SFS Group generated dynamic sales growth in business year 2017

News - 09. March 2018

2017 was a successful year. SFS Group generated dynamic sales growth and improved its position in the medical device industry and in the Americas, thanks to the integration of Tegra Medical. Operating profit showed double-digit growth.

Driven by strong organic growth of 7.4% and the first-time consolidation of Tegra Medical, SFS Group increased its sales in the 2017 financial year by 13.7% to CHF 1,632.7 million. All segments contributed to this pleasing development. Changes in the scope of consolidation had a positive impact of 5.8% and currency movements added 0.5% to reported sales.

Financial statements 2017 according to Swiss GAAP FER

For the first time, Swiss GAAP FER accounting standards were used to prepare the financial statements for 2017 instead of IFRS. These standards are more practical for SFS Group than IFRS.

After the switch to Swiss GAAP FER and the associated shortening of the balance sheet, the equity ratio as at 31.12.2017 reaches a high 71.6% (31.12.2017 under IFRS: 80.1%). In view of this strong balance sheet, the company’s financial stability and entrepreneurial freedom remain fully intact.

Income Statement

In CHF million
Swiss GAAP FER
2017 +/-PY 2016
Gross sales 1,632.7 13.7% 1,436.5
Net sales 1,634.8 13.8% 1,436.7
EBITDA
As a % of net sales
323.5
19.8
5.7% 306.2
21.3
EBITA
As a % of net sales
239.9
14.7
7.8% 222.5
15.5
EBITA adjusted
As a % of net sales
235.8
14.4
10.7% 213.0
14.8
Operating profit (EBIT)
As a % of net sales
197.7
12.1
23.7% 159.8
11.1
Net income
As a % of net sales
159.1
9.7
27.5% 124.8
8.7
Cash net income
As a % of net sales
192.8
11.8
10.3% 174.8
12.2

Operating profit increased

Adjusted operating profit (EBITA) rose by 10.7% and amounted to CHF 235.8 million. The adjusted EBITA margin achieved an attractive level of 14.4% (previous year 14.8%) of the total net sales, despite extraordinarily high advance outlays and expenditures in the realization of demanding new projects. Furthermore, SFS is completing important transformational projects initiated in the Fastening Systems segment. The related cost-savings will become effective in the coming years. The fast appreciation of the euro increased procurement costs, while necessary adjustments to selling prices could only be made after a certain time lag. The high dynamics as well as project activity are also reflected in the high investments made in property, plant, equipment and software of CHF 132.8 million (previous year CHF 84.6 million). Net income including proceeds from property disposals amounted to CHF 159.1 million (previous year CHF 124.8 million), which corresponds to a year-on-year increase of 27.5%.

Balanced market exposure

In the 2017 financial year, sales showed positive growth in every region. Sales generated in the Americas increased by 39.9% thanks to the successful integration of Tegra Medical and amounted to CHF 281.4 million. Due to this acquisition, the geographical sales contribution from the Americas region increased to 17.2% (previous year 14.0%). Sales generated with medical device manufacturers jumped from 1.9% (2016) to 6.4% (2017) of the total sales. Thus, a significantly broader market exposure in terms of regional and end market sales has been achieved.

Segment Engineered Components: Strong sales growth generated

Key figures Engineered Components
in CHF million
2017
SGF
2017
IFRS
+/-PY 2016
IFRS
2015
IFRS
Third party sales
Sales growth comparable*
925.8 925.8 20.5%
9.6%
768.1 740.1
Net sales 938.2 938.2 20.0% 781.5 756.1
EBITDA
As a % of net sales
243.3
25.9
243.3
25.9
11.2% 218.9
28.0
185.3
24.5
EBITA
As a % of net sales
186.0
19.8
186.0
19.8
12.4% 165.4
21.2
134.1
17.7
Net operating assets 618.6 1,482.2 -2.4% 1,519.2 1,290.6
Investments 80.3 80.3 66.6% 48.2 70.3
Employees (FTE) 6,492 6,492 4.4% 6,217 5,635
RONOA (%)** 30.1 12.6   12.6 10.4
ROCE (%)*** 31.7 31.7   32.3 26.5

* at constant exchange rates and on the same scope of consolidation

** return (EBITA) in % of net operating assets (adjusted for Tegra Medical 2016)

*** return (EBITA) in % of average capital employed without intangible assets

SGF = Swiss GAAP FER

The Engineered Components segment reported sales of CHF 925.8 million (+20.5% y-o-y), thanks to the first-time consolidation of Tegra Medical and to the strong growth momentum at the Automotive and Electronics divisions. The EBITA margin is once again at a very attractive level of 19.8% (previous year 21.2%) despite advance outlays in connection with the realization of new projects and customer-induced project delays, which had a negative effect on operating profitability.

Segment Fastening Systems: Good momentum sustained

Key figures Fastening Systems
in CHF million
2017
SGF
2017
IFRS
+/-PY 2016
IFRS
2015
IFRS
Third party sales
Sales growth comparable*
384.0 384.0 8.0%
6.5%
355.6 326.9
Net sales 401.0 401.0 8.2% 370.8 341.4
EBITDA
As a % of net sales
47.1
11.7
47.1
11.7
-4.5% 49.3
13.3
38.9
11.4
EBITA
As a % of net sales
31.0
7.7
31.0
7.7
-7.4% 33.5
9.0
23.2
6.8
Net operating assets 240.8 347.5 12.2% 309.7 289.1
Investments 30.6 30.6 12.7% 27.2 16.3
Employees (FTE) 1,992 1,992 5.7% 1,885 1,758
RONOA (%)** 12.9 8.9   10.8 8.0
ROCE (%)*** 13.5 13.5   16.0 11.1

* at constant exchange rates and on the same scope of consolidation

** return (EBITA) in % of net operating assets

*** return (EBITA) in % of average capital employed without intangible assets

SGF = Swiss GAAP FER

The Fastening Systems segment sustained its good growth momentum from the first half into the second half of the year. It reported full-year sales of CHF 384.0 million, which corresponds to a growth rate of 8.0%. The EBITA margin for 2017 lowered to 7.7% (previous year: 9.0%) due to increased costs in connection with ongoing transformational projects.

Segment Distribution & Logistics: Sales lifted by new customer accounts

Key figures Distribution & Logistics
in CHF million
2017
SGF
2017
IFRS
+/-PY 2016
IFRS
2015
IFRS
Third party sales
Sales growth comparable*
322.9 322.9 3.2%
3.1%
312.8 309.3
Net sales 328.9 328.9 3.2% 318.6 314.8
EBITDA
As a % of net sales
35.9
10.9
35.9
10.9
6.2% 33.8
10.6
26.5
8.4
EBITA
As a % of net sales
30.0
9.1
30.0
9.1
10.7% 27.1
8.5
18.8
6.0
Net operating assets 134.2 143.1 2.0% 140.3 151.9
Investments 10.4 10.4 166.7% 3.9 1.6
Employees (FTE) 655 655 4.8% 625 643
RONOA (%)** 22.4 20.9   19.3 12.3
ROCE (%)*** 21.3 21.3   19.0 12.5

* at constant exchange rates and on the same scope of consolidation

** return (EBITA) in % of net operating assets

*** return (EBITA) in % of average capital employed without intangible assets

SGF = Swiss GAAP FER

The Distribution & Logistics segment strengthened its market position thanks in particular to the acquisition of new customers and realized sales growth of 3.2% to CHF 322.9 million. The segment EBITA margin came in at 9.1%. Excluding non-recurring effects, profitability for the current year as measured by the EBITA margin of 6.9% was only slightly below the level achieved in previous year (7.2%). Rapidly rising procurement costs have temporarily impacted profitability.

Shareholder payout

In view of the robust earnings and the positive outlook for future business activity, the Board of Directors will propose an increase in the payout to CHF 1.90 per share (previous year CHF 1.75), to be paid from capital contribution reserves. This payout is not subject to withholding or income tax for natural persons whose tax domicile is in Switzerland.

Outlook for the 2018 financial year

Our focus in the 2018 financial year will be on strengthening our position with existing customers and on the selective expansion of our customer base. We also intend to exploit new application areas, launch significant new projects and extract greater synergies from the transformational projects currently under way at SFS Group. All projects aimed at sharpening our production profile in the Fastening Systems segment should also be completed by the end of this year.

Assuming unchanged economic conditions, we expect sales to grow by 5–7% in 2018 and the EBIT margin to increase compared with the 2017 financial year.

Documents to the 2017 financial year

Please find the full report, summary report and the presentation on the FY2017 at www.sfs.biz/investorrelations.

The online annual report is available at annualreport.sfs.biz/en

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Corporate Communications

SFS Group AG
Claude Stadler
Rosenbergsaustrasse 8
CH-9435 Heerbrugg
T +41 71 727 51 51