Arbonia : with marked increase in revenue and profitability compared to previous year

Ad hoc release in accordance with Art. 53 KR

Press release

Arbonia with marked increase in revenue and profitability compared to previous year

Half-year results 2021 (continuing operations, reported)

• Revenue growth of 19.5% (organic growth of 16.5%)
• EBITDA: +49% from CHF 45.3 million to CHF 67.6 million (EBITDA margin: 11.5%)
• EBIT: +134.7% from CHF 14.9 million to CHF 34.9 million (EBIT margin: 5.9%)
• Group result after tax: +299.7% from CHF 5.9 million to CHF 23.6 million.
• Increase of the vertical value-added depth through the acquisition of Glasverarbeitungs- Gesellschaft Deggendorf mbH (GVG), a subsidiary of the SAINT-GOBAIN Group. The Glass Solutions Business Unit thus integrates the processing of its most important raw material, glass, into its own production processes.
• The closing of the sale of the Windows Division to the Danish DOVISTA Group, announced on 5 January 2021, is expected in the next few days. All responsible competition authorities have now given their approval.

Arbon, 24 August 2021 - Arbonia can look back on a very successful first half-year of 2021. This was driven by the continued good building construction activity due to still favourable conditions resulting from low interest rates, a housing shortage, and European-wide subsidy programmes for energy-efficient new construction and renovation. Arbonia additionally benefits from its further strengthened competitive position as a European building components supplier. The investments made in recent years in automation, digitisation, and vertical integration created the conditions for gaining market shares in Central European sales markets and for further increasing profitability, even during the COVID-19 pandemic and the following upturn.

The following key figures relate to the continuing operations (HVAC, Sanitary Equipment and Doors): Revenue increased compared to the previous year from CHF 492.5 million

(CHF 529.1 million in the first half-year of 2019) to CHF 588.6 million, corresponding to a growth in Swiss francs of 19.5% (11.2% compared to the first half-year of 2019) and organic growth of 16.5% (14.5% compared to the first half-year of 2019). EBITDA increased to CHF 67.6 million compared to CHF 45.3 million in the previous year (+49.0%) and compared to CHF 44.6 million in the first half-year of 2019 (+51.5%). This corresponds to an EBITDA margin of 11.5% (9.2% in the previous year and 8.4% in the first half-year of 2019). EBIT increased by 134.7% from

CHF 14.9 million in the previous year (and from CHF 15.6 million in the first half-year of 2019) to CHF 34.9 million in the first half-year of 2021. This represents an EBIT margin of 5.9% in the first half-year of 2021 (3.0% in the previous year and 2.9% in the first half-year of 2019). The group result after tax amounted to CHF 23.6 million compared to CHF 5.9 million in the same period last year (+299.7%).

Cash flow from operating activities including the discontinued windows operations increased by 145.8% from CHF 21.0 million in the previous year to CHF 51.6 million and free cash flow from CHF −14.4 million to CHF 6.7 million.

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Shareholders' equity increased to CHF 927.6 million (previous year CHF 839.6 million). Consequently, the equity ratio has also increased from 54.7% in the previous year to a very solid 55.8%.

Net debt as of 30 June 2021 declined by around CHF 15 million to CHF −183.5 million compared to the first half-year of 2020 (previous year CHF −198.6 million). The leverage ratio (net debt / EBITDA (LTM)) decreased to 0.97x (previous year 1.51x).

Closing Sale of the Windows Division expected in the next few days

The closing of the sale of the Windows Division to the Danish DOVISTA Group, announced on 5 January 2021, is expected in the next few days. All responsible competition authorities have now given their approval.

A significant portion of the sales proceeds was and will be used to increase profitable growth further by rapidly further developing and strengthening the two remaining divisions HVAC and Doors, both organically as well as through targeted acquisitions. Various strategic initiatives are already being considered and implemented. In addition, part of the proceeds of the sale will be used to optimise the balance sheet structure.

Development of the divisions in the first half-year of 2021

For the first half-year of 2021, the HVAC Division reports net revenue of CHF 304.9 million, which corresponds to an increase of 23.9% compared to the same reporting period of the previous year (CHF 246.1 million) and of 11.0% compared to the first half-year of 2019 (CHF 274.6 million). Growth when adjusted for currency and acquisition effects amounted to 20.9%. EBITDA increased from

CHF 21.3 million in the previous year (and from CHF 20.2 million in the first half-year of 2019) to CHF 33.6 million, which corresponds to an increase of 57.7% compared to the previous year and an EBITDA margin of 11.0% in the first half-year of 2021. EBIT developed from CHF 6.8 million in the previous year (and from CHF 6.7 million in the first half-year of 2019) to CHF 18.3 million (EBIT margin in the first half-year of 2021: 6.0%).

The first half-year of 2021 went well for the HVAC Division with its wide product range. The division also owes this to the dynamic development of the construction industry. The strong response to the division's own system solutions for heat/cold generation, energy storage, heat/cold distribution, as well as ventilation and air filtration for residential and commercial construction is having a positive effect. The demand for integrated building systems as well as for individual components is additionally accelerated by European subsidies for energy-efficient buildings.

The division has implemented price increases for the most part due to the increase in raw material costs, particularly for steel, sheet and PVC pipe, and further price increases will follow in the second half of 2021.

Although the division was able to purchase material in addition to the planned delivery volume thanks to its long-term supply contracts and thus good supplier relationships, the large order volume could not be fully processed in the short term due to a lack of material availability. The extremely high demand in the first half year of 2021 meant that the inventory, which is important for the peak season (third and fourth quarter), could not be fully built up in many productions plants.

Construction of additional heat pump capacities for the market, which has been growing strongly for years and is benefiting from climate targets and their promotion, started in the first half-year of 2021. From the beginning of 2022 onwards, the existing production capacity at the new site in Czech Republic will be continuously increased many times over.

The business development of the Sanitary Equipment Division (integrated into the Doors Division

as the Glass Solutions Business Unit as of 1 July 2021) was gratifyingly positive in the first half-yearof 2021. Revenue increased from CHF 68.5 million in the previous year (respectively from CHF 71.7 million in 2019) to CHF 77.7 million, corresponding to a growth of 13.5% (8.4% compared to the first half-yearof

2019). When adjusted for currency effects, this resulted in a revenue growth of 11.2%. At

CHF 9.5 million, EBITDA was 53.6% above the figure for the previous year (CHF 6.2 million). This

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corresponds to an EBITDA margin of 12.2% in the first half-year of 2021. In the first half-year of 2019, EBITDA amounted to CHF 6.5 million. EBIT in the first half-year of 2021 amounted to CHF 6.3 million (previous year: CHF 3.2 million, +95.6%), resulting in an EBIT margin of 8.2% in the first half-year of 2021. EBIT in the first half-year of 2019 was CHF 3.8 million.

This growth was certainly driven by the good market position and the renovation cycle of the pandemic, but also by a strong contractor services business, which can be attributed to a good supply chain that remained intact even during the pandemic.

Although the Sanitary Equipment Division is also feeling the increase in material prices, especially for aluminium and glass, the material supply is secure thanks to long-term contracts. This strengthens the division's image among customers as a reliable partner.

In the first half-year of 2021, however, the COVID-19 pandemic had a negative impact on production. It was restricted at times due to the quarantine of several employees, despite regular testing. At present, however, the production activities at the Plattling (D) and Dagmersellen (CH) plants are no longer impaired.

The Sanitary Equipment Division is working intensively on expanding its product range with the aim of becoming a full-range supplier for a wider range of customers, and on service operations, among other things, to secure a favourable market position in Eastern Europe as well, primarily in the contractor services sector and in Poland. At the same time, initiatives for an increased vertical integration were examined in the first half-year of 2021. With the acquisition of Glasverarbeitungs-Gesellschaft Deggendorf mbH (GVG) the Sanitary Equipment Division, now the Glass Solutions Business Unit of the Doors Division, is integrating the processing of its most important raw material, glass, into its own production processes. GVG is a subsidiary of the SAINT-GOBAIN Group and one of Germany's leading glass processing companies in the segments single-pane safety glass and laminated safety glass. It allows a continuous optimisation of both procurement times for glass in a very flexible manner and a significant reduction of process costs in handling. The division's dependence on external partners is also reduced. The closing of the acquisition of Glasverarbeitungs-Gesellschaft Deggendorf is expected in the third quarter of 2021.

The Doors Division, in turn, recorded a very pleasing business trend in the first half-year of 2021. Revenue developed positively and increased by 14.5% (11.5% compared to the first half-year of 2019) from CHF 178.0 million in the previous year (respectively from CHF 182.8 million in the first half-year of 2019) to CHF 203.9 million. Currency-adjusted revenue grew by 12.4%. EBITDA rose by 31.7% from CHF 23.4 million in the previous year (and from CHF 22.4 million in the first half-year of 2019) to

CHF 30.8 million (EBITDA margin of 15.1% in the first half-year of 2021). EBIT increased by 55.9% from CHF 11.2 million in the first half-year of 2020 (and from CHF 10.4 million in the first half-year of 2019) to CHF 17.5 million, corresponding to an EBIT margin of 8.6% in the first half-year of 2021.

The high order volume of all production plants of the Doors Division shows that the ongoing investment programme to increase productivity and expand the capacity of the Prüm production plant at the Weinsheim site (D) by 40% was urgently needed. The division has already invested considerably into new machinery and equipment in recent years to expand capacity at the sites in Germany at Garant and in Poland at Invado in order to create additional manufacturing capacity.

The Doors Division is also being adversely affected by material price increases, particularly for wood materials and downstream materials such as foils and adhesives. The division is striving to pass on these still rising costs by means of appropriately staggered price increases. The situation is aggravated by the fact that the usual inventory for the second half-year 2021 could not be adequately built up in recent months.

Not only is the already historically high order volume increasing daily at the two German companies Prüm and Garant, but RWD Schlatter, which specialises in functional doors, is also enjoying a good order situation in the contractor services and in the wholesale business. The Swiss company continues to invest in vertical integration by intensifying its competence in frame production and planning the expansion of a warehouse and logistics building at the Roggwil (CH) site, among other things. The latter will enable the

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company to serve the market with prefabricated doors as well. As a further measure, RWD Schlatter is establishing its new specialist partner concept for western Switzerland with a sales location in Vevey (CH).

Outlook

Arbonia looks back on an exceptionally strong first half-year of 2021 and registers continued high demand in all its business units. In the coming years, this will continue to be driven by the previously mentioned factors: a persistent low interest rate environment, a scarcity of housing also due to demographic change and single households driving demand, as well as growth in the renovation sector caused by government subsidies as part of the climate programmes and the renovation backlog of recent years.

In contrast, there are still capacity bottlenecks in skilled workers and continuing high demand for construction services. The number of orders to be processed remains at a record level. There is a strong demand for the new subsidy programmes of the countries, but applications can only be processed with longer waiting times. In Arbonia's largest home market, Germany, for example, the Federal Office for Economic Affairs and Export approved three times as many subsidies by the end of May 2021 as in the previous year. This can delay the processing of construction project approvals. The ongoing significant increase in raw material prices and lack of availability will also have a restraining effect.

In particular, the second quarter of 2020 was negatively affected by measures due to the COVID-19 pandemic, so that the second half-year of 2020 benefited from catch-up effects to a certain extent. The described catch-up effect will not occur again in the second half-year of 2021, especially as the divisions already sold off a large part of the seasonally important inventory in the first half of 2021 and the inventories for the second half-year (peak season) could not be filled to the full extent due to the shortage of materials.

Taking into account the above factors, Arbonia is raising its guidance for the full year 2021, expecting organic growth of ∼ 8% (previously 4 − 5%) and an EBITDA margin of ∼ 11.5% (previously > 11%).

Arbonia will provide an in-depth insight into the divisional strategies and their measures as well as an outlook for the coming years at the Capital Markets Day on Tuesday, 26 October 2021, in Plattling (D).

Contact

Fabienne Zürcher

Head Corporate Communications & Investor Relations T [phone] [e-mail]

This media release, the key figures for the first half-year 2021, the First Semester Report 2021 and further information on Arbonia can be found on the website www.arbonia.com.

Explanations, definitions and reconciliations of the alternative performance measures can be found in the First Semester Report 2021 on pages 23 to 26.

Arbonia is a focused building components supplier that is listed on the SIX Swiss Exchange and has its headquarters in Arbon, in the canton of Thurgau (CH). The group is active worldwide with its own distribution companies, as well as offices and partners in more than 70 countries. Its main production sites are located in Switzerland, Germany, the Czech Republic, Poland, Slovakia, Serbia, Russia, Italy, Belgium, and the Netherlands. A total of around 8 400 employees work for the Arbonia Group.

The divisions that make up Arbonia are active in the following sectors: heating, air-conditioning and ventilation technology, sanitary equipment, windows, as well as exterior and interior doors.

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