2020

17.03.2020 – Conzzeta AG

Conzzeta: Margin expansion and proposal for dividend with special distribution

Conzzeta / Key word(s): Annual Results/Dividend
Conzzeta: Margin expansion and proposal for dividend with special
distribution

17-March-2020 / 06:45 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.

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Annual results 2019
Margin expansion in a challenging environment - proposal for a dividend with
special distribution

- Net revenue CHF 1,573.2 million, -11.7%, or -4.9% on a comparable1 basis

- Operating result (EBIT) CHF 167.2 million, +13.9%, or stable on a
comparable1 basis

- Adjusted2 EBIT margin 8.7%, +50 basis points with improvement in all
segments

- Group result CHF 136.8 million, +19.2%

- Sale of Schmid Rhyner

- Proposal for a dividend of CHF 42.00, incl. special distribution of CHF
24.00 (class A shares)

    Group in CHF m                               2019       2018  Change
    Net revenue                               1,573.2    1,782.2  -11.7%
    comparable1                                                    -4.9%
    Total revenue                             1,579.1    1,796.7  -12.1%
    Operating result (EBIT)                     167.2      146.8   13.9%
    adjusted2                                   137.3      146.8   -6.5%
    as a % of total revenue, adjusted2           8.7%       8.2%   50 bp
    Group result                                136.8      114.8   19.2%
    as a % of total revenue                      8.7%       6.4%  230 bp
    Minority interests                           11.1       18.2  -39.1%
    Free cash flow from operating activities     40.6       83.4  -51.3%
    Cash, cash equivalents and securities       300.9      389.6  -22.8%
    Total assets                              1,266.0    1,366.2   -7.3%
    Shareholders' equity                        880.1      926.9   -5.0%
    as a % of total assets                      69.5%      67.8%  170 bp
    Net operating assets (NOA)                  550.7      520.1    5.9%
    Return on average net operating assets      20.0%      23.1%    -310
    (RONOA) 2                                                         bp
    Number of employees on December 31          5,026      5,259   -4.4%
    Earnings per class A share, in CHF          60.85      46.76   30.1%
    Dividend per class A share, in CHF         42.003      18.00  133.3%
    Dividend per class B share, in CHF          8.403       3.60  133.3%
1 At constant exchange rates and adjusted for changes in the scope of
consolidation.
2 2019 excluding capital gain of CHF 29.9 million from the sale of the Glass
Processing segment.
3 As proposed by the Board of Directors, including special distribution of
CHF 24.00 (class A shares) and CHF 4.80 (class B shares), respectively.
Furthermore, a special dividend was paid in 2019, i.e. CHF 30.00 (class A
shares) and CHF 6.00 (class B shares).

Zurich, March 17, 2020 - In a challenging environment, Conzzeta in 2019 was
able to increase its EBIT margin by 50 basis points to 8.7%, adjusted for
the capital gain of CHF 29.9 million from the sale of the Glass Processing
segment. At constant exchange rates and adjusted for changes in the scope of
consolidation, net revenue declined by 4.9% primarily due to market factors,
while the corresponding operating result was maintained. The Group result
was CHF 136.8 million, 19.2% above the previous year's level, and earnings
per class A share amounted to CHF 60.85 (+30.1%) after lower deductions for
minority interests.

With the inflow of funds from the sale of the Schmid Rhyner business unit,
which was completed at the end of February 2020, Conzzeta again has an
excess cash position. After an overall assessment, taking into account the
operating margin expansion in the 2019 financial year and the uncertain
environment for 2020 on one hand, and the aforementioned inflow of funds
after the balance sheet date on the other, the Board of Directors proposes
to the Annual General Meeting a dividend with a special distribution in the
amount of CHF 86.9 million. This comprises a dividend at the previous year's
level of CHF 37.3 million and the distribution of excess liquidity reserves
of CHF 49.7 million. Subject to the approval of the Annual General Meeting,
CHF 42.00 will thus be paid out for each class A registered share and CHF
8.40 for each class B registered share.

The Group's annual results for 2019 were strongly impacted by the sale of
the Glass Processing segment, which was completed on April 1, 2019. The
segment did not contribute to revenue and results for three quarters, and
the sale did give rise to the aforementioned capital gain. Reflected in the
Group's net revenue were the adverse impacts of changes in the scope of
consolidation of CHF 91.2 million and from exchange rate fluctuations of CHF
29.7 million. As expected, there was a slowdown in the Sheet Metal
Processing and Chemical Specialties segments, while the Outdoor segment
continued to grow. The continued focus on innovative solutions and
operational improvements paid off in all areas of activity. The challenges
in the 2019 financial year included trade disputes, geopolitical
uncertainty, disruptive changes in important industrial sectors and
increasing competitive pressure.

Free cash flow from operating activities reached CHF 40.6 million in 2019,
down from CHF 83.4 million in the previous year. The decrease was primarily
the result of the lower business volume and the increase of net operating
assets, particularly within net working capital. Investments in property,
plant and equipment and intangible assets amounted to CHF 69.8 million,
after CHF 72.2 million in the previous year.

According to Michael Willome, Conzzeta Group CEO: "All segments contributed
to the margin expansion. As announced, we are preparing a comprehensive
strategy for accelerated medium-term growth in the Sheet Metal Processing
segment, which we are expecting to present at a Capital Markets' Day in
fall. Despite the progress made, earnings in the Chemical Specialties and
Outdoor segments are still too low, which is why we are continuing to work
on operational improvements notwithstanding the announced strategic
focusing. I thank our employees for their efforts and support during this
challenging transformation process."

Trends and outlook: With the announced strategic reorientation, 2020 will be
a transition year for Conzzeta. The timing of the sale of both the
FoamPartner and Mammut business units remains to be seen. Conzzeta
anticipates a difficult economic development due to the consequences of the
coronavirus epidemic and is taking appropriate actions. In the current
situation it is not possible to provide a concrete financial outlook for
2020. With regard to the continuing business, Conzzeta expects Bystronic to
outperform the relevant market development thanks to its innovative
portfolio of products and services.

Please see page 3 for segment reporting.

    Segments in CHF m                     2019     2018  Change
    Sheet Metal Processing Order intake  929.4  1,002.9   -7.3%
    comparable1                                           -6.5%
    Net revenue                          936.0  1,013.2   -7.6%
    comparable1                                           -6.4%
    Total revenue                        941.3  1,032.5   -8.8%
    Operating result (EBIT)              121.1    132.5   -8.6%
    as a % of total revenue              12.9%    12.8%   10 bp

    Chemical Specialties Net revenue     346.6    382.9   -9.5%
    (discontinued segment) comparable1                    -7.9%
    Total revenue                        341.8    383.0  -10.8%
    Operating result (EBIT)               14.2      5.8  144.3%
    as a % of total revenue               4.2%     1.5%  270 bp

    Outdoor Net revenue                  268.4    253.4    5.9%
    (discontinued segment) comparable1                     6.8%
    Total revenue                        268.4    253.4    5.9%
    Operating result (EBIT)                7.5      5.2   42.0%
    as a % of total revenue               2.8%     2.1%   70 bp
1 At constant exchange rates and adjusted for changes in the scope of
consolidation.

The Sheet Metal Processing segment (Bystronic) generated net revenue of CHF
936.0 million in 2019 (previous year CHF 1,013.2 million). On a comparable
basis, i.e. at stable exchange rates, revenue declined by 6.4%. The
operating result amounted to CHF 121.1 million (CHF 132.5 million), yielding
an EBIT margin of 12.9% (12.8%). Factors that contributed to the improved
EBIT margin despite the lower sales volume included not only the innovative
range of products and services, but also process improvements, active cost
management and certain non-recurring special factors in the amount of CHF
6.7 million. The significant decline in revenue in Asia was partially
compensated for by sustained growth in America, while revenue in Europe was
slightly weaker. Net revenue in the "Cutting" product segment was lower than
in the previous year, while revenue increased in the "Bending" and "Service"
segments. In a competitive market subject to constant pricing pressure,
investments to enhance market presence continued to be made and the
organization was strengthened in preparation for structural growth
opportunities. The modernization of a factory hall at the Niederönz site was
completed on time in December. The assembly plant and the experience centers
in the USA, where visitors can gain on-site insight into the future of smart
factories, are scheduled to be opened by the middle of 2020. New sales and
service companies were established in South Africa and Thailand over the
course of the reporting year. As part of the company's growth plans in Asia,
in 2019 the equity interest in the Chinese company DNE Laser was increased
from 51% to 70% and a project was launched to build an experience center and
a new office building in South Korea.

The Chemical Specialties segment (FoamPartner and Schmid Rhyner) generated
net revenue of CHF 346.6 million in 2019 (previous year CHF 382.9 million).
On a comparable basis, i.e. at stable exchange rates, revenue declined by
7.9%. The operating result amounted to CHF 14.2 million (CHF 5.8 million),
yielding an EBIT margin of 4.2% (1.5%). Net revenue declined in all regions
and market segments. Thanks to notably lower raw material costs and internal
profitability improvements in the FoamPartner business unit, the EBIT margin
increased despite the decline in revenue. Against this, raw material costs
in the Schmid Rhyner business unit were higher than in the previous year,
which, coupled with an unfavorable trend in the product mix, weighed on the
operating result. In the FoamPartner business unit, work continued steadily
on the implementing of the multi-layered measures to realize the medium-term
margin potential, with some of those measures having already been defined in
2017 and 2018 following the takeover of Otto Bock Kunststoff and the
streamlining of the joint venture structures in Asia and America. The
measures include the optimization of business processes, modernization of
management systems and the investment program to improve the production
infrastructure in Europe. At the Duderstadt site in Germany, construction
work began on a new processing center, which will be opened during the first
half of 2020. On the product front, considerable efforts were made to
enhance the profile by means of customized "Best in Foam" solutions. Such
efforts included the widespread launch of OBoSky(R) products in the largest
market segment, "Mobility". These products combine high-quality surfaces for
vehicle roof lining with the lowest emission levels. The efforts also
included the development of new acoustically effective and thermo-insulating
solutions, also for electro-mobility.

The Outdoor segment (Mammut Sports Group) generated net revenue of CHF 268.4
million in 2019 (previous year CHF 253.4 million). On a comparable basis,
i.e. at stable exchange rates, revenue increased by 6.8%. The operating
result amounted to CHF 7.5 million (CHF 5.2 million), yielding an EBIT
margin of 2.8% (2.1%). The result includes a weak delivery performance in
the third quarter with declining sales and loss of earnings due to the
processing of defective textiles by a supplier as well as internal
difficulties in providing the largely renewed collection across the enlarged
number of sales channels. Despite this, revenue for the year increased in
the regions of Europe, America and Asia. The high level of acceptance of the
newly launched products as well as the development of digital sales channels
as part of the five-year strategic plan started in 2016 had a favorable
impact. Measures taken in 2019 to expand the scalable business models
included progress in linking consumer-relevant content with commercial
offers. To this end, 120 products were fitted with "Mammut Connect" at the
end of 2019, which, through NFC technology, allows customers to access
comprehensive product information on demand, use additional services or be
part of a digital social network. The online store was available in 19
markets at the end of 2019. With innovative products, a consistent pricing
strategy and a reduction in the number of styles, the Group managed to
further increase the gross margin in 2019. The launch of the "Photics"
jacket, for example, represented the launch of the world's first laser-fused
and therefore waterproof down jacket with welded seam sealed chambers, which
received the "ISPO Winner Award".

Notes on page 5.

Links

Please visit www.conzzeta.com for further information.

The Annual Report is published digitally: report.conzzeta.com.

Inquiries

Michael Stäheli, Head Investor Relations & Corporate Communications

Telephone +41 44 468 24 49; media@conzzeta.com

About Conzzeta

Conzzeta is a diversified Swiss group of companies. It stands for
innovation, market orientation and an entrepreneurial approach. About 5,000
employees at more than 60 locations worldwide work in the Sheet Metal
Processing, Chemical Specialties and Outdoor segments. In December 2019,
Conzzeta announced the strategic focusing on the Sheet Metal Processing
segment and its plan to divest all of its other activities. Conzzeta AG is
listed on the SIX Swiss Exchange (SIX:CON).


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