2.1 Healthcare Solutions
Datwyler is a leading supplier of system-critical elastomer components for injectable drug delivery systems. These components are used in billions of prefilled syringes, glass vials and cartridges worldwide, improving patients' lives. With a worldwide network of highly automated production facilities, Datwyler is able to supply locally manufactured components to global pharmaceutical companies in the key economic regions. The market for healthcare components is low cyclical and is characterized by high entry barriers and long-term growth trends such as the aging society in industrialized countries or the increase in living standards in emerging markets.
improve patients' lives
Products and services
High-quality rubber components
for prefilled syringes, pens and injection systemsComponents and closures
for injectable drugs in vialsRubber components
for blood collection systems, IV administration sets, disposable syringes, etc.Rubber components
for diagnostics and medical devices
Target groups
Pharmaceutical and biotech companies
Manufacturers and contract fillers of injectable drugs
Manufacturers of diagnostic and medical products
Manufacturers of parenteral drug delivery systems
Geographical markets
Europe
North and South America
Asia
Australia
Further information
Revenue and earnings
Healthcare Solutions with temporary decline in revenue and marginsIn 2023, the Healthcare Solutions business area was confronted with the almost complete loss of the COVID business. As a result, reported revenue fell in comparison with the very strong previous year to CHF 469.0 million (previous year: CHF 520.3 million), which corresponds to an organic decline of 5.2% due to the substantial negative currency effect. The loss of the high-margin COVID components led to under-utilization of our recently expanded plants and a temporary unfavorable development of the product mix.
As a result, EBIT fell to CHF 74.4 million (previous year: CHF 106.3 million) and the EBIT margin declined to 15.9% (previous year: 20.4%). In the process of optimizing our cost structures, Datwyler takes care to maintain capacities and competences without restricting the use of future growth potential. Nevertheless, thanks to the measures implemented, we were able to improve the EBIT margin to 16.1% in the second half of the year despite negative seasonal effects. To assess the development of the Healthcare business, a comparison with the 2023 reporting should be drawn with 2019, the last year prior to the pandemic. With the same exchange rates and adjusted for the acquisition of Xinhui and the low COVID revenue in 2023, organic revenue growth amounts to 37.6%, corresponding to strong average annual growth of the regular business of 8.3%.
Key developments and priorities
For some years now, Datwyler has been pursuing a growth strategy in its healthcare business which aims to increase the share of revenue generated by high-quality, high-margin products for modern injectable medicines. To this end, Datwyler has systematically invested in the expansion of its global production presence and of its product portfolio, as well as in market development and technical and scientific customer support.
Production presence
In terms of production presence, we are currently focusing on upgrading the plant in China, which was acquired in 2022. This will be achieved through the modernization of the facilities and implementation of Datwyler’s standards and processes.
Product portfolio
During the reporting year, Datwyler expanded the product portfolio, among other things with the introduction of a proprietary film coating technology. This makes Datwyler the first company to offer its customers the optimal components with film or spray coating, depending on the requirements of the injectable medicine.
Market development
For market development, Datwyler has further expanded its traditional measures and activities to include digital marketing campaigns and offers its customers strong scientific support when choosing package components. In this way, the rapidly growing number of small but innovative medicine development companies can be addressed and supported in a targeted and cost-efficient way.
Outlook
Over the short term, the ongoing destocking among customers will limit growth and margin potential at least in the first half of the year. Once the demand situation normalizes, Datwyler will be able to benefit from economies of scale thanks to advanced investments and the production capacities made available by these investments. In addition, Datwyler is strengthening its competitiveness by transferring product lines from European facilities to the recently expanded Indian facility.
In the medium term, Datwyler has a strong foundation in the Healthcare Solutions to exceed market growth and gain market shares through the development work completed over the past few years. Revenue growth will be driven by three developments:
Organic growth
After reducing inventories, organic growth with existing products and customers will accelerate again.The trend of dual sourcing for existing and new medicines
The pandemic showed the healthcare industry how high the risks are of disruptions to the supply chain and how important the availability of packaging components is for the delivery of life-critical medicines. To reduce dependence on individual suppliers or production facilities and to improve business continuity, more and more healthcare and pharmaceutical companies are switching to dual procurement with local production for local markets.Significantly growing number of injectable medicines
Injection is the preferred method to administer. This is shown in the fact that more than half of FDA-approved medicines are injectable. According to forecasts, medicines, among other things, with the metabolic hormone GLP-1 to treat obesity will expand the addressable market further.
With its harmonized global production presence with three identical cutting-edge FirstLine plants on three continents, Datwyler was known during the pandemic to be an extremely flexible and reliable partner for the healthcare and pharmaceutical industry.
The additional customer contacts, together with the large number of new injectable medicines led to a new record of offered projects for existing and new medicines. As the high-value products for biotech drugs are growing significantly faster, their share of revenue will increase continuously.
2023 |
2022 |
Change | |
|---|---|---|---|
Net revenue |
469.0 |
520.3 |
–9.9 % |
Operating result (EBIT) |
74.4 |
106.3 |
–30.0 % |
as % of net revenue (EBIT margin) |
15.9 % |
20.4 % |
n/a |
ROCE1 |
15.9 % |
23.9 % |
n/a |
Average capital employed1 |
466.8 |
443.9 |
+5.2 % |
Capital expenditures1 |
22.0 |
58.2 |
–62.2 % |
Full-time equivalents at 31 December |
2'594 |
2'870 |
–9.6 % |
Datwyler Group uses certain financial performance measures that are not defined by Swiss GAAP. The definitions of these Alternative Performance Measures (APM) are explained in the Financial Report 2023 (pages F58–F59).
2.2 Industrial Solutions
Datwyler is a leading supplier of system-critical elastomer components to the attractive global Mobility, Connectivity, General Industry and Food & Beverage markets. For instance, customer-specific components make an important contribution to driver and passenger safety in more than every second car worldwide. Leading core competencies in solution design, material expertise and operational excellence as well as a worldwide presence with its own production sites form the successful basis for this.
As a recognized development partner, Datwyler maintains close, long-standing relationships with global innovation leaders and has in-depth knowledge of business models, technologies and development trends in the markets it serves.
innovation leaders
Products and services
System-critical components
for cars with all drive concepts. Applications include batteries and powertrains in electric vehicles, brake systems, interior and active assistance and safety systems in all cars as well as fuel and engine management and exhaust gas aftertreatment in combustion enginesSeals and components
for electrical connectors for demanding applications in various markets such as mobility, aerospace or the manufacturing industrySealing components
for upstream systems in the oil and gas industry, aerospace and heavy machinery, power tools, process and water treatment industriesSealing solutions
for portioned food and beverages
Target groups
Automotive system suppliers
Electrical connector manufacturers
Oil and gas service companies
Aerospace and heavy machinery
Manufacturers of power tools
Process and water treatment industries
Manufacturers of portioned food products
Geographical markets
Europe
North and South America
Asia
Further information
Revenue and earnings
Industrial Solutions with operating progressThe Industrial Solutions business area increased its revenue by 8.2% to CHF 688.2 million (previous year: CHF 636.1 million) in 2023. QSR, acquired in 2022, was included for a twelve-month period for the first time. Adjusted for acquisition effects and considerable negative currency effects, organic growth amounted to 3.6%.
In absolute terms, EBIT increased to CHF 46.0 million (previous year: CHF 42.9 million). This corresponds to an unchanged EBIT margin of 6.7%. For the year overall, operational improvements and positive effects from the restructuring measures were more than offset by shifts in the product mix and higher one-off energy costs, especially in the Swiss plant. However, in the second half of the year and despite negative seasonal effects, the positive effects led to an improvement in the EBIT margin to 7.5%, which clearly exceeds the amount of the first six months (5.9%).
Revenue growth of the Industrial Solutions business area was bolstered by both the Mobility and Food & Beverage business units. Despite modest economic development in China, Mobility was able to grow more or less in line with the market average. Food & Beverage significantly exceeded market growth thanks to close cooperation with successful innovation leaders. By contrast, both the Connectors and General Industry business units were affected by destocking among customers. While Connectors was able to hold steady at the prior year’s level adjusted for currency effects, General Industry was hit especially hard compared to the strong previous year due to temporary market weaknesses of individual major customers.
Key developments and priorities
Connectors
2023 was marked, among other things, by the integration of QSR, which Datwyler acquired in May 2022 and manages as an independent Connectors business unit. Through the support of Datwyler specialists, the production processes in the Mexican QSR facility were stabilized and improved. This also steadily and sustainably increased the margin of the new Connectors business unit. The cross-selling projects between the Connectors business unit and the Mobility and General Industry business units are developing pleasingly and will generate additional revenue from 2024.
Mobility
In the Mobility business unit, Datwyler has been working successfully on the transformation to e-mobility. By strengthening its presence with local development engineers in key markets, the company was able to acquire leading electric vehicle and battery manufacturers as new customers. The project pipeline is developing encouragingly and the share of acquired customer projects for vehicle electrification has risen to well over a third for the first time this year. At the same time, the EBIT margins on these projects are in double figures. To ensure cost-efficient production of the future Mobility product portfolio, Datwyler is working to optimize and consolidate the plants. The innovation project of electroactive polymers in stacked design also led to key technical advances in the reporting year and generated a lot of attention among potential customers.
General Industry
The General Industry business unit also acquired promising new projects with existing and new customers in the reporting year, despite temporary market weakness. By digitalizing its marketing and sales and business processes, the business unit is expanding market access and accelerating the acquisition of profitable new orders. In parallel, the product and service offer is being expanded.
Food & Beverage
The Food & Beverage business unit has further optimized its production facilities and processes through internal engineering efforts and in doing so, will strengthen its margins. With the European Union’s new regulation on packaging and packaging waste, packaging materials must be recyclable in the future. Aluminum, which is used by Datwyler for the production of coffee capsules, meets this requirement. To promote a circular economy, Datwyler has already used primarily recycled aluminum for some time now.
Outlook
Despite a demanding environment and modest forecasts for the global Mobility and General Industry markets, Datwyler is cautiously optimistic for 2024. Lower energy costs, optimization of cost structures, and the ongoing recovery of the Connectors business unit should contribute to a continuous improvement of the EBIT margin in the Industrial Solutions business area during the course of 2024.
In the medium term, potential for profitable growth remains intact. Thanks to the stable megatrend in the markets served, Datwyler has promising product pipelines in all four business units. Moreover, the Connectors business unit is intensifying its market development in Europe.
For the Food & Beverage business unit, the European Union's new packaging regulation provides additional opportunities for growth. The requirement for coffee capsules to be recyclable is expected to result in a shift from plastic to aluminum.
2023 |
2022 |
Change | |
|---|---|---|---|
Net revenue |
688.2 |
636.1 |
+8.2 % |
Operating result (EBIT) |
46.0 |
42.9 |
+7.2 % |
as % of net revenue (EBIT margin) |
6.7 % |
6.7 % |
n/a |
ROCE1 |
10.9 % |
10.7 % |
n/a |
Average capital employed1 |
422.7 |
399.2 |
+5.9 % |
Capital expenditures1 |
30.8 |
43.2 |
–28.7 % |
Full-time equivalents at 31 December |
5'322 |
5'585 |
–4.7 % |
Datwyler Group uses certain financial performance measures that are not defined by Swiss GAAP. The definitions of these Alternative Performance Measures (APM) are explained in the Financial Report 2023 (pages F58–F59).
Continuing operations