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Report of the Directors and Executive Committee |
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Ladies and gentlemen
The SFS Group recorded sales growth and improved profits in almost all areas of activity in the 2007 financial year. Consolidated sales by the SFS Group increased by 8.5% to 1334 million Swiss francs in the year under review. Profit margins improved slightly compared with the previous year.
The profi table growth of the SFS Group is attributable to internal strength and also to the generally favorable overall business environment.
Key figures from the consolidated income statement of the SFS Group
| Million Sfr. | 2007 | 2006 | Change |
| Gross sales | 1,334 | 1,230 | + 8,5% |
Cashflow from operations (EBITDA)
% of total revenue | 231.0
17,0 | 210.0
16,8 | +10,1% |
Operating profit (EBIT)
% of total revenue | 151.8
11,2 | 134.0
10,7 | +13,3% |
| Net income (EAT) | 121.3 | 110.1 | +10,1% |
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The group invested 129.9 million Swiss francs in order to secure its competitiveness and future growth. These investments were financed entirely from internally generated funds. The group’s net financial assets increased to 276 million Swiss francs (257 million Swiss francs in 2006).
The balance sheet was strengthened further. The equity ratio rose to 74.5% of consolidated total assets (71.0% in 2006). The development in the number of personnel employed by SFS varied according to region. The SFS Group created a total of 90 new jobs in the year under review.
Employees by region
| Number of employees (FTE) | 2007 | 2006 | Change |
| Switzerland | 2,449 | 2,350 | +4,2 % |
| Europe | 1,121 | 1,095 | +2,4 % |
| North America, other | 447 | 482 | -7,3 % |
| Total | 4,017 | 3,927 | +2,3 % |
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SFS intec
SFS intec is an efficient developer, manufacturer and supply partner for customized precision cold formed components and special fasteners for applications in numerous industries as well as system products for the construction sector. SFS manufactures in 14 plants in Europe and North America and supplies its customers via an international network of wholly owned sales and service companies.
 | 2007 | 2006 | Change |
| Gross sales (million Sfr.) | 829 | 775 | + 6,9% |
| 2 number of employees | 3,014 | 2,952 | + 2,1% |
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The trend of business at SFS intec varied according to business segment and market region.
In the component supply business to the automotive industry the focus on selected growth areas again proved its worth. For example, SFS intec participated in the automobile industry’s efforts to achieve substantial reductions in fuel consumption and CO2 emissions. The increasing market penetration of safety systems such as ABS, airbags and passenger retention systems was also a major growth driver for the AutomotiveProducts Division.
Dynamic growth was also recorded in sales to customers in the electronics industry and mobile telephone manufacturers. Deliveries to manufacturers of carbide cutting tools were also expanded considerably as a result of the investment boom in the tool industry. Delays in the fi nal assembly and delivery of the Airbus A-380 resulted in signifi cantly lower revenues from deliveries of components to the relevant customers.
The FasteningSystems Division posted double-digit sales growth in Europe due to the robust level of construction activity and internal strength. Our American subsidiary faced major challenges due to the downtrend in commercial and industrial construction activity and the steep price rises for raw materials and bought-in products.
A logistics hub and service organization were established in southern China to enable international key accounts in Asia to be served optimally in future and to facilitate participation in the dynamic growth of these markets.
The acquisition of a significant interest in a Turkish manufacturer of special fasteners for applications in lightweight steel structures and in industry was completed at the end of the year. This company will be utilized as a platform for the further expansion of our business in this market and in the neighboring region.
In Sweden, new premises substantially increased manufacturing and storage capacity in Strängnäs. At the end of the year the Canadian subsidiary moved into newly completed premises providing extensive infrastructure facilities for manufacturing, logistics and administration.
SFS unimarket
SFS unimarket is a specialist supply and logistics partner for fasteners, tools, architectural hardware and DIY articles. Its business activities are focused on the Swiss market and bordering areas in neighboring countries. SFS unimarket supplies customers in the industrial, craft and small business sectors, as well as the wholesale and retail trade and DIY centers.
| 2007 | 2006 | Change |
| Gross sales (million Sfr.) | 308 | 288 | + 7,2% |
| Number of employees (FTE) | 622 | 607 | +2,4% |
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SFS unimarket seized the opportunities arising from the robust growth of the construction industry and the industrial sector in its home market. Despite the continued focus on core business segments and the streamlining of product ranges, SFS unimarket achieved growth of 7.2% in the year under review.
Trading margins came under pressure due to increases in the cost price of goods for resale imported from the Euro region in conjunction with fi erce price competition in various business segments.
Nevertheless, SFS unimarket succeeded in maintaining its operating profi t margins at a healthy level through strict cost management and numerous productivity-boosting programs.
SFS unimarket acquired interesting new customers and orders with its offering of additional, innovative services in the fi eld of supply chain management (SCM). These provide an important basis for future growth.
SFS Locher
SFS Locher supplies customers in the building trade and the structural steelwork and metalworking industries with reinforcement systems, construction tools and fabricated steel products.
| 2007 | 2006 | Change |
| Gross sales (million Sfr.) | 219 | 185 | + 18,1% |
| Number of employees (FTE) | 192 | 181 | +6,1% |
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SFS Locher reinforced its business by purchasing the SheetmetalService Center from
the J. Brunschwiler company in Arnegg. This move enables SFS Locher to supply customers rapidly and fl exibly with sheet metal individually cut to size and processed to order. The integration of this operation into SFS Locher was completed within a short time and without any disruption. The high sales growth at SFS Locher was mainly due to this acquisition.
SFS Locher further improved its profi tability by concentrating on products and services offering higher value added.
SFS services
SFS services is the group’s in-house service provider in the fields of finance, controlling, information technology, HR management, marketing services and central support services, as well as the planning and implementation of major construction projects.
| 2007 | 2006 | Change |
| Gross sales (million Sfr.) | 42 | 41 | + 2,9% |
| Number of employees (FTE) | 189 | 187 | +1,0% |
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The systematic bundling and standardization of support processes and services creates competitive advantages for the SFS Group’s operating units.
In the year under review SFS services made significant contributions in the context of various change and expansion projects. The numerous roll-outs of the new ERP solutions in
further group companies in particular represented major challenges for SFS services.
Outlook
At the start of the 2008 financial year we are confi dent of the continued successful development of our corporate group, despite the rather subdued economic prospects.
We are aiming for sales and profit growth of 6–8% and further gains in market share in the current financial year.
Partnership, identifi cation, loyalty
Special thanks are due to our customers and suppliers for their cooperative partnership and the loyalty they have shown to our company.
Our sincere thanks go to all our employees in more than 20 countries for their high level of commitment, their outstanding performance and their determination to continue seeking new opportunities for improvement.
Thanks also to our shareholders for their long standing loyalty and confidence, as well as their commitment to the ongoing development of our group.
On behalf of the Board of Directors
and the Executive Committee
Heinrich Spoerry
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