«New» Datwyler with significantly higher margin.

With the announced sale of the distribution companies Distrelec and Nedis, Datwyler is now focusing on the existing high-growth, high-margin sealing business. During 2019, the company was faced with a slowdown in the economy as a whole, which led in turn to difficult market conditions. The trade dispute between the USA and China led to a reduction in inventories, particularly in the automotive sector, and a decline in demand, whereby this decline varied from region to region. Thanks to good strategic positioning in low cyclical markets and some positive acquisition effects, Datwyler was able to increase net revenue for continuing operations (Sealing Solutions division and Reichelt) to CHF 1’088.5 million (previous year: CHF 1’060.9 million). Adjusted for currency effects, this equates to growth of 5.0%. Integration of the 2018 acquisitions Parco and Bins is proceeding according to schedule and has already generated added value. Adjusted for these two acquisitions, revenue for continuing operations declined slightly by 0.6%. Including the distribution companies Distrelec and Nedis, Datwyler’s net revenue is virtually unchanged at CHF 1’360.8 million (previous year: CHF 1’361.6 million).

The announced sale of the distribution companies Distrelec and Nedis led to asset impairment charges and one-off costs for the restructuring of the Group of CHF 195.0 million in the 2019 financial statements. There were also start-up costs for the new Healthcare plant in the USA of CHF 9.2 million. Overall, the negative one-time effects in the reporting year resulted in a reported operating result (EBIT) of CHF –40.3 million and a reported net result of CHF –86.6 million. At an operational level, however, Datwyler again reported solid profit figures in the reporting year despite the difficult environment. Thanks to the early adoption of efficiency-improvement programmes, continuing operations achieved adjusted EBIT of CHF 168.7 million (previous year: CHF 183.5 million) and an adjusted EBIT margin of 15.5% (previous year: 17.3%). The decrease on the previous year is largely due to the cyclically induced decline in demand for automotive components and higher depreciation. The adjusted net result for continuing operations was CHF 129.7 million (previous year: CHF 140.2 million). The previous year’s figures highlight the potential of the “new” Datwyler in a normal market environment. The investment programme to expand production capacities is nearing completion, with investments in the reporting year declining accordingly as planned to CHF 104.6 million (previous year: CHF 138.0 million). In view of the solid profitability levels and given that prospects look promising, the Board of Directors is asking the Annual General Meeting to pay an unchanged cash dividend of CHF 3.00 per bearer share and CHF 0.60 per registered share. This equates to a payout ratio of 43.1% of the adjusted net result of the former Datwyler Group.

The strong market positions are based on the recognised core competencies in terms of solution design, materials expertise and operational excellence. With the announced new organisational structure, Datwyler wants to make it even easier for customers to draw on and benefit from its strengths and decades of experience. The pace of technological progress means our globally active customers are running increasingly powerful systems. But these are becoming increasingly complex too. This is why customers are paying ever greater attention to Datwyler’s core competencies and recognising the value they bring. As a result, there is growing demand for high-quality system-critical Datwyler components across a wide variety of industries, and these components no longer only seal, but also perform a variety of functions. Taken together, its core competencies allow Datwyler to support its customers as a development partner – from the original design study and prototype phase through to global production of billions of parts based on a zero-defect philosophy throughout the entire life cycle of the product. The successful partnership with Nespresso is just one example of how this approach can work. And with FirstLine for healthcare components and Lean&Clean for automotive components, Datwyler has sector-leading production standards.

Structural growth trends in existing and new markets.

Megatrends such as the rapid development of living standards in emerging countries or the pace of technological progress are ensuring that growth remains high in the markets served. In the Healthcare market, further structural growth trends such as the ageing society in industrial countries, the increase in rates of chronic diseases like diabetes and rising numbers of injectable drugs are boosting demand. In the Mobility (previously Automotive) market, new opportunities are emerging in the wake of increasingly stringent exhaust gas standards, the electrification of vehicles and autonomous driving. Here, Datwyler is working on projects relating to seals for sensors, high-voltage connectors and housing for power distribution equipment. Besides developing its core business, Datwyler is also working on innovations with a view to accelerating long-term organic growth. The key themes here are smart rubber and soft dry electrodes, which are paving the way for interesting new applications in the fields of digital health, diagnostics and wearables – as well as driver-vehicle interfaces and digitalisation in vehicles. The common thread with all these innovations is how Datwyler is using its unique core competencies, in terms of solution design, materials expertise and operational excellence, in order to develop new system-critical applications for existing or new market segments.