DKSH Management AG: Another year of record earnings

According to Dr. Joerg Wolle, President & CEO of DKSH: “The 2011 record performance is a seamless continuation of the successful development of previous years. It speaks for the resilience of our business model, as well as for our strategy that is focused on sustainable profitable growth in promising future markets. In view of our record results, our leadership position in Asia’s growth markets, and the promising business perspectives, DKSH’s Board of Directors has unanimously approved the listing of the shares of DKSH on the SIX Swiss Exchange. This move is an important step for the Group, and will support our strong growth course as proven during the past decade.”

Strong growth in turbulent markets
In its 2011 business year, DKSH continued its steady growth trend of recent years. Net Sales rose to CHF 7.3 billion. EBIT increased notably by 21.7% to reach CHF 238 million, while Profit After Tax grew by 25.7% to CHF 152 million.

These record figures were achieved despite a year in which some of DKSH’s core markets (in particular Thailand and Japan) were struck by natural catastrophes that had very severe consequences for those nations’ peoples and economies. The fact that the resultant economic setbacks did not have a lasting negative impact on DKSH financial results can be attributed to the strength and resilience of its business model as well as to the broad diversity of its portfolio and activities, both in terms of industries and geographic spread throughout the Asia region. Another challenge the company faced in 2011 was the strong Swiss Franc, but only in terms of local currency conversions into Swiss Franc, the Group’s reporting currency. At constant exchange rates, Net Sales and EBIT results were even more remarkable.

Middle class driving the dynamics of emerging economies
In 2011, DKSH’s very good financial performance resulted mainly from organic growth – actively growing existing business and acquiring new clients and customers. This accomplishment was favored by a number of factors. The rapidly rising middle class of Asia’s emerging economies is driving demand for high-quality consumer goods and healthcare products which, in turn, is having a direct and positive impact on consumer markets. In DKSH’s assessment, this demand is also boosting overall consumption in Asia’s markets and consequently leading to a rise in the need for Western materials and technologies in order to build local infrastructures and production capacities to manufacture products locally. The resultant market dynamics are not only promoting trade with the West; inner-Asia business is also benefiting from the sustainable impetus generated by the growing affluence of the middle class. At the same time, increasing numbers of companies are faced with the need to focus on core competencies. Those intending to expand in Asia are therefore relying increasingly on specialized service providers dedicated to market entry and expansion. Thanks to its traditionally strong presence and capillary market coverage across Asia, combined with the rising demand for outsourced Market Expansion Services, DKSH was able to benefit from these economic megatrends and registered impressive 2011 financial results.

Selective acquisitions
To complement its organic growth, DKSH exploited suitable opportunities and closed five strategic “bolt-on” acquisitions in 2011. In Taiwan, the field marketing specialist 3D Asia was acquired, allowing DKSH to further enhance its leadership position in the consumer goods market within the geographic triangle of South China, Hong Kong, and Taiwan. In New Zealand, DKSH acquired Brandlines and FNZ Brands – two leading full-service companies in the consumer goods sector. In Australia, DKSH succeeded in making an important acquisition in the specialty chemicals industry by taking over Tiger Chemicals Company. Moreover, in the middle of the year, DKSH acquired a majority shareholding in the Swiss watchmaker Maurice Lacroix.

Broadly diversified growth
All four Business Units performed well and contributed to DKSH’s growth in profits in 2011. Consumer Goods, the largest business unit of DKSH, grew its EBIT by 22.2%. The second largest, Business Unit Healthcare, increased its EBIT by 10.3%. Business Unit Performance Materials reported a rise in EBIT of 7.7%, while Business Unit Technology realized an EBIT growth of 8.0% for 2011. These gratifying results can be attributed to the rigorous implementation of DKSH’s strategy for growth, which is based on the successful expansion of existing business partnerships, winning new clients and customers, plus the ongoing improvement in operational efficiency.

Planned IPO
DKSH intends to have its shares listed on the SIX Swiss Exchange within the first six months of 2012, offering part of its existing shares to the general public. The IPO is supported by both the majority shareholder, Diethelm Keller Holding, and the strategic minority shareholders. This transformation of DKSH from a privately owned enterprise into a listed group is a logical development of the gradual opening of the company since the merger in 2002. In 2008, DKSH succeeded in broadening the shareholder base with additional high-caliber investors in the context of a capital increase. This next step, in the form of an IPO, will open up the company to the wider public. Moreover, it will allow its major shareholder, Diethelm Keller Holding, to systematically diversify its investments, preparing it for the fifth generation of the founding families.

Says Adrian T. Keller, Chairman of the DKSH Board of Directors: “Diethelm Keller Holding wants to ensure that DKSH can continue its ambitious business growth in the medium and long-term by broadening the shareholder base. At the same time, this will result in a diversification of our investment portfolio for the transition to the next family generation. As an anchor shareholder, Diethelm Keller Holding will continue to retain strong ties to the organization.”

Joerg Wolle, President & CEO: “We are conscious of the fact that an IPO will expose DKSH to public scrutiny to a far greater degree than in the past. We see this move as an opportunity to sustainably enhance DKSH’s brand recognition among existing and potential new clients and customers, as well as favoring us in the labor market when recruiting top talent. In addition, it will help us to sharply raise the profile of our company among our existing and potential shareholders.”

UBS and Deutsche Bank are acting as Joint Global Coordinators and together with Berenberg Bank and Credit Suisse as Joint Bookrunners for the planned IPO. The consortium also includes Crédit Agricole Corporate and Investment Bank and the Zürcher Kantonalbank as Co-Lead Managers.

Contact
DKSH Management AG Wiesenstrasse 8 Postfach 888 8034 Zürich Tel. 044 386 72 72 Fax 044 386 72 82 info@dksh.com

Editor's note: Image rights belong to the respective publisher.