DKSH Maintains Track Record of Growth, Margin Expansion, and Strong Cash Conversion in H1 2023

DKSH Management Ltd. / Key word(s): Half Year Results DKSH Maintains Track Record of Growth, Margin Expansion, and Strong Cash Conversion in H1 2023 18-Jul-2023 / 07:00 CET/CEST Release of an ad hoc announcement pursuant to Art. 53 LR The issuer is solely responsible for the content of this announcement. Ad hoc announcement pursuant to Art. 53 LR

• Net sales increased to CHF 5.6 billion (7.2% at CER1)
• Core EBIT grew double digit to CHF 162.6 million (15.5% at CER)
• Core EBIT margin expanded by 15 basis points to 2.9%
• Free Cash Flow of CHF 179.0 million and strong cash conversion of 168.2%
• Confirmed outlook for 2023

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Key Figures Group (CHF million)	H1 2023	H1 2022	△ in % CHF	△ in % CER¹
Net sales	5,623.8	5,596.2	0.5	7.2
Core operating profit (Core EBIT)	162.6	153.3	6.1	15.5
Core EBIT margin	2.9%	2.7%	-	-
Operating profit (EBIT)	158.5	153.3	3.4	12.8
Core profit after tax	106.4	105.2	1.1	9.3
Profit after tax	107.1	105.7	1.3	9.5
Free Cash Flow	179.0	72.1	148.3	-

 

Zurich, Switzerland, July 18, 2023 – DKSH’s first-half 2023 results are marked by above GDP growth, further margin expansion, and effective cash management. Net sales reached CHF 5.6 billion (7.2% at CER), Core EBIT grew double digit to CHF 162.6 million (15.5% at CER), and Free Cash Flow reached CHF 179.0 million (168.2% cash conversion).

 

DKSH CEO, Stefan P. Butz, said: “I am pleased to report that, after a strong year in 2022, DKSH delivered above GDP growth and further margin expansion in the first half of 2023. Capitalizing on diligent strategy execution and resilient business models, our valued employees across all Business Units contributed to the result. Based on our good first half results, we confirm our outlook for 2023.”

 

DKSH Group

DKSH Group net sales increased by 0.5% to CHF 5.6 billion in the first half of 2023 and 7.2% at constant exchange rates (CER). Organic growth contributed the most with 4.3%, acquisitions added 2.9%, and exchange rates -6.7% due to the strong appreciation of the Swiss franc.

The Group Core EBIT reached CHF 162.6 million, 15.5% higher than in H1 2022 (at CER). Core EBIT margin increased from 2.7% to 2.9%. Core profit after tax was CHF 106.4 million. The difference between Core EBIT and EBIT (CHF -4.1 million) as well as Core profit after tax and profit after tax (CHF +0.7 million) is mainly due to the share of result in associates in which DKSH’s ownership is below 50% and which are not consolidated under any of the four Business Units. Free Cash Flow reached CHF 179.0 million. Cash conversion improved from 68.5% in the first half of 2022 to 168.2%.

1 Constant exchange rates (CER): 2023 figures converted at 2022 exchange rates.

* For the definition of Alternative Performance Measures (APM), see Half-Year Report 2023.

 

 

Business Unit Healthcare

Business Unit Healthcare accelerated net sales growth (6.7% at CER) in the first half of 2023. The key driver was business expansion with existing and new clients in Thailand, Malaysia, and Vietnam. With a focus on growing its higher added-value segments and services, such as the Own Brands and Medical Devices businesses, Core EBIT margin further increased after a strong first-half 2022 from 2.6% to 2.8%. Backed by attractive market fundamentals, the Business Unit will continue expanding its position and driving into higher-value segments and services.

 

Healthcare (in CHF million)	H1 2023	H1 2022	△ in % CHF	△ in % CER1
Net sales	2,809.8	2,803.4	0.2	6.7
Core EBIT	78.6	74.0	6.2	13.6
EBIT	78.6	74.0	6.2	13.6

 

 

Business Unit Consumer Goods

The gradual shift towards topline acceleration in Business Unit Consumer Goods drove a modest net sales growth (2.0% at CER) to CHF 1.8 billion due to client wins and expansions. Portfolio optimization resulted in another half year of Core EBIT growth (at CER) and margin increase from 2.1% to 2.2%. The successful transformation of the Unit over the last four years has resulted in a doubling of Core EBIT and margin. The Unit will continue capitalizing on its position in Asia Pacific, now amplified by a stronger market reputation, to drive growth and profitability under the leadership of the new Business Unit Head.

 

Consumer Goods (in CHF million)	H1 2023	H1 2022	△ in % CHF	△ in % CER1
Net sales	1,788.0	1,867.1	(4.2)	2.0
Core EBIT	38.8	39.9	(2.8)	5.5
EBIT	38.8	39.9	(2.8)	5.5

 

 

Business Unit Performance Materials

Business Unit Performance Materials delivered M&A-driven net sales growth of 14.6% (at CER). Results must be viewed against a strong performance in the previous year as well as industry slowdowns due to the challenging macroeconomic environment and temporary destocking. Core EBIT in the first half of 2023 was CHF 62.3 million, which includes amortizations of CHF 4.9 million, almost entirely related to M&A. Excluding amortizations, the Core EBIT margin of 8.8% remained around last year’s level. The Business Unit's second-quarter results show a sequential improvement versus the first quarter and year-on-year growth.

 

Performance Materials (in CHF million)	H1 2023	H1 2022	△ in % CHF	△ in % CER1
Net sales	767.0	719.4	6.6	14.6
Core EBIT	62.3	63.2	(1.4)	7.0
EBIT	62.3	63.2	(1.4)	7.0

 

 

Business Unit Technology

Business Unit Technology reported very strong results. Net sales and Core EBIT increased double digit. The business benefitted from increased investments in the scientific instrumentation, precision machinery, and semiconductor industries across Asia Pacific. At the same time, the Unit diligently executed its strategy by further focusing its Business Lines and expanding its consumables and service portfolio. The Business Unit is determined to solidify its position in key industries in Asia Pacific, build further resilience, focus on higher-margin segments and services, and play a leading role in market consolidation.

 

Technology (in CHF million)	H1 2023	H1 2022	△ in % CHF	△ in % CER1
Net sales	259.0	206.3	25.5	34.4
Core EBIT	12.1	5.4	124.1	138.9
EBIT	12.1	5.4	124.1	138.9

 

 

Outlook

DKSH is committed to deliver GDP+ sales growth and expects Core EBIT in 2023 to be higher than in 2022 based on its resilient business model, successful strategy execution, and strong balance sheet. This outlook assumes economic growth in Asia Pacific, exchange rates at current levels, and barring any unforeseen events. The Group remains confident about Asia's long-term potential and is well-positioned to benefit from favorable market, industry, and M&A consolidation trends.

 

Further Information

The conference and webcast for media and investors will take place today at 10:00 a.m. CEST. The Half-Year Report 2023 and recording of the webcast will be available on the DKSH website.

 

 

Appendix:

Net Sales Growth Components

(in CHF million)	H1 2023	H1 2022	% CHF	% Organic	% M&A	% FX
Healthcare	2,809.8	2,803.4	0.2	6.4	0.3	(6.5)
Consumer Goods	1,788.0	1,867.1	(4.2)	2.0	0.0	(6.2)
Performance Materials	767.0	719.4	6.6	(3.7)	18.3	(8.0)
Technology	259.0	206.3	25.5	24.3	10.1	(8.9)
DKSH Group	5,623.8	5,596.2	0.5	4.3	2.9	(6.7)

 

 

EBIT to Core EBIT – H1 2023

(in CHF million)	Operating profit (EBIT)	Fair value adjustment related to employee benefit expenses	Non-recurring share of result in associates	Core operating profit (Core EBIT)
Healthcare	78.6	-	-	78.6
Consumer Goods	38.8	-	-	38.8
Performance Materials	62.3	-	-	62.3
Technology	12.1	-	-	12.1
Other/Elimination	(33.3)	0.9	3.2	(29.2)
Group Total	158.5	0.9	3.2	162.6

 

 

Profit after tax to Core profit after tax

(in CHF million)	H1 2023	H1 2022
Profit after tax	107.1	105.7
Non-recurring share of loss in associates	3.2	-
Fair value adjustment related to employee benefit expenses	0.9	-
Loss on sale of subsidiaries	1.9	-
Expense/(Income) from financial instruments	(6.7)	(0.5)
Core profit after tax	106.4	105.2

 

 

About DKSH

DKSH’s purpose is to enrich people’s lives. For more than 150 years, we have been delivering growth for companies in Asia and beyond across our Business Units Healthcare, Consumer Goods, Performance Materials, and Technology. As a leading Market Expansion Services provider, we offer sourcing, market insights, marketing and sales, eCommerce, distribution and logistics as well as after-sales services. DKSH is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. Listed on the SIX Swiss Exchange, DKSH operates in 37 markets with 32,600 specialists, generating net sales of CHF 11.3 billion in 2022. www.dksh.com 

For further information, please contact:

 

DKSH Holding Ltd.

Till Leisner

Head, Investor & Media Relations, Sustainability

Phone [phone] 

[e-mail]

 

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End of Inside Information

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Language:	English
Company:	DKSH Management Ltd.
	Wiesenstrasse 8
	8008 Zurich
	Switzerland
Phone:	044 386 72 72
E-mail:	[e-mail]
Internet:	www.dksh.com
ISIN:	CH0126673539
Valor:	12667353
Listed:	SIX Swiss Exchange
EQS News ID:	1681945

End of Announcement	EQS News Service

1681945  18-Jul-2023 CET/CEST