In an increasingly difficult market environ- ment, the Bossard Group achieved solid re- sults in the first half of 2019. Sales rose by 1.0 % to CHF 450.9 million compared to 2018 (+1.9 % in local currency). When adjust- ed for acquisitions, sales declined slightly by
0.3 % in local currency in comparison to the same period last year. EBIT was CHF 53.0 million after last year’s CHF 61.6 million. The achieved EBIT margin was a solid 11.7 % (13.8 % last year) and remains consistently above the industry average. In the first six months, net income amounted to CHF 41.6 million following CHF 49.0 million last year.
More signs of economic headwind appeared in the first half of 2019. The purchasing managers’ indices as well as demand in individual market regions reflect this development. The slowing economy plus the renewed strengthening of the Swiss franc noticeably affected our business in Europe in the first half of the year. Nonetheless, the Group posted sales of CHF 264.8 million in this market region, an in- crease of 1.7 %. In local currency, growth was 4.2 %, of which 2.5 % is attributable to acquisitions. The overall demand picture is uneven. Some regional companies posted double-digit growth rates, whereas others increasingly felt the effects of the weaker economic environment.
Headwind in America
Following the pleasing business performance in 2017 and 2018, Bossard is confronted with headwind in America. In the first half of 2019, sales declined by 5.1 % to CHF 113.4 million (–8.3 % in local currency). One reason for this development is that some customer projects from the previous year have now been completed. We saw weaker demand from major customers, especially in the second quarter of 2019 – a tendency likewise reflected in the US purchasing managers’ indices. The product mix of the largest US electric vehicle manufacturer has markedly changed since the introduction of its third mod- el series, adversely affecting sales.
Solid growth in Asia
In Asia, investments in our distribution network and infrastructure modernization are paying off.
Although the effects of the trade dispute between the USA and China are palpable, Bossard continues to enjoy healthy growth rates in important markets such as China, India and Taiwan. In the first half of the year, sales in Asia grew by 9.7 % to CHF 72.7 million (12.0 % in local currency). Excluding the acquisition effect, the sales increase was 7.2 % in local currency.
The second-best half-year result
In the first six months of this year, EBIT amounted to CHF 53.0 million compared to last year’s CHF 61.6 million. The Bossard Group thus achieved its second- best half-year result in an increasingly challenging market environment. The EBIT margin reached a solid 11.7 % (2018: 13.8 %), well within the 10 % to 13 % target range. In addition to the record-high comparative basis in the first half of 2018, the Group’s results were impacted by a lower gross profit margin and higher selling expenses.
Owing to the product mix and higher procurement costs, the gross profit margin fell from 32.5 % last year to 31.3 %. The 5.6 % increase in selling and administrative expenses to CHF 88.3 million resulted, among other things, from the additional investments needed to expand the services portfolio in Smart Factory Logistics and Engineering Services. It was gratifying to see that the response to the engineering modules introduced in spring has been positive – from existing and new customers alike. As experience has shown, the long-term in- vestments in expanding our services lead to higher costs in the initial phase. The headcount increased by 129 employees or 5.4 % to 2,517 employees in the comparison period, partly due to acquisitions. Furthermore, Bossard is currently observing a general rise in labour costs as a direct result of high employment in various industrial countries. Finally, the slowing economy and long-term investments are also having an impact on net income, which totalled CHF 41.6 million in the first half of 2019 compared to last year’s CHF 49.0 million.
Growth and investments lead to higher total assets
Compared to the end of 2018, growth and investments led to an increase in total assets by 7.9 % to CHF 651.5 million. This development was the result of the acquisitions made in Germany and China as Although the effects of the trade dispute between the USA and China are palpable, Bossard continues to enjoy healthy growth rates in important markets such as China, India and Taiwan. In the first half of the year, sales in Asia grew by 9.7 % to CHF 72.7 million (12.0 % in local currency). Excluding the acquisition effect, the sales increase was 7.2 % in local currency.
The second-best half-year result
In the first six months of this year, EBIT amounted to CHF 53.0 million compared to last year’s CHF 61.6 million. The Bossard Group thus achieved its second- best half-year result in an increasingly challenging market environment. The EBIT margin reached a solid 11.7 % (2018: 13.8 %), well within the 10 % to 13 % target range. In addition to the record-high comparative basis in the first half of 2018, the Group’s results were impacted by a low- er gross profit margin and higher selling expenses.
Owing to the product mix and higher procurement costs, the gross profit margin fell from 32.5 % last year to 31.3 %. The 5.6 % increase in selling and administrative expenses to CHF 88.3 million resulted, among other things, from the addi- tional investments needed to expand the services portfolio in Smart Factory Logistics and Engineering Services. It was gratifying to see that the response to the engineering modules introduced in spring has been positive – from existing and new customers alike. As experience has shown, the long-term in- vestments in expanding our services lead to higher costs in the initial phase. The headcount increased by 129 employees or 5.4 % to 2,517 employees in the comparison period, partly due to acquisitions. Furthermore, Bossard is currently observing a general rise in labour costs as a direct result of high employment in various industrial countries. Finally, the slowing economy and long-term investments are also having an impact on net income, which totalled CHF 41.6 million in the first half of 2019 compared to last year’s CHF 49.0 million.
Bossard Holding AG, Zug, Switzerland, a limited company subject to Swiss law, is the parent company of all entities within Bossard Group (hereinafter Bossard). Bossard is a leading distributor of fasteners of every kind and a provider of related engineering and logistics services including inventory management solutions. The Group operates in three geographic regions, Europe, America and Asia, and is one of the market leaders in its sector of industry.
Segment information
Acquisitions 2019
In January 2019, assets from Linquan Precision Co. Ltd, China, were acquired as part of an asset deal.
In January 2019, BRUMA Schraub- und Drehtechnik GmbH, Germany, was acquired.
Further acquisitions
In March and April 2019, the investment in bigHead Fasteners Ltd, England, was successively increased from 19.0 percent to 41.9 percent. This investment led to a cash outflow of CHF 0.7 million and a goodwill of CHF 1.6 million.
In April 2019, a share of 30 percent of Ecoparts AG, Switzerland, was acquired. This investment led to a cash outflow of CHF 3.0 million and a goodwill of CHF 2.6 million.
Summary acquisitions
All the mentioned investments led to a cash outflow of CHF 26.4 million and a goodwill of CHF 18.1 million.
Acquisitions 2018
The following table shows the acquired balances at their market value as per acquisition date and the resulting goodwill.
In March 2018, assets from RGM SAS, France, were acquired as part of an asset deal.
In March 2018, a purchase price adjustment for assets which were part of an as- set deal with Mario Marchi Eredi, S.p.A, Italy, in August 2017 resulted in a good- will adjustment of CHF 0.1 million.
In June 2018, a purchase price adjustment of an acquisition in the USA from the year 2016 resulted in a cash inflow of CHF 0.8 million and a reduction of goodwill in the same amount.
Exchange rates
Events occurring after balance sheet date
In July 2019, the Bossard Group has acquired the Boysen distribution business of the German AQUAERO Goup. Boysen has a large international customer base and generates an annual sales equivalent of CHF 29 million. Founded in 1967, the distribution company is headquartered in Munich, Germany, and has fur- ther locations in Hamburg, Germany, and Irving (Texas), USA. Boysen’s main sales market is Europe.
Since June 30, 2019 no further major events occurred which would require additional disclosures or changes in the Semi-Annual Report 2019.
The complete Semi-Annual Report 2019 is available on http://www.bossard.com > About us > Investor Relations. This report is unaudited and prepared in accordance with Swiss GAAP FER 31.