Annual Report 2005 - Walter Meier

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WMH Heating WMH Heating: Very strong again WMH Heating again looks back on an extremely successful business year. Its shares of the Swiss heating market were strengthened. Sales and income increased again from an already high level. As a provider of solutions and systems in the heating sector, WMH Heating achieved very good results in the new installations, refurbishment, and maintenance businesses. Factors contributing to this success were convincing products and services as well as favorable market conditions, especially the booming construction of residential buildings. In addition, climbing oil prices and more stringent air pollution regulations made property owners and system operators increasingly aware of the need for efficient heating systems. The replacement business was also good. It was stimulated further by the severe floods in Switzerland. Offering efficient solutions Vescal continued its differentiation strategy in the reporting year. The focus was on innovative strength and energy efficiency as well as product and service quality. The three segments of heat generation, heat distribution, and components were systematically expanded. With its new slogan “Heat for Life”, Oertli Service underscored its competence as a solution provider and its even stronger alignment to a wide range of customer requirements. Although its growth potential as a pure service organization is limited, the company again optimized the efficiency of its services. To reduce its dependence on oil burner servicing, its spectrum of services was expanded. Since Oertli Induflame no longer formed part of the core strategy, it was sold to one of its main customers in June 2005. Improved market position Vescal and Oertli were still operating in saturated markets and challenged by intensive predatory competition. Both companies nevertheless asserted themselves excellently and strengthened their positions. In the underfloor heating segment, Vescal defended its leading position with its own well-known Metalplast brand. In individual niches, it succeeded in gaining market shares with new products or optimized services. Expanded product portfolio Vescal expanded its product portfolio with Oertli brand pellet and wood-piece boilers. It also launched new gas-fired boilers from Remeha/De Dietrich. With air heaters and floor convectors from Kampmann, and cooling ceilings from Lindner, Vescal penetrated new market niches. After a severe setback, thermoactive building systems under the Vescal tabs brand experienced strong demand again. Burner technician Christian Menzi regulates one of the four Oertli burners at Alpamare. Oertli Service successfully sold service contracts for gas burners, heat pumps, pellet boilers, and hot water boilers and thereby complemented the core business that focuses on oil burners. With its new Comfort service, Oertli Service accepts total responsibility for a heating system and, should faults occur, coordinates with other partner companies like installation contractors, electricians, chimney sweeps, and heating oil suppliers. More efficiently organized Vescal improved its business processes and costs by expanding its headquarters building in Vevey and integrating storage space. Optimized follow-up of offers also contributed to increased efficiency. In addition, a project was launched for more systematic management of the engineering and architectural consultants. In view of the breadth and depth of the offerings, and the large number of new products and services, this consulting function is of great importance. Oertli Service expanded its information and reporting system with further important functions. These allow both service technicians and service heads to schedule dates online, which increases productivity even more. The standby service was also optimized.
Environmental awareness WMH Heating takes care to promote ecological principles. Whenever possible, goods are transported by rail, and companyinternal transfer of material is reduced to the absolute minimum. All drivers of company owned vehicles are given training in environmentally aware and safe driving at special courses. Ecobalances are drawn up annually for every company. Vescal, for instance, particularly promotes eco-efficient products like heat pumps, solar systems, and combined heating/power generation plants. Managing risks The business activities of WMH Heating are directed toward sustainable generation of cash flow. Risks are minimized by constantly analyzing the market’s behavior, as well as the quality of the services and products, and adapting them to changed conditions. Suppliers are also carefully selected and customers evaluated for creditworthiness. Outstanding financial results In the reporting year, WMH Heating clearly exceeded its targets and achieved an outstanding result at an already high level. At the end of the 2005 business year, WMH Heating reported net sales of CHF 168.1 million, representing an increase of 3.2% over 2004. EBITA at CHF 17.3 million was 27.5% above the previous year. The growth potential for WMH Heating is limited, since its market exploitation is focused on Switzerland where the markets are saturated. However, with new products and services, a sustainable moderate increase in sales should nevertheless be possible. 18 19 WMH Annual Report 2005 Key figures CHF mil. 2002 2003 2004 2005 Net sales 156.8 158.0 162.9 168.1 EBITA 11.5 12.2 13.5 17.3 EBITA margin (%) 7.3 7.7 8.3 10.3 ROA (%) *Incl. goodwill 19.5 23.1 24.6* 32.9* Number of employees 2002 2003 2004 2005 Average 528 527 519 496 Change Y-on-Y (%) 0.6 -0.2 -1.6 -4.4 Net sales 2002– 2005 CHF mil. 02 03 04 05 0 Net sales by geographical segment CHF mil. 25 50 75 100 125 150 175 Switzerland 165.6 (98.5%) Other Europe 2.5 (1.5%) 200
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