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February 11, 2020 01:21 PM

Datwyler aims to grow sales, boost margin in 2020

European Rubber Journal Report
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    ALTDORF, Switzerland—Datwyler Group is putting 2019 behind it and looking to the new year with optimism.

    The company recently issued an upbeat projection for the year ahead, especially as it restructures to focus less on cyclical sealing products markets.

    In 2019, the Swiss group posted an 8.1 percent decline in earnings (adjusted EBIT) to nearly $170 million, from continuing operations in 2019. Net sales totaled $1.1 billion, 5 percent higher than a year ago if adjusted for currency effects.

    Including the divestment of Distrelec and Nedis, Datwyler's net sales were "virtually unchanged" at about $1.37 billion, though one-off factors contributed to an operating loss (EBIT) of around $405 million and net loss of around $87.1 million.

    The announced sale of the distribution companies led to asset-impairment and one-off costs of nearly $200 million in the 2019. There also were start-up costs for a U.S. health care products plant of $9.3 million.

    Excluding the two distribution companies, the performance reflected difficult market conditions offset by efficiency-improvements, Datwyler said in a financial report issued Feb. 6.

    The adjusted net result for continuing operations—Sealing Solutions division and electronics distributor Reichelt—came in 7.5 percent lower at about $130.5 million.

    In 2019, Datwyler said the U.S.-China trade dispute impacted demand, particularly in the automotive sector. However, net revenue for continuing operations increased by 2.6 percent before currency effects. With the recently announced sale of Distrelec and Nedis to German investment firm Aurelius, Datwyler said it is focusing on the existing high-growth, high-margin sealing business.

    The company's plan to expand production capacities is nearing completion, with investments in 2019 declining about 24.2percent to $105 million.

    "With the investments and acquisitions we have already made, we are in an ideal position," Datwyler's CEO Dirk Lambrecht said in a statement.

    Looking ahead, Datwyler said "it is hard to see any significant turnaround in the automotive market during the coming months." However, it added that with its health care and Nespresso seals businesses, more than half of revenues will come from "low cyclical markets that are growing steadily."

    And with new health care production capacities coming on stream in the U.S., Europe and India, Datwyler said it is targeting revenue growth of 2 to 5 percent and an EBIT margin of more than 15 percent in 2020.

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