Bobst’s intention to issue a debenture bond

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Bobst’s Pune plant

On 22 January 2020, Switzerland headquartered packaging and label printing and converting Bobst Group announced that it is currently expecting 2019 full-year sales on a similar level as in the previous year 2018, which was CHF 1,635 million. The group now also manufactures digital textile printing machinery in its Mouvent joint venture.

The Bobst website investor pages reveal that the 2019 sales were 1636.3 CHF million (approximately Rs. 12,934 crore) compared to 1634.5 CHF million for 2018. The full-year operating result (EBIT) margin is expected to be slightly lower than 5%, as stated in the press release, but is listed as 5% in the key figures table on the website. The headcount, which we believe is a crucial figure for the viability of global manufacturers, was 5,555 in 2019 in comparison to 5,660 in 2018.

The headcount, which we believe is a crucial figure for the viability of global manufacturers, was 5,555 in 2019 in comparison to 5,660 in 2018. This works out in Euro 0.279 million in sales per employee in 2019 compared to Euro 0.273 million in sales per million in 2018.
For 2020, the group is currently expecting full-year sales to be around 6% lower than in the previous year. The full-year operating result (EBIT) margin is expected to be smaller than in the last year due to lower sales and higher marketing costs. Marketing costs were expected to be high due to drupa 2020 in June, now postponed to 2021. We do not yet have any comment on the additional costs caused by the delay.

The Bobst Group press release also states that the company intends to issue a debenture bond. The proceeds will be used partially to reimburse the CHF 150 million debenture bond maturing on 30 September 2020 and partially to finance investments.

Our view

Although the drupa 2020 bump in sales may not happen this year, there are reports that in China, at least, after the Coronavirus has diminished and packaging businesses are reopening, the industry is running to full capacity. Other news from the packaging industry in several large developed markets suggest that FMCG, food, and pharma supply chains are still functioning or were as of 30 March 2020 and that packaging plants are running to capacity.

There is every expectation that if India can come out of the total lockdown by 15 April 2020 for social distancing, the packaging industry will pick up well. Reports suggest that as of 30 March 2020, the Indian government is planning to activate the 3 million trucks that have been standing still throughout the country since 22 March.

The Bobst Group is relatively unique in our industry because it has plants in almost every major region, including plants in Brazil, India, and China, apart from its plants in Switzerland and Italy. It is a significant supplier of gravure and flexo presses to the flexible packaging segment and of monocarton converting equipment. For cartons Bobst manufacturers seven die-cutters: the Novacut, Visioncut, Expertcut and the Mastercut for monocartons; and three levels of die-cutters in its corrugated carton series – the Visioncut, Expertcut, and Mastercut.

The entry-level Novacut diecutter is not only the most popular in emerging markets but has customers in all global markets. The company’s plant in Pune manufactures for global consumption, a wide range of its folder-gluers for monocartons, and the downstream module for the flexo printer slotter for corrugated cartons. Bobst in Pune has grown well both in output and turnover over the past three years, which is a real consideration for South Asian customers when looking at the viability of its suppliers.

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Naresh Khanna
Editor of Indian Printer and Publisher since 1979 and Packaging South Asia since 2007. Trained as an offset printer and IBM 360 computer programmer. Active in the movement to implement Indian scripts for computer-aided typesetting. Worked as a consultant and trainer to the Indian print and newspaper industry. Visiting faculty of IDC at IIT Powai in the 1990s. Also founder of IPP Services, Training and Research and has worked as its principal industry researcher since 1999. Author of book: Miracle of Indian Democracy.

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