Business Review

On a growth trajectory in a challenging market environment

Bystronic achieved solid sales growth in the 2022 financial year. In spite of the challenging environment, further progress was achieved in the strategic growth areas. These comprise the expansion of the product portfolio with innovations, the launch of the pioneering BySoft Suite software family, and the further expansion of the service portfolio. In addition, Bystronic published its first Sustainability Report in accordance with GRI standards, thus underscoring its strong commitment to sustainability throughout all its business processes.

Order intake and sales development

In the 2022 financial year, order intake decreased by 14.1% (–10.2% at constant exchange rates) to CHF 1,009.5 million. On the one hand, the Group benefited significantly from pandemic-related catch-up effects in the previous year. On the other, the customers adopted an increasingly cautious approach during the course of the reporting year as a result of economic uncertainties. Order intake declined in the EMEA (Europe, Middle East & Africa), Americas, and China regions. In the APAC (Asia-Pacific) region, by contrast, order intake again increased, driven in particular by attractive solutions in the mid-range/silver segment.

The high order backlog enabled Bystronic to increase sales by 8.1% (13.0% at constant exchange rates) to CHF 1,015.9 million in 2022. The three regions EMEA, Americas, and APAC all performed well and contributed toward this growth. In China, business slowed as a result of the ongoing COVID restrictions and economic uncertainties.

Due to a lack of components caused by supply bottlenecks, it was not possible to realize the full sales potential, in particular during the first half-year. In spite of a significant improvement in the availability of components in the second half of the year, the final installation of a number of systems at customer sites remains outstanding. This means that these sales can only be recognized with a delay. By the end of the year, the effect still amounts to about CHF 50 million.

Operating result and profitability

The operating result (EBIT) amounted to CHF 48.1 million. The EBIT margin stood at 4.7% compared to 7.5% in the previous year. The reduced profitability is attributable chiefly to three effects: Firstly, Bystronic achieved lower sales growth than anticipated due to supply bottlenecks for components. Secondly, in pursuit of its growth strategy, the Group expanded its service business and increased its production capacities. Thirdly, Bystronic incurred significantly higher costs relating to procurement, transport, and sales as a result of inflation. In order to counteract these effects, the Group explored the utilization and development of alternative components to ensure higher availability and faster delivery of systems to customers. In addition, Bystronic repeatedly implemented price increases for new orders.

Net result, cash flow, and dividend

The net result stood at CHF 36.6 million (2021: CHF 56.8 million). The earnings per class A registered share amounted to CHF 17.69. Advance payments from customers continued to increase, but, were not able to compensate for the inventory build-up. The latter was the result of the targeted build-up of key components on the one hand and the increase in products awaiting installation due to missing components on the other. In total, the operating free cash flow decreased to CHF –40.6 million (2021: CHF 64.8 million). With CHF 341.6 million as of December 31, 2022, cash and cash equivalents and marketable securities remained at a very high level.

The Board of Directors proposes to the Annual General Meeting on April 25, 2023, that a dividend of CHF 12.00 per class A registered share and CHF 2.40 per class B registered share be distributed. In total, CHF 24.8 million will thus be distributed to shareholders. Bystronic looks to the future with confidence. In view of the solid liquidity, the proposal reflects an ordinary distribution of slightly more than two-thirds of the net result.

Following the distribution of the dividend, liquidity will remain at over CHF 310 million with an equity ratio of 63%. This means that the Group is in a good position to continue its organic and acquisitive growth and also has sufficient liquidity to face a challenging market environment. In the future, in line with its dividend policy, Bystronic plans to continue to distribute between one-third and one-half of the net result as dividends each year, taking into account the liquidity situation and the company’s future requirements.

Strategy implementation

In line with its strategy, Bystronic successfully expanded all three of its growth areas – systems, software, and service: In the systems business, the Group unveiled new product innovations, including a laser cutting system with an output of 30-kilowatt. This enables us to offer our customers even more efficient processes, particularly for the processing of thick sheet metal. In the software business, Bystronic launched the groundbreaking BySoft Suite solution. This modular software family helps our customers to digitalize their business processes. In the service business, the Group built up additional capacities and increased sales by 10.7% to CHF 227.2 million, thus contributing 22.4% to the Group’s sales (previous year: 21.9%).

In addition, Bystronic published its first Sustainability Report in accordance with GRI standards. On the one hand, this creates transparency with regard to the relevant business areas. On the other, it underscores the Group’s commitment to make both its own business activities and those of its customers in the sheet metal processing industry more sustainable. For this purpose, Bystronic established, among other things, a Sustainability Committee comprising all the relevant operational functions and anchored the achievement of ESG targets in the compensation of the Executive Committee. In addition, the Group published data on KPIs such as the carbon footprint, energy consumption, employee engagement, and diversity.

Outlook

Bystronic is in a strong position to achieve further growth in an attractive market. On the one hand, the Group can benefit from structural growth drivers: Sheet metal is a highly versatile, recyclable, easy to process, and lightweight material that will remain in demand in the future. On the other hand, Bystronic supplies customers from various industries that have diverse exposures to economic cycles. Bystronic has successfully boosted the proportion of stable, recurring sales from its service business in the recent years. In addition, our Smart Factory solutions increase the productivity of our customers. All of this gives the business model resilience in the face of an economically challenging market environment. Furthermore, Bystronic has a strong balance sheet and high liquidity, which will allow the Group to continue to resolutely implement its strategy.

In the medium term, subject to the recovery of the economy, Bystronic continues to aim for annual organic sales growth in excess of 5%, an EBIT margin of over 12%, and a RONOA of over 25%.

For the 2023 financial year, Bystronic expects order intake in the systems business to drop due to the economic slowdown, but it continues to enjoy a high order backlog in excess of CHF 400 million. The Group will drive its service business forward and systematically implement cost-saving measures in order to offset rising personnel and energy costs. For the 2023 financial year, Bystronic expects a higher operating result with slightly lower sales.

Discontinued operations

In 2021, the Group successfully completed the transformation from Conzzeta to Bystronic. The FoamPartner business unit was divested in March 2021 and the Mammut business unit in June 2021.

Net sales of the discontinued operations amounted to CHF 183.6 million in 2021, to which FoamPartner contributed CHF 76.3 million in the first quarter of 2021 and Mammut CHF 107.3 million in the first half-year of 2021. The operating result (EBIT) of the discontinued operations was CHF –88.8 million. At CHF –80.1 million, the bulk of this is attributable to the loss on sale in connection with FoamPartner resulting from the goodwill recycling as prescribed by the Swiss GAAP FER accounting standards.

Total group

In the 2022 financial year net sales of the entire Group amounted to CHF 1,015.9 million (2021: CHF 1,122.9 million.). The operating result (EBIT) was CHF 48.1 million, while in the previous year, the loss due to the divestment of FoamPartner amounted to CHF –18.7 million. Overall, the Group result was CHF 36.6 million, compared with CHF –27.8 million in the previous year.