sustainabilitymatrixmontagetechnikmkc102

Economic performance

In a dynamic market environment characterized by high demand, supply chain bottlenecks and the ongoing COVID-19 pandemic, SFS was able to significantly increase net value added by 20.2% compared to 2020. The pronounced growth in the Fastening Systems and Distribution & Logistics segments resulted in product mix shifts. In some cases, this led to a change in the share of stakeholder groups. The long-term goals of a continuous increase in value added and a balanced distribution to the benefit of stakeholders remain in place, even in the current challenging conditions.

GRI 103: MANAGEMENT APPROACH 2016

GRI 103-1 Explanation of the material topic and its boundary
SFS’s daily mindset and actions are centered around economic performance and therefore on the creation of sustainable added value for all stakeholder groups. The value added is expressed in terms of its benefit to the various stakeholder groups, namely customers, suppliers, employees, investors and the government and the form it takes, whether as wages, dividends or tax payments. SFS avoids aggressive tax practices and structures and pays taxes based on value added. Since 2017, the SFS Group has reported its tax expenses per country to the Swiss Federal Tax Administration as part of its country-by-country reporting. Information on the development of material figures is provided in the financial report of the Annual Report 2021 ( “Information for shareholders,” p. 111 ff.). As a result of the acquisition of Hoffmann SE in May 2022, SFS expects the effective tax rate to increase slightly compared to the reporting year (2021: 17.8%).

GRI 103-2 The management approach and its components
Since SFS values sustainable and collaborative partnerships, having a balanced distribution of value added that benefits stakeholders is of great importance to the company.

In a dynamic market environment characterized by high demand, supply chain bottlenecks and the ongoing COVID-19 pandemic, SFS was able to take advantage of the opportunities that arose in all segments and generate strong results. These had a positive impact on the development of net value added in the period under review and resulted in growth of 20.2% over the previous year; this benefited all stakeholder groups. The shares going to individual stakeholder groups developed differently in the period under review:

  • In absolute terms, the share of value added going to employees increased by CHF 60.2 million to CHF 555.3 million compared to the same period of the previous year. The result represents a significant increase in the absolute value added paid per employee and was achieved thanks to wage increases, improved utilization of production capacities, lower solidarity contributions from employees and bonus-based participation in results. Due to the pronounced growth in the Fastening Systems and Distribution & Logistics segments, the share of value added for employees as a whole declined by –4.6 percentage points in the period under review. This development is due to the business models of the two segments, which have – due to the high proportion of trading activities – a lower personnel intensity than the Engineered Components segment.
  • Due to the good earnings situation, the healthy balance sheet structure even after the financing of the transaction with Hoffmann and the outlook for further business development, the Board of Directors proposed to the Annual General Meeting 2022 that a dividend of CHF 2.20 per share be distributed. As a result, the share of value added going to investors and shareholders was significantly higher than the 2019–2020 period. It should be noted that the dividend was reduced during the aforementioned period as a sign of solidarity with employees during the pandemic. The payout ratio amounts to 33.3% and is slightly below the target range of 35–50% of Group profit in accordance with the applicable financial policy of the SFS Group.
  • Due to a slightly higher effective tax rate of 17.8% compared to the previous year, the government’s share of value added rose to 6.7% (PY 5.0%).
  • The company’s absolute value added amounted to CHF 165.5 million, an increase of 41.1% over the previous year. Due to the trend in the share of value added going to employees, the company’s share of value added rose to 19.2% in the period under review (PY 16.3%).

The inclusion of Hoffmann will result in a change in material financial figures as well as the outlook of the SFS Group for the current fiscal year. An update of the expectations was communicated upon completion of the transaction. Despite persistently challenging conditions, SFS expects the company to remain on its positive trajectory and to continue increasing value added in the coming years thanks to its healthy, attractive project pipeline and good positioning. The stakeholder groups’ share of value added should remain largely stable.

GRI 103-3 Evaluation of the management approach
Ensuring the long-term and above-average economic development of SFS is in the interest of all stakeholder groups. Compliance with the Principles of Corporate Governance creates the necessary transparency and a balanced relationship between management and control. The Board of Directors is responsible for strategic control, while the Group Executive Board is responsible for operational management. SFS publishes a business report every six months. The consolidated financial statements for the respective financial year are verified by external auditors in accordance with Swiss GAAP FER.

GRI 201: ECONOMIC PERFORMANCE 2016

GRI 201-1 Direct economic value generated and distributed
SFS creates lasting value for its stakeholders, which include customers, suppliers, shareholders, employees and the government. While part of the economic value flows directly to the stakeholder groups, another part remains in the company in order to be able to further develop innovations and technologies or to make acquisitions and investments.

The following table provides an overview of value added over the past five years, whereby the stakeholder groups are measured as a percentage of net value added:

Development of gross value added
in CHF million
2021 2020 2019 2018 2017
Total income 1,923.5 1,724.5 1,814.7 1,756.7 1,657.9
Advance payments to suppliers 955.8 906.6 915.3 898.5 839.0
Gross value added 967.7 817.9 899.4 858.2 818.9
Development of net value added
in CHF million
2021 2020 2019 2018 2017
Gross value added
as a % of net sales
967.7
51.0%
817.9
47.9%
899.4
50.5%
858.2
49.4%
818.9
50.1%
Depreciation/
amortization

as a % of net sales
–105.4

–5.6%
–100.2

–5.9%
–95.4

–5.4%
–89.7

–5.2%
–125.8

–7.7%
Net value added
as a % of net sales
862.3
45.4%
717.7
42.0%
804.0
45.1%
768.5
44.2%
693.1
42.4%
Development and distribution of value added
as a % of net value added/in CHF million
2021 2020 2019 2018 2017
Employees
Personnel expenses
64.4
555.3
69.0
495.1
68.5%
550.4
67.6%
519.3
69.3%
480.6
Government
Current tax expense excl. deffered taxes*
Public levies
6.7%
52.7

4.8
5.0%
31.3

4.6
5.3%
37.7

4.6
6.6%
46.4

4.6
7.0%
44.2

4.3
Investors
Dividends to shareholders
Interest expenses
9.7%
82.5

1.5
9.7%
67.5

1.9
9.0%
67.5

4.8
10.3%
75.0

4.3
11.0%
71.3

4.9
Company
Retained profits
19.2%
165.5
16.3%
117.3
17.3%
139.0
15.5%
118.9
12.7%
87.8

*In accordance with GRI 201, deferred taxes are not factored into payments to governments.

Further indicators of value creation and distribution in accordance with the GRI requirements can also be found in the Financial Report of the Annual Report 2021.