dormakaba
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Investor Relations

Financial commentary

Sales and profitability targets achieved

Sales

The Group generated net sales of CHF 2,520.1 million in the financial year 2016/17, an increase of 9.4%. There was a small negative impact of foreign currencies on growth in 2016/17 (–0.2%), while acquisitions contributed to growth by 5.4%. Organic sales growth was 4.3% compared to the same period of the previous year.

Profitability

EBITDA for the reporting period increased by CHF 54.6 million and came to CHF 387.3 million (+16.4%). The impact of acquisitions on EBITDA was CHF 28.4 million and organic growth contributed CHF 26.4 million, while the impact of foreign currencies on EBITDA was CHF –0.2 million. The EBITDA margin improved to 15.4%, compared to 14.4% in the same period of the previous year. The higher EBITDA margin for the Group was mainly driven by a very positive business development of AS APAC and AS AMER, a positive effect from acquisitions and divestments as well as by significant cost savings from the merger which overcompensated the additional integration-related IT and branding costs. EBIT during the period under review increased by 17.5% compared to previous year and reached CHF 327.0 million, and the EBIT margin increased to 13.0% from 12.1% in the same period of the previous year.

Financial result, ordinary result and income taxes

dormakaba reported a net financial result of CHF –31.8 million compared to CHF –16.2 million in the same period of the previous year. The increase was driven by financial expenses of CHF 37.6 million due to financing costs related to the acquisitions of Mesker (Mesker Openings Group) and Best Access Solutions (Mechanical Security businesses of Stanley Black & Decker) as well as increased hedging costs and foreign exchange losses. The ordinary result came to CHF 295.2 million compared to CHF 262.0 million in the previous year (+12.7%). In line with guidance provided at the time of the merger, a disclosure of an extraordinary result (CHF –89.4 million) was limited to the financial year 2015/16, where the business combination of Dorma and Kaba took place. This previous year figure covered exclusively integration costs relating to the merger of dormakaba Group. The income tax rate for 2016/17 (23.9%) was substantially below the previous year (32.1%). While in the previous year the tax rate was negatively impacted by merger- related integration projects, in 2016/17 it was positively impacted by the utilization of tax loss carry forwards, which had not been recognized as deferred tax assets, and because of tax benefits from the acquisitions of Mesker and Best Access Solutions. The latter effect will be recurring for the next years.

Net profit

dormakaba generated a net profit of CHF 224.6 million compared to CHF 117.2 million in the previous year (+91.6%). The increase was driven by an improved profitability and the lower tax rate in 2016/17. Additionally, the previous year’s figure was impacted by the merger-related integration costs of CHF 89.4 million (extraordinary result). Net profit after minorities was CHF 116.4 million compared to CHF 60.4 million in the same period of the previous year (+92.7%).

Cash flow and balance sheet

The acquisitions of US-based Mesker (closed on 12 December 2016) and of Best Access Solutions (closed on 22 February 2017) had a significant impact on the cash flow profile and the balance sheet structure. In addition, cash flow was influenced by progress on post-merger integration, especially expenditures for restructuring projects and production footprint changes. Cash generated from operations was CHF 354.7 million compared to CHF 327.6 million of the previous year. Free cash flow, driven by the acquisitions, was CHF –699.2 million compared to CHF 268.8 million in the same period of the previous year. dormakaba reported total assets of CHF 1,909.0 million as at the balance sheet date of 30 June 2017. Within current assets, cash and cash equivalents amounted to CHF 188.3 million and inventories to CHF 411.4 million, while trade receivables amounted to CHF 461.4 million. Non-current assets consisted mainly of property, plant and equipment worth CHF 412.8 million. Liabilities totaled CHF 1,725.9 million, with total financial debt coming to CHF 815.9 million. As at 30 June 2017, the net debt position was CHF 627.6 million (prior year as at 30 June 2016: net debt of CHF –159.1 million). Equity of the Group was at CHF 183.1 million, with an equity ratio of 9.6%. Equity and equity ratio (previous year as at 30 June 2016: 43.2%) declined significantly as acquisition-related goodwill of the Mesker and the Best Access Solutions acquisitions of in total CHF 650.0 million was offset against equity.

Currency effects

The Euro against the Swiss Franc compared to the previous year weakened by 0.6% from CHF 1.087 to CHF 1.080, while the British Pound dropped by 13.5% from CHF 1.454 to CHF 1.257. At the same time the US Dollar strengthened by 1.1% from CHF 0.980 to CHF 0.991 (all exchange rates being average rates).