Letter to the shareholders

In 2021, Arbonia once again achieved respectable results. This was accomplished despite considerable challenges in the raw material markets and the resulting unprecedented material price increases, as well as the unavailability of materials and components due to supply bottlenecks.

In addition to the good structural, economic, and regulatory environment ("EU Green Deal"), the strongly performing German market for construction supply products in particular is responsible for Arbonia's impressive numbers. The considerable investments that have been strategically made for many years to automate the production sites, increase the vertical integration, as well as further develop the product portfolio allow Arbonia to benefit from the positive environment now and in the future. Arbonia is intensifying its commitment to sustainability in order to counteract human-caused global warming and to minimise the impact of this, among other things. Since 2015, Arbonia has invested several hundred million Swiss francs in modern and thus efficient manufacturing.

The financial year 2021 was very successful for Arbonia. Sharply increased raw material prices as well as massively higher energy and, to a certain extent, freight costs negatively impacted the margins. Nevertheless, the investments of the past years in increasing efficiency and productivity had a positive effect and, together with a careful price policy, they were able to more than compensate for the negative effects. The selective investment of capital in the central production sites and the focus on a few state-of-the-art and efficient production sites, as well as selected sales markets with the right products made it possible to considerably increase organic revenue growth as well as profitability, thereby gaining further market shares. In addition, it was necessary to master the challenges in Arbonia’s own supply chain in all markets and to guarantee the availability as well as the prices of raw materials and intermediate products. Arbonia managed to ensure the availability of raw materials and to pass on price increases to customers. There were only delivery delays in a few cases, which were due to record-high order volumes within tense procurement markets.

Following the sale of the Windows Division and the integration of the former Sanitary Equipment Division into the Doors Division, the Arbonia Group now consists of the two divisions Heating, Ventilation and Air-Conditioning (HVAC) and Doors, which is why the reporting has also been adjusted accordingly.

A revenue growth of 11.6% when adjusted for currency and acquisition effects, or an increase of 14.2% in Swiss francs from CHF 1038.4 million to CHF 1186.2 million, resulted for the 2021 financial year. Without one-time effects, Arbonia increased its EBITDA by 17.4% from CHF 114.5 million to CHF 134.3 million and thereby succeeded in increasing its EBITDA margin to 11.3% in a challenging environment. Arbonia increased EBIT without one-time effects by 28.6% from CHF 52.1 million to CHF 67.0 million. Arbonia was able to increase the Group result from continuing operations without one-time effects by 46.2% to CHF 41.1 million (previous year: CHF 28.1 million). The reported Group result, which includes the continuing and discontinued operations, amounted to CHF 138.7 million (previous year: CHF 44.9 million) especially thanks to the proceeds from the sale of the Windows Division.

The free cash flow was CHF 252.7 million in the reporting year (previous year: CHF 52.5 million). The positive development resulted from the cash inflow from the sale of the Windows Division and despite outflows of liquidity of around CHF 130 million from acquisitions, through the accelerated investment programme, balance sheet optimisations (discontinuation of factoring and purchase of the Garant production site) and the increase in net working capital.

As of 31 December 2021, the total assets of Arbonia increased compared to the previous year by around CHF 108 million to CHF 1623.3 million (previous year: CHF 1515.2 million). The increase came about from the cash inflow from the sale of the Windows Division, the increase in inventory, the trade accounts receivable, as well as the increase in non-current assets (investments and acquisitions).

The net debt of CHF -140.6 million at the end of the 2020 financial year turned into a net cash position of CHF 93.2 million due to the cash inflow and the decline in liabilities from the sale of the Windows Division, despite considerable investments in non-current assets, acquisitions, and other cost-optimising measures.

The shareholders' equity increased by around CHF 150 million to now CHF 1044 million, which meant an increase in the equity ratio from 59.0% to 64.3% as of the end of 2021. This increase is mostly due to the Group result of CHF 138.7 million, which consists of the capital gains of the Windows Division and the net profit of the continuing operations.

The strong balance sheets also makes it possible to distribute a 20% higher dividend of CHF 0.30 per registered share (CHF 0.25 for the financial year 2020) to the shareholders for the financial year 2021, for the fourth year in a row since the start of dividend payments. For this reason, the Board of Directors will propose to the General Meeting on 22 April 2022 to distribute a cash dividend of CHF 0.30 per registered share for the 2021 financial year, half from retained earnings and, tax-neutral for Swiss shareholders, half from capital contribution reserves.

Market environment 2021

In the year 2021, as in the previous year, residential construction and other building construction developed differently almost everywhere in Europe. The same trends apply that had already appeared in 2020 due to the pandemic. A positive development was the increased savings of private households used to upgrade private living space, which has become more important due to working from home. This has already led to a noticeable increase in renovation projects. The still record-low interest rates also contribute to the attractive environment for the construction industry. On the other hand, the temporary closures of cultural, sports, and shopping centres, as well as other places of assembly, had a negative impact – especially in the case of retail and tourism properties.

While the pandemic continued to affect everyday life in Arbonia's most important market, Germany, its impact on the construction industry was once again relatively minor. In the first quarter of 2021, the comparatively cold winter as well as anticipatory effects, especially due to VAT being reduced until the end of 2020, still had a negative effect. Demand rose strongly, especially in residential construction, at the latest with the announcement of the first easing measures starting in March 2021. The construction industry in Germany continues to be at its capacity limit, however, due to a shortage of skilled workers and lengthy approval processes. Together with the uncertainty in retail business and tourism, these limiting aspects led to a slight decrease in building construction on the whole, while residential construction was able to increase slightly from an already very high level. This continually strong demand for living space, caused in particular by the state support of energy efficiency, which the new government would like to expand further, and limited capacities will ensure well-filled order books in the medium to long term.

Arbonia's second domestic market, Switzerland, was able to develop well in the past year. The rapidly increased savings rate during the pandemic together with changed requirements contributed to a quick recovery in residential construction. This led to the vacancy rate declining again for the first time in twelve years. In addition, Swiss industry was also able to recover quickly from the pandemic. In particular the export and pharma-ceuticals industries continue to invest in new production and research facilities as well as in office space, allowing the remaining building construction to increase too. The special cycle in residential construction due to the desire to optimise one's own living space will probably also continue in 2022 before the situation starts to normalise here. As in Germany, the renovation of living space will come back into focus, which together with the investments of business and the state sector should ensure growth in building construction.

Arbonia's eastern European markets were characterised by a strong recovery from the effects of the pandemic. The economic output in Poland, for example, had already reached the pre-Corona level in the second quarter of 2021 and was supported by a dynamic construction industry. In the first three quarters of 2021, the construction of almost one third more living space was started than in the previous year; the number of building permits even increased by >30%. This boom in residential construction should continue to have a positive impact at least in the next two years. In the Czech Republic, residential construction also recovered robustly. The market potentials of the next few years are limited, however, due to the already very high capacity utilisation and long approval processes.

In Italy, the strong impact of the pandemic in 2020 led to a massive and rapid recovery of the economy in 2021. Another contributing factor here was the "superbonus" that subsidised energy-related renovation measures with up to 110%. As a consequence of this generous support, EUR 7.5 billion of subsidies had already been approved by the end of September 2021, increasing the renovation of residential buildings by more than 20% compared to the previous year. However, the other sectors of building construction also increased due to the fast economic recovery in the previous year. By contrast, the situation is expected to considerably normalise again in 2022.

In Belgium, the construction industry was able to recover from its sharp decline in 2020 for the most part and significantly increased its output in residential construction as well as in non-residential construction during the reporting year. However, due to delays in the implementation of EU support programmes for reviving the economy, no trend is foreseeable yet. In renovation, a one-time effect is expected for the next one to two years, though: The flood damage to residential buildings from summer 2021 alone represents around 10% of the added value in this segment. In the Netherlands, the pandemic did not have much effect on the construction industry. Instead, there was a catch-up effect in the reporting year for new construction projects that had been halted in 2020 due to environmental restrictions. These absorbed capacities, which had been previously used for renovation, are the reason why this segment shrank in the reporting year. For the coming years, strong growth in new residential construction is expected in order to meet the strong demand for living space.

Strategy and development of the Arbonia Group

Following the sale of the Windows Division and the integration of the Sanitary Equipment Division in the Doors Division, Arbonia focused on the two divisions Heating, Ventilation, and Air Conditioning (HVAC) and Doors in the 2021 reporting year. These divisions are independently continuing their strategic development and are essentially focused on the megatrends of energy efficiency, urbanisation, digitisation, as well as automation.

Heating, Ventilation, and Air Conditioning Division (HVAC)

The strategy of the HVAC Division clearly reflects the important megatrends of "CO2 reduction" as well as "healthy and sustainable indoor climate". The recently adopted comprehensive climate protection package of the EU Commission, corresponding to those of the member states, which has climate targets of 55% greenhouse gas savings by 2030 and climate neutrality by 2050, confirms the long-term strategic orientation of the division. For several years now, as in the reporting year, the division has consistently pursued a strategy of being an innovative provider of sustainable heating systems and their components: from modern heat generation and optimum heat exchange to energy storage for all types of buildings and scopes of application, both for new construction and renovation markets.

The expansion of the strong market position in the established product groups continues to be the basis for the business model, however. In the reporting year, targeted investments and acquisitions were made to underpin the product and production strategy based on the following four pillars:

  • "Best in class" production for radiators
  • Use of renewable energies with heat pump and battery storage products
  • Radiant heating and cooling for modern buildings
  • Ventilation and indoor air quality

With the construction of the new production plant in Opočno (CZ), the division is ideally positioning itself in the strongly growing market for heat pumps, with a capacity of approx. 10 000 units per year. In line with this strategy, a new resource-saving, highly efficient generation of air-to-water heat pumps for the lower and medium output range was launched in the reporting year. As an optimal addition to the heat pump range, a new hot water and layered buffer storage tank was also launched, which offers many advantages thanks to its modular design and high degree of pre-assembly. In addition, the division is currently developing a battery storage system based on the sustainable redox flow technology, making it a future-oriented alternative to conventional lithiumion batteries for both private and commercial residential construction. This product offers convincing features such as the important safety aspect of non-flammability, a high number of charging cycles without loss of capacity, and economic efficiency as well as sustainable production and operation.

In addition, the strategy of «best in class» production with steel panel radiators continues to be implemented through the consolidation of production volumes of steel panel radiators with the planned closure of the production plant in Tubbergen (NL). Ongoing projects have also been initiated to reduce complexity and lower costs.

With the acquisition of the Serbian company Termovent as of 1 July 2021, the HVAC Division was not only able to expand its geographical presence in South-Eastern Europe but also significantly deepened its expertise in the area of air handling units. Cleanroom technology is the second focus of Termovent and rounds off the division’s product portfolio in the commercial and industrial ventilation systems segment. In the first half of 2021, the HVAC Division also acquired the Spanish company Cicsa to strengthen its sales position in Spain and Portugal.

Doors Division

In the middle of the reporting year, the Sanitary Equipment Division with its shower doors and partitions was integrated into the Doors Division as the Glass SolutionsBusiness Unit. The strategic logic of the integration lies in the better use of synergies in joint market development in contract sales on the one hand and in procurement on the other. In addition, the product range of the Wood Solutions Business Unit with functional and interior doors will be expanded to include shower doors, and in the medium term the glass doors and glass partitions area can be expanded for interiors.

The focus of the Wood Solutions Business Unit continues to be on the strategic, multi-year investment programme for increasing productivity and expanding capacity with the goal of improving delivery performance and the market position.

Most of the investments went into the capacity expansion of the two German door plants Prüm and Garant. The largest individual items were the purchase of the property of Garant and the second high-bay warehouse, the combined heat and power plant (CHP), and the construction of the new door frame plant at Prüm. Arbonia also invested in a coating robot at RWD Schlatter and started the planning for a raw materials and finished goods warehouse at this Swiss site.

As a result of these investments, the Wood Solutions Business Unit will be able to produce around 900 000 more doors with corresponding frames than before across all locations in 2023/2024, thus increasing their capacity to 3.5 million doors and frames.

The division additionally invested in IT and the digitisation of processes. It is in the process of rolling out SAP S4 / Hana in the Wood Solutions Business Unit, for example. Harmonising the ERP system will make the future cooperation between the four door companies more efficient.

Another important milestone in the reporting year was the acquisition of Glasverarbeitungs-Gesellschaft Deggendorf mbH (GVG). The Glass Solutions Business Unit is thus increasing its vertical integration by sourcing processed single-pane safety glass within the Group now. The separation of GVG from the Saint-Gobain Group and its integration into the Glass Solutions Business Unit of the Doors Division is proceeding according to plan. This sets the stage for future growth and further process improvements.

Intensification of sustainability | Highlights in 2021

To achieve the "1.5 °C" scenario of the Paris Climate Accords, companies are required to reduce their emissions from their own operations (Scope 1 and Scope 2) by more than 4% and reduce indirect emissions (Scope 3) by over 2.5% per year (in relation to the reference year) annually. Arbonia is committed to this. It has set itself the goal of reducing the intensity of its Scope 1–3 emissions on the basis of the Science Based Targets Initiative by 2035 so much that it will contribute to the global climate target despite further organic growth.

In the two divisions HVAC and Doors, Arbonia is not limited the vision of a zero emissions policy. Over the course of the reporting year, it also defined further ambitious medium-term goals for responsible handling and use of resources. In the year 2021, the company started the process of joining the UN Global Compact and thus commits itself to observing and promoting the ten universal principles. Since the beginning of the year, the Arbonia Group has officially been a member of the UN Global Compact.

The HVAC Division is developing a storage system for electricity generated from solar energy. The division thereby rounds off its product portfolio with the energy storage (battery): It can now offer a complete, coordinated system of products for heat and energy management of living space. This energy store, which is environmentally friendly and sustainable in manufacturing and operation, will also contribute to the energy transition in general and the energy self-sufficiency of houses in particular.

In addition to the implementation of photovoltaic systems at some sites, the refurbishment of the welding line cooling as well as the heat recovery in the welding fume extraction in the steel panel radiator production at the large site of Plattling (D) led to a considerable reduction in the energy consumption in the reporting year.

The Doors Division is reducing CO2 through two new CHP plants at its two production sites in Germany. With the planned CHP plants that are being implemented, the Prüm and Garant door companies are pursuing the following goals:

  • 1. Own production and use of CO2-neutral electricity,
  • 2. Own production and use of CO2-neutral heat and
  • 3. 100% use and pollution-free disposal of wooden residue directly at the production site and thus elimination of some external disposal


The new plant that is already being implemented at Prüm will cover approx. 60% of the entire power requirement of the door production plant and additionally heat an area of around 24 000 m².

In the core markets of Arbonia in Europe, the construction sector is expected to grow further due to the continuing housing shortage. It continues to benefit from a strong construction industry that has a considerable pent-up demand from the last decades, especially in Germany. Investments in housing have become more attractive, on the one hand due to a variety of subsidy programmes for building modernisation, and on the other hand due to people's focus on their own four walls during the pandemic. The German market, which is important to Arbonia, is being stimulated further by the large housing programme presented by the government coalition at the end of 2021. According to this programme, at least 400 000 new apartments are to be completed – despite a shortage of skilled workers – each year (currently around 300 000 per year).

However, the lack of material availability and the resulting shortage will continue to be felt in 2022 to some extent. The resulting enormous material price increases, especially for steel, aluminium and wood, as well as the considerably higher energy and freight costs, could also continue to lead to exceptional price increases, thus causing construction projects to be postponed due to excessive building costs. The shortage of skilled workers is intensifying and is evident in a massive shortage of installer capacities, which are in even more demand because of the attractive support policies for heating and regenerative energies. Correspondingly, many labour market observers now expect that no longer a lack of work but a lack of workers will be even more of an issue in the future than previously. The main reason for this development is certainly the retirement of the babyboom generation born in the 1950s. In addition to this lower labour participation of the domestic population, the immigration of foreign workers will also decrease.

Nevertheless, the well-known, long-term economic and growth drivers for the construction (materials) industry remain in place in 2022: the still low interest rates as well as the high number of flats in need of renovation, and last but not least government subsidy programmes for energy-efficient living and additional, affordable living space. The latter is also being strongly promoted by the new German government. Germany wants to nearly triple the speed for decreasing climate-damaging emissions. This is to be achieved by expanding wind and solar energy more intensively; solar roofs are to be obligatory for new buildings. In addition, an explosion in the heating costs of fossil-fuel heating systems could result in the more rapid testing and implementation of alternatives. This will continue to drive the demand for the corresponding Arbonia products, with a revenue share of ~70% in residential construction, even more.


Arbonia looks to the future with great confidence, despite the stated challenges but with the described positive market impulses in combination with the operative activities in the two divisions for the next few years. The specific guidance for the full year 2022 can be found in the press release when the 2021 annual results are published on 1 March 2022.

Alexander von Witzleben
Chairman of the Board of Directors
and CEO

Daniel Wüest