Solid sales and EBIT again in the first half of 2023 in a challenging environment

• Group sales increased by 2% to EUR 407.0 million; for the first time, Zehnder Group achieved 60% of total sales in the ventilation segment
• Organic sales growth of 21% to EUR 62.9 million in North America
• Operating result (EBIT) rose by a slight 2% to EUR 37.5 million, which corresponds to an EBIT margin at previous year’s level of 9.2%
• EBIT margin of 14.7% in ventilation and 0.9% in radiators
• Cash flow from operating activities increased to EUR 22.3 million (+93%)

Graenichen (CH), 28 July 2023: The Zehnder Group (SIX: ZEHN), a leading international provider of complete solutions for a comfortable, energy-efficient and healthy indoor climate, increased its sales by 2% to EUR 407.0 million in the first half of 2023 (organically –1%[1]). Acquisitions from the previous year contributed 3% to sales growth. Foreign exchange effects had a slightly negative impact of around –1% on consolidated sales. For the first time in its history, Zehnder Group achieved 60% of total sales in the ventilation segment. Accordingly, the share of sales in the radiator segment was 40%.

Sales in the ventilation segment increased by 12% (of which 7% was organic) to EUR 245.4 million in the first half of 2023. The most recent acquisitions contributed 6% to sales growth, while currency effects had a slightly negative impact of –1%. The enhanced component availability led to improved delivery capability, particularly in residential ventilation. Consequently, production volumes of ventilation units were increased, and the backlog of orders accumulated due to a lack of components was largely reduced.

The radiator segment recorded sales of EUR 161.6 million in the first half of 2023, which corresponds to a decline in sales of 10% (–10% organically). The sharp decline in volumes was partially offset by higher prices. Weakening purchasing power due to increased financing costs and persistently high levels of inflation have led to a decline in demand. This development had a negative impact on the renovation business and led to a significant overall decline in volumes in the radiator segment.

Stable operating margin in a challenging market environment

The operating result (EBIT) in the first six months of 2023 amounted to EUR 37.5 million and was thus 2% above the figure for the period during the previous year. The EBIT margin of 9.2% was at the same level of the previous year. Cost increases due to higher levels of inflation were largely passed on to customers. At the same time, Zehnder Group is pursuing a proactive pricing policy and differentiated cost management in this challenging market environment. In this way, it was possible to implement cost reductions and efficiency improvements in many areas.

In the ventilation segment, the EBIT rose to EUR 36.1 million in the first half of 2023 (previous year: EUR 29.1 million). This corresponds to an increase of 24% compared to the previous year. The EBIT margin increased by 1.5 percentage points to 14.7%. The gradual resolution of global supply problems and the associated improvement in delivery capability had a positive impact on profitability – as did the cost-related price increases.

In the radiator segment, the EBIT fell to EUR 1.4 million in the first half of 2023 (previous year: EUR 7.8 million). The EBIT margin thus decreased to 0.9% (previous year: 4.4%). This was mainly due to the decline in order volumes in Europe and China in view of the difficult economic environment and the associated lower production capacity utilisation. Furthermore, the challenging climate ceilings business continued to weigh on earnings. Targeted cost-saving measures were implemented consistently in the radiator segment. These resulted in restructuring costs of 1.7 Mio. EUR in the first half of the year.

Increased cash flow from operating activities

Cash flow from operating activities increased to EUR 22.3 million (previous year: EUR 11.6 million) in the first half of 2023. The increase is mainly due to the lower build-up of trade receivables compared with the previous year’s period. At the same time, Zehnder Group repurchased its own shares and paid dividends for the 2022 financial year. Net liquidity[2] amounted to EUR 24.3 million at the end of June 2023 (previous year: EUR 23.3 million). Equity was at EUR 336.0 million (previous year: EUR 327.7 million), corresponding to a continued high equity ratio of 62% (previous year: 58%).

Outlook 2023 and confirmed medium-term targets

As already announced in the last ad hoc release of 20 July 2023, due to the current economic situation, Zehnder Group expects that high levels of inflation and rising interest rates will continue to affect the number of planning permits granted for new buildings and renovation projects for customers. It is currently difficult to gauge when the new building and renovation business will recover. Against this background, Zehnder Group continues to expect a challenging market development. Consequently, Zehnder Group expects sales for the full year 2023 between EUR 780 million and EUR 820 million, and an EBIT margin of around 8% of sales.

In the long term, growth prospects remain positive, particularly in the ventilation segment. New building regulations for better insulated buildings, the increasing demand for energy-saving and efficient climate control solutions, and the desire for healthy indoor air quality, together with the still low penetration rates in various countries, are fueling growth – especially in the ventilation segment. Therefore, the medium-term targets of average annual sales growth of 5% and an EBIT margin of 9% to 11% remain unchanged.

The complete Six-month report 2023 is available on our website at:

www.zehndergroup.com/en/investor-relations/reports-and-presentations

Next dates to note

Contact

René Grieder
Member of the Group Executive Committee, CFO
Zehnder Group AG, 5722 Gränichen (Switzerland)
T +41 62 855 15 21, rene.grieder@zehndergroup.com

Alexander Kamb
Senior Manager Investor Relations & Communications
Zehnder Group AG, 5722 Gränichen (CH)
T +41 62 855 15 36, alexander.kamb@zehndergroup.com

This media release is published in German and English. The German version is binding. For further information about the Zehnder Group, please visit www.zehndergroup.com.

Company profile

The Zehnder Group provides worldwide leading solutions for a comfortable, energy-efficient and healthy indoor climate. The products and services of the Group include heating, cooling, indoor ventilation and air cleaning. The Group develops and manufactures its products at its own factories in Europe, China and North America. In the financial year of 2022, the Zehnder Group had about 4000 employees and achieved sales of EUR 812 million. The company is listed on the SIX Swiss Exchange (symbol: ZEHN, number: 27 653 461). The unlisted registered shares B are held directly or indirectly by the Zehnder family and persons closely associated with them.