Conzzeta is a diversified Swiss group of companies. It stands for innovation, market orientation and an entrepreneurial approach. About 5,000 employees at more than 60 locations worldwide work in the Sheet Metal Processing, Chemical Specialties and Outdoor segments. On December 9, 2019, Conzzeta announced the strategic focusing on the Sheet Metal Processing segment and its plan to divest all its other activities.
Having already completed the sale of the Glass Processing segment on April 1, 2019, Conzzeta announced its intention on August 9, 2019, to accelerate the development of the potential inherent in the remaining business portfolio, taking all options into account, and to decentralize management. This culminated in the announcement on December 9, 2019, that the Group’s future focus would be on the Sheet Metal Processing segment (Bystronic), and that its other activities would gradually be sold within a year, as far as the market situation permits. Already on December 20, the conclusion of a binding agreement to sell the Schmid Rhyner business unit as part of the Chemical Specialties segment was announced, which was completed at the end of February 2020.
The decision to focus on becoming a technology-oriented industrial company is aimed at concentrating Conzzeta on its own strengths and accelerating the development of the potential created in recent years. With a net revenue share of 59.5% in 2019, Bystronic generated 88.2% of the Group’s adjusted operating result. The company is one of the world’s leading providers of premium sheet metal processing solutions. It takes care of automating and integrating the entire material and data flow of the cutting and bending process chain. The portfolio includes laser cutting systems, press brakes as well as automation and software solutions, which will play a central role in the global trend toward “smart factories”. Comprehensive services complete the portfolio. As Conzzeta’s largest business unit by far, it has reported annual average revenue growth of 13.3% since the beginning of 2016. Despite the market-related slowdown in 2019, Bystronic continues to pursue an ambitious growth strategy. With around 3,000 employees worldwide, the company is well set up, operating in numerous markets with an efficient and effective local sales and service organization. Among other things, it has opened up additional market and earnings potential with innovative digital solutions. Bystronic’s strategy envisages accelerated growth, with the company intending to position itself even closer to its customers with new technical solutions and services.
According to the announcement of December 9, 2019, the intention is to sell the Chemical Specialties segment (FoamPartner and Schmid Rhyner) and the Outdoor segment (Mammut), which were still part of the Group as at December 31, 2019. In particular, a realistic assessment of Conzzeta’s own capabilities in terms of strategic development and considerations with regard to resource allocation played a role in the decision. Conzzeta’s decision was based on its claim to leading market positions in its target markets in order to ensure profitability and viability on a long-term basis.
The chart “Diversified management” shows the strategic priorities consistently pursued since 2016 and the individual competencies systematically promoted across the Group. These enabled value-generating progress in all business units, which should also pay off during the upcoming transformation process. Conzzeta will continue to rely on these foundations in 2020, a year of transition for the Group, and is planning a Capital Markets’ Day to present Bystronic’s growth strategy, probably in fall 2020. Conzzeta will continue to report on operational progress, including in the discontinued operations, on an ongoing basis.
The expected sales proceeds will further strengthen Conzzeta’s capital position, and it has already been announced that shareholders will participate in the anticipated surplus liquidity, while Bystronic is to remain sufficiently capitalized to implement its growth strategy. Taking into account the sale of Schmid Rhyner after the balance sheet date, the Board of Directors will therefore propose to the upcoming Annual General Meeting a dividend with special distribution (see Business Review).
Priorities, targets, performance
The focus on Bystronic, which was announced in December 2019, is based on a realistic assessment of existing market positions and own capabilities. Bystronic holds a leading market position and has the critical size to make its mark in a dynamic market through innovation and enhance its presence in the growth regions. Ultimately, the other business units lack the access to global markets needed in order to survive in the intensely competitive environment over the long term.
We are hoping to develop Bystronic’s potential to a greater extent outside our local European markets. We see significant opportunities, particularly in Asia and America. Since the beginning of 2016, revenue in Asia and America has increased by 77.1% (total increase reported for Bystronic: 64.5%). This included acquisitions in Asia and the strengthening of its sales network in various South-East Asian countries. An assembly & brand experience center is scheduled to be opened in the USA by the middle of 2020.
We encourage and support our employees based on the Conzzeta competencies model. In 2019, we continued our Talent Development Program and launched a Senior Leadership Program. This further training program focuses on the topics of digitalization, customer focus and problem-solving skills. We will continue our programs in 2020, a year of transition, fully confident that they will equip our employees with the skills to shape change in a forward-looking way.
With a view to achieving sustainable improvements, we have been developing a Group-wide Business Excellence Program since 2016 based on the Six Sigma model, and have provided education and training to approximately 100 employees. The program includes measures in all business units that will make a significant contribution to results. Despite the Group’s announced strategic reorientation, the program will consistently be continued in all business units, albeit with a more decentralized approach.
In the form in which the Group was previously structured, Conzzeta aimed to increase revenue by more than 5% at Group level. Assuming stable exchange rates and excluding changes in the scope of consolidation, revenue fell by 4.9% in 2019, as was expected in a weaker market environment. New medium-term financial targets are envisaged for the period after the sale of the discontinued operations.
In the form in which the Group was previously structured, Conzzeta aimed to achieve an EBIT margin of between 8% and 10%. The EBIT margin in 2019 amounted to 8.7%, up from 8.2% in 2018 (not including the capital gain of CHF 29.9 million from the sale of the Glass Processing segment in 2019). New medium-term financial targets are envisaged for the period after the sale of the discontinued operations.
Conzzeta is aiming for a RONOA of more than 15%. The RONOA in 2019 was 25.6%, or 20.0% when adjusted for the capital gain from the sale of the Glass Processing segment. RONOA stands for return on net operating assets and is calculated after taxes. New medium-term financial targets are envisaged for the period after the sale of the discontinued operations.