Performance

Belimo with Strong Results in a Demanding Environment

2022 was a very successful year for Belimo, with sales growth ahead of the five-year average and stable operational results. Supply chain excellence was the most critical factor in mastering the year.

Belimo posted excellent results in 2022 in a highly volatile economic environment. The Company withstood multiple tests of its business model, notably supply chain disruptions, inflation, and the war in Ukraine.

Maintaining supply availability and superior lead times were the main success factors in a year with global supply chain shortages. The proximity to our customers and suppliers, along with increased stock levels, were vital to maintaining product availability throughout the year. The Group’s robust supply chain performance enabled full-year sales growth rates to exceed the Company‘s five-year sales growth average (compound annual growth rate 2016–2021) of 8.8% in local currencies and gain additional market share. Organic net sales increased by 11.9% in local currencies. In Swiss francs, net sales grew by 10.7% to CHF 846.9 million.

In 2022, the Company had to deal with rising inflation. Material, energy, and freight expenses increased more than expected. Higher input costs were partially compensated by price adjustments. Price increases had a positive effect of 6.1% and higher sales volumes of 5.3% on net sales growth.

While business performance was strong across the regions, the Americas market region stood out decisively with a net sales growth of 21.3% in local currencies. Also, the EMEA sales performance of 4.7% in local currencies is remarkable when considering the exit from the Russian market. Since March, shipments to Russia and Belarus are suspended, which had an impact on net sales of about 6% at the market region level.

Net Sales by Market Regions

The damper actuators business was most impacted by the exit from the Russian business, as it was a key market for advanced fire and smoke damper actuator solutions. Considering the high market shares globally, the growth rate in local currencies of 6.6% represents a solid result. Meanwhile, net sales of control valves were up 16.5% and accelerated well ahead of damper actuators, reflective of the Company’s success in driving its global market share in this application. Sensors and meters gained further traction with a growth of 38.5% in local currencies.

Net Sales by Applications

Earnings before interest and taxes (EBIT) rose to CHF 152.4 million (2021: CHF 145.4 million). The EBIT margin amounted to 18.0% (2021: 19.0%). Sustained disruption in global supply chains led to higher material and freight costs, negatively impacting the operating profit margin. Belimo achieved a net income of CHF 122.7 million (2021: CHF 115.5 million). Earnings per share rose to CHF 9.99 (2021: CHF 9.41).

Operating cash flow amounted to CHF 112.9 million (2021: CHF 153.0 million). Higher safety stocks and longer transport times led to an increase in net working capital and affected operating cash flow negatively. Free cash flow increased to CHF 91.2 million (2021: CHF 45.5 million). The net divestment of term deposits of CHF 35.0 million (2021: investment of CHF 60.0 million) partially compensated the increase in net working capital and higher capital expenditures. 

EMEA

Belimo registered net sales of CHF 367.9 million in the EMEA market region. The Company largely compensated for the top-line impact from exiting the Russian business of about 6% at the market region level. EMEA increased sales in local currencies by 4.7% compared to the previous year (-2.0% in Swiss francs). In particular, the contracting business has developed positively, and one vertical gaining across European countries was data centers.

The most significant countries performed well. In Germany, Belimo was able to materialize on positive market trends. The post-COVID-19 building investment recovery, CO₂-emission reduction programs of companies, and higher energy costs accelerated the renewal of inefficient existing HVAC systems. In particular, the replacement of fossil-fueled primary equipment by heat pumps and the retrofit of hydronic control systems led to strong growth in the business line control valves.

Italy showed exceptional sales performance thanks to a strong demand for data center cooling applications. In France, supply chain bottlenecks on construction sites and a highly inflationary environment accelerated the cost of new construction and continued to impact contracting projects.

Americas

Among the market regions, sales growth was most pronounced in the Americas market region. Belimo registered net sales of CHF 368.3 million, corresponding to an outstanding 21.3% growth in local currencies (26.4% in Swiss francs). A critical factor for this exceptional result was a healthy non-residential construction activity throughout the market region, benefiting both new construction and retrofit.

Tremendous top-line growth in the US market that accelerated in the year’s second half was possible mainly because of superior lead times of the Group, which resulted in market share gains. A key growth vertical was data centers, boosting sales in contracting and the OEM channel.

Belimo also experienced double-digit sales growth in both the Canadian and Latin American markets thanks to a combination of stable market demand, superior product availability, and shorter lead times.

Asia Pacific

In the Asia Pacific market region, Belimo recorded CHF 110.7 million in sales, corresponding to an increase of 11.4% in local currencies (12.5% in Swiss francs). The business line damper actuators grew ahead of the business line control valves, as variable air volume (VAV) control solutions saw an acceleration in popularity in new buildings. The vertical segment of data centers performed well throughout the market region as the popularity of the expansion of 5G networks and cloud services further accelerated.

In China, sales growth was muted due to recurring pandemic-inflicted lockdowns that interrupted business activities throughout the year. Awarded projects had to be postponed amid access restrictions and logistics bottlenecks.

India showed strong growth along with Southeast Asia. The Indian market was performing exceptionally well after a further post-COVID-19 business normalization. The verticals data center, healthcare, pharma, infrastructure such as airports or subway stations, and technology parks registered the most robust growth performance on the subcontinent. The new building of Belimo India in Mumbai, which was completed at the beginning of 2022, provides the basis for future growth in the rapidly expanding Indian market (find out more here).

Outlook

For 2023, Belimo is expecting a sales revenue growth rate in local currencies around its five-year average. Energy efficiency and indoor air quality represent accelerating tailwinds that support the above-average growth of the building automation market. Capacity constraints due to a lack of qualified labor is hampering the strong underlying growth drivers. The uncertainty regarding the direction of the global economy and higher interest rates might have a negative impact on investment decisions in the non-residential building market. Furthermore, geopolitical implications and persisting supply chain challenges may further impact 2023.

Looking at the market regions, Euroconstruct predicts a slowdown of total non-residential construction output for EMEA. Nevertheless, Belimo is cautiously optimistic about the market region. While higher interest rates and inflated costs for construction are anticipated to cool down the pipeline for new construction, Belimo expects freed-up capacities used in retrofit projects will compensate. For the Americas market region, Belimo anticipates continued solid demand for the first half of 2023 thanks to a strong project pipeline of its customers. In the Asia Pacific market region, the end of strict COVID-19 measures in China might accelerate many non-residential projects and increase demand while the overall challenging economic environment is likely leading to delayed or canceled projects. In India, we expect a continuation of the growth phase because of positive GDP forecasts and the dedicated growth initiative. For the rest of the market region the project pipelines appear solid.

Belimo continues to pursue its long-term growth strategy, allocating significant resources for advancing solution leadership, operational excellence, and sales network expansion. This might result in higher expenditures. Furthermore, adverse foreign exchange movements might negatively impact margins. 

To ensure a robust supply chain aligned with the growth strategy, Belimo is accelerating capacity expansion in logistics and customization in subsequent years, leading to higher investments in all market regions and consequently impacting cash flow.

Financial Key Performance Indicators

Income Statement

Cash Flow

Balance Sheet

Balance Sheet as at December 31, 2022

Belimo was successful in maintaining a strong balance sheet in 2022. Total shareholders’ equity amounted to CHF 521.8 million (2021: CHF 511.3 million) or 77.6% of total assets (2021: 79.6%).

The decrease in cash and cash equivalents to CHF 86.8 million (2021: CHF 109.4 million) was mainly attributable to the increase in net working capital as well as the higher dividend distribution to the shareholders of BELIMO Holding AG in 2022.

The Board of Directors of BELIMO Holding AG will propose a dividend of CHF 8.50 (2021: CHF 8.50) at the Annual General Meeting 2023.