Datwyler improves earnings in weak market environment
25 Jul 2024
Gains from passing on cost increases, improved productivity and lower energy costs
Altdorf, Switzerland – Datwyler has posted an 11.6% increase in first-half earnings (EBIT) to CHF67.5 million (€70.5 million) on sales down 5.0% year-on-year to CHF572.5 million in "weak" first-half trading.
Profitability improved on the back of the Swiss group's progress in passing on cost increases, improving productivity and lower energy costs, said its 23 July announcement.
Sales were impacted by "predominantly weak" market demand and ongoing reduction in stocks by healthcare customers in the first six months of the year.
For 2024 as a whole, Datwyler expects an EBIT margin above the prior year and revenue in the range of the prior year, helped by a strengthened project pipeline.
"Acquisition of attractive new business in all business units shows that the long-term growth drivers in the markets are intact," it stated.
In addition, the group reported a loss of CHF7.5 million in revenue from components for Covid-19 vaccines compared to the prior year period.
Adjusted for negative currency effects, the first-half decline in sales at the Swiss rubber-based products manufacturer translated to a year-on-year decrease of 2.4%.
First-half sales at the group's 'healthcare solutions' business overall fell 9.1% year-on-year to CHF230.7 million, or 6.4% adjusted for currency effects.
A lesser decline in sales revenues in the 'industrial solutions' unit to CHF343.4 million from a prior-year period CHF351.8 million was linked mainly to negative currency effects.
Datwyler's 'mobility' and 'food & beverage' units "slightly outperformed" their markets, while its 'connectors' and 'general industry' businesses fell short of their sales and revenue targets.
The latter two units were impacted by "a slowdown in the expansion of the e-mobility market and a weak market environment in the US oil & gas industry."
Datwyler went on to report that it is using the current challenging market-phase to further optimise its structures and processes.
Also, the group said it is "driving forward" its activities in the healthcare and e-mobility markets, while continuing to invest in innovation and growth projects.
Examples here include film-coated healthcare products, magnetically active or electroactive polymers and soft dry electrodes for wearable applications.
An industrial-scale pilot production line for electroactive polymers will go into operation in the second half of 2024, Datwyler further pointed out.
Regarding full-year prospects, Datwyler expects "weak demand and the destocking by healthcare customers to continue in the second half of the year."
"Probable exceptions to this are the mobility and food & beverage business units, which are expected to maintain their positive business performance in the second half of 2024."
