Finishing & Screen Printing

Bobst Group achieves a significant improvement of its results

Thursday 27. March 2014 - Bobst Group, the Swiss-based worldwide leading supplier of equipment and services to the packaging industry, achieved consolidated sales of CHF 1.354 billion in 2013, an increase of CHF 90 million or +7.1% compared to 2012.

The operating result (EBIT) reached CHF 60.3 million compared to an operating result of CHF 19.0 million in the previous year. The net result reached CHF 27.7 million compared to CHF -5.0 million in 2012. The significant improvements were achieved due to a strong growth in sales, a favorable product mix and due to the successful implementation of the Group transformation program. The strong operating results (EBIT) together with a notable reduction in net working capital, resulted in a significant cash inflow from operating activities of CHF 83.2 million. This enabled the Group to reduce net debt from CHF 190.4 million in 2012 to CHF 109.0 million in 2013 and the cash position increased by CHF 11.8 million to CHF 317.2 million. For the first time since 2008, the Board of Directors will propose the payment of a dividend of CHF 0.75 per share to the Annual General Meeting of Shareholders. The Board of Directors will also propose to reduce the share capital of the company by CHF 1’291’524.- by way of cancellation of the corresponding number of registered shares, namely the treasury shares held by the company.
Order Entries and Backlog
2013 started with an improved backlog of orders compared to the beginning of 2012. Order entries showed an increase for the first seven months of the year, slowed down from August to October 2013 and increased again at year end.
Sales
Consolidated sales for full-year 2013 amounted to CHF 1.354 billion, an increase of CHF 90 million or +7.1% compared to 2012. Sales in the second half of 2013 reached CHF 791 million compared with CHF 563 million in the first six months of the year, and to CHF 731 million in the second semester 2012. All three Business Units and all geographical regions of the world had a positive contribution to the sales growth. Sales of Sheet-fed products increased by 7.6% compared to the previous year. Products for the folding carton industry as well as products for the corrugated equipment industry contributed to this improvement leading to a turnover of CHF 639 million for the year. Sales of Web-fed products increased by 8.9% and achieved CHF 336 million for the year 2013. This excellent result is very close to the all-time-high achieved in 2008, although exchange rates were more favorable in 2008. Sales of Services and spare parts increased by 5.7% to now CHF 377 million, demonstrating the successful implementation of the Group’s service strategy.
Results
The significant improvements of both operating result and net result were achieved due to a strong growth in sales, a favorable product mix and due to the successful implementation of the Group transformation program.
Without transformation costs and the influence of one-time events, the underlying operating result (EBIT) increased from CHF 8.3 million in 2012 to an underlying operating result (EBIT) of CHF 72.6 million in 2013.
The Group’s results for the reporting year were negatively influenced by transformation costs and one-time events.
In comparison to the above net negative impact on Net Result of CHF -9.1 million, in 2012, the net impact of one-time events was positive and amounted to CHF 10.7 million at the operating result (EBIT) level and to CHF 8.4 million at the net result level.
Group transformation program contributed CHF 161 million to operating result (EBIT) by end 2013
Between its launch in January 2010 and the end of 2012, the Group transformation program phase 1 generated CHF 85 million of recurring savings. The additional actions launched in November 2011 with the Group transformation phase 2 were implemented successfully and generated CHF 76 million of profitability improvements by the end of 2013, which is CHF 16 million more than the initial target of CHF 60 million.
Solid balance sheet
The successful business operations, as well as continued efforts to reduce net working capital, resulted in a significant cash inflow from operating activities of CHF 83.2 million. This cash has been used mainly for the repayment of the bonds which matured in July 2013 and to increase the cash position by CHF 11.8 million in the year-end balance sheet. Net debt reduced from CHF 190.4 million in 2012 to CHF 109.0 million in 2013. The consolidated shareholders’ equity for 2013 improved by CHF 97.9 million and amounts to 33.6% in relation to the total balance sheet (27.3% in 2012). The improvement is due to the positive net result of the year 2013 (CHF 26.2 million) and to a large extent due to the impact of IAS 19R (CHF 73.4 million).
Outlook and financial targets
In 2014 the business environment will be similar to 2013, unbalanced and challenging; with consolidation likely to occur among both our customers and competitors, particularly in Europe. We expect to have opportunities to leverage our competitive advantages and we will continue to reap the profitability improvement and value creation benefits of our Group transformation. On a global level the folding carton industry is regaining strength after a long period of recession, corrugated is expected to remain strong and flexible packaging will remain stable – based on positive economic indicators worldwide.
Regionally, Europe and South America are likely to remain fragile, North America and SEA are expected to maintain good levels of activity, while investment levels in India and AMEA will depend on local political confidence and exchange rates. China is expected to continue its good level of activity although tempered by increasing overcapacity and price wars. The investment mood remains volatile, but our markets are active and our product portfolio responds to a large extent to our customers’ demands. Some new products will be launched around mid-year 2014, keeping up the bookings momentum for the last quarter.
The underlying 2013 results demonstrate the robustness of the Group transformation strategy and 2014 profitability level will be in line with the Group financial targets set for 2015. Profitability increase, value creation and special investments in innovations will be the top priorities this year.
Bobst Group confirms the guidance published 12 February 2014 that it should reach sales of CHF 1.250 to 1.335 billion in 2014.
Bobst Group also confirms the following mid- to long-term financial targets: sales of CHF 1.3-1.4 billion due to organic growth at constant exchange rates; a return on capital employed (ROCE) of 9-12%; and an operating result (EBIT) of at least 7%. The equity ratio should be around 35% (excluding the impact of IAS 19R) and the dividend payout ratio between 30-50% of consolidated profit.
Board of Directors elections
At the forthcoming Annual General Meeting of Shareholders to be held on April 29, 2014, all five current members of the Board will be proposed for re-election for a new period of one year. The Board proposes to to re-elect Alain Guttmann as Chairman of the Board.