Value engineering specialist

Value engineeringspecialist

CS Swiss Equity Forum16 November 2021

2

1. Positioning of SFS

2. Key takeaways 1H 2021

3. Development by segment 1H 2021

4. Development of key financials 1H 2021

5. Updated guidance 2021 & Group priorities

CS Swiss Equity Forum | 16 November 2021

Table of contents

Positioningof SFS

3CS Swiss Equity Forum | 16 November 2021

4

Mission critical products for selected niche applicationsWe are by your side – 24/7


SFS Value EngineeringCreating customer benefit in three dimensions

Solution provider

Fastening Systems

• lower process cost

• increased reliability

• improved ergonomics

Engineering partner

Engineered Components

• reduction of product complexity

• lower cost due to cold forming

• improved product characteristics

Supply partner

Distribution & Logistics

• process automation

• higher product availability

• lower inventory cost


6

Our core technologiesExcellence in technology enables compelling solutions


In depth plastics injection molding

know-how allowed to fulfill custom-

er's material requirements for the

dental industry. High market accept-

ance resulting 110m parts in 2019

7

Creating sustainable benefitSFS Value Engineering – Reference Case Dental

Labelling, packaging and storage

directly at SFS' site and shipments

to customer's distribution hub allow

for significantly reduced handling


Leverage Industry 4.0 opportunities

of digitization to constantly improve

processes

Innovative and patented fastener for

the invisible fastening of façade

panels. Compared to other solutions

simpler installation and lower costs

8

Creating sustainable benefitSFS Value Engineering – Reference Case Construction

Efficient installation process with in-

house developed setting tool from

GESIPA

Technical values, BIM data and

sales via eShop


Large D&L product offering in tools

and fasteners (>150,000 items)

allows customer to source more than

5,000 articles from SFS, leading to

reduce supplier base

9

Creating sustainable benefitSFS Value Engineering – Reference Case D&L

Efficient supply processes and

global footprint offer stable supply

chain for customer's Swiss and

international facilities

SFS logistic systems (eLogistics,

eShop, toolLog) created for tailor

made order processes, resulting in

increased efficiency, reduced invent-

tory and lower risk of shortages


Key takeaways



Convincing sales and profitability improvement realised

• Strong 1H 2021 results achieved, supported by dynamic market environment, retained capacity

and capability to fulfill customer requirements and continued attention to employee health

• Advantage taken of driving market demand, 1H 2021 gross sales amounted to CHF 957.8 million

(+23.8% vs. PY) driven mainly by segments Engineered Components and Fastening Systems

• High capacity utilization, proactive price management and cost consciousness lead to operating

profit margin peaking at 17.1%

• Progress on infrastructure projects as planned, with most recently announced expansion of

production platform in Nantong (CN) planned to be commissioned in autumn 2023

• Highlights from the Sustainability Report for the period of 2020:

• Number of work-related accidents reduced by another –13.3% (total of 85 accidents)

• 5.0% of workforce enrolled in dual education programe

• Implementation of CO2 roadmap, containing measurable targets for reduction of CO2 emissions

Key takeaways

• Economic

performance

• Occupational health

and safety

• Training and

education

• Emission reductions

• Socioeconomic

compliance

• Continued focus on

set goals

• Update materiality

assessment


Key elements to improve sustainable developmentFocus on sustainability

Mgmt

attention

• Regular reporting

on progress

• Management

remuneration tied

to ESG KPIs

Reporting

• UN Global Compact

(SDGs)

• GRI (“core" option),

Sustainability re-

port 2020 released

end of May

https://sustainability.

sfs.com/en

Core

KPIs

CO2 emission

reduction:

• Scope 1 and 2 by

≥90% by 2030

• Scope 3 by ≥90%

by 2040

CO2

roadmapOutlook

2021

https://sustainability.sfs.com/en


Like the milestone to reduce our emissions by ≥90%GRI materiality analysis identifies priorities

We aim to reduce our CO2 emissions (Scopes 1 and 2) by ≥90% by 2030 through the optimisation of

processes, products and digitalisation, with a focus on sustainable customer benefits.

14

Sustainable thinking and acting is part of our DNA From our value proposition of today …


15

Sustainable thinking and acting is part of our DNA … to a holistic view on sustainability


Price of sustainable

components & services

Direct &

indirect cost

for:

•Social, health

& safety risks

•Resources

•Emissions

•Waste

•Disposals

Direct &

indirect cost

for:

•Social, health

& safety risks

•Resources

•Emissions

•Waste

•Disposals

Customer

internal cost

• Logistics

• Manufacturing

• Assembly

• Reliability

• Performance

• Etc.

Total cost

Total cost

Developmentby segment


17

• Positive development in most end markets

resulted in 1H 2021 reported sales of CHF

492.1 m (+29.5% YOY and +8.3% vs. 1H 19)

• Pronounced recovery in Automotive and most

Industrial markets. Electronics with continued

strong demand pattern

• Local-for-Local strategy supported largely

high delivery performance and allowed

selective market share gains

• Global Medical platform positively received

• High utilisation of production capacity

resulting in strong EBIT margin of 18.7%


Participated in strong market recoveryHeadlines Engineered Components segment

Key figures Engineered Components

In CHF million (unaudited)

2021

1H

+/–

PY

2020

1H

Third party sales

Sales growth comparable

492.1 29.5%

29.1%

380.1

EBITDA

As a % of net sales

128.9

25.9

86.5% 69.1

17.9

Operating profit (EBIT)

As a % of net sales

93.1

18.7

165.2% 35.1

9.1

Average Capital Employed 733.8 3.3% 710.3

Investments 33.8 –30.5% 48.6

Full-time equivalents (FTE) 6,955 –0.3% 6,978

ROCE in % 25.4 9.9

18

• Recovery in demand across regions and

applications, but dampened by shortages in

semiconductor supply

• Ongoing electrification of vehicles continue to

be major engine for innovation and growth of

the division, evidenced by new project wins in

the area of electric brake applications

• Building expansion project for electric brake

systems production in Heerbrugg (CH)

developing as planned

• Market conditions expected to remain unchang-

ed, supporting position to outgrow the market


Pent-up demand driving market environmentKey messages Automotive division

Progress building expansion project in Heerbrugg (CH)

19

• Continued growth in the areas of mobile

devices and lifestyle electronics supported by

home office push

• Positive demand pattern for HDD appli-

cations, stimulated by cloud and enterprise

computing

• Shortages in semiconductor supply creating

some degree of volatility

• Expansion of Nantong platform planned

• Positive development expected for full

FY2021 vs. previous year


Stable growth across all applicationsKey messages Electronics division

Platform in Nantong (CN)

20

• Platform combines all SFS core technologies

under one roof and was occupied in 2018

• Ongoing growth of mobile devices, lifestyle

electronics and demand from other divisions

requiring expansion

• Floor space will increase by approx. 70% to

a total of 130,000 m2

• Ready for occupancy in autumn 2023

• Total investment spending budgeted at about

CHF 32 million


Provide capacity for future growthExpansion of production platform in Nantong (CN)

Expansion of platform in Nantong (CN)

21

• Returned on growth track, but development

of demand varies across individual business

units

• Strong demand for furniture, cutting tools and

general industrial applications

• Aircraft components business expected to

continue to operate in stabilised, but

challenging environment for the next 12–24

months

• Ongoing good demand in the second half

year expected to result in organic growth in

full FY2021


Continued recovery in most niche marketsKey messages Industrial division

Fastening application in furniture

22

• Challenging market environment for ortho-

paedic products due to continued

postponement of elective surgeries

• Ongoing positive development in other

application areas

• Build-up of global manufacturing platform

continues as planned. Positive customer

feedback and good project inflow in Europe

and Asia

• Slightly positive development for full FY2021

expected, hampered by orthopaedics busi-

ness and phase-out of lower margin products


Positive customer sentiment towards global platformKey messages Medical division

Titanium bone screw

23

• Continued high demand in construction and

industrial manufacturing industries and pent-

up demand in automotive market resulted in

1H 2021 reported sales of CHF 293.1 m

(+25.3% YOY and +18.0% vs. 1H 19)

• High market demand put supply chains and

material prices under considerable strain

• Strong performance orientation allowed

divisions to navigate challenging environment

and benefit from market opportunities

• High capacity utilisation and thorough cost

management resulted in record EBIT of 17.7%


Advantage taken of dynamic market environmentHeadlines Fastening Systems segment

Key figures Fastening Systems


2021

1H

+/–

PY

2020

1H

Third party sales


293.1 25.3%

25.5%

234.0

EBITDA

As a % of net sales

62.2

20.7

93.2% 32.2

13.5


As a % of net sales

53.0

17.7

133.5% 22.7

9.5

Average Capital Employed 262.8 –8.9% 288.5

Investments 4.2 –2.3% 4.3

Full-time equivalents (FTE) 2,522 5.7% 2,386

ROCE in % 40.3 15.7

24

• Construction market continued its positive

development, driven by rebound effects and

moved up orders

• Extraordinary demand across applications in

EU and NA resulted in historically high sales

• Increasing signs of overheating expected to

result in slowdown of construction projects

and potentially normalisation of demand

• Expansion of TFC branch network by ac-

quisition of GLR Fastener in San Jose (CA)

• Division expects a positive development for

full FY2021


Strong demand and high capacity utilisationKey messages Construction division

Extraordinary market environment across Europe and North America

25

• Denmark-based provider of fastening solutions

for application in high quality building

envelopes

• Expansion of market access to the Danish

construction industry

• High technology and application competence,

including specific services

• Key figures FY2020:

• sales of approx. EUR 5 m

• 10 employees

• First-time consolidation as per 1 July 2021


Broaden market access in DenmarkAcquisition of Jevith

Brick fixings for rainscreen facades

26

• Pent-up demand in automotive market and

recovery of industrial manufacturing industry

drove growth across all application areas

• Some automotive customers have been

negatively impacted by shortage in semi-

conductor supply

• Relocation of Chinese production site to

Nantong (China) expected to yield further

efficiency gains

• Market environment expected to remain stable,

resulting in organic growth for full FY2021


Continued improvement of performanceKey messages Riveting division

Relocation of production site from Nansha to Nantong (CN)

27

• Overall good market demand continued in

1H 21 and resulted in reported sales growth of

13.0 m (+8.1% YOY and +4.4% vs. 1H 19)

• Strong demand from construction customers,

still challenging environment in milling and

machining end markets

• High market demand put supply chains and

price levels under considerable strain,

expected to result increasingly in reduced

availability of certain product categories

• Segment expects organic growth for full

FY2021


Ongoing positive developmentHeadlines Distribution & Logistics segment

Key figures Distribution & Logistics


2020

1H

+/–

PY

2019

1H

Third party sales


172.6 8.1%

7.8%

159.6

EBITDA

As a % of net sales

18.7

10.7

8.7% 17.2

10.6


As a % of net sales

16.2

9.2

11.7% 14.5

8.9

Average Capital Employed 126.8 –1.7% 129.0

Investments 2.2 15.8% 1.9

Full-time equivalents (FTE) 591 –0.7% 595

ROCE in % 25.6 22.4

Development ofkey financials


868

774

0 0 0

958

0

100

200

300

400

500

600

700

800

900

1’000

1HY19 1HY20 Organic Scope FX 1HY21

29

Reported growth of +23.8% (PY –10.8)

• Core business +23.6% (PY –10.4)

• Scope +1.4% (PY 3.4)

• FX impact –1.2% (PY –3.8)

Organic growth SFS Group

• Q1 2021 +10.4%

• Q2 2021 +13.2%

Like-for-like growth by segment

• +29.1% in EC (PY –13.5%)

• +25.5% in FS (PY –10.0%)

• +7.8% in D&L (PY –2.6%)

Sales bridgeOn the path of guided organic growth in 1H 2021

In CHF million +182.4 +10.7 –9.0


-3.1%-1.7%1.4%0.7%

7.5%6.7%4.1%

-1.0% 0.9%

-21.0%

-2.4%

9.9%

10.4%

39.8%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Weakening global economy COVID-19 Rebound

30

Organic sales developmentCOVID-19 with massive impact and stark rebound


Organic growth in % YOY

2018 2019 2020

• First half year saw

unprecedented increase in

demand across all end

markets

• Supply chains are strained

and capacity utilisation high

Organic Growth by end markets

Growth yoy Q1.2021 Q2.2021

Construction 13.0% 34.2%

Automotive 7.8% 128.8%

Electronics 30.3% 27.1%

Medical 1.5% 13.3%

Others -2.8% 16.4%

SFS Group 10.4% 39.8%

YOY

31

Automotive & Europe coming back stronglySales by end markets and regions

18.7%

39.2%

22.5%

19.6%

By regions

Switzerland Europe America Asia

21.7%18.5%

23.2%

36.6%

2020 data2021 data

32.9%

18.6%

23.6%

7.1%

17.8%

By end markets

Construction Others Automotive Medical Electronics

19.4%

33.1%

17.8%

8.6%

21.1%

2020 data2021 data


233

.3

243

.1

239

.1

225

.3

71.0

161

.0

14.3% 14.0% 13.4% 13.2%

9.2%

16.8%

19.8%19.2% 18.6% 19.2%

15.5%

22.4%

0

100

200

300

400

500

0%

5%

10%

15%

20%

25%

2017 2018 2019 2020 1H20 1H21

32

• EBIT margin adjusted 16.8% or CHF 161.0 m;

we report the 4th quarter in a row EBIT >15%

• EBITDA margin 22.4% or CHF 215.0 m

• High utilization supports overall profitability

• Supply chain and logistics cost ask for high focus

and close management

• Diligent cost management remains in place for

personnel and other operating expenses

High utilisation and cost discipline drive performanceOperating profitability

In % of net sales In CHF million


33

Operating profitability Seasonal patterns to continue?


11

0.9

122

.4

11

6.0

127

.1

109

.2 129

.9

71.0

154

.3

161

.0

14.2% 14.3%13.6%

14.4%

12.6%

14.2%

9.2%

16.6% 16.8%

0%

4%

8%

12%

16%

20%

0

50

100

150

200

250

1HY17 2HY17 1HY18 2HY18 1HY19 2HY19 1HY20 2HY20 1HY21 2HY21

EBIT adjusted in CHF million EBIT adjusted margin in %

1’3

27

1’1

22

1’0

93

1’0

68

1’1

93

1’3

31

1’3

83

1’3

76

1’4

37

1’6

33

1’7

39

1’7

81

1’7

05

1’9

00

958

15.5%

11.7%

19.1%

17.3% 17.1%18.9%

19.7%18.5%

20.7%19.5% 19.2% 18.6% 19.2%

22.1%

0%

5%

10%

15%

20%

25%

0

500

1’000

1’500

2’000

2’500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 G 2021 H12021

34

Growth through the cycle holds firmOperating profitability

Sales in CHF million EBITDA margin adjusted


113

111

10

9

111 12

4

114

31.1% 30.3% 29.8% 30.3%

34.0%

31.3%

0

25

50

75

100

125

150

175

0%

5%

10%

15%

20%

25%

30%

35%

2017 2018 2019 2020 1HY20 1HY21

35

NWC seasonally high, improved vs PY

• Equals 114 working days

• Measured at balance sheet date

Cash-to-Cash

• Acc. Receivables 66.1 (PY 65.3)

• Inventory 63.9 (PY 75.2)

• Payables –20.1 (PY –20.7)

• Total Cash-to-Cash 109.9 (PY 119.8)

• Low inventory levels as the whole supply chain is

strained

• No collection risks arisen during the crisis

Seasonal peak per HY | Normalizing in 1H 2021Net working capital

In % of net sales


In days

36

• CAPEX spending at 4.9%

• Significant projects ongoing

• Switzerland: Hall 6 Automotive in Heerbrugg

• Initialised capacity expansions in Asia and

selected other production sites

CAPEX spending by region

• 59% Switzerland (PY 35%)

• 12% Europe (PY 10%)

• 16% Americas (PY 36%)

• 13% Asia (PY 19%)

CAPEX by segment

• 72% EC (PY 86%)

• 9% FS (PY 8%)

• 5% D&L (PY 3%)

• 14% Corporate (PY 3%)

CAPEX at <5% | Expansion projects in 2H 2021Capital expenditure

132

.8

149

.1

11

6.7

104

.1

56.6

46.9

8.1%8.6%

6.6% 6.1%7.3%

4.9%

0

50

100

150

200

250

0%

2%

4%

6%

8%

10%

2017 2018 2019 2020 1HY20 1HY21

In CHF millionIn % of net sales


37

Good cash generation (in CHF)

• 136 m cash flow from operations (PY 103 m)

• –47 m CAPEX (PY –57 m)

• 89 m operating free cash flow (PY 46 m)

Conversion rate at 41.3%

• Target range of 40–50%

CAPEX and NWC increase fully financed by cash flowFree cash flow

94 1

14

161

192

46

89

29.0% 34.4%

48.5%

58.7%

0

50

100

150

200

250

300

0%

10%

20%

30%

40%

50%

60%

70%

2017 2018 2019 2020 1H20 1H21

CHF millionIn % of EBITDA


38.2%41.3%

38

Equity ratio increased to 78.3%

• Target range >60%

Net cash at year end CHF 144 m increased to

CHF 180 m as of 30 June

• 89 m operating free cash flow

• 12 m disposal PPE

• –66 m dividend payout

• 35 m increase vs. year end 2020

Financial flexibility for growth secured by

• Unused and existing credit facilities

• Annual free cash flow

Strong balance sheet and financingBalance sheet ratios

Equity ratio in % CHF million net cash/debt


72.7%

78.3%

35

59 69

14

4

-11

18

0

71.6%74.4% 75.5% 75.9%

-30

0

30

60

90

120

150

180

210

240

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2017 2018 2019 2020 1H20 1H21

24.6%

22.7%21.1%

19.9%

9.8% 9.7% 9.2%8.6%

0%

5%

10%

15%

20%

25%

30%

2017 2018 2019 2020 1H20 1H21

39

Return on capital employed at 28.3%

• EBIT adjusted in % of Ø CE CHF 1.1 bn

Return on invested capital at 12.0%

• EBIT after tax (flat rate of 17.5%)

• Invested capital CHF 2.2 bn including goodwill

offset with CHF 1.0 bn

Bridge between ROIC and ROCE

12.0% ROIC after tax

+11.3% CHF 1.1 bn higher capital

+5.0% tax impact on EBIT

28.3% ROCE before tax

High capital intensity | Strong leverage from EBITReturn on capital

Return in %


12.5%

28.3%

5.5%

12.0%

40

Performing and participating from the rebound

In CHF million 1H 2021 % 1H 2020 % YOY

Sales 957.8 773.7 +23.8%

EBITDA margin 215.0 22.4% 120.3 15.5% +690bps

EBIT adjusted margin 161.0 16.8% 71.0 9.2% +760bps

Net income margin 134.1 14.0% 53.9 7.0% +700bps

Equity ratio 1,370.7 78.3% 1,169.0 72.7% +560bps

Net cash 179.9 –11.4 +191.3

CAPEX % net sales 46.9 4.9% 56.6 7.3% –240bps

Free cash flow conversion rate 88.9 41.3% 46.0 38.2% +310bps

ROCE 28.3% 12.5%


KPI summary

Updated guidance 2020 &Group priorities


42

Assumptions:

• Continued dynamic development in second half year 2021

• No further global waves of COVID-19 infections leading

to a deterioration of the economic conditions

Guidance FY2021Increased expectations thanks to organic growth


2020A 2021G

(10 June)

Mid-TermG

Gross sales development(in local currencies incl. M&A)

–0.2% ca. CHF 1.9 bn 3–6%

EBIT margin 13.3% ca. 15% 13–16%

A = Actual G = Guidance


Continued focus on organic growth pathSFS Group priorities

43

Megatrends

Strengthening

innovation,

particularly in the

megatrends of

digitisation &

autonomous driving

Growth

Investments in

future growth pro-

jects in particular

in the med-tech,

automotive &

electronics sectors

Employees

Continue with

preventive meas-

ures to protect

employee health

and safety

Profitability

Balance produc-

tion capacity with

demand, while

ensuring supply

capability & control

of costs

Sustain-

ability

Continued focus

on the set goals

and update of

materiality

assessment

Thank you foryour attention




This presentation includes forward looking statements. These statements reflect the SFS Group's

current assessment of market conditions and future events. The statements are therefore subject

to risks, uncertainties and assumptions. Unforeseen events may lead to deviations of the actual

results from the forecasts and estimates made in this presentation and in other published

information. To this extent all forward looking statements in this presentation are subject to such

limitations.

Disclaimer

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Value engineering specialist