Ad hoc announcement pursuant to Art. 53 of the SWX Listing Rules
Zurich, February 27, 2024
2023 annual results
Bellevue reports market-driven decrease of net profit to CHF 15.2 mn – dividend proposal of CHF 1.15 – promising recovery of key markets since Q4 2023
- Persistent difficult market environment for small- and mid-cap growth stocks as well as re-allocation by clients erode assets under management by 26% to CHF 6.9 bn
- Operating income just 15% lower with CHF 81.9 mn thanks to improved net financial investment result and performance fee from private market business
- Operating cost reduction by 5% to CHF 58.2 mn mainly thanks to entrepreneurial compensation model – cost/income ratio up to 71% and above mid-term target range
- Net profit down 40% year-on-year to CHF 15.2 mn – return on equity of 14.2%
- 4.7% dividend yield based on dividend proposal of CHF 1.15
- Strengthening of Executive Board of Bellevue Group with well experienced experts
- Recovery of Bellevue’s key market in Q4 2023 providing tailwind for healthcare strategies – promising growth potential of entire product range as specialist asset
Gebhard Giselbrecht, CEO of Bellevue Group, on the annual results 2023: “2023 was another challenging year for our group. Although the global financial markets were remarkably positive, Bellevue’s key market in the healthcare sector generated once again a below-average market performance. Due to this persistent weakness, clients reallocated some of their assets to more rewarding investment sectors. This situation impacted the development of our group again significantly and compromised our results. However, we’ve seen a promising rebound in our key markets generating tailwind for our healthcare strategies in the fourth quarter of last year. Additionally, our well-diversified and mature private market portfolio will provide further exit opportunities and attractive performance-based income. Our entrepreneurial compensation model ensures an appropriate cost level even allowing targeted investment in our investment expertise and infrastructure. As a specialist asset manager with a straightforward business model and a broad range of selected investment strategies, we are well-positioned to capture any market revival in the healthcare sector for small and medium sized companies to the benefit of clients and shareholders likewise, as we have shown in the past.”
Market driven decline of assets under management – reallocation by clients offsets gross new money raised
The healthcare sector overall saw one of the worst relative annual investment performances in 2023 due to continued interest rate hikes, increasing inflation expectations and geopolitical tensions. It did not help that particularly China and Hong Kong continued to exhibit poor investment performances due to the deteriorating domestic situation and political concerns. These developments have been impacting the assets under management significantly, given Bellevue’s focus within the healthcare sector on smaller and medium-sized growth companies and more balanced regionally weighted strategies including Asia/China. In parallel, clients shifted some of their investments during the second half of the year. These reallocations significantly outweighed gross new money raised of almost CHF 600 mn in this challenging market environment. As a consequence, assets under management have decreased substantially from CHF 9.4 bn to CHF 6.9 bn. This drop of 26% was driven roughly half by the negative market environment and half by the reallocations by clients.
Earnings decline due to lower asset base – performance fee from private market exit
In line with this development, the revenues from management fees decreased by 24% to CHF 79.3 mn, based on an average AuM base of circa CHF 8.2 bn. Total operating income amounted to CHF 81.9 mn and were just 15% lower than the previous year mainly due to an improved net financial investment result but also due to the realization of performance fees of CHF 2 mn from an exit in the private market business. On the cost side, the performance-linked compensation model ensures flexible personnel expenses aligned with the business and investment performance development. Hence, personnel costs were reduced by 7%. Despite continued investments into investment talents and expertise (data scientist for AI/big data, sales team in Switzerland and Germany) as well as in infrastructure and technology (AI solutions), operating costs are 5% lower year-on-year. Nevertheless, the resulting net profit of CHF 15.2 mn is down 40% on a year-on-year basis. The cost income ratio of 71% is more than the medium target range of 60-65%. The return on equity is 14.2% (previous year: 23.2%).
Financial solidity as the basis for an attractive dividend policy
Bellevue’s equity situation remains very solid, and its balance sheet remains strong and debt-free with a surplus equity of CHF 33 mn. This affords Bellevue the requisite resilience to weather difficult market conditions like these and provides strategic flexibility, including the seeding of innovative investment strategies. Furthermore, it paves the ground to continue an attractive and shareholder friendly dividend policy for investors. The Board of Directors will propose an ordinary dividend of CHF 1.15 at the Annual General Meeting on March 20, 2024, resulting in a dividend yield of about 4.7% based on the share price as per end of 2023.
Strengthening of the executive Board of Bellevue Group
The Group Executive Board will be extended with additional competencies as of March 1, 2024, to underpin and support the development of Bellevue going forward. Next to Gebhard Giselbrecht as CEO and Stefano Montalbano as CFO, Markus Peter will join as Head Products & Investments and Patrick Fischli as Head Distribution. Markus Peter and Patrick Fischli have been in management positions at Bellevue Asset Management since 2009 and have contributed substantially to the positioning of Bellevue as a specialized asset manager. The Board of Directors is delighted that Markus Peter and Patrick Fischli will be part of the leadership team of the Group and help shaping its future with their comprehensive expertise and experience.
Bellevue started into 2024 with Gebhard Giselbrecht as the new Group CEO. He has comprehensive international asset management experience across multiple functions. The CFO Michael Hutter will also leave Bellevue with Stefano Montalbano (previously Head Finance & Controlling) taking over as of March 1, 2024. The Board of Directors thanks both former CEO André Rüegg and Michael Hutter for their long tenure at Bellevue and their contribution to the transformation of the Group into a pure play asset manager.
Long-term growth prospects intact – cautiously optimistic view on 2024
Bellevue believes in the attractive long-term growth prospects of the healthcare sector as investing into health remains a secular trend. Therefore, Bellevue is cautiously optimistic that 2024 will offer a more supportive market environment. The return to lower interest rates is constructive for the healthcare sector overall and in particular for Bellevue’s investment focus on smaller and medium-sized growth stocks. The valuations for the sector and especially for smaller and medium-sized growth companies are now more attractive on both a market relative and an absolute basis than they have been for a long time. Additionally, investor sentiment has improved significantly since last quarter of 2023 as the renewed focus is on company fundamentals rather than macro. The broadening of market leadership has been evident now for some months and has been already reflected in the performance of Bellevue’s strategies.
Bellevue is well positioned to capture the above-mentioned growth opportunities in an improving market environment leveraging the recognized expertise and long-term investment track record. However, there will be no straight path and despite the cautious optimism, volatility will continue in the market throughout the year as inflation and rate expectations continue to adjust and recognise the potential uncertainties that may arise from any geopolitical escalations, and the changes that will inevitably come to pass in such a busy election year.
The 2023 annual report and presentation slides are available at www.bellevue.ch and https://report.bellevue.ch/2023
Financial calendar 2024:
March, 20, 2024 Annual General Meeting 2024
July, 25, 2024 Publication H1 2024 results
Contact
Media Relations: Jürg Stähelin, IRF
Phone: +41 43 244 81 51, staehelin@irf-reputation.ch
Investor Relations: Stefano Montalbano, CFO Bellevue Group
Phone: +41 44 267 67 00, smn@bellevue.ch
Bellevue
Bellevue is a specialized asset manager listed on the SIX Swiss Exchange with core competencies covering healthcare strategies, alternative investments (including private equity) and selected niches strategies. Established in 1993, Bellevue, a House of Investment Ideas staffed by 100 professionals, generates attractive investment returns and creates value added for clients and shareholders alike. Bellevue managed asset of CHF 6.9 bn as of December 31, 2023.