Bossard Group Results for 2011: Profitable growth continued

With total sales of CHF 473.5 million, Bossard Group achieved purely organic growth of 9 percent in local currencies. Although the level of growth varied, all three Group sales regions – Europe, America, and Asia – contributed positively. In the first six months all three regions reported double-digit sales growth. However, given the uncertainties on the market, demand lost momentum in the second half of the year particularly in Europe and Asia.

Europe entirely positive
Sales in Europe amounted to CHF 268.1 million, an increase in local currencies of 8.3 percent. France and Denmark both reported double-digit growth. Moreover, there was solid growth in Switzerland despite the ongoing foreign exchange turbulences. Thus the Group further strengthened its position in these three major markets.

America with the highest sales growth
The American market reported the strongest growth with sales of CHF 124.6 million or, currency adjusted, an increase of 13.7 percent. In contrast to our European or Asian markets, the strong growth in America continued in the second half of the year. Business with new customers developed particularly well.

Asia more restrained in the second semester
Sales in Asia amounted to CHF 80.8 million. After double-digit growth in the first six months, demand weakened in the second half of the year. Overall, sales were up 4.6 percent in local currencies.

Gross profit almost unchanged
Gross profit fell marginally to CHF 185.6 million and the corresponding margin fell very slightly from 39.5 percent to 39.2 percent. The extremely volatile foreign exchange situation as well as the increase in the cost of raw materials at the beginning of the year – which could not be passed on fully to the customers – impacted on the margin. This was partially balanced out through focusing on special parts and customer specific products.

Less than proportional increase in operating expenses
Compared to the prior year, operating expenses before depreciation and amortization decreased by 4 percent to CHF 125.5 million; currency adjusted, however, they were up 4.5 percent. This is primarily attributable to the increase in the number of employees resulting from greater business volume together with a strategy of enhancing the Group's marketing efforts and investments in engineering. Overall, costs rose less than proportionally to sales, which made it possible to compensate for the lower gross profit via costs.

Highest ever operating profit
The currency-adjusted operating profit rose in 2011 by 14.6 percent to CHF 50.3 million, the highest operating result in the company's history. The EBIT margin also reached a record level at 11.0 percent (2010: 10.3 percent). Once again, all the sales regions contributed to this pleasing result.

Foreign exchange effects lead to higher financial expense
Compared to the prior year financial expense rose by CHF 1.0 million to CHF 2.1 million. This increase is primarily attributable to foreign exchange effects. Conversely, the very low interest rates impacted positively on the financial result.

A further record result
With CHF 44.8 million consolidated net income reached the record level of 2010. However, currency adjusted it was 5.2 percent higher: the best result in the company's history. Although financial expense and taxes rose, the return on sales of 9.8 percent was still at the prior year's level.

Above average return on capital
Total assets rose from CHF 292.7 million in the prior year to CHF 331.0 million. The increase is attributable to higher investment volume and net working capital, particularly inventories. Despite this the equity ratio was up from 61.3 percent to 62.3 percent, which strengthens the Group's capital base even further.

The return on equity was 23.2 percent, the return on capital employed 21.2 percent. Both of these ratios were clearly above the long-term target of 12 percent and 15 percent respectively, and also noticeably above the average for this sector of industry.

Healthy base for further market growth
In spite of the higher investment volume and net working capital, the free cash flow reached CHF 13.1 million. With this positive cash flow, the net debt rose only marginally from CHF 25.7 million to CHF 29.6 million. Given its unused credit lines and high equity ratio, Bossard Group is ideally equipped to invest in further market growth.

Unchanged dividend
In view of this excellent result for the year the board of directors will propose to the annual meeting of shareholders that an unchanged dividend of CHF 6 will be paid. At the current share price, this corresponds to a dividend yield of around 4.8 percent.

Cautiously optimistic outlook
For the current 2012 business year Bossard Group basically expects lower demand because of worldwide uncertainties which will hardly be resolved in the short term. However, in view of a well filled pipeline for the Group's new customers and despite a challenging environment, the Group anticipates gratifying growth. Should the sales targets be reached, they will be accompanied by a positive development of earnings.


Contact:
Bossard Gruppe Steinhauserstrasse 70 6301 Zug Tel. 041 749 66 11 Fax 041 749 66 22 investor@bossard.com

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