Press release, 7 February 2017 Datwyler enjoys significantly improved operating profit figures The Datwyler Group increased its net revenue by 4.3% to CHF 1'215.8 million during 2016. The operating result (EBIT) increased to CHF 146.1 million, which equates to a significantly improved and record-high EBIT margin of 12.0%. Before one-off costs, the adjusted EBIT margin stood at 13.0%. And with an adjusted net result of CHF 116.9 million, Datwyler also managed to improve significantly on the previous year's figure. The Annual General Meeting will be asked to pay an unchanged cash dividend of CHF 2.20 per bearer share. As regards the future, Datwyler is optimistic the profitable growth trajectory can be accelerated through acquisitions and by developing and expanding the company's own sites across both divisions. The target range for the EBIT margin is now being increased to between 11% and 14%. The Datwyler Group increased its revenue, compared with the previous year, by 4.3% to CHF 1'215.8 million (previous year: CHF 1'165.2 million) during 2016. Adjusted for positive currency and acquisition effects, organic growth of 1.4% was achieved in the year under review. Various one-off situations across both divisions restricted organic growth to this level. Thanks to effective cost control, the adjusted operating result (EBIT) increased to CHF 157.6 million, giving a record-high adjusted EBIT margin of 13.0%. Including one-off costs from the Technical Components Division and costs relating to the attempted acquisition of Premier Farnell, the reported EBIT figure was CHF 146.1 million (previous year: CHF 126.1 million), which equates to a reported EBIT margin of 12.0%. "Strategically speaking, both divisions at Datwyler are well positioned in attractive market segments. I am convinced the investment and acquisitions we have made, and those currently pending, will help us accelerate growth. And further acquisitions are also planned," confirms CEO Dirk Lambrecht. Adjusted net result significantly up on the previous year With an adjusted value of CHF 116.9 million, Datwyler also managed to improve the net result significantly compared with the previous year (CHF 82.2 million). Additional one-off costs relating to currency hedging and exchange rate losses from the attempted acquisition of Premier Farnell had a negative impact on the financial result during the year under review and reduced the reported net result to CHF 57.6 million. In view of the fact that operating profitability has remained strong for several years and the promising potential for growth, the Board of Directors is asking the Annual General Meeting to pay an unchanged cash dividend of CHF 2.20 per bearer share and CHF 0.44 per registered share. This equates to a distribution ratio of 64.9% of the reported or 32.0% of the adjusted net result. Sealing Solutions on course for profitable growth The Sealing Solutions division performed well again in 2016. Thanks to its leading positions in attractive global market segments, Datwyler managed to increase net revenue, compared with the previous year, by 6.7% to CHF 753.3 million (previous year: CHF 705.9 million). Adjusted for currency and acquisition effects, this equates to organic growth of 2.9%. Capacity bottlenecks in the Health Care market segment and delays to projects in the Civil Engineering market segment restricted organic growth to this level. In geographical terms, Datwyler recorded strong growth in Asia in particular, followed by the NAFTA area and Europe. The operating result (EBIT) increased to CHF 136.7 million (previous year: CHF 125.8 million). With an EBIT margin of 18.1% (previous year: 17.8%), the division achieved another slight increase in profitability. Before corporate one-off costs (particularly relating to the attempted
acquisition of Premier Farnell), adjusted EBIT stood at CHF 138.7 million and the adjusted EBIT margin at 18.4%. In addition to targeted measures for strategic and operational improvements during previous years, this was also the result of high capacity utilisation. In terms of the Health Care market segment, the high-quality elastomer components for pre-filled syringes and drug delivery systems recorded the biggest growth. Within this segment, the purity requirements expected of seal components continue to increase. With a view to satisfying these customer needs and eliminating existing capacity bottlenecks, Datwyler is investing in expansion of its FirstLine capacities in Belgium, India and now the USA too. By investing over CHF 100 million to build a new highly automated health care plant in the USA, Datwyler is looking to boost future organic growth. Once the new US plant is up and running in 2018, Datwyler will be able in future to provide customers in the three key business regions (NAFTA area, Europe and Asia) with locally produced FirstLine components. The Automotive market segment recorded improvements across all geographical regions. And China also recovered from the previous year's slowdown in growth. Through targeted acquisitions, Datwyler is boosting organic growth and the potential for development. And thanks to the acquisitions of the Italian firm Origom in 2015 and the German firm Ott in early October 2016, Datwyler has acquired new technologies and secured access to new niche markets associated with both existing and new customers. Acquired by Datwyler during the year under review, Ott is a specialist in injection moulding technology, both single- and multi-component, based on thermoplastics and liquid silicone. This complements existing technologies perfectly and offers Datwyler an opportunity to increase added value and devise novel solutions to accommodate, for example, the megatrends of environmental sustainability and electrification within the automotive industry. The partnership with Nespresso in the Consumer Goods market segment continues to develop nicely. Negotiations on a new contract are at a very advanced stage, with the key parameters already defined. Datwyler and Nespresso have continually intensified their cooperation since 2006. Today, the world leader in high-quality portioned coffee is the Datwyler Group s largest single customer. The new contract envisages further growth potential. Technical Components reversed negative trend for revenue and margins With its focus on Europe, the Technical Components division continued to operate in a challenging market environment in 2016. In the business-to-consumer segment in particular, demand in the second half of the year declined across all markets and quite sharply in some cases. The sector as a whole lacked the kind of innovative on-trend products that have wowed customers in previous years. By contrast, Datwyler s distribution companies Distrelec, Reichelt and Nedis gratifyingly managed to increase revenue in their core business with business-to-business customers. Significant operational improvements due to the increased stability of structures and processes resulted in better product availability and shorter delivery times. Further optimisation of search functions and product information in the online shops also helped to enhance the customer shopping experience. After several years of declining revenue, the division managed to reverse the trend in 2016 and slightly increased its net revenue to CHF 462.6 million (previous year: CHF 459.3 million). Adjusted for currency effects, this means that revenue remained virtually the same in organic terms. A reduction in lowmargin products and the standardisation of discounts had an expected negative impact on revenue. The expansion of the product range made a positive contribution to revenue performance, as did the launch of the new "RND" house brand for standard products. The focus in future will be on accelerating
organic growth by concentrating more closely on the Maintenance, Repair, Operations (MRO) and the Automation market segment and continuing to expand the range and the house brand. Strategic integration projects to create a shared infrastructure platform were able to be completed in the first half of the year. The new platform is operational, enabling the implementation of substantial recurring cost savings in the year under review. For example, the central distribution centre in the Netherlands managed to continually reduce its costs by optimising its processes. Furthermore, the division centralised its accounting and financial departments in the Netherlands and, in particular, at the shared service centre in Latvia. The realignment of sales structures from a national to a regional management level resulted in further cost savings. Margins also benefited from an improved range and a standardised discounts policy. Although the effects of these measures have yet to play out for an entire year, the operating result (EBIT) improved significantly to CHF 9.4 million (previous year: CHF 0.3 million). Before one-off costs relating to cost-cutting measures and corporate one-off costs (particularly associated with the attempted acquisition of Premier Farnell), adjusted EBIT amounted to CHF 18.9 million. Consequently, the adjusted EBIT margin improved from 2.5% in the previous year to 4.1% in the year under review. Change of Chairman for Board of Directors The Annual General Meeting to be held on 7 March 2017 will see Ulrich Graf step down as Chairman and both Hans R. Rüegg and Ernst Lienhard resign as directors for age-related reasons. Paul Hälg, who resigned as CEO at the end of 2016, is to be recommended for election as the new Chairman. After the Annual General Meeting for 2017, the Datwyler Board of Directors will have seven members. Reasons to be optimistic target range for EBIT margin to be increased to between 11% and 14% Datwyler is optimistic that the Group can accelerate the profitable growth trajectory. The Sealing Solutions Division is benefiting from its strong positions in growing global market segments. In the medium term, the recently acquired new technologies will open up additional potential for development. In the Technical Components Division, Datwyler is confident the measures implemented and introduced will make it possible to improve competitiveness and thereby also increase revenue and margins. At a Group level, Datwyler is expecting to achieve revenue of between CHF 1'250 million and CHF 1'350 million. And based on the fact that operating profitability remains strong, the target range for the EBIT margin is to be increased to between 11% and 14%. Looking ahead to 2020, the Datwyler Group is still targeting revenue of CHF 2 billion and an EBIT margin of 12% to 15% by this time. The Group intends to secure more than half of the shortfall in revenue (based on this target) via acquisitions. With liquidity reserves (cash and cash equivalents plus unused credit limits) worth more than CHF 650 million, Datwyler has the potential to finance the acquisitions it aims to make.
Key figures Datwyler Group (in CHF millions) 2016 2015 Net revenue 1'215.8 1'165.2 Year-on-year change (%) 4.3% -6.9% EBITDA 204.3 179.4 EBITDA as % of net revenue 16.8% 15.4% Operating result before interest and tax (EBIT) 146.1 126.1 EBIT as % of net revenue 12.0% 10.8% Net result 57.6 82.2 Net result as % of net revenue 4.7% 7.1% Net cash from operating activities 90.7 172.5 Net cash used in investing activities -51.3-45.6 Free cash flow 39.4 126.9 Net cash used in financing activities 37.4-94.4 Net change in cash and cash equivalents 76.8 32.5 Cash, cash equivalents, money market investments and securities 317.5 302.0 Net cash surplus 313.5 298.7 Capital expenditure on property, plant and equipment 77.8 59.5 Total assets 1'217.1 1'129.1 Equity 805.5 726.1 Equity as % of total assets 66.2% 64.3% Number of employees (annual average) 7'312 7'013 Full-time equivalents (annual average) 7'068 6'773 Key figures Datwyler divisions (in CHF millions) Net revenue EBIT EBIT margin (%) 2016 2015 2016 2015 2016 2015 Sealing Solutions 753.3 705.9 136.7 125.8 18.1% 17.8% Technical Components 462.6 459.3 9.4 0.3 2.0% 0.1% Dätwyler Gruppe 1 215.8* 1'165.2 146.1 126.1 12.0% 10.8% *Inter-division revenue: CHF 0.1 million
Annual Press Conference/Analyst Conference: 7 February 2017, 10.00 a.m., SIX ConventionPoint, Zurich Publication of Annual Report 2016: 7 February 2016, 06.00 a.m., http://www.datwyler.com/en/investors/publications/ Datwyler Group (www.datwyler.com) The Datwyler Group is a focused industrial supplier with leading positions in global and regional market segments. With its technological leadership and customised 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 Sealing Solutions division is a leading supplier of custom sealing solutions to global market segments, such as the health care, automotive, civil engineering and consumer goods industries. The Technical Components division is one of Europe s foremost high-service distributors of maintenance, automation, electronic and ICT components and accessories. With a total of some 50 operating companies, sales in over 100 countries and more than 7 000 employees, the Datwyler Group generates annual revenue of more than CHF 1 200 million. The Group has been listed on the SIX Swiss Exchange since 1986 (security number 3048677). Enquiries: Guido Unternährer, Head of Corporate Communications, +41 41 875 19 00 Photos (in print quality): www.datwyler.com > Media > Image Library http://www.datwyler.com/en/media/image-library/ Financial Calendar: Annual Press Conference/Analyst Conference 7 February 2017 Annual General Meeting 7 March 2017 Interim Report 11 August 2017 The figures in the 2016 Annual Report are binding (German edition). The Annual Report and this media release contain forward-looking statements. They reflect current estimates regarding market conditions and future events and are therefore subject to certain risks, uncertainties and assumptions. Unforeseeable events could result in a deviation in the actual results from the forecasts in this document and other published information. Accordingly, all the forward-looking statements in this media release are subject to this reservation.