The Bossard Group has yet again improved its performance in FY2014: Sales, operating profit and net income reached new record levels. The operating profit (EBIT) increased by 4.3% to CHF 72.8 million. The group’s consolidated performance is also reflected in an increase in operating margin from 11.5 to 11.8%. “The results of FY2014 demonstrate that our strategy, with its focus on sustainability, is paying off. Even in an economic environment which has been difficult again since mid-2014, we have made progress in virtually all of our sales markets,” explains Bossard CEO David Dean about the group’s improved performance.
The Bossard Group’s net sales in the FY2014 reached CHF 617.8 million, namely 2.0% above the previous year’s level. This growth figure equates to 3.1% in local currency.
Last year’s investments produced a consistent improvement in results, particularly in Europe: remarkably, all European markets played a part in this growth. On balance, sales in Europe increased by 3.5% to CHF 394.7 million (+4.4% in local currency). Sales growth in Europe was adversely affected in the second half of the year by the weakening of the Euro, uncertainty surrounding the conflict in the Ukraine and sanctions against Russia. Nevertheless, even in the difficult Q4, there was a slight upward trend in European sales.
Growth in the Asian market is particularly dynamic: Sales in this region increased by no less than 12.3% to CHF 101.1 million, translating to 14.7% in local currency. Likewise in Asia, all markets contributed to this positive trend. With this performance the Bossard Group is reaping the fruits of its targeted investments to opening up the Asian markets.
Business fell short of original expectations in America, where revenues fell by 9.2% to CHF 122.0 million (-8.0% in local currency). This setback was mainly due to low demand from a major customer. In addition, the planned expansion of production by the largest US electric vehicle manufacturer went more slowly than at first anticipated. This cooperation will however lead to substantially increased sales volumes in the current year.
Profitability is up again
The Bossard Group’s efforts to improve profitability met with success once again in FY2014. At CHF 72.8 million, operating profit (EBIT) reached a new record level. After the striking progress in previous years, the EBIT margin increased further from 11.5 to 11.8%. In the period from 2004 to 2014, the Bossard Group’s profitability-oriented strategy is reflected in an increase in EBIT margin by 6.4 percentage points (from 5.4 to 11.8%). The level of performance now being reached is significantly above the industry average. “The continuous growth in profitability is clear evidence of the success of our strategy. The orientation of the Bossard Group toward high-end products and services is clearly paying off,” stresses Dean.
This increased performance has been sustained over the last year mainly by the Asian business. In Europe, Bossard managed to keep the margins stable despite the noticeably challenging market conditions. However, the decline in sales in America was also associated with pressure on margins.
Increased net income – higher tax burden
The altogether pleasing development of the Bossard Group is reflected in a 2%t increase in net income to CHF 57.1 million. The lower growth in profit compared to operating earnings is attributable to the tax burden, which increased from CHF 9.7 million to CHF 12.5 million in the previous year. It is worth noting that, in the previous year, Bossard was able to benefit from the use of losses carried forward. Nevertheless, the return on sales remained with 9.2% at a high level.
With regard to dividends, Bossard adheres to the proven distribution policy, according to which 40% of the group’s net income is distributed on to the shareholders. The Board of Directors will therefore propose the Annual General Meeting of Shareholders for FY2014 to pay a dividend of CHF 3 for registered A shares split in the ratio 1:2 since April 2014 (previous year: CHF 3). The dividend is to be paid from capital contribution reserves.
Solid balance sheet ratios
The balance sheet ratios improved yet again in FY2014 and reflect the Bossard Group’s robust financing policy. The equity ratio grew from 43.2 to 48.5% and by the end of the year was significantly higher than the long-term target of 40%. The net debt also moved in the desired direction: it fell from CHF 101.2 million to CHF 97.9 million, after reaching a high of CHF 202.2 million at the end of 2012 as a direct result of the acquisition of KVT-Fastening.
Cautiously optimistic outlook
As a result of business growth in the last few months and the overall promising development work in various countries, the Bossard Group is expecting a further growth in sales for FY2015 – always provided there is no fundamental change in the underlying macroeconomic and geopolitical conditions. This cautious optimism is derived not least from leading indicators such as the purchasing manager indices, which are developing positively in the markets relevant to Bossard. Even the weakening of the Euro compared to the US dollar is likely to improve the competitiveness of European exporters and can therefore help to ensure increased demand in Europe. The impact of the strong Swiss franc on Bossard customers in Switzerland cannot be accurately assessed for the time being. “Overall we are expecting a slight growth in local currency in Europe. In America, despite the low demand from one major customer, we are seeing an upward trend among our other customers,” explains Dean. In particular, the cooperation with the US electric vehicle manufacturer will help with this. The acquisition of Aero-Space Southwest, which was concluded in January 2015, will also have a positive effect. A consistently encouraging increase in demand for Bossard products and services is also assumed in the Asian markets. Despite the anticipated positive business growth in the foreign markets, the substantial strengthening of the Swiss franc will leave its mark on the consolidated financial statement. Nevertheless, Bossard is aiming for sales growth of 13 to 16% in local currency in 2015.