Building Technology

Market trends

During the reporting year, the Building Technology Division achieved total revenue of CHF 486.8 million (previous year: CHF 462.2 million), a development that was accompanied by the pro rata effect of the two acquisitions that took place. This equates to 5.3 % growth. When adjusted for currency and acquisition effects, revenue rose by 1.1 %. EBITDA grew from CHF 45.6 million in the previous year to CHF 53.4 million. Without special effects, the EBITDA amounted to CHF 57.9 Mio. (previous year: CHF 50.7 million). EBIT amounted to CHF 35.2 million (previous year: CHF 4.4 million). Without special effects the division reported an EBIT of CHF 39.7 million (previous year: CHF 33.5 million). Again, all three business units – Heating Technology, Air Conditioning and Ventilation Technology, and Sanitary Equipment – made substantial contributions to the division’s results.

2016 was marked by a diverse market environment for the Building Technology Division. The positive and negative trends that were seen in the individual product and country markets partially compensated each other. Against this background the division experienced a satisfactory level of growth during the reporting year, aided in part by the launch of new products, the continued development of its market presence, and further improvements in the area of cost-effectiveness. Two acquisitions had an especially significant effect on the division’s key figures. One of these, the Koralle Group, made it possible for the Sanitary Equipment Business Unit to achieve a stronger position on the key markets of Switzerland, Germany and Austria. The second, involving the French sales partner Sabiatherm, led to the division gaining a better line of direct access to distribution channels for air-conditioning and ventilation products. Furthermore, the reporting year was shaped by extensive optimisation and investment projects, that are progressing as planned.

In terms of sales, 2016 demonstrated weaker development in the commercial construction industry across Europe. However, Germany in particular experienced a highly positive trend in the new residential construction sector. This did not, unfortunately, have the same positive effect on all product segments within the division, as capacity levels in the trades sector had become excessively low. The dampening effect that has resulted from this is currently being felt especially keenly in market trends for renovation, a vital sector for the division. The division results were affected by the extremely challenging situation on the domestic market of Switzerland, which experienced a noticeable weakening in demand within the renovation business as well as competitive pressure that continued to be high. While Italy started the year with great promise, it recorded disappointing results as time went on, due to growing political instability that in turn hampered the investment climate. In Russia, increased moves towards protectionism plus a weak performance from the ruble represented significant challenges for the division. By contrast, it was possible to take advantage of the positive stimuli generated by the Middle East, with new sales partners gained in what is a market of interest to the area of air-conditioning and ventilation technology.

Products, technology and innovation

The reporting year was marked by a diverse range of investments made in a bid to boost competitiveness within virtually every production facility in the division. One example was the extensive programme of investments – amounting to more than EUR 25 million – in radiator production at Kermi in Plattling (D). Aiming to raise awareness of the strengths offered by its brands, the division intensified both its cross-selling activities and its efforts to develop online marketing with a focus on users. It also had a presence at all the major industry trade fairs.

Ongoing process optimisations and foward-looking additions to the product range made formed the basis for further market penetration and a strengthened position for the Heating Technology Business Unit. “Kermi x-well“ residential ventilation products, first launched in 2015, began to establish themselves more widely. Gaining a positive response from its three-tiered approach to distribution, Kermi’s sustainable “x-optimiert“ system was also developed further thanks to innovations in additional system segments – a new form of smart control technology and a significantly improved heat pump. Moreover, practical solutions including “x-net connect“ for floor heating and cooling plus additional bathroom radiators represented strong additions to the established business units. The newly launched fan coils are providing a solid basis for the Arbonia range to successfully tap into more opportunities in the public and commercial construction sectors. Also many of the new products designed for new buildings and modernisation projects are providing a stronger position from which to maintain the important business area of the housing industry.

Where the Air-Conditioning and Ventilation Technology Business Unit was concerned, the reporting year represented one of the most successful years in Sabiana’s history. Building on a solid foundation of more than 75 distributors worldwide, plus successful efforts to establish a customer network in the Middle East, it was possible to establish an even stronger market position for the business unit in the fan coil sector. Furthermore, the planned revenue gained from the takeover of heating product sales for the Kermi and Arbonia brands on the Italian market has already experienced a positive trajectory, within just the first year of the takeover happening. At the same time, the successful acquisition of the sales partner Sabiatherm has made it possible to expand direct business in France – the second-largest market for fan coils in Europe. New commercial ventilation products, plus the successful launch of a strategy for gaining major customers in the area of air quality – a move that is based on the patented, electromechanical “CRYSTALL™“ filter – were other contributors to the business unit’s positive development.

In Sanitary Equipment, integrating the Koralle Group makes it possible to take advandage of various synergy effects. The Koralle and Kermi brands continue to be developed independently with the aim of achieving maximum market coverage. All brands develop products for new buildings and renovation projects, with a focus on both design and demographics. Kermi’s communication concept during the spring trade fairs of 2016 was “UNLIMITED // GRENZENLOS“, and it showcased cross-generational, safe and convenient shower solutions for new buildings and renovation projects. The Kermi concept won the German Brand Award 2016. Koralle’s innovative shower enclosure known as “myDay Comfort“, designed to suit all generations and lifestyles, also received the renowned German Design Award 2016.

Sustainability

The principles of sustainability have been an integral part of the corporate philosophy of the Building Technology Division for decades now, and are applied in the areas of development, production and personnel relationships.

The integrated management system according to ISO 9001 / 14001 / 50001 (Quality / Environment / Energy) and the SAP module EH & S (Environment, Health & Safety) form the basis for the continuous improvement of key environmental aspects of the production and development processes within the division. Within the Heating Technology Business Unit, all the production processes for radiators take place at just two sites, making them more efficient and allowing them to use resources more sparingly. The Business Unit has also switched over to an energy-saving form of propulsion technology as part of efforts to modernise production technology for flat-panel radiators. The company’s energy programme has introduced a whole host of energy-saving measures for essential consumers at a basic level as well as measures at levels above this.

The obligation to determine suitable employee protection goals is a standard element of corporate policy. Marking its 11th entry in a row, Kermi GmbH participated in the 2016 competition for ideas held by the company’s professional association for occupational safety, receiving a successful response which led to an award. Each year, the company introduces prevention campaigns focusing on a range of different subjects, such as back health. Managers also receive training in the area of responsibility for occupational safety, as a means of giving safety-related issues more prominence.