Fastening Systems

Important
progress made

The Fastening Systems segment’s successful business trends from the prior year continued in 2018. Growth accelerated and profitability clearly improved amid a challenging market environment.

Key figures Fastening Systems

Strong sales growth realized

Thanks to its innovative products, the Fastening Systems segment strengthened its competitive position and captured more market share. Sales grew by 13.8% to CHF 437.1 million. New product launches fueled much of this sales growth, with additional support coming from the good market environment. Organic sales growth for the period amounted to 5.6%. Currency effects and changes in the scope of consolidation contributed 2.4% and 5.8% respectively to the reported top-line growth rate.

Profitability increased

Fastening Systems made considerable progress towards improving its profitability during the period under review. At 9.8% (previous year 7.6%), the EBIT margin almost achieved the medium-term target of 10%. This improvement can be traced to the market success of innovative products, the pass-through of higher raw material costs and the first success of projects implemented to sharpen the production profiles. These effects will continue to have a positive impact on profit margins.

Sharpening of production profiles completed

Major projects designed to sharpen the production site profiles have laid a sound foundation for future productivity gains. The Rochade project (Construction division) had been completed to a large extent by the end of 2018. The objective of this project was to transfer production operations with lower levels of knowledge and capital intensity, and processes that are difficult to automate to SFS sites outside of Switzerland.

The Evotion Project (Riveting division) was also completed by the end of 2018. Two of the Riveting division’s most important sites in Germany, Mörfelden-Walldorf and Thal, were recon­figured in this context. The Mörfelden-Walldorf site is now focused on the manufacture of rivet setting tools, while the production of fasteners will be concentrated at the significantly expanded site in Thal. This greater emphasis on production site specialization with the required critical size will increase efficiency gains in the future and thus help to improve profitability.

Construction division

Market position strengthened

The Construction division again generated good sales growth. Amid a supportive market environment, it widened its share of the market thanks to the success of its innovative products, systems and services. Trends towards more safety, energy efficiency, aesthetics and individualization are key innovation triggers for the Construction division.

Success regionally anchored

The positive results reported by the Construction division were broadly based in terms of regions and product groups, with major successes achieved in both North America and Europe. The concentration of screw production and custom assembly in Europe has been largely completed, this will bring economies of scale and a stronger focus in the future. In North America, market entry of substructures for high-quality facades has been successful.

Interest in HECO unleashed growth and synergy potential

In August of 2015, HECO and SFS established a close strategic alliance. SFS acquired a minority interest of 30% in HECO as part of this alliance and subsequently increased this interest to 51% as of July 2018. Both companies are active in the structural timber work market and have built strong reputations for quality and innovation. By combining their largely complementary product portfolios, the two partners can offer customers a wider range of products and services. This broad market coverage is provided by two distribution channels: the wholesale channel for the HECO brand and the direct sales channel for the SFS brand. Merger of the production of wood screws leads to great synergies. Thanks to the increase in SFS’ stake to 51%, the growth and synergy potential, as well as the core competencies of each partner, are now exploited even more effectively.

Declining demand from Turkey

The difficult economic environment in Turkey has had an impact on SFS’ sales site in the country, with local demand from Turkish customers declining. The freed-up production capacities have since been used increasingly for products for export to SFS companies, which has compensated for the decline in domestic demand.

Positive development expected

The outlook for 2019 is cautiously positive. The division expects positive sales growth amid a stable market environment.

Riveting division

Growth broadly based

The Riveting division reported solid sales and higher profits amid a healthy market environment. Growth was broadly based: several European markets and China displayed positive trends, while the division’s GESIPA® brand delivered good results in various application areas.

Broad market spectrum covered

The division’s success in innovative products is an important support of its sales growth. The electrification of industrial assembly lines and 100% monitoring of setting processes are game-changing market trends. New product launches such as the iBird® Pro, a rivet setting tool that can be connected to smartphones, tablets or computers using an app, have created future growth potential. Another example is the new FDR® (Flow Drilling Rivet) blind rivet. The division Riveting offers a comprehensive range of rivet setting products, from hand tools and networked cordless devices to fully automated solutions with process monitoring and control functionality, all from a single source.

Site in China excelled

The operational challenges that arose in connection with the consolidation of two locations in the US, and which had a detrimental impact on 2017 results, were resolved largely during the period under review. Meanwhile, the factory in Nansha (China) performed very well, doubling its sales output from the previous year and topping expectations.

Solid business trends expected

Looking ahead to 2019, the division expects solid sales trends amid a cautiously positive market environment.

The iBird® Pro is a networkable, cordless rivet setting device that can be connected to smartphones, tablets or a customer’s IT infrastructure via app