Continuing high equity ratio and low net indebtedness

The total assets of Arbonia as of 31 December 2019 increased only negligibly to CHF 1534.4 million compared to the previous year (CHF 1511.9 million). The shareholders' equity also remained virtually unchanged at CHF 873.3 million (previous year CHF 887.7 million). The slight decrease in shareholders' equity is due to the first-time payment of a dividend from capital contribution reserves for the 2018 financial year and currency translation differences resulting from the depreciation of the euro against the Swiss franc on the balance sheet date. In addition, the first-time application of IFRS 16 resulted in an increase in total assets. As a consequence, the equity ratio as of the end of the financial year 2019 decreased slightly from a high level of 58.7% to 56.9%.

The net indebtedness increased slightly by CHF −11.2 million to CHF −128.0 million as of 31 December 2019 (previous year CHF −116.8 million) or CHF −180.6 million taking into account CHF −52.6 million due to IFRS 16. The net indebtedness ratio (net indebtedness / EBITDA) increased to −1.1x (previous year −0.9x), which is still a very good figure and provides Arbonia with sufficient strategic and financial scope. This means that all key financial figures of the credit agreement clauses have also been met. In addition, Arbonia intends to refinance the syndicated credit of CHF 350 million due in 2021 ahead of schedule in the 2020 financial year.

Development in the Divisions

The HVAC Division achieved a total revenue of CHF 554.7 million in the reporting year, which represents an increase of 9.7% (CHF 505.5 million) compared to the previous year. After adjustment for currency and acquisition effects, the division's revenue increased organically by 2.5%, despite the regionally varying economic slowdown. Encouragingly, not only established product groups such as radiators and fan coils contributed to this growth but also in particular the newer product ranges in the ventilation, surface heating and heat pump segments. EBITDA without one-time effects was CHF 59.0 million and was thus 7.7% over the previous year (CHF 54.8 million). EBITDA with one-time effects was CHF 51.6 million, which represents an increase of 9.9% over the previous year (CHF 46.9 million). EBIT without one-time effects was 2.9% below the previous year's figure (CHF 33.1 million) at CHF 32.1 million. EBIT with one-time effects closed at CHF 22.7 million, 0.4% slightly below the previous year's figure of CHF 22.8 million.

The Sanitary Equipment Division achieved a total revenue of CHF 143.8 million in the reporting year, which represents a decline in revenue of 0.7% compared with the previous year (CHF 144.8 million). However, when adjusted for currency effects, this resulted in organic revenue growth of 2.2%. This result was primarily sustained by successful business in Switzerland and a slightly positive development in Germany, which was based on the stable development of the construction industry and a steady high demand for custom shower solutions. The earnings situation also improved, with an EBITDA without one-time effects of CHF 15.1 million (previous year CHF 12.5 million), which corresponds to an increase of 21.5%. EBITDA with one-time effects closed with CHF 14.7 million (previous year CHF 11.7 million). This corresponds to an increase of 25.3%. EBIT without one-time effects of CHF 9.5 million is 16.1% above the previous year's level of CHF 8.2 million. EBIT with one-time effects closed with CHF 9.0 million, 25.8% over the figure for the previous year of CHF 7.2 million.

In the reporting year, the Windows Division achieved a net revenue of CHF 358.2 million, which represents a decrease of 2.2% in comparison to the previous year (CHF 366.3 million). When adjusted for currency effects, this resulted in a decrease of 0.5%. Without one-time effects, EBITDA grew by 69.3% from CHF 16.0 million in the previous year to CHF 27.1 million. EBITDA with one-time effects improved by 24.9% from CHF 19.7 million in the previous year to CHF 24.7 million. EBIT without one-time effects changed from CHF –2.5 million in the previous year to CHF 3.2 million. With one-time effects, EBIT slightly decreased from CHF 1.5 million in the previous year to CHF –0.4 million.

This positive earnings development on the EBITDA level is mainly due to the following three factors: In the Swiss market, especially in direct customer business with large customers, the quality of earnings was significantly optimised at the expense of revenue. In the Polish market, both the product mix and the quality of earnings were further improved. In addition, the wood/aluminium competence centre in Langenwetzendorf (D) was able to significantly increase productivity and thus the output. Compared to the previous year, production was increased by over 90%. In light of the constant high demand for wood/aluminium windows, the production volumes must be boosted significantly again in the coming year as well.

During the reporting year, the Doors Division achieved a revenue of CHF 359.4 million (previous year: CHF 357.5 million), which represents growth of 0.5%. When adjusted for currency effects, the revenue increased by 3.7%. EBITDA without one-time effects grew from CHF 40.2 million in the previous year to CHF 44.0 million (+9.2%). There were no one-time effects at EBITDA level in the reporting year. EBITDA with one-time effects amounted to CHF 39.6 million in the previous year. Adjusted for one-time effects, EBIT of CHF 19.6 million was 1.5% higher than the previous year (CHF 19.3 million). EBIT with one-time effects resulted in a 4.3% higher result of CHF 19.5 million (previous year CHF 18.7 million).

Guidance

Building on the good operating results in 2019, Arbonia is looking to the future with positive expectations despite the still challenging environment, in order to continue to grow profitably.

For 2020, Arbonia expects organic revenue growth of ~3% and an EBITDA margin of ~10%, assuming a stable market environment and exchange rate conditions. Based on organic growth of ~3%, the medium-term goal is an EBITDA margin of > 11% at Group level, which will allow Arbonia to pursue a dividend policy with an annual increase in the dividend of ~10%. At the General Meeting, the Board of Directors will propose to pay a 10% higher dividend of CHF 0.22 per share for the 2019 financial year.

The detailed report can be found in the Annual Report 2019 in the sections "Letter to the Shareholders" and "Divisions", see appendix or www.arbonia.com/report2019.

From 2021 onwards, Arbonia will no longer publish a prior revenue release. The company will publish its full annual results for 2020 on March 2, 2021.