ARBONIA

Strong performance by AFG in the first half of 2013

0.7% growth in revenue – EBIT improvement by CHF 3.1 million – Further key steps in the restructuring and expansion of AFG completed – Optimistic outlook – Great potential in plans for cladding and interiors

A r b o n, 8 August 2013 – AFG Arbonia-Forster-Holding AG brought in a net revenue of CHF 597.3 million (previous year: CHF 594.3 million) in the first half of 2013. Adjusted for currency, acquisition and effects and divestment effects, the net revenue is up 0.7% on the previous year (actual 0.5%). At CHF 14.7 million, EBIT is significantly higher than the past year's figure of CHF 11.6 million (+26.9%). With a net profit before tax of CHF 2.0 million, AFG achieved a positive result. It has completed key restructuring measures; the strategic initiatives leading toward making AFG the technological leader in construction materials with all kinds of products and solutions for cladding and interiors are proving to be very successful. With its positioning in the three megatrends of energy efficiency, safety & security and well-being, AFG has great potential.

AFG can look back on solid performance in the first six months of 2013. Its restructuring and expansion to become the leader in construction materials with products and solutions for cladding and interiors is being consistently continued. Resolutions of the Annual General Meeting also led to personnel and institutional renewal of the company to abolish the 5% restriction on voting rights and introduce an age limit for members of the Board of Directors as well as the new forward-looking composition of the Board of Directors.

At CHF 597.3 million, revenue is 0.5% up on the previous year (0.7% when adjusted for currency, acquisition and divestment effects) – and this in a difficult environment. This solid performance is attributable to the positive effect of the individual strategic programmes and the intensification in sales activities, but also positive impulses from individual markets as well as the Company's attractive portfolio of products and solutions. In general the home markets of Switzerland and Germany have tended sideways while the South European markets remain negative. The trend remains positive in Russia, China and the Middle East, where AFG is actively pursuing opening up these markets with its own hubs.

At CHF 14.7 million, EBIT has improved significantly year-on-year (+26.9%). The AFG companies are exposed to continuing strong and largely increasing competitive pressure in their markets. This is characterised by high price pressure with corresponding price sensitivity among customers. AFG has succeeded in further reducing its procurement and production costs and increasing productivity.

By selling the Precision Steel Tubes business unit to the Mubea Group and completing the sale of the Forster refrigeration technology business to V-ZUG, AFG has made significant progress in the pursuit of its strategic focus on building supplies. The two businesses have been guaranteed a secure long-term future with investments by the new owners in the further development of the businesses while the jobs at the Arbon location remain intact.

The Windows and Doors Division permanently took over Polish window manufacturer Dobroplast on 21 February 2013. This raises AFG to number three among Europe’s window and door manufacturers and it can therefore continue to push ahead in cultivating the market in Eastern Europe, Germany and Scandinavia. The Windows and Doors Division is being strengthened and geared towards future challenges with investments amounting to CHF 33 million and the establishment of new centres of competence in Switzerland and Slovakia. The expansion of door production at RWD Schlatter is progressing according to plan with a new building and new machines that will herald a significant increase in production capacity. The first phase is scheduled to enter operation at the end of the year.

Since 1 January 2013, the Heating Technology and Sanitary Equipment Division has been clearly focusing its organisation and responsibilities on the two business units Heating Technology and Sanitary Equipment. The business unit Heating Technology came up with a surprise in March 2013 at the most important trade fair of the year, the ISH in Frankfurt, by unveiling the new “x-optimiert” complete system. The feedback from the industry was positive on what, thanks to the introduction of the heat pump, is now an end-to-end system with heat generation, regulation, storage, distribution and transmission. Heating Technology is therefore set to develop consistently from a component supplier to a system supplier.

From Division to Division

The Heating Technology and Sanitary Equipment Division posted revenue of CHF 209.0 million in the first half of 2013. Adjusted for currency effects and the divestment of Aqualux, it fell by 2.3% year on year. In the heating technology sector, the Russian and Chinese markets are experiencing particularly positive growth, while exports to Poland, Iran and Iraq are more sluggish. The home market of Germany in the sanitary equipment sector is stable and an innovative new flat shower offers new sales opportunities. The lower revenues impacted EBIT, which is CHF 2.9 million down on the previous year at CHF 16.1 million, but, with a margin of 7.7%, they meet expectations and thus once again bear witness to the operational excellence of the division.

The net revenue of the Windows and Doors Division increased by 29.1% year on year to CHF 205.0 million. Adjusted for currency and acquisition effects, growth came to an impressive 8.5%. 
The Swiss windows market remains subject to massive price pressure – particularly for plastic windows. With the measures announced in May 2013 to create an international product network with the establishment of centres of competence, the division is preparing itself for future market requirements and will be able to gain market shares in the lower price segment. At CHF 9.3 million (4.6%), EBIT is twice as high as it was in the past year. Door production at RWD Schlatter is also displaying a positive trend.

The Steel Technology Division achieved a slight increase in year-on-year revenue to CHF 66.0 million. The rise in third-party sales was largely made possible by the launch of direct distribution in Austria. The EBIT of CHF 4.7 million (7.2%) that is up CHF 4.3 million on the previous year is attributable to the reduced depreciation owing to the impairment carried out at the end of 2012 as well as a combination of higher sales and lower material costs. The imminent sale of the business unit Precision Steel Tubes will clear the way for the Profile Systems business unit to implement a focused growth strategy.

The kitchen business operating under the name AFG Kitchens (excluding the Forster refrigeration technology business that has been sold) sustained a fall in revenue of 8.4% to CHF 75.9 million in the first six months of the year. The fall in revenue left its mark in particular on the direct sales of both brands, Forster Steel Kitchens and Piatti. The EBIT of AFG Kitchens remains significantly negative at CHF -3.4 million (-4.5%) albeit that an improvement on the prior-year period can be noted. The business unit Kitchens has a considerably greater order backlog compared with the previous year, which should facilitate positive growth in the second half of the year.

The net revenue of the Surface Technology Division in the first half of 2013 is up 1.4% year on year at CHF 33.2 million. Its revenue performance remains shaped by the weak demand in the Print and Paper segments. The low revenue resulted in a year-on-year decrease in EBIT of CHF 0.5 million to CHF -2.4 million (-7.2%). Despite the high volatility for the whole year, AFG expects EBIT in the Surface Technology Division to improve on the previous year.

Outlook

A slight growth in revenue is expected for the year as a whole. The challenge lies in countering the on-going price pressure due to imports to the home markets by means of suitable measures and innovative products and making further gains in terms of international growth and profitability. AFG is making use of the present year to strengthen its core business in a sustainable manner, push ahead with its expansion to become the technological leader in construction materials for cladding and interiors, integrate Dobroplast, develop and procure skills that are lacking and consistently implement the strategic programmes drawn up with a view to achieving the financial targets of AFG for 2015.

Contact
Daniel Frutig
CEO
daniel.frutig(at)afg.ch

Stefan Kern
Head Corporate Communications
stefan.kern(at)afg.ch