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The Siegfried Group looks back on a successful 2019 financial year in which it achieved its goal of profitable growth. Sales amounted to 833.5 million Swiss francs which, compared to the previous year, represents growth of 6.9 percent in local currencies, or 4.9 percent in Swiss francs.

Dear Shareholders

Core EBITDA (earnings before interest, taxes and amortization) grew by 11.3 percent to 140.7 million Swiss francs. This corresponds to a core EBITDA margin of 16.9 percent, 1 percent above the previous year’s value (2018: 15.9 percent). Core EBITDA thus again grew faster than sales. Core net profit of 65.7 million Swiss francs is reported clearly above that of the previous year (55.4 million), representing an increase of 18.5 percent.

Against the background of this good result, the Board of Directors will recommend to the Annual General Meeting a distribution to shareholders of 2.80 Swiss francs per registered share. This is done by reducing the nominal value within the framework of a capital reduction. In the previous year, 2.60 Swiss francs were distributed to shareholders from capital contribution reserves. 

Siegfried reports operating cash flow for 2019 before changes in net current assets of 135.6 million Swiss francs (2018: 134.9 million). Investments in tangible and intangible fixed assets of 61.9 million Swiss francs remained at the previous year’s level (2018: CHF 60.1 million). 
Robust organic growth of nearly 7 percent is noticeably above that of previous years. Drug substances represented about three-quarters of Siegfried’s sales and drug products one quarter. In its business with drug substances, exclusive synthesis, especially, developed very favorably. The slight decline in portfolio products, particularly drug substances used in pain treatment, reflects various special effects. In local currencies, business with drug products grew moderately compared to the previous year. 
Siegfried is an important supplier of development services and a producer of drug substances and finished dosage forms for the pharmaceutical industry (Custom Development and Manufacturing Organization, CDMO) as well as a valued strategic partner of various pharmaceutical companies. We are in a position to produce about 200 of the 1,500 drug substances approved for marketing by the FDA, the US registration authority. Thus, according to an internal estimate, Siegfried supports the annual medical treatment of about 40 million patients. With its nine sites on three continents, Siegfried today competes in the top group of the worldwide leading CDMOs and is active in a highly competitive but attractive and continuously growing market. Siegfried is determined to keep up the good position in the current financial year while creating the preconditions for continued growth in the future. 
The different measures with which we want to secure this growth are summarized in the corporate strategy “Evolve”.  Considering that the ten leading CDMO companies today have a market share of less than 20 percent and that size enables competitive advantages, we expect consolidation in the supplier market to the worldwide pharmaceutical industry to proceed by means of acquisitions and mergers. That is why, in addition to continued organic growth, the ongoing expansion of the company’s critical size remains a key strategic objective. Our aim is to actively participate in this process of consolidation. We are considering acquisitions in the production of drug products and finished dosage forms.  Our primary objective remains to provide our customers both services – chemical and pharmaceutical development and industrial-scale production – as an integrated offering from a single source, thus enabling our customers to simplify their supply chains and make them more efficient. In this regard, as in the past, we shall continue to proceed proactively and in a disciplined manner. We will ensure that potential targets represent a good fit for Siegfried in terms of culture, business, technology and acquisition price and will in a timely manner contribute toward a rise of our enterprise value. 
In the 2019, Siegfried attached great importance to effective networking among its production sites. Consequently, management has initiated numerous internal projects, which will allow us to increasingly act as a global team across all of our sites. This also applies to the group-wide introduction of software-based management processes in the areas of quality management and production, which will continue in 2020 and beyond. At the same time, in the year under review, more production transfers were implemented between sites than ever before in the history of the company. Our aim is to ensure that individual products are produced at that site, which is best suited while freeing up capacity for new business. At the same time, the qualification of two sites increases both reliability of supply and flexibility for important and large customer products.
Expansion of our technological capabilities represents a further focus in addition to strengthening our network concept. In the year under review, Siegfried Group implemented investments at several sites that will benefit research & development and connected production operations. At our headquarters in Zofingen, we initiated the construction of a multi-purpose train in Building 425 for a specialized chemical technology, which will be completed and available in 2020. In Hameln, Siegfried worked on increasing capacity and capabilities required in sterile filling of biologically produced drug substances and took into operation new development laboratories in July. In 
Evionnaz, a new micronization plant for pharmaceutical drug substances is currently under construction and will be put into operation in 2020. 
As we can successfully operate our high-quality and competitive plants with a strong team, we inaugurated the “Siegfried Academy” in the year under review. The Academy pools and strengthens our investment in our employees’ capabilities. In addition to promoting scientific and technological Excellence, which is one of our five corporate values, the Academy’s aim is to support Siegfried Group’s junior and senior managers in their development by means of special programs concerning the company’s strategic development and its management tasks. 
All of these investments aim at strengthening the competitiveness of our global teams as well as of our sites and facilities, and they provide a basis on which our targeted long-term growth can be mastered. These efforts will continue in the current year and beyond. 
Never before in the history of the company have so many inspections by regulatory authorities been carried out as in the year under review. Consequently, another corporate value – Quality – was put to the test more often than ever before. The FDA, the US American regulatory authority, paid Siegfried a visit six times. The results were positive, and they confirm that Siegfried’s network of sites meets the highest quality standards. In this connection, the US-FDA inspection in Nantong – the first ever at the site – was particularly positive. It concluded with the rating of “no action indicated”. 
As a partner of the worldwide pharmaceutical industry, Siegfried attaches great emphasis not only on quality, but also on sustainability. In addition to quality, Sustainability is one of our five central corporate values. For several years, we reported on the basis of the standards set out by the Global Reporting Initiative (GRI). The current annual report, in addition, embraces the standards of the Sustainable Development Goals (SDG) of the United Nations. The aim is not only to strengthen Siegfried’s reputation, but also to combine the varied measures and make them available for internal and external use. A workgroup performed a materiality analysis and defined the nine most significant issues concerning sustainability, which include product safety, environmental protection, fair working conditions including health and occupational safety, avoidance of corruption and anti-competitive behavior, political representation of interests and involvement of the local population at the various sites. Both the Executive Committee and the Board of Directors regularly address issues concerning sustainability, especially the considerate dealing with natural resources, and our corporate social responsibility. The separate Sustainability Report, which is available online, reflects Siegfried’s high awareness for matters concerning sustainability and shows that the company has the necessary tools to meet the demands made on sustainability in its everyday work. We consider all of these measures and the connected reporting to be an active contribution by our company toward the ongoing discussion concerning the responsibility shown by internationally active companies. 
Dr. Wolfgang Wienand started in his new position as Chief Executive Officer on 1 January 2019. Dr. Jürgen Roos succeeded Wolfgang Wienand as new Chief Scientific Officer and Daniel Nieper as new Chief Strategy Officer. Following many years as head of the Legal Department, Dr. Luca Dalla Torre was appointed General Counsel, and he will remain Secretary of the Board of Directors. The management change at the top of the company was successful; the positive annual result 2019 not only confirms the strategic but also the personnel orientation of the Siegfried Group.  
On the occasion of the Annual General Meeting of Shareholders in April 2020, the Board of Directors will propose Isabelle Welton (1963) for election as an additional Board member. The entrepreneur looks back on a successful career in globally active corporations in the financial services and IT industries. Today, she runs a consulting company with a focus on corporate culture and change processes. She serves on the boards of NZZ Media Group, Avobis Group, Swisscontact, SOS Children’s Villages Switzerland, and Lucerne Festival. Isabelle Welton is a Swiss national. As an entrepreneur with extensive management experience she will strengthen our Board of Directors as she is well versed in important areas that are of great significance to Siegfried at the present and in the future. 
Dr. Andreas Casutt (Chairman), Ulla Schmidt, Colin Bond, Prof. Dr. Wolfram Carius, Reto Garzetti and Dr. Martin Schmid stand for reelection. Following the successful transfer of his responsibilities as CEO to his successor, Dr. Wolfgang Wienand, Dr. Rudolf Hanko will not stand for reelection. 
In the year under review, the Siegfried Group’s employees were again highly challenged and confronted with many changes. It was the only way to achieve continuing organic growth. Credit for the growth must be given to our dedicated and loyal workforce. We would like to take this opportunity to thank the Executive Committee and all employees for the great effort accomplished at all of the sites worldwide. 
Despite uncertainty in the macro-environment caused by the spread of the coronavirus the Siegfried Group expects sales for the 2020 financial year to increase in the low-single digit percentage range in local currencies and the operating margin (core EBITDA) to further improve. Medium-term expectations are confirmed unchanged: growth in line with the market, with the ambition to exceed it (in local currencies). This is to be implemented by means of robust organic growth and by acquiring other companies, sites and business. 
In closing, we would like to express our gratefulness to you, dear shareholders, for your support and loyalty to Siegfried. We shall do everything in our power to ensure the company continues on its path of successful development in the current year and beyond and reports continued growth.

Highlights of the reporting year

Key figures

Net sales
million Swiss francs
Change over previous year:
+4.9% (+6.9% in LC)
million Swiss francs
Change over previos year:
+11.3 %
million Swiss francs
Change over previous year: