Press release BoxID: 163212 (Dätwyler Holding AG)
  • Dätwyler Holding AG
  • Gotthardstr. 31
  • 6460 Altdorf
  • Contact person
  • Silvio A. Magagna
  • +41 (41) 87513-04

Record result – strategic turning point

Precision Tubes Division sold – distribution operations expanded

(PresseBox) (Altdorf, ) In 2007, the Daetwyler Group again delivered record revenue and profit levels. Net revenue climbed 17.7% to CHF 1,429.4 million and profit for the year jumped to CHF 219.5 million. Strategically, Daetwyler reached an important turning point in 2007 with the sale of the Precision Tubes Division, which generated a gain of CHF 111.5 million on disposal. With the acquisition of the Swedish-based ELFA Group, Daetwyler has already leveraged the room for acquisition growth in less cyclical businesses with higher margins. In place of a dividend, the Board of Directors is proposing a profit distribution in the form of a par value repayment of CHF 4.95 per bearer share. In 2008, Daetwyler aims to continue increasing revenue and profit from operations for the year.

For the Daetwyler Group, 2007 was an exceptional year in more ways than one. Operationally, all the divisions came up with high growth rates and record results. Strategically, Daetwyler reached an important turning point with the sale of the Precision Tubes Division: the international multi-niche player is now focusing on the industrial, construction and pharmaceutical markets with a technology portfolio based on rubber and electrical engineering.

Growing market share
During 2007, the environment was extremely positive in Daetwyler s principal markets of Germany and Switzerland, in general, and in the construction and manufacturing industries, in particular. Supported by their strong niche positions, intensive market activities and successful growth projects, Daetwyler companies continued to capture market share and benefited disproportionately from the buoyant demand. Substantial sales successes in the growth markets of Eastern Europe, the Middle East and Asia accelerated expansion. Net revenue (incl. the Precision Tubes Division) was up 17.7%, rising to CHF 1,429.4 million from CHF 1,214.8 million a year earlier. CHF 82.3 million or 6.8% of the growth was attributable to acquisitions, disposals and movements in exchange rates, while organic growth accounted for 10.9%.

Record profit performance at all levels
In 2007, Daetwyler delivered record profit performance at all levels, as in the preceding years. These results were driven by good capacity utilisation, further productivity improvements and increased manufacturing at facilities in low-cost countries. At the same time, they were fuelled by the Daetwyler companies success in winning customer projects yielding higher margins with innovative new system solutions. Operating profit (EBIT) climbed 52.1% to CHF 136.9 million from CHF 90.0 million a year earlier. As a result, the EBIT margin reached 9.6%, improving from 7.4% and beating the target of 8%.

Profit for 2007 came in at CHF 219.5 million, compared to CHF 76.5 million the year before, and can be broken down as follows:

- profit from operations (including the Precision Tubes Division) of CHF 108.0 million, up from CHF 76.5 million;
- a gain of CHF 111.5 million on the sale of the Precision Tubes Division.

In place of a dividend, the Board of Directors will recommend a profit distribution in the form of a par value repayment of CHF 4.95 per bearer share and CHF 0.99 per registered share for approval at the Annual General Meeting. This represents a payout ratio of 38.4%.

Reduction in industrial manufacturing - expansion of Business-to-Business distribution
After evaluating the strategic options, Daetwyler sold the Precision Tubes Division to the German-based Benteler Group on 28 December 2007. The Precision Tubes Division, operating as Rothrist, exhibited the least synergy with the rest of the Group and was surrounded by very large global players among its customers, competitors and suppliers in a consolidated market. With the acquisition of the Swedish-based ELFA Group, announced in mid-March 2008, Daetwyler has leveraged the room for acquisition growth in less cyclical businesses with higher margins. ELFA is the leading catalogue distributor for industrial electronics and automation in Scandinavia, the Baltic and Eastern Europe, and has successfully focused on high-margin product segments. Employing about 400 people, the group generates revenue of some CHF 180 million and EBITDA of about CHF 35 million, and will contribute to profit from the outset. Geographically, the ELFA Group ideally complements Distrelec, Daetwyler s catalogue distributor. With the combined forces of Distrelec and ELFA, Daetwyler will be the Number Two catalogue distributor for industrial electronics and automation in Continental Europe.

Cables Division sees profit surge
The Cables Division, operating as Daetwyler Cables, significantly improved its market positioning, revenue and profit again during 2007. Intensive marketing and market development activities both inside and outside Switzerland, favourable economic conditions still prevailing in the principal sales markets, and strong worldwide growth in elevator cabling business all combined to drive net revenue up some 20.6% to CHF 271.2 million from CHF 224.9 million a year earlier and brought gains in market share. Operating profit (EBIT) exceeded previous expectations, coming in at CHF 20.6 million, up from CHF 6.7 million the year before, to represent 7.6% of net revenue. The marked advance in profits was fuelled by increased market and customer responsiveness, further expansion of systems business and the productivity enhancement measures successfully put in place. At the main Altdorf facility, the best-in-class project to improve productivity allowed the additional volume to be handled without any notable investments in new plant capacity.

Rubber Division faces difficulties in the US market
The Rubber Division, operating as Daetwyler Rubber, generated net revenue growth of 9.5% to CHF 153.9 million from CHF 140.5 million a year earlier. Operating profit (EBIT) before impairment charges in the NAFTA region increased to CHF 12.3 million, up from the previous year s figure of CHF 9.1 million excluding the effects of the fire in France. This represents an operating EBIT margin of 8.0%. Including impairment charges, EBIT stood at CHF 8.7 million, resulting in an EBIT margin of 5.7% versus 4.7% a year earlier. The US plant still has to contend with the difficult conditions in the American market for automotive sealing solutions. In a bid to improve the situation and reinforce operations in the NAFTA region, Daetwyler Rubber is opening a manufacturing facility in Mexico during 2008. As announced in the Interim Report, the company s projects during the year included significant investments to lay the groundwork for a major long-term contract that will be effective from 2008. The final agreement was signed in January 2008. When mass production gets fully underway, the annual volume is expected to reach more than CHF 30 million.

Precision Tubes Division hikes productivity
The Precision Tubes Division, operating as Rothrist, increased net revenue by 16.8% year on year to CHF 255.9 million from CHF 219.1 million in a relatively stable environment, supported by intensive marketing and market development activities. Particularly dynamic growth was seen in industrial applications, especially hydraulic cylinder tubes. Vast productivity improvements enabled Rothrist to handle the volume growth with almost the same number of employees. The company was also able to pass on most of the increases in raw material costs to customers. These factors together resulted in a surge in operating profit (EBIT) to CHF 25.7 million, compared to CHF 12.2 million a year earlier, raising the EBIT margin to 10.0% from 5.6%.

Pharmaceutical Packaging Division continues to grow
The Pharmaceutical Packaging Division, operating as Helvoet, continued to grow during 2007. Net revenue in this non-cyclical business rose 8.1% to CHF 260.8 million from CHF 241.4 million a year earlier, with organic growth outpacing market growth in the pharmaceutical industry. Operating profit (EBIT) came in at CHF 29.4 million, 9.7% ahead of the previous year s figure of CHF 26.8 million. However, the EBIT margin fell short of expectations at 11.3%, as compared to 11.1%, because of higher labour and raw material costs. Helvoet Pharma used the year to keep expanding business with major strategic customers. One example is the ten-year supply agreement with Hospira Inc., a US pharmaceutical and medication delivery company, which kicked in successfully. 2007 also saw the start of work on the planned extension at the Alken plant. Construction will last until the second half of 2008. In addition, Helvoet Pharma established a functional organisational structure with a team of key account managers responsible for worldwide relationships with large pharmaceutical customers.

Technical Components Division realises synergy potential During 2007, the Technical Components Division reaped the benefits of the restructuring programmes completed the year before. With its strong operational base, the division was able to capitalise fully on the good economic climate, increasing net revenue by 25.2% to CHF 491.1 million from CHF 392.1 million a year earlier. Excluding the impact of the Revol and Proditec acquisitions at the beginning of 2007 and the disposal of Daetwyler i/o devices in mid-2006, the division grew revenue by 10.1%. Driven by good capacity utilisation and the contributions from Revol and Proditec, operating profit (EBIT) climbed 45.2% year on year to CHF 48.8 million from CHF 33.6 million. At the beginning of 2007, Daetwyler successfully made two strategic acquisitions. Specialist distributor Maagtechnic took over the French Revol Group (Rhône-Alpes region/France and Czech Republic) with revenue of some CHF 50 million, while mail order distributor Distrelec was able to acquire Proditec, a Swiss company generating about CHF 25 million in revenue. The integration of the two companies and active efforts to realise synergy potential are going according to plan.

Having started the year with strong demand, Daetwyler is optimistic that the environment in its industrial markets will remain good during 2008. The Group is confident that it will be able to continue its track record of increasing both revenue and profit from operations for the year. An unexpected slowdown in economic growth in Europe would slightly limit the growth potential of the Daetwyler companies. Looking to the medium term, the Daetwyler Group is convinced that it has the right strategic focus and a strong operational foundation to sustain profitable growth as a multi-niche player.

Daetwyler Holding Inc. financial calendar:
22 April 2008: Annual General Meeting at 5:00 p.m. at the theater (uri) Tellspielhaus, Altdorf
29 August 2008: Interim Report 2008

Dätwyler Holding AG

The Daetwyler Group is an international multi-niche player dedicated to industrial component supply and distribution of engineering and electronic components. Its activities concentrate on attractive markets and niches that offer opportunities to increase value added and sustain profitable growth. Having sold the Precision Tubes Division (on 28 December 2007), Daetwyler is focusing on the industrial, construction and pharmaceutical markets with a technology portfolio based on rubber and electrical engineering. The Daetwyler Group comprises the Cables, Rubber, Pharmaceutical Packaging and Technical Components Divisons. With more than 50 operating companies, sales in over 100 countries and some 4,700 employees, the Daetwyler Group generates over CHF 1,400 million in revenue. The Group has been listed on the main board of the SWX Swiss Exchange since 1986 (security number 3048677).