Sfs Group Ag

So good morning, everyone, and thanks for joining us today for presenting the annual report of 2025. The following presentation of the 2025 annual results can be found on our website at www.sfs.com under the download section. Now it's not moving to the next slide, huh? Somehow. It's not moving to the next slide. Can you take that foot away? Yeah. Someone is on the braking pedal here. Yeah. Yeah. It was probably you. Sorry for that. Volker Dossmann and I are pleased to present the SFS group results for the financial year 2025. It was yet another year characterized by a demanding market environment, geopolitical uncertainty and continued currency headwinds. Despite this, SFS delivered solid results. Our diversified positioning across end markets and regions once again proved to be a strength. At the same time, we initiated important structural measures that will strengthen our competitiveness for the years ahead. Next slide, I have to say. Let me briefly guide you through today's agenda. In the next roughly 45 minutes, Volker and myself will actively walk you through the highlights of the year. I will start with a short reminder of how SFS is positioned and how we create value for our customers. After that, I will summarize the key takeaways of 2025. Volcker will then walk you through the key financial figures in more detail. And then I will return with a short overview of the segment developments before we conclude with our outlook for 2026 and open the floor for questions for the reminder until noon. Now we got kicked out. Okay. I start with the positioning of the SFS group. SFS accompanies people throughout everyday life, often unnoticed, 24 hours a day, seven days a week. Our mission-critical precision components, fastening systems and quality tools are embedded in the products and processes of our customers. While our products are often small components within larger systems, they play an essential role in ensuring reliability, safety, and performance. By focusing on mission-critical applications, we help customers achieve efficiency and cost effectiveness across a wide range of applications. This positioning is built on a long-term customer relationship engineering expertise, and a deep understanding of our customers' applications. Our guiding principle is simple, inventing success together. In many cases, the direct cost of our products represents only a very small share of the overall cost of our customer products. The real value lies in optimizing the overall process. Through value engineering, we improve product performance, simplify installation processes, and reduce supply chain complexity for our customers. This is where we as value creators create measurable gains. Our activities are structured in three segments. Engineer components focuses on highly precise customer-specific components and assemblies. Fastening systems develops and markets application-specific fastening solutions for the construction industry. And distribution logistics provide tools, fasteners, and C-part management solutions for industrial manufacturing customers. optimizing the product. Let's now take a look at the specific end market with an aerospace application. This example illustrates how value engineering works in practice. Instead of simply supplying a standard component, SFS engineers analyzed the entire application and redesigned a new solution. By replacing the conventional bracket solution on the left side with a hybrid insulated pin fixation with bolts on the right side, we can reduce weight and operating cost. At the same time, customers benefit from easier installation and lower procurement complexity. The next success story, as well in aerospace, shows the engineering capabilities of our engineered component segment in the aerospace industry. From the initial custom idea to first flight, the development took only 16 months, which is very short for aerospace projects. The solution combines advanced plastics and metal processing technologies to create an ultra high strength composite overhead compartment hinge for the refurbishment of existing aircraft cabins. It provides more space for passenger luggage, improves boarding and deboarding, and contributes to both sustainability and cost efficiency for airlines. To give another example from the aerospace market, many of the solutions developed by SFS are not visible to the passenger, yet they are essential for the performance and safety of the aircraft. Typical examples include cabin assemblies, assembled solutions, injection molded components, and new also aerospace fasteners. These solutions require very high precision and close cooperation with the customers already during the design phase. SFS supports customers from engineering and prototyping all the way to serial production, creating strong and long-term partnership. In the fastening system segment, SFS combines products, tools and digital engineering solutions into integrated fastening systems. Our approach is not only to supply fasteners itself, but to optimize the entire fastening process. This includes specialized installation tools and calculation software that ensures the correct application of the fastening solution. By combining these elements, we improve reliability, productivity and efficiency for our construction customers. In distribution and logistics, SFS focuses on optimizing the supply and management of tools and C-parts for industrial customers. Through smart tool storage and digital issuing system, employees have immediate access to tools and consumables at any time. This improves availability while reducing inventory levels and administrative effort. At the same time, the generated data enables further optimization of procurement and production processes. Payback for the customer is usually less than five years. The concept can also be compared to a race on plate model. The system itself is the infrastructure, while the tools and consumables represent the continuously used plates. Through this system, we not only supply the tools, but also generate transparency on consumption and usage patterns. This allows us to provide additional services such as cost optimization, inventory reduction, and process improvements for our customers. To act as a true value engineering partner, it is essential for SFS to have a clear focus on specific end markets and customer applications. For this reason, the SFS group implemented several organizational changes to sharpen its end market exposure and strengthen collaboration across the segments. As of January 1st, 2026, the engineer components divisions were reorganized around applications, and a new region, Asia, was created to further develop the important Asian growth markets. Urs Langenauer was appointed as head of EC segment, Martin Reichenegger took over the leadership of Region Asia, and Isa Raunerck became head of D&L segment, while Christina Buvi joined the group executive board as head of corporate HR, communications, and ESG. These changes also reflect the generational transition in leadership and ensure continuity in the execution of our strategy. I start with the key takeaways of 2025 at the glance, resilience in turbulent times. The year 2025 proved to be another intense year against the backdrop of an adverse market environment. SFS realized solid results thanks to its broad positioning across different end markets and regions. A program to streamline the global production and distribution network was proactively introduced with the goal of realigning production capacities with partially reduced customer demand and strengthening focus on core activities. Third-party sales of 3 billion. Swiss franc was generated, plus 0.6% versus prior year. Organic sales growth of 2.9% demonstrates strong market positioning. Currency effects again had a significant impact with minus 2.9%. An adjusted operating profit EBIT of 371 million Swiss franc in the prior year, 350.2 million Swiss franc was achieved, which resulted in an adjusted EBIT margin of 12.2% in the prior year, 11.6%. Reduced earnings per share of 5 Swiss francs 63 in the prior year, 6 Swiss francs 21 were caused by the economic environment and the non-recurring effects from our program to streamline global production and distribution network. Expenditure on plant equipment, hardware and software declined considerably to 103.7 million Swiss franc in the prior year 148.9 Swiss franc due to the completion of several major projects. Organizational adjustments, as mentioned, were completed to support the generational transition and to strengthen customer focus. The key takeaways are clear. Consistent progress was achieved. In 2025, SF has achieved total sales growth of 0.6%, while organic growth reached 2.9%, demonstrating the solid underlying performance of the business. Currency effects had a negative impact on the reported figures. The main growth driver during the year was the electronics end market, which showed particularly strong demand. As a result, sales in electronics increased from around 400 million Swiss francs to 422 million Swiss francs, confirming the strong positioning of SFS in the targeted electronics applications. On the environmental side, interim targets were exceeded. Sustainability remains an important pillar of SFS long-term strategy. In 2025, we made further progress in reducing our environmental footprint. Compared to the 2020 baseline, Scope 1 and Scope 2 emissions were reduced by 77.1%, measured as CO2 emissions in metric tons relative to net sales. At the same time, we continue to increase the use of renewable energy. 81.5% of our total electricity demand is now covered by renewable sources, reflecting our continued efforts to decarbonize operations and move towards our long-term climate targets. On the social side, dual education goals were secured, progress in exit and trade finally achieved. Alongside environmental progress, SFS also made further advancements in the social dimension of sustainability. Our training and development targets were successfully confirmed, reflecting our strong commitment to education and continuous employee development. A significant number of employees are engaged in education and training programs, reinforcing the importance we place on developing skills and future talents. At the same time, we achieved a significant improvement in workplace safety. The accident rate, measured as the number of accidents per million hours worked, declined noticeably, reflecting the continued focus on safety initiatives across the group. With that, I'm now handing over to Volker for the presentation of the key financials.

Thank you very much, Jens, and a warm welcome also from my side. The financial year 2025, as said, was to be seen in front of a backdrop mixed with geopolitical and economic challenges, distinct ethics, development, and instability of international trade. We may report good results and satisfactory development in such difficult environment, The team showed great dedication to their end markets, to their customers, and found opportunities despite all of that. We thank all of the 30,646 employees for their dedication, and I summarize the performance as a consistent progress. We grow. We optimize ourselves, namely the production and distribution network. We drive profitability and we generate with that significant levels of cash. But let me go into the details, starting with sales. we show sales of 3,056,000,000, which is 0.6% growth adversely affected as you see by the FX environment, 88 million up to the tune of 2.9% that is lost against the appreciation of the Swiss francs. Sales dynamics during 2025, have been challenging, as said, but after a muted first half year by geopolitics and hesitations in order patterns globally, we report a pickup in Q4, especially versus prior year, and our organic growth is, despite the adverse conditions, at 2.9%. just shy of our mid-term guidance. This is largely based on the positive developments in engineered components, where we see, especially in the electronics end market, replacement cycles in mobile phones. Additionally, the increase of stamped parts that we deliver to the respective customers successfully support our top line. In parallel, we continue to ramp up the known brake systems in the automotive end market. That's happening in Switzerland, in China, in India, and in the U.S. We are on track. See good progress there. Distribution and logistic shows very solid development in an end market where especially machine builders and manufacturers restricted their demand painfully and kept their priorities on operational necessities. Still, the team has managed to achieve organic growth of 2.4%. With construction activities in Central Europe being very sluggish, Versus a more dynamic North American market, the segment fastening systems saw headwinds from the weakening of the U.S. dollar. Gradual improvements during the year were dampened towards year end again. Overall, we see a slight negative performance throughout the year for the fastening system segments. As I said, FX development mainly against Swiss franc dollar, euro, Swiss franc, melted off a significant portion of the locally made progress, 29% up to the tune of 88 million Swiss francs. Looking into breakdown by geography and industries, I would like to highlight that we stay fairly solid in Europe at 56.8% of the share, but also we'd like to point out the shift in North America and Asia, where we gradually gain footprint to Asia 14.3%, and the Americas, 17.8. Sales back down by industry shows the stable situation as well. Industrial manufacturing at 27%, just losing a bit, a wee bit. In an extremely competitive market environment, we managed to keep the footprint almost stable. Construction and automotive both at the 20% reach. Our local for local approach remains a strategic pillar. And with that set up, we see ourselves well positioned against tariffs and customs discussed. And also the unilateral measures taken by the respective countries. The uncertainty and the volatility from the end market demand is more of a concern to us these days. as to Teres itself. Operating profitability is at the 371 million or 12.2%, or EBITDA 505.8 million, 16.6%, which is a normalized figure. Reported, we are at 324.3 million, 10.6%, or EBITDA of 466.6 billion, 15.3%. We adjusted to 46.7 million one-time non-recurring costs in the program of streamlining our production and distribution footprint. And this shows the results. We have managed to lower our personal expense quota by 0.5 percentage points and our OPEX by 0.4 percentage points in a sustainable way. Based on a stronger second-half-year top line versus prior year and improved performance, we record an emphasized pickup in profitability towards year-end. As mentioned before, we tied that to a significant part to the favorable economic environment in electronics, where we see this replacement trend. the replacement cycle, and also do the dynamics as such. We expect that to flatten out slightly during the coming months, and 2026 should not be such a distinct difference between first half year and second half year. Being on an adjusted basis back in the target of 12% to 15% EBIT range was possible due to the progress in the streamlining of the footprint of production and distribution networks. And I would like to give a bit more detail on what we are doing. doing at the moment and where we are on the next slide. We said that we are going to reduce top line by 110 million Swiss francs phasing out technologies and legacy products. We are at this point of time at a rate of 20% that we actually phased out. Individual discussions with customers are ongoing and we are confident to reach the target. As a nature of the topic, this is going to take longer. 650 FTEs were announced that we want to reduce overall. We implemented actions affecting more than 330 FTEs by year end. Fifty percent of the workforce is therefore roughly targeted. And again, this is a topic where we take our time in order to find the best possible solution for the businesses, but also for the individuals. And we are working towards finishing all these managers by end of 2027. Reducing these 650 FTEs does and will involve closing as well as selling of individual sites. Divestiture is clearly there in the realm, and we would in any case prefer that closing. as we can grant these people a future in a different environment. Should you be looking at the overall FTEs on the group level, you will not find the 650. We have two counter effects that we would like to mention here, which have absolutely nothing to do with the streamlining of the production for FTEs. but you see the distinct workforce up in electronics, which usually is a temporary workforce that is temporarily hired, as well as the ramp up in India where we are expanding our product portfolio. The total cost for the adaptation program was targeted at 75 million Swiss francs, which still is our total target. At the moment, we are more than 60% through the measures from a cost perspective. One-time cost perspective, as said, the 46.7 million Swiss francs. We are striving to improve 0.8 percentage points on EBIT. We've seen first minor effects in 2025. We'll see roughly shy half of that in 2026. So, we are here on good tracks. If we look at what we did in a chronological order, then you see these different sites that are and will be affected. I'll summarize as follows. We have places where we are through, sites where we are through, like Brunnen am Gebirge in Austria, like Alpe in Germany or Moxville in the U.S. These sites are closed. The measures are fully implemented. On the other hand, we have sold Alchemet to the management in Emmenbrücke. That is one of these divestitures I mentioned. And we are lastly in implementation in Torvali in Turkey, in Turnov in Czech, and also in Flaville in Switzerland, where we are on track. And all measures as said shall be implemented by year end of 2027. Which brings me to earnings per share, and as already mentioned, we have earnings per share of 5.63 Swiss francs, which is 58 up and down versus prior year. We have impacts from the streamlining program and the one-time cost, which obviously are reflected in our earnings per share. On the other hand, we have a pickup in profitability and mix. which works counter this. We have no or minor impacts from the financial result this year. And we have a bit of a pickup as we pay normally less taxes in the year 2025. Based on that result, the Board of Directors will propose to the General Assembly of 22nd of April a dividend of 2.5 Swiss francs, as in prior year we will distribute part of that, 50 rotten, out of privileged capital reserves, which is an advantage to the individual shareholders in Switzerland. The rest, the 2.0 Swiss francs, will be distributed as a genuine dividend. With that, we stay on a payout ratio of below 50%, which is a clear signal that we will continue to deleverage our balance sheet. Dividend yield is at 2.3% measured with the share price end of the year. Networking capital development remained flat, which was quite of a challenge in a situation where we had tariffs and uncertainty from logistics point of view. We managed to keep that flat, especially focusing on inventories. Overall, we stay at 28%. Clearly, it remains a topic to calm down on these levels again. Brings me to capital expenditure, where we say with 3.4% of sales, we are reaching a historical low, which is clearly down and below D&A ratio of 4.7%. This is clearly the outcome of the streamlining of the production floor print. and the increase of utilization of existing installed capacity. Additionally, of course, we have the trends from the ending of the investments in Herebrooke, which were large, and in China, in Nantong, where we had larger investment cycles during the last two years. We keep the rigid view on CapEx, and we will reconfirm here the bracket of 4% to 6% of sales going forward in investment. into capex as we take the positive cash flow from that element. We go to the operation-free cash flow, which is a very strong signal at $274 million. and therefore at 57% of EVTA or 124% of net income, which we deem as a strong signal and a clear document of the good ability to generate cash asset whilst we optimize ourselves, whilst we grow. and therefore also deleverage our balance sheet, and we will strive for that further. Networking capital management, diligent capex decisions, and profitable growth are cornerstones in our decision-making. We see ourselves positioned to keep the cash generation up, and reconfirmed the target bandwidth of 40 to 50 of EBITDA going forward. As said, balance sheet ratios come back steadily and the equity ratio that we lowered deliberately in 2022, acquiring Hofmann Group and expanding distribution and logistics has come back to 64.4%. Meanwhile, good in the range and above the targeted 60% threshold. Our first outstanding bond has been reimbursed against the revolving credit facility, and we strive, as said, to go that path further as we go along. Return on capital is fluctuating or moving exactly in parallel with our profitability and comparable levels to prior year along those performance indicators. Effective tax rate to our dismay did raise again. We were aiming to reverse the trend and fighting against it, but we have some elements to line out here. One is the closer of sides made us write off deferred tax assets as we lose them, which drives the tax rate. Secondly, we have... distinct hunger of the economies to generate tax income and the creativity in Germany, France, Italy, and Hungary with new taxes drives our tax rate and our ability to counteract was somewhat limited. And lastly, the continued moving out of our tax shield in the U.S. is counter-effecting our other measures. If we look at tax rate on strict statutory rates, we would end up at 23% as we are positioned today. So there is potential, and we will implement measures to drive that down or keep it flat. That brings me to the KPI summary. I conclude my detailing on the performance. Thank you very much for your attention, and hand back to Jens.

Thank you very much, Volker. And I'm happy to continue with the presentation of the segment development. We'll start as usual with the headlines of the engineered components segment. The engineered component segment delivered good growth in both sales and profitability, supported by several end markets and application areas. Within this segment, the electronics division was a key growth driver, particularly through stamped components used in mobile devices and components for near-line HDD applications. The aerospace business showed a very encouraging performance throughout the entire year, reflecting strong demand and successful project execution, as proven through the introduction. In contrast, demand in the medical device industry developed somewhat below expectation during the year. Despite excess capacity in the European market, the automotive division achieved solid results, demonstrating the competitiveness of its product portfolio. In addition, several ramp-up projects in Switzerland, China, India, and the United States are progressing. Finally, George Poe and Walter Kobler retired from the group executive board and Urs Langenau assumed the role of head of engineered components segment. The fastening system segment was impacted by the economic environment, particularly in Europe. In this context, the segment recorded a slightly negative sales development and weakening currencies further reduced operating profit in this sluggish market environment. At the same time, the North American construction industry proved more dynamic than its European counterpart. In addition, regionally cold and unusually long winter conditions at the beginning and end of 2025 had a temporary negative effect on construction activities. Nevertheless, demand recovered slightly over the course of the financial year. And finally, market access in North America was further expanded through the acquisition of DB building festivals in the United States on August 1st of 2025. The distribution logistics segment showed subdued market momentum during the year. Nevertheless, the segment delivered solid results in this challenging environment, supported by prudent cost management, down-boarding of partners, and a comprehensive range of products and services. The planned acquisitions of the partner companies Goethe, Oltrog and Perschmann will further strengthen the platform. These acquisitions will enable the further internationalization of the trading business. They will also allow us to pool resources and realize advantages in terms of expertise and costs. Furthermore, the purchase of a 51% stake of the 3D printing platform JellyPipe AG, now renamed Hoffman Additive Manufacturing, expands our technology offering. Since January 1st, 2026, ISO RAUNAC has been leading the distribution and logistics segment. Looking ahead to the financial year 2026. The outlook is still characterized by considerable uncertainty. Against this backdrop, the group will continue to focus on its rigorous custom orientation, pushing ahead with innovation projects, and ensuring efficient and profitable business processes. We will steadfastly continue to pursue and implement the global production and distribution network streamlining programs introduced in the year 2025. For the 2026 financial year, the SFS group is focusing on the midterm guidance and expects organic growth of 3% to 6% in local currencies, as well as an adjusted EBIT margin of 12% to 15%. Looking ahead, we continue to focus on our main strengths and opportunities. With a clear emphasis on discipline strategy execution, a key priority is building a fit for purpose global manufacturing and distribution network that reflects the current economic environment. and includes targeted site-specific optimization measures. At the same time, we remain committed to maintaining a strong financial foundation supported by operational cost discipline in response to the challenging market conditions. In addition, we'll continue to pursue selective bolt-on M&A opportunities that strengthen our technology portfolio, market access and distribution capabilities. Alongside these initiatives, we aim to further increase the equity ratio, ensuring that SFS remains financially robust and well-positioned for sustainable long-term growth. At this point, I would like to thank all employees of the SFS Group for their commitment, expertise, and innovative energy, which were essential for the good results and development achieved during the year. I also extend my sincere thanks to our customers, business partners, and shareholders for their trust, loyalty, and constructive collaborations which supports the long-term success of SFS. Thank you for your attention and now Volker and myself are happy to answer your questions you may have. We'll start first here in the room. We have two microphones here available. which we give around. So please raise your hand, you know, to get the microphone and then maybe state your name, company and start with your question.