Datwyler confident about second half on high healthcare orders

Altdorf, Switzerland – Datwyler Holding is “generally confident” about the second half of 2020, despite a “massive slump” in demand within its automotive and oil industry target markets.

First half earnings (EBITDA) fell 17.8% year-on-year to CHF97.2 million (€90 million), on 22.7% lower sales of CHF545 million, Datwyler announced 11 Aug. 

The Swiss manufacturer reported an operating loss (EBIT) of CHF400 million, down from CHF91 million of profits reported in the first half of 2019.

Datwyler attributed the operating loss to the sale of its Distrelec and Nedis distribution companies, which led to a non-cash loss of CHF464.5 million in total. The company remained profitable with an EBIT margin of 11.9%.

Despite the weak results, the Altdorf-based manufacturer said it was generally confident about the second half of the year, due mainly to high order volumes in its healthcare solutions business area.

Earlier this year, Datwyler launched a restructuring programme to focus on “system-critical elastomer components” sealing business.

The reorganisation combined the company’s market and production activities to form two business areas: Health Care Solutions and Industrial Solutions.

In its half year press release, Datwyler said the streamlining of the business structure “proved its worth”, allowing the company to respond to changing market conditions “with speed and agility”.

In the healthcare business, sales remained flat at CHF201 million, hit by a 5.7% negative currency impact of strong franc. Due to additional costs from Covid-19, operating results (EBIT) fell to CHF35.5 million from CHF42.4 million reported in the first half of 2019.

Datwyler’s industrial solutions faced with “sharp declines” in demand from automotive and oil & gas customers, with many mobility customers closing their plants for several weeks. 

Helped by its food & beverage business unit, the segment reported a 24% decline in sales to  CHF212 million. Adjusted operating result (EBIT) was nearly halved to CHF21.2 million during the six-month period.

For the full year, Datwyler said it is expecting conditions in the automotive and oil & gas markets to continue to have “significant uncertainty for the foreseeable future”. The company said it believed that demand would “only recover slowly” in the markets and a recovery to 2019 levels will be possibly by 2022. 

By contrast, the manufacturer said it was confident that revenue growth will remain high in the food & beverage business unit as well as its healthcare segment in the second half of the year.