Bobst Group announces stable sales and slightly improved net result

The Board of Directors proposes to the Annual General Meeting of Shareholders the payment of a dividend of CHF 1.50 per share (CHF 1.50 in 2018). In 2020, the Group is currently expecting full year sales to be around 6% lower as in the previous year. The full year operating result (EBIT) margin is expected to be lower than in the previous year due to lower sales and higher marketing costs.
In January 2020, the coronavirus outbreak occurred in China and is now spreading to Europe and other regions. This is impacting BOBST’s business operation to a certain extent. The actual impact will depend on the situation and duration of the coronavirus outbreak.
 

Order entries and backlog
The Group started 2019 with a similar machine backlog to the year before. 2019 order entries were 8% lower as in the year before, with Business Unit Sheet-fed at -7%, Business Unit Web-fed at -22% and Business Unit Services at the same level as the year before. Order entries improved to a good level in the last 3 months of the year. Compared to the previous year, order entries decreased, mainly in Europe and the Americas, and slightly increased in Asia and Africa. The Group finished the reporting year with a significantly lower machine backlog than in 2018 and a stable service backlog.

Sales
For the full year 2019, consolidated sales increased by CHF 2 million, or 0.1%, to CHF 1 636 million. Adjusted for currency effects, organic sales were up CHF 33 million, or 2.0%, in 2019. Exchange rate variances decreased sales by CHF 31 million, or 1.9%.

Sales reached CHF 899 million in the second half of 2019 compared to CHF 737 million in the first six months of the year, and to CHF 872 million in the second semester of 2018. Sales recognized in the second half of 2019 are at the highest level achieved in a semester since the all-time high recorded in the second half of 2007.

Sales of sheet-fed products increased by 0.7% to CHF 810 million. The demand for products for the corrugated industry was slightly stronger than for products for the folding carton industry. Sales of web fed products decreased by 1.6% reaching CHF 338 million for the year 2019. The reduction is mainly due to lower sales of coating equipment which could not be fully compensated by higher sales of flexo printing equipment. Sales of services and spare parts increased by 0.4% to CHF 488 million.

Results
The operating result (EBIT) was CHF 81 million, or 5.0%, of sales compared to CHF 87 million, or 5.3%, of sales in 2018. The operating result (EBIT) achieved in the second half of the year was on a good level but could not compensate for the negative impact of the unfavorable product mix, lower production workload and increased pressure on margins of the first half of 2019. All three Business Units are also impacted by the increased costs associated with the ramp-up of the Group’s digital activities (Mouvent, BBS, IoT).

Business Unit Sheet-fed reached an operating result (EBIT) of CHF 40 million compared to CHF 60 million in 2018. A quite unfavorable product mix in the first half of the year, pressure on prices and a lower utilization of the industrial capacities, mainly due to lower orders and the reduction of inventories, led to this drop in operating result (EBIT). Business Unit Web-fed reduced its loss to CHF 16 million compared to a loss of CHF 37 million in 2018. The quality campaigns launched in 2018 are progressing as planned and led to a significant improvement of customer satisfaction. The initiated cost reduction measures are on track and delivered encouraging first results. Business Unit Services absorbed the run rate effect of the significant increase in field service technicians and technical support people which was accelerated in 2018 in accordance with the Group’s strategy. The training costs had a negative impact on the Business Unit’s operating result (EBIT). Operating result (EBIT) reached CHF 59 million compared to CHF 66 million in the previous year.

The net result increased to CHF 53 million compared to CHF 50 million in 2018. The lower operating result (EBIT) was more than compensated for by lower financial costs and lower income taxes. Lower income taxes are mainly due to a reduction of losses in entities, where no deferred tax assets are recognized in 2019.

Balance sheet
A significant reduction of inventories contributed to a cash inflow from operating activities of CHF 55 million compared to the negative cash flow from operating activities of CHF 46 million in 2018. The net debt position increased to CHF 59 million compared to CHF 21 million in 2018. The increase was mainly due to capital expenditures of CHF 56 million and the purchase of non-controlling interests in Bobst Firenze and Bobst Istanbul. The return on capital employed (ROCE) decreased to 12.9% in the reporting year compared to 14.2% in 2018. The equity ratio increased to 36.7% from 32.2% in the previous year, mainly due to the reimbursement of the CHF 110 million bond maturing in February of the reporting year.

Dividend proposal
The Board of Directors proposes to the Annual General Meeting of Shareholders the payment of a dividend of CHF 1.50 per share (CHF 1.50 in 2018). This proposal is in line with the Group’s dividend policy which recommends a payout ratio between 30-50% of the net consolidated profit after tax.

Outlook and strategy
Because of Brexit, the political crisis in many countries, the trend towards EUR/CHF parity in the longer term, the commercial war between the USA and China and the weakening in the booking dynamics since mid-2018, we must focus on our key priorities. If a downturn occurs, the Group will be prepared for lower activities in the short term. This will trigger a change in our strategy.
In January 2020, the coronavirus outbreak occurred in China and is now spreading to Europe and other regions. This is impacting BOBST’s business operation to a certain extent. The actual impact will depend on the situation and duration of the coronavirus outbreak.

Strategic objectives
BOBST follows a long-term strategy focusing on four strategic objectives – innovation, operational excellence, people development and growth. Delivering these objectives involves a range of initiatives which cover, among others, the quality of our products and services, optimizing our organization, focusing on customers, developing new products and digitalization.

• Sustainability continues to grow in importance and is now fully integrated, from machine design to substrate processing. Leading the way with industrial solutions, key industry leaders have been jointly developing new recyclable plastic materials and pouches, with respect for the global environment. BOBST is investing heavily with brand owners in the search for environmentally friendly packaging and label solutions.
   
• Digitalization supports and spurs Group transformation through various initiatives, including a common Group processes platform, IoT and Mouvent. Digital printing will continue to ramp up equipment for labels, film and folding carton applications, ensuring complete solutions and eco-friendly water-based ink (made by Mouvent). Furthermore, the unmet needs around workflow and connectivity are on the table, and solutions – largely linked to the digitalization of the process – will form a major element of discussions at drupa 2020. We are addressing all these new challenges through development and innovation in connectivity (people and machines) and digitalization (internally through BOBST Business Systems – BBS – to establish the Group business blueprint and externally through IoT).
   
• drupa 2020 is a strategic communication platform to officially present our vision for the packaging industry. The new BOBST industry vision embodies how we will drive the future of packaging production across industries. Customer plants will be connected to a digitalized and automated workflow, accessing cloud-based information.

Based on today’s evaluation of the overall business environment and prospects, the Group expects for 2020 to reach around a 6% lower sales level as in 2019. The full year operating result (EBIT) margin is expected to be lower than in the previous year due to lower sales and higher marketing costs. Marketing costs are expected to be high due to drupa, the most important exhibition for packaging and printing which takes place every four years in Düsseldorf.

The long-term objectives, with an operating result (EBIT) margin of at least 8%, and a return on capital employed (ROCE) of at least 20%, are maintained.

Annual General Meeting
The mandates of all the members of the Board of Directors become due for renewal for a one-year period. At the forthcoming Annual General Meeting of Shareholders on April 7, 2020, Alain Guttmann, Thierry de Kalbermatten, Jürgen Brandt, Gian-Luca Bona and Philip Mosimann will be proposed for re election for a new period of one year. The Board of Directors wishes to propose Alain Guttmann as Chairman. The Annual General Meeting will, besides the dividend proposal of CHF 1.50 per share in particular, further deal with the requests concerning the remuneration for the Board of Directors (AGM 2020-AGM 2021) and for the Group Executive Committee (fiscal year 2021).

 
Today’s information meeting – Publication of the annual report 2019
A conference for financial analysts and the media will take place today, March 2, 2020, at 10.15 a.m. in Mex. The 2019 Annual report, financial statements, along with translations in French and German of this release, will be available on the Group’s website investors.bobst.com from 06.00 a.m. The presentation will be available from 10.15 a.m.

Bobst Group SA, Mex, Switzerland

Download PDF documents

Press release

Presentation for financial analysts

Annual report 2019

Sustainable development report 2019

Annual profile 2020

Inquiries
Media and Investor Relations
Stefano Bianchi
Tel. +41 21 621 27 57
E-mail: investors(at)bobst.com

 

Disclaimer
Forward looking statements are subject to uncertainties and risk. Actual future results may differ materially from those expressed in or implied by the statements. Some of these uncertainties and risks relate to factors that are beyond BOBST’s ability to control or estimate precisely, such as, in particular, future market conditions, currency fluctuations, or behavior of other market participants. Readers are cautioned not to put undue reliance on forward looking statements, which speak only of the date of this communication. BOBST disclaims any intention or obligation to update and revise any forward looking statements constantly, whether as a result of new information, future events or otherwise.