DKSH, the leading Market Expansion Services provider with a focus on Asia, continued to grow in the first half-year of 2014 at constant exchange rates in a challenging market environment. All Business Units and major countries positively contributed to net sales growth.
Net sales grew by 6.7% at constant exchange rates to CHF 5,071.8 million. Organic growth was 6.0%, while just 0.7 percentage points of net sales growth resulted from M&A activities. The depreciation of Asian currencies impacted net sales in total by 9.6%. Reported in Swiss francs, net sales accordingly reached CHF 4,618.4 million.
Despite the challenging political situation in our main market, Thailand, operating profit before interest and taxes (EBIT) at constant exchange rates increased by 1.4% and reached CHF 144.8 million. Reported in Swiss francs, EBIT accordingly reached CHF 131.4 million. Political unrest in Thailand was more profound and enduring than expected at the beginning of the year, resulting in negative economic growth. Over the past months, this caused a temporary lower demand for consumer goods, higher-margin luxury and lifestyle products as well as reduced industrial investments. The military takeover at the end of May, however, helped to stabilize the situation.
Profit after tax (PAT) has been impacted by profit hedging costs and accordingly reached CHF 99.8 million at constant exchange rates. Reported in Swiss francs, PAT accordingly reached CHF 91.7 million.
Although net sales grew in the first six months of 2014, free cash flow achieved, at constant exchange rates, CHF 166.7 million thanks to sound working capital management and thereby almost reached the high level of last year.
Dr. Joerg Wolle, President & CEO of DKSH, commented: "Despite the challenging market environment, DKSH again reported solid growth in numerous markets. This was achieved on the back of our robust business model and the rigorous implementation of our strategy."
DKSH's strategy for sustainable, profitable growth is centered on growing organically, through expanding business with existing clients, multiplying success stories from country to country and new business development, complemented by strategic bolt-on acquisitions.