Bobst Group recently releases its first half year financial report and the numbers are disappointing. Company’s results severely affected by the Covid-19 lockdown. Sales are down 29% compared to first half of 2019 and the net result is a loss of CHF 30 million compared to 7.4 million profit in first half of 2019. Order entries decreased by 21% and backlog by 10% compared to previous year. However, the company is cautiously optimistic about the second half of 2020.
Whilst the Chinese market recovered rapidly after the Covid-19 pandemic lockdown, other markets were going through a slowdown of equipment investments. However, as the pandemic created intense packaging demand for the high consumption segments such as Food, Pharma and Home & Personal Care, market activities may considerably evolve in the second half of the year. As the current unstable economic situation strongly affects some market players, customers may put more value on choosing a solid business partner.
In line with the new Group strategy to reduce its presence at industry tradeshows, several virtual events were organized to launch and promote our new solutions in the market.
Business Unit Services was less impacted by the Covid-19 pandemic as the spare parts supply chain proved to be very efficient and resilient, and part of the service and technical support interventions could be performed remotely.
The Business Unit Services expects to see a gradual return to normal demand for the second half of 2020, provided that global health conditions do not deteriorate further in its key regions and markets (particularly in North America). The Business Unit Services will continue to support customers despite adverse conditions, thereby protecting the high level of satisfaction observed. The focus for the remainder of 2020 will therefore be to secure the supply chain for spare parts and to further optimize service interventions, including remotely when possible. In parallel, the Business Unit Services will continue to pursue the digitalization of its activities and the integration of the recent CITO acquisition.
OUTLOOK FOR THE SECOND HALF OF 2020
In June BOBST unveiled its new vision for the packaging industry and launched a new range of machines and solutions. The BOBST vision is shaping a new reality where connectivity, digitalization, automation and sustainability are the cornerstones of packaging production. BOBST continues to deliver best-in-class machines, and is now adding intelligence, software capabilities and cloud-based platforms, to make packaging production better than ever. At the heart of this vision is BOBST Connect, an open architecture cloud-based platform delivering solutions for pre-press, production, process optimization, maintenance and market access. It ensures an efficient dataflow between digital and physical worlds. It will orchestrate the entire production process from the client’s PDF to the finished product.
In order to implement this new vision, the Group is adapting its organization. The Group Executive Committee has been reduced from five to four members. The two machine Business Units are being merged. Stephan März, the current head of Business Unit Web-fed will lead this new Business Unit. Julien Laran will continue to lead the Business Unit Services. This Group transformation will lead to a simplification of the organization and support the achievement of the Group’s long-term financial targets.
Uncertainty remains high in our relevant markets due to the Covid-19 pandemic situation. If borders between countries remain open and air travel will further improve, the Group expects a second half of the year 2020 on a significantly higher level compared to the first six months of this year. It will however not be possible to achieve the same results as in the second half of 2019 as some constraints linked to the pandemic situation remain.
The long-term financial targets of at least 8% operating result (EBIT) and a minimum 20% return on capital employed (ROCE) might have to be adapted according to the evolution of the global economy.