2 million (previous year: CHF 93.3 million). These figures include several negative and positive extraordinary items. Restructuring costs, special write-offs and one-time operating effects for 2013 add up to CHF -29.1 million, attributable mainly to the centralization of logistics for online distribution in European markets at the Nedis site in the Netherlands. There were also negative one-time charges from the merger of the two former divisions and integration of newly acquired companies. In addition, the Datwyler Group modified the actuarial basis for the occupational pension fund to suit the changing circumstances and low interest rates. Datwyler mitigated the financial consequences with a voluntary employer contribution of CHF 9.1 million. These negative extraordinary items are offset by a one-time gain from the sale of real estate in the amount of CHF 15.9 million. Exclusive of these extraordinary items, adjusted EBIT rose 26.0% to CHF 158.3 million (previous year: CHF 125.6 million), with a corresponding increase in adjusted EBIT margin to 11.5% (previous year: 10.6%). Despite the difficult conditions prevailing in the distribution business, this brings the Datwyler Group within the target EBIT range, raised at the start of 2013, of 10% to 13%. In view of promising perspectives and solid profitability, the Board of Directors will propose an increased dividend of CHF 2.80 (previous year: CHF 2.60) per bearer share and CHF 0.56 (previous year: CHF 0.52) per registered share to the Annual General Meeting. This represents a payout ratio of 37.1% (previous year: 32.1%).
CEO Paul Hälg summarises the 2013 financial year as follows: "The major portfolio changes announced at the end of 2012 have proven worthwhile and have helped to strengthen the Group‟s earning power. The announced sale of the Maagtechnic speciality sales unit represents a further focusing of the Group‟s portfolio in the current year."
Technical Components: Investing in future growth
Focusing on Europe, the Technical Components division continued to struggle with a very difficult market environment throughout 2013. Although net sales grew 11.0% to CHF 711.2 million (previous year: CHF 640.4 million) thanks to the first-time full consolidation of Nedis, acquired in September 2012, when adjusted for acquisition and exchange rate effects the Datwyler distribution companies experienced a year-on-year decline in sales of 3.3%. The slight recovery in demand in the fourth quarter suggests that the low point is now past. Reported operating profit (EBIT) declined in comparison to the year-back period to CHF 37.9 million (previous year: CHF 50.8 million), due primarily to restructuring costs and one-time operating charges in the amount of CHF -16.7 million. This figure is the result of centralizing the logistical activities of Nedis, Distrelec and Elfa Distrelec for the European market at the existing Nedis logistics centre in the Netherlands. Adjusted for these negative extraordinary items, net EBIT came to CHF 54.6 million (previous year: CHF 57.8 million). The decline in the adjusted EBIT margin to 7.7% (previous year: 9.0%) reflects the missing volume along with more intense marketing and sales activities to combat the fall in demand.
Technical Components: Multi-brand strategy with centralized functions
With the announced sale of the specialist distribution unit Maagtechnic at the end of March 2014, Datwyler now concentrates in the Technical Components division on the high-earning and high-growth business of distributing electronics, automation and ICT components and accessories. To take advantage of synergies from the acquisition of Elfa, Reichelt and Nedis and the growth potential of the markets, Datwyler has defined four strategic priorities for electronics distribution in the Technical Components division. Using a comprehensive multichannel approach we will coordinate and optimize all of our online and offline marketing activities, thus boosting our penetration in the markets we serve. Furthermore, we wish to expand in East and West European countries where we have little presence as yet, both through acquisitions and organic growth. We see additional growth opportunities in broadening our product range. Here our target is to double the number of articles to over one million by 2016. Moreover, we want to realize synergies through an integrated business model in the base functions across brands.
Profitable growth at Sealing Solutions
The Sealing Solutions division, newly formed in November 2012, recorded a positive first year of business. Thanks to its global orientation, it enjoyed healthy demand in all market segments and increased net sales by 22.6% to CHF 672.2 million (previous year: CHF 548.4 million). Zhongding Sealtech and Hankook Sealtech, two companies acquired in October 2012, significantly accelerated this growth. After adjustments for the effects of the acquisitions and for exchange rate effects, the new Sealing Solutions division achieved organic growth of 9.1%. Due to very good capacity utilization in almost every product area, positive exchange rate effects, optimization of market prices and lower raw material prices, reported operating profit (EBIT) rose to CHF 98.1 million (previous year: CHF 58.3 million). The reported EBIT margin improved to 14.6% (previous year: 10.6%). A stronger presence in Asian growth markets along with optimized processes at various production sites had a positive impact on operating profit. Reported EBIT reflects one-off restructuring costs in the amount of CHF -5.6 million in relation to the merger of divisions and integration of Zhonding Sealtech and Hankook Sealtech. Adjusted for these negative extraordinary items, net EBIT came to CHF 103.7 million (previous year: CHF 67.8 million).
Sealing Solutions: Cutting-edge technology and worldwide presence
In the Sealing Solutions division, Datwyler operates in narrowly defined but global market segments. The success factors in the markets of interest - Healthcare (formerly the Pharma Packaging division), Automotive, Civil Engineering and Consumer Goods - have grown ever more similar. Datwyler has identified four strategic priorities for the Sealing Solutions division as well. These priorities will create the conditions that allow us to realize the growth potential that exists from the merger of divisions and acquisitions in Asia. We thus intend to strengthen and expand our global presence, thereby further strengthening our relationships with our global customers. Differentiation through innovation and thanks to our leading know-how will play an important role. In addition, we intend to further increase the value we generate by taking over responsibility from our customers for certain tasks and processes. Furthermore, we are convinced that the merger of divisions will enable us to capture new markets and applications in the medium term.
Annual General Meeting and change on the Board of Directors
Werner Inderbitzin will not stand for re-election to the Board of Directors at the Datwyler Holding AG Annual General Meeting on 8 April 2014. Werner Inderbitzin was elected to the Board of Directors of Datwyler Holding Inc. in 2002. Since 2005 he has also been a member of the Human Resources Committee. After the next Annual General Meeting, the Board of Directors of Datwyler Holding Inc. will consist of six members. The Board will propose a proactive amendment to the Articles of Association to comply with the new Ordinance on Excessive Compensation at Exchange-Listed Corporations (VegüV) to the 2014 Annual General Meeting.
Outlook: Further gains in competitiveness
Despite cyclical weak demand for the Technical Components division, the Datwyler Group looks to the future with optimism. Thanks to our acquisitions, we hold a leading position in every market segment we serve. We believe that the worst of the downturn at the Technical Components division is over. Nevertheless, we still do not anticipate a substantial tailwind in our key electronics and industrial markets in 2014 due to continuing economic uncertainty in Europe. By investing in shared infrastructure we are improving our cost structure and enhancing our competitiveness. In the global market segments of the Sealing Solutions division we expect strong demand to continue in 2014, driven by growth in emerging markets. Thanks to our stronger presence in Asia and the combined strength from the merger of divisions, Datwyler will see greater than average benefits from the growth trends in the market segments served. At the consolidated level, taking account of the Maagtechnic disposal and net of acquisitions, we anticipate sales of around CHF 1,300 million with an EBIT margin within our target range of 10-13%.
The figures in the German version of the Annual Report 2013 are binding. The Annual Report as well as this Press Release contain forward-looking statements. They reflect the Group's current expectations regarding market conditions and future events and are therefore subject to a number of risks, uncertainties and assumptions. Unanticipated events could cause actual results to differ from those predicted in this communication and from the information published. All forwardlooking statements contained herein are qualified in their entirety by the foregoing.
Dätwyler Holding AG
The Datwyler Group is a focused industrial supplier with leading positions in global and regional market segments. With its technological leadership and customized solutions, the Group delivers added value to customers in the markets served. Datwyler concentrates on markets that offer opportunities to create more value and sustain profitable growth. The Technical Components Division is one of Europe‟s foremost high-service distributors of electronic, automation and ICT components and accessories. The Sealing Solutions Division is a leading supplier of customized sealing solutions to global market segments, such as the automotive, health care, civil engineering and consumer goods industries. With a total of more than 50 operating companies, sales in over 100 countries and some 7,000 employees, the Datwyler Group generates annual revenue of some CHF 1,400 million. The Group has been listed on the SIX Swiss Exchange since 1986 (security number 3048677).