BELIMO : Semiannual Report 2023

1

Belimo Posts Continued Growth

Patrick Burkhalter (left), Chairman of the Board of Directors, and Lars van der Haegen,

CEO

Dear Shareholders,

In the first half of 2023, Belimo posted continued net sales growth of 12.4% in local currencies versus the first half of 2022. In Swiss francs, net sales increased by 7.7% to CHF 448.4 million.

The Company's history of organic growth is continuing. In most of its major countries, Belimo achieved high single- to double-digit net sales growth in the reporting period. The Group performed particularly strongly in the Americas, where it was able to sustain the market share gained last year and strengthen its position by convincing newly acquired customers of the advantages that Belimo offers - not only in terms of superior product availability, but also in terms of customer service excellence. In addition, sales generated in India, currently one of the world's strongest heating, ventilation, and air conditioning (HVAC) markets, grew exceptionally well.

1. in % of total net sales

Regarding the Company's business lines, control valves continued to record double-digit growth rates, particularly in the Americas, suggesting further market share gains. At the same time, sensors and meters gained further traction, while Belimo also grew in damper actuators despite its already high market penetration.

Net Sales by Business Lines

1. in % of total net sales

Material costs, which were on the rise in 2022 owing to supply disruptions, higher energy costs, and inflation, started to normalize in recent months. However, there is still a spillover effect into 2023 due to the Company's long supply chain and gradual passing on of inflation by suppliers. Consequently, the Group implemented price adjustments in the first half of the year.

Financials

In terms of profitability, earnings before interest and taxes (EBIT) rose to

CHF 84.7 million in the first half of 2023 (first half 2022: CHF 76.7 million), and

the EBIT margin improved to 18.9% (first half 2022: 18.4%). Belimo achieved a

net income of CHF 65.0 million (first half 2022: CHF 61.3 million) and earnings

per share of CHF 5.29 (first half 2022: CHF 4.99).

The Group generated a free cash flow of CHF 79.6 million (first half 2022: CHF 81.7 million), which includes a divestment of term deposits of CHF 25.0 million (first half 2022: CHF 60.0 million). Net liquidity at the end of June 2023

came to CHF 48.0 million, and the equity ratio was 73.8%. Supply chain management was kept stable, and the supply situation for critical components eased, particularly for electronics. Belimo is now actively reducing stock according to the risk profile of each item and is seeing the market become more efficient again, with fewer goods in transit. Based on this, Belimo expects the respective inventories to return to pre-COVID-19 levels toward year-end

2024. However, net working capital increased due to higher trade receivables balances.

EMEA

The EMEA market region registered net sales of CHF 201.9 million in the first half of 2023. This corresponds to an increase of 9.3% in local currencies (4.1% in Swiss francs). In the first quarter of 2022, the war in Ukraine prompted Belimo to exit the Russian market, which continued to show directly and indirectly in the Group's sales performance. Despite signs of recession in the EMEA market region, Belimo has not seen any weakness in the non-residential building market, with its largest markets ‒ Germany, Italy, France, and Switzerland ‒ recording single- to double-digit growth in the reporting period.

In Germany, the export-oriented original equipment manufacturer (OEM) business performed significantly better than the domestic contracting business. The trend toward electrification is leading to an increase in the number of fossil- fueled boilers being replaced with heat pumps. These upgrades also require new and more sustainable control valves, sensors, and meters in the central plant. Furthermore, the building's hydronic system is often upgraded to ensure that the energy consumption is controlled as efficiently as possible.

From a vertical market perspective, data centers again stood out as a particularly successful segment across the EMEA market region.

Americas

In the Americas market region, Belimo registered net sales of CHF 193.4 million in the first half of 2023, corresponding to 14.9% growth in local currencies (11.6% in Swiss francs). As in the previous year, the region is still affected by the high inflation rate, but the HVAC market remains resilient despite less robust general economic growth.

After gaining market shares in 2022 owing to superior lead times for its products, Belimo was able to secure most of its new customers in the first half of 2023 by demonstrating its strong supply chain, smooth logistics, and extensive HVAC application know-how. Demand in the data center market remained strong, driving sales in both the contracting and OEM channels.

Other sectors of growth are numerous large-scale projects in the semiconductor and electric vehicle industry, with new factories currently being built in the wake