Letter to the Shareholders
“Despite the uncertain environment caused by the pandemic, Siegfried took a significant step in implementing its corporate strategy EVOLVE in the year under review with the acquisition of two large drug products sites from Novartis in Barcelona.”
Dr. Andreas Casutt
Chairman of the Board of Directors
Dr. Wolfgang Wienand
Chief Executive Officer
The Siegfried Group achieved a good operating result in a demanding environment characterized by the coronavirus pandemic, and it proved capable of mastering exceptional challenges. In addition, significant progress was made within the framework of our EVOLVE strategy, which takes the company into a new dimension and will have a positive impact on the business results already in the current year.
Sales in Swiss francs increased by 1.4 percent to 845.1 million (2019: 833.5 million Swiss francs). In local currencies, growth even amounted to 4.5 percent. Core EBITDA grew faster than sales to 149.4 million Swiss francs (2019: 140.7 million), an increase of 6.2 percent, corresponding to a noticeable growth of the core EBITDA margin to 17.7 percent (2019: 16.9 percent). Core net profit amounted to 72.5 million Swiss francs (2019: 65.7 million), a plus of 10.4 percent.
Operating cash flow for 2020 grew to 114.8 million Swiss francs, an increase of nearly 75 percent compared to the previous year, due to higher sales, higher profitability and the favorable development of net working capital. Investments in tangible and intangible fixed assets of 69.1 million Swiss francs are reported slightly above those of the previous year. Free cash flow amounted to 45.7 million Swiss francs.
In view of the solid business development and the very good outlook, the Board of Directors proposes to the Annual General Meeting to increase the distribution to the shareholders by 20 cents to 3.00 Swiss francs. This will be made tax-free by reducing the nominal value as part of a capital reduction.
Both the Drug Substances business – the larger of the two segments – and sales of finished dosage forms (Drug Products) increased. Sales in Drug Substances grew by 1.4 percent to 647.8 million Swiss francs, while business in exclusive synthesis as well as in portfolio products developed positively. In Drug Products, growth amounted to 1.2 percent, corresponding to sales of 197.2 million Swiss francs. Siegfried’s business portfolio is well diversified with regard to individual customers and products. Siegfried’s business portfolio is very well diversified in terms of the importance of individual customers and products: The largest customer contributes only 6 percent and the largest product 5 percent of sales, and the 10 largest customers together account for only 37% of sales.
The coronavirus pandemic placed heavy demands in various areas on Siegfried and its employees. Thanks to early information, also from our own site in Nantong (China), a crisis unit was put together as early as January 2020 and an updated pandemic plan set in motion which had originally been developed for the SARS pandemic in 2002. The focus here was on our duty of care for our employees and their safety in the workplace. Also of paramount importance and a yardstick for our actions was our commitment, as one of the significant worldwide manufacturers of often vital drugs and a company classified as systemically important, to maintain our production activities and supply capability with all our strength.