In a dynamic market environment characterized by high demand, supply chain bottlenecks and the ongoing COVID-19 pandemic, the SFS Group seized opportunities that arose in each of its segments to boost its sales by 11.0% to CHF 1,893.1 million in the year 2021, an outcome based on its ability to fill customer orders. All end markets and regions contributed to this good growth. The result was a high level of production capacity utilization that strengthened profitability and generated an EBIT margin of 15.9%. Net income came to CHF 248.0 million.

The COVID-19 pandemic continued to be the defining theme for the SFS Group in 2021 again. The market environment had already begun showing signs of recovery in the third quarter of 2020 and this recovery continued unabated during the first half of 2021. The first half of the year saw growth of 23.8% compared to the same period of the previous year, which was dominated by the lockdown. In the second half of the year, production slowdowns – yet another of the consequences of the COVID-19 pandemic – increasingly resulted in global supply chain disruptions as well as shortages of semiconductors and other raw materials, some of which also had an impact on call-offs at SFS. Despite sales declining slightly by 2.3% in the second half the year compared to the first half of 2021, total sales increased substantially by 11.0% to CHF 1,893.1 million in the period under review. Growth was broadly based across all segments and regions and nearly exclusively organic in nature. Consolidation effects contributed +0.8% to growth and currency translation effects had a negative effect of –0.1%. As a result, sales clearly exceeded the 2019 figures and confirm SFS’s good positioning throughout the cycle.

Profitability increased through high capacity utilization
Strong yet occasionally volatile market demand resulted in good overall utilization of production capacities. Phases of high utilization as well as targeted, forward-looking cost management resulted in a record-high operating profit (EBIT) of CHF 301.7 million and an EBIT margin of 15.9% of net sales (previous year 13.3%). Net income of CHF 248.0 million corresponds to 13.1% of net sales and the equity ratio amounts to 78.9%.

Investments in future growth continued
Growth-related expenditure on property, plant, equipment, hardware and software amounted to CHF 121.4 million (previous year: CHF 104.1 million). This was driven by the construction of the new production hall in Heerbrugg (Switzerland) for the Automotive division, ongoing efforts to switch to S/4HANA (the new generation ERP system), the strong commitment to cybersecurity and other project-specific investments.
Top priority was also given to sustainability-related projects and developments. A milestone was reached with the adoption of a roadmap defining specific, ambitious targets for reducing CO2 emissions. The annual sustainability report contains more detailed information regarding the targets and progress made.

Engineered Components segment – high level of capacity utilization and profitability

Performance in the Engineered Components segment was characterized by pent-up demand in the automotive and industrial areas as well as persistently strong demand in the Electronics division. Semiconductor shortages put a damper on recovery in the second half of the year and caused sales to decline by 1.8% compared with the first half. Overall, the segment generated sales of CHF 975.2 million, representing growth of 8.6% compared to the previous year. Sales growth was almost exclusively organic in nature, foreign currency and consolidation effects had minor impacts of –0.5% and +1.2%, respectively.

Profitability benefited from the generally high level of production capacity utilization that resulted from the good demand situation and the EBIT margin rose by 160 basis points to 17.1%.

Fastening Systems segment – record results achieved
The exceptional demand situation that the Fastening Systems segment had already successfully leveraged in the first half of the year to generate record results continued in the second half, albeit at a slightly lower level. The good market position and robust supply chains enabled the segment to reliably serve customers and profit from strong demand. The segment succeeded in boosting its sales in this environment by 17.4% year over year to CHF 574.9 million. Consolidation effects and currency translation effects contributed +0.5% and +0.3%, respectively, to sales growth.

The segment took advantage of the strong growth and generated a record EBIT margin of 17.4%, 5.5 percentage points higher than in the prior-year period.

Distribution & Logistics segment – good initial situation from first half of year exploited
Thanks to stable market demand in all areas of application and good overall availability of materials, sales in the Distribution & Logistics segment were increased to CHF 343.0 million during the period under review, up +8.2% over the previous year. Stable growth of +8.1% and +8.3% in the first and second halves of the year, respectively, was achieved compared to the prior-year period. +0.2% was attributable to foreign currency effects.
The strong sales growth resulted in an EBIT of CHF 32.6 million, which corresponds to an EBIT margin of 9.4%.

Internationalizing the Distribution & Logistics segment with the inclusion of Hoffmann
The planned inclusion of Hoffmann SE lends the D&L segment an internationally strong position in the attractive area of quality tools. Hoffmann is a leading international systems partner for quality tools that is well-known on European markets and serves more than 100,000 customers with a product range comprising around 500,000 items. Customers appreciate not only the company’s comprehensive range of products but also its high level of product and logistics expertise, which will be strengthened even further through the commissioning of the new LogisticCity in Nuremberg (Germany), Europe’s most high-performance logistics center for quality tools.

The joining of forces marks a milestone and the companies’ complementary positioning opens up attractive development opportunities. Together they will be able to exploit advantages in the areas of cross selling, digitalization, logistics, software and purchasing. Access to LogisticCity will further strengthen the logistics of the Distribution & Logistics and Fastening Systems segments.
The transaction is subject to the usual closing conditions and is expected to be concluded in the first half of 2022.

Personnel changes in the Board of Directors and Group Executive Board
At the Annual General Meeting 2021, the Board of Directors of the SFS Group appointed Manuela Suter, currently CFO of Bucher Industries and a member of its Group Executive Board, to the Board of Directors. Volker Dostmann succeeded Rolf Frei as CFO following the Annual General Meeting 2021.
Once the transaction with Hoffmann SE has been concluded, Hoffmann will be embedded into the SFS organization as the second division within the Distribution & Logistics segment. Hoffmann’s current CEO, Martin Reichenecker, will then join the Group Executive Board of SFS.

Outlook for the financial year 2022
Performance will remain characterized by major uncertainties as a result of smoldering geopolitical developments such as the current war in Ukraine, trade conflicts and sustained disruptions in supply chains. Uncertainties in international supply chains, which should gradually subside as the COVID-19 pandemic abates, are expected to persist until early 2023. In this environment, ensuring the highest possible focus on customers takes top priority. Investments in the selective expansion of our production capacity and thus the implementation of ambitious growth projects will continue.

SFS expects product call-offs to be partly subdued in the first half of the 2022 financial year but for these to pick up over the course of the year. Given the solid project pipeline, SFS is confident that the development will be positive in all end markets. Based on that, SFS expects standalone sales growth of 3–6% at an EBIT margin of 13–16%. The outlook will be updated once the transaction with Hoffmann has been closed.