A broad-based economic upturn on a global scale dominated the first half of 2021. Bossard reached new records in sales as well as EBIT and net income, thus returning to a growth course. Sales in the first half of 2021 grew by 23.9 % to CHF 494.8 million (previous year: CHF 399.4 million). All three market regions contributed to this significant growth with double-digit growth rates. EBIT increased by 63.6 % to CHF 67.2 million, with the EBIT margin reaching a high 13.6 %. Therefore, sales and the mid-year result are not only significantly above prior year, but also 9.7 % and 26.9 % respectively above 2019 levels. Ongoing growth initiatives also boost the structural growth of the Group.
The strong performance in the first half of the year is a result of both the last year’s low comparative base as well as high demand in all three market regions following the slowdown of the COVID-19 pandemic. The fourth quarter of 2020 already showed accelerated demand, which picked up even further in the first half of this year. The breadth of this recovery was evident in the double-digit growth rates, not only in all three market regions but even in all regional companies. The growth industries in focus, such as robotics, electromobility, railway, and healthcare technology, performed particularly well.
In the first half of 2020, the Bossard Group worked hard to ensure supply to its customers in spite of interrupted supply chains as a result of the lockdowns. Similarly, the Group continued to face major challenges on the procurement market in the first six months of 2021. In this case, above-average demand led to supply shortages, capacity restrictions, and a significant price increase for raw materials and ship- ping costs.
In both extreme situations, three key factors were essential for Bossard’s success. The first is the flexibility of our employees, who performed exceptionally well under difficult circumstances. The second is Bossard’s proven purchasing strategy, which is based on multiple sources of procurement. And the third is our generous stock-keeping. Although the latter represents a capital lockup of over CHF 280 million, the largest position on the balance sheet, it was of major importance during the last 18 months because it ensured the best possible delivery capability to our customers.
Strong recovery in Europe
Europe played a major role in the significant improvement of the result in the first half of the year. Sales in the first six months increased by 24.6 % to CHF 293.7 million (in local currency: +22.2 %). All areas, with the exception of the aerospace segment, showed solid growth. This was not only due to Bossard’s consistently high delivery capability, but also a result of the recovery of the European economy. In addition, substantial business was gained in the focus market of railway vehicle construction.
Diversified growth in America
In the first half of the year, the Group saw a broad- based, above-average increase in demand in America. Sales grew by 14.5 % to CHF 110.8 million. In local currency, growth was even higher, with an in- crease of 21.4 %. Our expertise in the electro- mobility sector built up over the last several years proved especially successful and translated into new customer relationships.
Market share gains in Asia
In Asia, sales in the first six months grew by an im- pressive 35.0 % (in local currency: +34.6 %) to CHF 90.3 million, notwithstanding last year’s relatively high comparative base. The Group’s focus on growth segments led to an expanded market position in the robotics and electronics sectors, with a gratifying development of the project pipeline.
Significant jump in profit
The sales growth compared to last year was also reflected in gross profit, which grew by 30.8 % to CHF 159.8 million. Selling and administrative expenses increased by 14.2 % to CHF 92.6 million, with some of this increase driven by the higher number of employees. Compared to the previous year, the number of employees increased by 3.2 % to 2480 full-time equivalents. Nonetheless, selling and administrative expenses in relation to sales fell from last year’s 20.3 % to 18.7 %.
In spite of the higher cost basis, the strong growth dynamic resulted in a striking growth in earnings. In the first six months, EBIT increased by CHF 26.1 million, or 63.6 %, to CHF 67.2 million. The EBIT margin amounted to 13.6 % compared to the previous year’s 10.3 %. Net income increased to CHF 52.6 million (previous year: CHF 31.6 million), a plus of 66.5 %.
Solid balance sheet
Because of the accelerated growth in the first six months, total assets increased by 15.8 % to CHF 742.5 million compared to year-end 2020. This was largely driven by the higher operating net working capital, which increased by 13.7 %. This increase is driven by higher customer receiv- ables due to increased sales as well as higher inventory on stock, which was expanded considerably to ensure delivery capability in the tense procurement market. The equity ratio amounts to 47.6 %, which underlines our solid financial position.
Growth reflected in cash flow
In the first half of the year, free cash flow was CHF 35.3 million compared to last year’s CHF 13.6 million. The main drivers were solid earning power and lower in- vestment activities. In spite of the dividend payment of CHF 33.9 million in April 2021, net debt fell slightly in the first six months from CHF 155.7 million to CHF 152.6 million.
Innovation as the foundation for further growth
The market is embracing Smart Factory Assembly. With the introduction of this new, independent ser- vice, we are supporting our customers in digitalising their assembly processes. This boosts process reliability and productivity and lowers production costs. With additional digital services such as our new «Real Time Manufacturing» purchasing plat- form, we enable our customers to procure milled or turned CNC prototypes or initial small series quickly and with time and cost reliability. Both areas high- light our expertise in digitalization, process optimisation, and improving productivity.
In the course of implementing our Strategy 200, Bossard will continue to invest heavily in growth initiatives.
We anticipate demand to remain strong in the second half of 2021. This expectation is based on our customers’ full order books as well as the broad-based global economic recovery, which is reflected in the purchasing manager indices. The situation on the procurement market will likely remain tense in the second half of the year, leading to further price in- creases and longer delivery times. The outlook for the full year remains subject to uncertainties and risks as a result of the COVID-19 pandemic.
Until the end of this year, we expect the growth rate to normalize as recovery continues. For the financial year 2021, the Group is targeting sales be- tween CHF 930 million and CHF 960 million (2020: CHF 812.8 million). From today’s perspective, the EBIT margin is expected to be in the upper part of the targeted range of 10 % to 13 %.
9. Events occurring after balance sheet date
Since June 30, 2021 no major events occurred which would have required additional disclosures or changes in the Semi-Annual Report 2021.
The Bossard Group is a leading global provider of product solutions and services in industrial fastening and assembly technology. More than 1 million items as well as proven expertise in technical consulting and inventory management distinguishes the Bossard Group.
Bossard was founded in Zug in 1831. Today local and multinational companies count on Bossard’s expertise to increase their productivity – with success. Bossard calls this concept, which is also a promise to its customers, “Proven Productivity.” This includes, among other things, optimizing processes and reducing inventories to increase the efficiency and productivity sustainably. In addition, Bossard is considered a pioneer in developing intelligent production facilities in line with Industry 4.0.
With 2500 employees at 83 locations in 31 countries throughout the world, the Bossard Group generated CHF 812.8 million in sales in the financial year 2020. Bossard is listed on the SIX Swiss Exchange.