AFG results for 2012 shaped by strategic reorientation

Slight downturn in sales of 2.1% after adjustments – Slightly higher EBIT margin of 3.5% before special items – Value adjustments and disposal losses have negative impact on results – Strategic reorientation and operational advances confirmed

Arbon, 5 March 2013 – AFG Arbonia-Forster-Holding AG had a consolidated net loss of CHF –74.5 million for the 2012 fiscal year. Excluding one-off items, AFG Group profits stood at CHF 21.0 million. Value adjustments and disposal losses amounting to CHF 99.1 million (previous year: 73.0 million) have had a negative impact on results. After adjustments for special items, there was a slightly higher EBIT compared to the previous year (CHF 45 4 million / 3.5% of net sales). The Board of Directors is to ask the upcoming Annual General Meeting to refrain from the distribution of a dividend. The sale of the Forster Refrigeration technology business was successfully concluded on 1 March 2013. The strategic reorientation is bearing fruit and has been approved by the Board of Directors.

The 2012 fiscal year was a challenging one for AFG Arbonia-Forster-Holding AG. With a 4.3% fall in sales (2.1% after adjustments for currency, divestiture and acquisition effects) to CHF 1289 million, the results in this transitional year were in line with expectations. Given the somewhat uncertain economic climate, fiercer market competition with pressure on prices and margins from cheap foreign imports as well extraordinary seasonal effects on the construction sector, the sales figures achieved are quite satisfactory.

The company-wide review and streamlining of the business portfolio led – as in the previous year – to high value adjustments and disposal losses, which impacted the group accounts to the tune of CHF 99.1 million (previous year CHF 73.0 million). These losses were caused by the disposal of UK sanitary equipment company Aqualux, Warendorfer Küchen and the Corporate Center, as well as expected book losses from the disposal of the Forster Refrigeration technology business which was announced at the beginning of 2013. In addition, value adjustments in the Forster Precision Steel Tubes Business Unit and in the Surface Technology division were a further factor.
The sale of the Forster Refrigeration technology business was officially completed at the end of February 2013. For AFG the sale represents a further step towards focusing on its core business. At the same time, the future of refrigerator production has been ensured and jobs have been maintained.

Together with the cost reduction programmes, the weak Euro had a positive effect on costs of materials. Personnel costs though could not be reduced on the same scale. The EBITDA of continuing operations fell slightly by 7.6% to CHF 92.1 million. Excluding one-off items this represents an improvement to CHF 96.5 million or 7.9% of net sales.

Value adjustments and disposal losses had a significant impact on EBIT. After adjustments for special items, the EBIT of the overall group was CHF 45.4 million (previous year: CHF 40.9 million) or 3.5% of net sales. Excluding one-off items, AFG could report group profits of CHF 21.0 million (previous year CHF 4.5 million). This confirms the operational progress achieved in comparison to the previous year.

Reorientation of AFG

The 2012 fiscal year was used mainly to drive forward the policy of reorientation and to realise the company's strategic aims. Initial successes have already been seen, with significant savings in materials purchasing (CHF 5 million), increases in productivity (CHF 4.2 million) and a marked reduction in error rates (CHF 2.5 million).
AFG has made important investments for the future during the past financial year. In particular, an agreement was signed for the acquisition of Dobroplast, the leading Polish window manufacturer. The acquisition was completed on 22 February 2013.

This means that the Windows and Doors division will not only have an important presence in the attractive Polish market, but will also have a base for further expansion in the direction of the German and Eastern European markets. The investment of CHF 30 million in the expansion of RWD Schlatter's door manufacturing facilities and the creation of 40 jobs in Roggwil are a clear sign that AFG believes in Switzerland as a centre of industry.


The balance sheet total for AFG as of 31 December 2012 fell to CHF 1143.6 million, primarily due to the sale of parts of company that no longer form part of its core business and to value adjustments. As a result of value adjustments and disposal losses the equity ratio on the balance sheet date fell to 38.1%. AFG is confident that the equity ratio will rise again relatively rapidly to the target corridor of 40-50% after streamlining of the portfolio. With liquid assets of CHF 261.3 million, AFG remains solidly financed.

Focus on shell and interior

During the 2012 fiscal year, AFG defined its strategic orientation with greater precision. The stated vision – "We make buildings efficient, safe and comfortable" – ensures that AFG has a clear identity. The AFG companies position themselves as suppliers for the building shell and interior. These solutions are informed by the three megatrends of energy efficiency, safety & security and well-being.

The company is therefore concentrating its activities on the six business units that belong to its core business: Windows, Doors, Heating Technology, Sanitary Equipment, Profile Systems and Kitchens. In respect of the other business units a start was made in 2012 on the investigation of strategic options. The Board of Directors has confirmed the strategic reorientation and concentration on the core business.

Sales performance differs between divisions

Sales performance differed in the individual divisions and was influenced by a number of factors.

The Heating Technology & Sanitary Equipment division recorded a 5.4% downturn in sales (0.3% after adjustments) to CHF 456.2 million. The market situation was particularly difficult in the export markets of southern Europe, whereas increased growth was recorded in Switzerland, France and Russia. The division faces enormous pressure on prices as a result of cheap brands and the trend towards lower-price products. Preparations were made for the Swiss market launch of Kermi shower cubicles. As of 1 January 2013, the division was developed into a focused "business unit-oriented" management structure in order to bring innovations more quickly to market, drive forward growth and accelerate the process of internationalisation.

A 4.0% downturn in sales (3.8% after adjustments) to CHF 247.2 million was suffered by the Kitchens and Refrigeration Technology division. Despite the high volume of construction activity in Switzerland, the kitchen business is suffering from continuing high levels of imports of competitor products, which are putting severe pressure on prices and margins particularly in the contract sector. With the consolidation of Swiss kitchen activities in AFG Küchen AG, the first regional Piatti and Forster Steel Kitchens triple-brand kitchen centres opened in Chur, Bern, Muttenz and Lausanne-Bussigny with Warendorf kitchens being sold on a reseller basis.

The Windows and Doors division reported a 2.6% (2.3% after adjustments) drop in sales compared to the previous year to CHF 396.0 million. This has been primarily due to increasing pressure from imports, which has resulted in a significant fall in prices. The growing demand for wood and wood/aluminium windows again led to capacity problems in production. The cold period at the start of last year and the early onset of winter in December contributed to the fall in sales. The generation change in the division has been completed and a division management structure, including international sales, under the leadership of Thomas Gerosa has been established. Roman Hänggi took over as Managing Director of EgoKiefer AG.

The Steel Technology division last year separated out the organisational structures of the Profile Systems and Precision Steel business units. Sales were affected in both units by the continuing strength of the Swiss franc. Sales in the division were down 8.1% on the previous year at CHF 129.1 million. Figures for the Profile Systems unit were overall at the same level as the previous year with positive impulses from Asia and France and a weakening situation in Germany, Italy and Eastern Europe. The downturn in precision steel tubes was most significantly affected by the weakening demand from the European automotive industry.

The Surface Technology division recorded sales of CHF 64.7 million, which represents a small increase of 1.8% (0.6% after adjustments). In particular, the print sector is continuing to suffer from the recession in the industry, especially in Europe. The new factory in Changshu was opened on schedule in March 2012 and is now coming on stream. Since 11 December 2012, the management of Surface Technology is no longer represented on the Group Management Board as this field of activity no longer forms part of the core business of AFG. At the same time a new operational management structure has been put in place to ensure the development of surface technology.

Change in the Board of Directors

Georg Früh, a member of the AFG Board of Directors since April 2010, is not standing for re-election at the upcoming Annual General Meeting on 19 April 2013. On 19 February 2013, Chairman of the Board of Directors, Paul Witschi, resigned from the Board of Directors. The Board of Directors has already started to look for a successor and will notify the AGM in good time of the relevant nomination proposals.

Daniel Frutig

Stefan Kern
Head Corporate Communications