2023 – A record year
The packaging industry is in the midst of a digital revolution, which is forcing every company to innovate, challenge their approach, think end to end and digital, and leverage networks and platforms to deliver new business models for their clients. At BOBST, we support this transformation and despite the CHF 20 million year on year investments on digitalization to implement our vision of Shaping the Future of the Packaging World, our results 2023 show a turnover of CHF 1.96 billion and 7.5% EBIT.

Leaders have to be prepared for all types of events: 2023 was a year with a lower booking already in H1 and the slowdown continued in H2. In the midst of a record year, we suffered two main business interruptions, a cyber-attack attempt and the flooding in Firenze which affected the full year results.

The Easter weekend attempted cyber-attack served as a powerful learning experience for the top management, for IT teams worldwide and all our employees. You feel as if a robber has broken into your home, playing with your organization until you can detect, isolate and protect your systems and data again.

We have drawn lessons from this event, as do all companies which must answer the question “when will it happen? and not “if”. The crisis management was very good, and our strong cohesion allowed us to restore business operations in services, sales, production and R&D in record time. A big THANK YOU to all our employees and external partners for their rapid and effective response.

Taking our responsibilities, we held on to our defense line, getting more resilient, improving our security strategy and our systems recovery capabilities, company culture and people education.

Flooding at Bobst Firenze (BFL) site – in the night of November 2nd, following a week of ceaseless rain, the Bisenzio river overflowed and entered our facility. Luckily, no one from BOBST was injured although nine families incurred substantial losses. Machines and buildings were impacted. Thanks to the great contribution of volunteers, Group support, local employees, and suppliers, BFL was already able to ship the first M1 machine in December, a nice recovery! Congratulations to everyone who invested enormous energy into the recovery.

THANK YOU for your great support and for your belief in our vision and in the future of the company.

2023 was very busy with some key projects supporting the Group strategy:

• Acquisition of Dücker Robotics, now Bobst Novara. BOBST acquired 70% of the equity of Dücker Robotics srl, a specialized supplier of robotic systems in April 2023. The integration of a wide range of robotic solutions will allow us to configure complete and seamless production lines for our customers.
• In October, BOBST acquired 51% of the company CnS, a manufacturer of Flexo Printer Slotters and Flexo Folder Gluers in South Korea. This will enable BOBST to offer a full range of Flexo Folder Gluers to the corrugated board industry.

• Competence 23 – Folding Carton and Corrugated Board in Mex – At the end of June, we announced our latest innovations in printing, converting, services and performance to help our customers thrive in the packaging industry. Our Vision of the packaging supply chain becoming fully digital is the engine behind these innovations and BOBST Connect is at its heart. Our innovative solutions in Flexible Packaging, Labels, Folding Carton, Corrugated Board, Services, and our activities in the domain of Sustainability are the latest in a line of continuous innovation.
• Labelexpo Europe 2023, in September, the product line Narrow mid-web introduced the DIGITAL MASTER, a testament to the collective dedication, hard work and passion of ONE Team. Four years ago, we were still presenting machines with different brand and colors! Also in September, BOBST sold its 100th digital machine. The company reaffirms its continued commitment to offering the most comprehensive portfolio of presses with flexo, pure digital and All-in-One (hybrid) technologies.
• CORRUGATED 23 and FEFCO – In October, we welcomed in Bobst Lyon about 150 customers from all over the world, combining the customer event with the technical seminar FEFCO to showcase our end-to-end solutions for the corrugated industry. It was an opportunity to share valuable inputs with the industry on energy efficiency and on multi-out applications on casemakers and to showcase our latest innovations and our commitment to sustainability.

• Resilience – a strategic advantage: Following the events that have disrupted its business over the past three years, the Group has decided to strengthen its resilience, i.e. its ability to quickly resume normal business activity to continue serving its customers. To achieve this, Business Unit Printing & Converting is deploying and certifying Business Continuity Management Systems (BCMS) at its production sites in compliance with ISO 22301, so that it can continue to serve its customers by delivering machines, products and services at predefined levels of capacity following a disruption.

In terms of innovations which exemplify our vision, we have:

• The solutions of Bobst Novara (Robotics) to reinforce our automation and connectivity streams, while offering opportunities in the folding carton industry.
• BOBST DIGITAL MASTER “All-in-One“ printing machines that integrate fully into BOBST Connect.
• Job recipe and Software – BOBST aims to provide unique functionalities to remotely set-up the equipment recipe. Based on the artwork and job-related data it will be possible to send digital parameters to the machines to decrease set-up time and reduce potential errors. A true demonstration of connectivity and automation. The features will be available progressively on the equipment range.

• In the context of Environmental, Social and Governance (ESG), BOBST reports based on the Greenhouse gas (GHG) protocol. In 2022 BOBST has committed to Science-Based Targets initiative (SBTi) methodology. BOBST’s GHG inventory shows that most carbon emissions occur downstream in its value chain. BOBST has joined the SBTi, reflecting its commitment to urgent climate action. BOBST has clearly formalized the company’s targets and is evaluating decarbonization options for its operational activities (scope 1&2) to reduce by 42% its carbon footprint. BOBST is working actively on scope 3 reduction which includes the reduction of its machines’ electricity consumption up to 20% and actively partnering with our suppliers upstream targeting overall 25% reduction by 2030 (scope 3). Other key ESG-related activities include the ongoing development of recyclable substrates, the development of water-based inks and the refurbishment of existing equipment.
• With our partners, we won the PEUOL Award for oneBARRIER FibreCycle in the Recyclable Packaging (Pre-Commercialized) category at this year’s Sustainability Awards. Developed as a joint end-to-end project by BOBST, UPM and Michelman, FibreCycle is a high barrier, recycle-ready fiber-based structure and is the successful outcome of four years of in-depth R&D studies and an extensive test program, carried out on production scale equipment.

The Group started 2023 with a 20% higher machine backlog than the year before. During this year, orders for the Business Unit Printing & Converting were 30% below the previous year with different trends by industry. Orders for the Business Unit Services & Performance remained on a similar level as in 2022.

Consolidated sales for the full year 2023 increased by CHF 119 million, or 6.5%, to CHF 1.960 billion. Adjusted for currency effects and acquisitions, organic sales were up CHF 179 million, or 9.7%, in 2023.

An improvement of CHF 9 million, or 0.5%, came from a change in scope of consolidation due to the acquisitions done in 2023. The unfavourable evolution of exchange rates had a negative effect on sales of CHF 68 million, or -3.7%. The operating result (EBIT) was CHF 147 million, or 7.5% of sales, compared to CHF 141 million, or 7.7% of sales in 2022.

Business Unit Printing & Converting reached an operating result (EBIT) of CHF 42 million compared to CHF 47 million in 2022. Higher sales and good cost management had a positive contribution on the operating result (EBIT), but the flooding incurred in our Firenze operation in November 2023 had a negative impact on the Business Unit’s operating result (EBIT) of around CHF 25 million. The utilization of the industrial capacities improved compared to previous year. The ongoing initiatives to further improve the efficiency and profitability continue to be implemented.

Business Unit Services & Performance reached CHF 108 million operating result (EBIT) compared to CHF 97 million in the previous year. The improvement came mainly from higher activity and better utilization of our field service technicians compared to previous year.

The net result increased to CHF 119 million compared to CHF 115 million in 2022. The increase in net result is mainly due to the higher operating result (EBIT) and financial result.
The income tax rate increased due to losses in entities, where no deferred tax assets are recognized in 2023 and the reversal of deferred tax assets recognized in prior years.

Net working capital increased from CHF 113 million in 2022 to CHF 247 million in the reporting year, which is in the Group’s target range of 12 to 14 percent to sales. Customer down payments decreased significantly due to the lower machine backlog, and inventories further increased compared to previous year. Therefore, cash inflow from operating activities reduced to CHF 45 million, compared to CHF 93 million in 2022. The cash position decreased in the reporting year, resulting in a net debt position of CHF 134 million, compared to a net cash position of CHF 67 million in 2022. This was mainly due to the increase of net working capital during the reporting year and the CHF 165 million dividend distributed in April 2023.

The return on capital employed (ROCE) decreased to 24.9% in the reporting year and remains above the Group’s target level of minimum 20%. The reduction compared to the 28.7% all-time high reached in 2022 is mainly due to the increase in net working capital. The equity ratio decreased from 28.9% in the previous year to 25.7% in 2023. The reduction of the ratio is mainly due to the distribution of ordinary and extraordinary dividends in the reporting year.

Dividend proposal and Annual General Meeting
The Group’s dividend policy recommends a payout of at least 50% of the net consolidated profit after tax. The Board of Directors recommends to the Annual General Meeting of Shareholders to pay in 2024 a dividend of CHF 5 per share (CHF 5 regular dividend, plus an extraordinary dividend of CHF 5 per share paid in 2023).

The mandates of all the members of the Board of Directors become due for renewal for a one-year period. At the forthcoming Annual General Meeting of Shareholders on 28 March 2024, Alain Guttmann, Thierry de Kalbermatten, Montserrat Peidro-Insa, Jürgen Brandt, Gian-Luca Bona and Marc Schuler will be proposed for re-election for a new period of one year.

2024 priorities and outlook
The global economy faces instability on a lot of fronts with tensions between nations impacting global markets and investment moods. The IMF foresees global growth at 2.9% with adjustments to inflation expectations. Much of this growth will be driven by the emerging markets activity while it remains weak in advanced economies.

The attention in 2024 will revolve around the topics of the geopolitics, growth, cost optimization, digitalization and energy. They will drive economic decisions and policy responses.

The United States turns out to be more resilient than expected. China grapples with a real estate crisis and Europe’s complicated geopolitical dynamics, coupled with global misinformation and disinformation, impact trust and stability in the region. India and the Middle East seem to find a good dynamic within the global trends. While consumer confidence remains low overall, business confidence will experience fluctuations due to economic recovery, policy measures and market dynamics.

In addition to the high raw material cost, skills shortage and decline in order entries due to the industrial slowdown in the main sales market, the Swiss Franc has lately appreciated dramatically against the Euro and the US Dollar, with consequences for us.

In 2024, the sustainability requirements, driven by the European Union which intensifies its focus on climate-related risks, and digitalization will continue to impact the packaging industry which remains active overall, despite fluctuations and the increasing complexity of the global environment.

Meanwhile, brand owners and converters are under pressure for volume, shorter time-to-market, smaller lot sizes and the need to build consistency between physical and online sales. In this fast-moving environment, BOBST’s vision has remained stable and consistent throughout. As we look ahead to drupa 2024, our vision is continuing to progress at pace. Eventually, all the machines and tooling will “talk” to each other, seamlessly transmitting data through a cloud-based platform orchestrating the entire production process with quality control systems.

For companies who embrace this approach, across the whole production workflow, more fact-based and timely decisions will be made, and higher productivity, higher efficiency and lower waste will be a reality. By drupa 2024, we will have even more proof points to demonstrate its impact and business cases.

Based on today’s evaluation of the overall business environment and prospects, the Group is expecting 2024 full year sales and operating result (EBIT) to be lower than the levels reached in 2022. Bobst Group has issued on 31 January, 2024, a CHF 200 million debenture bond. The proceeds will be used to reimburse the CHF 135 million debenture bond maturing on 27 September, 2024, and for general corporate purposes.

The challenges ahead do not shake our confidence and optimism, on the contrary! We believe in the great abilities and strengths of our more than 6 300 collaborators. We wish to express our sincere gratitude to them and to our shareholders, customers and partners who have again supported BOBST on its mid- and long-term journey.

We look forward to working closely with you in 2024.