In this Research Note, we examine the Belimo Group, based on their 2023 annual report, investor presentations and financial results announced on 4th March 2024 in the building automation field devices sector. This is an update to our previous coverage of Belimo’s growth strategy.

Belimo Group, a listed company on the Swiss Stock Exchange, is headquartered in Hinwil, Switzerland with over 2,300 employees. The group is a market leader in field devices for the energy-efficient control of HVAC systems. The focus of their core business is on damper actuators, control valves, sensors and meters.

Belimo Financial Highlights 2023

The company reported that Belimo pursued its long-term growth and investment strategy successfully throughout 2023. The most significant challenges came from a demanding economic environment leading to a slowdown of business momentum in the construction industry. Nevertheless, Belimo saw net sales grow 7.2% in local currencies and 1.4% to CHF 858.8 million in Swiss francs (2022: CHF 846.9 million).

Earnings before interest and taxes (EBIT) amounted to CHF 152.5 million (2022: CHF 152.4 million), and the EBIT margin was stable at 17.8% (2022: 18.0%). Owing to a one-time tax effect of CHF 17.1 million, net income rose by 11.5% to CHF 136.8 million (2022: CHF 122.7 million), and earnings per share came to CHF 11.14 (2022: CHF 9.99).

Regional Highlights

The Americas market region reported impressive results with a sales growth of 7.7% in local currencies. This follows an extraordinary previous year in which Belimo was able to gain significant market share due to delivery issues in the industry. This led to a substantial baseline effect, particularly in the second half year of 2022.

EMEA achieved solid sales growth of 6.4% in local currencies. This performance was still impacted both directly and indirectly by the war in Ukraine, which had prompted Belimo to exit the Russian market in the first quarter of 2022.

The Asia Pacific market region registered an increase in sales of 8.2% in local currencies. Belimo India, along with other regional subsidiaries, performed exceptionally well, compensating for the challenging circumstances in China.

Net Sales by Business Lines

The Control Valves business line gained significant market share, posting growth of 12.0% in local currencies. This confirms Belimo’s successful efforts as innovation leader in this application field. Additionally, Sensors and Meters gained further traction, registering an increase of 31.0% in local currencies. Damper Actuators, on the other hand, grew only slightly by 1.1% in local currencies. Destocking by OEM customers and the slowed-down business momentum in the new construction industry adversely affected sales.

Outlook

In 2024, the Group anticipates solid demand for its field devices in both new construction and the renovation of existing structures. Sales growth, measured in local currencies, is projected to be at the lower end of its guided growth corridor. Additionally, the EBIT margin is likely to be influenced by foreign exchange fluctuations and sustained high levels of research and development, along with ongoing investments in future advancements.

The non-residential building market faces challenging investment decisions amid global economic uncertainty, signs of recession, and higher interest rates. Nevertheless, even if these higher rates slow new construction activity, refurbishment projects are expected to pick up, albeit with some delay. This potential shift presents Belimo with additional growth opportunities.

Belimo is well-positioned to maintain its global market share in control valves and damper actuators through its long-term growth strategy.

This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.