SFS increased sales and net income in the financial year 2019
News – 6 March 2020
SFS Group coped well with the challenges of the financial year 2019. This was achieved thanks to strong innovation power on the one hand – true to its claim of “Inventing success together” – and thanks to its balanced target market portfolio on the other hand. Sales grew by 2.5% to CHF 1,781.4 million. The adjusted EBIT margin of 13.4% was better than projected. Full-year results were driven by a significant improvement during the second half. Consolidated net profit rose by 6.5% to CHF 206.5 million.
SFS Group’s financial year 2019 was marked by considerable challenges, such as weak demand from customers in the automotive and electronics markets. Over the course of the year this weakness spread to related market segments, while trade conflicts and political tension put an additional strain on business. Against this backdrop, we can affirm that the SFS Group coped well with the financial year 2019. That was clearly reflected in the significant improvement of its performance during the second half of the year. SFS profited from its presence across a balanced range of different markets and from its clear focus on customer needs and innovation trends. The company is well positioned and successfully defended its competitive position. This was evident in the ramp-up of major projects, in particular during the second half. Thanks to these projects, SFS returned to organic growth as expected. Sales in the second half were 3.5% above the figure of the prior-year period. Organic growth accounted for 1.1% of that growth. Organic sales growth in the first half of 2019 was still negative at –2.4%.
Consolidated third party sales for the full financial year of 2019 amounted to CHF 1,781.4 million. This corresponds to an increase of 2.5% from the previous financial year. Changes in the scope of consolidation had a positive effect of 4.4% on sales growth. Foreign currency translation had a negative effect of –1.3%. Organic sales growth for the full year was slightly negative at –0.6%.
Share of sales from Americas region significantly increased
SFS Group’s targeted markets are broadly based geographically. Sales in Asia, Europe and Switzerland were slightly lower, pressured on the one hand by negative currency effects and on the other hand by decreasing momentum. The sharp increase in sales from the Americas region is attributable to the acquisition of Triangle Fastener Corporation (TFC) and to the organic growth of successful products and services for the construction industry and, in particular, the medical device industry. Total sales in the Americas rose by 25.0% (organic 5.0%) and accounted for 21.6% of consolidated sales.
Operating profit improved in the second half
With an adjusted EBIT margin of 14.2%, SFS Group managed to significantly improve its operating performance in the second half. Compared to the first-half EBIT margin, this represented an increase of 160 basis points. Higher profitability was fueled by sales growth in the Engineered Components segment, by measures taken to strengthen the profitability and by positive seasonal effects. Adjusted operating profit amounted to CHF 239.1 million (previous year: CHF 243.1 million). The corresponding adjusted EBIT margin of 13.4% is better than the guidance given at mid-year 2019. Reported operating profit amounted to CHF 236.3 million. The difference in the adjusted figure is attributed to non-recurring effects. Consolidated net profit was positively impacted by a one-term effect of CHF 17.2 million arising from the capitalization of deferred tax assets. Group net profit of CHF 206.5 million (previous year: CHF 193.9 million) corresponds to 11.6% of Group sales.