Progress made with respect to sustainability
In early June, SFS published its
Sustainability Report 2021 in accordance with the GRI Standards (“Core” option). Despite the challenging environment in the financial year 2021, further important progress was made towards achieving the ambitious targets, for example occupational accidents were reduced by –12.8% and CO2 emissions by –11.9% (on a like-for-like basis).
SFS would like to expand the share of self-generated electricity and therefore plans to build a wind turbine on the company’s premises in Heerbrugg (Switzerland). This will enable SFS to generate approximately 10% of its electricity needs in Switzerland itself. Around 10% of SFS’s electricity needs in Switzerland are already covered by existing photovoltaic installations. Additional future photovoltaic installations offer the potential for approximately another 10%. This would mean SFS generating around 30% of its electricity needs in Switzerland itself in the future. SFS has also made major efforts to build more photovoltaic installations at its sites outside Switzerland, for example Nantong (China) and Johor Bahru (Malaysia).
Stable financing for the Hoffmann transaction
To partly finance the purchase price, the shareholders of SFS Group approved the proposal to create authorized capital in the amount of no more than CHF 160,000 (which corresponds to a maximum of 1,600,000 shares) at the Extraordinary General Meeting on January 31, 2022. On the day of completion of the transaction, a part of the purchase price was paid in the form of 1,400,000 new shares and 200,000 existing shares. The share capital of SFS Group AG now amounts to CHF 3,890,000 and is divided into 38,900,000 registered shares with a nominal value of CHF 0.10 each. The new share capital created took the form of a capital contribution. This means that a proportion of the dividends can be distributed to private individuals resident in Switzerland free of withholding and income tax. The total capital contribution reserve that can be used in this way amounts to around CHF 165 million.
On May 18, 2022, two fixed-rate bonds with terms of three (CHF 250 million) and five years (CHF 150 million) were successfully placed. The settlement date was June 8, 2022. The coupon rates for the two bonds are 1.00% and 1.45% respectively. The proceeds of the placement are being used to refinance the Hoffmann transaction. SFS received a good rating (BBB+) from Zürcher Kantonalbank and Credit Suisse (outlook “stable”).
Outlook: High level of flexibility still required
How the economy will perform in the second half of 2022 is far from certain: geopolitical tensions, the war in Ukraine, an impending energy shortage in Europe, sustained disruption in supply chains and ongoing restrictions as a result of the COVID-19 pandemic are increasingly having an impact on the global economy. The associated high inflation is having a negative impact on consumers and supply chains in the form of rising prices and costs.
Against this backdrop, SFS expects business activities to slow in the second half of 2022. SFS expects sales growth to remain unchanged at 3–6% for the year as a whole – before the consolidation of Hoffmann – even though uncertainty has increased in the course of the financial year. In addition, a sales effect of CHF 720–770 million is expected for the current financial year as a result of the consolidation of Hoffmann (eight months of consolidation in 2022). For SFS Group as a whole, including Hoffmann, an adjusted EBIT margin of 12–15% is expected due to mix shifts resulting from the acquisition of Hoffmann. This assumes no significant worsening in the underlying economic conditions or pandemic-related restrictions.
Due to the strategic international positioning of the D&L segment and the resulting mix shifts, SFS revises its medium-term guidance. While the sales growth target for the entire company remains unchanged at 3–6%, the target range for the adjusted EBIT margin is newly set at 12–15%.
Link to the Half-Year Report 2022