Letter to the Shareholders

In the financial year 2017, Arbonia completed further key steps in its restructuring and strategy process launched in 2015. Following the companyʼs completion of two major acquisitions in 2016 – a move which served to reinforce its strategy – it honed its profile with carefully planned divestments in the year under review. Arbonia now owns a balanced corporate portfolio made up of four divisions: Heating, Ventilation and Air Conditioning (formerly Building Technology), Sanitary Equipment (formerly Building Technology), Windows, and Doors. Thanks to its divestment activities, Arbonia was also able to significantly reduce its net indebtedness. As a result, the company is now on solid ground for the future, both strategically and financially. In an effort to establish itself in new growth regions and align its production processes with market developments, Arbonia made a number of significant investments in 2017. The company is well on track to become one of Central Europeʼs leading building supplier.

Dear shareholders
Dear ladies and gentlemen

The Arbonia Group developed positively in the financial year 2017. It managed to surpass the previous yearʼs values for all relevant indicators: the company increased both its revenue and earnings, and also improved its balance sheet. The former companies of the Looser and Koralle Groups, which were consolidated for the full year for the first time in 2017, contributed significantly to the solid performance. However, Arbonia also improved the profitability of its original business thanks to a strict cost management programme and, primarily, by relocating production processes to sites with more favourable cost structures. The results meet the companyʼs own expectations for its strategic measures programme launched by Arbonia in 2015.

Including the discontinued operations (Condecta and Forster Profile Systems), Arbonia increased its consolidated revenue by 38.5% to CHF 1 378.5 million. When adjusted for currency and acquisition effects, growth amounted to 1.5%. Consolidated revenue for the continuing operations (without Condecta and Forster Profile Systems) rose by 35.9% to CHF 1 245.6 million. On a pro forma basis (including Looserʼs doors business and the Koralle Group), Arbonia achieved growth of 2.6%, when adjusted for currency and acquisition effects. This growth was achieved in a financial year that was marked by production facility relocations, rising raw material prices and the integration of Looserʼs doors business and the Koralle Group.

EBITDA from continuing operations increased by 84% and therefore disproportionately when compared to revenue, reaching CHF 120.3 million (previous year: 65.3 million). The EBIT was up from CHF 27.2 million in the previous year to CHF 61.3 million in the 2017 reporting year.

Arbonia achieved a Group result of CHF 46.4 million (prior year CHF 7.6 million).

Market environment

In the financial year 2017, Germany was the largest sales market followed by Switzerland, Poland, Italy and France. Arbonia attained over 83 % of its revenue in these core markets. In Germany, the strong construction industry continued on its positive trajectory of the last few years, as was also the case in emerging Eastern European economies. The market segment for new residential buildings continued to record particularly high growth. Due to the ongoing lack of construction specialists, the market potential within the German industry could not be fully exploited. Demand for more living space will remain high, however, meaning that the construction industry is expected to retain its strength over the next few years.

In Switzerland – Arboniaʼs second domestic market alongside Germany – the situation was quite different. The construction suppliersʼ industry continued to suffer from a high level of competitive pressure. While the high import pressures of the past few years may have resided thanks to the stronger euro, margins for re-imports from the euro zone to Switzerland fell. This development had a particularly big impact on the Windows Divisionʼs result. Due to a lack of alternative investments, activity in residential construction remained at a high level. The commercial construction sector, however, suffered a decline.

Construction activity in Arboniaʼs key Eastern European markets of Poland, Slovakia and the Czech Republic benefited from strong economic growth with good labour market conditions, that is, rising wages and decreasing unemployment.

However, in the year under review, the situation on the labour market deteriorated as a result of the lack of skilled workers caused by the strong construction industry in Germany and Arboniaʼs core markets in Eastern Europe. The company responded to this trend with specialist recruitment and professional development measures, though the planned increase to staff at sites in the countries affected was still delayed.

In 2017, Arboniaʼs procurement market was confronted with a strong increase in commodity prices. The company counteracted this development by increasing the price of specific products, without losing any major market shares.

General activities from Arbonia Group

In 2016, Arbonia significantly increased the revenue, markets, market shares and earnings potential of its Sanitary Equipment and Doors Divisions with its two key acquisitions of Koralle and Looser. In 2017, Arbonia continued to work hard to successfully complete the legal and strategic side of the acquisition of the Looser companies. The legal process was completed in June with the cancellation of the final Looser shares remaining in public hands and the cash settlement paid to the shareholders affected. The company also achieved its goal on a strategic level in 2017, successfully finding suitable new owners for the Looser companies that did not fit in with Arboniaʼs core business. In the first half of the year, the Coatings business was sold in a series of transactions. Arbonia also sold the Industrial Services Division (Condecta) in November. All of Looserʼs former arms that were not part of Arboniaʼs core business are now owned in structures that will allow for long-term industrial progress.

In December, Arbonia announced that the Profile Systems Business Unit, part of the Doors Division, had been sold to the Reynaers Group, a family-run business from Belgium. Arbonia will focus on its interior door business in future; this field of business received a major boost with the acquisition of Looser in the previous year. Reynaers will integrate the Profile Systems Business Unit as an independent business unit, including its brands, and will also keep production of steel and stainless steel profiles in Switzerland and take over all the employment contracts. The transaction was completed on 22 January 2018 after the balance sheet date.

Shortly before the end of 2017, Arboniaʼs subsidiary EgoKiefer and its welfare foundation sold their property in Altstätten (CH). This sale reflected a continuation of the Arbonia Groupʼs strategy to divest non-essential properties as quickly as possible with maximum profit. Relocating production to other European countries has decreased EgoKieferʼs need for space. EgoKiefer will relocate in the medium term to a new, nearby location in Eastern Switzerland.

Arbonia used the profits from the sale of all of these assets to invest around CHF 105 million in 2017. The sale of the business units and real estate reduced the net indebtedness to CHF 43.3 million. As a result of these measures, the equity ratio increased to 60.9%.

After the successful integration of the Koralle Group and in order to facilitate further strategic development, it is sensible to convert the Sanitary Equipment Business Unit into its own division within the Arbonia Group. To this end, the Business Unit was separated from the Building Technology Division as of 1 January 2018. The HVAC business activities will be combined into a newly established Heating, Ventilation and Air Conditioning Division.

Strategies and developments in the divisions

One of the main measures defined in Arboniaʼs 2015 programme was the relocation of the production footprint and the focus on divisional strategies. The majority of the measures planned for 2017 were implemented; the most important strategic steps are described in the following. Detailed information on the divisions is provided in the separate chapters from here.

The Building Technology Division is aiming to become the market and cost leader for its markets. Further substantial investments in manufacturing were completed in 2017 and the division forged forwards with its plan to tap into high-potential market segments.

During the first quarter of 2017, the Heating Technology Business Unit (part of the HVAC Division as of 1 January 2018) completed the process of relocating production of its special radiators to the Czech Republic. The programme for increasing capacity and productivity in radiator production at the Plattling (D) site continued on schedule and should be finalised over the course of this year. A ground-breaking ceremony for a new radiator production site was held in Stupino (RUS). This production plant will enable the division to supply the Russian market without any trade restrictions. Furthermore, it will be able to supply steel panel radiators to neighbouring markets in Eastern Europe.

With the presentation of Sabianaʼs new range of innovative air-conditioning units, the Air-Conditioning and Ventilation Technology Business Unit (part of the HVAC Division as of 1 January 2018) is now tapping into the central residential ventilation market, which is currently experiencing strong growth across Europe.

With the acquisition of Koralle, the Sanitary Equipment Business Unit (part of the Sanitary Equipment Division as of 1 January 2018) completed its process of consolidating production. In the year under review, the Koralle production was relocated from Vlotho (D) to the existing factory in Plattling (D). As a result, Arbonia was able to increase efficiency and reduce costs. The new production hall and warehouse in Plattling (D) were completed on schedule. All in all, the process of integrating the Koralle Group into the division was completed on schedule.

The Windows Division is working towards becoming the European market leader in the windows sector. In the reporting year, the aim was to secure a leading position in Switzerland, tap into the German market more extensively and reinforce its position in the emerging markets of Poland, Slovakia and the Czech Republic. The division pushed forwards with its transformation into an integrated European window manufacturer in 2017. With its new generation of wood/aluminium windows, the division successfully introduced its first cross-company and market-wide product platform for the German-speaking markets.

The consolidation of manufacturing at the cutting-edge product-group-specific production sites in eastern Germany, Poland and Slovakia (lead factories) provides Arbonia with a sustainable competitive advantage. The planned relocation of production away from Switzerland should be finalised in the reporting year. Due to the strong demand for wood/aluminium windows and the delayed ramp-up at the Langenwetzendorf (D) site, the service shop in Switzerland will continue to run with a capacity of 73 000 m² (previous year 117 000 m²) during the ramp-up phase at the new wood and wood/aluminium plant.

With the acquisition of the Looser Group doors business, the Doors Divisionʼs strategic goal was to transform from a niche Swiss provider of special doors into the number-two provider of interior doors in Europe. This was achieved in 2016. The acquisition saw the integration of the brands Prüm, Garant and Invado, whose products have complemented RWD Schlatterʼs existing business to give the division a broad and attractive product portfolio. This development is helping the division to expand on a geographic level and also gives it the chance to tap into new markets. The Doors Division already enjoys a strong position in the German, Swiss and Polish markets and now has the potential to enter further markets in Central Europe. Following the sale of the Profile Systems Business Unit in December 2017, the division is finally able to focus on its interior doors business.

In the year under review, the Doors Division worked hard to find the best possible strategy for its new network of companies. The strategy focuses on four main areas:

  • Positioning as a full-range provider
  • Full coverage of sales channels
  • Investments in production plants for the purpose of expanding capacity, protecting performance and ensuring long-term competitiveness
  • Use of synergies in purchasing, development and the expansion of the product range for the benefit of the entire Doors Division

In 2017, the division recorded its first significant savings in purchasing thanks to the consolidation and renegotiation of Prüm, Garant and RWD Schlatter procurement volumes. It also quickly completed investments in the German and Polish production sites as they had long since been working at maximum capacity.


For the financial year 2018, we are anticipating organic growth of 3%. We are also expecting an EBITDA of > CHF 110 million.

For 2019, we are anticipating organic growth of 35% and an EBITDA of > CHF 125 million. Our company wants to generate a substantial free cash flow from 2019 onwoards and be able to pay a dividend for the 2018 reporting year.

We are in convinced that, in light of the strategically well-positioned business units, we will make the best of our new opportunities and tackle any challenges with ease.


With the merger of the former AFG and Looser arms to form a company with a new market position, the financial year 2017 placed a great deal of strain on Arboniaʼs staff and managers. At the same time, the repositioning and restructuring measures had to be implemented quickly across the entire Group. In addition, it was important to process the sales of the various business units and real estate in a timely manner. On behalf of the Board of Directors and Group Management, we would like to thank all those involved for their outstanding dedication. We would also like to thank our customers and suppliers and most notably you, our dear shareholders, for your trust.

Arbon, February 2018

Alexander von Witzleben

Chairman of the Board of Directors and CEO

Felix Bodmer


Arbonia Group Management as of 1 January 2018

Harald Pichler Head of Windows Division

Peter Spirig Head of Doors Division

Felix Bodmer CFO

Alexander von Witzleben CEO

Ulrich Bornkessel Head of HVAC Division

Knut Bartsch Head of Sanitary Equipment Division