Editorial

Slowdown as expected – accelerated further development

The half-year results show progress. With the divestment of the Glass Processing segment, Conzzeta has reduced the complexity of its business portfolio. We intend to accelerate the development of the potential of the remaining segments.

With the divestment of the Glass Processing segment in the first half of 2019, Conzzeta succeeded in reducing the complexity of its business portfolio by structurally improving its margin profile. In the remaining segments, we are continuing to work systematically on our ambitious growth targets and on broadly supporting profitability across the segments. Net revenue for the first half of 2019, adjusted for changes in the scope of consolidation and exchange rate effects, was 5.6% down on the previous year, while the operating result (EBIT) on this basis declined by 4.3%.

Slowdown as expected

The slowdown in business development in the first half-year was not unexpected: on the one hand, the benchmark was high due to the strong performance in the previous year, in which growth on a comparable basis was nearly 20% – with the acquisitions even exceeding 35%. In addition, the business environment slowed as expected due to geopolitical and macroeconomic uncertainties. Our half-year results equally demonstrate the benefits of innovative customer solutions, an expanded market presence, the Group-wide Business Excellence Program and active cost management. In all our businesses, we will continue to focus on our claim to leading market positions.

In the Sheet Metal Processing segment, it remains to be seen how the weaker order intake at mid-year will develop in the second half of the year. The segment will not be able to completely escape the potential further cooldown in the investment climate. However, we have done our homework: for example, numerous future-oriented products and end-to-end solutions were presented at the biennial Competence Days in June, which should make it possible to expand market shares and strengthen the service business even in a weaker environment.

Foundations laid

In the Chemical Specialties segment, the FoamPartner business unit was able to compensate well for the adverse effects of the market-related decline in revenue in the automotive business thanks to significantly lower raw material costs and internal improvements in earnings. At the Duderstadt location in Germany, construction work has begun on a new foam converting center, which will form the basis for an expanded and much more efficient production infrastructure in Europe.

In the Outdoor segment, finally, the half-year results show further encouraging progress with the implementation of the five-year strategic plan, launched in 2016. In the meantime, the streamlining and fundamental renewal of the collection and the development of digital competencies are well advanced. The main objective now is to increase revenue in the defined growth markets, thereby boosting the margin. Here, too, the foundations have been laid.

More decentralized management and special dividend

In the future, we intend to accelerate the development of the potential of our three segments, taking all options into account. For this purpose and due to their diversity, dedicated teams will be created for the segments, on which members of the Board of Directors and the Group CEO will sit on the committees. This will enable us to further develop our differentiated management approach by shortening information paths and taking more decentralized decisions.

After the disposal-driven cash inflow from investing activities of CHF 60.0 million in the first half year, Conzzeta had cash and cash equivalents and short-term securities of CHF 389.9 million as of mid-2019 (7.1% above the previous year). The equity ratio was 71.2%. The Board of Directors proposes the repayment of excess liquidity reserves in the amount of CHF 62.1 million in the form of a special dividend of CHF 30.00 per class A registered share and CHF 6.00 per class B registered share. For this purpose, an Extraordinary General Meeting is planned for Friday, September 27, 2019.

Trends and outlook

Conzzetaʼs outlook continues to be shaped to a significant extent by the above-mentioned uncertainties, especially by the development of the global trade dispute between the USA and China. In the middle of the year, the signs of a global economic slowdown intensified. For the continuing operations, we now expect net revenue for 2019 as a whole to be slightly lower than in the previous year, but still with a broader-based operating result across all segments and a slightly improved EBIT margin. Including the capital gain from the divestment, profitability is still expected to be significantly higher than in the previous year.

Ernst Bärtschi

Chairman of the Board of Directors

Michael Willome

Group CEO