SFS Group sales declined almost 11% in the first half of 2020 to CHF 773.7 million compared to the same period last year, as a result of impacts of the Covid-19 pandemic.
Despite this decline in first-half year sales, however, Gesipa owner SFS achieved a robust EBITDA margin of 15.5% and an EBIT margin of 9.2%.
After slightly positive organic growth in the first quarter of the year, business was significantly impacted by the repercussion of the pandemic which saw strict measures taken early by the Group protect employee health, ensure customer orders were filled and reduce the impact of lower capacity utilisation rates on profitability. To this end, in March the firm temporarily reduced its operations following government decrees and production plant shutdowns by major customers.
SFS' automotive division was, unsurprisingly, the hardest hit during the first half of the year, declining 33% compared to the same period in 2019 and shrinking from a 25.8% share to 19.4% share. The construction division also dipped, although by a significantly smaller margin of 1.7%. SFS' electronics division grew 2.4% while its medical device division grew 2.2%.
Due to good margins and early implementation of countermeasures in response to the downturn in demand at the start of the second quarter, SFS was able to generate solid operating profits, with EBIT amounting to CHF 71 million. The Group is in a 'very sound financial situation', it said, with a high equity ratio of 72.7% and ample liquidity.
For SFS' Fastening Systems Segment, investments to expand the segments reach, namely the acquisition of Triangle Fastener Corporation (TFC) and MBE Moderne Befestigungselemente (MBE), had a positive impact. The restrictions imposed on the construction industry to limit the spread of the pandemic were comparatively less drastic than on the key markets addressed by the riveting division. This, SFS said, resulted in a greater decline in the riveting decision than in the construction division.
Segment sales for the first half of 2020 amounted to CHF 234 million, a decline of 5.8% on the prior year. Meanwhile, the EBIT margin of 9.5% was slightly higher than the 9.4% margin reported for the first half of 2019.
Looking ahead, SFS stated it expects slightly higher sales in the second half of the year, with an approximately comparable EBIT margin for the first half of 2020, providing there is no second global wave of Covid-19 which would affect economic development. The firm acknowledged it is difficult to assess further business development in light of the uncertainties surrounding the ongoing Covid-19 pandemic.
