DKSH Group continued on expansion course in 2007

Zurich. In recent months, DKSH strengthened its shareholder base in readiness for further expansion moves. The positive business trend and the acquisition of Desco's Asia activities indicate to Jörg Wolle, President and CEO of DKSH, that "The strategic orientation chosen by DKSH towards specialist and premium services is a successful one. In Switzerland, the consolidation process within our sector that has been globally apparent and actively spurred on by DKSH has been brought a successful conclusion."


With the acquisition of the Asia activities of Desco, DKSH can further consolidate its positioning as the leading group dedicated to Market Expansion Services in Asia. Explains Wolle: "We hope that the Desco acquisition will have a certain lighthouse effect on other traditional, family-owned trading houses that are in the process of succession planning, or do not have the critical mass and essential resources needed for the massive investments that must be made in IT and the logistics infrastructure."

Successful capital increase

With the increase in capital completed at the end of April 2008, DKSH enhanced its basis for further growth, both organic and through acquisitions. The group accrued an additional CHF 170 million in equity through that move.


At the same time, there was a change in the shareholding structure. The minority shareholders Christophe R. Gautier and Carolina Müller-Möhl's Hyos Group withdrew either partially or entirely. As already communicated in January, two new professional investors, i.e. the successful Swiss entrepreneur Rainer-Marc Frey and the FFP Group - the holding company of the French Peugeot family of industrialists, joined the DKSH shareholder base. In May, they will be joined by a further important investor, the Anova Group which manages the commitments of Stephan Schmidheiny and his family. DKSH hopes that the participation of the Anova Group will create increased expansion potentials in the South American markets.


According to Jörg Wolle: "This increase in capital equity will allow us to shift into higher gear with regard to additional and even bigger acquisitions, whereby the emphasis will clearly be on continued internal growth."

Higher investments in IT and Logistics

In 2007, DKSH invested CHF 25 million in expanding the state-of-the-art IT infrastructure of the Corporate Shared Services Center (CSSC) in Malaysia, which provides the full range of IT services for the entire group. By end of 2008, the entire DKSH Group will be using one and the same IT platform, meaning that the organization will be able to offer identical systems and quality standards worldwide. Moreover, DKSH can apply that platform to satisfy the increasingly demanding requirements of manufacturers and clients in terms of feedback from the markets.


Additional investments amounting to CHF 80 million in the logistics infrastructure were undertaken in 2007 to set up new and improve existing distribution centers, which will serve as bridgeheads for further expansion in various markets.

Successful Business Units

All four Business Units - Consumer Goods, Healthcare, Performance Materials and Technology - contributed in 2007 to the success of the Group and in achieving the excellent corporate results.


Thanks to strong growth, the Business Unit Consumer Goods succeeded in expanding its leadership position in the market for fast moving consumer goods. Through new distribution centers in Korea and South China, plus the acquisitions - Texchem Consumer Goods in Malaysia and Interactive Research in Thailand - capacities and market shares were increased and the quality of services improved. In Thailand, where DKSH produces all Levi's products and operates boutiques and shop-in-shops, the partnership which has lasted over 20 years was extended by another 5 years up to 2012. In the ongoing business year, further impetus in the consumer goods sector will be generated by the integration of the Asia activities of Desco. DKSH has obtained the marketing rights to the Desco- owned watch brand Maurice Lacroix and to other first-class names for timepieces such as Breitling, Parmigiani, Arnold & Son and Graham from British Masters.


For the Business Unit Healthcare, 2007 was a year of upheaval. Despite major difficulties in the joint venture with local partners in the Philippines, which have since been resolved, net sales were increased while profitability remained unchanged. DKSH distinguished itself further by expanding its highly specialized own products. In Thailand and Vietnam respectively, the biggest and most advanced distribution centers for healthcare products and services were opened.


With the renaming of its Business Unit "Specialty Raw Materials" into "Performance Materials", DKSH is articulating that the organization is not simply a distributor of highly specialized materials, but rather a development partner for globally active industrial companies in the sector of new products and applications. Simultaneously, it is presenting itself as an alternative source for innovative materials and ingredients. The acquisition of the raw materials operations of Desco offers DKSH promising expansion potentials for this Business Unit.


The Business Unit Technology again reported record results. Agreements were reached with no less than 30 new manufacturers, complementing the 600 existing partnerships. DKSH successfully penetrated new business segments, enlarging the portfolio with products from the area of renewable energies, e.g. solar cells and recycling systems. Moreover, the long-standing joint venture in China with Trumpf, the world's biggest manufacturer of machine tools, was extended by a further 10 years.

Positive Start to 2008

DKSH also got off to a promising start in 2008. Compared to the previous year, net sales for the first four months rose by more than 4 percent, while operating profit EBIT increased by over 10 percent, despite a very strong Swiss currency which led to a 6 percent decline through translation of results into Swiss francs.


Adrian T. Keller, Chairman of the Board of Directors of the DKSH Group states: "We are expecting continuing growth in 2008. We assume that the financial crisis and the resultant economic softening in the USA will do little more than slow down the rate of growth in Asia somewhat."

--- END press release DKSH Group continued on expansion course in 2007 ---

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