Bobst reports slower start compared to first half of 2018

First half year results of 2019

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Bobst

Bobst Group recorded first half-year sales of CHF 736.8 million for the first six months of 2019, compared to the high CHF 762.5 million in the first half of 2018. The operating result (EBIT) decreased to CHF 14.8 million compared to CHF 35.2 million in 2018. The net result reached CHF 7.4 million, down from CHF 24.9 million in the previous year.

The group is facing signs of a slowdown and an increased pressure on prices. Order entries decreased by 15% and the order backlog is 9% lower than in the previous year. The 2019 full year profit guidance is therefore reduced. Bobst expects to achieve an operating result (EBIT) margin of less than 5% for the full year 2019 (compared to 6-7% as announced in March of this year).

During the first half of 2019, consolidated sales amounted to CHF 736.8 million, representing a decrease of CHF 25.7 million, or -3.4%, compared with the same period in 2018. The volume and price variances had a negative impact of CHF 15.0 million, or -2.0%. The exchange rates had an overall negative impact on sales of CHF 10.7 million. The evolution due to the conversion of foreign currencies for consolidation accounts for CHF -6.7 million, or -0.9%, and the transactional impact on sales volume from its Swiss operations accounts for CHF -4.0 million, or -0.5%.

The reduction of consolidated sales was mainly driven by lower order intake compared to the first six months of 2018. The operating result (EBIT) reached CHF 14.8 million compared with CHF 35.2 million for the same period in 2018. Slightly lower sales compared to the high level achieved in the same period of 2018, an unfavorable product mix, the increased pressure on prices in order to defend market shares, as well as foreseen increased costs associated with the digital initiatives launched by the group have led to the reduction of the operating result (EBIT).

The operating result (EBIT) for sheetfed business unit decreased from a high CHF 29.7 million in the first half of 2018 to CHF 12.1 million in the first half of 2019. Lower sales in the first half of the year, a quite unfavorable product mix, pressure on prices and a lower utilization of the industrial capacities due to lower orders and the planned reduction of inventories led to this drop in operating result (EBIT). The webfed business unit continues to have an unfavorable product mix and high pressure on margins. The quality campaigns launched in 2018 are progressing as planned and should bring the expected improvements. The operating result (EBIT) was CHF -21.4 million in the first half of 2019 compared to CHF -20.2 million in the first six months of 2018. Business unit services had to absorb the run rate effect of the significant increase in field service technicians and technical support people, which was accelerated in 2018 according with the group’s strategy. The training costs have had a negative impact on the business unit’s operating result (EBIT), which was CHF 25.3 million in H1 2019 compared with CHF 27.4 million in the same period in 2018. All three business units have higher costs due to the ramp-up of the group’s digital activities (Mouvent, BBS, IoT) which were launched in 2017.

Net result reached CHF 7.4 million, compared to CHF 24.9 million in 2018. The decrease in net result is mainly due to lower operating result (EBIT) but also due to losses, on which no deferred tax assets are recognized since year end 2018. In the 2018 half-year results, deferred tax assets on losses incurred in Germany and China were still recognized. Higher financial expenses for the set-up of a revolving credit facility and unfavorable foreign currency impacts were compensated by an exceptionally high result from associates in the first six months of 2019.

Net debt increased to CHF 117.1 million from CHF 20.7 million at the end of 2018. This is mainly due to the ongoing capital expenditure, dividends paid and the usual increase of work in progress for machines to be invoiced in the second half of the year. The consolidated shareholders’ equity reached 36.5% of the total balance sheet, compared to 33.4% at the end of 2018.