SFS Harnesses Strong Market Demand in 2021 to Achieve Record Results
Ad hoc announcement pursuant to Art. 53 KR – January 13, 2022
In a dynamic market environment characterized by high demand, supply chain bottlenecks and the COVID-19 pandemic, SFS seized opportunities in each of its segments to increase sales by 11 .0% to CHF 1,893 million, a result which was based on its ability to fulfill customer orders. The resulting high capacity utilization boosted profitability. Based on the provisional and as yet unaudited figures, the SFS Group expects an EBIT margin of around 16%.
Fiscal 2021 was characterized by strong market demand, supply chain bottlenecks and the continued impact of the COVID-19 pandemic. Focusing on temporary capacity adjustments in the previous year enabled the Group to largely preserve jobs and retain know-how, enabling SFS to respond quickly to the recovery in demand. While all three segments benefited from strong demand in the first half, some of which were marked by strong catch-up effects, this demand was increasingly impacted during the year by bottlenecks in our customers’ supply chains. Our own ability to fulfill customer orders has enabled certain divisions to gain market share.
Despite a slight drop in revenue of 2.3% in the second half compared to the first half, revenue increased significantly by 11.0% in fiscal year 2020. As a result, sales for the year under review also significantly exceeded the level generated in 2019 (CHF 1,781.4 million, published). Given the strong base effect, second half sales were up slightly year-on-year.
The development in all individual regions was positive, with the strongest growth of 18.6% reported in Europe due to the dynamics of the automotive and construction sectors during the year under review. The growth of the other regions was between 6.7 and 7.0%.
Technical components: characterized by catch-up effects in automotive-related fields and industrial sectors
The Engineered Components segment recovered significantly following the COVID-19 crisis in fiscal 2020. In the automotive industry, the recovery had already started in the third quarter of 2020 and continued in the first half 2021. Bottlenecks in the semiconductor supply chain began to put pressure on OEM production numbers in the summer months, which also impacted calls. off at SFS.
While the trend in the various industrial niche markets served by the Industrial division overall showed a similar but lagged trend, supply chain issues had a much lesser impact on this division. The Aircraft business remained at a low level but started to show first signs of recovery during the fourth quarter.
The Electronics division, which was expected to measure against a solid base due to the very good results it had generated the previous year, benefited from a still positive market environment.
Demand in the Medical division grew solidly, with a different growth pattern depending on the area of application.
In total, the segment generated sales of CHF 975.2 million, representing growth of 8.6% compared to the same period of the previous year. In addition to the supply chain bottlenecks of our customers mentioned above, the strong base effect is another factor that contributed to the lower growth rate in the second half of the year. Sales growth is almost exclusively organic in nature; currency and consolidation effects had only minor impacts of -0.5% and +0.9% respectively.
Fastening systems: dynamic market situation throughout the year
The exceptional demand situation that the Fastening Systems segment had already successfully exploited in the first half of the period under review to generate record results continued in the second half, albeit at a slightly lower level. This strong demand, however, has resulted in widespread supply shortages in the market. Both divisions were able to largely secure their ability to fulfill customer orders in this challenging environment.
The generally stable situation in terms of the availability of materials and products enabled the Construction division to take advantage of its good positioning and win new customers.
While the Riveting division benefited from the good demand situation with industrial customers, activity with customers in the automotive industry slowed considerably during the second half.
In this exceptional environment, the segment generated sales of CHF 574.9 million, which corresponds to a remarkable increase of 17.4% compared to the same period of the previous year. Consolidation effects contributed +0.5% to reported sales, while currency effects generated +0.3%.
Distribution & Logistics: Good initial situation in the first half exploited
The Distribution & Logistics segment, which mainly serves customers in the industrial manufacturing and construction sectors in Switzerland, experienced substantial growth and reached an all-time high in the financial year just ended. After achieving sales growth of 8.1% in the first half of 2021 compared to the same period of the previous year, the segment was able to grow by 8.3% in the second half thanks to stable market demand in all areas of application and good overall availability of materials.
The resulting segment revenue amounted to CHF 343.0 million in the reporting period, corresponding to an increase of 8.2% year-on-year, of which +0.2% attributable to currency effects.
Better profitability thanks to high capacity utilization
Strong but sometimes volatile market demand led to good overall capacity utilization. High utilization phases, the ability to timely pass on price increases as well as the continuation of targeted cost management practices prompted by the ongoing COVID-19 pandemic and associated risks, should result in a profit margin operating profit (EBIT margin) amounting to approximately 16% of sales.
Detailed and audited financial figures for fiscal year 2021 and guidance for fiscal year 2022 will be presented online at the media and analyst conference on March 4, 2022.