Swiss Company Dernakaba Posts Strong Profits, Faces Tariff Threat

Post by : Monika

Photo: Reuters

A Swiss company named Dormakaba, which is well-known for making locks, security systems, and access solutions, has surprised many experts by announcing profits that were bigger than expected.

Even though the global economy is facing challenges such as weak demand in housing and car industries, and even with risks of new tariffs in the United States, the company has shown it can manage costs and keep growing.

This news has brought confidence not only to the company’s investors but also to the business community, as Dormakaba has proven that smart cost management and careful planning can lead to success even during uncertain times.

The Strong Profit

For the financial year that ended on June 30, 2025, Dormakaba reported a profit of 188 million Swiss francs, which is around 234 million U.S. dollars.

Experts had predicted a profit of about 176 million Swiss francs, which means the company performed much better than what was expected. This profit figure is an important achievement because it shows the company’s ability to stay strong, even when some industries around the world are struggling.

Why This Profit Matters

• This result is important for several reasons:
• Beating Expectations: When a company earns more than what financial experts predict, it usually makes investors more confident about the company’s future.
• Proof of Strong Management: Higher profits during difficult economic conditions show that the company is being managed wisely.
• Positive Signal for Growth: It means the company is in a strong position to expand and invest in the future.

How Did Dormakaba Do It?

• The profit was not just because of lucky timing. Dormakaba achieved this by managing its costs very carefully.
• The company cut unnecessary spending.
• It worked on efficiency, which means doing more with fewer resources.
• Even though there were challenges in housing construction, car manufacturing, and global trade worries, these savings helped balance out the weaker demand.
• This shows that smart planning and control of expenses can make a big difference when sales are not at their highest.
• Risks That Could Have Hurt Profits
• The company faced some serious risks, such as:
• Weak Demand in Some Sectors: Fewer houses being built and slower car manufacturing meant lower demand for locks and access systems.
• Tariff Concerns: In the United States, there were worries about higher tariffs (extra taxes on imports). These could have made Dormakaba products more expensive.
• Even with these risks, the company still managed to grow its profit, which makes this performance even more impressive.

Future Plans: Growth Ahead

• Dormakaba is not stopping here. The company is already looking forward to the next year, which will cover July 2025 to June 2026.
• The company expects organic sales growth (growth without mergers or big acquisitions) to be between 3% and 5%.
• Last year, the growth rate was 4.1%, so the new target is almost the same, showing stability.
• The company also expects its EBITDA margin (a measure of profit compared to sales) to rise to above 16%, compared to 15.5% last year.
• This shows confidence that the company can keep performing well.

Why Dormakaba Is Hopeful

There are a few good reasons why the company is confident about the future:

Lower Interest Rates in Europe: If interest rates go down, businesses and people can borrow money more cheaply. This usually leads to more construction projects and investments, which means more demand for Dormakaba products.

More Investment in Germany and the U.S.: If these big markets invest more in industries and infrastructure, companies like Dormakaba can benefit by selling more security and access systems.

• These supportive conditions give Dormakaba a positive outlook for the coming year.
• Dividend Increase: Reward for Shareholders
• One of the most exciting announcements from Dormakaba is about its dividend.
• A dividend is the money a company pays to its shareholders from its profit.
• The company’s board has proposed raising the dividend by 15% compared to last year.
• The new dividend will be 9.20 Swiss francs per share.
• Dormakaba also plans to keep this level of dividend in the coming years, which gives long-term investors confidence.
• This shows that the company not only wants to grow but also wants to share its success with the people who have invested in it.

Why This News Matters

• This news is important both for the business world and for ordinary people who follow economic stories. Let’s look at why:
• For Investors: It shows that Dormakaba is a reliable company that rewards its shareholders.
• For Employees: A stable and growing company means better job security.
• For Customers: Strong profits mean the company can continue to invest in making better, safer, and more modern security systems.
• For the Economy: When companies like Dormakaba do well, it reflects strength in the manufacturing and technology sectors.

Lessons From Dormakaba’s Success

• Dormakaba’s performance also gives us some lessons that can be applied to business in general:
• Smart Cost Management Is Key: Even when sales are slow, controlling costs can help maintain profits.
• Don’t Panic in Hard Times: Even when there are risks like tariffs or weak demand, a strong plan can help a company stay on track.
• Invest in the Future: Dormakaba did not just save money, it also prepared for growth by focusing on long-term opportunities in Europe and the U.S.

Easy Example for Students

Imagine you are running a small lemonade stall. If fewer people are buying lemonade because it’s raining, you can still make a profit if you:

• Buy lemons at a cheaper price.
• Use the right amount of sugar and water without waste.
• Save money on decorations or extra items.

This is similar to what Dormakaba did. Even though some customers (housing and car industries) were not buying as much, the company reduced costs and kept profits high.

Dormakaba’s story is a reminder that success in business does not always depend only on high sales. Careful planning, smart cost control, and looking for future opportunities are just as important.

The company has shown confidence by increasing its dividend, which means it is ready to share profits with investors and continue growing in the future.

With supportive global conditions, such as lower interest rates and increased investments in major markets, Dormakaba seems well-positioned to maintain its growth and keep surprising experts in the years ahea

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