DKSH reports solid 2020 results, strong Free Cash Flow and proposes higher dividend February 09, 2021


			
				DKSH reports solid 2020 results, strong Free Cash Flow and proposes higher dividend
  • Despite COVID-19, DKSH reports key figures broadly stable on last year's level – at CER1
  • Second consecutive year of EBIT growth in Fast Moving Consumer Goods
  • Strong Free Cash Flow of CHF 210.2 million (+34.1%)
  • Assuming an easing of the impact of COVID-19, higher EBIT expected in 2021

Media release

DKSH reports solid 2020 results, strong Free Cash Flow and proposes higher dividend

  • Despite COVID-19, DKSH reports key figures broadly stable on last year's level – at CER1
  • Second consecutive year of EBIT growth in Fast Moving Consumer Goods
  • Strong Free Cash Flow of CHF 210.2 million (+34.1%)
  • Assuming an easing of the impact of COVID-19, higher EBIT expected in 2021

Key figures Group (in CHF million)

2020

2019

in % CHF

in % CER1

Net sales

10,742.2

11,579.2

(7.2)

(2.1)

Operating profit (EBIT)

257.5

265.4

(3.0)

2.4

Adjusted operating profit (EBIT)2

257.5

279.9

(8.0)

(2.9)

Profit after tax

164.8

176.1

(6.4)

(1.8)

Free Cash Flow

210.2

156.7

34.1

-

Dividend (in CHF)

1.953

1.90

2.6

-

Constant exchange rates (CER): 2020 figures converted at 2019 exchange rates

Excluding restructuring costs in 2019 of CHF 14.5 million
Proposal of the Board of Directors

 

Zurich, Switzerland, February 9, 2021 – Despite the COVID-19 pandemic, DKSH reported solid 2020 results. Net sales, EBIT and profit after tax at constant exchange rates broadly matched last year’s level. In addition, DKSH increased its Free Cash Flow by 34.1% to CHF 210.2 million and proposed a higher dividend of CHF 1.95 per share (+2.6%). Business Unit Performance Materials expanded its position as a leading specialty chemicals and ingredients distributor and the Fast Moving Consumer Goods business increased profits for the second consecutive year. DKSH leveraged its digital capabilities, increased eCommerce sales double-digit and integrated two acquisitions in 2020.

 

DKSH CEO Stefan P. Butz said: “In this unprecedented year, our highest priority was to ensure the safety and well-being of our employees and stakeholders. We reliably supplied products and played a critical role in responding to the pandemic. Our solid results and strong cash flow are a proof of our disciplined teamwork, resilient business model and diligent strategy implementation. The visibility on the evolution of the pandemic remains limited, however, we are confident about the long-term potential in Asia and are well positioned to benefit from favorable market, industry and consolidation trends.”  

 

DKSH Group

In 2020, Group net sales declined by 7.2% to CHF 10.7 billion, however, exchange rates had a negative impact of 5.1%. Acquisitions contributed 2.1%, which resulted in an organic growth of -4.2% (see appendix on page 3).

 

The pandemic-related restrictions, lockdowns and travel bans resulted in a GDP contraction. Despite these challenges, EBIT stood at CHF 257.5 million. Profit after tax was CHF 164.8 million and the Free Cash Flow of CHF 210.2 million increased due to better inventory and receivables management and the unwinding of working capital from lower sales.

 

Business Unit Healthcare

COVID-19 led to softer demand from hospitals and lower medical tourism in Asia. Business Unit Healthcare continued to reliably supply medication and proved resilient due to its diversified portfolio across channels, categories and markets as well as client wins and extensions.

 

EBIT at constant exchange rates remained at last year's level due to a higher share of commercial outsourcing partnerships and stringent cost management.

 

Demand for healthcare services has not yet recovered, visibility on future patient flows is limited and medical tourism remains at a minimal level. The Unit continues to monitor expenses, expand digital channels as well as focus on commercial outsourcing deals and higher added-value partnerships.

 

Key figures Healthcare

(in CHF million)

2020

2019

in % CHF

in % CER1

Net sales

5,424.1

6,014.9

(9.8)

(5.1)

Operating profit (EBIT)

129.8

134.5

(3.5)

0.4

 

Business Unit Consumer Goods

The transformation of the Fast Moving Consumer Goodsbusiness, initiated at the end of 2018, progressed well in 2020. EBIT increased strongly due to a leaner structure and an optimized product portfolio led by a strong leadership team as well as strategic client wins and improved supply chain operations. DKSH expanded its footprint in eCommerce and Indonesia, successfully integrated all acquired companies and remains confident about the further transformation of the business.

 

As many shops closed during lockdowns and tourist numbers fell, net sales and EBIT declined by a substantial double-digit percentage in the Luxury and Lifestyle segment. DKSH implemented cost-saving initiatives which will support profitability going forward. The watch brand Maurice Lacroix gained market share and reported a small profit for the second year in a row.

 

In sum, net sales and EBIT for Business Unit Consumer Goods at constant exchange rates remained at last year's level.

 

Key figures Consumer Goods

(in CHF million)

2020

2019

in % CHF

in % CER1

Net sales

3,827.6

4,120.9

(7.1)

(1.4)

Operating profit (EBIT)

64.6

68.4

(5.6)

1.2

Adjusted operating profit (EBIT)4

64.6

82.9

(22.1)

(16.5)

4 Excluding restructuring costs in 2019 of CHF 14.5 million

 

Business Unit Performance Materials

Business Unit Performance Materials delivered another year of net sales and EBIT growth. Net sales of CHF 1.1 billion increased by 15.1% at constant exchange rates, as the Unit expanded with clients and consolidated acquired businesses. The life sciences segment, where DKSH caters to the pharma, food and beverage as well as personal care industries, performed well and accounts for around two-thirds of the Business Unit. In line with the strategy to strengthen its geographical reach, DKSH acquired Axieo in Australia and New Zealand. The EBIT of CHF 91.7 million grew 7.0% at constant exchange rates. Integration costs for Axieo slightly diluted margins in the first year.

 

A resilient business model, continued business development, the focus on value-added services and digital marketing activities provide growth opportunities in the future.

 

Key figures Performance Materials

(in CHF million)

2020

2019

in % CHF

in % CER1

Net sales

1,108.0

1,011.5

9.5

15.1

Operating profit (EBIT)

91.7

89.7

2.2

7.0

 

Business Unit Technology

Many customers temporarily shut down production facilities and put investments on hold. Consequently, net sales declined by 6.7% at constant exchange rates and EBIT was CHF 21.8 million.

 

The Business Unit realized cost savings of a high single-digit million and drove forward its strategic initiatives to increase resilience and deliver growth to exceed pre-COVID levels in the mid-term. DKSH intensified business development focusing on growing segments like scientific instrumentation, precision machinery, Industry 4.0 and after-sales services. The Business Unit’s digital transformation is well under way and will be intensified moving forward.

 

Key figures Technology

(in CHF million)

2020

2019

in % CHF

in % CER1

Net sales

382.5

431.9

(11.4)

(6.7)

Operating profit (EBIT)

21.8

26.8

(18.7)

(13.8)

 

Outlook

While visibility on the evolution of the pandemic remains limited, DKSH is optimistic that 2021 will bring a return to some form of normality and an improved economic outlook. A robust business model, large share of daily consumption items and strong balance sheet provide resilience and offer growth opportunities. DKSH is convinced that it will emerge stronger from last year’s challenges. The Group will continue developing its business through diligent strategy implementation, digitization, sustainability and M&As, while focusing on operational excellence and cost discipline. For 2021, DKSH expects an EBIT above last year assuming an easing of the impact of COVID-19 such as rebounding tourism and stable currencies. DKSH will strive to continue its progressive dividend policy and to drive market consolidation via M&As. Beyond short-term uncertainties, DKSH remains confident about Asia's long-term potential and is well positioned to benefit from favorable market, industry and consolidation trends.


Further information

The media conference will take place today at 9:30 a.m. CET and the investor call at 11:30 a.m. CET. The Annual Report 2020 and the recording of the investor webcast will be available on the DKSH website.

 

Annual General Meeting

DKSH will hold its 88th Annual General Meeting on March 18, 2021 without physical presence of shareholders due to the pandemic. Accordingly, the shareholders will have to exercise their rights via the independent proxy, as will be explained in more detail in the invitation to the Annual General Meeting. The invitation will also be available on the DKSH website.

 

Appendix: Reconciliation table net sales

(in CHF million)

2020

2019

% CHF

% organic*

% M&A*

% FX*

DKSH Group

10,742.2

11,579.2

(7.2)

(4.2)

2.1

(5.1)

Healthcare

5,424.1

6,014.9

(9.8)

(5.1)

-

(4.7)

Consumer Goods

3,827.6

4,120.9

(7.1)

(4.4)

3.0

(5.7)

Performance Materials

1,108.0

1,011.5

9.5

3.5

11.6

(5.6)

Technology

382.5

431.9

(11.4)

(8.5)

1.8

(4.7)

 *Organic: Difference 2020 figures to 2019 figures excluding M&A and FX

  M&A: Auric Pacific, CTD and Crossmark (Consumer Goods), Dols and Axieo (Performance Materials) and SPC (Technology)

  FX: Impact from currency translation on net sales