Bobst Group, the Swiss-based worldwide leading supplier of equipment and services to the packaging industry, achieved consolidated sales of CHF 1.3 billion in 2014, a marginal decrease of CHF 54 million, or 4.0%, compared to 2013. The operating result (EBIT) reached CHF 81.7 million (CHF 60.3 million in 2013) and the net result reached CHF 53.0 million (CHF 27.7 million in 2013). These significant improvements were achieved due to the first full-year impact of Group transformation measures, and to very good utilization of the Group's industrial capacities, which have been adapted to demand.
The strong operating result (EBIT), together with a further reduction in net working capital, resulted in a significant cash inflow from operating activities of CHF 129.4 million (CHF 83.2 million in 2013). This enabled the Group to further reduce net debt from CHF 109.0 million in 2013 to CHF 17.7 million in 2014. The return on capital employed (ROCE) reached 12.6% compared to 8.6% in 2013.
The Board of Directors proposes to the Annual General Meeting of Shareholders the payment of a dividend of CHF 1.25 per share (CHF 0.75 in 2013).
After the announcement made by the Swiss National Bank on January 15, cost reduction measures have been initiated to mitigate significantly the impact of the rise of the Swiss franc.
The Group confirms its strategy and will dedicate core resources and energy to keeping its technological lead and enhancing customer satisfaction. In 2015 the Group expects to achieve an operating result (EBIT) margin higher than 5% and a net result margin higher than 3%, at current exchange rates.
Order entries and backlog
The Group started 2014 with a slightly lower backlog of orders than the year before. Month-by-month, order entries were uneven, but with bookings at good levels for the last months of the year.
Sales
For the full year 2014, consolidated sales decreased by CHF 54 million to CHF 1.3 billion. Sales in the second half of 2014 reached CHF 740 million, compared with CHF 560 million in the first six months of the year and to the CHF 791 million of the second semester 2013. Sales of Sheet-fed products remained stable compared to the previous year, at CHF 639 million. Demand for products for the corrugated equipment industry was strong and this compensated for weaker demand for products in the folding carton industry. Sales of Web-fed products decreased by 15.8%, achieving CHF 283 million for the year 2014. This reduction was mainly due to lower demand for special machines and complex lines. Sales of Services and spare parts remained stable compared to the previous year at CHF 377 million.
Results
The significant improvements in both operating result, up 35% to CHF 81.7 million, and net result, up 91% to CHF 53.0 million, were achieved due to the first full-year impact of Group transformation measures and to very good utilization of the Group's industrial capacities, which have been adapted to demand. The net result also benefitted from the strong contribution of associated companies, reduced financing cost and lower tax charges.
The Group's results for the reporting year were negatively influenced by transformation costs and one-time events. Restructuring costs of CHF 6.2 million were partly offset by government grants of CHF 4.3 million, resulting in a net negative impact of CHF 1.9 million on the operating result and of CHF 1.2 million on the net result. The net impact of one-time events in 2013 amounted to CHF -12.3 million at the operating result level and to CHF -9.1 million at the net result level.
Group transformation program contributed CHF 163 million to operating result (EBIT) by end 2014
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 78 million of profitability improvements by the end of 2014, which is CHF 18 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 strong cash inflow from operating activities of CHF 129.4 million. This cash has been used mainly for the repayment of the bonds which matured in May 2014, and to increase the cash position by CHF 69.1 million in the year-end balance sheet. Net debt was reduced from CHF 109.0 million in 2013 to CHF 17.7 million in 2014. Despite the positive net result of the year, the consolidated shareholders' equity decreased by CHF 54.5 million and amounts to 27.9% in relation to the total balance sheet for 2014 (33.2% in 2013). This reduction is mainly due to the impact of IAS 19R* (CHF -91.3 million in 2014 compared to a positive impact of CHF 73.4 million in 2013).
Outlook and financial targets
In 2015, Bobst Group will focus its strategy on innovation and product launches. The Group will dedicate core resources and energy to keeping its technological lead and enhancing customer satisfaction – which is one of the Group's main priorities. Moreover the Group will continue the implementation of measures to mitigate significantly the impact of the rise of the Swiss franc. The Group confirms the guidance published on February 11, 2015 that it expects to reach sales of CHF 1.15 to 1.23 billion in 2015. Taking into consideration the positive impact of the additional efficiency measures launched since January 15, 2015, and barring unforeseen circumstances, the Group expects to achieve an operating result (EBIT) margin of higher than 5% and a net result margin of higher than 3% for the current year. As interest rates have continued to decrease since the end of 2014, the equity ratio might reduce even further in 2015 due to the impact of IAS 19R*. This guidance is based on exchange rates of CHF 1.05 per Euro and CHF 0.92 per US Dollar.
On December 3, 2014 Bobst Group announced increased mid- to long-term financial targets of at least 8% operating result (EBIT) and a minimum 15% return on capital employed (ROCE). In light of the decision of the Swiss National Bank to discontinue the EUR/CHF 1.20 minimum floor, it will take more time to achieve the "mid- to long-term" financial targets and the Group confirms its commitment to create value for its stakeholders.
* IAS 19R: Norm which defines how employee benefits have to be accounted
Board of Directors elections
At the forthcoming Annual General Meeting of Shareholders on April 29, 2015, the mandates of all members of the Board of Directors will come to an end. Alain Guttmann, Thierry de Kalbermatten, Michael W.O. Garrett, Ulf Berg and Jürgen Brandt will be proposed for re-election for a new period of one year. Prof. Dr. Gian-Luca Bona, CEO of Empa (Swiss Federal Laboratories for Material Science and Technology), will be proposed as a new member of the Board. His profile and experience will bring the company important added value in the field of new technologies, especially in the digital world. The Board proposes to re-elect Alain Guttmann as Chairman of the Board.