Dätwyler : Half-Year Report 2023

HALF-YEAR REPORT

2023

H A L F - Y E A R R E P O R T 2 0 2 3

Solid organic revenue growth - loss of Covid business pressures margins

The almost complete loss of the high-margin Covid business and destocking by customers led to underutilization at the recently expanded plants. However, the growth trends in the markets are intact, as is shown by the large number of promising new projects with existing and new customers in all the markets served.

Table of contents

• Highlights
  1.1 Letter to the shareholders

• Financial Report
• 1. Key figures
  2. Per share data
  3. Consolidated Financial Statements

602.7million	10.0%	60.5million	915.8million
Net revenue	EBIT margin	Operating result (EBIT)	Average capital employed

15.0%	29.2million	8'234
ROCE	Capital expenditures	Full-time equivalents	All key figures

Review

Negative external one-time effects - large number of new projects

After a favorable start to the year, Datwyler was confronted with a weakening economy and negative external one-time effects in the first half of 2023. The almost complete loss of the Covid business and our customers' reduction of their high safety stocks in nearly all sectors slowed our revenue growth and led to under- utilization at our recently expanded plants.

In addition, the higher energy costs in 2023 and the temporary unfavorable development of the product mix had a negative impact on the margin. Thanks to our strong market positions and our recognized core competencies, we succeeded in winning a large number of promising new projects with existing and new customers in all the markets we serve.

Organic revenue growth thanks to sustained price increases

5.6%

Organic revenue growth

Overall, Datwyler increased its revenue year-on-year in the first half of 2023 by 11.3% to CHF 602.7 million (previous year: CHF 541.6 million). The two companies acquired in the previous year, QSR and Xinhui, were taken into account for a six-month period for the first time. This resulted in a positive acquisition effect of CHF 55.0 million or 10.2%. The strong Swiss franc caused substantial negative currency effects of

CHF 24.5 million or -4.5%. As a result, organic revenue growth stood at solid 5.6%, including a sustained positive price effect of 4.7%.

At the level of EBIT, the higher employee and energy costs and the insufficient capacity utilization led to a decline to CHF 60.5 million (previous year: CHF 72.5 million). The EBIT margin fell to an unsatisfactory 10.0% (previous year: 13.4%), although the figures for May and June were above the average for the first few months. Due to the lower EBIT and the significantly higher financial expenses, the net result declined to

CHF 32.1 million (previous year: CHF 57.4 million). The net result per share came to CHF 1.89 (previous year: CHF 3.38). The strong Swiss franc also had a significant negative impact on the profit figures.

Where appropriate, we took proactive measures to combat the margin pressure in the form of changes to cost structures and further price increases on the customer side. At the same time, however, we maintained and selectively expanded our capacities and competencies for acquiring and implementing new customer projects and further developing our growth and innovation projects. Examples include the expansion of the healthcare product portfolio, new materials and products for electric vehicles, electroactive polymers and soft dry electrodes.

Our sustainability measures are a further competitive advantage which we are continuously advancing. In the reporting period, the internationally recognized rating agency EcoVadis awarded us a Gold medal for our sustainability performance for the first time. This places Datwyler in the top 5% of more than 100'000 companies from 175 countries that are rated by EcoVadis each year. Furthermore, our ICT security management system is now certified to ISO/IEC 27001:2013.

More about the EcoVadis Gold Award

H E A LT H C A R E S O L U T I O N S

Healthcare Solutions suffers overproportionally from the loss of the Covid business

The Healthcare Solutions business area was able to compensate the almost total loss of the Covid business through growth in its regular business (4.7%) and by implementing price increases (5.9%). It achieved this result despite the fact that healthcare customers also significantly reduced their safety stocks. Although reported revenue fell in comparison with the very strong first half of 2022 to CHF 253.8 million (previous year: CHF 265.7 million), when adjusted for currency and acquisition effects, this equates to slight organic growth of 0.6%. The loss of the high-margin Covid components led to underutilization of our recently expanded plants and a temporary unfavorable development of the product mix. As a result, EBIT declined to CHF 39.8 million (previous year: CHF 58.0 million) and the EBIT margin to 15.7% (previous year: 21.8%).

However, the pandemic has also had a lasting positive effect on our business. Supply chain pressure and our pioneering investments have secured us access to all important pharmaceutical companies. We are currently working on a large number of new projects with considerable future revenue potential.

Thanks to its newly launched UltraShield™ film coating, Datwyler is also the only provider with two coating technologies and can therefore offer its customers the optimal solution according to their needs. Following its acquisition in 2022, the integration of Xinhui is going to plan and has strengthened our position in the rapidly growing healthcare market in China. Overall, with our advanced investments, we are ideally positioned to take advantage of the market growth forecast for the medium term. We will benefit from scaling effects as soon as the environment normalizes.