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Annual Review 2009
www.dksh.com
DKSH Holding Ltd.Wiesenstrasse 8, P.O. Box 888, 8034 Zurich, SwitzerlandPhone +41 44 386 7272, Fax +41 44 386 7282
Think Asia. Think DKSH.
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PublisherDKSH Holding Ltd.Wiesenstrasse 8 P.O. Box 8888034 Zurich SwitzerlandPhone +41 44 386 7272 Fax +41 44 386 7282
Concept and designEclat, Erlenbach / Zurich
PhotosAlex Wydler, Zurich Stephan Knecht, Zurich
LithographyRoger Bahcic, Zurich
Print Neidhart + Schön AG, Zurich
Contents
2 Our services Managing the entire value chain
4 Market Expansion Services Enabling companies to grow
6 DKSH at a glance Our profile 10 What is important to us Our corporate values
11 DKSH strategy for growth Our vision
12 Managing the flow of services and products Turning market insight into strategic advice
14 The year 2009 reviewed To our shareholders and business partners
22 Business Unit Consumer Goods Market insight combined with customized solutions
34 Business Unit Healthcare Commitment to healthcare excellence
44 Business Unit Performance Materials Unmatched global sourcing network and industry application expertise
54 Business Unit Technology Total technology solutions for expansion
64 Business organization Our structure
66 Our Board of Directors Guiding the overall strategy and direction of DKSH
67 Our Executive Board Ensuring the implementation of our strategic goals
68 Our corporate services Supporting the Business Units
70 Diversity is us A long-standing tradition
72 In and for Asia Committed to local communities
76 140 years of experience Our history
80 Symbolizing the business Our heritage
82 Ready for the future Strong foundation for growth
84 DKSH worldwide Our offices
Our services We offer a broad range of customized and integrated services to manage the entire value chain for our business partners: from sourcing, research and analysis, marketing and sales, distribution and logistics, to after-sales services.
Managing the entire value chain
Research and
AnalysisSourcing
Marketing and
Sales
Distribution and
Logistics
After- Sales
Services
› Application Engineering
› Installation/ Commissioning
› Training› Customer Service› Repairs and
Maintenance› Technical Support› Standby
Maintenance Programs
› Warranty Services› Quality Assurance
and Control› End-Consumer
Communication
see pages 62/ 63
› Global Sourcing› Scouting for
Suppliers› Supplier Auditing› Supplier
Certification› Quality Assurance› Compliance
Management
see pages 20 / 21
› Feasibility Studies› Market Information
and Trends› Applications
Research and Support
› Technical and Innovation Support
› Product Development
› Product Licensing/ Assistance
› Customer-Specific Product Adaptation and Packaging Solutions
see pages 32 / 33
› Market Research› Field Marketing› Product
Management› Marketing› Brand Building› Public Relations› Promotion
Management› Merchandising› Channel
Management› Category
Management› Key Account
Management› Sales› Order Taking
and Processing› Stock Reporting
and Planning› Market Feedback› Fairs/Exhibitions/
Seminars
see pages 42 /43
› Importation› Customs Handling› Product Registration› Regulatory
Compliance› Warehousing› Stock
Management› Vendor Managed
Inventory› Co-Packing› Transportation
and Delivery› Order Fulfillment› Invoicing› Cash Collection› Information
Processing› KPI Reporting› Market Perception
Surveys
see pages 52 / 53
4
Enabling companies to grow
Market Expansion ServicesWe help companies to grow their business in new and existing markets. We expand their access to knowledge, their sourcing base, their revenue opportunities, and their market shares. Providing business partners with a compre hensive package of services to reach their indi vidual goals is what we call Market Expansion Services.
5
No. 1Market Expansion Services Group with a focus on Asia.
We help companies to grow in existing markets and to expand into new ones.
540business locations
in Asia Pacific
20business locations in Europe and the Americas
35countries
50nationalities
21,000specialized staff
Top 20of Switzerland’s companies – ranked by sales and numbers of employees
In 2009, DKSH Group’s Total Sales amounted to CHF 8,576 million.
Market Expansion Services6
DKSH at a glance
As the No. 1 Market Expansion Services Group with a focus on Asia, we help companies to achieve their growth targets.
What we doDKSH is the world’s leading Market Expan-sion Services provider with a focus on Asia. We are a company with Swiss roots, doing business in and with Asia for more than 140 years. We help companies to grow in existing markets and expand into new ones. To achieve this we offer a compre-hensive package of services that includes organizing and running the entire value chain for any product, from sourcing, re-search and analysis, marketing and sales, distribution and logistics, to after-sales services. We provide industry expertise and on-the-ground logistics as well as tailor-made services for our clients and customers. Our leading position as a Market Expansion Services provider is based on our ability to deliver everything our business part-ners need to grow their businesses in their chosen markets.
Any company wishing to expand its busi-ness in and with Asia should think of DKSH first. Because of our long history in the region we are deeply rooted in many communities throughout Asia, and have established a vast network of busi-ness and personal relationships. Our local knowledge, combined with our worldwide sourcing ability, allows us to identify new market opportunities for our clients and customers. Our company is organized into four spe-cialized Business Units: Consumer Goods, Healthcare, Performance Materials, and Technology, which guarantee expert han-dling of even the most specialized prod-ucts and brands. We know our clients’ products as if they were our own, and can therefore bring the right products to the right places and customers at the right time – every time.
7
Our service is aimed at helping business partners to open up new markets. “Rationality has come back,” Weltwoche, January 1, 2009
Key results 2009In 2009, DKSH generated Net Sales of CHF 6,500 million. We employed 21,000 specialized staff from 50 nationalities, op-erating in 35 countries and 540 business locations in Asia Pacific, and 20 locations in Europe and the Americas. Ranked by sales and number of employees, DKSH is one of Switzerland’s top 20 companies. Group EBIT in 2009 amounted to CHF 128 million, down 14% from CHF 149 million in 2008. Profit After Tax (PAT) was just 3.4% below 2008. Total Sales in-creased by CHF 200 million from 2008 to CHF 8,600 million – an excellent result in light of the difficult business and eco-nomic conditions that prevailed for much of 2009. Equity rose in 2009 to CHF 925 million, up from CHF 872 million in the previous year. Our largest Business Unit Consumer Goods contributed 49.3% of Total Sales,
followed by Business Unit Healthcare, which accounted for roughly 36.6% of our business. Business Unit Performance Materials’ share of Total Sales was 8.2%, and Business Unit Technology’s 5.9%. With regard to EBIT contributions, Con-sumer Goods contributed most, followed by Healthcare, Performance Materials, and Technology. Thailand remains the largest single market, with Total Sales of CHF 3,716 mil-lion, representing 43.3% of our sales vol-ume, followed by Malaysia with 14.4% and Greater China with 13.8%. Overall, Asia generated nearly 97% of our sales volume. Our solid performance in an increas-ingly challenging market environment clearly demonstrates that our business model, based on high diversity in terms of geography and industries, together with proactive and very hands-on management
of cost and efficiency issues, serves us well in good as well as bad economic times.
Total Sales by Business Unit in %
Total Sales by region in %
EBIT by Business Unit proportional
49.3 Consumer Goods
36.6 Healthcare
8.2 Performance Materials
5.9 Technology
43.3 Thailand
16.7 Other Asia
14.4 Malaysia
13.8 Greater China
4.9 Japan
3.6 Singapore
3.3 Europe and the Americas
Consumer Goods
Healthcare
Performance Materials
Technology
Market Expansion Services8
Market Expansion ServicesMarket Expansion Services goes far be-yond offering individual services. To a very large extent, it is about the integration of many different services. Our business is much more than the exchange and pro-motion of goods. It is about a service phi-losophy that takes profound responsibility for the goods and brands of our clients. Furthermore, it is about gathering data from our hundreds of thousands of cus-tomers and translating this into highly de-tailed, up-to-date market information that helps our business partners succeed. We take a proactive approach to handling products, building brands, and expanding brand equity, always working in the best interests of our clients and customers in a spirit of true partnership. Our market insights and pan-regional network combine to provide long-term solutions to sourcing, marketing and sales,
distribution, and after-sales services. Mar-ket Expansion Services is a business that is constantly breaking new ground, where experience and entrepreneurial spirit unite with state-of-the-art processes and 21st-century information management. It is an efficient and effective approach that en-ables businesses to grow and succeed in our global economy.
Providing our clients and customers – no matter what their size – with a comprehensive package of tailor-made services to reach their goals is what we call Market Expansion Services.
9
Responding to our business partners’ needsAt DKSH, our business partners are either clients or customers, depending on their position in the manufacturing and distri-bution chain, and the services we provide to them. Our clients – manufacturers of fast moving consumer goods, lifestyle and luxury products, pharmaceuticals, spe-cialty chemicals, ingredients, advanced machinery, or technical equipment – wish to sell their products. Strategically they want to grow their business by increasing sales, enhancing efficiency and margins, or by launching into new markets. We support our clients by bringing their prod-ucts to Asia, Europe, and the Americas, where we market, sell, and distribute them, and provide after-sales services. Depending on their business, our cus-tomers buy or resell clients’ products. Man-
ufacturers want to process the products we provide, for example raw materials, or use them in their own production. Resell-ers such as supermarkets, department stores, luxury and apparel boutiques, doctors, hospitals, or pharmacists want to resell the products we provide. Strategi-cally they want to increase their sourcing base, market shares, and revenue oppor-tunities. We help our customers get the best products and brands at the best prices, as well as provide them with access to knowledge and market understanding. Our clients today need to be able to know everything: from the number and location of retail outlets to the shelf-life of their products, how much stock remains, the latest trends influencing consumers’ behavior, the impact of price changes on customers, advertising and specialized marketing campaigns. Whether it is for de-termining advertising budgets, reducing
storage costs, or best customizing products to customers’ needs, accurate, in-depth, and extensive market knowledge is, these days, simply imperative. Our deep understanding of our cus-tomers’ needs empowers us to translate our clients’ brand strategies into a local context with skill and precision. We are a trusted link between our cli-ents and customers, ensuring their prod-ucts successfully reach the right markets. Whatever their strategic objectives, we at DKSH provide them with all the necessary access to knowledge, advice, relationships, and on-the-ground logistics.
As a service provider, we bring our clients’ products to our customers, forming a trusted link between our business partners to the benefit of all.
Consumer goods
Healthcare products
Customers
Customers
Products
Clients
Raw materials
Instruments
Equipment
Market Expansion Services10
A
uthentic
Pragmatic
W
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and
act in
a stra
ight-
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ard way
We are hands-on
and act with
common sense
a pi
onee
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sp
irit
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a
c
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w
i
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h
We
are
self
- dri
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results-orienteda
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a
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We take charge
act with passion
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We take people
Our corporate
values
Passio
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Our corporate valuesIn a world where it is all too easy to copy new products, processes, and technolo-gies, true competitive advantage stems not just from organizational capabilities, but requires a corporate culture that is hard to imitate or reproduce. We believe that having a unique corporate culture is crucial to achieving the competitive ad-vantage that leads to sustainable business success. But what constitutes corporate culture? A key requirement is the exis-tence of meaningful and actionable cor-porate values. To achieve our vision of being the world’s leading company in Market Expan-sion Services, we consistently strive to live
up to our corporate values, which reflect our unique culture and are reinforced in all aspects of our business. Our values guide our priorities and our behavior, in-spiring us to deliver the best possible ser-vices to our clients and customers, and helping them to grow their businesses. DKSH’s reputation is based on our au-thentic, pragmatic, and entrepreneurial approach to finding tailor-made solutions. Our commitment and passion drive the sustainable business results we achieve for our business partners and ourselves. In building true partnerships that last, we use the best of both worlds – East and West – for the benefit of our clients and customers. DKSH stands for what our
people practice every day: authentic com-mitment to supporting our partners’ busi-ness success. Like the founders of DKSH, we adopt a pragmatic, entrepreneurial spirit and are passionate about what we do. The DKSH Group is privately held, and fourth-gener-ation descendants of the founding families remain active on the Board of Directors. Majority-owned by the Diethelm Keller Group, DKSH is a financially stable global player, securely founded on time-proven principles.
What is important to us
11
Passionate Committed
Ent
repr
eneu
rial
Our vision is to be known as the world’s leading company in Market Expansion Services with a focus on Asia. Anyone thinking of growing their business in or with Asia should think of DKSH first. To accomplish this we drive a strategy for growth that continuously increases our market share and at the same time helps our business partners expand their busi-nesses. The cornerstone of our strategy is the continuous improvement of our success-ful business model. We stick to what we do best – or in other words, we do more of the same … and we do it even more efficiently! The strategy consists of three main areas that assist us in reaching our vision:
Grow existing markets and Business UnitsWe focus on growing existing markets, as well as existing Business Units. Since we have a history of over 140 years of doing business successfully in and with Asia, our business partners fully capitalize on our broad knowledge of local markets and culture, our infrastructure, and our lead-ership position in the region.
Strengthen service offeringsWe continually strengthen and expand our range of service offerings across the entire value chain and Business Units. To ensure the long-term success of our busi-ness partners, we constantly deliver more value-added solutions that give them a competitive advantage.
Increase operational efficiency We continuously improve the efficiency and effectiveness of our processes. The quality of our services is based on best practices and standards throughout our entire organization. An efficient supply chain as well as leveraged synergies across all our Business Units and countries allows us to fulfill the diverse requirements of the industries and communities we serve.
A reliable strategic business partnerOur strategy for growth results in a broad range of services and solutions that are tailored to the unique needs of our clients and customers. Relying on our core com-petencies provides the following benefits:
A financially stable and dependable •partner who has been at home in Asia for more than 140 years, reliably safe-guarding your business interests
A global network of experts and the •ability to adapt to the businesses we serve in any local market
A comprehensive package of services •along the entire value chain – tailored to your needs
Services and infrastructure from a single •source, meaning lower cost, enhanced transparency, and greater account ability
A partner who proactively works in •clients’ and customers’ interests, pos-sessing the expertise to provide strate-gic advice and on-the-ground logistics to “make things happen”
DKSH strategy for growth
Market Expansion Services
Performance Materials
Technology
Healthcare
Consumer Goods
Europe and the
Americas
12
Managing the flow of services and products
Companies turn to us to expand their businesses in new or existing markets. We manage their products in Asia Pacific, Europe, and the Americas, with a focus on Asia. As a strategic partner we safe-guard the interests of our business part-ners by providing integrated services and solutions customized to fit their specific needs. We support our clients by bringing their products to Asia, Europe, and the Americas, where we market, sell, and dis-tribute them. We help our customers get the best products and brands at the best prices and provide them with access to knowledge and market understanding.
Turning market insight into strategic adviceTo cover the diversity of our business part-ners’ industries, we are organized into four Business Units: Consumer Goods, Healthcare, Performance Materials, and Technology. Each highly specialized Busi-ness Unit operates worldwide as part of a vast network of experts covering the en-tire value chain. Backed by the largest SAP application in Asia, we manage hun-dreds of thousands of business transac-tions every day. We closely monitor mar-ket activity and convert information into strategic advice for our business partners, providing them with a competitive edge needed to succeed in today’s global econ- omy. This is what makes us the No. 1 in Market Expansion Services.
We operate in 35 countries and out of 540 business locations across Asia Pacific as well as 20 locations in Europe and the Americas. For all addresses see pages 84- 86.
13
Performance Materials
Technology
Inner-Asia distribution
Asia Pacific
Healthcare
Consumer Goods
14
The year 2009 reviewedDear ShareholdersDear Business PartnersSince DKSH’s establishment in 2002, the company has consistently reported double- digit growth in profitability. At the begin-ning of 2009, however, with the business environment affected by deep recession in many countries, it was clear that this would not be another record year. Never-theless, we are pleased to report that our Profit After Tax (PAT) amounted to CHF 85 million, down just 3.4% on 2008.If we look only at our Asian business, we would have had a new record year, with almost all our operations in Asia report-ing profit figures well ahead of our 2008 results. Unfortunately, the decline in our European activities due to the economic environment could not be fully compen-sated by our success in Asia. Even so, at a time when global trade dropped by 12%, the largest downturn since World War II, we achieved an increase of 4.8% in Trans-action Value, reaching CHF 8,600 million. For our four Business Units, 2009 in-cluded both successes and challenges. Our two largest Business Units, Consumer Goods and Healthcare, achieved excellent
results, seizing the opportunities offered by a difficult environment and improving their market shares. The sharp fall in de-mand for luxury products left its mark on our Luxury & Lifestyle business though, and Business Unit Performance Materials also suffered, chiefly due to the economic down turn in Europe, which badly affected our customers in the automotive, chemical, construction, and food industries. Business Unit Technology experienced a difficult year, due to tough market conditions and reduced or delayed capital expenditure and industrial spending.
Resilient business modelNevertheless, we exploited the opportu-nities that come with every crisis, and achieved a larger overall market share. We benefited from the strength of our highly specialized yet broadly diversified busi-ness model, which enabled us to absorb the significant fluctuations experienced in several sectors last year. High diversifica-tion in terms of geography and industries, combined with proactive, hands-on man-agement of cost and efficiency issues, served us well. As a financially well-man-
aged company, our strong cash flow allowed us to achieve a net-debt position of zero, which is extremely valuable in the current environment. Since the merger that established DKSH in 2002, our development has been a tremendous success story, based on re-inventing the trading company business model and creating a distinctive new cat-egory: Market Expansion Services. Our ex-pertise is supported by an extensive net-work with an unrivalled infrastructure and on-the-ground logistics, allowing us to help companies to grow their business in and with Asia. Our comprehensive servic-es and products extend from sourcing, marketing, and sales, to distribution and after-sales services. The numbers reflect our leading mar-ket position: since 2002, the value of our transactions has grown by 83%, our prof-its are up by 125%, we have created 7,700 new jobs, and increased our busi-ness locations by 133% to 560. A testament to our attractive indus - try position is the involvement of Pierre Mirabaud, well-known in the Swiss pri-vate banking world and until September
To our shareholders and business partners
1515
Adrian T. Keller, Chairman, and Dr. Joerg Wolle, President & CEO of DKSH Group.
16 The year 2009 reviewed
2009, President of the Swiss Banking Association, as a new shareholder since early 2010.
Well positioned for growth In pursuit of our goal to become known as the No. 1 in Market Expansion Services, we held an extensive strategy review dur-ing 2009 with a consulting company spe-cialized in this field. This review confirmed that despite – or even because of – the economic crisis there are still plenty of opportunities for further expansion in our home markets. As a result of this assessment, strate-gies for growth were developed for the Group and all Business Units, which are currently being implemented. This inde-pendent outside-in view provided valu-able inputs that are helping us to set our course for future development. The focus of our strategy for growth is on our current geographic footprint and Business Units, leveraging internal strengths and organic growth in combi-nation with strategic bolt-on acquisitions and partnerships. In addition, we will en-hance our service and solution competence through strengthening and extending our service offering. We will also improve the coordination of country- related matters across the Group, and increase process efficiency and effectiveness.
Strengthened key functions To achieve the goals in our strategy for growth and drive our development to the next stage, we are investing in strengthen-ing key functions within our organization. In September 2009, Bernhard Schmitt was appointed Executive Vice President
of Country Operations & Business Pro-cesses, a new position created at Executive Board level. In his new function, Bernhard Schmitt is responsible for coordinating all country-related issues and for ensuring that we realize operational synergies and improve operational excellence, especially in country infrastructures and supply chain management. Also in line with our strategy for growth, dedicated business development func-tions were created in all Business Units to accelerate and professionalize business development across countries.
Strategic alliances and acquisitions A vital component of our business model is the sheer breadth of our growth poten-tial, which is based on the extension of existing partnerships, the rollout of suc-cessful relationships from one country to another, and the development of new business partners. For example, in 2009 we extended our cooperation with Tipco Foods, a producer of ready-to-drink bev-erage products. After working together for 15 years in Thailand, our relationship will now include Vietnam. A similar exten-sion to Vietnam with another Thai com-pany was accomplished with Taokaenoi Food, a producer of fried seaweed snacks. These examples demonstrate our grow-ing success in helping not just Western but also Asian brands to access new mar-kets in Asia. While the DKSH strategy for growth centers on growing from within through business development and leveraging suc-cess, we will also pursue bolt-on acquisi-tions in strategic growth areas. Against the backdrop of a difficult economic environ-
ment, acquisition opportunities are reason-ably priced. Supported by a healthy balance sheet, we are excellently positioned to take advantage of both organic growth op-portunities as well as acquisitions. In early 2009, we acquired Dasico A/S, a specialty chemicals distributor, which greatly enhances our position in Scandi-navia. The acquisition lets us serve a broad range of customers in the pharmaceutical, food and beverage, agrochemical, and specialty chemicals industries through our global sourcing network and in-depth in-dustry expertise. In addition, at the beginning of 2009, we acquired Voltas Ltd., a leading com-pany in specialty chemicals and food in-gredients in India, and formerly the chem-icals trading division of the TATA Group. This acquisition significantly strengthens our Business Unit Performance Materials in this growth market. A further important development in 2009 was the establishment of our joint venture with Smollan, a world-leading field marketing company. This will help us to enter the field marketing arena and to expand our range of value-added services. It illustrates our recognition of the global trend towards dedicated field marketing services, and our commitment to meeting our business partners’ desire to outsource these activities to specialized companies.
Trend to outsource activities in AsiaMany companies today question if it makes sense to maintain their own subsidiaries in Asian markets given that there are bet-ter and less costly alternatives. As a ser-vice specialist and outsourcing partner,
17
Our business model has proven both robust and crisis-resistant. We continue to be at home in the most promising and rapidly growing markets.“We are less exposed,” Handelszeitung, May 13 -19, 2009
DKSH is perfectly positioned to provide such alternatives. In April 2009, we formed a partnership with Oerlikon Systems, a high-quality pro-vider of production equipment for the semiconductor, data storage, and nano-technology industries. DKSH took over all their sales and after-sales operations in China and Taiwan, and now offers the re-gion’s most technologically advanced pro-duction equipment for PVD semiconduc-tors. By the end of 2009, the acquisition had proven itself, with equipment sales of over CHF 25 million. Early in 2009, DKSH Japan took over the Japanese business of Michael Weinig Germany, the market leader in solid wood processing machinery and equipment. This acquisition has allowed DKSH Japan to ex-tend its product portfolio and add com-plementary technology solutions. More recently, we acquired the Shell Distribution Company, a subsidiary of Shell
in Thailand. This positions us as the Market Expansion Services provider for its lubri-cants business, and generates enhanced value-added services for our business part-ners in the region. The integration, with 27 sites across Thailand and 225 special-ists, will be completed in 2010. The common thread running through the Oerlikon Systems, Michael Weinig, and Shell Distribution Company transactions is that they are all major multinational com-panies that had existing operations in Asia but decided to sell their sales and distribu-tion infrastructures to DKSH. Our ability to seamlessly integrate their operations into a wider platform and to provide them with better services, less complexity and risk, and reduced fixed costs, was key to their decisions.
The partner of choice in 2010 With our anti-cyclical investment approach and clearly defined growth strategy, we
continue to extend our position as the lead-ing Market Expansion Services provider in Asia. By the end of the first quarter of 2010, we had concluded an additional three ac-quisitions that allow us to expand in stra-tegic growth areas. The takeover of Chiao Tai Logistics Corporation, Taiwan’s leading logistics company, makes us the largest full-service consumer goods distributor in Taiwan, strengthening our Business Seg-ment Fast Moving Consumer Goods in Greater China. Chiao Tai’s excellent client portfolio is the ideal complement to our existing network, and allows us to pro-vide truly regional solutions to our busi-ness partners. We have also taken over Hagemeyer-Cosa Liebermann Group, the last stand-alone trading house with Swiss roots, which exclusively focuses on the market-ing and distribution of quality branded consumer goods in the Asia Pacific region.
DKSH Group* money figures in CHF million (in rounded figures)
2005 2006 2007 2008 2009
Total Sales ** 7,275 7,945 8,561 8,185 8,576
Net Sales 4,878 5,695 6,282 6,447 6,549
EBIT 101 115 140 149 128
PAT 53 59 83 88 85
Assets 2,234 2,499 2,627 2,657 2,586
Equity 585 636 679 872 925
Specialists 20,482 21,361 21,888 21,552 20,744
* comparative figures have been adjusted to reflect discontinued operations ** equals Transaction Value
18 The year 2009 reviewed
This acquisition strengthens our Luxury & Lifestyle operation by expanding our pres-ence in Korea, Taiwan, and Hong Kong, and by adding Guam and Saipan to our footprint. It reinforces Luxury & Lifestyle’s position as the leading independent brand builder and services provider for the mar-keting, sales, and distribution of premium luxury items in Asia. Another significant acquisition at the beginning of 2010 was Biolife Sdn Bhd, a major vitamin and food supplement prod-ucts company in Malaysia, strengthening our Business Unit Healthcare. DKSH has become the owner of all Biolife brands and now controls access to a key health-care market segment in Malaysia and to a platform for further business growth. We are pleased with the development of our acquisitions in 2010 so far and con-fident of our ability to seamlessly integrate additional companies that complement our organic growth. A key outcome of our strategy review is a clear commitment to focusing on our core competencies. Consequently, we have started to divest non-core and non-scalable activities, such as our joint ven-tures in China in animal nutrition. Further divestments are underway.
Communicating a unified brandTo ensure that our brand is recognized around the world and clearly communi-cates the message of a unified, global organization, we embarked on the GO! branding project two years ago. In 2009, the implementation of our new corporate design was completed in all areas of ap-plication. Our unified brand demonstrates that we operate as one company. In 2009,
we took a further major step towards our goal with the renaming of organizations that still carried legacy names in Japan, Thailand, Myanmar, and Vietnam. Compa-nies in Laos, the Philippines, and Singapore were renamed in early 2010. The consistent DKSH appearance en-ables individual country operations to le-verage the global synergies of the entire DKSH Group. With all the branding basics in place, we can now start to actively pro-mote our new positioning and convey our messages on a global level. We have also refined our corporate values to bring them into line with our brand attributes and strategy for growth. Our corporate values – authentic, prag-matic, entrepreneurial, committed, and passionate – set the standards for our be-havior every day, worldwide. They give clear guidance on what is important to us and how we work together. One of the key projects to strengthen brand awareness and to communicate our leadership position in Market Expansion Services was the launch of our new client magazine expand – DKSH’s magazine for Market Expansion Services at the begin-ning of 2010. This unique new knowledge platform for Market Expansion Services offers valuable insights into our industry. In addition, we launched our new website in fall 2009, which supports our unified, global appearance and provides even more effective contact with business partners. We are also proud to report the 2009 publication of Dr. Joerg Wolle’s first book Expedition into Far Eastern Markets. Based on the DKSH success story, it documents our evolution from three pioneering trad-
ing houses into the world’s leading pro-vider of Market Expansion Services in Asia. The text describes how to do business in Asia and offers an outlook on the world’s most important growth market. The book was highly ranked on the Swiss bestseller list for several weeks, enabling us to pres-ent our company and Market Expansion Services to a broader public.
Fostering talent developmentDKSH has always recognized that people are our major asset. High-quality training, management and talent development, as well as networking opportunities, are es-sential to our success. With this in mind we launched our new in-house center for ex-ecutive training, the DKSH Fantree Acade-my, in September 2009, in Singapore. An equally important initiative to at-tract and retain top talent was the devel-opment of a new employer value proposi-tion, which gives our company a clear and consistent positioning in the talent market. This articulates the employee qualities that are important to us, and at the same time gives tangible evidence of how DKSH sup-ports its specialists.
Improved internal processes While fostering the development of our people, we are also focusing on the im-provement of our internal operations. We achieved a key milestone in the standard-ization of our business processes in 2009 when we completed the global rollout of Pegasus, our SAP-based Global Enterprise Resource Planning template. This state-of-the-art IT infrastructure is a strategic cornerstone of our competitive position as the No. 1 Market Expansion Services
19
provider, as it offers our customers and suppliers substantial efficiency gains. Throughout 2009, risk workshops and reviews were conducted by a specialist consultant in key countries for all four Busi-ness Units and with our Executive Board members. These activities led to clearly de-fined risk mitigation plans, which will be updated regularly.
Investment in a strong infrastructure We continued to invest heavily in our distribution infrastructure in 2009. We opened three new distribution centers in Myanmar, Thailand, and Australia. Each state-of-the-art facility is equipped with the latest technology to increase efficien-cy and productivity, provide more capacity, and better serve our business partners. The distribution center in Australia provides smarter storage solutions to all Business Units under one roof, with shared processes, material distribution synergies, and unique storage and logistics solutions. In June 2009 we opened the leading cold chain distribution center for consumer goods in Thailand, featuring an impressive service offering and cutting-edge technol-ogy, further strengthening our position in the chilled and frozen products category. The distribution center in Myanmar ex-tends our storage capabilities in the region and improves our processes. In addition, through our acquisitions, we added several branch offices and distribution centers all over Asia to our network. These expand our distribution coverage, serve as a platform for further market development, and bring us even closer to our business partners.
Moving forward 2009 was a challenging year for everyone in business. With most of our business lo-cated in the world’s premier growth mar-kets, we were able to compensate for the decline in certain other regions and indus-tries. Our ability to deliver good results de-spite one of the worst economic crises in living memory is testament to the strength of our business model. Throughout our company’s 140-year history, we have often thrived in challenging conditions. Now is no exception. The DKSH strategy for growth will help us achieve our vision of being known as the No. 1 in Market Ex-pansion Services. As we move forward into 2010, our Business Units are well positioned for sus-tainable growth, with key strategic initia-tives in place to drive business development and enhance our service and solution of-ferings. DKSH has an optimal geographic foot-print, with about 97% of our sales gener-ated in Asia. With weak sales in Western markets, numerous companies are seek-ing new market expansion opportunities in this dynamic region. In addition, in-creasing cost pressures are causing many Western companies to consider downsiz-ing their operations in Asia if these are not in their core markets. DKSH is in prime position to take on marketing and sales as well as distribution and logistics for companies and their products in Asia, whether already established, or seeking access to markets here. We anticipate continued growing de-mand for our services and products. Our partners have benefited in the past from our ability to penetrate markets quickly,
with limited risk, and without incurring high fixed costs. We will continue to sup-port them to capitalize on new and excit-ing opportunities. Our accomplishments in 2009 are a di-rect reflection of our dedicated and pas-sionate team. Our 21,000 employees in 35 countries are deeply committed to the clients and customers they serve. We thank each and every one of them for their dedi-cation. We also extend our gratitude to our shareholders for their ongoing loyal support. The commitment of our key shareholders has been vital in helping us succeed in both good and difficult times. As we move forward into 2010, our focus remains clear: to provide excellent services and tailor-made solutions that help our partners grow their businesses.
Adrian T. Keller Dr. Joerg Wolle Chairman President & CEO
We serve more than 550,000 customers every day through 560 business locations in Asia Pacific, Europe, and the Americas: a comprehensive network and infrastructure unique in size and depth. “Rationality has come back,” Weltwoche, January 1, 2009
SourcingSourcing
Our specialists define product specifications, search for hard-to-find ingredients, and assure the consistently high quality of the materials we source, while offering the perfect mix of cost-effectiveness and dependable supply.
Access to a power ful global sourcing network We locate new and alternative sources for a diverse range of specialty chemicals and ingredients, audit suppliers, and take care of all quality assurance and compliance issues. With access to more than 70 markets and deep industry expertise, we are able to match customers’ needs with the most suitable suppliers. As a result, we provide sourcing solutions that meet the specific requirements of our customers while thereby creating business opportunities for our suppliers.
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DKSH’s Business Unit Consumer Goods is Asia’s leading Market Expansion Services specialist with a focus on fast moving consumer goods, food services, luxury goods, as well as fashion and lifestyle products, and hair and skin cosmetics. Our comprehensive Market Expansion Services extend from product feasibility studies and registration to importation, customs clearance, sales, marketing and merchandising, warehousing, physical distribution, invoicing, cash collection, and after-sales services. Our expertise and broad local knowledge, together with our infrastructure, enable us to bet-ter understand our business partners’ needs and to deliver customized solu-tions to grow their businesses.
The Business Segment Fast Moving Con-sumer Goods serves 300,000 retail out-lets and operates 60 distribution centers in Asia. With more than 3,000 retail points of sale, ten boutiques, 80 shops-in-shops, and 130 brand corners, the Business Segment Luxury & Lifestyle has a proven track record as an expert in luxury goods. Our Business Segment Food Services & Hotel Supplies caters to the rapidly growing hospitality industry in the region and serves more than 1,500 customers. DKSH is also the sole franchisee and distributor of Levi’s ® products in Thailand and Cambodia.Business Unit Consumer Goods employs a total of 11,400 specialists in 443 loca-tions in 19 countries. In 2009, Consumer Goods achieved Net Sales of CHF 2,936 million.
Consumer Goods
Business Unit
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No. 1Market Expansion Services specialist with a focus on
consumer goods
19countries
60distribution centers in the region
3business locations in Europe and the Americas
440business locations
in Asia Pacific
11,400specialized staff
300,000retail outlets served in Asia daily
In 2009, Consumer Goods’ Total Sales amounted to CHF 4,231 million.
24 Consumer Goods
Market insight combined with customized solutions
Despite the unstable economic environ-ment throughout 2009, Business Unit Consumer Goods delivered very good re-sults, with an EBIT of CHF 82 million, al-most 14% higher than for 2008. Net Sales were only 5.9% behind last year. Fast Moving Consumer Goods, Levi’s ®, and Food Services & Hotel Supplies contribut-ed significantly to the year’s overall excel-lent performance, although market con-ditions affected the Business Segment Luxury & Lifestyle. The resilience of Business Unit Con-sumer Goods is a direct result of our ded-ication to anticipating and meeting the needs and goals of our clients and custom-ers, and our strong focus on creating cus-tomized solutions that help companies to grow in every economic environment. Another positive factor is our capillary dis-tribution across all product groups and trade channels, which helps to balance out volatilities across industry sectors and markets.
Fast Moving Consumer GoodsBusiness Segment Fast Moving Consumer Goods, which serves 300,000 retail outlets and operates 60 distribution centers across the region, is the leading Market Expan-sion Services provider for fast moving con-sumer goods in Asia. Our focus in 2009, as ever, was on working closely with our business partners in order to quickly find new ways to grow their business. This hands-on approach contributed to overall good sales in light of the market condi-tions. For example, in Thailand consumer shopping habits changed considerably, with more consumers choosing to make purchases from smaller shops. In response
we concentrated our efforts on small out-lets, and achieved good organic growth in key categories. Staple items such as food and beverages were particularly af-fected as consumers bought in smaller quantities. However, this was balanced by positive results in the smaller outlet chan-nel. By the end of the year the economy had recovered and we were able to capi-talize on market growth. Malaysia’s achievement of double-digit growth was another success story. This significant improvement in performance is largely the result of the stringent and diligent implementation of a transforma-tion program that started in 2008 and in-cluded a complete review of our business fundamentals, such as sales team organi-zation, sales channel efficiency, inventory management, as well as back office struc-ture. The successful reinvention of our business in Malaysia enabled us to build
on our dominant position in this market, increase our competitive advantage, and improve the service proposition, thus trans-forming market dominance into customer satisfaction. Another excellent result was achieved in Myanmar. Despite the damaging effects of Cyclone Nargis in 2008, which are still being felt throughout the country, we ex-perienced substantial growth. In addition, our presence in Vietnam continues to grow, driven by our efforts to steadily increase our market position. In Singapore, we managed to grow our business substantially, a noteworthy achievement in a very saturated market where DKSH has the highest market share. We achieved growth through the optimiza-tion of our portfolio and securing a major account with Johnson & Johnson and its personal care products such as Neutrogena.
We serve 300,000 retail outlets in Asia, ensuring that our clients’ products are visible on the shelves, and in stock at all times.
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Hong Kong achieved strong growth in 2009 thanks to its successful long-term business relationships with key customers, which resulted in priority participation in store promotions and increased sales to consumers. To counter having some of the highest land and labor costs in Asia, Fast Moving Consumer Goods Hong Kong’s strategy of relocating its bulk storage to South China has enabled us to capitalize on the lower storage costs in China and thus to maximize logistics efficiencies.
A reliable partner for successOur focus is on growing our business or-ganically through rolling out success sto-ries and business development. To this end, building and maintaining sustainable re-lationships with our suppliers is absolutely crucial. Last year, we renewed our long-term contract with Energizer Holdings, Inc. in Thailand, a relationship that goes back over 20 years. We will continue to provide them with services covering supply chain management, product registration, and importation management. Also in Thailand, we extended our cooperation with Inbisco
(Mayora), a quality snack food company. We have worked with Inbisco for three years, helping to improve the market cov-erage and sales of their brands. Finally, we took over sales and distribution for NatureGift, an innovative slimming coffee product, and Pan Tai sauces, a leading hot-pot sauce producer in Thailand. The fact that DKSH, in addition to being the distributor of choice for US and European brands, is able to serve increasing num-bers of local brands, demonstrates our competitiveness and strong position in the market. Our economies of scale, comprehensive network, and well-established infrastruc-ture in Hong Kong have built our reputa-tion as a reliable partner. This was an im-portant factor in extending our contracts with Pepsico Beverages, Mead Johnson Nutrition, and Sunwa, and starting new relationships with Whealthfields Lohman and Kambly. In Taiwan, we renewed con-tracts with Nivea and Procter & Gamble Pet Care. Another highlight is our new contract with Taokaenoi, a producer of fried seaweed snacks. Having worked with
them in Thailand since 2005, we extend-ed our successful relationship to Hong Kong in January and to Vietnam in July 2009. Since we started to manage their marketing, sales, and distribution activi-ties, sales have risen substantially and we anticipate increased growth in 2010. However, we not only grew organically but also through acquisitions. For exam-ple in Thailand, where we took over the Shell Distribution Company, the provider for Shell’s lubricant business in Thailand. This addition allows us to penetrate the auto care industry, giving us a larger mar-ket share and opening up an entirely new trade channel for products and categories for suppliers. The impact of this acquisition is even more significant since Shell’s exist-ing infrastructure of 30 depots around Thailand now belongs to DKSH. This ad-ditional distribution network will help us to get even closer to customers and to ex-pand our distribution coverage to smaller outlets across the country. At the end of the first quarter of 2010, we acquired Chiao Tai Logistics, the lead-ing consumer goods logistics company
Business Unit Consumer Goods* money figures in CHF million (in rounded figures)
2007 2008 2009
Total Sales ** 4,648 4,283 4,231
Net Sales 2,948 3,123 2,936
EBIT 81 72 82
Assets 1,005 1,003 962
Specialists 12,319 12,022 11,395
* comparative figures have been adjusted to reflect discontinued operations ** equals Transaction Value
26 Consumer Goods
With our state-of-the-art logistics infrastructure, our business partners can rely on efficient, dependable, just-in-time delivery of their products, in urban as well as remote areas.
We are able to handle all kinds of products, for example sensitive fresh and frozen goods, in our new cold chain distribution center in Thailand.
Thorough market research enables us to ensure that the products we deliver match local tastes.
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We are the sole distributor for Levis ® in Thailand and Cambodia, operating 23 stores and 105 shops-in-shops.
Our large sales force is equipped with handheld devices, which put real time information at their fingertips. DKSH representatives can instantly access contact and database information, record sales orders and call activities, and monitor the use of promotional materials for greater operational efficiency.
Through the acquisition of Shell Distribution Company and its 30 depots across Thailand, we have moved even closer to our customers and expanded our distribution coverage to smaller outlets.
28 Consumer Goods
in Taiwan. This acquisition makes DKSH the largest full-service consumer goods distributor in Taiwan. We will also now be able to offer more regional solutions from a much stronger platform within the Hong Kong, South China, and Taiwan tri-angle. Furthermore, we can provide Chiao Tai’s clients with a more comprehensive portfolio of services, as well as outsourcing options for marketing, sales, and back office functions.
Unrivalled infrastructureBusiness Segment Fast Moving Consumer Goods benefits greatly from our infra-structure, which includes state-of-the-art distribution centers that allow us to pro-vide our business partners with innovative technology as well as sound operational practices. Our new cold chain distribution center in Thailand is a major gain, as it significantly enhances our capabilities for handling fresh and frozen products from leading international manufacturers in-cluding Unilever, Kraft, Fonterra, F & N, Tipco, and Danone. The 21,500 sqm facil-ity is one of the most technologically ad-vanced cold chain distribution centers in Asia. It uses our custom-designed SAP management system, which provides un-matched inventory management and lo-gistics solutions. The facility gives us a competitive edge in the dairy industry, as we now have the capacity to manage the higher volumes needed to service a larger customer base. A new distribution center is planned in Singapore for the Business Units Fast Moving Consumer Goods and Healthcare, which will greatly increase capacity and give us the opportunity to expand our
business and to enter the chilled and fro-zen food category in Singapore. In South China, DKSH expanded its export-supervised bonded facility in the Shenzhen International Logistics Center, and increased its co-packing lines, help-ing the Hong Kong distribution center to strengthen its competitive edge. Another major achievement for our Business Segment was the completion of the global rollout of Pegasus, our SAP-based Global Enterprise Resource Planning template, in Thailand. We also introduced a highly effective sales management soft-ware program in Malaysia to manage sub-distributors, providing us with greater transparency when tracking sales and in-ventory.
2010 – business development What has made Business Segment Fast Moving Consumer Goods such a success over the years is our regional scale com-
bined with tailored services and solutions. In keeping with our strategy for growth, in 2010 we will continue to strengthen our full-service business. As usual, we will apply our in-depth market knowledge and unmatched infrastructure to help our clients and customers successfully seize business opportunities. Moreover, we will further optimize our supplier, service, and category portfolios country-by-country to ensure that we maximize the growth of our profitability. We have placed proactive business de-velopment at the core of our expansion activities to further strengthen our domi-nant market position. To achieve this we have created a new global business de-velopment role: Vice President Business Development, to help the entire Business Segment carve out new opportunities whilst maintaining and developing key relationships with our current suppliers across countries. Furthermore, with the
We support luxury brands, such as Maurice Lacroix, to successfully expand and grow in Asia.
29
introduction of a new global Vice President Sales function, we will be able to concen-trate better on building up sales capabili-ties and rolling them out across countries. The position will also ensure that certain quality criteria are met, establish best prac-tices in sales, and promote the adoption of standard operating procedures and sys-tems across the business.
Luxury & LifestyleOur Business Segment Luxury & Lifestyle represents some of the most renowned and respected luxury brands in the world. We help international manufacturers to access markets and extend their reach into Asia. Our key strategy is to focus on creating a strong local presence through brand-building, as well as to target whole-sale and single-brand retail distribution. The Business Segment is organized into four Business Lines: Luxury Watches, Accessories & Apparel, Household Luxury, and Hair & Skin Cosmetics. On behalf of our partners we launch and run flagship stores, shops-in-shops, and corners with great success in many different locations across Asia. The luxury products we handle include classic timepieces, fine writing in-struments and stationery, and high-end household goods. In 2009, our Business Segment Luxury & Lifestyle was affected by the global eco-nomic downturn, with sales of luxury goods in Asia down by 20% on average. However, we remained vigilant and re-sponsive to market conditions, and intro-duced several initiatives to improve the positioning of the Business Segment. In order to ensure the continued optimiza-tion of our portfolio, we terminated sev-
eral agencies that were not performing to expectations, added six new brands, and successfully renegotiated four agency con-tracts: Graham, Harry Winston, Breitling, and Corum. We also extended the agree-ment with XinYu Hengdeli, our exclusive distribution partner for Maurice Lacroix watches in China. We further added four new lifestyle brands: Bolle, MCR, Silencia, and Sperian, with products such as ear plugs and safety eyewear. The Hagemeyer-Cosa Liebermann ac-quisition concluded at the end of the first quarter of 2010 massively strengthens our Luxury & Lifestyle operation and gives us a portfolio of luxury watch and lifestyle brands such as Parmigiani, Louis Erard, Ferragamo, Bally, and Porsche Design. Further, its network of 74 sales outlets, over 300 staff, and operations in Korea, Taiwan, Hong Kong, as well as Guam and Saipan, significantly expands our footprint and enables us to strengthen the regional coverage. As we look ahead to the near future, our strategy is to be a regional player with Asia-wide coverage for all our brands. The focus now is primarily on further develop-ing the current brand and market portfo-lio. On top of this, we will selectively add promising new brands.
Luxury Watches In this industry, where large groups con-trol up to 70% of all brands, DKSH is the only significant independent force for smaller and upcoming luxury and lifestyle brands seeking to launch into Asia. We have the capabilities to support brands from the very first stage: from providing market entry studies and consulting, to
marketing campaigns, and identification of and access to suitable sales environ-ments. Our service and solutions offering is designed to enhance the exclusive im-age of a brand and is one of the reasons why we have been able to maintain such an impressive track record in Asia. The 2008 acquisition of the Desco Asia Pacific Holding business enlarged our foot-print, as it provided us with distribution rights for blue-chip watch brands such as Maurice Lacroix, Parmigiani, Graham, and Breitling, and further supported our growth in Malaysia and China. In 2009, we extended our partnership with Graham from five to twelve coun-tries in total. Korea and Australia reported a sales record of double-digit growth. We reorganized our watch portfolio during 2009 in order to optimize the positioning of current brands and to make room for future development. We obtained the dis-tribution rights for two additional brands: Esprit and Puma. The Hagemeyer-Cosa Liebermann acquisition also provided a sig-nificant addition to the existing portfolio.
Accessories & ApparelOur business with Lamy, the Germany-based maker of premium pens, continues to do very well in Japan. We enjoyed a re-cord year, reporting a 40% increase. The combination of successful marketing ini-tiatives and Lamy’s reputation for high quality and innovative design has greatly contributed to its continuous success. Our long-term partnership with Graf von Faber- Castell, the German manufacturer of exclusive fine writing, drawing, and coloring instruments, is also a continu-ing success. Its flagship store in Tokyo’s
The resilience of Business Unit Consumer Goods is a direct result of our dedication to anticipating the needs and goals of our clients and customers.
30 Consumer Goods
prestigious Midtown Galleria performed well in 2009. The performance of our line of luxury accessories and apparel reflects the fact that our products can maintain a unique position in a highly competitive market.
Household Luxury In Australia, New Zealand, and Korea, we have become a leading distributor of high- quality household goods from internation-al brands such as J. A. Henckels, William Levene, and Zyliss. In 2009, sales improved considerably during the second half of the year. We focused on strengthening the positioning of our brands in the market-place through new product development. Although the 2009 retail environment was tough, we expect improvement in con-sumer confidence in 2010.
Hair & Skin CosmeticsOur hair and skin portfolio experienced double-digit growth in 2009. The presti-gious Swiss skin care line La Prairie opened a new store at The Elements, Hong Kong’s luxury shopping complex. As the sole dis-tributor of La Prairie in Hong Kong since 2006, DKSH was instrumental in the plan-ning and organization of the new shop. With the early 2010 acquisition of the Hagemeyer-Cosa Liebermann Group, we have also taken over La Prairie business in Thailand. Our plans for 2010 include en-hancing current operations, and adding non-competing brands to our portfolio to help increase our distribution reach.
Levi’s ®
For over 20 years, DKSH has been the sole franchisee and distributor of Levi’s ® ap-parel in Thailand, with a total of 23 Levi’s ® stores, five of which opened in 2009, and 105 shops-in-shops. In addition to our re-tail activities, we also handle the design, manufacturing, distribution, and market-ing of Levi’s ® products for the Thai market. This has been a successful and mutually beneficial relationship that has brought growth to both companies. In 2009, we gained the rights to distribute Levi’s ® in Cambodia as well. This new agreement is a direct result of our effective and strate-gic management of the brand in Thailand. We are looking forward to furthering our relationship with Levi’s ® in Cambodia, and will begin brand-building initiatives in 2010. Last year was not without challenges, however. Sales were slightly down in com-parison to 2008. Several factors, such as the reduction in tourism-related travel and the global economic crisis, resulted in low-er than average consumer traffic. In order to maintain Levi’s ® competitive market position, we dedicated our efforts to new product launches and to optimizing busi-ness operations at our two factories and at our distribution center. We leveraged our internal Group synergies and trans-ferred our logistics operations to the Fast Moving Consumer Goods Business Seg-ment, which greatly improved our supply chain processes, increased production ef-ficiency, and reduced costs. The Levi’s ® factories we manage have also adopted lean manufacturing practices, which have led to more streamlined operations.
Our management team also identified im-provement opportunities at Levi’s ® retail shops, converting six shops to factory outlets and opening an additional two new ones. In 2009, we appointed a new Visual Merchandising Manager whose re-sponsibility is to ensure that all our stores meet global Levi’s ® standards. Further, we strengthened our management team with new functional leaders for sales, product development, and finance. One of the most successful financial months ever recorded for Levi’s ® Thailand occurred in August 2009. We implement-ed a highly successful retail marketing strategy, the “Swap Jeans” promotion, which allowed customers to exchange any pair of jeans for a discounted purchase of Levi’s ® jeans and other products. By link-ing the promotion with charity donations, as described in more detail in the “In and for Asia” section of this Annual Review, we were able to make a significant contri-bution to the local community. In 2010 our strategic focus will be on continued operational efficiency initia-tives and new product launches, such as Curves, a new jeans collection for women, and the upgrade of the well-known 501®. We will also invest in a new and more so-phisticated ePOS (electric Point of Sale) system for all stores. The Dockers ® brand is still relatively new in Thailand, having been introduced only in 2007. DKSH currently operates one Dockers ® store and 13 shops-in-shops. The brand is growing steadily, due to the fact that we invested in brand develop-ment strategies in 2009, and will continue to do so this year.
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Food Services & Hotel SuppliesFor the past seven years our Business Seg-ment Food Services & Hotel Supplies has enjoyed steady and solid growth. We are one of the leading suppliers of high-qual-ity pastry, dairy, and chocolate products, imported coffee and tea brands. Our dis-tribution network is extensive – with fa-cilities in over 25 cities – allowing us to provide supplies and services to high-end hotels and restaurants in China, Hong Kong, and Macau. In 2009, overall bakery chain consumption was higher than av-erage because end-consumers increas-ingly purchased pastry products for home consumption. One of the highlights of 2009 was our ability to capitalize on the 2008 addition of Elle & Vire, one of France’s top produc-ers of fine dairy products. With its repu-table product range we significantly im-proved dairy sales in all the markets we
serve. Furthermore, the brand opens up exciting business opportunities with new channels, such as international hotel and coffee chains. We anticipate that the dairy product line will allow us to better sup-port China’s growing pastry market. As part of our Business Segment we have our own Gourmet Academies in Hong Kong and Shanghai where we pro-vide product training and demonstrations. New and existing hotel chains have ben-efited from our highly trained pastry chef graduates, who help them to stay at the forefront of the industry. The academies apply innovative applications to tradition-al ingredients. For example, in 2009 dur-ing the mid-Autumn Moon Festival in China, we used Lindt chocolate couverture as the coating for traditional moon cakes. It was a very popular gift item, and thanks to this creative idea we were able to reach a broad customer base.
In 2007 we created the “Club Gourmet” e-platform, a loyalty program for our cus-tomers. This has been a great success, and in 2009 we enhanced it considerably. In addition to offering members the latest product news, we can now provide them with access to customized price lists for the products DKSH offers. This user-friend-ly feature makes it easier for our business partners to make informed purchasing decisions. As part of our continuous investment in technology, we also launched our EchoPlus system, a handheld tool that allows our sales force to instantly view inventory in real time and to formulate promotional offers on the spot. In terms of our organizational structure, we have appointed key positions in Hong Kong and China with the task to establish Hong Kong as a regional base and plat-form for expansion. These roles will ad-vance product and sales development in the region. 2010 will present many interesting opportunities to expand support for our business partners. In 2010 we will focus on further developing our business with bakery chains, Michelin star restaurants, and top-end hotel restaurants. In addi-tion, we are working on improving the coordination of local warehousing and lo-gistics operations as well as inventory management, with the help of our IT team. The implementation of these efforts will allow us to enhance the services and solutions we offer our business partners, and help them grow in their markets.
In keeping with our strategy for growth, in 2010 we will continue to strengthen our full-service business and further optimize our supplier, service, and category portfolios country-by-country.
Our Gourmet Academies offer expert product training and demonstrations for pastry chefs.
SourcingResearch
and Analysis
DKSH voloreetumsan henibh elenis el utatum il ut delendigna augiam velenit ad tat wis augiam, vulput ilisi et nim nosto odigna feuissed te miniam, vero odiam, vel utpat vent lum venis nulla
Support for innovation and growth We research new specialty ingredients and tech nology applications, conduct feasibility studies and collect market information that enable our business partners to advance their businesses. In our network of 15 formulation and application laboratories we carry out samples and validation testing, as well as work on developing cutting-edge products. Our research and analysis capabilities allow us to provide in-depth market insight and strategic advice to our business partners.
Our highly trained experts generate, develop, and customize innovative and competitive new products. By taking the information gathered from our market activities and combining it with our expertise, we help our business partners grow their businesses.
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Business Unit
HealthcareDKSH’s Business Unit Healthcare is the leading Market Expansion Services pro-vider for healthcare companies seeking to grow their business in Asia. We offer a wide range of solutions, extending from product registration, marketing and sales, to physical distribution. Products available through DKSH include ethical pharmaceuticals, consumer health, over-the-counter (OTC), as well as medical devices, and are supplied to multiple professional healthcare outlets includ-ing hospitals, clinics, pharmacies, drug-stores, dentists, optical outlets, and others. With our leading marketing and sales competencies supported by regu-latory affairs, customer care centers, and GMP-compliant distribution centers and logistics processes, our capabilities set the standard, and our integrated service offerings are unmatched across Asia.
7,000 healthcare expert staff operate out of 109 locations across 11 countries and provide the deep market knowledge coupled with breadth of capabilities that enable us to develop truly customized solutions. We support and represent more than 260 clients and over 150,000 purchasing and decision-making custom-ers. For companies wishing to license out products in the Asian markets, we are a proven partner through our Medi-nova business based in Switzerland and Asia. In addition, the Business Unit’s OLIC manufacturing facility in Thailand produces an extensive range of ethical and OTC medicines in all standard for-mats and is South East Asia’s foremost contract manufacturer for this segment. In 2009, Healthcare’s Net Sales amount-ed to CHF 2,598 million.
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150,000customers in Asia served daily
11countries
No. 1Market Expansion Services partner
for healthcare companies
260clients
7,000specialized staff
1business location
in Europe
3,000highly specialized field-based sales
force representatives
108business locations
in Asia Pacific
In 2009, Healthcare’s Total Sales amounted to CHF 3,135 million.
36 Healthcare
Commitment to healthcare excellence
The year 2009 was highly successful for our Business Unit Healthcare. Net Sales of CHF 2,598 million exceeded 2008’s result by 15.7%, with all core countries grow-ing their business. An excellent EBIT of CHF 46 million delivered 39.4% above 2008 results. This strong financial perfor-mance is an outcome of our strategy for growth, which focuses on business devel-opment, refining operational processes and efficiencies, strengthening our ser-vice offerings, and building up full agency business in all channels and segments. Our ability to create customized and integrat-ed solutions, combined with our deep industry expertise and local knowledge, makes us the leading healthcare Market Expansion Services provider in Asia.
A strong business modelThe Business Unit operates in the core segments of ethical pharmaceuticals, con-
sumer health, over-the-counter (OTC), and medical devices, with integrated capabili-ties in regulatory, marketing, sales, logis-tics, and manufacturing. Over the years we have achieved operational excellence through the ongoing refinement of busi-ness processes to ensure both efficiency and effectiveness across the value chain. This has been enhanced further in recent years through the implementation of a highly robust IT infrastructure built around SAP across all core countries. Our signifi-cant commercial and logistical footprint in all key markets enables us to serve thou-sands of healthcare customers directly. These capabilities, along with our commit-ment to GMP- and ISO-related quality and high standards in terms of governance and transparency, have made us a trust-worthy partner for many of the world’s leading companies in the healthcare in-dustry. Every year we strive to support our
business partners better, and it is this ded-ication that drives our success. A significant factor behind our solid 2009 results is our broad geographic reach. With over 150,000 purchasing and decision-making customers in pharmacies, clinics, and hospitals across Asia, Business Unit Healthcare’s comprehensive footprint allows us to generate a diverse range of business opportunities for our clients and customers. It is our expertise and local knowledge of key regions in Asia that help our partners enter, grow, and succeed in their markets of choice. As part of our Business Unit strategy for growth, we have dedicated our efforts to further growing in the countries where we are already active. This focus has been integral to our excellent performance. All countries where we operate improved their EBIT contribution in 2009. There was particularly strong growth in Vietnam, Myanmar, and Taiwan, followed by Hong Kong, China, and Thailand. These coun-tries played a major role in our 2009 achievements. Moreover, OLIC, our health-care manufacturing facility and Thailand’s largest contract manufacturer of pharma-ceuticals, continued to grow and attract-ed a number of new long-term accounts. One of the benefits of doing business in Asia for over 140 years is that we have the experience and know-how to develop tailored market entry strategies for spe-cific countries. We provide Market Expan-sion Services to over 260 clients and sup-pliers, from highly innovative small and medium-sized companies to leading glob-al healthcare corporations such as Sanofi Aventis, Roche Pharma, Roche Diagnostics, Novo Nordisk, and Alcon.
Our business partners can rely on our fast and reliable customer service, tracked and measured with KPIs, to ensure the same consistently high standards in every country we operate in.
37
Partner of choice In 2009, we acquired many new contracts and extended ongoing relationships. In Taiwan for example, we widened our col-laboration with Alcon, the leading global ophthalmology company. The partnership was initiated previously in Hong Kong and China, and DKSH will now further support their expansion efforts. In addi-tion to providing a compliant logistics and commercial platform, we will utilize our SAP-based IT system with further unique enhancements to enable Alcon to track and optimize inventory levels at hospital locations. Over the years we have established a number of partnerships with Japanese companies. In 2009, after a comprehen-sive partner assessment by Astellas, one of Japan’s major pharmaceutical compa-nies, we secured several important new contracts. Our ability to demonstrate thorough knowledge of our markets and to build on an established track record was influential in their decision to select us to help them expand their business in Vietnam as well as in Hong Kong, Taiwan,
and Thailand. Another Japanese company that extended its partnership with DKSH was Taisho, Japan’s leading OTC-drug provider, which will partner with us in Thailand, Malaysia, and Singapore. 2009 also saw us extend our collabo-ration with Sanofi Aventis, a major multi-national pharmaceutical company. After many years of successful partnership in Vietnam we added three more markets: Taiwan, Thailand, and Malaysia. A further important partnership extension took place in Laos with long-term partner Roche. We have been working with Roche in many countries for some time, and a key factor for our new contract in Laos was our capac-ity to provide high-quality cold chain prod-uct storage and handling, essential for their specialist products in tropical climates. Finally, in Taiwan we renewed our part-nership with Royal FrieslandCampina, a global dairy company that has a special -ist infant formula product line. We have provided Market Expansion Services to Friesland Campina since 2004, helping to strengthen their brands and to increase their market share.
As we look back on 2009, a year that pre-sented challenges to many companies around the world, we are proud of having proved our ability to offer tailored solu-tions to our clients and customers that deliver positive results and help them con-tinue to grow. Last year marked the start of building a stronger, more robust portfolio, as well as the deepening of our regulatory, marketing and sales, and logistics servic-es. We are especially pleased with our in-creased capabilities in OTC, consumer health, and medical device markets, and will continue to place more emphasis on these key segments in order to provide a more comprehensive offering to clients and customers alike. The beginning of 2010 brought ad-ditional business with the acquisition of Biolife Sdn Bhd, a leading vitamin and health supplement company and distribu-tor in Malaysia. Through this acquisition we have strengthened our distribution platform for present and future clients into the pharmacy channel and also add-ed a successful brand to our own DKSH portfolio. We are not only building greater
Our ability to create customized and integrated solutions, combined with our deep industry expertise and local knowledge, makes us the leading healthcare provider in Asia.
Business Unit Healthcare money figures in CHF million (in rounded figures)
2007 2008 2009
Total Sales * 2,697 2,629 3,135
Net Sales 2,334 2,245 2,598
EBIT 16 33 46
Assets 768 663 799
Specialists 7,189 7,010 6,993
* equals Transaction Value
38 Healthcare
Our network – the largest in Asia – covers more than 150,000 purchasing and decision-making customers in pharmacies, clinics, and hospitals.
By regularly presenting new and innovative products to doctors, we help to ensure that patients receive the best possible care.
Our 3,000 field-based sales staff can record their daily call activities or orders with EchoPlus, our electronic customer relationship management and sales force effectiveness tool. The result is higher customer service and satisfaction, because up-to-date information is always available when serving a customer.
39
Through our new Global Consignment Inventory Management tool, we can track and trace individual items at hospital locations, thus allowing orders to be delivered within just a few hours after receiving a request for supply.
Our state-of-the-art distribution centers in Asia provide our business partners with the highest standards of logistics and distribution services, ensuring full compliance with GMP and ISO standards.
40 Healthcare
competence in this area, but we are now even better positioned to deliver benefits to all our key stakeholders in a way that was not possible before.
Expansion of tailor-made servicesThe extension of our service offering has led to an increase in the solutions we of-fer our clients and customers. One area of focus in recent years has been our entry into the medical devices sector. In 2009, we renewed or initiated cooperation with many companies in this segment, includ-ing Smith and Nephew, Boston Scientific, Alcon, Terumo, and Metronic. A specialist service offering that has been key to sup-porting this momentum has been our Global Consignment Inventory Manage-ment (GCIM) tool, which can track and trace individual items in hospital locations. This tailored hardware and application is unique to DKSH, and demonstrates how we synergize our market knowledge and advanced IT developments to create unique solutions for our partners. The Alcon partnership is a prime exam-ple of the potential of Market Expansion Services to provide high-quality customized solutions that deliver positive business re-sults. Although we have had limited expe-rience in the ophthalmic industry, through building on our strengths, asking the right questions, and thoroughly assessing the needs of our business partner, we were able to deliver a custom-made solution. We are currently negotiating with other medical device companies that are inter-ested in having access to our capabilities. As we look ahead, we are excited about the many possibilities the GCIM tool can
yield for our clients and customers in other healthcare sectors. Another example of our Business Unit’s capacity for developing innovative tech-nology is EchoPlus, our handheld sales force effectiveness tool. Over 3,000 of our field-based sales force use the tool to im-prove customer relationship management, consignment inventory management, and merchandising management. Since its in-troduction in 2005, EchoPlus has not only contributed to improving our own DKSH sales force, but also those of our business partners. There has been increased de-mand for EchoPlus, opening up new busi-ness opportunities for us as well as pro-viding added value to our partners in the Asian healthcare industry. Furthermore, in 2009 we benefited greatly from the DKSH global SAP platform, Pegasus, which has been implemented in
all major countries and significantly im-proves reporting capabilities. This system is a source of timely and insightful informa-tion, and provides a robust platform to support data security and business conti-nuity, unmatched by any other company operating as a service provider in our mar-ket. The system benefits all our stakehold-ers, and is an important competitive ad-vantage to Business Unit Healthcare and our clients and customers. As we look ahead, we expect to create more efficien-cies and to become increasingly effective with this sound and proven technological infrastructure.
Highest quality standardsIn order to serve the industry to the high-est standards, we are constantly investing in upgrading our distribution infrastruc-ture, and are committed to operating in
DKSH Healthcare provides a unique platform for business growth based on our expertise and commitment to GMP/GSP quality standards to protect product integrity and patients.
41
Our SAP system is a source of timely and insightful information, unmatched by any other company operating as a service provider in our market.
compliance with GMP standards and ISO 13485, which is the essential stan-dard for specialist medical devices. In addition to the two state-of-the-art distribution centers opened in 2008 in Thailand and Vietnam, both fully compli-ant with Good Manufacturing Practice (GMP) and Good Storage Practice (GSP), we set up a new distribution center in Tai-wan in 2009, which offers – among other features – cold chain storage capabilities, a relabeling facility, and an advanced SAP operating system. Now DKSH Taiwan can provide even better and more compre-hensive logistics and distribution solutions for the country’s growing healthcare mar-ket. In addition, the center raises the bar for product quality and service standards in the region, and enables us to provide clients and customers with effective and efficient services. Along with other DKSH distribution centers across the region, the new center further contributes to our strong reputation in the Asian healthcare market for implementing best practices in quality compliance. In building an infrastructure that our business partners can trust and that gives them a competitive advantage, one of our main areas of focus has been on improv-ing best practice sharing and benchmark-ing across the entire Business Unit. As part of our strategy for growth, we track and measure KPIs in key areas such as logistics, regulatory, quality, and technology tools, to ensure that we can deliver the same consistently high standards in every coun-try where we operate. Our priority is our clients and customers around the world, who depend on us to protect the quality
and integrity of their products in many different locations, and to operate in line with other essential standards of corpo-rate governance vital to multinational corporations. To support our commitment to main-taining the highest standards across our entire Business Unit and in every country, we have built a solid management team to implement our strategies for growth. We consistently seek to cultivate leader-ship. One of our key initiatives in 2009 was to identify and foster potential new leaders within the Business Unit, and to this end we implemented a new leader-ship development program for a total of 30 young talents. We expect an increase in participation in 2010, and look forward to reporting on the achievements of these up-and-coming leaders in the future. 2009 also saw a number of strategic personnel appointments in the area of Business Development, and the newly created role of Regional Head of Regula-tory and Quality, who will coordinate the regulatory needs of our partners and up-grade our approach to implementing GMP and ISO quality-related projects.
Developing a robust platform for growthThe last two years were filled with numer-ous challenges, not only for our Business Unit but also for many of our clients and customers. Overall, the healthcare seg-ment has proved resilient, and in most markets has continued to grow even in a challenging economic climate. At the same time, however, it has become an absolute necessity to constantly develop
new approaches and to deepen the inte-grated service offering we provide across all countries and Business Segments. We have recognized the importance of creating integrated services that truly dif-ferentiate our Business Unit and meet our business partners’ developing needs. Our status as the only one-stop provider in the healthcare market with a focus on Asia is a direct outcome of having a diversified portfolio of clients and products, a sound infrastructure, and a full range of service offerings. As we move forward in 2010, we will not lose sight of the global eco-nomic conditions and the ongoing chal-lenges they present, and will continue to refine the implementation of our strategy for growth in order to generate new busi-ness opportunities for DKSH, and an ever-improving service offering for our partners. In order to accomplish all our planned initiatives, we have dedicated time and resources to improving operational excel-lence and realizing synergies throughout our Business Unit in terms of supply chain, customer and supplier satisfaction, quality assurance, financial reporting capability, and business solutions. Over the past two years we have built a strong foundation that allows us to fully leverage our sound market knowledge, differentiated service offering, logistics infrastructure, and IT platform. The results of our strategic focus and efforts are evident in last year’s per-formance and will guide us through 2010. By remaining focused yet agile, Business Unit Healthcare is set for another success-ful year that promises further growth for all stakeholders.
SourcingMarketing
and Sales
DKSH voloreetumsan henibh elenis el utatum il ut delendigna augiam velenit ad tat wis augiam, vulput ilisi et nim nosto odigna feuissed te miniam, vero odiam, vel utpat vent lum venis nulla
We offer a comprehensive range of marketing and sales services for consumer goods, luxury and lifestyle, healthcare, and technology products, and performance materials. Our dedicated teams have an extensive brand-building track record and experience ser vicing all relevant channels and outlets with services ranging from market research, product management, or merchandising to sales and stock planning. Through our unrivalled market coverage in Asia Pacific, we help companies of any size gain revenue opportunities in new or established markets.
Expansion of revenue opportunities
With our complete array of marketing and sales services, our experienced specialists help to grow businesses by increasing sales, enhancing efficiency and margins, and by launching into new markets.
44
Business Unit
PerformanceMaterialsDKSH is a leading global provider of Market Expansion Services for perfor-mance materials. We source, develop, market, and distribute a wide range of specialty chemicals and ingredients to business partners in the brush and ap-parel, food and beverage, personal care and cosmetics, pharmaceutical, and spe-cialty chemical industries. Thanks to our comprehensive networks and global re-lationships, we provide reliable sourc-ing around the world with instant ac-cess to over 70 markets, obtaining the best products at the most advantageous prices. Our 15 application and formula-tion laboratories allow us to develop solutions to meet the evolving needs
of our customers and to create opportu-nities for our suppliers. Using our deep industry expertise and the innovative approach of our 1,200 specialists in 24 countries and 57 locations, we research and develop new product ideas, value-added formulations, and in-depth ap-plications. This enables our over 4,000 suppliers and 20,000 customers to ben-efit from strategic market insights, lower operating costs, reduced time-to-market intervals, and new revenue opportuni-ties, as they grow their businesses in new and existing markets. Performance Materials achieved Net Sales of CHF 629 million in 2009.
45
44business locations in Asia Pacific
No. 1provider of Market Expansion Services for
specialty chemicals and ingredients
24countries
13business locations in
Europe and the Americas
15application and formulation laboratories
20,000customers
In 2009, Performance Materials achieved Total Sales of CHF 703 million.
1,200specialized staff
4,000suppliers
46 Performance Materials
Following a record result in 2008 with an EBIT of CHF 42 million, Business Unit Per-formance Materials was affected by the economic downturn in 2009, which re-sulted in an EBIT of CHF 30 million. Never-theless, we achieved Net Sales of CHF 629 million, a result just 4.8% lower than 2008, but well above the performance of most of our competitors. Looking only at Asia, 2009 would have resulted into an-other record year. In Europe, however, our customers in the automotive, chemical, consumer electronics, luxury, and con-struction industries suffered badly in 2009. This affected the overall performance of our Business Lines Specialty Chemicals In-dustry and Brush & Apparel Industry. Some recovery was realized in the last quarter of 2009. Thanks to our broadly diversified business in terms of geography and in-dustries, and our proactive and hands-on management of cost and efficiency issues,
Business Unit Performance Materials was able to limit the impact of the crisis and to deliver results that were above market even in these difficult times.
Industry insight and global reachThe key strength of our Business Unit Per-formance Materials is the ability to com-bine industry insights with a global net-work. Our customers want to work with a highly responsive partner that commands deep technical expertise in performance materials and can offer a complete, tailor-made portfolio of products and services. Because we know what matters for each specific product or application, we are able to suggest changes in formulations that match the original specifications while significantly reducing costs – a real com-petitive advantage in today’s challenging markets.
What is more, in addition to having an unrivalled sourcing network of over 70 markets around the world, we also have the capacity to develop new product ideas and formulations in our network of 15 application and formulation laboratories across Asia, Europe, and the Americas. These capabilities, and the fact that we are the only distributor of specialty chem-icals and ingredients in all major econom-ic markets, put us well ahead of our com-petitors. Over the years, we have earned a repu-tation among our business partners for high quality, cost-effectiveness, depend-able supply, innovative products, and very importantly, compliance with safety and environmental regulations. This has led to us providing supply chain management and tailor-made services to many leading international companies and to long-term partners such as L’Oréal. Serving such re-nowned companies has helped put us at the forefront of industry trends, and has allowed us to develop even more tailored solutions for our business partners.
Proactive management: the key to success In our business, technical know-how and application expertise are essential. It takes time from the development of a new prod-uct or new application to the materializa-tion into real sales. Therefore, continuously building a strong business development pipeline and producing tangible outcomes is absolutely crucial. The resilience and strength of the Busi-ness Unit was put to the test in 2009. In response to the highly unstable economic climate, increased cost-consciousness to-
Our worldwide network of strategic suppliers and sourcing capabilities enables us to provide a wide range of specialty chemicals and ingredients to our business partners.
Unmatched global sourcing network and industry application expertise
47
gether with the tireless efforts of our sales teams helped to forestall a substantial im-pact on the entire Business Unit. Although we typically provide custom-made spe-cialties for formulations, we increasingly also offer semi-commodities to our exist-ing business partners. Especially against the background of the difficult economic environment, this strategic initiative signif-icantly increased our share of wallet with our customers last year. Thus, the benefits of having a highly attentive and responsive Business Unit, as well as market power in a diverse range of industries, proved their worth again in 2009. Overall, Japan, the Philippines, and Thailand were the strongest country per-formers. Business Lines Pharmaceutical and Personal Care & Cosmetics Industries had a very good year, with strong sales especially in Japan. Business Line Food & Beverage Industry also performed very well, with improved results in all major markets. Our particular focus is on growing or-ganically through business development and rolling out success stories across the
region. For example, in the area of photo-voltaics we are introducing new metalli-zation pastes from an innovative South Korean supplier. These are screen-printing metal pastes used in the production of mono- and multi-crystalline silicon-based photovoltaic cells. We have been success-ful in gaining business from two major photovoltaic producers from south of Europe and expect approvals from key us-ers in Germany, Italy, Belgium, and the USA in the near future. For thin-film solar cell producers, we offer special cleaners from a US-based supplier, which are spec-ified by a leading technology provider of thin-film production equipment. We have gained major accounts in this field in Spain and Germany. At the same time, we are continuously working to complete our product portfolio of innovative products for the photovoltaics industry, such as back sheet films, or products for dye-sen-sitized solar cells, and organic photovol-taic cells. Alongside organic growth, the integra-tion of our early 2009 acquisitions added positively to our Business Unit. Dasico A/S,
a specialty chemicals distributor based in Denmark, strengthens our portfolio and enhances our Scandinavian presence, al-lowing us to offer fuller coverage across the whole of Europe. Furthermore, the acquisition of Voltas Ltd., a member of the TATA group and one of the leading distributors of specialty chemicals and food ingredients in India, enables us to enter into full-fledged mar-keting, sales, and distribution activities with Indian customers. Through seven of-fices located in the major Indian industrial centers, DKSH now serves over 400 cus-tomers in the coatings, construction, cos-metics, food and beverage, pharmaceu-tical, plastics, and specialty chemicals industries, with tailor-made solutions for their specific applications. In addition, this acquisition yields exclusive distribution agreements with several blue-chip suppli-ers from Europe and the Americas. Moreover, the 2008 acquisition of Desco Rohstoffe Holding, a long-estab-lished Swiss trading house for silk and bristles, led to positive results in 2009. The acquisition established us as an
The key strength of our Business Unit Performance Materials is our ability to combine industry insights with a global network.
Business Unit Performance Materials money figures in CHF million (in rounded figures)
2007 2008 2009
Total Sales * 622 721 703
Net Sales 572 661 629
EBIT 35 42 30
Assets 214 235 177
Specialists 1,197 1,278 1,177
* equals Transaction Value
48 Performance Materials
In our 15 application and formulation laboratories we work on new high-quality, cost-effective formulations and technology applications, accompanying our business partners in the development of future product generations from concept to commercialization.
Our specialists have deep technical expertise in specialized raw materials.
Safety, the protection of the environment, high quality, and regulatory compliance are our top priorities.
49
Thanks to our global sourcing network and long-term partnerships, our customers in the chocolate industry enjoy the rare benefit of having a global supplier of non-GMO soy lecithin, an important ingredient for chocolate.
Our globally connected teams offer tailor-made services and solutions that maintain performance while significantly reducing costs.
We offer unmatched global logistics, warehousing, and distribution services.
50 Performance Materials
international niche provider of high-quality silk for luxury garments and accessories. It also makes us the undisputed global leader in bristles for brushes, which we supply to leading players in the paintbrush and polishing equipment industries. All these strategic bolt-on acquisitions extend the position and market reach of Performance Materials in existing regions and industries.
Emphasis on high-level service quality Once again we have been recognized for our excellent sourcing network and for our emphasis on safety and compliance. In 2009, a major multinational pharma-ceutical company and long-term DKSH business partner invited us to participate in a supply chain review aimed at reducing fixed costs and complexity and increasing cost efficiency, during which they exam-ined their outsourcing activities. Based on our excellent service, innovative supply processes, and cost-saving strategies, we are now one of only a handful of long-term strategic suppliers for the company’s products worldwide. This significantly en-hances Business Line Pharmaceutical In-dustry, as it enables us to work with this international group on future products. Another major development took place with one of our long-term partners in In-dia. We have strengthened our relation-ship with a leading producer of non-GMO (genetically modified organisms) soy leci-thin. Because of our foresight in deepen-ing this partnership, we are now one of the few suppliers of non-GMO soy lecithin worldwide. Since the substance is an im-portant ingredient for chocolate and is in-
creasingly difficult to find, our customers in the chocolate industry benefit greatly from having a global supplier of this high-quality product. Additionally, we achieved an important technological accomplishment during a project with Pfizer, the world’s largest pharmaceutical company. We successfully adapted our hand-held technology for their Animal Health sales force in Vietnam. The tool provides virtual visibility of client information and inventory databases. Proj-ects like this are a reflection of our Busi-ness Unit’s capacity to provide solutions that both add value and improve business processes.
Enabling safety and compliance DKSH has long recognized the importance of continually improving safety, quality, and supply chain management processes. From the earliest stage of development
for any project, we help to reduce busi-ness risks so that our partners can deliver high-quality products and services. We are pleased to report that we have taken our commitment to safety and compliance to an even higher level. Our independent team of dedicated SEQRA (Safety, Environment, Quality, and Regu-latory Affairs) specialists supports our business partners with regulatory compli-ance matters. We perform risk assessments and ensure that regulations are met for manufacturing, transport, warehousing, and handling of chemical compounds. These capabilities enable us to have stan-dard operating procedures in place in all countries where we source, significantly reducing risks for our customers. Our spe-cialists also conduct supplier auditing and certification, which assures our customers that the products they source from us are on-specification. Further, we have devel-
Our dedicated global SEQRA team of experts delivers professional risk assessments and guarantees compliance with safety regulations.
51
oped a global reporting system backed by state-of-the-art IT solutions to help our business partners improve safety, quality, and regulatory compliance across a wide range of industry clusters. 2009 also saw the setup of our special-ized REACH (Registration, Evaluation, Au-thorization, and Restriction of Chemicals) team, in response to new legislation that aims to ensure safety in the distribution of chemicals and applies to approximately 30,000 substances marketed in the EU. In order to deal with the implications of this legislation, we have established our own European Regulatory Affairs Compliance Competence Center in Lyon, France. The center allows us to take care of the sub-mission of registration packages and sup-port non-EU companies through the com-pliance process. What is more, we have a portfolio of 900 pre- registered substances that help our business partners to remain important players in or gain rapid access to the European markets. Finally, as part of our focus on distri-bution optimization, in 2008 we opened a new supply chain competence center in Hamburg, Germany. In 2009 our invest-ment paid off, as the center is delivering on its promise to achieve savings in freight, warehouse, and insurance costs for per-for mance materials distribution in Europe. Further investments were made with the addition of two Personal Care Industry laboratories, one in Lyon, France, and the other in Shanghai, China. Both laborato-ries will help us to be even more competi-tive, as well as offer our business partners European and Asian access to sourcing, testing, and safety and regulation services for cosmetics and personal care products.
Foundation for sustainable growthAlthough 2009 presented a number of challenges for the Business Unit, our strat-egy for growth served us well and contrib-uted to our ability to weather the tough business environment. As we move ahead into 2010, we will continue to anticipate and address the concerns of our business partners. Through our comprehensive ser-vice portfolio we will help our partners to become more innovative, eliminate ineffi-ciencies, and transfer fixed costs into variable costs by providing them with op-portunities to outsource their sourcing, product development, sales, and distribu-tion to us. One main focus in 2010 will be on proactive business development, ensuring that we expand our business with our global suppliers and customers. To accom-plish this we have set up a worldwide business development initiative managed by Business Line, aiming to gain new sup-pliers that fit with our existing industry portfolios. We have also appointed a new Vice President of Developing Markets. The role focuses on Vietnam, Malaysia, Indonesia, and Myanmar, in order to fur-ther strengthen our rapidly growing pres-ence in these growth markets. As the economy accelerates into recov-ery, DKSH is the ideal partner for business expansion, offering innovative ingredients as well as formulation and application ca-pabilities. It is DKSH’s financial strength that allows Business Unit Performance Materials to grow and develop new busi-ness opportunities. One of our key goals in 2010 is to con-clude more regional and global contracts with suppliers. An integral part of our
strategy is to increase our emphasis on the solutions-oriented services we provide to our business partners, and to maximize our share of wallet with customers by selling both specialties and semi-commodities, as well as by leveraging distribution compe-tence to optimize profitability. These stra-tegic initiatives differentiate Business Unit Performance Materials in the market and strengthen our relationships with our busi-ness partners. By continuing to listen to our customers and suppliers, and understand-ing the challenges they face, we aim to provide relevant insights that will serve in 2010 and beyond to grow their businesses.
An integral part of our strategy is to increase our emphasis on the solutions-oriented services we provide to our business partners.
SourcingDistribution
and Logistics
DKSH voloreetumsan henibh elenis el utatum il ut delendigna augiam velenit ad tat wis augiam, vulput ilisi et nim nosto odigna feuissed te miniam, vero odiam, vel utpat vent lum venis nulla
Far-reaching network for reliable delivery Through our state-of-the-art infrastructure, we store, transport, and distribute products professionally and efficiently. We have more than 170 distribution centers and offer the possi bility to outsource many additional specialized services, including product registration, regulatory support, customs handling, importation, and supply chain management. Throughout Asia, our business partners receive highly cost- effective distri bution and logistics solutions that give them a real competitive advantage.
Backed by the largest and most comprehensive logistics infrastructure in Asia, our dedicated logistics specialists ensure that products arrive on time whenever and wherever needed, allowing our business partners to concentrate on their core business.
Business Unit
54
Tech nologyDKSH’s Business Unit Technology is the leading provider of Market Expansion Services involving technical solutions for capital investment goods and analytical instruments. We cover the manufactur-ing and production, energy, research, food and beverage, advanced metals, and infrastructure sectors with a service portfolio that includes market entry consultancy, project financing, product planning, marketing, sales, application engineering, and after-sales services. Our application engineering expertise delivers the know-how our customers need to make optimal use of the equip-ment we provide. In addition, we oper-ate our own test and application labo-ratories that supply customers with samples and feasibility and validation testing, and help them to develop new
applications. Our local, regional, and global networks, combined with our broad capabilities and expertise across industries, enable us to quickly under-stand our business partners’ needs and deliver customized products and ser-vices that help them become even more successful. Some 1,200 specialists, in-cluding over 450 service engineers, op-erating from 67 business locations in 17 countries, serve a customer base of over 5,000 companies, providing access to new tech nologies. We help to identify opportunities and create new markets for a supplier base of over 700 renowned European, American, and Asian manu-facturers. In 2009, Business Unit Tech-nology’s Net Sales reached CHF 386 million.
55
No. 1provider of Market Expansion Services
for capital investment goods and analytical instruments
17countries
450service engineers
700suppliers
64business locations
in Asia Pacific
3business locations in Europe and the Americas
1,200specialized staff
In 2009, Technol ogy’s Total Sales amounted to CHF 507 million.
5,000customers
56 Technology
2009 was a year that included both suc-cesses and challenges for Business Unit Technology. With Net Sales of CHF 386 million, down by 7.7% compared to 2008, our EBIT stood at CHF 14 million. Com-pared to other industries, the impact of a recessionary climate and recovery from it in the capital goods sector is character-ized by a cyclic lag. Last year, the invest-ment climate suffered a massive decline across the globe since in times of eco-nomic uncertainty, investments in capital goods are invariably put on the back burner. Business Unit Technology was unable to entirely escape the effects of this, and saw a steep drop in profits. The strength of our business model was demonstrated, however, by the fact that we still made a profit in every country we are active in, which few others in the industry were able to do.
Our results were achieved through our emphasis on the refurbishment and up-grading of existing equipment by our ex-tensive team of maintenance and service engineers, a logical reorientation given the increased demand for machine up-grades when investment in new equip-ment is postponed. The stringent focus on expenses, accounts receivables and inven-tory management also helped. Our ability to expand our service and maintenance business on our large in-stalled base of equipment was made pos-sible by our presence in the markets for many decades. A further advantage is the enormous diversity of product groups and industries we supply. Additionally, we serve not only the private but also the state sector where even, or especially, in difficult times, government support packages aimed at housing, agriculture, transportation, telecom, and other infra-
structure sectors are rolled out, and re-search institutes and universities continue to invest in laboratory instruments. Our strong roots in the Chinese automobile and aircraft industries, which saw con-tinuing strong investment, and our efforts in terms of new business development and innovative solutions also contributed to our results.
Far-reaching geographic presenceIn Australia, our greatest success came from expansion into photovoltaics, which by the end of 2009 saw an increase in business of over 500%. Australia also maintained its leading position in cable and connector sales. In Malaysia and Singapore, our business activities developed well, especially in the analytical instruments business. Thanks to the delivery of the first and only online mercury analyzer to Exxonmobil, a major player in the oil and gas industry, and an increase in revenue from calibration jobs, Singapore managed to stay ahead. A ma-jor highlight of the year was the establish-ment of a long-term exclusive partnership with Lighthouse Worldwide Solutions, the world leader in contamination monitoring solutions. The partnership with Lighthouse includes marketing, sales, distribution, and after-sales services for their products in Singapore, Malaysia, and Vietnam and will further strengthen our reach into new in-dustries such as HDD (hard disk drives) and semiconductors. In China, Business Unit Technology re-ported a strong performance, further ben-efitting from the successful turnaround of our Business Line Food & Beverages which
We manage the efficient and careful delivery of all ordered goods and spare parts, making sure that they arrive on time and are fit for immediate use.
Total technology solutions for expansion
57
provides equipment and services to the hospitality industry. Moreover, Business Line Research doubled its profits com-pared to 2008. We also achieved record sales of machine tools for the manufacture of gears. New suppliers were added, and more services and tools offered to cus-tomers in all Business Lines. Hong Kong realized strong results on most projects, largely due to close moni-toring of project costs and good supplier management. Business Line Service per-formed particularly well, as many cus-tomers preferred to invest in services and upgrades rather than purchase new equipment. Korea experienced high volume sales of die-casting machines for the automo-tive industry as well as equipment for the photovoltaics sector. We successfully ex-panded our product portfolio with new suppliers signed in the areas of automo-tive, food and beverage, photovoltaics, industry power supplies, and wind power. In Vietnam, the generator business yielded good results, as the demand for our services was very high, and will con-
tinue to be so. One of the highlights of 2009 was the new contract with Viettel Telecom, the leading telecoms company in Vietnam, which DKSH now supplies with generators. At the end of 2009, we ob-tained the investment certificate for our joint venture in Vietnam with Cummins, the US-based world leader in power gen-erators, a company with which we have worked for over 40 years in Thailand and 15 years in Vietnam. This is a significant achievement because it allows us to sell both products and services. Our excellent partnership over the years in Thailand paves the way for future success in Viet-nam. Further, we supplied the largest hydraulic crawler crane in Vietnam to Petrovietnam, Vietnam’s national oil and gas group. The largest profit contribution came from Thailand and the greater Mekong region. We were able to further develop our infrastructure business by achieving high market shares in road building seg-ments, for example with Bomag, a market leader in the manufacture of machines for the compaction of soils, asphalt, and
refuse, as well as stabilizers and recyclers. In addition, we successfully won a large overhaul job for mining shovels used in lignite extraction. Both contracts were achieved thanks to our ability to act as a true added-value partner for suppliers and customers by providing experienced and highly specialized services for the equip-ment purchased from us. Finally, Taiwan managed to exceed our expectations and delivered truly excellent results. Implementing the strategy for growth yielded its first positive results with the acquisition of the local Oerlikon Systems operation. We also entered the very promising new field of environmental technologies, for example recycling and water treatment equipment, and expect solid growth here in future.
New relationships, new strengthsThe ability to offer a comprehensive range of Market Expansion Services has put us ahead of traditional technology distribu-tors, especially since many companies are currently searching for ways to reduce their fixed costs, focus on core competencies,
The ability to offer a comprehensive range of Market Expansion Services has put us ahead of traditional technology distributors.
Business Unit Technology money figures in CHF million (in rounded figures)
2007 2008 2009
Total Sales * 594 552 507
Net Sales 428 418 386
EBIT 30 25 14
Assets 191 184 190
Specialists 1,183 1,242 1,179
* equals Transaction Value
58 Technology
Our 450 service engineers provide a 24/7 emergency service, delivering technical assistance over the phone or on site, and making sure that our business partners can focus on their core business.
Our professional and reliable spare parts management ensures continuous equipment functionality.
At our trend-setting seminars, our business partners learn about the latest technology, which helps them to grow their business.
59
Our test and application laboratories supply customers with samples and feasibility and validation testing, and help them to develop new applications.
Training courses and application engineering at customer sites form part of our proactive approach. We offer services across the full value chain for photovoltaics, an important growth market.
60 Technology
and delegate non-core but essential ser-vices to reliable and financially stable busi-ness partners. As part of our Business Unit strategy for growth, we continually search for companies with existing operations in Asia that wish to outsource their sales and distribution infrastructures to DKSH. Our ability to seamlessly integrate their operations into a much wider platform, and thus provide them with better ser-vices, less complexity and risk, as well as reduced fixed costs, is their rationale to cooperate. In 2009 we benefited greatly from the strategic business development efforts of DKSH Taiwan when we reached an agree-ment to take over the sales and after-sales activities with 20 sales and service engi-neers in Taiwan and China of Oerlikon Systems, a worldwide provider of produc-tion equipment for the semiconductor, data storage, and nanotechnology indus-tries. The integration of the local Oerlikon Systems operations into our Business Unit provides our Taiwanese and Chinese cus-tomers with access to the most techno-logically advanced production facilities for PVD semiconductors and optical disc equipment in the region. So far we have been able to sell a substantial amount of equipment, worth more than CHF 25 mil-lion, in Taiwan, and anticipate further growth in 2010. Moreover, the Business Unit Technology was able to further ex-pand our reach into synergistic markets such as advanced nanotechnology appli-cations like LED. We also took over all the sales and after- sales activities of Tordivel Solar, a supplier of in-line and off-line inspection instru-ments and measurement systems for the
global photovoltaics industry in China, Korea, Singapore, Malaysia, Italy, Spain, and France. The equipment provides us with a uniquely innovative and proven technology. We can now offer our custom-ers the most technologically advanced optical machine vision solutions for 3-D measurement of ingots and blocks, as well as for in-line wafer inspection. We have also signed an exclusive distributor-ship with Von Ardenne, one of the lead-ing worldwide suppliers of PV manufac-turing equipment, for France, Singapore, Malaysia, Thailand, and Taiwan. In 2009 we also acquired the Japanese subsidiary of Michael Weinig, the world market leader for solid-wood processing machinery and equipment, which had worked the Japanese market indepen-dently for over ten years. This has strength-ened our technology operations in Japan with a service center in Kobe and ten ad-ditional sales and service engineers, and
expands our portfolio with an excellent range of premium products. We also be-came the preferred partner of Daido Steel Titanium Division, one of the leading man-ufacturers in Japan. This partnership will allow our Business Unit to increase market activity in the medical implants industry in Europe, South Africa, and the USA. In ad-dition, we plan to expand into China and Malaysia in the near future. All in all we added a total of 59 new suppliers – 19 from the USA, 35 from Eu-rope, and five from Asia – to our portfolio. We anticipate that we will begin to see the fruits of these business development efforts in 2010, and we are excited about the growth opportunities that lie ahead.
Growth through innovationBusiness Line Energy, which provides Mar-ket Expansion Services for photovoltaics, cables and connectors, diesel engines, generators, and hybrid power solutions,
Our business partners rely on us for careful, preventive maintenance of their equipment.
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is one of our major 2009 success stories. For the second consecutive year it experi-enced double-digit growth. The excellent performance of our Product Group Photo-voltaics, a relatively new business for DKSH, confirms that our decision to enter this sector was correct. 2009 saw the Product Group’s expansion into Thailand and China, as well as our entry into thin-film technol-ogy and distribution of solar panels. Another achievement was the perfor-mance of Business Line Research, which supplies analytical instruments, life sci-ence and surveying equipment to private companies and also institutions and gov-ernment agencies. Our strong results were due to several strategic initiatives, such as our investment in demonstration units, and our focus on key accounts, es-pecially in the government sector, since we correctly anticipated the slowdown in private sector purchasing. Business Line Service also saw further successful development and solid results, particularly in Thailand, Taiwan, and Hong Kong. Our extensive network of over 450 highly qualified service and application engineers across Asia is instrumental in helping us to win contracts, for example, in Taiwan, where we are active in the pho-tovoltaics area, and in Hong Kong, where we maintain parking systems and road traffic light reinforcement cameras.
Internal process optimization Our Business Unit is committed to achiev-ing operational excellence across all the countries we operate in. In 2009 we made several key investments to strengthen our infrastructure. In Australia we relocated to a larger, more efficient distribution cen-
ter, equipped with our SAP system and with a centralized customer care unit. These internal measures have positioned Australia for further growth. Similar proj-ects are underway in other countries, and due for completion in 2010.
Future initiatives for business successOver the years we have recognized and met our customers’ and suppliers’ grow-ing demand for complete solutions ex-tending beyond single services or product sales. Today we offer value-added services such as application engineering, training, repairs, maintenance, and spare parts management. We plan to continue devel-oping the service side of our business and to focus on constantly improving service delivery performance and customer satis-faction. To help us achieve this goal, we have recently appointed a Vice President of Technical Services, who will be respon-sible for the further development and op-timized alignment of our service offering and processes throughout the entire Busi-ness Unit. In addition, in order to accelerate and professionalize business development, we have created a new global business devel-opment function. Our particular focus will be on implementing our strategy for growth by streamlining structures and processes in our Business Unit whilst devel-oping new concepts and business models with existing and new supplier business in our markets. Finally, a large range of different ini-tiatives will be implemented to further improve operational sales and service ex-cellence. These include, for example, sys-tematic CRM and service management
tools, which leverage our activities around the globe. The tools provide a quick and transparent view of all customer activities in one central database. Our commitment to continuous im-provement, combined with our deep-root-ed expertise, allows us to deliver solutions that help our customers and clients grow their businesses, now and in the future.
We offer value-added services such as application engineering, training, repairs, maintenance, and spare parts management.
SourcingAfter- Sales
Services
DKSH’s highly skilled staff offer a broad range of after-sales services and support, which ensure top quality standards, fast problem resolution, and the ability to establish a high-value image, offering real added value to suppliers and customers alike.
Service through-out a product’s entire lifespan Our expertly trained teams provide customer care services, quality assurance and control, repairs and maintenance, and technical support and training. We offer dedicated and re li able support for consumer goods, technology, health care, and luxury and lifestyle products. Our business partners gain access to a competent service force that is available whenever and wherever needed, helping to ensure overall customer satisfaction and allowing companies to concentrate on their core business.
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With an organizational structure that cuts through the complexity of the businesses we manage, we are optimally organized for both today and tomorrow as we move into the next stage of growth. Our struc-ture seamlessly leverages the vast resourc-es of knowledge and market power within our organization for the benefit of all stakeholders. DKSH’s overall strategy and direction is guided by an international Board of Direc-tors. The Executive Board has executive management responsibility for the Group and ensures the implementation of our strategic goals across our markets and Business Units. Our business activities are managed through four highly specialized Business Units. Country organizations implement Business Unit strategy and enable region-wide coverage, while our streamlined head office provides cost-effective services and a Group-wide infrastructure. Spanning Asia Pacific, Europe, and the Americas, our comprehensive sourcing and distribution network serves hundreds of thousands of business partners every day.
Board of Directors
Executive Board
Dr. Joerg Wolle President & CEO
Gonpo Tsering Operations & Business Support
Stuart Davy Chief Financial Officer
Marcel W. Schmid Governance, Compliance & Resources
Bernhard Schmitt Country Operations & Business Processes
Business Unit Managers
Consumer Goods Somboon
Prasitjutrakul
Healthcare Charles Toomey
Performance Materials
Mario Preissler
Technology Claus Bressmer
ad interim
Country operations
Our structure
Business organization
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Country operations
Business Unit Consumer Goods
Business Unit Healthcare
Business Unit Performance
Materials
Business Unit Technology
Asia Pacific Asia Pacific
Australia • • • Australia
Brunei • Brunei
Cambodia • • • Cambodia
China • • • • China
Hong Kong • • • • Hong Kong
India • India
Indonesia • Indonesia
Japan • • • Japan
Korea • • • Korea
Laos • • • Laos
Malaysia • • • • Malaysia
Micronesia • Micronesia
Myanmar • • • • Myanmar
New Zealand • • New Zealand
Philippines • • Philippines
Singapore • • • Singapore
Taiwan • • • • Taiwan
Thailand • • • • Thailand
Vietnam • • • • Vietnam
Europe Europe
Denmark • Denmark
France • • France
Germany • Germany
Great Britain • Great Britain
Italy • • Italy
Netherlands • Netherlands
Norway • Norway
Poland • Poland
Spain • Spain
Switzerland • • • • Switzerland
The Americas The Americas
Chile • Chile
USA • USA
66 Business organization
Our Board of Directors
DKSH’s Board of Directors guides the overall strategy and direc-tion of the Group. The combination of representatives of the ma-jority shareholder – the fourth generation of the founding fami-lies –, other shareholders, and independent outside members ensures that the Board is made up of high caliber leadership, rep-resenting different areas of business expertise.
Adrian T. Keller (1951, CH), Chairman, has been a member of the Board of Directors of DKSH since its inception in 2002. In 2003, he was elected Chairman of the Board. Since 2000, he has been Vice Chairman of Diethelm Keller Holding Ltd., the majority shareholder of DKSH. Before that, he pursued a career in invest-ment banking, and spent many years in New York, USA. He studied economics at the University of St. Gallen, Switzerland, and graduated with an MBA (lic. oec. HSG).
Jean-Daniel de Schaller (1939, CH) has been a member of the Board of Directors of DKSH since its inception, and is Chairman of the Nomination & Compensation Committee. He has spent his entire career with Diethelm and Keller companies, starting in 1964 in Singapore. Until 2004, he was responsible for Diethelm Keller’s activities in Australia /New Zealand and the USA. He studied international trade and marketing at the J.W. Goethe University, Frankfurt, Germany, and holds an MBA from the University of Ottawa, Canada.
Rainer-Marc Frey (1963, CH) has been a member of the Board of Directors since 2008, and is a member of the Audit & Finance Committee. He is the Founder and Chairman of the investment management company Horizon21. In 1992, he created one of Europe’s first hedge fund groups, RMF, becoming its CEO. He holds a degree in economics (lic. oec. HSG) from the University of St. Gallen, Switzerland.
Dr. Frank Ch. Gulich (1963, CH) joined the Board of Directors in 2009. Since 2003, he has been Delegate of the Board and CEO of DKSH shareholder Anova Group, which manages the assets of the Stephan Schmidheiny family. From 2000 to 2002, he was CEO of the Müller-Möhl Group. He is a Doctor of Law (Dr. iur.) from the University of Zurich, Switzerland, and obtained an MBA at the INSEAD business school in Fontainebleau, France.
Andreas W. Keller (1945, CH) has been a member of the Board of Directors since 2003, and is a member of the Nomination & Compensation Committee. Since 2000, he has been Chairman of the Board of Directors and the Executive Committee of Diethelm Keller Holding Ltd., Zurich, the majority shareholder of DKSH. Since 1976, he has held numerous senior positions in Diethelm and Keller companies in Asia as well as the USA and Switzerland. He studied law at the University of Zurich (lic. iur.), Switzerland, and graduated from the Harvard Business School, PMD, USA.
Dr. Rolf A. Meyer (1943, CH) has been a member of the Board of Directors of DKSH and its predecessor company SiberHegner since 1996. In 2002, he was elected Chairman of the Audit & Finance Committee of DKSH. From 1998 to 2000, he was CEO and Chairman of the Board of Ciba Specialty Chemicals, formerly Ciba-Geigy. Before that, he held numerous senior positions at the company. He has a PhD in political science from the Univer-sity of Basel and an MBA (lic. oec. HSG) from the University of St. Gallen, both in Switzerland.
Robert Peugeot (1950, F) has been a member of the Board of Directors since 2008. He has served as Chairman and CEO of Société Foncière, Financière et de Participations (FFP) since 2002. He has held various senior positions at PSA Peugeot Citroën since 1975. From 1998 to 2007, he served as Vice President for innova-tion and quality and was a member of the Executive Committee. He studied at the Ecole Centrale de Paris engineering school, and at the INSEAD business school in Fontainebleau, France.
Dr. Theo Siegert (1947, D) has been a member of the Board of Directors since 2006, and also serves on DKSH’s Audit & Finance Committee. Dr. Siegert joined de Haen Carstanjen & Söhne, Ger-many, as Managing Partner in 2006. Before that, he held various positions at Franz Haniel & Cie. GmbH from 1975 to 2005, where he became Chairman of the Board of Directors in 2005. He has a PhD in political science from the University of Munich, Germany, where he is an honorary professor.
Dr. Joerg Wolle is a member of the Board of Directors and CEO of the Group.
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Our Executive Board has executive management responsibility for the Group and ensures the implementation of our strategic goals across our markets and Business Units. DKSH is led by a lean and flexible management team with a proven track record and an unmatched depth of knowledge, experience, and understanding of doing business in Asia. The long-term working relationship with DKSH and its predecessor companies, as well as the straight-forward, hands-on approach and entrepreneurial spirit of the en-tire Executive Board, drive the continuing success of our company.
Dr. Joerg Wolle (1957, CH and D) was appointed President & CEO of DKSH in June 2002, following the merger of Diethelm Keller Services Asia and SiberHegner Holding Ltd. to form the DKSH Group. Previously, he was President & CEO of SiberHegner Holding Ltd. from early 2000. He took charge of the restructuring of the Group and orchestrated a rapid and sustainable turnaround, which culminated in the merger with Diethelm Keller Services Asia. Before that, he worked in various positions from 1991 onwards at SiberHegner Holding Ltd. Dr. Wolle obtained his PhD in Engineer-ing in 1987 from the University of Technology Chemnitz, Germany, and is an Honorary Professor of Intercultural Communi cation at the University of Applied Sciences, Zwickau, Germany. Dr. Wolle is also a member of the Board of the German Asia-Pacific Busi-ness Association (OAV).
Gonpo Tsering (1956, CH) has been a member of the Executive Board since its inception. In his function as Senior Executive Vice President Operations & Business Support, Gonpo Tsering is re-sponsible for IT, Internal Consulting, Special Projects, and Field Marketing. Prior to his current appointment, he was Chief Finan-cial Officer of SiberHegner Holding Ltd., Finance Director of Global Duty Free Business at Rothmans of Pall Mall, Switzerland, Group Finance Director of publicly-listed Diethelm Holdings, Malaysia, and Regional Planning & Control Manager of Ciba-Geigy, Kenya. He graduated from the University of St.Gallen, Switzerland, in Business Administration (lic. oec. HSG). Subsequently, he obtained an MBA degree from IMD in Lausanne, Switzerland.
Stuart Davy (1957, GB) has served as Group Chief Financial Officer and member of the Executive Board of DKSH Group since 2005. In 1998, he joined Diethelm Thailand as Chief Financial Officer. Following the 1997 financial crash, Mr. Davy was in charge throughout the financial recovery, and guided the organi-zation through the restructuring of the travel organization and the mergers with Edward Keller in 2000 and SiberHegner in 2002. As CFO of DKSH in Thailand, he was responsible for real estate in-vestments in Thailand and for supervising finance in the Mekong sub-region. Before joining DKSH, he was with Price Waterhouse, initially in Pittsburgh, USA, and later as Senior Audit Manager for two years in Hong Kong. He graduated with a BSc in Economics from the University of Bristol, Great Britain, and obtained his Chartered Accountant qualification in 1981.
Marcel W. Schmid (1965, CH) In his position as Executive Vice President Governance, Compliance & Resources, Mr. Schmid has been responsible since 2009 for Group Human Resources, Cor-porate Affairs and Legal, Risk Management, as well as Mergers & Acquisitions /Capital Market Transactions. Before joining DKSH, he was a member of the Executive Board of the St. Galler Kantonal-bank Group, from 2005 to 2008. He was Head of Private Banking and CEO of the bank’s fully owned Zurich-based private bank. From 1996 to 2005, he was the head of the Swiss Initial Public Offering (IPO) team and later the Swiss Equity Advisory team at UBS Investment Bank, and previously a Managing Director. He holds an MBA from IMD in Lausanne, Switzerland, and a Bachelor’s degree from the University of Applied Sciences, Zurich.
Bernhard Schmitt (1959, D) has been a member of the Execu-tive Board since 2009. In his role as Executive Vice President Country Operations & Business Processes, he is responsible for all country-related issues, supply chain management, logistics, and business process re-engineering. Mr. Schmitt joined DKSH in 2004 as Vice President Central Services in Thailand. As a member of the Steering Committee, he rolled out DKSH’s SAP-based global ERP template Pegasus in Thailand, restructured DKSH’s legal entity in Thailand, and integrated Desco. Before joining DKSH, he held various positions at Wacker, a German chemical and silicon company, over a period of 19 years. He graduated from the University of Mannheim with an MBA equivalent.
Our Executive Board
68 Business organization
Operations & Business SupportThe Operations & Business Support teams enable and support the operational activi-ties of the Business Units, and comprise IT, Internal Consulting, Special Projects, and the newly created Field Marketing func-tion. Many of the Operations & Business Support services are centralized at our Corporate Shared Services Center in Kuala Lumpur, Malaysia, where around 200 highly specialized IT staff develop and pro-vide key services. For example, the center hosts our Enterprise Resources Planning system, running on SAP. The rollout of the strategic IT project Pegasus, which focuses on the develop-ment and implementation of a global ERP template, was completed in 2009. The implementation of the SAP software solu-tion represents the standardization of all business processes within DKSH, giving us a true competitive advantage. The new ERP template makes comprehensive mar-ket information available in a standardized, easy-to-understand form. Our specialists also develop proprietary software solu-tions that are deployed internally as well as marketed and sold to suppliers. The Internal Consulting team embarked on numerous projects in 2009 that greatly improved transparency and efficiency in the areas involved. The team worked in close cooperation with their colleagues from operations to maintain and leverage knowledge across DKSH. Finally, in 2009 we entered a joint ven-ture with South African-based Smollan Group Pte. Ltd., one of the world’s lead-ing field marketing companies. This step shows our recognition of the global trend towards dedicated field marketing services,
and our commitment to meeting our busi-ness partners’ wishes to outsource these activities to specialized companies. DKSH has now established a Field Marketing unit that will focus solely on point-of-sale across all services, and will develop new and tailor-made technologies.
FinanceThe Finance function supports our Busi-ness Units and country operations around the world. The CFO and a team of special-ists are responsible for a wide spectrum of Group-wide financial activities, principally: controlling, accounting, financial analysis, budgeting and reporting, business deci-sion support, treasury, financial risk, and taxation. In order to accommodate DKSH’s ex-pansion, the Group has continued to in-vest in specialist corporate level finance resources. Business Unit Controlling and Group Treasury, as well as Taxation, were moved to Singapore during 2008, and are now firmly established there. From this location Controlling is better able to provide analysis, management reporting, and decision support to country and Busi-ness Unit operations, and to the Business Unit heads in Asia. The implementation of a centralized Group Treasury function has enabled the Group to increase both operational and financial efficiencies, improve control of financial risks, and reduce costs through scale benefits. 2009 also saw the establish-ment of a Tax function, giving the Group a dedicated specialist resource for the con-tinued optimization of Group-wide tax efficiency and compliance.
Governance, Compliance & ResourcesThe Governance, Compliance & Resource function is responsible for areas including Group Human Resources, Corporate Legal, Operational Risk and Control, as well as Mergers & Acquisitions /Capital Market Transactions. Corporate HR is responsible for our HR strategy and focuses on compensation and benefits, new hires, talent and man-agement development, as well as em-ployer branding and provides strategic direction to the local HR teams. In 2009, a Fantree Academy program jointly orga-nized with the Executive School of the University of St. Gallen brought together some 50 senior managers in Singapore for a first week-long course. In addition, together with Corporate Communications, the employer branding initiative was kicked off, which aims to attract new em-ployees in the highly competitive global market. Corporate Legal supports the Group management with legal advice and assis-tance in corporate matters, compliance and corporate governance issues, contract negotiations, and transactions, as well as handling Group-wide intellectual prop-erty rights. A major focus of 2009 was our emphasis on IP law issues, and further strengthening of Group-wide trademark management. The structure ensures effi-cient and quick decision-making, and guarantees the required awareness for all trademark registration and enforcement issues. In 2010 there are plans for tailor-made workshops to enhance legal nego-tiation skills, and to help staff keep abreast of developments in the regulatory and compliance field.
Our corporate services
69
Operational Risk & Control provides sup-port by identifying, assessing, reducing, monitoring, and reporting the Group’s risks based on a formalized methodology and process. The function actively sup-ports the Group with selected risk mitiga-tion plans with focus on strategic, oper-ational, financial, and compliance risks. Regular risk reports are issued to the Audit and Finance Committee and the Board of Directors, and flow into the internal and external audit planning process. Through-out 2009, the function conducted several risk workshops and reviews in key coun-tries and our four Business Units. 2010 will see a continuation of risk manage-ment efforts throughout the Group, with the aim of anticipating and reducing risks, as well as fostering DKSH’s risk manage-ment culture. Capital Market Projects supports Group and Business Unit Management in the ex-ecution of M&A transactions. This mainly involves advisory, coordination, and proj-ect management activities at the differ-ent phases of the M&A process: prepara-tion of sales documentation, finding and approaching counterparties, initial eval-uation and negotiation, due diligence, contract negotiation, preparation of post-merger integration, and closing of the transaction. Capital Market Projects con-tributed to several important acquisitions in 2009 and the beginning of 2010.
Country Operations & Business ProcessesThis newly created function is responsible for all country-related issues as well as for ensuring that we realize operational synergies and improve operational excel-
lence, especially in the areas of country infrastructure and supply chain manage-ment. The corporate Supply Chain function supports our operations by bringing a network view to the supply chain, setting standards and guidelines in the area of logistics, and fostering the sharing of sup-ply chain best practices across countries. The team also evaluates new investments in terms of supply chain infrastructure. The Business Processes team works with all our Business Units and countries to identify and remove bureaucracies, im-prove efficiency, create synergies, and standardize best practices. This will en-able our organization to become even more competitive and promote strategic growth. Two major supply chain projects in Vietnam and Thailand took place in 2009, both of which proved that there is real cost-savings potential in using synergies across Business Units. The main focus in 2010 will be to get this function on track and to start realizing synergies in other countries.
Strategy & Corporate CommunicationsCorporate Communications is responsible for all external and internal communica-tions for the Group, as well as for the DKSH branding project. Communications is lo-cated at Corporate Center in Zurich, and is focused on achieving DKSH’s goal of be-ing the No. 1 Market Expansion Services Group with a focus on Asia, and promot-ing this message throughout the world’s business community. The function pro-vides communication assistance for cor-
porate projects and transactions, prepares the annual press conference in Zurich as well as local press conferences, and is re-sponsible for global media relations. The launch of our new client magazine expand, our website relaunch, and the creation of an employer value proposition and new corporate values were the major milestones in 2009. Moreover, we renamed those of our legal entities that still carried legacy names, in order to strengthen our unified global DKSH brand. The implementation of both the new corporate identity and corporate design was completed by the end of 2009. 2010 will see major activities to further strength-en our DKSH brand. The strategy review project, launched in 2008 with the aim of sharpening our existing corporate and Business Unit strat-egies and putting all strategies into a con-sistent framework for the whole Group, is now completed. Our new strategies for growth define how we want to achieve our vision and what we will focus on to succeed and achieve our growth ambi-tions. In 2010, we will concentrate on im-plementing the strategies on both corpo-rate and Business Unit levels to best serve our business partners.
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A long-standing tradition
At DKSH diversity comes naturally and is an integral part of our company culture, stretching back over more than 140 years.
Diversity is us
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Operating a business in a way that re-spects the inherent values and differences between countries and cultures is an es-sential success factor for multinational companies. Organizations that foster di-versity as a vital asset gain significant ad-vantages, such as the full utilization of human potential, greater innovation and flexibility, improved productivity, better team spirit, higher retention rates, and en-hanced recruitment success. In brief: the more diverse a company, the deeper the pool of talent and experience on which it can draw. At DKSH, diversity is not just a concept that gathers dust in management manu-als; nor is it a question of implementing quota policies. Diversity comes naturally to us, with no need to be managed artificially. We have always recognized the value of diversity. After all, from the very beginning, DKSH’s Swiss founders embraced cultures new and foreign to them. This legacy is re-flected today in the highly diverse compo-sition of our global workforce. At our Fantree Academy in Singapore, we nurture our greatest asset: our people. The academy is where managers from all Business Units and countries come for in-house training, knowledge sharing, and networking. With it we further strengthen the understanding of other cultures and live up to our philosophy: diversity is us.
Global presence with local rootsWe are a truly multinational company, yet we are also a local company in the com-munities we serve. We work with hun-dreds of thousands of clients and custom-ers around the world – all with distinct needs. We ensure that there are always
people within our organization who speak their language and understand their cul-ture. This translates into real added value, as it not only supports our service delivery, but also contributes to the innovative ideas and market insights we offer. Our success in the Asian market is based on the fact that as a Swiss company – well-known for our quality and reliability – we have become familiar with many local en-vironments and have adapted to them. Every day, millions of people throughout Asia use and trust the products we sell. We touch their daily lives in the truest sense of the word. Today, our 21,000 people representing 50 nationalities with hugely diverse cul-tural and educational backgrounds work together in 35 countries serving clients and customers alike. Their manifold tal-ents, united by their commitment to our business partners’ success, make DKSH what it is today: the leading provider of Market Expansion Services with a focus on Asia.
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Committed to local communities
In Thailand, we were able to donate 100,000 pairs of jeans to those who need them most, as a result of our Levis ® “Swap Jeans” store promotion.
In and for Asia
73
Companies in today’s global economy are accountable not only for the quality of their products and services, but also for their obligations to fulfill social and envi-ronmental commitments. As a successful and prosperous company we fully under-stand the responsibility that comes with our privileged position. Throughout the course of our history, we have maintained a culture and philosophy of corporate so-cial responsibility. Because we recognize that DKSH’s success rests on more than our solid entrepreneurial performance, we strive to make a positive impact on the general well-being of the regions we operate in. Every year, through a variety of locally rooted initiatives, we actively engage with the communities where our specialists live and work. While we participate in many small, regional development activi-ties throughout the year, here we have selected some larger highlights of 2009 that demonstrate our dedication to creat-ing social value in the communities we serve.
Continued relief for cyclone victims in Myanmar Cyclone Nargis – the worst natural disas-ter in Myanmar’s history – swept across the country on May 2, 2008. Hundreds of thousands of people were killed, and many more lost their loved ones and belongings. The damage was estimated at over USD 10 billion. Immediately after the cyclone struck, DKSH arranged the delivery of life-saving medicine and other emergency supplies, using our well-estab-lished and extensive distribution network and infrastructure in the country.
Although it is almost two years since the devastation of Cyclone Nargis, we remain highly committed to assisting Myanmar with its rehabilitation efforts. Since the disaster, we have dedicated time and re-sources to helping survivors rebuild their lives and communities. Beyond emergen-cy supplies we have initiated several proj-ects to help local communities recover. We are pleased to report that 2009 saw the completion of some of our major re-building projects. In February, we complet-ed the reconstruction of a free clinic locat-ed inside the compound of the Picimar Yone Monastery in the Mawgyone town-ship. The two-story building consists of a dentist and eye clinic, pharmacy, and mul-tiple examination rooms. Another significant project finalized in 2009 was the hospital in the Bogalay township. We presented the newly con-structed, fully operational hospital, which
serves a population of 150,000 people, to the Ministry of Health in October. It has since been recognized as the best-built hospital in the entire Delta Region. In ad-dition, we officially opened three new schools in the Mawlamyaing Gyune, and Bogalay townships in the same month. The hexagon-shaped school buildings, which accommodate a total of 300 stu-dents, were designed to also serve as cy-clone shelters in an area which is prone to such natural disasters. Besides these reconstruction projects, we assisted communities through liveli-hood programs, such as the donation of small and deep-sea fishing boats, as well as the renewal of prawn breeding fields. These efforts have helped inhabitants to re-establish an important source of in-come and boosted the local economy. All our Myanmar initiatives were made possible through substantial contributions
In 2009, we finalized a major reconstruction project in Myanmar: the building of the hospital in the Bogalay township, serving a population of more than 150,000 people in the region.
74 In and for Asia
from both Diethelm Keller Holding and DKSH. We are pleased to be able to bring meaningful change to communities in Myanmar, and will continue to work on projects that make a positive impact on the country’s renewal efforts.
Supporting Thailand’s primary schools DKSH has been active in Thailand for over 100 years. We have always sought to sup-port the communities we serve, particu-larly in poverty-stricken areas. In 2009 our Business Unit Healthcare focused on as-sisting schools that were in need of educa-tional materials and equipment. For ex-ample, we donated utensils and furniture such as stationery, electric fans, and sports equipment to the Ban Pongkrasang School located in Nakornratchasima province. Additionally, for the Watbuyaibai Pri-mary School, located in Prajinburi province, we organized a renovation project that in-volved cleaning and re-painting classrooms, upgrading the school’s playground, and donating a considerable amount to help further educational programs. Our team greatly enjoyed working directly with the school, and meeting teachers and stu-dents who were extremely appreciative of our efforts.
When children play, the world wins Right To Play is a leading international hu-manitarian and development organization that uses the transformative power of sport and play to develop essential skills in children and thereby drive social change in communities affected by war, poverty, and disease. DKSH Thailand has been a proud supporter of this charity for many
years. In 2009, numerous initiatives took place, ranging from Play Days, when chil-dren playfully explored different life skills to help them make healthy and positive lifestyle choices; to teacher training work-shops; to sport-specific activities with young offenders at the Trang Youth Reha-bilitation Center. Our commitment gives children a chance to become constructive participants in society, regardless of gen-der, disability, ethnicity, social background, or religion. It also contributes to the Thai Ministry of Education’s national education reform through active partnerships and collaborations with international NGOs, the business sector, and international agencies such as UNICEF.
Caring Heart volunteer team in Hong Kong Our staff in Hong Kong have been dedi-cating their after-work hours to volunteer-ing. Founded in September 2009, our vol-unteer team currently has 110 members who spend time volunteering in homes for the elderly, children’s centers, and as-sociations for the mentally disabled. As a first activity, volunteers spent a fulfilling and meaningful afternoon at a home for the elderly, where they participated in the mid-Autumn festival, playing games and helping residents make lanterns. The team will now be supported through our new partnership with the Agency for Volun-teer Service (AVS), a non-profit organiza-tion that provides training to improve the quality of volunteer service, and helps companies like DKSH better develop and utilize internal volunteer efforts.
Through the donation of educational materials and equipment, DKSH Thailand supported the Ban Pongkrasang School, located in a poverty-stricken area.
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Early in 2010, we learned with great pride that DKSH Hong Kong had been award-ed by the Hong Kong Council of Social Service, in recognition of our community involvement and care of our employees over the past year. This award is an ac-knowledgement of our commitment, and will further enhance and boost the efforts of our Caring Heart volunteer team.
Medical scholarships in VietnamFor DKSH Vietnam and its employees, it has become a tradition to engage in social responsibility activities each year and to contribute to local community develop-ment. Hue University, located in the cen-tral area, is one of the best training and research universities in Vietnam. To sup-port its medical school, DKSH offered ten scholarships, which last for the duration of the degree. Beginning in 2010, we will
sponsor these scholarships for the next five years. Our goal is to help foster growth in a field that is vital for the growth of both the university and Vietnam.
DKSH Thailand and Levi’s ® jeans donationWe have been the sole franchisee and dis-tributor of Levi’s ® products in Thailand for over 20 years. In August 2009, we con-ducted a store promotion called “Swap Jeans”, where customers could trade any pair of jeans for a discounted new pair of Levi’s ® jeans. This promotion was not only highly successful, but also helped us to support several local charity organizations. All in all we donated some 100,000 pairs of jeans to the Red Cross in Bangkok, and to Ayutthaya, Baan Mahamek Boys Home, and the Wat Suan Kaew Foundation. The Swap Jeans promotion is an excellent ex-ample of how companies can find ways
to give surplus resources to those in their community who need them most.
Making a meaningful contributionAs a multinational company we are highly aware of the fact that we are also mem-bers of local communities around the world. Our success is based on the diver-sity of our employees and on our deeply rooted networks and relationships, built up during our long history in each country. Since the beginning, it has always been important for us to be a socially responsi-ble member of society in every country we do business in. This year and every year, we continue to use our resources to make a significant social impact and assist posi-tive change.
The Caring Heart volunteer team in Hong Kong dedicated after-work hours to volunteering.
Throughout the course of our history, we have maintained a culture and philos o phy of corporate social responsibility and community involvement.
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In the 1860s, three Swiss entrepreneurs sailed east to Asia. Independently and within a few years of each other, Wilhelm Heinrich Diethelm set off for Singapore, Eduard Anton Keller for the Philippines, and Hermann Siber for Yokohama. Over the years, they established flour ish ing trading houses, which over decades evol ved into major players in South East Asia, China, the eastern Asian Pacific re-gion, and Japan.
1865 Founding of Siber & Brennwald, •the precursor of the SiberHegner Group, in Yokohama
1868 Eduard Anton Keller joins •C. Lutz & Co., founded in Manila in 1866 and later acquired by Keller
1871 Wilhelm Heinrich Diethelm joins •Hooglandt & Co., Singapore, established in 1860 and later acquired by Diethelm
Our history
140 years of experience
SiberHegner & Co., Yokohama, Japan.
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1887 Founding of Diethelm & Co. Ltd. •in Singapore
Ed. A. Keller & Co. founded in Manila •after the takeover of Lutz & Co. Ltd.
1902 SiberHegner enters the Chinese market•
1906 Founding of Diethelm & Co., Zurich; •branch office opened in Bangkok
Takeover of Singapore-based •Swiss trading firm Cadonau & Co. by Diethelm
1921 SiberHegner & Co. acquires a small •Swiss trading company with a presence in Shanghai
1923 Keller acquires Kern Ltd. in Hong Kong•
1936 SiberHegner acquires German trading •house H.Boss & Co. based in China
1968 Acquisition by SiberHegner of •Manchester-based trading firm Haycraft, and London merchant house L. J. Rickards & Co. Ltd.
1998 Acquisition of Cosatec AG by •Ed. A. Keller in a joint venture with the Diethelm Group
Diethelm & Co., Phnom Penh, Cambodia.
Ed. A. Keller & Co. Ltd., Manila, Philippines.
78 140 years of experience
2000 June 16: Merger of Diethelm Holding •Ltd. and Edward Keller Holding Ltd. to form Diethelm Keller Holding Ltd.
2002 June 19: DKSH Holding Ltd. is formed •through the merger of Diethelm Keller Services Asia Ltd. and SiberHegner Holding Ltd., with annual revenues exceeding CHF 4 billion, approxi-mately 13,000 employees, and an EBIT of CHF 50 million
Acquisition of consumer goods busi-•ness of East Asiatic Co. in Malaysia
2003 Acquisition of KOSE Logistics, Korea•
2004 Acquisition of Medinova Ltd., Zurich, •EAC Transport (Malaysia), and United Housewares Pty Ltd.
Official opening of the Corporate •Shared Services Center in Kuala Lumpur, Malaysia
2005 Opening of two distribution centers •in Vietnam and Singapore
2006 Diethelm & Co. Ltd. celebrates 100 •years in Thailand. Nihon SiberHegner celebrates 140 years in Japan
Opening of three state-of-the-art •distribution centers in Thailand, Taiwan, and Cambodia
Acquisition of the Pro-Tech Group •(Australia) Pty. Ltd.
Participants in the first Fantree Academy in Singapore, in September 2009.
Signing of the Shell Distribution Company acquisition, in October 2009.
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2007 Five acquisitions, among them •Texchem Consumers Sdn. Bhd. in Malaysia
Opening of four state-of-the-art •distribution centers in Thailand, Vietnam, Korea, and South China
2008 Addition of new investors• Acquisition of Desco, A. i. Scientific, •and Drives & Power Systems
Opening of four new distribution •centers in Thailand, Vietnam, Cambodia, and Malaysia
Opening of the new Finance Center •in Singapore
2009 Development and implementation •of DKSH strategy for growth for the Group and the Business Units
Acquisition of Dasico A/S, Denmark; •Voltas Ltd., India; Michael Weinig Japan K.K.; and Shell Distribution Company, Thailand
Joint Venture with Smollan Group •Pte. Ltd., a leading field marketing company
Launch of the Fantree Academy •in Singapore
Opening of three new state-of-the-art •distribution centers in Australia, Thailand, and Myanmar
Completion of Group-wide rollout of •project Pegasus, a global ERP system
Completion of the new DKSH design •implementation
Launch of new client magazine •expand and launch of new website
DKSH is deeply rooted in communities all across Asia Pacific because the company looks back on a more than 140-year-long tradition of doing business within and outside the region.
President & CEO, Dr. Joerg Wolle, announcing the name change of DKSH in Japan, in March 2009.
Hot spot for cold goods: our new cold chain distribution center in Thailand, opened in June 2009.
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Our heritage
Symbolizing the business
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The fantree takes its name from the distinc-tive cluster of foliage branching out from the top of its stem. This uniquely striking plant is often known as the “traveler’s palm”. This is because thirsty travelers were able to find water in many parts of the tree, which can hold up to one liter of liquid. According to legend, if a traveler stands in front of a fantree and makes a wish in good faith, the wish is certain to
come true. Reportedly, a fantree trademark was employed by the Saigon bureau of Diethelm & Co. Ltd. (established in 1890) as early as 1899. At that time the fantree served as a symbol for the Diethelm mer-chant house. It later evolved into the offi-cial logo of the merged Diethelm Keller Group and ultimately into that of DKSH. The fantree symbolizes our long heritage of truly belonging to the places where we
do business. It also stands for our unre-lentingly enterprising spirit and the unique combination of versatility and adapt abil-ity that is at the heart of our company. The fan of leaves represents our many ac-tivities; the red color in the new logo may be taken as a re minder of our Swiss heri-tage; and the firmly rooted fantree as a whole symbolizes our deep connection with Asia.
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Strong foundation for growth
As the world’s leading company in Market Expansion Services, we are ready to take full advantage of the tremendous growth potential ahead.
Ready for the future
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In 2009 we proved firsthand the strength of our business model. In a year when almost every business was challenged, our results on a Group level showed few effects of the crisis. This clearly demon-strates our unique position as the global leader in Market Expansion Services. Although we can look back on a very successful track record, we are determined neither to become complacent, nor to rest on our laurels. It is a trademark quality of DKSH that we are constantly working to prepare the ground for the future, chal-lenging ourselves, and striving to improve and expand, even while we are doing well. This is the attitude that helped us evolve from three pioneering Swiss trading hous-es into the world’s leading provider of Market Expansion Services with a focus on Asia. Our strategy for growth was created through rigorously identifying areas where we can fully leverage our core competen-cies, Business Units, strong market posi-tion in Asia, internal operations, and infra-structure. Our strategy is to stick to what we do best. In other words, we will do more of the same … and we will do it even more efficiently. While for many years conglomerates appeared to be out of fashion with the financial community, it is clear today that too strong a dependence on only a few areas or markets can make a company vulnerable. Our high level of diversifica-tion in terms of geography and industries has helped us pass almost unaffected through the economic crisis. Our ability to recognize and build on our true strengths, and to avoid the traps of short-term trends, has kept us strong, stable, and
successful in the past, and will do so in the future.
Setting the standards for Market Expansion ServicesAs the leader in Market Expansion Services, we have already realized major opportu-nities to create customized solutions that benefit today’s businesses and we will continue to set the pace in this new cate-gory. While taking every opportunity to build our business by helping our business partners to expand theirs, we are deter-mined to remain at the forefront of new developments also in the future. We are ideally positioned to capitalize on global business trends. First among these is the fact that weak sales in West-ern markets especially in the aftermath of the financial crisis are encouraging com-panies to seek new expansion opportuni-ties in the growing markets of Asia where our geographic footprint is unmatched. With around 97% of our sales generated in Asia, DKSH offers exceptional opportu-nities for business partners to expand in one of the world’s strongest growth re-gions. Our extensive network and long history in Asia give us unparalleled knowl-edge and experience of its markets, thus providing our business partners with a competitive advantage. With DKSH as a partner, Asian markets can be penetrated quickly, with limited risk, and without high fixed costs. When manufacturers collab-orate with DKSH, they have no need to maintain their own sales and distribution infrastructures, or to set up subsidiaries in the region. Another accelerating trend is the out-sourcing of sales and distribution func-
tions. Increasing cost pressure is causing many Western companies to consider downsizing their branch offices in Asia, particularly in countries that are not tradi-tionally among their key markets. These countries, by contrast, are DKSH’s core markets, where we have unmatched ex-pertise in sales, marketing, distribution, logistics, and after-sales for such compa-nies and their products. We can thus meet the growing demand for outsourcing, while providing our business partners with fully tailor-made solutions.
Strengthening our leading market positionDKSH has proven expertise at replicating a success story for particular products and services in one country in any other mar-ket in the region. In order to meet the needs of an ever-changing global business environment, we will keep our finger on the pulse of the markets. Furthermore, we will constantly improve our core processes and services, in order to continue to pro-vide our business partners with sophisti-cated support tailored to their require-ments. In the past we have always striven to be one step ahead. This remains integral to our success today. Our entrepreneurial spirit led to the transformation of our company from traditional trading houses to the creation of a distinctive new busi-ness category. Thanks to our dedicated and passionate teams of specialists, we are ready to further strengthen our position as the world’s leading company in Market Expansion Services, and to take full advan-tage of the tremendous growth potential ahead.
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Australia (6 locations)Paul Edward ChaplinDKSH Australia Pty. Ltd.14 - 17 Dansu CourtHallam Victoria 3803AustraliaPhone + 61 3 9554 6666Fax + 61 3 9554 6677
Brunei (2 locations)Leonard TanDKSH Holdings (Malaysia) Berhad74 Jalan UniversityP.O. Box 7746700 Petaling JayaSelangor Darul EhsanMalaysiaPhone + 60 3 7966 0288Fax + 60 3 7957 0829
Cambodia (4 locations)Menh TechDKSH (Cambodia) Ltd.No. 160 Mao Tse Tong BoulevardSangkat Tom Noup TeakKhan ChamkarmonP.O. Box 1051Phnom PenhKingdom of CambodiaPhone + 855 23 212 838Fax + 855 23 212 738
Chile (1 location)Felipe LavadosDKSH Chile S. A.Hernando de Aguirre 162 of 902Providencia7510026 Santiago de ChileChilePhone + 56 2 333 1962Fax + 56 2 232 3385
China (61 locations)Vincent See DKSH (China) Co., Ltd.3rd Floor, Tomson Commercial Building710 Dong Fang Road, PudongShanghai 200122PRCPhone + 86 21 5830 0518Fax + 86 21 5830 0519
Denmark (1 location)Omar Francesco SabinotDKSH Nordic A / STeglporten 23460 BirkerødDenmarkPhone + 45 4581 4488Fax + 45 4581 2340
France (1 location)Jean-Dominique FoulonDKSH France S. A.1475, Quai du RhôneP.O. Box 26601702 Miribel CedexFrancePhone + 33 4 7855 7855Fax + 33 4 7855 7887
Germany (2 locations)Thomas SulDKSH GmbHBaumwall 320459 HamburgGermanyPhone + 49 40 374 7340Fax + 49 40 374 73480
Great Britain (1 location)Marco CaspaniDKSH Great Britain Ltd.Wellington House, 3rd Floor68 Wimbledon Hill RoadWimbledonLondon SW19 7PAUnited KingdomPhone + 44 208 879 5500Fax + 44 208 879 5501
Guam (6 locations)Angel MendozaDKSH Guam Inc.1807 Army DriveDededo Guam 96929USAPhone + 1 671 646 8850Fax + 1 671 646 4487
Hong Kong (33 locations)Victor HewDKSH Hong Kong Ltd.23 rd Floor, Tower A, Southmark11 Yip Hing StreetWong Chuk HangHong KongPhone + 852 2895 0888Fax + 852 2577 1057
DKSH offices worldwide
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India (8 locations)Mridul K. BasuDKSH India Pvt. Ltd.1001 AlphaHiranandani Business ParkPowaiMumbai 400 076IndiaPhone + 91 22 6157 7000Fax + 91 22 2570 7597
Indonesia (2 locations)Budi SetiawanPT DKSH IndonesiaMenara Jamsostek22 nd FloorJl. Jend. Gatot Subroto No. 38Jakarta 12710IndonesiaPhone + 62 21 5297 1570Fax + 62 21 5297 1571
Italy (1 location)Natale CapriDKSH Italia SrlVia Polidoro da Caravaggio, 3320156 MilanItalyPhone + 39 02 3070 181Fax + 39 02 3070 1834
Japan (13 locations)Ayumi GotoDKSH Japan K. K.DKSH Mita Building3 - 4 - 19, Mita, Minato-kuTokyo 108-8360JapanPhone + 81 3 5441 4511Fax + 81 3 5730 7333
Korea (34 locations)Byung-Wook OhDKSH Korea Ltd.4 - 6th Floor, Daesun Building546 - 11, DoGok-DongGangNam-Gu135-858 SeoulKoreaPhone + 82 2 2192 9500Fax + 82 2 2192 9590
Laos (2 locations)Ohmar TheinDiethelm & Co. Ltd.Ban PhonsinouanUnit 18 New RoadSisattanak DistrictVientianeLao P. D. R.Phone + 856 2145 3100Fax + 856 2145 3103
Malaysia (67 locations)Leonard TanDKSH Holdings (Malaysia) Berhad74 Jalan UniversityP.O. Box 7746700 Petaling JayaSelangor Darul EhsanMalaysiaPhone + 60 3 7966 0288Fax + 60 3 7957 0829
Malaysia Matthias LeglerDKSH Corporate SharedServices Center Sdn BhdLot L4 -E - 3A, Enterprise 4Technology Park Malaysia57000 Bukit Jalil Kuala LumpurMalaysiaPhone + 60 3 8992 2888Fax + 60 3 8992 2999
Myanmar (9 locations)Preman MahaldayvanDKSH Services Ltd. No. 013, Thitsar RoadYankin TownshipYangonMyanmarPhone + 95 1 565 270Fax + 95 1 565 269
Netherlands (1 location)Freek KlijnsmaDKSH Netherlands B.V.Vogelaarsweg 23P.O. Box 8893300 AW DordrechtNetherlandsPhone + 31 78 622 0622Fax + 31 78 622 0608
New Zealand (2 locations)Frank McCueDKSH New Zealand Ltd.14c Omega StreetAlbanyAucklandNew ZealandPhone + 64 9 415 1096Fax + 64 9 414 6899
Norway (1 location)Morten BaastadPremium Pet Products Norge A/SVollaveien 20 AP.O. Box 1740668 OsloNorwayPhone + 47 22 727 670Fax + 47 22 727 671
Philippines (3 locations)Patrocinia CortezDKSH Philippines, Inc.3rd Floor, 101 Prosperity Corner Unity AvenueCarmelray Industrial Park 1Canlubang, Calamba4037 LagunaPhilippinesPhone + 63 2 864 1677Fax + 63 2 864 1697
Poland (1 location)Violetta KomorskaDKSH Switzerland Ltd.Liaison Office PolandUl. Rejtana 17/3702 - 517 WarszawaPolandPhone + 48 22 646 4239Fax + 48 22 848 7640
86 DKSH offices worldwide
Saipan (1 location)Angel MendozaDKSH Saipan Inc.P.O. Box 5236Saipan 96950Commonwealth of the Northern Mariana IslandsPhone + 1 671 646 8850Fax + 1 671 646 4487
Singapore (3 locations)Leonard TanDKSH Singapore Pte. Ltd. 34 Boon Leat TerraceSingapore 119866SingaporePhone + 65 6471 1466Fax + 65 6479 3473
Spain (1 location)Xavier BarrachinaSiberHegner Ibérica, S. L.Aragón 308, 1o 2a 08009 BarcelonaSpainPhone + 34 93 272 3902Fax + 34 93 272 3560
Switzerland (2 locations)Robert Koller DKSH Switzerland Ltd.Wiesenstrasse 8P.O. Box 8888034 ZurichSwitzerlandPhone + 41 44 386 7272Fax + 41 44 386 7282
Taiwan (40 locations)Adrian EberleDKSH Taiwan Ltd.Hanover High-Tech Square10 th Floor, No. 22, Lane 407TiDing Boulevard, Sec. 2Neihu Technology ParkTaipei 11493TaiwanPhone + 886 2 8752 7770Fax + 886 2 8751 8688
Thailand (216 locations)Somboon PrasitjutrakulDKSH (Thailand) Limited2535 Sukhumvit Road, BangchakPhrakhanongBangkok 10260ThailandPhone + 66 2 790 8888Fax + 66 2 332 6101
USA (1 location)Lourdes CuarteroDKSH North America100 Stierli CourtSuite 102Mt ArlingtonNJ 07856USAPhone + 1 973 810 5511Fax + 1 973 810 5520
Vietnam (19 locations)Claire BurgessDKSH Vietnam Co., Ltd.Liaison Office1 st - 2 nd Floor, Etown 2 Building364 Cong Hoa StreetTan Binh DistrictHo Chi Minh CityVietnamPhone + 84 8 3812 5848Fax + 84 8 3812 5773
PublisherDKSH Holding Ltd.Wiesenstrasse 8 P.O. Box 8888034 Zurich SwitzerlandPhone +41 44 386 7272 Fax +41 44 386 7282
Concept and designEclat, Erlenbach / Zurich
PhotosAlex Wydler, Zurich Stephan Knecht, Zurich
LithographyRoger Bahcic, Zurich
Print Neidhart + Schön AG, Zurich
Annual Review 2009
www.dksh.com
DKSH Holding Ltd.Wiesenstrasse 8, P.O. Box 888, 8034 Zurich, SwitzerlandPhone +41 44 386 7272, Fax +41 44 386 7282
Think Asia. Think DKSH.
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