Arbonia AG / Key word(s): Annual Results
02-March-2021 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.
Annual results 2020 (continuing and discontinued operations)
- Currency-adjusted revenue growth of 2.1%
- Revenue decrease in Swiss francs of 1.4%
- EBITDA1: +25.9% from CHF 125.4 million to CHF 157.8 million.
- EBIT: +84.6% from CHF 39.7 million to CHF 73.3 million.
- Group result: +71.4% from CHF 26.2 million to CHF 44.9 million.
- Combined dividend payment for the financial years 2019 and 2020 of CHF 0.47 (CHF 0.22 for 2019 and CHF 0.25 for 2020)
Strategic pillars and a trend-setting organisation as of July 2021
- Integration of the Sanitary Equipment Division into the Doors Division: focus on wood and glass solutions
- Change of leadership in the HVAC Division: Ulrich Bornkessel steps down as CEO of the HVAC Division and member of Arbonia Group Management due to age and, as planned, hands over to the Division's long-standing COO, Alexander Kaiss
- From summer 2021, the new Arbonia will consist of two similarly large, focused divisions and a lean group management
- New holding structure and governance as of April 2022: Alexander von Witzleben steps down as CEO as planned at the 2022 Annual General Meeting and is simultaneously proposed to the General Meeting as Executive Chairman of the Board of Directors
- Expanded focus on sustainability: First publication of a GRI-compliant sustainability report as an integral part of the 2020 annual report
Arbon, 2 March 2021 - For the financial year 2020, currency-adjusted revenue growth of 2.1% and in Swiss francs a decline of -1.4% from CHF 1416.0 million to CHF 1396.3 million resulted for the continuing and discontinued operations. The measures for a targeted increase in profitability ensured that EBITDA increased by 25.9%, compared to the previous year, to CHF 157.8 million (previous year: CHF 125.4 million, with one-time effects mainly from closures and ramping up of production plants). This corresponds to an EBITDA margin of 11.3% compared to 8.9% in the previous year. EBIT benefited disproportionally from this positive development and increased by 84.6% to CHF 73.3 million (previous year: CHF 39.7 million). Despite a lower financial result due to the appreciation of the Swiss franc and a higher tax burden due to the better pre-tax result, Arbonia was able to increase its group result by 71.4% to CHF 44.9 million (previous year: CHF 26.2 million).
Derived from these earnings figures, cash flow from operating activities increased by 26.4% from CHF 111.8 million to CHF 141.3 million and the free cash flow by 527.3% from CHF 8.4 million to CHF 52.5 million.
Explanations, definitions, and reconciliations for the alternative performance key figures are found in the annual report 2020 on pages 209 - 214.
1 As a comparison for analyst consensus:
- EBITDA without one-time effects: +18.1% from CHF 134.8 million to CHF 159.2 million.
- EBIT without one-time effects: +44.5% from CHF 52.3 million to CHF 75.6 million.
- Group results without one-time effects: +28.0% from CHF 36.5 million to CHF 46.7 million.
At the beginning of January 2021, Arbonia announced that it would sell the Windows Division, subject to the required approval by the responsible competition authorities, to the Danish DOVISTA Group. Excluding this non-continuing operation, the Arbonia Group's key figures for the 2020 reporting year are as follows:
Currency-adjusted revenue grew by 2.0% and revenue in Swiss francs decreased by -1.8% from CHF 1057.8 million to CHF 1038.4 million. EBITDA without one-time effects increased by 6.3% over the previous year from CHF 107.7 million to CHF 114.5 million. EBITDA with one-time effects came to CHF 116.3 million, 15.5% above the previous year (CHF 100.7 million). EBIT without one-time effects reached CHF 52.1 million (previous year CHF 49.1 million, +5.9%), while EBIT with one-time effects came to CHF 53.9 million (previous year CHF 40.1 million, +34.4%). The group result without one-time effects fell slightly by -6.6% from CHF 30.1 million to CHF 28.1 million; with one-time effects, it reached CHF 29.7 million (previous year CHF 22.5 million, +31.9%).
Continuous dividend policy
Based on the positive result for the reporting year, the Board of Directors of Arbonia proposes to the shareholders to distribute a dividend of CHF 0.25 per dividend-bearing share for the 2020 financial year. The Board of Directors will also propose to them to distribute the deferred dividend of CHF 0.22 per dividend-bearing share for the 2019 financial year as well. In total, a combined dividend payment of CHF 0.47 per dividend-bearing share will therefore be distributed to the shareholders after the General Meeting on 23 April 2021. Half of this amount, i.e. CHF 0.235, will be paid as a dividend from retained earnings and CHF 0.235 from capital contributions. As announced, Arbonia thus continues to increase dividend payments by around 10% starting in the 2018 financial year (CHF 0.20).
High shareholders' equity and reduction of net debt
The total assets of Arbonia as of 31 December 2020 decreased only negligibly to CHF 1515.2 million compared to the previous year (CHF 1534.4 million). This is mostly due to the exchange rate conversions of assets and liabilities held in foreign currencies as of the balance sheet date. However, despite negative exchange rate effects, shareholders' equity increased to CHF 893.2 million (previous year: CHF 873.3 million), which is due to the net profit and the deferred dividend for the 2019 financial year. Consequently, the equity ratio also increased from 56.9% to a very solid 59.0% at the end of the year.
The net debt decreased as per 31 December 2020 by around CHF 40 million to CHF -140.6 million (previous year CHF -180.6 million). The leverage ratio (net debt/EBITDA) fell to -0.9x (previous year: -1.4x), which is well below the defined value of the covenant, so that Arbonia has sufficient strategic and financial leeway. In addition, Arbonia renewed the syndicated loan of CHF 350 million, which expires in 2021, ahead of schedule in November 2020. The firmly committed syndicated loan facility now amounts to CHF 250 million and thereby reflects the improved and solid financial situation of Arbonia, which is reflected in more advantageous terms and conditions.
Developments of the Arbonia Group in 2020
In the reporting year, Arbonia continued to focus on the relevant drivers of energy efficiency, urbanisation, digitisation, as well as automation. It also continued to push the expansion and modernisation/digitisation of its production capacities at all locations.
In the reporting year, the HVAC Division achieved revenue amounting to CHF 529.1 million. This represents a decrease of -4.6% in comparison to the previous year (CHF 554.7 million). Adjusted for currency effects, however, the revenue closed at -0.4%, just slightly below the previous year as well. However, as a result of immediately implemented cost-cutting measures and a variable cost structure, the division succeeded in improving the EBITDA margin to >11%. EBITDA without one-time effects amounted to CHF 59.6 million and was thus 1.0% above the figure for the previous year (CHF 59.0 million). EBITDA with one-time effects amounted to CHF 59.2 million, which corresponds to an increase of 14.8% (previous year: CHF 51.6 million). EBIT without one-time effects was CHF 30.0 million, -6.5% below the previous year's figure of CHF 32.1 million, but EBIT with one-time effects, however, closed with CHF 29.6 million, 30.3% above the previous year (CHF 22.7 million).
The climate packages of the European countries provide for tax depreciation and subsidies for the modernisation of houses and especially heating systems in order to reduce CO2 emissions. For several years now as well as in the reporting year, the HVAC Division has consistently pursued its strategy of being an innovative provider of holistic heating systems and their components: from modern heat generation and optimum heat exchange to energy storage for all types of buildings and application areas, both for the new construction and renovation markets.
The business development of the Sanitary Equipment Division was gratifyingly positive in the reporting year. Revenue increased from CHF 143.8 million in the previous year to CHF 145.0 million, which corresponds to a growth of 0.8%. When adjusted for currency, this resulted in a revenue growth of 4.0%. At CHF 17.0 million, EBITDA without one-time effects was 12.2% above that of the previous year (CHF 15.1 million). There were no one-time effects in the reporting year. In the previous year, EBITDA with one-time effects amounted to CHF 14.7 million and EBIT with one-time effects amounted to CHF 9.0 million. EBIT without one-time effects was CHF 11.0 million in the reporting year and was thus 16.1% above the previous year (CHF 9.5 million).
In the reporting year, the Windows Division achieved a net revenue of CHF 357.9 million, which represents a decrease of -0.1% in comparison to the previous year (CHF 358.2 million). When adjusted for currency effects, this resulted in growth of 2.2%. Without one-time effects, EBITDA grew 65.0% from CHF 27.1 million in the previous year to CHF 44.8 million. EBITDA with one-time effects improved 71.9% from CHF 24.7 million in the previous year to CHF 42.4 million. EBIT without one-time effects changed from CHF 3.2 million in the previous year to CHF 23.6 million (+636.5%). With one-time effects, EBIT increased from CHF -0.4 million in the previous year to CHF 20.3 million in the reporting year.
The strategically most far-reaching decision in 2020 was the sale of the Windows Division to the Danish DOVISTA Group, which was agreed and announced at the beginning of January 2021. The transaction was signed on 4 January 2021. The completion, subject to approval by the relevant competition authorities, is expected in the second quarter of 2021. The inflowing funds to Arbonia from the transaction will amount to approximately CHF 350 million, resulting in a strong cash position.
A significant portion of the sales proceeds will be used to further increase the company value by accelerating the further development and strengthening the remaining divisions of Arbonia, both organically as well as through targeted acquisitions. Various strategic initiatives are being considered and some are already being implemented.
The Doors Division achieved a revenue growth of 1.4% in the reporting year 2020, from CHF 359.4 million in the previous year to CHF 364.4 million. Adjusted for currency effects, the revenue increased by 5.0%. EBITDA without one-time effects grew from CHF 44.0 million in the previous year to CHF 49.1 million (+11.8%). In the reporting year as well as in the previous year, there were no one-time effects at the EBITDA level. EBIT without one-time effects amounted to CHF 24.1 million, compared to CHF 19.6 million in the previous year (+23.2%). While there were no one-time effects at the EBIT level in the reporting year, EBIT with one-time effects amounted to CHF 19.5 million in the previous year. To counteract the negative effects of the COVID-19 pandemic, the division implemented various cost-saving programmes and postponed some investments.
In 2020, the Doors Division continued to focus on its multi-year investment programme to increase productivity and expand capacity to improve delivery performance. The investment volume of CHF 48 million went largely into capacity expansion at the German door production plants Prüm and Garant. Following these investments, the Doors Division will be able to produce around 900 000 more wooden doors with corresponding frames in 2023/2024 across all locations than before.
Detailed reporting on the divisions can be found in the printed Annual Report 2020 on pages 13 ff and in the online report www.arbonia.com/report2020.
Strategic pillars and a trend-setting organisation as of July 2021
- The Sanitary Equipment Division with its shower doors and shower enclosures will be integrated into the Doors Division. The strategic logic of the integration lies in the better use of synergies in joint market development in contract sales on the one hand and in procurement on the other. In addition, the product range of the Doors Division with functional and interior doors will be expanded to include shower doors, and in the medium term the glass doors and glass partitions area can be expanded for interiors. The Doors Division is strengthening its position as a single-source solution provider for accessibility, including the keyless KIWI access system.
The integration of the Sanitary Equipment Division will take place on 1 July 2021. The Doors Division will be divided into the Wood Solutions and Glass Solutions Business Units from that date. As co-Head of the Doors Division, Markus Hütt will additionally take over the management of the Glass Solutions Business Unit.
Knut Bartsch, Head of the Sanitary Equipment Division and simultaneously a member of Arbonia Group Management, will give up these responsibilities on 30 June 2021 and focus on his other functions in the Group.
The Doors Division will be able to increase its capacities in the wood solutions (wooden doors) area by 40% at the Prüm (D) and Invado (PL) production plants and by 30% at the Garant production plant in Eastern Germany by 2023/2024. The investments in the capacity expansion at Invado were completed in 2020.
Based on this expected and sustainable organic growth, the robust profitability of the Doors Division with the integrated Sanitary Equipment Division as the Glass Solutions Business Unit, and the liquidity of the group, additional inorganic growth is also being sought by means of targeted acquisitions in existing and/or neighbouring markets.
- After nine years at Arbonia and since 2018 as Head of the HVAC Division and member of Arbonia Group Management, Ulrich Bornkessel will retire on 30 June 2021. He will be succeeded by the long-serving COO of the HVAC Division, Alexander Kaiss, on 1 July 2021. Ulrich Bornkessel will be available until the end of 2021 to ensure a smooth handover of projects and responsibilities.
Alexander Kaiss, a German national, graduated in mechanical engineering from the Technical University in Munich (D) and then worked as an engineer at Siemens. At Arbonia, he is COO of the HVAC Division and responsible for all eight production sites (D, IT, BE, NL, PL, CZ, and RU) as well as the areas of R&D and product management. Alexander Kaiss was instrumental in the successful restructuring and production relocations at the HVAC Division and was the driving force behind the acquisition and integration of the Czech company PZP, which exclusively manufactures the promising heat pump products. The development of the heat pump business field is also part of his area of responsibility.
The Board of Directors of Arbonia would like to thank Ulrich Bornkessel for his successful work as Head of the HVAC Division under the difficult conditions of plant relocations, acquisitions, and subsequent integrations. At the same time, management would like to thank him for his valuable instinct for empowering and promoting people.
- From summer 2021, the new structure of Arbonia will consist of two divisions and a lean group management. Nicolas Casanovas will leave Group Management after the completion (closing) of the sale of the Windows Division. As of 1 July 2021, Group Management will decrease from six to four members: Alexander von Witzleben as the CEO, Daniel Wüest as the CFO, Alexander Kaiss as the CEO of the HVAC Division, and Claudius Moor as the CEO of the Doors Division.
- The previous organisation, in which the Chairman of the Board of Directors, Alexander von Witzleben, also holds the position of CEO, will be replaced by a holding structure without a dual mandate as of the General Meeting 2022.
This dual mandate, which Alexander von Witzleben has held since the start of Arbonia's radical restructuring in 2015, was absolutely necessary. During this challenging time, it was possible to decide, act, and inform more quickly, which led Arbonia to success. The company is now returning to governance with separate mandates.
The Board of Directors proposes, subject to approval by the 2022 General Meeting, that the office of the Executive Chairman of the Board of Directors be held by Alexander von Witzleben. Consequently, Group Management will consist of three members from that date: the CFO and the two CEOs of the HVAC and Doors Divisions.
- Arbonia, with its divisions and as a group, is dedicated to a consistent and comprehensive commitment to sustainability, which is both part of the group's strategic guidelines and part of the operating activities of the companies. The group is aware of its economic, environmental, and social responsibility. It is currently developing its sustainability strategy for the coming years. In addition to the previous objectives of continuously optimising the product portfolio and the production processes, further objectives will follow based on the materiality analysis conducted in 2020. With the new sustainability reporting, which is an integral part of the annual report for the first time for the 2020 reporting year, Arbonia wants to present a coherent picture of its activities.
For the year 2021, Arbonia expects a revenue growth adjusted for currency and acquisition effects of 4 - 5% and a group-wide EBITDA margin of >11%, assuming that no further significant restrictions due to the COVID-19 pandemic in Arbonia's production and sales markets will be imposed and that there will be a stable market environment as well as stable exchange rate conditions. Arbonia expects organic growth in the HVAC Division to be 3.5 - 4.5% and EBITDA to be >11%. The Doors Division incl. the integrated Sanitary Equipment Division expects an organic growth of >5% as well as an EBITDA margin of >13%.
Based on this revenue growth and the EBITDA margin, a further continuous dividend policy with an annual increase of ~10% is being pursued.
The detailed reporting can be found in the Annual Report 2020 in the chapters "Letter to the Shareholders" and "Divisions"; see www.arbonia.com/report2020.
End of ad hoc announcement