Annual Report 2019

Business Review Group

Margin increase in a challenging environment — focusing on Bystronic

The Conzzeta Group generated net revenue of CHF 1,573.2 million in 2019, down 11.7% from the previous year. On a comparable basis, i.e., at constant exchange rates and adjusted for changes in the scope of consolidation, the decline was 4.9%. The operating result (EBIT) at CHF 167.2 million was 13.9% higher than the previous year, or at the same level on a comparable basis. It includes an extraordinary gain of CHF 29.9 million from the sale of the Glass Processing segment in 2019. Not including this one-off gain, the EBIT margin improved by 50 basis points to 8.7%. At the beginning of December, Conzzeta announced that its strategic focus would shift to the Sheet Metal Processing segment and that it would divest all other activities. The aim is to rapidly develop the Group’s existing strengths and unleash value potential.

Financial performance

Conzzeta’s annual results for 2019 were strongly impacted by the sale of the Glass Processing segment, which was completed on April 1, 2019. Although the segment did not contribute to revenue or results for three quarters, the sale gave rise to a capital gain of CHF 29.9 million. Reflected in the Group’s net revenue were the negative impact of all changes in the scope of consolidation (CHF 91.2 million) and the negative impact from exchange rate fluctuations (CHF 29.7 million). Following on from its 20.2% growth spurt in 2018, Conzzeta had originally forecast that net revenue in 2019 would remain in line with the previous year’s figure, not including the sale of the Glass Processing segment, which had already been announced at that time. However, business performance demanded a downgrade of revenue expectations due to geopolitical and macroeconomic developments. This was communicated with the half-year results, whereby the annual profitability targets for 2019 were confirmed, with the operating result being more broadly distributed across the segments and an improved EBIT margin. The annual financial statements are generally in line with these expectations. Order intake in the Sheet Metal Processing segment was 7.3% lower than the previous year (or 6.5% on a comparable basis), with an order book level of CHF 242.3 million at the end of the year (–4.9%).

The challenging market environment in 2019 was marked, among other things, by global trade disputes, geopolitical uncertainty, disruptive changes in important industrial sectors and heightened competitive pressure. These factors affected the individual business areas differently. The Sheet Metal Processing and Chemical Specialties segments experienced the expected slowdown largely due to market conditions, while the Outdoor segment continued to grow despite the strong prior-year basis. At Group level, the first two quarters initially reflected the record high comparative basis of the previous year. In the third quarter, net revenue in the Sheet Metal Processing and Outdoor segments was then subdued, which was followed by a strong fourth quarter. In the Outdoor segment in particular, performance in 2019 would have been even better without the supply problems experienced in the third quarter, the causes of which were partially internal and partially external. On a regional basis, Group net revenue fell by 1.2% in America, 7.3% in Europe and 27.3% in Asia.

The operating result (EBIT) amounted to CHF 167.2 million, up 13.9% from the previous year. Adjusted for the aforementioned capital gain, it was 6.5% lower than the previous year, and at constant exchange rates as well as factoring in changes in the scope of consolidation, it was at the same level as the previous year, despite the decline in revenue. All of the segments contributed to the margin increase, with operational improvements and lower raw material prices having a noticeable positive effect in the Chemical Specialties segment, while the aforementioned supply problems in the Outdoor segment had a negative impact. The Sheet Metal Processing segment proved robust, reporting a margin increase of 10 basis points to 12.9%, despite a 7.6% decline in net revenue. This was due partly to its innovative range of products and services and active cost management, but also to certain non-recurring special factors.

The Group result for 2019 amounted to CHF 136.8 million, 19.2% above the previous yearʼs level (CHF 114.8 million). The capital gain included in the Group result was tax-exempt, which had a favorable effect on the tax rate (18.1%) compared with the previous year (20.4%). At CHF 11.1 million, minority interests were significantly lower than in the previous year. They primarily relate to DNE Laser in China, which was taken over in March 2016. Firstly, its profit in 2019 was lower due to the significant slowdown in business, and secondly, in the second half of 2019, Conzzeta exercised its contractually agreed option to increase its equity holding from 51% to 70%. When adjusted for the capital gain derived from the sale of the glass business, the return on net operating assets was 20.0%, down from 23.1% the previous year, when the level of net operating assets was lower.

Financing, investments and divestitures

In January 2019, Conzzeta announced the sale of the Glass Processing segment to the Helsinki-based Finnish Glaston Group for an enterprise value of EUR 68 million (CHF 78 million), and the sale was completed on April 1. Largely as a result of the inflow of funds associated with this sale, cash and cash equivalents and short-term securities amounted to CHF 389.9 million as per mid-2019, or 7.1% higher than the previous yearʼs figure. Therefore, in September 2019, an extraordinary general meeting approved the proposal of the Board of Directors for the repayment of CHF 62.1 million of excess liquidity reserves in the form of a special dividend. As at the end of 2019, cash and cash equivalents and securities amounted to CHF 300.9 million, down 22.8% from the previous year. The main reasons for this decrease were the aforementioned increase of the equity holding in DNE Laser, as well as the higher dividend payments and lower cash flow from operating activities.

Free cash flow from operating activities reached CHF 40.6 million in 2019, down from CHF 83.4 million the previous year. The decrease was primarily the result of lower business volumes and the increase of net operating assets, particularly within net working capital. Investments in fixed and intangible assets amounted to CHF 69.8 million, down from CHF 72.2 million the previous year. Notable single investments included the extensive renovation of the factory hall at the production site in Niederönz (Switzerland), which was completed in November 2019, the construction of an assembly plant in Elgin (USA) as well as two experience centers in Elgin (USA) and Incheon (Korea) in the Sheet Metal Processing segment, the expansion of the production facilities in Changzhou (China), and the construction of a new processing center for specialty industrial foams in Duderstadt (Germany) in the Chemical Specialties segment. Investments continued to be significantly higher than depreciation, resulting in a sustained high reinvestment rate of 1.8 (previous year 2.0).

Despite the lower level of cash and cash equivalents and securities, Conzzeta’s equity ratio stood at 69.5% as at the end of 2019, with total assets down 7.3%, following on from an equity ratio of 67.8% the year before. Conzzeta thus continues to have a solid balance sheet to sustainably support its business development.

Strategic development

Conzzeta strives to achieve leading positions in the markets in which it operates, demanding that all of its business units contribute to achieving the Groupʼs financial aspirations throughout their business cycles, namely by achieving revenue growth of more than 5%, an EBIT margin of 8% to 10% and a return on net operating assets of more than 15%. Despite significant operational improvements in previous years, the disposal of the Glass Processing segment at the beginning of April 2019 was prompted the realization that the potential for sustained growth as part of Conzzeta was limited for structural reasons.

The announcement on December 9, 2019, that the strategic focus would shift to sheet metal processing and that all other activities would be sold was preceded by a careful evaluation of all options, with the aim of accelerating the development of the potential that has been improved in all business units over recent years. The evaluation also included a realistic assessment of existing market positions and development prospects in the individual business areas, taking into account opportunities and risks of disruptive changes as a result of progressive digitalization and globalization. Since the introduction of the explicit internationalization strategy, revenue in the defined growth regions of America and Asia has increased disproportionately (by 49.7%) at Group level since the beginning of 2016. Nevertheless, the challenging market environment that prevailed in 2019 revealed the lack of economies of scale and, in particular, the lack of market access in the growth regions of Asia and North America. Added to this were the segments’ one-sided earnings contributions. Although the operating result of the Chemical Specialties and Outdoor segments improved in the reporting year, the Sheet Metal Processing segment, to which 59.5% of Group revenue was attributable, still contributed 88.2% to the Group’s adjusted operating result in 2019.

With its new focus on Bystronic, Conzzeta announced an accelerated growth strategy in this dominant business unit, while buyers with suitable, complementary prerequisites are being sought for the other business areas in order to release existing value. The various divestments are to be completed within a year if the market situation permits. The sale of the Schmid Rhyner business unit to the German Altana Group was already announced on December 20, 2019, with the sale being completed at the end of February 2020 and generating a substantial capital gain. Please see the section entitled “Strategy” for more information on Conzzeta’s new strategic direction.

Business excellence and personnel development

Notwithstanding its new strategic direction, Conzzeta remains committed to the four strategic priorities that were introduced in 2016: market orientation, internationalization, business excellence and people development. Accordingly, investments to strengthen the company’s presence and capacity to take action in the regions continued to be made in 2019. In a business environment that has become increasingly testing given the still challenging competitive environment and structural currency trends, efforts need to be made in all business units to maintain or improve margins by offering innovative, future-oriented products and solutions that meet the demands of the market.

Conzzeta did not fully achieve the Group’s financial aspirations in any of its business units in 2019. This highlights the need for further operational improvements and the importance of strong market positions. This despite very considerable progress having been made in terms of profitability in the reporting year, which was partially attributable to the successful implementation of the Business Excellence (BEX) Program. Since the program was launched in 2016, around 100 employees have received training based on the Six Sigma and lean methods, a Group-wide methodology has been introduced and a portfolio of initiatives has been defined. Given the new situation as far as strategy is concerned, responsibilities are to be gradually returned to the business units. At the same time, goal-oriented execution of the defined initiatives remains a priority, independent of the question of ownership.

Further measures were also implemented in the area of personnel development during the reporting year. The Talent Development Program, which involved employees from all business units and regions, was conducted for a third time in 2019, with the fourth cycle starting in February 2020. The second cycle of the Leadership Program was launched in January 2020 in collaboration with a renowned training partner for the approximately 80 members of the Global Management Team (GMT). The Group competencies rolled out in 2017 as strategically relevant key skills have proven themselves in management training and in practice. Also in 2019, a large proportion of positions that had become vacant were filled with internal candidates.

The clear priorities and the training of specific skills since 2016 have favored operational improvements over recent years and, not least, have also contributed to the value-generating development of the business portfolio. Accordingly, they also form the basis for the implementation of our new strategic direction.

Risk management and corporate responsibility

Conzzeta is committed to value-oriented corporate management with a long-term perspective. The strategic assessment carried out in 2019 addressed the future viability of the individual business operations and their ability to survive. Relevant aspects were also included in the annual risk assessment and the materiality assessment, which was carried out for the first time in 2018. Conzzeta encouraged and will always encourage responsible corporate behavior and a consistent focus on innovation and sustainable customer value, while carefully managing risks, seamlessly adhering to the binding standards of conduct laid down in the Code of Conduct, and appropriately considering the interests of all stakeholder groups.

During the reporting year, for the fourth time, the audit schedule set by the internal audit function established in 2015 was carried out for the full annual cycle. In 2019, the Board of Directors again undertook an integral Group-wide risk assessment based on management reporting and the separate Group Risk Report, which contains the process of risk monitoring as well as the most significant risks. The risk management process, which has been implemented across the Group, encompasses the identification, evaluation and qualitative appraisal of operational, financial and strategic risks in all business units and at Group level. It is linked to risk monitoring, plans of action and standardized reporting.

As at the end of 2019, the Group had identified five key risks:

As part of the systematic review of environmental, social and governance (ESG) issues, Conzzeta conducted a materiality assessment in 2018 and, as announced, developed a reporting model based on that, the outcomes of which are discussed in the section entitled “Responsibility”. They include initial steps in the Outdoor segment towards implementing the sustainability targets published in 2018 as part of the “We Care” strategy, including a reduction of harmful emissions consistent with the requirements of the 2015 Paris Agreement. Conzzeta also provides Mammut with financial support for the Glacier Initiative, a political push to enshrine CO2 reduction targets in the Swiss Constitution.

Appropriation of profit

The Group result for 2019 amounted to CHF 60.85 for each class A registered share and CHF 12.17 for each class B registered share, compared with CHF 46.76 and CHF 9.35, respectively in the previous year.

With the inflow of funds from the sale of the Schmid Rhyner business unit, which was completed at the end of February 2020, Conzzeta again has an excess cash position. The Board of Directors had announced that sales proceeds surpassing the needs of Bystronic shall be distributed to shareholders. After an overall assessment, taking into account, among other things, the operating margin expansion in the 2019 financial year and the uncertain environment for 2020 on one hand, and the aforementioned inflow of funds on the other, the Board of Directors proposes to the Annual General Meeting on April 22, 2020, a dividend with a special distribution in the amount of CHF 86.9 million. This comprises a dividend at the previous year’s level of CHF 37.3 million and the distribution of excess liquidity reserves of CHF 49.7 million. Subject to the approval of the Annual General Meeting, CHF 42.00 will thus be paid out for each class A registered share and CHF 8.40 for each class B registered share.


At the end of 2019, the Conzzeta Group had 5,026 employees worldwide, compared with 5,259 the previous year. The decrease is attributable to the sale of the Glass Processing segment with 436 employees. In the other segments, particularly in the Sheet Metal Processing segment, however, the workforce was expanded in the course of 2019. Traditionally, Conzzeta Group companies have participated in apprentice training programs. At the end of 2019, 151 apprentices were in training at 9 locations in a total of 25 disciplines.

The expertise, flexibility and commitment of our employees are the key factors in ensuring the long-term success of the Conzzeta Group companies. The Board of Directors and Executive Committee would like to take this opportunity to thank the employees for their dedication and efforts in 2019. Considerable effort will also, however, be required in the future in order to implement the Groupʼs operational and strategic initiatives in a competitive environment that continues to be challenging, particularly also in the context of the strategic reorientation of the Group.


With the announced strategic reorientation, 2020 will be a transition year for Conzzeta. The timing of the sale of both the FoamPartner and Mammut business units remains to be seen. Conzzeta anticipates a difficult economic development due to the consequences of the coronavirus epidemic and is taking appropriate actions. In the current situation it is not possible to provide a concrete financial outlook for 2020. With regard to the continuing business, Conzzeta however expects Bystronic to outperform the relevant market development thanks to its innovative portfolio of products and services.

Segment Sheet Metal Processing Strategy

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