Zehnder Group increased sales by 17% to EUR 812.5 million and increased EBIT by 3% to EUR 71.4 million

Sales growth in both segments despite a challenging market situation

Graenichen (CH), 1 March 2023: Zehnder Group (SIX: ZEHN), a leading international provider of complete solutions for healthy indoor climate, increased its sales in the reporting year 2022 by 17% to EUR 812.5 million (previous year: EUR 697.1 million). The organic growth, primarily influenced by price increases, amounted to 7%[1]. Acquisitions contributed 8% to sales growth. The Group, whose consolidated financial statements are reported in euros, also benefited from positive currency effects of approximately 2%. The continued limited availability of electronic components hampered further growth in the ventilation segment. However, the strained supply situation improved towards the end of the year; hence increasing shipments were achieved against delivery backlogs.

Above-average sales growth in the ventilation segment driven by acquisitions

The ventilation segment achieved sales of EUR 450.3 million in 2022, which corresponds to a growth rate of 28% (of which 10% was organic). The Airia, Caladair, Filtech and Fortuneway acquisitions contributed a total of 16% to the growth achieved in ventilation. The ventilation segment represented approximately 55% of the Group’s total sales, an increase of 5 percentage points compared with the previous year. All three product lines – residential ventilation, heat exchangers, and clean air solutions – showed a positive development.

EUR 349.4 million (previous year: EUR 289.1 million) of sales were achieved in the EMEA region (Europe, Middle East and Africa). The growth mainly came from Germany, the UK, and Belgium, as well as from the Caladair and Filtech acquisitions. In Germany, the businesses with service packages for maintenance of Zehnder ventilation systems was successfully expanded. In the UK, the Group increased its sales with various product groups, including sales of ventilation units with heat recovery for passive house projects. EUR 59.4 million of the ventilation sales (previous year: EUR 19.6 million) were attributable to the North America region. Thanks to the acquisition of the Canadian company Airia in February 2022, the share of sales from ventilation in North America increased from 35% to nearly 60%, making a decisive contribution to the expansion of the ventilation business. The Asia-Pacific region generated sales of EUR 41.6 million (previous year: EUR 43.9 million). The Chinese market continued to prove a very challenging one. Due to the heat exchanger business of Fortuneway as well as favourable currency effects, the decline in sales was limited.

Stable sales in the radiator segment

The radiator segment achieved sales of EUR 362.1 million in the reporting year. This corresponded to roughly 45% of Zehnder Group’s total sales. Compared with the previous year, revenue grew by 5% (of which 4% was organic) due to price increases and positive currency effects. The radiator segment showed a volume decline in 2022 compared with 2021. EUR 310.1 million (previous year: EUR 296.4 million) of sales were attributable to the EMEA region, driven by growth in Germany, Italy, and Switzerland and despite a decline in sales in the UK. In the North America region, sales of EUR 44.3 million (previous year: EUR 36.0 million) were achieved. Demand for radiators remained resilient and online sales gained momentum. The Asia-Pacific region contributed EUR 7.8 million (previous year: EUR 12.0 million) to the total sales in the radiator segment.

EBIT increased slightly by 3% to EUR 71.4 million

The operating result (EBIT) rose slightly by 3% to EUR 71.4 million in 2022. This corresponds to an EBIT margin of 8.8% (previous year: 9.9%). The consequences of the war in Ukraine and global supply chain shortages led to increases in material, transport, energy, and operating costs. Due to longer delivery times, these costs could not yet be fully compensated by higher sales prices.

The ventilation segment achieved an EBIT of EUR 54.8 million. This corresponds to an increase of 33% compared with the same period in the previous year. The EBIT margin rose to 12.2% (previous year: 11.7%). Growth and profitability were hampered by ongoing delivery issues in the ventilation product line in EMEA and North America, as well as due to the real estate crisis in China. In contrast, the positive development of the two product lines heat exchangers and clean air solutions had a positive effect on profitability.

In the radiator segment, the EBIT figure fell by 41% to EUR 16.6 million in 2022. The EBIT margin decreased to 4.6% (previous year: 8.1%), caused by low production utilisation due to declining volumes and rising energy and labour costs. The still unprofitable climate ceilings product line, the sharp decline in sales in China and lower margins in North America negatively impacted the result. In addition, Zehnder Group recorded one-off costs of approximately EUR 1.0 million for the discontinuation of business activities in Russia during the reporting period.

Investments in infrastructure development and further company acquisitions in the ventilation sector

In 2022, Zehnder Group invested EUR 27.1 million in property, plant and equipment and intangible assets (previous year: EUR 21.9 million). The largest single investment during the reporting year was the construction of the new “Center of Climate” in Lahr (DE). This centre for healthy indoor climate serves as a meeting place for customers, partners, and employees and includes training rooms and practical workshops, a showroom, meeting and conference rooms, office space and a restaurant. The move in is scheduled to take place in spring 2023.

In 2022, Zehnder Group continued its acquisition activities in the ventilation sector, investing a total of EUR 63.9 million (previous year: EUR 15.6 million) in new subsidiaries. In February 2022, the Group acquired the ventilation company Airia Brands Inc., which is based in London, Ontario, Canada. Airia has been involved in the development, production and distribution of heat recovery ventilation systems for more than 35 years. These systems are marketed in Canada and the USA under the established Lifebreath brand and are primarily used in new residential constructions.

In April 2022, Zehnder Group acquired Filtech, a long-standing supplier of high-quality air filters. Besides its headquarters and a production facility in the Dutch municipality of Udenhout, the company also has two additional production sites in Modane (FR) and Rancate (CH). These highly automated production facilities serve various markets with a focus on customers in the heating, ventilation, and air conditioning sectors.

Solid net liquidity despite investments and share buyback

Cash flow from operating activities decreased in the financial year 2022 to EUR 59.3 million (previous year: EUR 79.9 million). Firstly, trade receivables increased due to the growth in sales. Secondly, inventories increased on the one hand due to the rise in purchase prices and on the other hand because more stock was accumulated to ensure improved delivery capacities. At the same time, investments in subsidiaries and acquisitions increased significantly. In addition, treasury shares were bought back under the share buyback programme and also outside of this scheme. As a result, net liquidity[2] decreased to EUR 45.4 million at the end of 2022 (previous year: EUR 123.2 million). Equity amounted to EUR 340.8 million (previous year: EUR 364.4 million). This corresponds to an unchanged high equity ratio of 64% (previous year: 66%).

As part of the ongoing share buyback programme, Zehnder Group repurchased 257,632 listed registered shares A for a total price of EUR 17.8 million during the reporting period. It also acquired a further 60,000 listed registered shares A outside the programme for a total of EUR 4.3 million. These are earmarked for employee participation programmes.

Earnings-oriented dividend policy

Based on the results of the reporting year 2022, the Board of Directors proposes to the Annual General Meeting on 23 March 2023 a dividend of CHF 1.80 (previous year: CHF 1.80) per registered share A. The payout ratio of 37% is in line with the previous dividend policy of Zehnder Group, which envisages paying out 30–50% of consolidated net profits.

Outlook for the 2023 financial year

Heightened awareness of the sustainable use of resources and a healthy indoor climate as well as government subsidy programmes are increasing the demand for energy-efficient, healthy, and comfortable indoor climate solutions, such as those offered by Zehnder Group. At the same time, a recession is looming in the context of the ongoing war in Ukraine, a tense geopolitical situation, persistent global supply chain shortages and high inflation and interest rates.

Zehnder Group is consistently pursuing its proven strategy – growth for ventilation, harvest for radiators – and is focusing on long-term investments despite the challenging environment. These include market development, product and service innovation, production capacity expansion, digital transformation and commitment to sustainability.

For the financial year 2023, the Group aims to achieve further sales growth and an EBIT margin comparable to that of 2022. The medium-term targets of an average annual sales growth of 5% and an EBIT margin of 9–11% remain in place.

The complete Annual Report 2022 can be found on our website under the following link:

https://report.zehndergroup.com/2022/en/

Annex: Five-year Overview 2018-2022

Next dates to note

Contact

René Grieder
Member of the Group Executive Committee, CFO
Zehnder Group AG, 5722 Gränichen (Switzerland)
T +41 62 855 1521, rene.grieder@zehndergroup.com

This media release is published in German and English. The German version is binding. For further information about the Zehnder Group, please visit www.zehndergroup.com.

Company profile

Zehnder Group improves quality of life with comprehensive indoor climate solutions. The globally active company develops and manufactures its products in its own plants in Europe, China, and North America. Its sales activities, spanning more than 70 countries, take place through local sales companies and representative offices.

Zehnder Group products and systems for heating and cooling, comfortable indoor ventilation and air cleaning are characterised by outstanding design and high energy efficiency. The Group is among the market and technology leaders in its segments with brands such as Zehnder, Acova, and Core.

Zehnder Group has had its headquarters in Graenichen (CH) since 1895. It employs around 4,000 people worldwide and achieved sales of EUR 812 million in 2022. The company is listed on the SIX Swiss Exchange (symbol: ZEHN, number: 27 653 461). The unlisted registered shares B are held directly or indirectly by the Zehnder family and persons closely associated with them.