V-ZUG Group with stable net sales and lower results

Zug, 15 March 2023  In the 2022 financial year, the V-Zug Group increased net sales by 0.8 % to CHF 636.3 million (previous year: CHF 631.3 million). Currency-adjusted growth amounted to 1.2 %. The operating result (EBIT) was under pressure due to dramatic increases in procurement prices and lower volumes mainly as a result of supply shortages. At CHF 10.3 million, it was significantly lower than the previous year (CHF 62.7 million). In the second half of 2022, there was a gradual easing of the situation: the supply shortages became less problematic than they had been in early summer, although procurement prices remained high. V-ZUG confirms its medium-term targets of annual organic net sales growth of 3 % and an EBIT margin of 10-13 %.

Stable net sales despite adverse circumstances

Net sales for the V-ZUG Group increased slightly to CHF 636.3 million in the reporting year (previous year: CHF 631.3 million; +0.8 %, currency adjusted +1.2 %). The sales volume suffered due to the supply shortages while procurement prices increased substantially. In order to guarantee availability amidst supplier decommitments, procurement of electronic components had to resort to spot-market purchases to a large extent, which led to drastic cost increases. Other raw materials and components saw substantial price increases, too. The corresponding sales price increases were implemented gradually and with a lead time of 3-4 months so that business customers had enough time to adjust their own pricing. For V-ZUG, it is important to be a reliable partner also in todays very challenging environment.

After a record year in 2021 as a consequence of the pandemic (Sonderkonjunktur), net sales in Switzerland were down by 3 %, which was more than offset by the International business, which grew by 21.8 % (currency adjusted 24.2 %). This growth was achieved despite the ongoing supply shortages on the procurement markets. The share of International Markets accounted for 18.4 % of total net sales.

The low operating result reflects the challenges

At CHF 10.3 million, the operating result (EBIT) was significantly (i. e. 83.6 %) lower than the previous year (CHF 62.7 million). Accordingly, the EBIT margin fell to 1.6 % (previous year: 9.9 %) with net sales at a similar level to the previous year. This development is primarily due to lower sales volumes as a result of delivery delays, soaring procurement prices for almost all purchased materials and freights, as well as inefficiencies in production caused by the supply chain problems.

Cash flow from operating activities was CHF 1.0 million in the reporting year (previous year: CHF 63.5 million). Cash flow after operating and investment activities (free cash flow) was CHF -52.2 million (previous year: CHF 9.0 million). This is largely due to the lower operating result, the increased stock designed to guarantee delivery capability in the face of erratic availability, as well as the significant ongoing investment in the site transformation.

As of 31 December 2022, the balance sheet of the V-ZUG Group showed a strong equity ratio of 74.8 % (previous year: 72.9 %) and cash and cash equivalents of CHF 64.4 million (previous year: CHF 107.8 million).

A step closer to achieving our strategic goals

The transformation of V-ZUG is progressing according to plan:

• Product portfolio: All premium products are very popular with users, in particular the new products that stand out not only thanks to their technology but also their design and sustainable credentials. Product portfolio management also includes the continuous streamlining of the portfolio with the aim of meeting customer requirements while also ensuring efficient production processes.
  At V-ZUG, customer service plays an important role over the entire product life cycle.
  Product-as-a-Service is another strategic focus of V-ZUG.
• Brand strategy: Every year, V-ZUG commissions the evaluation Brand Monitor. The last survey was carried out in November 2022 in Switzerland. It showed that when potentially making purchase decisions, buyers favour VZUG by a substantial margin: 61 % of end-consumers questioned as part of a representative survey would buy appliances from VZUG (previous year: 50 %). This makes V-ZUG appliances very popular on the Swiss market.
• The internationalisation of V-ZUG is also progressing, as demonstrated by the consistently positive sales performance and the successful opening of two new V-ZUG Studios (showrooms) in London and Paris. 
• Digitalisation: The V-ZUG app was successfully launched in China in 2022, i.e. this application is now available in all important markets. The share of digital order intake has also significantly increased thanks to the introduction of new software systems with Machine Learning, which made the order process more efficient and of better quality for our customers. The partner network for the digital cooking assistant V-Kitchen was expanded in 2022, with a number of renowned partners including the Migros cooking portal.
• Site transformation: The new refrigerator factory building in Sulgen was successfully put into operation in spring 2022, and the further site transformation in Zug is clearly visible. The ground-breaking ceremony for the vertical production building Zephyr Ost took place in March 2022. This major project represents an important step in reducing the footprint of the production while simultaneously increasing its capacity. It also underlines the commitment to Switzerland as a production location.

Sustainable business conduct remains important focusing on the following topics: Products and services for a sustainable society, healthy and committed employees, environment and climate protection as well as entrepreneurship for sustainable prosperity. This topic is addressed in detail in the sustainability report, which will be published as a separate report for the last time at the end of March this year. In the future, the financial and sustainability report will be published together as one comprehensive annual report.

2023 outlook: A strong brand in a dynamic environment

The last three years have been turbulent and have had a fundamental impact on V-ZUG. Employees and organisation have learned to respond to challenges more quickly and flexibly. This year, V-ZUG will continue to focus on its customers by providing innovative and user-friendly products designed to make their day-to-day lives easier. It is precisely with this in mind that V-ZUG is pushing ahead with the strategic transformation. V-ZUG confirms its medium-term targets of annual average organic sales growth of 3 % and an EBIT margin of 10-13 %.

Waiving dividends

The dividend policy communicated as part of the stock market listing in June 2020 has not changed. The Board of Directors is proposing to the Annual General Meeting that no dividend be paid for the 2022 financial year due to the continued significant investments in the strategic transformation.

Key Figures

The previous years figures were amended in line with changes to accounting principles; see 2022 Annual Report, page 76, available at https://www.vzug.com/gb/en/financial-reports.

Further information

Adrian Ineichen 

CFO 

Tel.: +41 58 767 60 03 

Gabriele Weiher

Head of Investor Relations

Tel.: +41 58 767 60 03

This ad hoc announcement is available at https://www.vzug.com/gb/en/investor-relations-news and the 2023 Annual Report at https://www.vzug.com/gb/en/financial-reports.

About the V-ZUG Group

Bringing simplicity into your home and creativity into your kitchen.

V-ZUG is Switzerlands leading brand in household appliances and also markets its products in selected premium markets abroad. V-ZUG has been developing and manufacturing kitchen and laundry appliances in Switzerland for 110 years and offers a comprehensive service in all its markets. The SIBIRGroup AG, which focuses on the Swiss-wide provision of all-brand servicing and the retail of household appliances, is also part of the V-ZUG Group. The V-ZUG Group currently employs around 2,200 people.

V-ZUG Holding AG is listed in the Swiss Reporting Standard of SIX Swiss Exchange in Zurich and represented in the Swiss Performance Index (SPI) (securities number 54 248 374, ISIN CH0542483745, ticker symbol VZUG).

Legal notes

The expectations expressed in this ad hoc announcement/media/investor release are based on assumptions. Actual results may deviate from these assumptions. This ad hoc announcement is published in German and English. The German version is binding. V-ZUG Holding AG processes personal data in accordance with its privacy statement, which is available at https://www.vzug.com/gb/en/privacystatement.