Siegfried: Continued upward trend

The Siegfried Group reported gratifying results for the 2011 financial year despite a demanding market environment

07-Mar-2012 - Switzerland

The Siegfried Group reported gratifying results for the 2011 financial year despite a demanding market environment. The company’s sales grew also in terms of Swiss francs and profitability increased distinctly. Moreover, Siegfried returned to a net profit. Based on these results and on the sound business development, the Board of Directors proposes to pay out CHF 1.00 per share following two years without dividend payout.

The Siegfried Group generated sales of CHF 328.1 million for the 2011 financial year, representing a growth of 4.4% in terms of Swiss francs. In local currencies, sales grew by 15.6%. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to CHF 41.0 million (+ 11.9%), corresponding to an EBITDA margin of 12.5%.

Decisive growth (+ 116%) was achieved in earnings before interest and taxes (EBIT), which amounted to CHF 11.6 million, or 3.5% of sales. Adjusted for currencies, Siegfried reports an EBIT margin of 4.6%. The resulting net profit of CHF 9.6 million corresponds to earnings per share of CHF 2.61. Without the strong appreciation of the Swiss franc, Siegfried’s key indicators would have been clearly more positive. Net working capital remained at a low CHF 122.2 million. The 14.5% rate of return on capital employed (ROCE) shows that a good performance was achieved with committed resources. At year-end Siegfried reported cash holdings of CHF 52.6 million.

In view of the good results and the sound financial situation, the Board of Directors proposes paying of CHF 1.00 per registered share from the capital contribution reserve.

Rudolf Hanko, CEO, said: “In 2011, Siegfried made clear operational progress and achieved a gratifying result. We have returned to profitability, improved our market position and increased efficiency at high capacity utilization. Moreover, we are working on our strategic targets at full speed”.

All production facilities operating at high capacity utilization

Siegfried achieved growth in exclusive synthesis and in the production of portfolio active pharmaceutical ingredients (controlled substances). Sales in both fields each grew by about 10% in Swiss francs or approximately 20% in local currencies. Siegfried reported a sales decline of 18% (or 11% in local currencies) in the field of finished drugs as some of the main pillars of sales in this field are reaching the end of their product life cycle, and their sales contribution has not yet been fully substituted by new products. However, renewal of the portfolio is running on schedule.

The gratifying sales development is reflected by high capacity utilization at all Siegfried production facilities. In Zofingen, large segments of production switched to a 7-day/24-hour cycle, and in Pennsville, USA, the production plants were in operation six days a week on average. In Malta, the workforce was increased considerably in view of the introduction of an important product in 2012. Thanks to across-the-board cost discipline, the rising sales had a correspondingly positive effect on the financial results.

Continued improvement of earnings situation expected

Within the parameters of strategy implementation, Siegfried will continue to focus on three areas to secure its competitive position over the long term: backward integration in Asia, entry into sterile filling, and enhancement of the technological basis.

Despite demands made by the market and a continuing pressure on prices, Siegfried expects sales in 2012 in local currencies to develop at a stable rate. Higher capacity utilization and increased efficiency will further improve operating results.

Changes in the Board of Directors

Thomas Staehelin, Vice-Chairman of Siegfried’s Board of Directors, will resign from the Board on the occasion of the annual general meeting scheduled for April 20, 2012. After 21 years of service, he will not stand for reelection. All other Board members will stand for reelection for a further one-year period of office. The Board of Directors will propose no further nominations.

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