OREANDA-NEWS. DKSH, the leading Market Expansion Services provider with a focus on Asia, for the first time increased net sales above the CHF 5 billion mark in a first half-year period, thereby continuing the net sales growth achieved in recent years despite challenging market conditions in the consumer goods-related sectors. DKSH managed to generate further strong growth particularly in the frontier markets of Vietnam, Myanmar, Laos and Cambodia. At the same time, DKSH succeeded in stemming the decline caused by political challenges in Thailand and notwithstanding continuing difficult market conditions in Hong Kong, the company recorded first signs of improvements there.

DKSH managed to significantly grow its businesses with clients active in the fields of private investments and consumption goods. The Business Units Performance Materials and Technology recorded solid growth in net sales. Restructuring measures in the luxury goods business are taking effect. Despite further market contractions, DKSH managed to improve results in this business, too. Consequently, the measures already implemented will continue undiminished. DKSH was able to gain further market shares in several important areas. At the same time, the company increased its expansion in particularly promising markets.

Dr. Joerg Wolle, CEO and President of DKSH, said: "We continued our successful work at DKSH in the first half-year. Given the challenging situation in important markets, this was anything but self-evident. In all operational areas directly under our control, we continue to progress towards our goals. We recognized at an early stage the strategic opportunities offered by the rising purchasing power in Asia and exploited them. Today, we are one of the major suppliers of advanced performance materials and a preferred solutions provider for industries like the fast-growing automotive or food processing sectors in Asia. We continue to benefit from growing prosperity and increased purchasing power in Asia and see an unchanged positive trend there.”

Wolle added: "Overall, we managed to overcome the challenges experienced in some areas. In the luxury goods business, we are making progress with the rigorous measures announced earlier. Despite the various challenges, DKSH is well underway and we are in robust health.”

Net sales increased by 2.3% to CHF 5.1 billion. Organic growth was 3.5% and 0.3%-points were derived from M&A activities. This was achieved despite exchange rate fluctuations which had a negative impact of 1.5%. Adjusted for the termination of two client contracts in Business Unit Consumer Goods in Thailand and Malaysia, that were generating insufficient profitability, net sales grew by 6.7%. These results led to market share gains for DKSH in Asia.

DKSH generated an EBIT of CHF 135.7 million and profit after tax of CHF 91.7 million. These figures were lower than in the first-half of 2015. Adjusted for the one-time contract adjustments in Business Unit Healthcare, EBIT was significantly higher compared to last year. In the first half-year, the profit after tax was in particular negatively impacted by closing-date related foreign exchange rate fluctuations. Free Cash Flow amounted to CHF 42.0 million.

In the Business Unit Consumer Goods, margins recovered. Net sales decreased by 10.1% (–7.5% at CER) to CHF 1.8 billion. As part of our portfolio optimization, DKSH decided to discontinue contracts with two clients in Thailand and Malaysia. Excluding this, net sales would have grown slightly compared to last year. Whereas demand in Thailand for consumer goods stabilized at low levels attributed to political challenges, DKSH reported improvements in Malaysia. In Hong Kong, the current political uncertainty led to a drop in demand and a decline in tourist numbers, which in turn resulted in significantly lower consumption.

Despite these difficult market conditions, DKSH increased EBIT by 5.8% (10.3% at CER) to CHF 45.4 million. The efficiency measures initiated end of 2015, in the interface between FMCG and supply chain management, led to increased profitability.

The market environment for luxury goods further deteriorated in the first-half of 2016. DKSH continued the restructuring started in 2015 and was able to improve results for this business compared to last year.