Schweiter Technologies : Vollständiger Geschäftsbericht 2023 - EN

ANNUAL REPORT 2023

Schweiter Technologies is a traditional Swiss group which has performed very successfully in the last few years. We systematically pursue our clearly formulated corporate strategy, focusing on the development of business units in the area of composite materials.

Our globally active division 3A Composites enjoys prime positioning as market leader in its target markets. In order to further strengthen the solid market position, we are seeking to grow not only organically but also through targeted acquisitions. In addi- tion, we aim to continue increasing profitability.

We take our responsibility toward our stakeholder groups seriously. Customer centricity and innovation - key long-term value drivers

- are core priorities for our businesses.

ABOUT SCHWEITER TECHNOLOGIES

FINANCIAL OVERVIEW

FINANCIAL OVERVIEW

INCOME STATEMENT (IN CHF M)

Net sales

EBITDA

EBIT

Net income

BALANCE SHEET (IN CHF M)

Total assets

Net operating assets

Shareholders' equity

Net liquidity

STATEMENT OF CASH FLOW (IN CHF M)

Cash flow from operating activities

Cash flow from investing activities

Free cash flow

KEY FIGURES (IN %)

Return on sales

RONOA

Equity ratio

EMPLOYEES AS OF 31 DECEMBER (FTE)

Total employees

RATIOS PER SHARE (IN CHF)

Earnings per registered share

Equity

Payout1

STOCK MARKET CAPITALIZATION AS OF 31 DECEMBER (IN CHF M)

Stock market capitalization

1 2023: dividend proposal by the Board of Directors

2023

1 069.6

89.7

50.3

27.6

1 042.7

615.3

706.4

23.8

78.3

-42.4

35.9

8.4

8.2

67.8

4 598

19.3

493

15.0

743.1

2022

1. 197.7
   85.5
   42.5
   29.1

1. 084.3
   647.3
   752.8
   42.4

48.2

-54.0

-5.8

7.1

6.6

69.4

4 255

20.3

526

20.0

1 053.8

ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES KEY FIGURES

KEY FIGURES

NET SALES

in CHF m

1 070

-11%

EBITDA

in CHF m

	176	152
123
			86	90
2019	2020	2021	2022	2023

SHAREHOLDERS' EQUITY

in CHF m

706

EQUITY RATIO

68%

NET SALES

in CHF m

1 180	160	1 227	1 198
	1
				1 070
2019	2020	2021	2022	2023

NET INCOME

in CHF m

28

CASH FLOW FROM OPERATING ACTIVITY

in CHF m

	158
104		83
			78
			48
2019	2020	2021	2022	2023

NET LIQUIDITY

24in CHF m

ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

TABLE OF CONTENTS

ABOUT SCHWEITER
Letter to shareholders	2
Business performance	4
Management and risk assessment	6
Portfolio strategy	7
Operating segment 3A Composites	8
SUSTAINABILITY	23
CORPORATE GOVERNANCE	61
COMPENSATION REPORT	85
Report of the statutory auditor	101
CONSOLIDATED FINANCIAL STATEMENTS	105
Report of the statutory auditor	150
ANNUAL FINANCIAL STATEMENTS OF SCHWEITER TECHNOLOGIES AG	155
Report of the statutory auditor	162
INFORMATION FOR INVESTORS	165
Information for investors	165
Five-year review	166
Dates and contacts	167
GLOSSARY	168

1 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES

LETTER TO SHAREHOLDERS

LETTER TO SHAREHOLDERS

Dear Shareholders

The 2023 business year was characterized by challenging external conditions. Geopolitical uncertainties and conflicts increased, while central banks raised interest rates in an effort to tackle inflation. Energy prices remained high in Europe and the cost of raw materials was very volatile. This put a damper on the propensitiv to invest and consumer sentiment worldwide.

In this challenging market environment, Schweiter Technologies was able to increase EBITDA to CHF 90 million (8.4%) and EBIT to CHF 50 million (4.7%), despite a fall in net sales of -11% to CHF 1.1 billion. These figures represent a successful turnaround to increased profitability after the weak second half of 2022, thanks in particular to systematic sales management measures and increased efficiencies helping to improve margins. The foundations were thus laid for a return to sustainable double-digit EBITDA margins in the medium term.

Performance in the Core Materials business was volatile with a low level of growth achieved overall. Subdued order volumes in the non-wind sector and especially for ongoing wind farm projects, combined with lower sales prices in China, put pressure on organic growth However, the Group made good use of 2023 to prepare for the next growth cycle in the wind energy sector. Additional PET production capacity was installed in Po- land and the balsa production sites in Ecuador were further consolidated. At the same time, Kitting activity was strengthened by the full acquisition of JMB Wind Engineering and the extension of the value chain to the end customer. Activities in the non-wind business were subdued.

In Europe, the Display business area felt the effects of subdued consumer sentiment, especially in the shop fitting business. Volumes in North America returned to normal lev- els. Measures to improve sales and efficiencies in Europe and North America brought an increase in margins. The business saw healthy growth in sustainable, innovative prod- ucts, to the benefit of DISPA® and our new recycled products such as CRYLON®re.

Performance in the Architecture business area followed a varied pattern globally. North America achieved stable volumes with strong margins. Asia was able to return to growth after Covid, with potential still evident for our internationally strongly estabished aluminum panels brand ALUCOBOND®. The Group was also strengthened by the acquisition of an innovative manufacturer of multicolored façade solutions in China. In Europe, the business suffered from low demand in the construction industry owing to high interest rates and greater competition.

The Transport and Industry business area was impacted by the economic downturn and recorded lower revenues. Certain business activities such the lightweight product solutions for industrial applications, however, continued to benefit from structural growth.

2 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES

LETTER TO SHAREHOLDERS

Schweiter Technologies reports fully on sustainability in compliance with the standards of the Global Reporting Initiative (GRI). Many aspects of the Group's business activities contribute to the achievement of a sustainable future. The lightweight construction of its products helps customers to reduce their use of energy and materials, thereby also cutting CO2 emissions. The Group takes its social responsibility seriously, not just with regard to employees and local communities but also toward partners in the supply chain. Good governance and fair business practices are an essential basis for all these efforts. In 2023, the Group emphasized its focus on sustainability issues by establishing a Sustainability Board. New sustainable product solutions were launched in particular in the Display and Architecture business areas and requirements relating to human rights were reviewed and confirmed. With its own plantations, Schweiter has a unique carbon sink.

The Board of Directors proposes a dividend of CHF 15 per registered share for the year under review. Schweiter Technologies has a solid balance sheet with an equity ratio of 68% and will continue to invest systematically in innovation and any acquisition opportunities that arise, which will have a positive impact on profitable growth.

The Core Materials business area expects sales at the beginning of the year to be lower due to pricing pressure and the delay to the next cycle in the wind energy sector. Performance in the Display and Architecture business areas in Europe will continue to be affected by the subdued market and consumer sentiment. These declines in volume are not expected to be offset in full by the other business areas, innovation and new markets. In 2024, the Group will continue to place a clear focus on efficiency increases to furhter lift relative and absolute margins and on cash flow generation. The "Accelerate" performance -program addresses these requirements.

We are convinced that Schweiter Technologies is well positioned to benefit from an economic upturn. We have invested in additional production capacity and modernized key facilities. We will also benefit from structural growth in the wind energy market, in lightweight applications, and durable display product solutions thanks to our strong brands and streamlined sales structures.

Sincere thanks go to all our employees, whose tireless commitment and great dedication makes them the keystones of our company's success. We are in a strong position and together we will continue to take advantage of growth opportunities as they arise and further increase profitability through concerted action.

The Board of Directors wishes all employees every success in this endeavor.

Dr. Heinz O. Baumgartner	Roman Sonderegger
Chairman of the Board of Directors	Group CEO

3 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES

BUSINESS PERFORMANCE

BUSINESS PERFORMANCE

Despite economic challenges including a changing interest rate environment and high prices for materials and energy, Schweiter Technologies emerged from the disappointing second half of 2022 in a strengthened position during the year under review. The turnaround in the first half of 2023 was successful and the solid operational half-yearly EBIT result more than doubled. This was achieved particularly through agility, creativity and, innovation in all areas of company operations and the underlying understanding that the focus of activity must at all times be on the customer.

Net sales fell by 7% to CHF 1 069.6 million after currency adjustments (previous year: CHF 1 197.7 million). EBITDA rose by 5% to CHF 89.7 million (previous year: CHF 85.5 million) and EBIT by 18% to CHF 50.3 million (previous year: CHF 42.5 million), while net income fell to CHF 27.6 million (previous year: CHF 29.1 million). Operating cash flow at CHF 78.3 million showed a significant increase (previous year: CHF 48.2 million).

Net liquidity came to CHF 23.8 million at year- end and the equity ratio was 68%. At the Annual General Meeting on 10 April 2024, the Board of Directors will propose paying a dividend of CHF 15 per registered share.

At year-end, the headcount stood at 4 598 (previous year: 4 255), including 1 275 employees in balsa plantations and sawmills in Ecuador and Papua New Guinea and some 458 at JMB Wind Engineering, a recent acquisition.

Sustainable profitable growth in all areas of business will be possible thanks to systematic improvements made to processes and an even stronger focus placed on the customer, among other things, through adjustments to the organizational structure, with three agile and focused business areas covering the customer segments in Europe. In addition, the Group continued to invest in research and development, forward-looking production capacities, energy efficiency, and the skills and competences of employees around the world in order to understand the future needs of customers and continually refine the current prod-

uct portfolio. The transition to an even more sustainable offering was given further impetus with the launch of a number of recycled products. This served to develop existing market positions and open up new markets.

In addition to the clear focus on innovation that serves to drive organic growth, Schweiter Technologies is making targeted acquisitions to ensure sustained growth in its various business areas. Two transactions were completed during the reporting year. First, the acquisition of JMB Wind Engineering was completed at the end of May 2023 in order to expand the business with core materials, particularly in the wind energy and marine engineering sectors, and increase added value. Second, a contract to acquire a 60% stake in Jiangsu ZNL Coating New Materials, China, was signed in December 2023 to strengthen the Architecture business.

4 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES BUSINESS PERFORMANCE

NET SALES 2023 BY SALES MARKETS (in %)

NET SALES 2023 BY MARKET SEGMENTS (in %)

12 2

12

1

2858

Europe			Asia
America			Other

2045

	22
Display			Transport & Industry
Core Materials			Other
Architecture

• Light installation, Spira Culture Center, Jönköping, Sweden,
  PERSPEX®

5 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES

ABOUT SCHWEITER TECHNOLOGIES

MANAGEMENT AND RISK ASSESSMENT

MANAGEMENT AND RISK ASSESSMENT

MANAGEMENT SCHWEITER TECHNOLOGIES

Roman Sonderegger

Dr. Urs Scheidegger

Chief Executive Officer Group

Chief Financial Officer Group

RISK ASSESSMENT

The risk assessment and risk management within the Group are conducted on several levels and reflect the decentralized structures of Schweiter Technologies.

The individual Group companies are responsible for determining, evaluating, and managing local risks. A systematic identification of higher- ranking risks that could have a significant impact on the Group and its business activities is carried out at Group level. The risks identified are classified according to the criteria of probability of occurrence and potential impact. Where necessary, individual risks are analyzed in greater depth and measures are taken to minimize these risks.

The Board of Directors discusses the higher- ranking risks to the Schweiter Technologies Group at least once a year. The last risk assessment by the Board of Directors was performed in December 2023.

6 ANNUAL REPORT 2023 SCHWEITER TECHNOLOGIES