Walter Meier : Market environment remains challenging for Walter Meier – Combination with Tobler on track

MEDIA RELEASE

Schwerzenbach, 17 August 2017

MARKET ENVIRONMENT REMAINS CHALLENGING FOR WALTER MEIER - COMBINATION WITH TOBLER ON TRACK

• Sales drop slightly due to market environment that remains challenging with great pressure on margins
• EBITDA margin of 6.4 percent up on previous year (4.7 percent)
• One-off integration expenses result in loss
• Combination is on track, expectations regarding synergies have been increased
• Medium-term earnings target remains an EBITDA of CHF 60 million, which will enable income per share to climb back to CHF 2

In the first half of 2017, Walter Meier AG achieved consolidated net sales of CHF 187.7 million (previous year: CHF 110.5 million). This increase in sales is the

result of Tobler Haustechnik AG being integrated in the scope of consolidation as of 6 April 2017.

With CHF 109.0 million, Walter Meier AG's original business virtually equaled sales from the previous year at CHF 110.5 million (-1.3 percent). The business with new buildings continued its good performance, albeit with constant pressure on margins as a result of intense competition. The heating equipment replacement business once again performed poorly in the first six months of the year, but remained stable at a lower level. Finally, the maintenance business performed well as usual, with very little volatility. Due to the stagnating sales and the decreasing margins, the positive effects from the launch of the highly automated Distribution Center in Nebikon are not reflected in the result. In the first half of the year, the EBITDA of Walter Meier Climate only climbed from CHF 6.6 million in the previous year to CHF 6.9 million (+4.0 percent).

Tobler Haustechnik AG, which was integrated as of 6 April 2017, contributed

CHF 78.7 million and CHF 6.1 million to total sales and EBITDA, respectively. Overall, Tobler also faced another slight drop in sales. In the first half of 2017 (1 January to 30 June), Tobler achieved sales of CHF 155.8 million, compared to CHF 158.8 million in the previous year (-1.9 percent). Since the wholesale business is significantly more important for Tobler than for Walter Meier Climate, the price pressure was felt even more strongly. However, the maintenance business was highly stable at Tobler, too.

Consolidated EBITDA of Walter Meier came to CHF 12.1 million (previous year: CHF 5.2 million), while the EBIT margin amounted to 6.4 percent (previous year:

4.7 percent). In the first six months of the year, EBIT came to CHF 5.4 million, compared to CHF 3.4 million in the previous year. Depreciation was significantly higher, for one thing due to the new Distribution Center in Nebikon; for another, as a result of the goodwill from the combination with Tobler.

The group's net income was weighed down by increased financial expenses and one-off integration expenses in connection with the combination. As a consequence, Walter Meier has to record a loss of CHF 3.1 million for the first half of 2017, which translates to CHF -0.26 per share (previous year: CHF 0.38).

Cash flow from operating activities came to CHF -6.7 million in the first half of the year as a result of the usual seasonal increase in working capital in the first semester. Free cash flow was influenced by the outflow of cash resulting from the combination with Tobler and amounted to CHF -99.5 million.

For the same reason, financial liabilities increased to CHF 190.7 million as of 30 June 2017 (31 December 2016: CHF 35.0 million). Of this amount,

CHF 64.0 million was attributable to real estate financing and CHF 126.7 million to operating credit lines. At the end of June, the equity ratio was 35.7 percent.

Since the announcement, significant progress has already been made with the combination. In a detailed integration plan, the group evaluated its expectations regarding the integration expenses and the synergies. Findings indicate that the former should be slightly below, whereas the latter should be slightly above the original estimates. The combination of the two sales and service organisations as of 1 January 2018 is on track - the top management levels have already been defined. The new company name and company profile will be unveiled during an in-house trade fair and spectacular festivities on 24 November 2017.

Sales

110,515

EBITDA

as a % of net sales

Walter Meier Climate

Tobler

Corporate

5,242

4.7

6,618 +4.0

-1,376

per registered share in CHF

0.38

Free cash flow

-19,747

in thousand CHF 06/30/2017 12/31/2016

as a % of total assets

25.4

Number of employees (FTEs)

784

1) The 2017 financial year also includes the amounts of Tobler Haustechnik AG since the acquisition on 6 April 2017.

The Swiss market for building technology seems to be stabilising at a lower level than expected at the beginning of the year. Volumes in the area new-built remain high; however, the regional differences have become more distinct. The market for replacements has stabilised at a low level, without any signs of recovery. The wholesale business is marked by overcapacities and import pressure and the associated pressure on margins. In the short term, Walter Meier is countering these challenges by applying strict cost discipline and actively promoting sales initiatives in the wholesale business. In the medium term, the combination with Tobler should make it possible to significantly increase earnings.

Despite the market environment that is worse than expected, the medium-term earnings target in terms of EBITDA of CHF 60 million should still be achievable thanks to the increase in potential synergies. On this basis, income per share would amount to CHF 2.

For the 2017 and 2018 financial years, income per share will fall significantly short of this number due to the one-off integration expenses and the synergies that are yet to be realised. Nevertheless, Walter Meier's aim is to maintain the stable dividend payment policy of CHF 2.00 per share for the following years.

Should the markets fail to stabilise, a temporary lowering of dividends cannot be ruled out (until the synergies have been achieved and debt financing has been decreased).

Walter Meier, Corporate Communications

Phone +41 44 806 49 00, group@waltermeier.com

The building technology group Walter Meier operates with a focus on the Swiss market. The company was founded in 1937 and today counts more than 1,400 employees. Shares in Walter Meier are listed on the SIX Swiss Exchange (symbol WMN).

This media release and the Half-Year Report 2017 are available on www.waltermeier.com/investors.

Walter Meier AG

Bahnstrasse 24, 8603 Schwerzenbach, Switzerland

Phone +41 44 806 41 41, Fax +41 44 806 49 49

group@waltermeier.com, www.waltermeier.com