- Year In Review
- Growth Stories
SIG is known in Switzerland for a rich industrial heritage which began in 1853 with the production of railway carriages.
Chief Executive Officer
Over the past two centuries the group has transformed itself and today it exists as a highly specialised business focusing on aseptic carton packaging systems and solutions. Our engineering origins remain vital to our business – SIG has been designing and manufacturing packaging machinery since the early 20th century – and form the bedrock of its integrated offer to customers.
A venerable history is not enough to sustain a business and SIG owes its success to its foresight in focusing on a business area with a steady long-term growth outlook. Demand for aseptic carton packaging is supported by demographic trends and non-discretionary consumer spending. Under the ownership of Onex, the Company has significantly expanded both its geographic presence and its product offering while further increasing profitability. This has created a firm foundation for our return to SIX Swiss Exchange in September 2018. The IPO saw strong demand with a broad geographic mix of investors. We welcome our new shareholders and will do our utmost to merit the confidence they have placed in us.
The Management team at SIG has been responsible for completing the Company’s focus on aseptic carton packaging while driving a pioneering approach to sustainability. The team brings many years’ experience in the Company which has been enhanced by new members bringing valuable insights from other industries. Management is invested in the business and committed to maximising the many exciting opportunities that lie ahead.
The Board of Directors combines the knowledge and experience of the previous Advisory Board with the addition of new members who have a background in publicly listed companies both in Switzerland and abroad. Onex continues to be represented on the Board, being our largest shareholder with 53% of the share capital. The Board is committed to the highest standards of corporate governance and transparency.
In 2018, we continued our strong track record in terms of financial performance. Core revenue increased by 6.4% at constant exchange rates. Growth was driven in particular by Asia-Pacific, with strong demand across the region and benefits coming through from our recent investments there. The adjusted EBITDA margin increased to 27.5%, despite an adverse impact from currencies. We achieved this level of profitability while continuing to invest in R&D, sales and marketing, as we built up new markets and developed new solutions. Adjusted net income increased from €106 million in 2017 to €149 million. Adjusted free cash flow increased to €257 million. Thanks to our strong cash flow generation, we expect to pay an attractive dividend to shareholders. At the AGM in April 2019, we will propose a dividend of CHF 0.35 per share, and for future years plan a dividend payout ratio of 50-60% of adjusted net income.
Our products are something that people hold in their hands every day without giving it a second thought. The cartons look simple but actually they are not – they comprise multiple layers which guarantee 12 months’ shelf life for milk, juices and liquid food such as soup and sauces. We design our own closures and our own highly engineered filling lines ensure the sterility of the filling process. This integrated system allows a dairy in Germany, for example, to ship milk to North Africa where it can be consumed months later. There is no need for a cooling chain or refrigeration – which means consumers in many emerging markets have safe access to products which would otherwise not be available to them.
For our customers, it is not only the package that counts. Our system solution helps them to improve their production efficiency. With our engineering know-how, we transform filling plants into intelligent, connected factories which are at the forefront of digital technology.
We have stepped up our presence in growth markets. In 2007 less than 25% of our core revenues were outside the region Europe, Africa and the Middle East – today it is well over 50%. Over the last three years we have accelerated our investments in growth markets, increasing the number of filling machines in the Americas by over 10% and the number in APAC by over 15%. In 2018, we entered new markets including India and countries in South America. We also entered Japan – a developed market with strong potential for innovation and differentiation – through a joint venture with Dai Nippon Printing.
This geographic expansion puts us in an excellent position to benefit from the mega-trends – including favourable demographics, convenience and urbanisation – which will drive resilient and consistent growth. In some of our new markets the key is affordability and we engineer solutions that help to achieve retail prices which are accessible to millions of new consumers. In other markets – such as China – there is a clear move towards premium products, particularly in the area of single serve beverages to be consumed on-the-go. The launch of our new combismile package in Q4 2017 is allowing us to play a prominent role in the development of this trend. And wherever we operate we have a single-minded focus on sustainability with regard to our cartons, how they are produced and the way in which we as a company operate.
SIG was ahead of the curve in anticipating the crucial importance of sustainability in ensuring its future – in fact this awareness dates back to the Company’s inception, when its site overlooking the Rhein waterfalls was chosen in order to secure a renewable source of energy. Long before the current debate on global warming, carbon footprint, renewability and recycling gathered pace, SIG committed to sourcing and producing responsibly. This commitment pervades our factories, our innovation process and the mindset of our employees. As a result, the company has been ranked by EcoVadis in the top 1% of 30,000 businesses for environmental management and sustainable procurement. We have also received a number of awards for individual products such as Signature Pack, the first carton to be 100% linked to plant-based renewable materials. We have set ourselves the ambitious objective of going Way Beyond Good and aim to have a net positive corporate footprint in the long run.
We are equally ambitious with regard to our team and will strive to make SIG the best place to work in our industry. In 2018, the contribution of our employees was outstanding. We would like to thank not only those who were directly involved in the successful execution of the IPO but also and especially those who worked tirelessly to ensure that the business continued to perform and that our customers received the outstanding service levels they deserve and expect from us.
As we look ahead to 2019 and beyond, we can identify a multitude of growth opportunities. Although SIG is already a truly global company, significant white space opportunities both in terms of countries and segments remain. Our unique technology, our solutions-driven mindset and innovation capabilities and our strong teams all around the globe will enable us to unlock those opportunities, as we continue to deliver winning solutions for our customers.
Chief Executive Officer
26 February 2019
With our engineering know-how, we transform filling plants into intelligent, connected factories that are at the forefront of digital technology.
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