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Report to the shareholders

Consistency leads to new record results

 
 

Dr. Thomas Schmuckli, Chairman of the board of directors and David Dean, CEO

Dear Shareholders,

Once again, the Bossard Group can look back on a very successful financial year. In 2018 we increased sales as well as EBIT and net income to new record highs. EBIT grew by no less than 12.1 percent, net income by 6.5 percent; excluding the non-operating result from the prior year’s real-estate sale, the figure was 12.8 percent. At 12.5 percent, the EBIT margin is well above the industry average and sets a new record. Our dedicated investment policy, our eagerness to open up future markets, and our solid balance sheet have been the foundation for Bossard’s profitable growth over many years. As such, the record results in 2018 represent a milestone that encourages us to continue to forge ahead on this path.

The consistency in our performance is largely the result of the broad-based foothold of the overall Group. Our customers come from widely different sectors: machine, railway, energy, aircraft and automotive industry. Additionally, Bossard has deep roots in all major industrial centers. Such broad diversification holds major benefits, because experience has taught us that a dip in one market can be balanced out by growth in other sectors and regions.

Broad-based growth

Our broad diversification paid off particularly in Europe, where we again achieved double-digit growth in 2018 with a 10.8 percent increase in sales. Our business benefited from the healthy economy in the first half of the year. Thanks to modernized and expanded capacities, we were well prepared for this upswing. The latter half of the year was decidedly more challenging. Many customers were operating at full capacity, which along with the strengthening Swiss franc curbed demand. Nonetheless, Bossard’s solid development in all major European markets is noteworthy.

The America business flourished as well, its base broadened by the acquisitions we made in recent years. Solid demand in various sectors fueled accelerated growth throughout the year, further bolstered by the cooperation with the largest US electric vehicle manufacturer. Business from this customer makes up approximately 7 percent of Group sales, and we are benefiting today from the groundwork we laid over a number of years.

Our Asia business also grew by double digits in 2018. The investments Bossard undertook to expand its distribution network, especially in China, are bearing fruit.

Opening up future markets

Dear shareholders, the Bossard Group has its sights set on a number of future markets that will ensure our profitable growth over the long term. For example, we have set ambitious goals in the field of additive manufacturing: in spring 2018, we announced partnerships with three manufacturers of 3D printers. In fall 2018, we also acquired a 49 percent stake in the company 3d-prototyp GmbH.

These efforts are designed to give Bossard broad expertise in additive manufacturing, ranging from design to the manufacture of components. In addition, we want to offer our customers the best possible support in selecting suitable 3D printers and related production technologies. Of course, we are aware that 3D printing is still far from generating sizable sales and profits. We do consider additive manufacturing a market for the future, especially for prototypes, components with complex geometries, and parts where weight reduction is crucial. It is also significant that 3D printing is increasingly leading to the use of new materials for which Bossard, as the leading supplier of fastening technologies, intends to develop and market innovative solutions.

We strive for innovative solutions in supply chain management as well. One important element is Smart Factory Logistics, our automated logistics system for small parts; Bossard has been using it since 1998 to make customer procurement processes more cost efficient. Now, our efforts are focused on stepping up the integration of robotics into supply chain management. The robots we incorporate into production processes are able to transport components to the assembly site over even greater distances.

Furthermore, we are continuously striving to make progress in supply chain digitalization. One aspect is ensuring adequate requirements identification and inventory management. Bossard has assumed responsibility for supply chain management in many companies. We want to market our proven tools so that customers can use them on their own. Our message makes it clear that our proven solutions can be used in fields beyond industry. The partnership we forged with healthcare logistics provider Cosanum in 2018 is a case in point. However, we still have much preparatory work to do in order to expand our systems into markets less familiar to us. In addition, we want to lay the necessary groundwork to secure growth over the long term.

Change in the top management of the Group

In January 2018, Bossard announced the succession plan in top management of the Group. After15 very successful years as CEO, David Dean will be stepping down at his own request from the Group’s executive committee as of the annual general meeting of shareholders on April 8, 2019. His successor is Dr. Daniel Bossard, who was unanimously elected by the board of directors. The board of directors took extreme care in deliberating the succession plan. After all, the final decision needed to ensure the company’s continued successful development. Both the board of directors and the executive committee are convinced that Dr. Daniel Bossard has the skills necessary to achieve this ambitious goal. The board of directors interviewed both external and internal candidates at great length before making the final decision. Dr. Daniel Bossard has held a variety of positions in the Bossard Group since 2000 and has been a member of the executive committee since 2009. Under his leadership, strong growth and outstanding profitability have been the hallmarks of the country organizations he has led in Northern and Eastern Europe.

In other words, the new CEO has what it takes to successfully guide the Bossard Group into the future: a solid track record, a wealth of experience, and in-depth expertise of all the relevant developments across the Group. His appointment also means continuity in the corporate strategy in place through the end of 2020. The new CEO will finalize this strategy and submit a follow-on plan in due course.

It should also be noted that Dr. Frank Hilgers, member of the executive committee since 2015, will take over operational management of the Northern and Eastern European country organizations on May 1, 2019. To fill this vacancy, the board of directors has also selected a proven specialist: a member of the executive committee who is now successfully managing the marketing of premium fastening solutions.

The board of directors accepted with great regret the resignation of long-time CEO David Dean. “We are reluctant to let go a CEO with such track record. The board of directors would like to take this opportunity to thank David Dean for his outstanding contributions”, stated chairman of the board of directors Dr. Thomas Schmuckli in appreciation of the departing CEO’s performance and added: “We are especially pleased that we were able to gain someone of his caliber to join us on the board of directors. This is yet another sign of continuity in our company.”

On a promising course

Overall, our profitability and growth-oriented strategy combined with the desired consistency has yielded progress. Substantial investments have consolidated our market position in the relevant markets. Our solid balance sheet also allows us to continue to pursue growth through investments. Last but not least, we carry out the necessary preliminary work year after year in order to secure new markets. In short, Bossard has its gaze firmly fixed on the horizon – without forgetting the virtues that made the company strong in the past.

There are many reasons to be optimistic about the future, in spite of changing environment. There is currently much talk of growing trade barriers and their impact on established production sites. Trade barriers such as these are not in the interest of Bossard, and yet there is reason for optimism. We have a presence in all the major industry locations across the globe and maintain a dense distribution network. This enables us to follow customers to new locations as they restructure their own production networks. Here, too, we see that our broad geographical presence has substantial benefits.

Overall, we begin the new year with confidence. Our customers, our employees, and most especially you, our valued shareholders, are committed to a company that continues to have great potential for growth. Dividend increases, job security, and our reliability in doing business with our customers are positive indicators for continued success. Thank you very much for the trust and loyalty you have placed in Bossard over the years.

Dr. Thomas Schmuckli
Chairman of the board of directors

David Dean
CEO

Zug, February 22, 2019

Dear Shareholders,

Once again, the Bossard Group can look back on a very successful financial year. In 2018 we increased sales as well as EBIT and net income to new record highs. EBIT grew by no less than 12.1 percent, net income by 6.5 percent; excluding the non-operating result from the prior year’s real-estate sale, the figure was 12.8 percent. At 12.5 percent, the EBIT margin is well above the industry average and sets a new record. Our dedicated investment policy, our eagerness to open up future markets, and our solid balance sheet have been the foundation for Bossard’s profitable growth over many years. As such, the record results in 2018 represent a milestone that encourages us to continue to forge ahead on this path.

The consistency in our performance is largely the result of the broad-based foothold of the overall Group. Our customers come from widely different sectors: machine, railway, energy, aircraft and automotive industry. Additionally, Bossard has deep roots in all major industrial centers. Such broad diversification holds major benefits, because experience has taught us that a dip in one market can be balanced out by growth in other sectors and regions.

Broad-based growth

Our broad diversification paid off particularly in Europe, where we again achieved double-digit growth in 2018 with a 10.8 percent increase in sales. Our business benefited from the healthy economy in the first half of the year. Thanks to modernized and expanded capacities, we were well prepared for this upswing. The latter half of the year was decidedly more challenging. Many customers were operating at full capacity, which along with the strengthening Swiss franc curbed demand. Nonetheless, Bossard’s solid development in all major European markets is noteworthy.

The America business flourished as well, its base broadened by the acquisitions we made in recent years. Solid demand in various sectors fueled accelerated growth throughout the year, further bolstered by the cooperation with the largest US electric vehicle manufacturer. Business from this customer makes up approximately 7 percent of Group sales, and we are benefiting today from the groundwork we laid over a number of years.

Our Asia business also grew by double digits in 2018. The investments Bossard undertook to expand its distribution network, especially in China, are bearing fruit.

Opening up future markets

Dear shareholders, the Bossard Group has its sights set on a number of future markets that will ensure our profitable growth over the long term. For example, we have set ambitious goals in the field of additive manufacturing: in spring 2018, we announced partnerships with three manufacturers of 3D printers. In fall 2018, we also acquired a 49 percent stake in the company 3d-prototyp GmbH.

These efforts are designed to give Bossard broad expertise in additive manufacturing, ranging from design to the manufacture of components. In addition, we want to offer our customers the best possible support in selecting suitable 3D printers and related production technologies. Of course, we are aware that 3D printing is still far from generating sizable sales and profits. We do consider additive manufacturing a market for the future, especially for prototypes, components with complex geometries, and parts where weight reduction is crucial. It is also significant that 3D printing is increasingly leading to the use of new materials for which Bossard, as the leading supplier of fastening technologies, intends to develop and market innovative solutions.

We strive for innovative solutions in supply chain management as well. One important element is Smart Factory Logistics, our automated logistics system for small parts; Bossard has been using it since 1998 to make customer procurement processes more cost efficient. Now, our efforts are focused on stepping up the integration of robotics into supply chain management. The robots we incorporate into production processes are able to transport components to the assembly site over even greater distances.

Furthermore, we are continuously striving to make progress in supply chain digitalization. One aspect is ensuring adequate requirements identification and inventory management. Bossard has assumed responsibility for supply chain management in many companies. We want to market our proven tools so that customers can use them on their own. Our message makes it clear that our proven solutions can be used in fields beyond industry. The partnership we forged with healthcare logistics provider Cosanum in 2018 is a case in point. However, we still have much preparatory work to do in order to expand our systems into markets less familiar to us. In addition, we want to lay the necessary groundwork to secure growth over the long term.

Change in the top management of the Group

In January 2018, Bossard announced the succession plan in top management of the Group. After15 very successful years as CEO, David Dean will be stepping down at his own request from the Group’s executive committee as of the annual general meeting of shareholders on April 8, 2019. His successor is Dr. Daniel Bossard, who was unanimously elected by the board of directors. The board of directors took extreme care in deliberating the succession plan. After all, the final decision needed to ensure the company’s continued successful development. Both the board of directors and the executive committee are convinced that Dr. Daniel Bossard has the skills necessary to achieve this ambitious goal. The board of directors interviewed both external and internal candidates at great length before making the final decision. Dr. Daniel Bossard has held a variety of positions in the Bossard Group since 2000 and has been a member of the executive committee since 2009. Under his leadership, strong growth and outstanding profitability have been the hallmarks of the country organizations he has led in Northern and Eastern Europe.

In other words, the new CEO has what it takes to successfully guide the Bossard Group into the future: a solid track record, a wealth of experience, and in-depth expertise of all the relevant developments across the Group. His appointment also means continuity in the corporate strategy in place through the end of 2020. The new CEO will finalize this strategy and submit a follow-on plan in due course.

It should also be noted that Dr. Frank Hilgers, member of the executive committee since 2015, will take over operational management of the Northern and Eastern European country organizations on May 1, 2019. To fill this vacancy, the board of directors has also selected a proven specialist: a member of the executive committee who is now successfully managing the marketing of premium fastening solutions.

The board of directors accepted with great regret the resignation of long-time CEO David Dean. “We are reluctant to let go a CEO with such track record. The board of directors would like to take this opportunity to thank David Dean for his outstanding contributions”, stated chairman of the board of directors Dr. Thomas Schmuckli in appreciation of the departing CEO’s performance and added: “We are especially pleased that we were able to gain someone of his caliber to join us on the board of directors. This is yet another sign of continuity in our company.”

On a promising course

Overall, our profitability and growth-oriented strategy combined with the desired consistency has yielded progress. Substantial investments have consolidated our market position in the relevant markets. Our solid balance sheet also allows us to continue to pursue growth through investments. Last but not least, we carry out the necessary preliminary work year after year in order to secure new markets. In short, Bossard has its gaze firmly fixed on the horizon – without forgetting the virtues that made the company strong in the past.

There are many reasons to be optimistic about the future, in spite of changing environment. There is currently much talk of growing trade barriers and their impact on established production sites. Trade barriers such as these are not in the interest of Bossard, and yet there is reason for optimism. We have a presence in all the major industry locations across the globe and maintain a dense distribution network. This enables us to follow customers to new locations as they restructure their own production networks. Here, too, we see that our broad geographical presence has substantial benefits.

Overall, we begin the new year with confidence. Our customers, our employees, and most especially you, our valued shareholders, are committed to a company that continues to have great potential for growth. Dividend increases, job security, and our reliability in doing business with our customers are positive indicators for continued success. Thank you very much for the trust and loyalty you have placed in Bossard over the years.

Dr. Thomas Schmuckli
Chairman of the board of directors

David Dean
CEO

Zug, February 22, 2019

READ ALL
 
 
 

Highlights

A year of records

The gratifying development of our results of this past financial year provide further confirmation of our profitability-oriented growth strategy, which particularly reflects our dedicated investment policy over recent years. We posted new records for sales as well as EBIT and net income.

 

At a glance

Net Sales
in CHF million

Sales rises by

0%

to a new record level of CHF 871.1 million.

Geographic Sales Distribution
in %
EBIT
in CHF million

Targeted investments pay off – EBIT increases by 12.1 percent to a new record high.

Net Income
in CHF million

+6.5 percent
Net income at record high – basis for future growth.

 
 

Corporate Governance

Structure and corporate bodies

The Bossard Group’s organizational structure derives from international standards for corporate management. The Group’s corporate bodies and management follow the Directive on Information relating to Corporate Governance of SIX Swiss Exchange as well as the “Swiss Code of Best Practice for Corporate Govern­ance” of economiesuisse.

 

Board of Directors

Dr. Thomas Schmuckli-Grob
Chairman of the board of directors since 2007

Dr. Thomas Schmuckli-Grob currently works as a professional board member. Between 1993 and 2013, he held various management positions in the General Counsel division of Credit Suisse Group, initially in the Bank Leu Group and then from 1998 with a break at Credit Suisse. From 2005 to 2007, he headed the legal department of Corporate & Institutional Clients at Credit Suisse in Zurich, afterwards he was Managing Director of the Legal and Compliance Asset Management division in Zurich (2007 to 2013). From 2000 to 2005, he was head of process and product management at Zuger Kantonalbank.

Anton Lauber
Member of the board of directors since 2006

Anton Lauber works as a professional board member since 2012. From 2008 to 2011, he headed the Schurter AG, the Schurter Group´s Electronic Components division in Lucerne as a delegate of the board of directors of Schurter AG. From 1993 to 2008, he was CEO of Schurter AG and from 1996, he was the delegate of the board of directors of Schurter AG, where he worked as the head of production and technology between 1988 and 1992. Prior to that, he managed the Generator Plant of ABB Switzerland.

Dr. René Cotting
Member of the board of directors since 2015

Dr. René Cotting has held various positions in Switzerland and abroad for the ABB Group since 1995. From 2013 until the end of May 2017, he was CFO of ABB Switzerland. On March 1, 2017, he was named Head of Operation, Innovation and R&D for the ABB Group and Chairman of ABB Technology Ventures.

Martin Kühn
Member of the board of directors since 2018

Since 2010 Martin Kühn is working for the KIBAG Group in Zurich, since 2014 as CFO and member of the executive committee. He is responsible for finance, ICT, human resources, real estate, KIBAG Marina and the technical services of the construction and building materials company. From 2002 to 2010, he had been employed at PricewaterhouseCoopers AG national and international as an auditor and M&A consultant for industrial clients. Prior to that, he worked two years for UBS in Zug.

Daniel Lippuner
Member of the board of directors since 2015

Daniel Lippuner is Chief Operating Officer of the Meyer Burger Group in Thun, Switzerland since 2017. From 2013 to 2015, he headed the Saurer Group in Shanghai, China, and Wattwil, Switzerland, as Group Chief Executive Officer. He took over this position after posts in finance, sales and marketing as well as in general management with OC Oerlikon, Hilti AG and Autoneum (formerly Rieter Automotive).

Prof. Dr. Stefan Michel
Member of the board of directors since 2011

Prof. Dr. Stefan Michel is a professor for marketing and service management and director of the executive MBA at the IMD Business School in Lausanne, Switzerland since 2008. Between 2003 and 2008, he was as a professor at the Thunderbird School of Global Management in Arizona, USA. Prior to this, he taught as a professor at the Lucerne University of Applied Sciences and Arts, managed a family-run hotel and worked at Bank Leu in Zurich.

Maria Teresa Vacalli
Member of the board of directors since 2013

Maria Teresa Vacalli is since October 2018 CDO (Chief Digital Officer) as member of the management board of Basler Kantonalbank in Basel. From 2016 until 2018, she was CEO of Moneyhouse in Rotkreuz. Between 2008 and 2016, she has directed the wholesale unit at Sunrise Communications AG, Zurich, and was appointed executive director in 2014. Between 2002 and 2008, she worked in various executive positions at UPC Schweiz GmbH (formerly upc cablecom GmbH), Zurich. Before that, she had been employed in managerial posts in different companies.

Executive Committee

David Dean
Group CEO since 2005

From 1998 to 2004, David Dean served as CFO of Bossard Group and has been with Bossard since 1992. Between 1990 and 1992, he was corporate controller and a member of the executive committee of an international logistics group. From 1980 to 1990, he worked for PricewaterhouseCoopers AG in various management functions in auditing and business consulting.

Stephan Zehnder
Group CFO since 2005

From 1996 to 1997, Stephan Zehnder was a controller in Bossard’s corporate finance unit. In 1998, he took over the function of corporate controller of Bossard Group, remaining in this position until the end of 2004. Prior to this, he was employed by various international companies in functions concerned with finance and controlling.

Beat Grob
CEO Central Europe since 2006

Beat Grob joined Bossard in 1995 as a project manager in logistics; the following year, he became head of logistics for Bossard Group. From 2005 to 2016 he was managing director of Bossard Switzerland.

Dr. Daniel Bossard
CEO Northern & Eastern Europe since 2009

From 2006 to 2008, Dr. Daniel Bossard served as sales & marketing manager of Bossard Group and was responsible for the reorientation of Bossard´s sales strategy as well as the development of international customer relations. From 2003 until 2006, he was CEO of Bossard Denmark. Dr. Daniel Bossard joined Bossard in 2000 as an e-business manager, after having worked as a consultant for Accenture (formerly Andersen Consulting).

Steen Hansen
CEO America since 2008

From 2006 to 2008, Steen Hansen served as the president of Bossard IIP, Cedar Falls, Iowa. He was responsible for the Group’s logistics between 2004 and 2006, having joined Bossard in 2001 as head of logistics for Bossard Denmark. Prior to joining Bossard, he filled various management positions, the last being supply chain manager at Nomeco Denmark, a leading wholesaler for pharmaceuticals.

Robert Ang
CEO Asia since 2009

From 2005 until 2009, Robert Ang was responsible for Bossard Greater China (China, Taiwan) and prior to that, the Southeast Asia region. From 1997 until 1999, he was CEO of Bossard Singapore. Robert Ang managed his own company from 1994 until it was acquired by Bossard in 1997. He spent the four years prior as a product manager for Conner Peripherals and Optics Storage Pte Ltd. in Singapore. Between 1986 and 1989 he worked as a buyer at Printronix AG.

Dr. Frank Hilgers
Group CCO since 2015

Since 2015 Dr. Frank Hilgers has been responsible for the group-wide management of branded products and high quality fastening solutions (Chief Category Officer, CCO). He has also headed the business units of KVT-Fastening since 2012. From 2009 to 2012, he was a member of the KVT-Koenig management team in charge of sales, product management and the fastening systems division. During his employment at Continental between 2007 and 2009, he was in charge of all national organizations of the spare parts business and key account management in the Commercial & Special Vehicle area. (For further functions refer to PDF annual report.)

 
 

Compensation Report

Compensations in the 2018 fiscal year

The compensation report describes the compensation principles and programs as well as the governance framework related to the compensation of the board of directors and the members of the executive committee of Bossard Holding AG. The report also provides details around the compensation awarded to those two bodies in the 2018 financial year.

 
 

Financial Report

A year of records

The Bossard Group remains on its growth path: we posted new records for sales as well as EBIT and net income. Sales rose by 10.8 percent to CHF 871.1 million, with all market regions contributing to this significant growth. EBIT climbed by 12.1 percent to CHF 108.8 million, and the EBIT margin also reached a new record at 12.5 percent. Net income rose by 6.5 percent to CHF 85.4 million; excluding the non-operating result of CHF 4.5 million net from a real-estate sale last year, profit climbed by a considerable 12.8 percent.

 
 

Proven Productivity

Making our customers more competitive

David Dean, CEO Bossard Group

Getting ahead together with our customers means developing solutions that are better, faster, more efficient and more cost-effective and hence help our customers outperform their competition. At Bossard, we call this holistic view "Proven Productivity".

Realize the vision of Smart Factory Logistics

Bossard Smart Factory Logistics not only provides smooth and reliable B- and C-part management, but enables the transformation of your production. The time tested and proven methodology builds on the Internet of Things, thus uncovering hidden potential for productivity improvements and facilitating your supply chain optimization. Position your company ahead of others with Smart Factory Logistics.

How customers benefit from Bossard solutions

Thomas Siegenthaler

Production Manager Traction Converters, ABB Switzerland Ltd.

Successful partnership for a lean factory

“The traction converter is at the heart of every train. We produce such converters in the ABB plant in Turgi. Our customers – train manufacturers – have high expectations of us. To cope with, we need lean workflows, flexible processes and, of course, maximum productivity. Since the implementation of SmartBin, I haven't come across any missing C-parts. This ensures reliability and lies at the heart of process stability and timely handling and delivery of our products. I firmly believe that the close partnership between Bossard and ABB was a crucial factor in the project’s success, a quantifiable success that is evident each and every month. That’s what I call Proven Productivity.”

YD Meng

General Manager Bühler (China) Machinery Manufacturing Co., Ltd.

We chose Bossard not just because of their products but their philosophy of Proven Productivity.

“Bühler is a world-leading producer of food processing machinery. There are many successful cases of our cooperation with Bossard in joint project teams. We are working together on our global supply chain. This includes products as well as efficient processes. Bossard shows us product solutions and logistic concepts, like SmartBin, that help us to reduce costs and to improve productivity. I think this is the biggest value Bossard brings to us.”

Shi Yanyu

General Manager Excavator Division, SDLG Construction Machinery Co., Ltd.

Close cooperation increases product safety and reduced inventory by 75 %.

“At SDLG’s headquarters in Linyi, we produce 20,000 excavators and 50,000 wheel loaders every year. For us, safety is our top priority. Initially, screws from other uppliers were breaking during the assembly. Now, the fastener solutions from Bossard guarantee the safety of our machines, which helped us to lower process costs and to increase productivity. In addition, by introducing SDLG to SmartBin, we were able to reduce our stock level by 75% without compromising availability. We will for sure strengthen our cooperation with Bossard for improved product solutions and logistics.”

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