SFS realizes solid sales growth

News - 25. January 2019

SFS Group achieved solid sales growth of 6.5% in the 2018 financial year, lifting its consolidated sales to CHF 1,739 million. This attractive sales development was broadly based in terms of end markets and geographies. Operating profit rose to CHF 243 million, which corresponds to 14% of net sales.

Sales growth was carried forward by a solid and balanced organic growth rate of 5.0% in the Group's core business activities and reflects the strength of SFS’s customer-specific solutions for selected niche markets. Growth for the period was broadly based and led by the Fastening Systems segment. The growth rate in the second half was slower than in the first half. This can be traced to the challenging comparison base – sales growth in the previous year was strong – and to an unexpectedly sharp, temporary decline in demand during the fourth quarter, especially from customers in the automotive and electronics industry.

Sales growth attributable to changes in the scope of consolidation amounted to 0.8%, which primarily reflects the first-time consolidation of HECO (Ludwig Hettich GmbH & Co. KG) for the second half of the year. Currency movements had a positive effect of 1.4% on reported sales growth.

20190125_Sales by segment
20190125_Growth factors

Sales by region: Broadly based growth
SFS has a broad, balanced presence in its various geographic markets and the sales mix in the individual regions showed stable trends during the period under review. Besides the solid organic sales growth, the pleasing performance in Europe (+9.6%) is attributable to positive consolidation and currency effects. The good results in Americas (+9.3%) are primarily allocable to strong demand in the construction, industrial and medical sectors. In Switzerland (+3.8%), the positive development was fueled by innovation and promising new customers.

20190125_Sales by region

Engineered Components: Robust growth generated
The Engineered Components (EC) segment generated sales of CHF 967.0 million despite a challenging market environment, which corresponds to an increase of 4.4% versus the previous year. All divisions contributed to the sales growth. The ramp-up and launch of new projects were a major growth factor.

Sales momentum of the EC segment experienced a temporary weakness, particularly in the fourth quarter. Amongst others this can be traced to delays in the homologation of new engines in the automotive industry, a general market saturation in the smartphone business and an increasing uncertainty among market participants caused by US-China trade tensions.

Fastening Systems: Strong sales growth realized
Thanks to its innovative products, the Fastening Systems (FS) segment strengthened its competitive position and captured a larger share of its targeted markets. Sales grew by 13.8% to CHF 437.1 million. The launch of new products was a strong sales driver, with additional support coming from a good market environment. Organic growth amounted to 5.6% year-on-year.

SFS increased its stake in HECO to 51% to further strengthen this strategic partnership. Consequently, HECO has been consolidated by SFS Group since 1 July 2018 and it contributed 5.8% to reported sales growth for the FS segment.

Distribution & Logistics: Balanced sales trend continued
Sales in the Distribution & Logistics (D&L) segment rose by 3.6% year-on-year to CHF 334.5 million. Organic sales growth, taking into consideration the divestment of the segment’s security systems business, amounted to 5.1%, which clearly exceeds the growth rate of Switzerland's gross domestic product (a key benchmark for measuring the performance of D&L). Especially the tools sector and construction-related products displayed strong growth.

Operating profit increased to CHF 243 million
Based on the available preliminary results, SFS Group expects operating profit to show an increase of 23% (+4.2% on a like-for-like basis) to CHF 243 million. The corresponding EBIT margin of 14% of net sales will be slightly less than the given guidance of >14.3%. This is attributed primarily to mix effects, for example, from the faster rate of growth in the Fastening Systems and Distribution & Logistic segments.

The detailed and audited financial figures for the 2018 financial year will be presented at the conference for analysts and the media on 8 March 2019.