Sfs Group Ag · SIX:SFSN
Sfs — FY2023 Earnings Presentation
41 slides from Sfs's earnings presentation, Mar 7, 2024
Slide 1: Presentation of Annual Report 2023
Presentation of Annual Report 2023 Heerbrugg | March 7, 2024 Presentation of Annual Report 2023 | March 7, 2024 | Public
Slide 2: Agenda
Agenda Presentation on FY23 results 01 Positioning 02 Key takeaways 03 Development of key financials 04 Development by segment 05 Outlook 2024 Presentation of Annual Report 2023 | March 7, 2024 | Public 2
Slide 3: Positioning
Positioning Presentation of Annual Report 2023 | March 7, 2024 | Public 3
Slide 4: We are by your side – 24/7
Mission critical products for selected end markets We are by your side – 24/7 Presentation of Annual Report 2023 | March 7, 2024 | Public 4
Slide 5: SFS value proposition
SFS value proposition Inventing success together Presentation of Annual Report 2023 | March 7, 2024 | Public 5
Slide 6: SFS value engineering
SFS value engineering Synergies in tooling based technologies Presentation of Annual Report 2023 | March 7, 2024 | Public 6
Slide 7: Our focused business activities
Our focused business activities Tailored solutions for selected end markets Presentation of Annual Report 2023 | March 7, 2024 | Public 7
Slide 8: Global sales & manufacturing platform
Global sales & manufacturing platform 140 locations Customer proximity supported by local presence in 35 countries North America Europe Asia, others 40 Locations 85 Locations 15 Locations (7 Production sites) (20 Production sites) (5 Production sites) Presentation of Annual Report 2023 | March 7, 20
Slide 9: Our focused business activities: Sustainable growth through the cycle
Our focused business activities Sustainable growth through the cycle Presentation of Annual Report 2023 | March 7, 2024 | Public 9
Slide 10: Key takeaways
Key takeaways Presentation of Annual Report 2023 | March 7, 2024 | Public 10
Slide 11: 2023 at a glance
2023 at a glance Well on track • Despite difficult economic environment, SFS achieved stable development and met targets set • Third-party sales of CHF 3,090.8 million generated (+12.6% vs. PY). Sales development driven by robust organic growth (+2.1%) and consolidation effects from Hoffmann (+14.6%
Slide 12: Key takeaways | Environment
Key takeaways | Environment Well on the way to achieving our targets Presentation of Annual Report 2023 | March 7, 2024 | Public 12
Slide 13: Key takeaways | Social
Key takeaways | Social Dual education secured, accident rate too high Presentation of Annual Report 2023 | March 7, 2024 | Public 13
Slide 14: Key takeaways | Governance
Key takeaways | Governance No sanctions for compliance violations Presentation of Annual Report 2023 | March 7, 2024 | Public 14
Slide 15: Development of key financials
Development of key financials Presentation of Annual Report 2023 | March 7, 2024 | Public 15
Slide 16: Sales bridge
Sales bridge Robust growth and step change from Hoffmann inclusion Organic 2023 2023 2022 In CHF million growth CHF million % % 3,300 EC segment 14 1.4 6.5 FS segment 4 0.7 15.6 3,200 –113 3,091 D&L segment 39 3.7 5.3 3,100 • Overall organic growth 2.1% 3,000 401 • Strong FX effects of –4.1% 2,900 (
Slide 17: Sales breakdown by region
Sales breakdown by region Shift toward Europe • Shift to stronger Europe based on full consolidation 100% of D&L International (scope effect) 16.5% 13.0% 20.0% 22.4% 21.6% • Lower relative weight of other regions 80% 16.3% 18.5% 21.6% 21.8% 22.7% 60% 40% 39.0% 51.4% 59.0% 35.4% 37.8% 20% 19.4% 19.5%
Slide 18: Sales breakdown by end market
Sales breakdown by end market Shift toward Industrial Manufacturing • Stronger Industrial Manufacturing end market in 100% 7.8% 8.7% 9.6% 11.2% 12.5% accordance with market proposition D&L 7.7% 7.2% International 7.5% 5.6% 5.7% 80% • Slower Electrical and electronics end market due to 18.8% 20.9% 19
Slide 19: Operating profitability
Operating profitability Uneven utilization and slow demand challenging Reported Reported Adjusted Adjusted In CHF million In % of net sales Profitability CHF million % CHF million % 1,000 25 21.5% EBIT 358.6 11.7 358.6 11.7 900 EBITDA 486.0 15.8 486.0 15.8 800 18.6% 19.2% 20 16.4% 700 15.9% 15.8% 16
Slide 20: Swiss franc exposure
Swiss franc exposure Flat development of OPEX in Swiss francs • Share of OPEX in CHF flat whilst sales invoiced in 40% CHF further decreasing 38.4% 39.3% 35% 37.4% • FX impact significant especially vs. EUR and USD 30% 32.8% 32.3% • Reduction of CHF exposure is further targeted by • Continued produc
Slide 21: Earnings per share (EPS)
Earnings per share (EPS) EPS stable • Stable performance on EPS basis EPS in CHF 12 2.5 • Burdened by tax rate development (ETR at 23.8%) 2.50 11 2.50 10 2.00 1.90 2.20 2.0 1.75 1.80 1.80 9 8 1.50 6.95 6.84 1.5 7 6.51 6 5.47 5.14 4.90 5 1.0 4.24 4 3.32 3 2.39 0.5 2 1 0 0.0 2015 2016 2017 2018 2019 2
Slide 22: Payout ratio
Payout ratio CHF 2.50 dividend payout • BoD will propose a payout per share of CHF 2.50 Payout ratio in % Payout per share in CHF • Thereof CHF 1.25 from retained earnings 50% 4.5 • Thereof CHF 1.25 from statutory capital reserve 4.0 • Dividend yield ~2.4% 40% 36.7% 36.6% 36.4% 3.5 (at year-end shar
Slide 23: Net working capital
Net working capital Mix effect | Inventory decrease | Hoffmann factoring termination • Significantly decreased inventory on group level NWC simplified* in % of net sales C2C simplified in days • Decrease despite termination of Hoffmann’s 35% 150 factoring program in September 2023 with adverse 30.1%
Slide 24: Capital expenditure
Capital expenditure Investing to capture market potential CAPEX spending 2023 2022 In CHF million In % of net sales by segment % % 400 6.6% 7% EC 72 73 6.4% 6.1% 6.2% FS 12 8 350 5.6% 5.7% 6% 5.4% D&L 12 9 5.9% 300 5% 4.1% • Decisive expansion and capturing of customer 250 4.3% 4% demand in EC segme
Slide 25: Operating free cash flow
Operating free cash flow Recovery to past performance In CHF million 2023 2022 In CHF million In % of EBITDA 58.7% CF before changes in NWC 395 379 360 60% Changes in NWC –82 –91 49.9% Cash flow from operations 313 288 300 46.2% 50% CAPEX –174 –171 48.5% Operating free cash flow 139 117 240 224 40%
Slide 26: Balance sheet ratios
Balance sheet ratios Equity ratio increasing according to plan • Equity ratio picking up steadily Equity ratio in % CHF million net cash/debt • Further decrease of debt (Revolving Credit Facility) 90% 600 envisaged during 2024 78.9% 80% 75.5% 75.9% 400 • Bond maturity is 2025/2027 (CHF 250m/CHF 150m
Slide 27: Return on capital
Return on capital ROCE remains on high level • Bridge ROCE to ROIC In % of net sales • Impact from goodwill and net cash: –7.9% 30% • Impact from tax effects: –3.6% 26.1% 24.4%* 25% 22.7% 21.1% 19.9% 20.4% 20% 15% 11.2% 9.2% 9.7%* 10% 8.6% 8.9% 8.9% Adjusted EBIT Adjusted EBIT −Tax Rate 17.5% ROCE =
Slide 28: Effective tax rate
Effective tax rate ETR increase due to shift in taxable profits • In 2023 shift of taxable profit towards higher-tax-rate Effective tax rate in % countries 25% 23.8% • Fewer possibilities to use tax loss carryforwards 19.9% • Tax rate 2024 expected to decrease towards prior 20% 17.8% 17.6% adj. year
Slide 29: KPI summary
KPI summary Stable development in challenging environment In CHF million 1H 23 2023 % 2022 % YOY Third-party sales 1,580.7 3,090.8 2,746.1 Net sales 1,573.7 3,073.0 2,738.7 EBITDA Margin 253.1 486.0 15.8 448.1 16.4 –60 bps EBIT Margin 189.9 358.6 11.7 330.3 12.1 –40 bps EBIT adj. Margin adj. 189.9 3
Slide 30: Development by segment
Development by segment Presentation of Annual Report 2023 | March 7, 2024 | Public 30
Slide 31: Headlines Engineered Components segment
Headlines Engineered Components segment Challenging environment • Mixed development of segment’s divisions; Electronics and Industrial impacted by adjustment cycle, dynamic growth in Automotive and Medical • Reported sales of CHF 987.7 million, down –3.9% vs. PY, good growth of 6.2% in 2H vs. 1H 202
Slide 32: Snapshot – Productivity improvements in operations
Snapshot – Productivity improvements in operations Digital transformation in in-house production • Roll-out of digital assistant system across major production sites • Large volume of data calls for “Big Data and Analytics” systems • Enhance manufacturing processes by leveraging digital tools, produ
Slide 33: Headlines Fastening Systems segment
Headlines Fastening Systems segment Position defended • Reported sales of CHF 615.3 million (–4.6% vs. PY). On comparable basis, slight growth of 0.7% achieved • Over the course of the year, segment was negatively impacted by weakened market environment and occasionally high inventories across entir
Slide 34: Ongoing market introduction of product innovations
Ongoing market introduction of product innovations Flexibility and footprint reduction important drivers isoweld® field fastening solution is New full stainless self-drilling The new centering sleeve of the now available in a battery version screws have a considerably lower Center Point System is ma
Slide 35: Headlines Distribution & Logistics segment
Headlines Distribution & Logistics segment Potential realized • Overall good market demand led to reported sales of CHF 1,487.8 million (+38.7% vs. PY) • After a strong first half of the year, market demand deteriorated over the course of the year, decline in order intake partially offset by the hig
Slide 36: Digitalization of products and processes
Digitalization of products and processes Four strategic initiatives defined • Team of around 60 experts from sales, product management, information technology and finance • Initiative I: Optimize, simplify and tailor-made the customer experience by enhancing all front-end channels • Initiative II: H
Slide 37: Outlook 2024
Outlook 2024 Presentation of Annual Report 2023 | March 7, 2024 | Public 37
Slide 38: Guidance 2024
Guidance 2024 EBIT margin around previous year level Mid-term 2023A guidance (CHF) Gross sales SFS development +3–6%* 3,090.8 million *(in local currencies, incl. scope effects) EBIT margin 12–15% 11.7% Guidance reflects challenging geopolitical and economic environment, paired with low visibility.
Slide 39: Strategic priorities
Strategic priorities Careful focus on our main strengths Diversi- Mega- “Local-for- Focus on Solid fication trends local” technology financing Balanced focus on Focus on application Close customer Focus on a core set of Good profitability and a different regions, end areas with strong relationships
Slide 40: Coming up: Our IR agenda for FY2024
Coming up Our IR agenda for FY2024 Annual General Meeting IR Contact: investor.relations@sfs.com Wednesday, April 24, 2024 Publication of Half-Year Report 2024 Thursday, July 18, 2024 Investor Day Thursday, September 5, 2024 Presentation of Annual Report 2023 | March 7, 2024 | Public 40
Slide 41: Inventing success together
Inventing success together