Letter to shareholders

Stable development

The SFS Group continued to navigate a challenging economic environment in the first half of 2024, one marked by inconsistent business performance and inventory reductions in individual end markets. With sales of CHF 1,544.9 million and an EBIT margin of 11.7%, SFS is well on its way to achieving the targets it set for the 2024 financial year. SFS continuously strives to push sustainability forward. CO₂ emissions were further significantly reduced thanks to an increased share of purchased renewable energy.

Dear Shareholders,

Like in 2023, global economic growth fell short of its potential in the first half of 2024. Reasons for this include the weak international economy, geopolitical tensions and the associated lower investment demand. The results in SFS’s individual business areas felt the impact of the chal­lenging environment to different degrees. While all the divisions in the Engineered Components segment improved over the previous year, the repercussions of this environment were still quite noticeable in the business with construction customers (Fastening Systems segment) and industrial manufacturing customers (Distribution & Logistics segment).

The SFS Group generated third-party sales (sales) of CHF 1,544.9 million in the first half of 2024. This corresponds to a year-over-year reduction of –2.3%. Currency effects reduced sales growth by –2.4%. Organic growth of 0.1% was achieved on a like-for-like basis.

Profitability was influenced by mix effects and uneven capacity utilization. All in all, SFS generated operating profit (EBIT) of CHF 180.8 million. The EBIT margin amounts to 11.7% of net sales.

Operating free cash flow amounted to CHF 87.2 million, 25.6% higher than in the same period of the previous year (calculation of the key figure is shown in the Information on the publication section in the Annual Report 2023). The decline in earnings per share (EPS) to CHF 3.00 (PY CHF 3.37) is attributable to the lower operating profit (EBIT) as well as the considerably more negative financial result that arose due to foreign currency effects.

Progress made in strategy implementation

We drove strategic key projects and investments forward as planned in the first half of 2024:

• Ramp-up of precision components and assemblies for a new generation of electric brake systems at the Heerbrugg (Switzerland) and Medina (USA) sites
• Completion of second expansion phase at the location in Nantong (China), which will primarily be used for producing stamped precision components for the electronics industry
• Acquisition of land suitable for building in India to expand the local manufacturing platform
• Market position in the building envelope area in Spain and Portugal strengthened by the acquisition of Etanco
• Conclusion of integration project of Hoffmann into the SFS Group

Investments in the first half of 2024 totaled CHF 68.7 million, which is equivalent to 4.5% of net sales.

Integrating sustainability into all aspects of business operations

SFS considers sustainable business development a key factor for long-term success and competitiveness. We are currently faced with the challenge of integrating sustainability into all aspects of our business operations while simultaneously complying with increasing legal requirements.

Diligent preparation for regulatory requirements

The first half of 2024 was focused on preparing for regulatory requirements such as the Corporate Sustainability Reporting Directive (CSRD) and climate reporting in line with the requirements of the Task Force on Climate related Financial Disclosures (TCFD).

Committed to advancing ESG measures

In the environmental dimension, for example, the amount of wastewater produced at our location in Pordenone (Italy) was reduced by 20% by optimizing the internal water treatment system. Other positive side effects of this project include savings in CO₂ emissions and a reduction in machine energy consumption.

A top priority is the health and safety of our employees. In the social dimension, SFS’s goal is to report zero occupational accidents by 2030 at the latest. The “Vision Zero” initiative was launched in the first half of the year to gradually work towards achieving this ambitious undertaking. It calls for an all-encompassing safety culture underpinned by regular training, safety inspections and protocols as well as proactive hazard analyses.

The SFS Group is committed to responsible corporate management. Not only do we comply with legal requirements, but we also make a conscious commitment to the environment and society. SFS has been working together with Solvatten, its new strategic partner, since March 2024 to make access to clean water for all a reality. This Swedish company develops and manufactures environmentally friendly water cannisters. We optimized the fasteners in the portable canisters and provided them to Solvatten along with an annual financial contribution. By making this commitment, SFS is not just supporting Solvatten in its mission; it is also helping to protect the climate and having a positive impact on society.

Expectations for the 2024 financial year updated

Our top priority remains placing highest focus on customers and ongoing efforts to pursue forward-looking innovation projects. We want to identify the chances and opportunities that go hand-in-hand with the current changes and systematically seize them.

From the second half of the year onward, SFS anticipates a slight economic recovery that is sustained by global demand and improved industrial momentum. The SFS Group expects the 2024 financial year to bring slight organic growth and a slight improvement in the EBIT margin compared to the previous year.

We would like to thank our colleagues for their hard work, their innovative spirit and their loyalty. Their enormous commitment is pivotal to our success.

Thomas Oetterli

Chair of the Board of Directors

Jens Breu

CEO