Editorial
Good order volumes and stable demand amid challenging supply chains
Challenges in supply chains and the lockdowns in China marked the first half of 2022. In spite of this, thanks to its innovative product and service portfolio, Bystronic achieved solid order volumes. However, procurement and shipping frictions led to a delayed sales recognition and had a temporary impact on profitability. Thanks to our strong market position and the sheet metal industry’s long-term growth drivers, we are confident that we will achieve our ambitious medium-term targets in line with our Strategy 2025.
Demand remains at strong prior-year level
Our customers in a variety of industries continued to invest in the productivity of their sheet metal processing operations in the first half of 2022. This resulted in sound order volumes. Compared to the very strong previous year, which was characterized by catch-up effects, we achieved a stable order intake of CHF 536.1 million. In particular, the strong growth in the gold segment gives us reason for confidence and underpins the attractiveness of our innovative solutions.
Strong customer focus in spite of supply bottlenecks
The highest order backlog ever illustrates our strong market position. However, one challenge in the first half-year on account of the ongoing supply bottlenecks was the respective recognition of sales. Although in some cases certain components were not available, we maintained a high level of capacity utilization at all our production sites and shipped the products to our customers. As soon as the unavailable components became accessible again, Bystronic ensured installation on site as quickly as possible. However, until the systems were fully operational on site at our customers’ premises, we were not able to recognize the corresponding sales in our accounts. As a result, inventories of finished products increased by CHF 49 million, which translates into approximately CHF 100 million in sales and the corresponding profit contribution. Due to the delayed recognition of sales, higher procurement and transport costs, further increases in personnel, as well as intensified sales and marketing activities, profitability declined in the first half of 2022. As a result, the EBIT margin of 2.3% was below our own ambitions. We have therefore already initiated cost savings measures, which will materialize as of the second half of 2022.
Progress in the strategy
In line with our Strategy 2025, we maintained our focus in the first half of 2022 on continuing to achieve profitable growth in the fields of systems, services, and software.
Accordingly, we expanded our systems portfolio with applications for the various price segments. In the gold segment we launched our most powerful cutting system to date, a 20-kilowatt laser. This productivity boost will specifically benefit customers that process particularly thick sheet steel. We also sold initial machines from our new “DNE Global” brand, which is positioned in the entry-level segment.
We also continued to expand our service business in the first half-year. We recruited 35 new service technicians and expect to recruit further specialists in the second half of the year. Thanks to the service business, our customers can not only count on systems, but also on maintenance and spare parts from a single source.
We have strengthened the software business at our sites in Spain, the United States, and Korea with additional developers and sales specialists. Our new Smart Factory Software Suite is in test operation at selected customers. In October, we will launch our innovative BySoft Software Suite solution for networked production at the industry’s major trade show, the “EuroBLECH” in Hanover.
Outlook
Bystronic’s very strong position in an attractive growth market promises further market share gains and profitable growth. During our strategy cycle from 2019 to 2025, we aim to achieve annual organic sales growth in excess of 5%. We also target an EBIT margin of over 12% and a return on net operating assets (RONOA) in excess of 25%.
Despite the limited visibility, we expect a better second half of 2022.
Outstanding team spirit
The first half of the year was also challenging for our more than 3,600 employees. It was only thanks to their tremendous commitment that we were able to sustain our production operations and ship and install many systems in spite of the adversities. We would like to take this opportunity to thank them for their outstanding performance.
We would also like to thank our business partners and shareholders for their great support and the trust they place in us.
Zurich, July 21, 2022
Dr. Heinz O. Baumgartner
Chairman of the Board of Directors
Alex Waser
CEO Bystronic Group