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Annual Report 2023
Annual Report 2023

Temporary margin pressure due to loss of the COVID business and under-utilization

The 2023 financial year was marked by the nearly complete loss of the high-margin COVID business and the reduction of high security stocks among customers from nearly all sectors. These two one-off negative effects weighed on revenue development and led to under-utilization of the recently expanded production capacities and to an unfavorable development in the product mix. However, thanks to the intact megatrends and the company’s strong market position, Datwyler was able at the same time to gain a large number of promising new projects with new and existing customers.

All key figures
All key figures

Review

Annual Report 2023
Maintained revenue despite significantly negative currency effect

Despite the destocking among customers, Datwyler was able to maintain revenue at the prior year’s level at CHF 1'151.5 million (previous year: CHF 1'150.6 million). The two companies acquired in the previous year, QSR and Xinhui, were taken into account for a twelve-month period for the first time. This led to a positive acquisition effect of CHF 55.0 million or 4.8%. The strong Swiss franc caused substantial negative currency effects of CHF 50.4 million or -4.4%, resulting in a slight organic decrease in revenue of 0.3%.

Emerging from the low point: margin to recover in the second half of the year

At the level of EBIT, the insufficient capacity utilization due to destocking among customers, the one-off restructuring costs and the temporarily higher energy costs led to a decline to CHF 120.4 million (previous year: CHF 149.2 million). The EBIT margin temporarily declined to an unsatisfactory 10.5% (previous year: 13.0%). Despite negative seasonal effects and restructuring costs, the EBIT margin recovered in the second half of the year, and at 10.9%, exceeded the figure from the first six months (10.0%).

In the process of optimizing our cost structures, we took care to maintain our capacities and competencies for processing new customer projects to ensure medium-term growth potential was not put at risk. Due to the lower EBIT and the significantly higher financial expenses, the net result declined to CHF 66.8 million (previous year: CHF 104.8 million). The net result per share came to CHF 3.93 (previous year: CHF 6.16). The strong Swiss franc also had a significant negative impact on the profit figures in the reporting year.

Stable dividend

The cash flow statement normalized in 2023 compared to the previous year, which was affected by acquisitions. Cash from operating activities amounted to CHF 194.9 million (previous year: CHF 118.6 million). Through advanced investments, we were able to reduce our investment activity significantly. Accordingly, free cash flow in 2023 improved to a strong CHF 136.7 million. This allows us to further strengthen the balance sheet and still propose a stable dividend. The Board of Directors proposes to the Annual General Meeting a cash dividend of CHF 3.20 per bearer share and CHF 0.64 per registered share.

Annual Report 2023
Proposal of a cash dividend of CHF 3.20 per bearer share

Strategic topics

Technological advances open up further growth potential

Thanks to the expansion of its production capacities and on-schedule integration of the most recent acquisitions, Datwyler is in a strong position strategically to tap into the attractive potential for profitable growth in the markets it serves. Technological advances mean the systems of our customers and the end products in which our system-critical components are used are becoming increasingly powerful, but also more complex. This increases the mechanical, thermal, and chemical requirements of our components, but also opens up new applications and additional growth potential.

One example of this is the trend toward biotechnological medicines which can only be administered by injection. Already over half of FDA-approved medicines are injectable. The required injection devices, whether it be syringes or portable auto-injectors, only function with high-quality elastomer components. Another example is the electrification of vehicles. In the drive train, batteries, and driver assistance systems, high-quality Datwyler products made from newly developed materials make a significant contribution to the functioning of subsystems and the safety of drivers and passengers.

Annual Report 2023
Contribution to
improve patients' lives
Business Area
Healthcare Solutions
Annual Report 2023
Development partner for
innovation leaders
Business Area
Industrial Solutions

New customers and projects thanks to strengthened core competencies

In order to leverage these new growth opportunities, we have continuously strengthened our recognized core competencies over the years by commissioning a central technology and innovation lab and expanding the material development and engineering teams. Through the combination of our solution design, materials expertise, and operational excellence, we are able to support our customers as development partners from the design study and the prototype phase through to global serial production. At the same time, our three core competencies allow for high levels of synergies across all business units.

In the reporting year, we introduced, among other things, the new UltraShield film coating for healthcare components and new products for temperature management in batteries. We also achieved significant progress in industrializing electroactive polymers in a patented stacked design. The new products, coupled with our strong market position, have resulted in a large number of promising new projects with new and existing customers. Particularly in Healthcare Solutions, Mobility, and General Industry, we have gained several global innovation leaders as new customers, all of which have the potential to develop into long term major customers.

Annual Report 2023
The power of innovation for battery systems
Thermo management
Annual Report 2023
Advanced manufacturing of a novel actuation technology
Electro active polymers
Annual Report 2023
The film coated solution for safely storing innovative drugs
UltraShield™

Further development of sustainability in difficult conditions

Datwyler has a comprehensive sustainability strategy with 12 focus topics structured in line with the globally established ESG concept (Environmental, Social, and Governance). Each topic bundles activities and projects, and contains clear responsibilities with measurable objectives for effective management. This way, we take account not only of our impacts on the environment and society, but also the effects of ecological, social, and regulatory developments on the company. To the benefit of our stakeholders, we have driven forward our sustainability activities, despite the difficult environment. This is evident, among other things, in the EcoVadis gold standard, which places us among the top 5% of the more than 100’000 companies analyzed. The positive ratings from regularly conducted employee and customer surveys also motivate us.

Considering currency-adjusted revenue, we further reduced the consumption of heating fuels, electricity as well as waste volume per revenue unit again in the year under review. The share of electricity from renewable sources has increased further to 38.3%. With a new human rights guideline and updated code of conduct, we are raising awareness among employees, suppliers, and customers of possible human rights risks in our own operations and along the value chain. In addition, selected sustainability information is now subject to a limited assurance by the auditor.

Changes in the Executive Management

As announced in October 2023, after seven years as CEO and 18 years in Datwyler’s Executive Management, Datwyler CEO Dirk Lambrecht (63) has decided to relinquish his operational roles at the end of March 2024. He will be proposed for election to the Board of Directors at the upcoming General Meeting. The Board of Directors thanks Dirk Lambrecht on behalf of the shareholders and employees for his high level of commitment to Datwyler. For almost two decades, he has succeeded in expanding the current business organically with system-critical elastomer seals and through acquisitions.

The Datwyler Board of Directors has appointed Volker Cwielong (46) to take over as new CEO on 1 April 2024. He has broad-based entrepreneurial leadership experience that also includes the successful market launch of new product lines, acquisitions, and reorganizations. Most recently, he was responsible for the globally operating Purem business area of the German automotive supplier Eberspächer.

Newspaper icon More about the succession

Further, the Board of Directors has appointed Judith van Walsum as new CFO and Head of the Group function Finance & Shared Services. She succeeds Walter Scherz, who has decided to pursue a new professional challenge outside Datwyler. Judith van Walsum has held various global management positions at Roche Group since 2004, most recently as CFO and Head of IT at Roche Diabetes Care with revenue of over CHF 1.4 billion. She has also been a member of the Datwyler Board of Directors since the 2022 Annual General Meeting and so is already familiar with the company. She will not stand for re-election to the Board at the forthcoming Annual General Meeting on 14 March 2024. In Judith van Walsum we are gaining a proven manager with extensive financial and strategic expertise as our new CFO. Her career path will enable her to strengthen the pharma and healthcare expertise in Datwyler’s Executive Management and she will be an asset to that body.

Judith van Walsum will take over as CFO effective 1 June 2024. Until then Walter Scherz will remain CFO and ensure a smooth handover. Walter Scherz joined Datwyler in 2012 and held various positions, finally as CFO since 2020. We would like to thank Walter Scherz warmly for the fruitful and agreeable working relationship and for the commitment and dedication he has shown to Datwyler. We very much regret his decision and wish him all the best for his future career.

Outlook

Cautiously optimistic outlook despite challenging environment

Annual Report 2023

In the immediate future, the focus will be on achieving profitable organic growth by scaling the business model and production capacities and on strengthening the balance sheet. In the process, Datwyler intends to tap into the potential of its existing customers and markets more effectively, extend the markets it can serve with high-quality products, expand into new regions with the Healthcare and Connectors business units and increase the share of revenue generated by new products from the innovation pipeline. The large number of promising new projects with existing and new customers shows that the growth trends are intact in the markets with high entry barriers that Datwyler serves. For that reason, Datwyler confirms the medium-term objectives communicated to date.

Despite a challenging environment, Datwyler remains cautiously optimistic for the year 2024 on the whole. On the one hand, sustainably optimized cost structures, lower energy costs, the continuous recovery of the Connectors business unit, and the decline in the price of raw materials expected for this year should support the margin. On the other hand, geopolitical uncertainties, the strengthening of the Swiss franc, ongoing destocking at customers, recessive tendencies, and the modest forecasts for the global Mobility and General Industry markets call for caution. Accounting for the opportunities and risks, we expect organic revenue growth in the low single-digit percentage range and an improved EBIT margin.

Thanks

We would like to take this opportunity to send a heartfelt thanks to our employees for the high level of commitment they show to Datwyler. It is the competencies and creativity of each and every employee which makes the development of new products and acquisition of new customer projects possible.

We would also like to show our gratitude to our new and existing customers for the trust they place in us with every new order. Our shareholders also deserve our thanks for their loyalty to our company.

On behalf of the Board of Directors and the Executive Management

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Published, edited and designed by:

Dätwyler Holding Inc.
Gotthardstrasse 31, 6460 Altdorf, Switzerland
T +41 41 875 11 00, F +41 41 875 12 28
info@datwyler.com, www.datwyler.com

Consulting and support for sustainability report: Sustainserv, Inc.

Disclaimer

The Annual Report contains forward-looking statements. These statements reflect the Group's current assessment of market conditions, economic developments and future events. However, these forward-looking statements are subject to economic, regulatory and political risks, uncertainties, assumptions and other factors over which Datwyler has no control. Unforeseen events could therefore cause actual developments and report to differ materially from those anticipated and from the information published in this report. To that extent, all forward-looking statements contained in this report are qualified in their entirety and Datwyler cannot guarantee that they will prove to be correct. Datwyler is under no obligation, and assumes no liability, to update any such forward-looking statements. This document is neither an offer nor a solicitation to buy or sell Datwyler securities.

This Annual Report is available in English and German. The German version is binding.

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