BELIMO : Semiannual Report 2021

BELIMO	Semiannual Report
Holding AG	2021

Semi annual Re port 21

Key Figures 1st Half 2021

Net Sales

in CHF million

384.7

289	325	355	335	385
2017	2018	2019	2020	2021

EBIT

in CHF million

75.6

in % of net sales

19.7

Net Income	Earnings per Share (EPS)¹)
in CHF million	in CHF
63.7	5.2

38	48	53	41	64	3.1	3.9	4.3	3.4	5.2
2017	2018	2019	2020	2021	2017	2018	2019	2020	2021

Operating Cash Flow	Net Sales per Employee
in CHF million	in CHF 1 000
64.6	210.2

35	57	53	51	65	199	209	214	185	210
2017	2018	2019	2020	2021	2017	2018	2019	2020	2021

¹)A twenty-for-one share split was conducted in April 2021. The EPS-values for prior periods have been adjusted in the interests of comparability.

Management Report

Economic Recovery Fuels Growth

Dear Shareholders,

With a faster-than-expected rebound in construction activity, Belimo has seen a rapid return to above-average sales growth in the first half of 2021. Overall, net sales grew by 16.9 percent in local currencies as compared to the first half of 2020. In Swiss francs, net sales increased by

14.7 percent to CHF 384.7 million, and Belimo logged several all-time output records.

Overview

On a year-to-year comparison, the Asia Pacific market region has shown the best performance, growing at 18.8 percent in local currencies and

17.6 percent in Swiss Francs. The Americas market region followed, with 16.8 percent in lo- cal currencies (9.9 percent in Swiss Francs), and Europe recorded a net sales plus of 16.6 per- cent in local currencies (17.7 percent in Swiss Francs). As the safety measures of the pandem- ic have impacted the second quarter of 2020 significantly, a comparison with the strong first

Net Sales by Market Regions

half of 2019 also shows solid net sales growth (in Swiss Francs) of 8.3 percent.

A vigorous and unexpected increase in demand from industries such as automotive, comput- ing, communications, and consumer electronics has resulted in a near-term supply shock, triggering an unprecedented global shortage in semi-conductors and many other raw ma- terials. Despite the pressure on these supply chains, Belimo successfully maintained supplier and warehouse management, resulting in high product availability and thus once more proving the Company's Operational Excellence. These circumstances have also led to inflationary pressures in raw material prices and in the Americas especially in wages.

In terms of profitability, the Group reported earnings before interest and taxes (EBIT) of CHF 75.6 million (HY1 2020: CHF 55.4 million). The EBIT margin rose to 19.7 percent (16.5 per- cent) due to operational leverage and continued

						Growth
		1st half			in local		1st half
				currencies
	2021	%		in %	2020	%
in CHF 1 000
Europe	195 392		51	16.6		166 026	49
Americas	143 319		37	16.8		130 353	39
Asia Pacific	46 015		12	18.8		39 116	12
Group	384 727		100	16.9		335 495	100

Belimo Semiannual Report 2021

1

1) 

Management Report

reduced expenditures for travel, marketing and training, among other factors contributing to the margin increase. Belimo achieved a net income of CHF 63.7 million (CHF 41.2 million) and earnings per share of CHF 5.18 (CHF 3.36 ). The Group generated a free cash flow of CHF 52.1 million (CHF 38.8 million). Net liquidity at the end of June 2021 was CHF 110.6 mil- lion, and the equity ratio was 79.0 percent.

Europe

In the Europe market region, solid demand in the construction industry led to a record half- year. At the same time, inflationary pressures were felt throughout the European construction market, with shortages and price hikes in construction materials challenging customers.

¹) A twenty-for-one share split was conducted in April 2021. The EPS for the prior period has been adjusted in the interests of comparability.

Labor­ shortages also became a more prominent issue, limiting contractor growth and their ability to accept new projects.

Nevertheless, the contracting business has developed exceptionally well, as did also the origi­ nal equipment manufacturer (OEM) business, which experienced a solid first half-year. Water applications in particular ended the first half- year with a high growth rate, although air applications also enjoyed above-average growth rates. The sensor business that is included in both air and water applications grew very strong. Due to pent-up demand, the replacement business showed more vigorous growth overall than did new construction.

The largest market in the European market region, Germany, showed double-digit sales growth. A particular focus during this time was on retrofit jobs in the education and public sector that included upgrading air handling units to

Net Sales		EBIT/Net Income
1st Half		1st Half
in CHF million		in CHF million

289	325	355	335	385
2017	2018	2019	2020	2021

				76	EBIT
49	48 60	53 67	55	64
38			41		Net
			income
2017	2018	2019	2020	2021

Belimo Semiannual Report 2021

2

Management Report

comply with more stringent indoor air quality requirements. Energy-efficiency improvements have also been a driver for non-residential renovation projects in the context of the EU Climate Target Plan. The replacement of heating boilers with heat pumps, to give one example, led to a higher number of Belimo products being in- stalled.

As construction markets in Spain and France had suffered the most due to the total lock- downs implemented a year ago, they unsurprisingly showed the most robust comeback with a more significant number of small to medium-sized jobs. Similarly, the Italian market developed well, with broad-based growth development in both contracting and OEM ­applications.

Americas

Predominantly in the US, the availability of vaccines has allowed economic activity in the Americas market region to resume with great speed and has fostered a much more robust business climate in comparison with a year ago. A combination of pent-up demand from projects on hold in 2020 and new demand driven by the need for better indoor air quality in existing buildings led to double-digit growth in the market region. Additional factors included the lifting of contractor access restrictions to facilities and domestic travel restrictions.

Strong demand continued from the data center vertical in the US and Canada, followed by the education and healthcare sectors. As a result of robust data center demand and heightened awareness of indoor air quality, sales of actuators and sensors for air applications have grown significantly in comparison with 2020. Field devices for water applications have also shown positive results, with solid contributions from pressure-independent product lines. Contracting business was also positive, with higher

order volumes from distributors and key ac- counts.

All countries in the market region showed good development. The acquisition of Opera Electronics Inc. in December 2020 was a further source of share gain for Belimo Canada.

Asia Pacific

Most of the Asia Pacific market region enjoyed a healthy start into 2021 at levels above those of 2020 and 2019, supported by the ongoing economic recovery. The contracting business in markets such as China, India, and Malaysia performed strongly because it had been affected the most by last year's lockdowns. OEM business, on the other hand, remained stable.

Like in 2020, the speed of recovery across the market region was depending on the containment of the virus and corresponding restric- tions. As China had already overcome the pandemic in the spring of last year, the country's heating, ventilation and air-conditioning (HVAC) market felt barely any negative impact in 2021. Meanwhile, India and several South-East Asian countries continued to struggle with recurring waves of the pandemic and slow vaccine roll- outs, although to a lesser degree than in 2020, as lockdowns have been more targeted and less harmful to the overall economy.

The Chinese HVAC market showed very high growth rates in the first half of 2021, due to strict lockdowns and a slow contracting business in early 2020, with many projects on the market. The most positively performing verticals in China were data centers, health- care, and infrastructure. In the medical and hospital markets, Belimo has acquired several significant projects which have increased its market share. Particularly worth mentioning is the Wuhan Changfu Hospital, a large hospital complex of 236 000 square meters (2.5 million

Belimo Semiannual Report 2021

3