Swiss Zehnder Group Sales exceed EUR 600 million for the first time and increased results

In the 2018 financial year, the Zehnder Group (SIX: ZEHN), a leading international provider of complete solutions for a healthy indoor climate, boosted its sales by 3 % to EUR 601.8 million and its operating result (EBIT) from EUR 23.5 million to EUR 31.1 million. This enabled the EBIT margin to rise from 4.0 to 5.2 %. Net profit amounted to EUR 24.5 million.              

Increase in sales due to ventilation business

In the 2018 financial year, the Zehnder Group increased its sales from EUR 582.4 million to EUR 601.8 million, equating to growth of 3 % (+4 % organically). However, the market conditions in the key markets became increasingly challenging in the second half of the year. The sales growth is primarily attributable to the ventilation business in Europe and China. Ventilation sales in the financial year increased by 11 % (+10 % organically) and now account for 46 % of total sales (previous year: 43 %). Radiator revenues decreased by 2 % (-1 % organically).

As in the previous year, the Europe segment accounted for 84 % or EUR 506.5 million of consolidated sales (previous year: EUR 491.1 million), which represents an increase in sales of 3 % (+3 % organically). While the key markets of Germany, France, the United Kingdom and Switzerland demonstrated sideways trends, as did Italy, sales in the Netherlands, Belgium, Poland, Spain and Russia in particular put in a positive performance. The significant sales growth of 11 % in the ventilation business area in Europe (+9 % organically) more than compensated for the slight decline of 2 % (-2 % organically) in the European radiator business. The warm temperatures in autumn had a negative effect on radiator sales. The ComfoAir Q ventilation unit was the primary growth driver.

The China & North America segment accounted for EUR 95.3 million (EUR 91.3 million in the previous year) or 16 % of total sales. The 4 % growth (+8 % organically) for the entirety of 2018 is therefore significantly lower than for the first half of the year (+10 %, +20 % organically). In China, ventilation sales continued to grow in the second half of the year, but at a lower rate than in the first six months. For the year as a whole, ventilation sales rose by 21 % (+24 % organically) and thus accounted for 77 % of total sales in China at the end of the year (previous year: 70 %). While sales in the radiator business area remained stable in the first half of the year, sales for the entirety of the year fell by 17 % (-15 % organically) due to the lack of major projects involving radiant ceiling panels. Overall, the result for China in 2018 was growth of 10 % (+13 % organically). In North America, sales fell just slightly below the previous year’s level with a decline of 1%. However, the region achieved organic growth of 3%. Revenues in the radiator business area demonstrated a positive trend in the second half of the year. Ventilation sales continued to decline, and – as in the previous year – only accounted for around one fifth of sales in North America.

Further improvements in the operating result

The operating result (EBIT) increased by a considerable 32 % to EUR 31.1 million (previous year: EUR 23.5 million). This resulted in an improvement in the EBIT margin, which reached 5.2 % (compared to 4.0 % in the previous year).

The business also saw the impact of the Step-up programme, whose measures were adopted in the fourth quarter of 2017. The programme focuses on five principal objectives: reducing procurement costs, increasing our reliability of supply, optimising our pricing structure, turning around unprofitable businesses and product segments, and implementing general Group-wide measures that aim to boost efficiency and reduce costs. Significant progress was made in every single one of these areas.

In the Europe segment, the EBIT figure managed to reach EUR 28.8 million in the year under review (compared to EUR 21.1 million in the previous year), as a result of growth in the field of ventilation and the effects of the Step-up programme. 2018 also marked the point at which the Clean Air Solutions product line became profitable again. The business chose to suspend production and sales of the Zehnder Zmart polymer radiator: despite our best efforts, it was not possible to achieve the cost reductions that would have been necessary to make this a profitable product on the market. Real progress could be seen in the area of heating and cooling ceiling systems, however, where the impact of the measures that had been introduced was evident.

At EUR 2.3 million, EBIT in the China & North America segment remained at the previous year’s level (of EUR 2.4 million). China experienced welcome growth, as a result of increased sales in the ventilation business, although it was not possible to achieve the aim of turning around the unprofitable Buffalo, NY (USA) plant in 2018. Inventory, as well as property, plant and equipment amounting to approximately EUR 1.0 million were written down as part of efforts made to put this area of the business back on course, and the acquisition of part of NuClimate Air Systems, Inc. – headquartered in Syracuse, NY (USA) – in January 2018 is also set to help us realign the Buffalo plant’s fortunes.

As a result of the increases in sales and profitability, the Zehnder Group’s net profit rose by some 48 % to EUR 24.5 million (previous year: EUR 16.5 million).

 Investment level remains high

Expenditure on research and development in the year under review amounted to EUR 16.5 million (previous year: EUR 17.7 million), with the majority of investments being made in Europe. The focus of 2018 was on developing existing products and launching products on new markets; one example of the work carried out in this area was the launch of the ComfoAir E ventilation unit in Germany. This new model range has been designed specifically with project business and prefabricated buildings in mind.

With a view to expanding both its product range and its geographical territory, one of the Zehnder Group’s areas of focus is on making complementary acquisitions. In 2018, this included the takeover of ventilation company InteliVENT OÜ: based in Tallinn (Estonia), it specialises in planning, installing and selling heating, indoor climate and energy solutions. In Finland, meanwhile, the Zehnder Group acquired Porvoo-based ventilation company Enervent, whose high-quality, energy-efficient ventilation units focus on accommodating the specific climate-related needs and legal requirements found in the Nordic nations.

Investments in property, plant and equipment and intangible assets in the reporting period amounted to EUR 24.4 million (previous year: EUR 26.8 million), a figure that included investments of EUR 20.7 million (previous year: EUR 20.3 million) in Europe. Particularly worthy of note is the investment made in the new production site in Manisa (Turkey) that commenced operation on schedule in September 2018. In China, the plot of land required for building a new factory for ventilation units was purchased in the city of Pinghu (located in Zhejiang Province), around 100 km south-west of Shanghai.

 A strong balance sheet

At the end of the year, the Zehnder Group continued to have a high equity ratio of 64 % with shareholder equity of EUR 283.1 million (EUR 271.2 million, or 65 %, in the previous year). Net liquidity fell from EUR 27.5 million to EUR 21.3 million during the year under review, due in part to the acquisition activity that took place. However, cash flow from operating activities increased significantly from EUR 18.5 million to EUR 30.5 million.

 Proposed dividend within the framework of the long-term dividend policy

For the 2018 financial year, the Board of Directors is proposing to the Annual General Meeting a dividend of CHF 0.80 per registered share A. The provision of 35% reflects the Zehnder Group’s long-term dividend policy of distributing 30 to 50% of the consolidated net profit.


As the second half of 2018 demonstrated, the Zehnder Group is operating in a market environment in which it faces growing challenges. It is difficult to say with any certainty how trade disputes, Brexit, the Chinese property market or Switzerland’s stock of vacant residential buildings will have an impact on the business. We are continuing to devote our resources principally to attaining an EBIT margin of 8% in the medium term, and, will consistently follow up on the operational measures, that we have introduced with this in mind. We intend to achieve yet more improvement in our operating results in 2019 and will remain on the same strategic course by pursuing a growth strategy for our ventilation business and a harvest strategy in the area of radiators. We will also sharpen our focus on innovation, digitisation and new products with the aim of enabling the Zehnder Group to keep growing over the medium term.

Operating worldwide, the Zehnder Group improves quality of life by providing outstanding indoor climate solutions. It develops and manufactures its products in 15 of its own factories, 5 of which are located in China and North America. Its sales activities, spanning more than 70 countries, take place through local sales companies and representative offices.

Zehnder’s products and systems for heating and cooling, comfort indoor ventilation, and interior air purification feature outstanding energy efficiency and excellent design. With brands such as Zehnder, Runtal, Acova, Bisque, Greenwood, Paul, Core and Enervent, the Zehnder Group is a market and technology leader in its business areas.

The Zehnder Group has had its headquarters in Gränichen (Switzerland) since 1895. It employs around 3500 people worldwide and achieved sales of EUR 602 million in 2018. The company is listed on the SIX Swiss Exchange (symbol ZEHN/number 27 653 461). The unlisted registered shares B are held by the Zehnder family and persons closely associated with them.