Fastening Systems

Market position strengthened

The acquisition of Triangle Fastener Corporation (TFC) significantly strengthened the Construction division’s position in the US market. Business in the Riveting division was clearly pressured by the challenging environment.

Key figures Fastening Systems

Thanks to TFC and HECO, sharply higher sales growth achieved

The two divisions that make up the Fastening Systems segment experienced clearly divergent developments during the period under review.

The Construction division, which sells its products to customers in the construction industry, profited from a stable market environment. Its market position in the US market was significantly strengthened through the acquisition of TFC. In addition to the sales contribution from TFC as of April 2019, sales in the Construction division benefited from the first-time full-year consolidation of HECO’s sales for the first six months of the financial year.

The Riveting division, by contrast, had to contend with a difficult market environment. It experienced a sharp downturn in sales as it has considerable direct and indirect exposure to the German and the UK auto industry.

Total segment sales amounted to CHF 498.3 million (2018: CHF 437.1 million), which corresponds to an increase of 14.0% compared to the previous financial year. Changes in the scope of consolidation accounted for 18.5% of the Construction division’s sales growth. In organic terms, sales growth was slightly negative at –2.1%. Foreign currency translation had a negative impact of –2.4%.

Inconsistent development of profitability

The operating profit in 2019 was CHF 47.1 million, which corresponds to an increase of 6.7% compared to the same period in the previous year. The EBIT margin for the whole year was 9.2% (previous year 9.8%). The diverging development of the divisions was also evident at the level of profitability. The Construction division continued on its pleasing path of continuous profitability improvement. By contrast, lower capacity utilization, the lack of economies of scale and the necessary restructuring had a negative impact on the profitability of the Riveting division.

Construction division

Thanks to attractive products and services, organic growth achieved

The Construction division defended its market position as a specialist for mechanical fastening solutions in the building envelope amid an intact market environment, thanks to its attractive range of products and services. Its growth momentum slowed, however, compared to the prior-year period. Demand in Turkey dropped as a result of the country’s difficult economic situation.

Market position in the US clearly strengthened

SFS’s market position in the US construction market was significantly expanded through the acquisition of TFC. Thanks to TFC’s excellent network of sales outlets, 23 in all, this transaction broadens SFS’ access to customers in the US. This opened up a second sales channel alongside the existing sales channel, which is mostly focused on OEMs and wholesalers. With the additional sales channel, SFS is now closer to the customer and thus pursuing the same sales model that has already yielded successful results in European markets.

Broader access to end customers gives SFS a stronger positioning in the marketplace and enables it to address innovations more quickly than before. The merger between TFC and SFS also creates attractive procurement opportunities that can now be jointly exploited.

The integration of TFC into SFS went very smoothly, which confirms that their corporate cultures are highly compatible and guided by identical values. TFC’s operating results have been consolidated since April 2019.

Positive development benefited from stable market environment

The division expects its market environment to remain stable in 2020, allowing it to generate slightly positive sales growth.

Riveting division

Results burdened by weak markets

In the financial year under review, sales activity at the Riveting division, which markets its products under the brand GESIPA®, was pressured by a number of factors. The division’s strong focus on the weakening automobile industry and on customers from auto-related industries in Germany had a clearly negative impact on demand. In the UK, where the Riveting division operates a plant that supplies the UK automobile industry, uncertainty associated with Brexit had a clearly detrimental impact on business activities. Demand stabilized over the course of the year, but at a significantly lower level compared to the previous-year period.

Profitability weakened by lower capacity utilization

Generally lower and, in some cases, volatile capacity utilization together with the necessary restructuring measures resulted in lower profits for the division compared to the previous year. A broad package of measures to strengthen profitability was implemented during the second and third quarter, and this had an increasingly noticeable impact as the year progressed. In addition to measures such as short-time work and reducing temporary workers, which was used to offset temporary capacity utilization difficulties, job cuts were made where structural problems had been identified.

Attractive product innovations created

Thanks to its attractive portfolio of setting tools, the Riveting division is well positioned. The possibilities associated with automation and digitization offer customers additional value, be it in the form of efficiency gains or enhanced setting process quality. A particularly interesting development is the “Flow Drilling Rivet®” technology.

New divisional management appointed

On July 1, 2019, the Board of Directors appointed Urs Langenauer, Head of the Riveting Division, as a member of the Group Executive Board and thus the successor to Thomas Bamberger. With him, SFS relies on a longstanding employee with extensive management experience. Urs Langenauer joined SFS in 1995 and had previously managed the business activities of the Automotive division in North America from 2013 to 2019. He will use his expertise and experience to strengthen the Riveting division and to support the expansion of its fastener business.

Slightly declining development expected

Amid a persisting challenging environment, the division expects slightly positive sales growth in the financial year 2020.

FDR® – Flow Drilling Riveting – combining the advantages of different joining processes.

With the takover of Moderne Befestigungselemente GmbH (mbe) SFS expands its product range for façade fastening systems in Germany.