In comparison with the previous year, revenue was up by 21.4% to CHF 1'150.6 million in 2022 (previous year: CHF 947.6 million, continuing operations). Adjusted for negative currency effects of CHF 23.7 million and the revenues of QSR and Xinhui of CHF 127.9 million, which were consolidated for the first time, this corresponds to organic growth of 10.4%. Around one third of the growth comes from the price increases implemented.
The two business areas made different contributions to the revenue growth. Despite the strong decline in revenues for COVID components, Healthcare Solutions recorded organic growth of 13.0%. In Industrial Solutions, organic revenue growth amounted to 7.5%. While the Connectors, General Industry and Food & Beverage business units posted double-digit growth, Mobility was held back by the fall in vehicle production, especially in the first half of the year.
Margin pressure due to significant rise in input costs
To date, Datwyler has been able to pass on the sharp rise in input costs brought about by geopolitical developments and increasing inflation to its customers in all business units. However, due to the delayed impact of the price increases and cost savings implemented, the margin came under pressure. The operating result (EBIT) declined to CHF 149.2 million (previous year: CHF 160.4 million, continuing operations), which equates to an EBIT margin of 13.0% (previous year: 16.9%).
EBIT also includes one-off negative effects resulting from inventories in the acquired balance sheets and impairments on assets due to the temporary closure of the Ukrainian subsidiary totaling approximately CHF 7.5 million. The net result amounted to CHF 104.8 million (previous year: CHF 123.7 million, continuing operations), which equates to earnings per share of CHF 6.16 (previous year: CHF 7.28, continuing operations).
Payout ratio of over 50%
The Board of Directors proposes to the Annual General Meeting a cash dividend of CHF 3.20 per bearer share (previous year CHF 4.20) and CHF 0.64 per registered share (previous year CHF 0.84). With total dividends of CHF 54.4 million and a payout ratio of 51.9%, Datwyler maintains a balance between dividend payments and strengthening the balance sheet. Last year's reported net result of CHF 194.0 million included an exceptional contribution of CHF 70.3 million from operations and from the divestment of online distributor Reichelt.
Value-adding strategic acquisitions
Through its takeover of QSR, Datwyler became a leading global supplier of system-critical seal solutions for electrical connector seals for a wide range of industries at the start of May 2022. Several megatrends such as electrification, connectivity, the Internet of Things and Industry 4.0 offer attractive growth opportunities for QSR's seals and components. The acquisition of QSR has strengthened Datwyler’s market positions in North America and Asia and reduced its dependence on the European market due to QSR’s pro forma annual revenue of CHF 168.5 million and its workforce of some 1'500 employees. QSR is the ideal fit for Datwyler in terms of strategy, core competencies and culture. This has also become evident in the integration work, which is going according to plan and has already led to several cross-selling projects with the Mobility business unit.
At the beginning of March 2022, Datwyler completed the takeover of the Chinese company Yantai Xinhui Packing, which has around 200 employees and generates an annual revenue of over CHF 15 million. With Xinhui, we now have our own local plant that provides us direct access to the fast-growing Chinese healthcare market. The integration work is going to plan despite the pandemic. The process of upgrading the production standard and the product portfolio to higher-quality components is on track. With the help of Xinhui’s customer contacts and sales organization, we were already able to substantially increase healthcare revenue in China in the year under review.
Promising growth and innovation projects
Datwyler also made good progress with and in some cases completed a number of important and promising growth and innovation projects in 2022. The existing site in India successfully put a second healthcare plant into operation, for example, and at the Swiss site, the expansion of production facilities for the Food & Beverage business unit has been largely completed. These capacity expansions are an important basis for the profitable revenue growth in low cyclical, long-term growing markets that Datwyler is targeting over the coming years.
The Mobility business unit is working successfully on the transformation to electromobility and continuously increasing the share of projects focused on products for use in electric vehicles. Various new technologies such as smart rubber components, thermally conductive and electrically insulating materials are opening up attractive new applications in the vehicle of the future. In the form of electroactive polymers in a stacked design, we secured an important technology with patents in the year under review. Examples of applications include thermal management in batteries, comfort functions such as massage seats, and haptic feedback and morphing surfaces at the human-machine interface.
We are confident that, due to their many advantages, the electroactive polymers in a unique stacked design have the potential to become one of the highest-revenue product lines over the long term.
At its Swiss site, Datwyler opened new central technology and innovation labs for the chemical and physical analysis of materials and surfaces in the year under review. By taking this step, we have reinforced our research and development activities and our recognized core competencies in solution design, materials expertise and operational excellence.
Sustainability and operational excellence now an Executive Management function
Our strategic priorities – profitable growth, sustainability, agility and digitalization – form the framework for our decisions and the collaboration with all our stakeholders. With effect from 1 November 2022, we combined our existing activities to enhance sustainability and operational excellence in a new Executive Management function and appointed Sabrina Gérard as a new member of the Executive Management in the role of Chief Sustainability Officer. This underlines the fact that we view sustainability as an integral component of our business and promote it for the benefit of our customers and all our stakeholders.
Among other things, we also worked on the implementation of our climate strategy and on eco-design in 2022. A good example is our research into replacing petrochemical-based materials with those made from renewable raw materials. As part of our climate strategy, we installed our own photovoltaic systems at five further sites. As a result, the electricity that we obtain from renewable sources increased by 16.4% to 87'729 MWh and CO2 emissions per revenue unit fell by a further 4.7%. You can find more information on our sustainability achievements in our Sustainability Report.
Encouraging order book – many uncertainties
Datwyler has made a successful start to the new year, with good performance in all business units, solid demand and an encouraging order book. At the same time, however, the numerous geopolitical and macroeconomic uncertainties such as the war in Ukraine, the course of the pandemic in China, rising input costs and a possible economic downturn call for caution. In this context, Datwyler is aiming to improve its operating result in 2023.
Profitable growth potential intact
We remain confident with regard to the medium-term outlook. On the assumption that the environment will normalize, we confirm our medium-term objectives with annual revenue growth of 6% to 10% and an EBIT target range of 18% to 21%. Thanks to its value-adding acquisitions, the associated potential synergies and the progress made in its growth and innovation projects, Datwyler is in a strong strategic position. We have a clear focus on system-critical elastomer components that make a key contribution to the functionality and quality of our customers’ systems while at the same time accounting for a very low proportion of these system’s overall costs. We occupy leading positions in the markets we serve thanks to our products and our longstanding, close customer relationships with the market leaders. Global megatrends, long-term growth drivers and high barriers to entry create profitable growth potential. At the same time, we generate over 70% of revenue in markets that are low cyclical but are nevertheless growing. In the near future, our focus will be on achieving organic growth by scaling the business model and production capacities and on strengthening the balance sheet.
Thank you for your extraordinary commitment
With its material shortages, cost increases and supply bottlenecks, 2022 was a very challenging year that demanded a great deal from our employees in all departments and at all levels. In addition to our day-to-day business, it was also necessary to integrate the newly acquired companies QSR and Xinhui. We would like to express our sincere gratitude to all of our employees for their tireless and dedicated efforts.. We also thank our customers for their constructive cooperation. And finally, a thank you goes to you, dear shareholders, for your loyalty to Datwyler.
On behalf of the Board of Directors and the Executive Management