Datwyler ready to spend more to reach €2bn sales target
17 Aug 2015
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Altdorf, Switzerland – Datwyler Group is on track to achieve annual revenue of CHF2.0 billion (€1.9 billion) and an EBIT margin of between 12-15 percent by 2020, through both organic expansion and acquisitions.
In a half-year results announcement, the group added that it had a warchest of CHF283.6 million, giving it “plenty of entrepreneurial scope for further acquisitions and for investments in growth projects.”
Datwyler posted a 1.7-percent year-on-year increase in first-half net sales to CHF579.1 million amid a “challenging [trading] environment”. Its earnings {EBIT} margin also increased slightly to 11.6 percent – or 12.5 percent adjusted for negative currency effects, said the 14 Aug statement.
Looking ahead, Datwyler said it was confident of reaching its sales target of CHF1,200 million for the year – helped by recent acquisitions – and an EBIT margin in a range of 10-13 percent.
In the first half of this year. the Swiss group’s Technical Components division's Europe-focused distribution business continued to experience difficult market conditions. Its Sealing Solutions division, however, saw growth in its automotive, healthcare, civil engineering and consumer goods markets.
Datwyler cited the acquisition of Italian firm Origom, due for completion in September, as an example of how it is working towards the 2020 growth objective.
With 115 employees and around CHF23 million in annual sales, Origom will give the group access to the global O-ring market and an opportunity to develop new markets outside the automotive industry.
The Sealing Solutions division managed to maintain the momentum of the second half of 2014 and increase net sales organically by 5.1 percent in the first half of 2015.
Negative currency effects resulting from the conversion into Swiss francs amounted to –6.8 percent. Columbia Engineered Rubber, which was acquired in 2014, accounted for 3.3 percent of sales. Overall, reported net sales rose by 1.6 percent to CHF352.1 million.
Despite a strong Swiss franc, Datwyler’s Sealing Solutions division reported a 7.6-percent increase in earnings (EBIT) to CHF 62.1 million, which equates to an EBIT margin of 17.6 percent (previous year: 16.6 percent).
The improvement was linked to restructuring efficiencies including a merger of the former subdivisions, the integration of newly acquired companies and the expansion of the division's presence in low-wage countries. The division also benefitted from a move to a more higher-end mix of products and favourable raw material prices.
In the healthcare market segment, the outsourcing of a rapidly expanding product range from the plant in the US to the factory in India progressed on schedule, said Datwyler.
The automotive market segment, it added, enjoyed continued strong demand in Europe and the US, helped by additional sales capacity from the acquisition of Columbia Engineered Rubber in October 2014.
These gains were partly offset by a slowdown in China and Korea, though Datwyler said it would put a modern mixing plant into operation at its Chinese location in the fourth quarter of 2015 to enhance competitiveness.
In the civil engineering market segment, the group said a restructuring of its product portfolio and a healthy order book helped the margin to exceed the sector average.
Datwyler concluded that the pace of growth in the Sealing Solutions division should at least be maintained in the second half of the year – supported by the acquisitions of Columbia and Origom and a number of new healthcare components currently in serial production.
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