The transition from Rudolf Hanko to Wolfgang Wienand as the new CEO at Siegfried Holding was put into effect without any concomitant noise. This is rather typical for a company that has always valued continuity as a great asset. Wienand has already been a member of the Executive Committee for 10 years bearing responsibility for global research and development activities in the capacity of Chief Scientific & Strategy Officer. The former top-ranking athlete calls upon fitness: Hard work is required to establish Siegfried in the Premier League and to bring the company into a leading position. Setting high targets implies there is considerable room for improvement and need for training, permanently, according to Wienand.

The foilsman, repeated German Champion, Olympic athlete and medal winner at European and World Championships, strives for building the strongest team in the CDMO market, as a basis for attacking the top position.

The predecessor and his successor: On January 1, 2019 Dr. Rudolf Hanko passed the CEO torch to Dr. Wolfgang Wienand. On the occasion of the Annual General Meeting, Hanko was voted onto the Board of Directors. Photo: Sandra Blaser,

«Preserving the tried and tested and going boldly into the future – these are two of the talents Wolfgang Wienand possesses». This is what his successor advises him to pursue. Hanko shaped a CEO era of close to 10 years, and he is going to stay with Siegfried, given the fact that he was voted into the Board of Directors with 96% of the shareholders‘ votes. «I have a network that I would like to offer as potentialities for the management to grow in the internal and external markets». This is how Hanko interprets his role as newly elected member of the Board.

Keeping abreast with the Consolidation

Siegfried is still playing among the chase group, so to say. A sales volume of 794.3 MM CHF (+5.8% as compared to 2017) means there is still a good deal to catch up with the leading group, which is totalling revenues in the range of more than one billion Swiss francs, as Wienand explained during the 116th Annual General Meeting of the Siegfried Group in Zofingen. «We must keep abreast with the ongoing consolidation. You have to be fit if you want to actively participate in a current consolidation process». The strongly fragmented CDMO market, with the ten biggest companies just reaching a market share of 20%, means a challenge for Wienand to acquire and to integrate companies. This has been achieved in an outstanding manner with the takeover of the BASF business units, Wienand said. And he added that Siegfried has the financial strength to cope with further acquisitions.

Players on the strongly fragmented CDMO market. Source: zVg.

Andreas Casutt, Chairman of the Board, led through the AnnualGeneral Meeting with competence and humour, as usual. In his address to the 247 attending shareholders, who represented 58.1% of the share capital, he made comments in the same direction: «We are paying great attention to acquisitions». As in the past, this means Siegfried will take care that potential acquisitions make a good match with regard to culture, business, technology and purchase price, thus contributing to the growth of corporate value, according to Casutt.

Happy with the results, yet seeing room for more from the aspect of sales. Chairman of the Board Dr. Andreas Casutt at the 116th GA of the Siegfried Group. Photo: Sandra Blaser,

While both Casutt and Wienand expressed their satisfaction as to the results – a net profit increase of 40.9% to a level of CHF 57.5 million as compared to 2017, an EBITDA increase of 14.5% to a level of CHF 127.4 million, corresponding to a margin of 16% –, both of them are still seeing growth potential with regard to sales. The merely organic increase of 5.8% in sales achieved in 2018 is considered to be at the lower end of what both Board of Directors and Executive Committee had expected. Reactions to short-term demands must be improved. There is still some homework to be done in this area, Casutt said. This also applies to the Zofingen site, an expensive business unit for Siegfried, with old production facilities still running and the new ones working below capacity. In particular, one is suffering from shortage of skilled manpower. 40 new jobs for research & development laboratories were created in Zofingen in November 2018, to the benefit of the entire group. However, there are currently still more than 20 job vacancies in Zofingen in various business areas, which the company has difficulty to fill due to the shortage of skilled manpower.

Promising Market Perspectives

Yet, there were no more than just these few drops of water to the wine the Siegfried group served to the shareholders. They have reason to be pleased about a rise in dividends by 20 centimes to a level of 2.60 CHF.

Siegfried can face the future with a great deal of self-confidence. Today, the group belongs to the top 6 of the pharmaceutical suppliers worldwide, being a so-called CDMO (Custom Development and Manufacturing Organization). Siegfried produces approximately 200 out of a total of 1,500 active ingredients approved by the American Regulatory Authority FDA. Thereby, the Zofingen based company is supporting the medical treatment of approximately 40 million patients. If one includes the caffeine production at the Hameln facility, up to one billion people would get in contact with Siegfried products per year, according to Wienand.

Market perspectives are highly promising: OECD statistics assume an annual growth rate of 5% for the pharmaceutical and medical technology sectors. An even more distinct growth rate of 6.2% is expected for the CDMO market until 2022. At the present stage, this market has already a worldwide volume of USD 90 billion.

Size is the Key Issue

«Size matters», that is what both Board of Directors and Executive Committee keep saying: The strategy „Evolve“ implies an expansion of the technology portfolio, an improved integration of services and an increase in growth through acquisitions. The multitude of potential paths for growth and M&A, which Siegfried may pursue independently from one another, increases the likelihood of closing a transaction that generates sustainable value.

Moreover, once Wienand had started in the capacity of his new responsibility, Casutt introduced him at several company sites around the globe. Strengthening the technological competencies and deepening the integration of production activities over all of the 9 locations shall contribute to benefitting optimally from the opportunities of a growing market and to strengthening the network among the production locations, from Pennsville and Irvine in the USA via Hal Far on the isle of Malta, Hameln and Minden in Germany, St. Vulbas in France, right up to Nantong in China and, of course, the Swiss production facilities in Zofingen and Evionnaz.

As a partner of the worldwide pharmaceutical industry, Siegfried places particular value on sustainability. Consequently, in its reporting system the group meets the standards of the Global Reporting Initiative (GRI) to the full extent. The most important issues in this area have been defined: These include product safety, environmental protection, fair operating conditions, fighting corruption and anti-competitive practices, plus involving the local population at the various locations. Both Executive Committee and Board of Directors are concerned with an economical and considerate exploitation of natural resources and the overall responsibility as a business entity, the Corporate Social Responsibility.

Targeting the Rise to the Top League

Finally, Wienand took a look into the future: Assuming stable currency exchange rates, he is expecting a sales increase for 2019 in the medium single digit percentage range as minimum. This means the 800 millions mark will be surpassed in year 2019. And knowing that top athletes are orientating themselves at established records, it is to be assumed that Wienand and the Siegfried team are already focusing on the next all-time highs, which would mean the rise to the one billion sales league.

Annual report in newspaper format as role model. Photo:

At the close of the General Assembly Zurich ragout was served for the shareholders, as the two-hour performance had left them hungry. Much praise could be heard from shareholders with regard to the business report in newspaper format, designed by the team of Chief Communications Officer Peter A. Gehler. The report comprises 5 volumes and 76 pages. Its impressive structure and clearness and its neat layout may prove a role model for well-designed investor information.

However, there is one aspect where we can only hope that the shareholders will be profoundly mistaken, just like at the Annual General Meeting of 2018. Last year, the test question for the electronic voting referred to whether Germany would become football world champion. The result was a large majority of „YES“ votes. Well, all of us know the outcome of the world championship in Russia. This year, the question asked referred to whether Roger Federer would possibly win another Grand Slam tournament in 2019. There were 56.3% of votes saying „NO“. This should be a good omen for Roger Federer.

Translation: Karl Wollenhaupt

Photo Gallery of the Annual General Meeting

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