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DKSH continues to grow – exceeding CHF 11 billion in sales for the first time – further dividend increases February 05, 2018


			
				DKSH continues to grow – exceeding CHF 11 billion in sales for the first time – further dividend increases
  • Net sales grow by 4.8% in 2017 to CHF 11.0 billion
  • Operating profit (EBIT) increases to CHF 297.0 million
  • Profit after tax of CHF 213.3 million slightly above last years level
  • Successful market entry in Indonesia and expansion of digital business
  • Proposal to increase ordinary dividend by 10.0% to CHF 1.65 per share
  • Increased net sales and profit growth rate expected
  • Two new members of the Board of Directors proposed for election

Media release

DKSH continues to grow – exceeding CHF 11 billion in sales for the first time – further dividend increases

  • Net sales grow by 4.8% in 2017 to CHF 11.0 billion
  • Operating profit (EBIT) increases to CHF 297.0 million
  • Profit after tax of CHF 213.3 million slightly above last years level
  • Successful market entry in Indonesia and expansion of digital business
  • Proposal to increase ordinary dividend by 10.0% to CHF 1.65 per share
  • Increased net sales and profit growth rate expected
  • Two new members of the Board of Directors proposed for election

Key figures Group (in CHF millions)

2017

2016

in % CHF

in % CER¹

Net sales

11,006.4

10,505.2

4.8%

3.9%

Operating profit (EBIT)

297.0

293.0

1.4%

1.3%

Profit after tax

213.3

213.0

0.1%

0.0%

Free Cash Flow

139.5

128.8

8.3%

-

Ordinary dividend (in CHF)²

1.65

1.50

10.0%

-

Number of specialists

31,973

30,318

5.5%

-

¹ Constant exchange rates: 2017 figures converted at 2016 exchange rates

² Proposal of the Board of Directors

 

Zurich, Switzerland, February 5, 2018 – DKSH, the leading Market Expansion Services provider with a focus on Asia, again improved the relevant key figures in 2017. Sales exceeded CHF 11 billion for the first time. Net sales grew by 4.8% and EBIT increased by 1.4%. Profit after tax of CHF 213.3 million was slightly above last year’s level. Based on this performance, a 10.0% increase of the ordinary dividend to CHF 1.65 will be proposed to the Ordinary Annual General Meeting (AGM) on March 22, 2018. DKSH thereby emphasizes its confidence for further growth.

 

Organic growth constituted the greater part of the increase. DKSH generated strong growth in Vietnam, Laos, Cambodia and Myanmar. In addition, DKSH expanded its market presence through acquisitions. In January, DKSH took over the Cambodian medical device distributor Europ Continents and in March the field marketing provider IMA in Vietnam. With the strategic acquisition of PT Wicaksana, DKSH successfully entered the Indonesian market for Business Units Consumer Goods and Healthcare.

 

Despite muted consumer demand in Thailand caused by political developments, Business Unit Consumer Goods managed to keep its result on last year’s level. DKSH’s Business Unit Healthcare continued to grow strongly and further expanded its leading market presence. Net sales in Business Units Performance Materials and Technology rose due to higher demand for capital goods and specialty raw materials.

 

Stefan P. Butz, CEO, DKSH said: “In 2017, we again exceeded the key figures of the previous year. We achieved this in a year, in which we had sucessful leadership changes and despite external headwinds in some markets. Again, DKSH’s business model proved to be both robust and broadly diversified. We diligently executed our proven strategy with a focus on organic growth and developed new growth opportunities. In addition, we made value-added acquisitions, expanded our digital footprint and continued to invest in our people and infrastructure. We will pursue this path into the future and are confident for further growth in 2018.”

 

DKSH Group

Consolidated net sales in 2017 increased by 4.8% to CHF 11.0 billion. Organic growth was 3.7% and 0.2% resulted from acquisitions. Exchange rate fluctuations had a slightly positive impact of 0.9%.

 

Operating profit (EBIT) increased to CHF 297.0 million. Profit after tax of CHF 213.3 million was slightly above last year’s level. The Free Cash Flow added up to CHF 139.5 million above prior year, too.

 

In line with the progressive, shareholder-friendly dividend policy practiced for many years, the Board of Directors will propose to the AGM in March 2018 an ordinary dividend of CHF 1.65 per share. The ordinary dividend would thereby be CHF 0.15 or 10.0% higher than last year. The total of ordinary dividend payments amounts to CHF 107.3 million compared to CHF 97.6 million in the previous year. The payment date for the dividend, if approved by the AGM, is set to start on March 28, 2018 (record date: March 27, 2018; ex-dividend date: March 26, 2018). 

 

Consumer Goods

Net sales in Business Unit Consumer Goods contracted slightly by 3.3% (-3.7% at CER) to CHF 3.6 billion. The political situation in Thailand resulted in continued subdued consumption levels. In Vietnam, Cambodia, Laos and Myanmar, however, we achieved substantial growth.

 

Despite exceptional set-up costs for new client contracts, EBIT of CHF 105.9 million was at last year’s level. DKSH continued to restructure its luxury goods business and improved results for this segment compared to last year.

 

In March, DKSH acquired IMA, an established field marketing provider in Vietnam. In July, DKSH entered Indonesia by acquiring PT Wicaksana, an Indonesian distributor of consumer goods.

 

Key figures Consumer Goods

(in CHF millions)

2017

2016

in % CHF

in % CER¹

Net sales

3,643.1

3,768.5

(3.3%)

(3.7%)

Operating profit (EBIT)

105.9

105.8

0.1%

(1.2%)

 

Healthcare

Business Unit Healthcare reported a substantial increase in net sales of 10.7% (9.2% at CER) to CHF 6.1 billion and grew in South East as well as North East Asia. EBIT increased by 9.1% to CHF 146.5 million.

 

In January, DKSH acquired the specialized healthcare distributor Europ Continents. With this acquisition, DKSH strengthened its leading market presence in healthcare in Cambodia.

 

Key figures Healthcare

(in CHF millions)

2017

2016

in % CHF

in % CER¹

Net sales

6,065.8

5,481.5

10.7%

9.2%

Operating profit (EBIT)

146.5

134.3

9.1%

9.2%

 

Performance Materials

Net sales in Business Unit Performance Materials stood at CHF 894.1 million, up 2.7% compared to 2016 (3.2% at CER).

 

EBIT of CHF 73.2 million was slightly below last year’s level. In 2016, EBIT was positively impacted by the appreciation of Euro and Yen. Costs for specialty raw materials ‒ converted into Euro and Yen ‒ decreased in 2016 due to the appreciation of these currencies, resulting in a higher operating profit back then. Adjusted for this effect, EBIT would have increased slightly in 2017.

 

Key figures Performance Materials

(in CHF millions)

2017

2016

in % CHF

in % CER¹

Net sales

894.1

870.6

2.7%

3.2%

Operating profit (EBIT)

73.2

77.0

(4.9%)

(3.9%)

 

Technology

With a net sales increase of 4.9% to CHF 404.2 million, EBIT grew substantially by 8.5% to CHF 23.1 million. Especially in China, Taiwan, Indonesia and Japan, the business recorded continued high demand for capital investment goods.

 

Key figures Technology

(in CHF millions)

2017

2016

in % CHF

in % CER¹

Net sales

404.2

385.4

4.9%

4.8%

Operating profit (EBIT)

23.1

21.3

8.5%

8.5%

 

Outlook

DKSH expects further improvements in 2018. All key growth drivers are intact. The strategic position of DKSH remains strong and sustainable. Our important market Thailand seems to be improving. The performance of our 32,000 specialists, a promising business development pipeline from clients around the world and the opening of further distribution centers in Asia will drive DKSH’s expansion. DKSH is therefore overall confident and expects an increased net sales and profit growth rate for 2018.

 

Board of Directors

The Board of Directors proposes to shareholders to newly elect Prof. Dr. Annette G. Köhler and Eunice Zehnder-Lai to the Board for a term of office until the 2019 Annual General Meeting. The elections will take place at the company’s Annual General Meeting on March 22, 2018. At that time, Mr. Rainer-Marc Frey will not stand for reelection to the Board of Directors.

 

“On behalf of the entire Board of Directors and management, I would like to thank Rainer-Marc Frey for his highly appreciated services and important contributions as director over the last ten years,” said Dr. Joerg Wolle, Chairman DKSH Group.

 

Prof. Dr. Annette G. Köhler (German citizen, 1967) holds a chair in accounting and auditing at the University of Duisburg-Essen since 2005. Previously, she has taught accounting and auditing in several universities and has also worked as a research assistant and management consultant. She is a member of the Supervisory Board and Audit Committee of HVB UniCredit Bank AG (since May 2014) and DMG Mori AG (since May 2017). From 2012 to 2017, she was a member of the International Auditing and Assurance Standards Board (IAASB), New York. Annette G. Köhler holds a Master of Arts in Economics from Wayne State University in Detroit and a Diploma in Economics and Business Administration from University of Augsburg. She also holds a PhD from University of Cologne and a Habilitation from University of Ulm.

 

Eunice Zehnder-Lai (Swiss and Hong Kong citizen, 1967) is CEO of IPM (Institut für Persönlichkeitsorientiertes Management). Previously, she was in the financial services industry for 20 years with LGT Capital Partners, Goldman Sachs and Merrill Lynch in New York, London, Hong Kong and Switzerland. She also worked for Procter & Gamble in marketing and brand management as well as for Booz & Co. in strategy consulting. She is a member of the Board of Directors of Geberit Group (since 2017) and Asia Society Switzerland (since 2016). Eunice Zehnder-Lai holds a Masters of Business Administration from Harvard Business School and a Bachelor of Arts degree from Harvard University.

 

Further information

The media conference will take place today at 10.30 a.m. CET. The live webcast of the analyst and investor call will be held at 1.00 p.m. CET (in English). A recording of the webcast will be available on the DKSH website, along with the Annual Report 2017.