Strong radiator business, slowdown in ventilation growth

The Zehnder Group increased its sales by 13% to EUR 697.1 million in the reporting year (12% organic[1]). On the one hand, it benefited from catching up on the pandemic-related backlog – especially in the radiator business. On the other hand, the gradual decline in the availability of electronic components led to supply difficulties, which had a significant adverse impact on the ventilation business in particular. By the end of the year, sales in the ventilation business area increased by 9% to EUR 352.6 million (6% organic). Sales in the radiator business area grew by 17% to EUR 344.5 million (18% organic). This means that the share of total sales accounted for by ventilation and radiators was 51% and 49% respectively (52% and 48% in the previous year).

The Europe segment achieved sales of EUR 586.8 million in 2021. This represents an unchanged 84% of total sales, and a 13% increase in sales (13% organic). EUR 290.0 million of revenue in Europe was generated in the ventilation business area. All three product lines – residential ventilation, heat exchangers and clean air solutions – contributed to an 8% growth (7% organic). In the radiator business area, revenues increased by 20% to EUR 296.8 million (20% organic). Sales in the radiator product line as well as in the climate ceiling product line both experienced positive development.

The China & North America segment achieved sales of EUR 110.3 million in the reporting year, corresponding to an unchanged 16% of total sales. Compared to the previous year, revenues grew by 10% (3% organic).

Increase in EBIT margin from 8.2% to 9.9%

The operating result (EBIT) in the reporting year rose to EUR 69.1 million (previous year: EUR 50.5 million). As a result, the EBIT margin increased by a further 1.7 percentage points to 9.9%.

The EBIT figure achieved in the Europe segment was EUR 63.6 million (previous year: EUR 41.6 million). The Group continued to pursue a systematic strategy of optimising costs and improving efficiency. In addition, costs for business travel and events remained at a lower level as activities were reduced or conducted online. On the other hand, rising purchase prices, especially for steel and electronics, had a negative impact on profitability, as they could not be fully compensated by sales price increases. As well as this, supply bottlenecks affecting certain suppliers increasingly led to delivery problems and disruptions in the production and supply chain. In addition, logistics costs became more expensive. With a view to strengthening its competitiveness, the Zehnder Group also increased its spending on research into and development of innovative new products.

The EBIT figure achieved in the China & North America segment was EUR 5.5 million (previous year: EUR 8.9 million). The main reason for the lower profitability is the reduced credit rating of various construction groups in China, which made it necessary to make value adjustments on receivables.

The use of loss carry-forwards and the positive effects of the tax reform measures introduced in Switzerland reduced the income tax burden. Accordingly, a net profit of EUR 60.3 million (previous year: EUR 39.9 million) was achieved.

Investments in product development, infrastructure and geographical presence

In the reporting year, expenditure on research and development amounted to EUR 21.4 million (previous year: EUR 18.2 million), with two-thirds focusing on the ventilation business as a key growth area. The Smart Home is a central topic, and the Zehnder Group is working on integrating its appliances into intelligently networked buildings. A development team for controls and climate solutions has also been established in Italy. An innovation is the compact Zehnder ComfoAir Flex ventilation unit, which is particularly suitable for multi-family houses where the available space is limited. Another product worth highlighting in the area of decorative radiators is the Artémia radiator, sold under the French brand Acova. It was awarded the Trophée du Négoce 2021 prize in the Design category.

In 2021, the Zehnder Group invested EUR 21.9 million in property, plant and equipment and intangible assets (previous year: EUR 16.7 million). In the Europe segment, the amount invested was EUR 20.2 million (previous year: EUR 13.3 million). In the China & North America segment, investments worth EUR 1.7 million (previous year: EUR 3.4 million) were made. In April, construction started on the new training and office building at the Lahr (DE) site: the “Center of Climate” is envisaged as a future communication hub for customers and employees alike, and a centre for healthy indoor climate for Zehnder in Germany. Capacity for heat exchanger production was expanded in both Waalwijk (NL) and Reinsdorf (DE). In Vaux-Andigny (FR), further investments were made in modernising the radiator production. At the Dutch site in Zwolle, the new rooftop solar system was completed and put into operation in the spring. The 3,564 solar cells generate around 1,400 kWp (kilowatt peak) annually, which is equivalent to the consumption of 400 households.

The acquisition of a 51% share in the Chinese company Zhongshan Fortuneway Environmental Technology Co., Ltd. by the Zehnder Group was successfully completed at the end of April 2021. The company specialises in the development, production and sale of enthalpy exchangers for moisture and heat recovery. In October, the Zehnder Group acquired 75% of the shares in the French company Caladair International SAS. The company develops, produces and sells energy-efficient ventilation and thermodynamic systems, primarily for commercial buildings.

High cash flow from operating activities and solid balance sheet

Cash flow from operating activities amounted to EUR 79.9 million in the reporting period (previous year: EUR 95.3 million), while net liquidity¹ grew from EUR 96.4 million to EUR 123.2 million. Shareholders’ equity was EUR 362.4 million (previous year: EUR 326.9 million). This equates to an unchanged high equity ratio of 66%.

On 24 March 2021, the Zehnder Group launched a share buyback programme for the purpose of capital reduction. Over a maximum period of three years, the Group will buy back up to 5% of the listed registered shares A via a second trading line on the SIX Swiss Exchange. This corresponds to 487,800 registered shares A. By the end of the year, 79,300 registered shares A had been repurchased at a total price of EUR 5.6 million.

Continuous dividend policy

Based on the results of the 2021 reporting year, the Board of Directors is proposing to the Annual General Meeting on 7 April 2022 a dividend of CHF 1.80 per registered share A (previous year: CHF 1.25). The payout ratio of 33% is in line with the Zehnder Group’s continuous dividend policy. This envisages paying out 30–50% of consolidated net profits. The current share buyback programme will also be continued.

Higher sales growth targeted for 2022 due to acquisitions

The demand for system solutions for energy-efficient, healthy, comfortable and sustainable buildings is likely to increase further in the future. The Zehnder Group offers the perfect products to meet this demand, although the ongoing pandemic and global political tensions continue to create many uncertainties. That said, the Zehnder Group expects market conditions as well as the situation in the manufacturing and transport chains to increasingly normalise over the course of 2022; however, visibility and the ability to plan are still limited at present.

The Zehnder Group is resolutely pursuing its adopted strategy of growth for ventilation, harvest for radiators. It continues to invest in market cultivation, product development, digital transformation and production capacity, and its commitment to sustainability is being strengthened. The Group also continues to evaluate complementary acquisitions to round out its technology and product portfolio, strengthen its market position and expand its geographical presence.

On 18 February 2022, the Zehnder Group signed the contract to acquire the Canadian ventilation company Airia Brands Inc. The completion took place on 22 February 2022. This move sees the Group targeting sales growth above the 5% average annual target for the 2022 financial year, with the EBIT margin expected to be 8–10%. The tax rate, which was significantly lower in 2021 and 2020 than in previous years due to the use of loss carry-forwards and the tax reform measures introduced in Switzerland, will normalise in 2022 and have a corresponding impact on net profit.

In the medium term, the Zehnder Group continues to target average annual sales growth of 5%, raising the range for the targeted EBIT margin to 9–11%.

Annex: Five-year Overview 2017-2021