Hilti generates more sales but less profit in a difficult environment
Published: Friday, Mar 15th 2024, 15:50
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Construction equipment manufacturer Hilti felt the effects of the strong Swiss franc in 2023. Despite higher sales, the Liechtenstein-based company posted a slightly lower profit on the bottom line. However, the company remains confident in the long term.
"Overall, we are very satisfied with our results; the sales performance and return on sales were excellent given the environment," said CEO Jahangir Doongaji in an interview with the news agency AWP at the annual media conference on Friday. "It is particularly pleasing that we have grown faster than the market and all well-known competitors."
Strong franc puts the brakes on
Operating profit rose by 5.3 percent to 770 million Swiss francs, as Hilti announced on Friday. At the bottom line, however, net profit fell slightly by 0.9 percent to 560 million. Strong negative currency effects cost the company a whopping 91 million francs. Higher tax expenses also had a negative impact. "However, no operational factors are responsible for this development," assures the Hilti CEO.
The manufacturer of the famous red drilling machines had already reported a 2.7 percent increase in sales to 6.5 billion Swiss francs in January - here, too, there were massive negative currency effects that depressed sales by over 6 percent. "The Swiss franc will continue to keep us busy. The currency impact is the biggest since the Swiss franc was decoupled from the euro," says Doongaji.
Overall, growth is broadly based across regions, even if sentiment in Central Europe has deteriorated further. On the other hand, Asia is developing strongly. On the other hand, the Ukraine war and the conflict between Israel and Hamas weighed on the entire Eastern Europe/Middle East and Africa region. "We no longer export any products to Russia and are unsure how things will continue there. The trend is clearly pointing downwards," says Hilti CEO Doongaji.
A key growth driver in 2023 was the global launch of the new Nuron battery platform. The software business is also developing very well. "We are experiencing strong growth here and are now generating sales in the triple-digit million range," explained the CEO. The acquired 4PS is still mainly active in the Netherlands. Over the next few years, however, the offering is to be rolled out across Europe.
Investments and outlook
Meanwhile, Hilti continues to focus on innovation and, at 454 million Swiss francs, invested almost 4 percent more in research and development than in the previous year. The number of employees rose by 5 percent to 34,111. For Hilti CEO Doongaji, the high level of employee satisfaction is also the personal highlight of the year.
For the current 2024 financial year, Hilti is sticking to its January outlook and expects sales growth in local currencies in the mid-single-digit percentage range. The return on sales in Swiss francs is expected to be at a similar level to 2023.
However, the ongoing geopolitical tensions and fluctuations on the financial markets are likely to lead to a further appreciation of the Swiss franc and corresponding negative currency effects. Forecasts for the construction industry point to a further slowdown with negative real growth in several regions.
©Keystone/SDA
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