Acquisition and organic growth give SFS 45% boost

SFS had a successful 2022, with sales of CHF 2,746.1 million despite geopolitical and macroeconomic challenges.

The strong growth of 45.1% was driven both organically and by the acquisition of Hoffmann. SFS boosted its operating profit (EBIT) by 9.5% to CHF 330.3 million, which corresponds to an EBIT margin of 12.1%. Adjusted for acquisition related one-off effects, the EBIT margin amounts to 12.9%. Organic growth reached 9.1% in most end markets and regions throughout 2022.

Consolidation effects that mainly arose as a result of the inclusion of Hoffmann as per May 1, 2022, accounted for 37.9% of the growth surge. Currency effects negatively impacted sales by –1.9%.

SFS’ Hoffman acquisition was an “extraordinary strategic opportunity to secure an internationally strong position in the attractive area of quality tools”, the group said.

The considerable uncertainties and high volatility attributable to the war in Ukraine, sustained disruption in supply chains, further waves of COVID-19 as well as sharply rising energy costs, interest rates and inflation were constant companions during the entire reporting period. Thanks to local production sites, largely regional and therefore robust supply chains, an impressive product range as well as our employees’ enormous commitment, SFS said it managed to maintain the ability to deliver to customers with just a few exceptions and gain market share in several business areas.

Development by segment
In the Engineered Components (EC) segment, 2022 was a year shaped by regional events and occasionally high volatility. While good growth was supported largely by applications from the Electronics and Industrial divisions in the first half year, applications from the Automotive and Industrial divisions were the main contributors in the second half of the year. The segment generated CHF 1,028.2 million in third party sales, which corresponds to sales growth of 5.4% over the previous year. The uneven, fluctuating utilisation of production capacities in individual business areas of the segment had a major impact on profitability. This resulted in operating profit (EBIT) of CHF 146.2 million, which corresponds to an EBIT margin of 14.1% (PY 17.1%).

For around two years, the product range has helped the Fastening Systems segment and specifically the Construction division to consistently take advantage of the exceptional demand situation in the construction industry and achieve record results – which continued in the second half of 2022. CHF 644.9 million in third party sales were generated, which corresponds to another impressive 12.2% increase over the prior-year period. The EBIT margin for the period under review amounts to 17.7%, which corresponds to an increase of 30 basis points over the previous year.

Based on its product range and thanks to good material availability, the Distribution & Logistics (D&L) segment took advantage of the positive market environment again in 2022 and achieved attractive organic growth in both divisions, said SFS: "The segment generated third party sales of CHF 1,073.0 million. This corresponds to a year-on-year growth surge of 212.8%, which was mainly driven by consolidation effects that arose as a result of the inclusion of Hoffmann. The segment generated adjusted operating profit (EBIT) of CHF 102.2 million in the year under review, which corresponds to an increase of 213.5%. Development of the adjusted EBIT margin of 9.6% was stable over the course of the year. The reported result is weighed down by increased material expenses of CHF 22.9 million due to acquisition effects."

Outlook for the financial year 2023

SFS said: “Performance will continue to be shaped by considerable uncertainty as a result of macroeconomic and geopolitical developments. Regional restrictions in supply chains will impact the course of business in individual end markets also over the course of the 2023 financial year. Safeguarding business processes, ongoing efforts to pursue forward-looking innovation projects and sharpening the Group’s customer focus take top priority in this volatile environment. Chances and opportunities that go hand-in-hand with the current changes shall be identified and seized in a systematic way.

“SFS expects in the 2023 financial year sales of CHF 3.2–3.3 billion, including the first time consolidation of Hoffmann for the full year. With this, SFS expects – before consolidation effects – sales growth along the mid-term guidance of 3–6%. For SFS Group as a whole, including Hoffmann, an EBIT margin along the mid-term guidance of 12–15% is expected. The outlook is based on the assumption that there will be no significant deterioration in the underlying economic conditions or geopolitical, energy or pandemic-related restrictions.”