Strong organic growth and margin expansion in 2023/24 – Strategy reiterated and improved

Rümlang, September 3, 2024 – Till Reuter, CEO dormakaba, says: “In 2023/24, we made good progress in executing our strategy, supported by the transformation program. This led to a strong financial performance with strong organic growth and significant margin expansion. Our team achieved great victories. We innovate for growth and collaborate with other technology leaders to deliver advanced solutions that meet customer needs. Such as Motion IQ and the Door Efficiency Calculator that help our customers achieve their sustainability goals.”

“We have iterated and enhanced our strategy to move from form to growth. Looking ahead, while we continue ongoing efficiency and cost initiatives, we will launch new efforts designed to further drive profitable growth. These include building on our leadership in core markets, leveraging key offerings outside their home markets and simplifying our portfolio to free up resources for greater investment in innovation.”

Group results: strong organic growth and margin expansion

dormakaba recorded strong organic net sales growth of 4.7% despite a challenging market environment, driven by higher volume (1.9%) and pricing (2.8%); volume growth showed an even stronger development in the second half of the financial year. Total sales amounted to CHF 2,837.1 million and were impacted by the appreciation of the Swiss franc against all major currencies.

Adjusted EBITDA increased by CHF 32.1 million to CHF 416.9 million and the adjusted EBITDA margin increased significantly to 14.7% (+120bps). This marks a continuous margin improvement over the past four half years. The execution of the transformation program launched in July 2023 contributed significantly to the expansion of the adjusted EBITDA margin through operational efficiency and procurement initiatives.

Net profit decreased slightly to CHF 82.2 million, mainly due to one-off charges related to the ongoing transformation program.

Strong balance sheet, significantly lower net debt and substantially higher ROCE

The company delivered solid free cash flow of CHF 204.6 million (+15.9%), mainly driven by strong operational performance. This enabled dormakaba to significantly reduce its net debt by CHF 142.1 million to CHF 454.8 million with a resulting net debt to adjusted EBITDA ratio of 1.1x. Return on capital employed (ROCE) increased significantly to 29.0% (+390bps), benefiting from improved average net working capital and increased adjusted EBIT.

Business Segment Access Solutions: organic net sales growth in core markets

Access Solutions posted strong organic net sales growth of 4.9%, driven by volume (1.9%) and pricing (3.0%); volume growth was higher in the second half. Total sales amounted to CHF 2,405.9 million. All major product clusters and After Sales Services contributed to the growth. Core markets posted positive organic net sales growth. In Germany, growth was supported by strong project business. Both North America and Australia/New Zealand posted solid growth. The UK/Ireland returned to positive growth in the second half. Switzerland posted a strong performance in Access Solutions, mainly driven by the project and service business, offset by weaker demand for contactless smart cards.

Adjusted EBITDA increased to CHF 366.3 million and the adjusted EBITDA margin increased to 15.2% (+80bps). This increase in profitability was driven by improvements related to the transformation program, lower raw material costs and price increases offsetting inflation.

Key & Wall Solutions and OEM business segment: a record year of profitable growth

Key & Wall Solutions and OEM recorded organic net sales growth of 4.5%, driven by volume (3.1%) and pricing (1.4%). The main growth drivers were an exceptional performance by Movable Walls, mainly due to its leading position in the North American market, and increased volumes in OEM in the second half. Key Systems recorded a decline in sales due to weaker demand, mainly in the North and Latin American markets, as well as for key blanks in Europe. Total net sales amounted to CHF 484.4 million.

Adjusted EBITDA increased to CHF 95.2 million and the adjusted EBITDA margin increased to 19.7% (+270bps). This significant increase was driven by strong growth in Movable Walls, with Key Systems and OEM margins protected by operational improvements and a favorable product mix.

Transformation program delivers tangible improvements

dormakaba launched its transformation program in early July 2023 to support the execution of the strategy over three years. In the first year of implementation, the program has made significant progress, resulting in tangible improvements. dormakaba has established the three planned regional shared service centers, improved the factory’s productivity, further consolidated its supplier base, and detailed the optimization of its operational network for implementation. The company reached agreements with its social partners in Germany, Switzerland, and Austria, enabling it to enter the execution phase of major transformation initiatives and realize the associated cost savings.

Continuous progress in sustainability

dormakaba has achieved significant milestones in climate change, health and safety, human rights and product innovation by 2023/24. The company has met its ambitious carbon emissions targets for the third year in a row, saving 12,500 tonnes of CO2 equivalent (CO2e) since baseline. The company increased its share of self-generated solar power by more than five times with 21,000 newly installed solar panels at manufacturing sites in China and Malaysia. The company has also made significant progress in its health and safety management, resulting in a substantial reduction in our recordable injury rate of approximately 21%.

Strategy iterated and improved: from form to growth

The Shape4Growth strategy is about transforming the business, shaping it to reach its full potential and accelerating sustainable, profitable growth. In 2023/24, the execution of the strategy progressed well with a focus on efficiency and cost improvements, supported by the transformation program. Given the good progress, management has iterated the strategy and consistently further developed and improved it to move from shape to growth. The execution of the strategy will focus on the following value drivers:

• Improve performance: Add commercial transformation to the scope while executing ongoing efficiency and cost initiatives as planned.
• Reduce complexity: Increase business resilience and efficiency while continuing to streamline your product portfolio to free up resources for innovation and growth.
• Innovate and grow: capitalize on further growth opportunities by building on leadership positions in key markets and leveraging the core portfolio outside home markets.

The company reaffirms its medium-term guidance: annual organic revenue growth of 3-5%, an adjusted EBITDA margin of 16-18% in 2025/26 and a return on capital employed (ROCE) of over 30% from 2025/26.

Outlook 2024/25

dormakaba is well positioned to capitalise on market trends and growth opportunities. The company is confident that it will continue to grow profitably in 2024/25, despite a continued challenging environment, supported by a strong order book and new, innovative products. For 2024/25, dormakaba expects organic net sales growth in the range of 3-5% and an adjusted EBITDA margin of at least 15%.

Dividend proposal

The Board of Directors will propose to the 2024 Annual General Meeting of Shareholders to pay out a dividend of CHF 8.00 per share for the 2023/24 financial year (previous year: CHF 9.50). This corresponds to a payout ratio of 51.1%. This reflects the strong operating performance and the impact of one-off restructuring costs for the transformation of dormakaba on net profit for this financial year.

Key figures of the dormakaba Group1

1) For the definition of alternative performance measures, we refer to chapter 5.2 of the notes to the consolidated financial statements of dormakaba’s 2023/24 annual report.

The complete annual report of dormakaba Holding AG, including consolidated financial statements, as well as financial statements and the sustainability report for the financial year 2023/24, are available online at report.dormakaba.com. The analyst presentation is available at dk.world/publications.

Investor and Analyst Conference

Time: 11:00 CEST – This in-person event can also be followed via webcast: LINK

Press conference call

Time: 09:00 CEST