===
Arbonia AG / Key word(s): Annual Results
Arbonia considers purchase offers for the Climate Division and publishes annual results for 2023
27-Feb-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
Arbon, 27 February 2024 - The Board of Directors has received several unsolicited expressions of interest in purchasing
the Climate (formerly HVAC) Division, prompted by comparable transactions in the market. After careful consideration
and with a view to sustainably increasing the value for shareholders, the Board decided to carry out a structured sales
process with several strategic prospective buyers. Upon conclusion of a possible transaction, the Board of Directors
intends to return a significant share of the proceeds to the shareholders, in addition to reducing debt. At the same
time, the remaining Doors Division is to be strategically developed as well as further strengthened through targeted
acquisitions.
The Arbonia Board of Directors has received several unsolicited indications of interest in purchasing the Climate
(formerly HVAC) Division and has subsequently decided to carefully review them with the involvement of investment
banks. The process and the negotiations with several strategic potential buyers are currently at an advanced stage.
The valuation of the Climate Division used for the negotiations is based on market-standard EBITDA transaction multiple
for a company operating in the heating, ventilation and air-conditioning sector.
The Board of Directors intends to provide the shareholders with a significant share of the sales proceeds of the
Climate Division upon completion (closing) of a possible transaction. When the possible transaction is completed and
the proceeds from the sale are received, expected for the second half of 2024, the Board of Directors would invite
shareholders to an Extraordinary General Meeting, which would vote on the instruments for returning funds to the
shareholders. Due to the ongoing negotiations, the Board of Directors has also decided to request the distribution of
an ordinary dividend for the financial year 2023 at such an Extraordinary General Meeting.
Upon completion of the transaction, Arbonia would completely focus on the doors business and implementing the adopted
strategy. The division continues to work towards the goal of expanding its leading position as a Central and Eastern
European supplier of wooden doors and glass solutions. Based on the largely completed, comprehensive investment
programme for increasing capacity and productivity as well as by increasing market shares in its domestic and
neighbouring target markets, the Arbonia Doors group is aiming for above-average market growth in the future. Building
on the investments made and with the aid of digital solutions, the Arbonia Doors group is positioning itself as an
innovative full-range supplier and cost leader.
The Doors Division would use the sales proceeds that remain following debt reduction and the return of funds to
shareholders to accelerate the further development of its business. Firstly, it will continue growing organically and,
secondly, make acquisitions that will help it establish a broader position both geographically and with regard to
product variety.
Without currently knowing if and when the negotiations will lead to a transaction, the relevant IFRS guidelines (IFRS
5) require the Climate Division to be recorded as a discontinued operation in the consolidated financial statement as
soon as a sale is classified as highly probable. At the same time, it is important to note that the full holding costs
are allocated to the continuing operating activities, which leads to increased expense items and negatively affects the
profitability figures.
Financial figures for continuing operations for 2023
In the financial year 2023, Arbonia was confronted with a historic slump in the construction industry in most of its
core markets, which resulted in a volume decrease of up to 30% for its products in individual markets. In addition to
inflationary increases in construction costs and sharp rises in interest rates, the construction industry was also
subjected to uncertainties in Germany, culminating in the divisive negotiations within the "traffic light" coalition
government regarding the German Buildings Energy Act (GEG).
Revenue of the continuing operations decreased in the financial year by 9.2%, from CHF 555.9 million to
CHF 504.6 million. Without currency and acquisition effects (organic), the decrease in revenue amounted to 8.2%. EBITDA
without one-time effects fell from CHF 53.3 million to CHF 34.0 million, corresponding to a decrease of 36.3%. EBITDA
with one-time effects fell by 36.2% to CHF 31.7 million (previous year: CHF 49.7 million). Accordingly, the EBITDA
margin (without one-time effects) fell from 9.6% to 6.7%; including one-time effects, the EBITDA margin amounted to
6.3%, compared with 8.9% in the previous year. The one-time effects amounted to CHF 2.2 million net on the EBITDA level
and were mainly due to personnel measures in connection with changes made to production capacity. In continuing
operations, EBIT without one-time effects fell from CHF 16.2 million to CHF -6.6 million. EBIT with one-time effects
amounted to CHF -8.9 million, after CHF 12.4 million in the previous year. The corresponding EBIT margin without
one-time effects fell from 2.9% to -1.3%; with one-time effects, it decreased from 2.2% to -1.8%. The group result from
continuing operations without one-time effects amounted to CHF -12.5 million, compared with CHF 3.2 million in the
previous year. The group result with one-time effects amounted to a total of CHF -14.2 million (previous year:
CHF 0.5 million). The group result from discontinued operations after taxes amounted to CHF -3.0 million, which led to
a group result of CHF -17.2 million in total. [1]
Compared to the previous year, the cash flow from operating activities of the group substantially increased by
CHF 126.8 million, from CHF -25.8 million to CHF 101.0 million. This was due to the CHF 34 million reduction in net
working capital, which over-compensated higher interest charges. Both divisions contributed to this positive effect.
Both divisions achieved positive cash flows from their operating activities. Decreasing investments of CHF 93 million,
which corresponds to an investment rate of 8.6% compared with 12.4% of the revenues of the continuing and discontinued
operations in the previous year, the payment of the purchase price for Interwand, the shareholding increase in KIWI and
deferred payments for acquisitions, led to a free cash flow of CHF 2.4 million. This would have been significantly
higher if there had been no semi-finished and finished products and materials totalling more than CHF 20 million in
stock at the end of the year due to the slump in demand for heat pumps.
The net debt increased to CHF 209 million at year-end, from CHF 184 million in the previous year. A free cash flow of
CHF 2.4 million was countered by the payment of the dividend (CHF 20 million), the purchase of treasury shares
(CHF 3 million) as well as an increase in leasing liabilities. At the end of the year, the leverage ratio was 2.3x
(without one-time effects) or 2.9x, taking into account all one-time effects. A mortgage financing in the amount of
CHF 15 million was set-up as announced in order to independently finance the investment property in Arbon. As of
year-end, the shareholders' equity was CHF 921.0 million, which corresponds to an extremely stable equity ratio of
62.1%.

Outlook
Arbonia expects a challenging environment in its core markets in the financial year 2024 as well. Despite improving
external factors (decreasing inflation and interest rates as well as lower material and construction costs), Arbonia
does not anticipate any increase in new residential building activity in Central Europe in 2024. Only in the renovation
sector could a recovery start in the course of the year.
Due to the wide product and country mix as well as a significant share of commercial and public construction, Arbonia
expects organic growth in the Climate Division, while the Doors Division should end up at the previous year's level.
The profitability (EBITDA) of the Climate Division is set to increase further as a result of revenue growth and
additional cost optimizations. In the current year, the Doors Division is benefiting from the consistent implementation
of the cost-savings measures it started in 2023 as well as the positive effect of strategic electricity purchasing; as
a result, profitability is expected to increase compared to the previous year.
The detailed reporting can be found in the annual report 2023 in the chapters "Letter to the Shareholders" and
"Divisions" as well as "Sustainability Report"; see www.arbonia.com/report2023.

[1] Explanations, definitions and reconciliations for the Alternative Performance Measures are found in the Annual
Report 2023 on pages 237 - 241.
Contact
Fabienne Zürcher
Head Corporate Communications & Investor Relations
T +41 71 447 45 54

fabienne.zuercher@arbonia.com  
End of Inside Information  
Language:     English 
Company:      Arbonia AG 

Amriswilerstrasse 50
9320 Arbon
Switzerland

Phone:        +41 71 447 41 41 
E-mail:       holding@arbonia.com 
Internet:     www.arbonia.com 
ISIN:         CH0110240600 
Listed:       SIX Swiss Exchange 
EQS News ID:  1845607 

End of Announcement EQS News Service
===
(MORE TO FOLLOW) Dow Jones Newswires

February 27, 2024 01:00 ET (06:00 GMT)