Bystronic AG (BYS) Earnings Call Transcript & Summary

Good morning or good late morning, everybody. Welcome to our annual conference. We conduct it in a digital format for obvious reasons. We have roughly 50 participants on the line. Thank you for your interest. I'm joined here by our Chairman, Ernst Bärtschi; Group CEO, Michael Willome; Group CFO, Kaspar Kelterborn; and the CEO of Bystronic, Alex Waser. Briefly looking at the agenda, Michael Willome will start with the highlights of the results and an update on the strategic transformation, then Kaspar will discuss the financial results in more detail. Alex will talk about Bystronic and the outlook for 2021, and then Ernst Bärtschi will share some news from the Board of Directors. After the presentations, you can ask questions either over the phone or in writing. If you want to ask questions over the phone, please register early to get your personal access code. I draw your attention to the cautionary statement on Page 5. And with this, I hand over to Michael. Thank you.

[Audio Gap] Very much. Good morning, ladies and gentlemen. Good late morning, and welcome to the Conzzeta results presentation. It is the last one of its kind. So please, let's enjoy it. If you look at 2020, we closed the year with CHF 1.3 billion in sales, which is 10% below the previous year. Bystronic and FoamPartner fared a little bit better than this, whilst Mammut was at minus 16%. We had an operating result including the CHF 47 million divestment gain from Schmid Rhyner of CHF 79.7 million. If you take this away, it's CHF 32.3 million, which resulted at the end in a group result of CHF 65 million and an operating free cash flow of CHF 51.5 million. This cash flow is stronger than last year. While all the other numbers are lower than last year, the cash flow is stronger. We were able because we were running the company basically since March on a cash, cost, complexity program, so we could benefit from lower net working capital from lower investments and from a reduced cash position. We had liquid assets at the end of the year of CHF 273 million. That is slightly below last year. But bear in mind that out of this, we paid CHF 87 million of dividends early in the year, and we acquired the last 30% of DNE in Shenzhen for Bystronic. We expect the closing of FoamPartner by the end of Q1, which is basically in 2 weeks' time. And we proposed to the Annual General Meeting a dividend of CHF 60, which translates in a total amount of CHF 124 million. This was about 2020. I give you now a brief update how 2021 started. And I can tell you, it was a good start, a strong start into the year in all business units, all 3 units. We have a revenue growth of double digits. We have a correspondingly increased EBIT, and probably the most important number going forward but also the most encouraging number at the same time is the order entry of Bystronic. If we look at the Bystronic business, Bystronic closed at CHF 800 million, which is 9% below the previous year. We had clearly lower margins. We had price pressure, which always happens in more difficult times. But also, we invested or we continue to invest into the future, which is mainly investments into all type of smart factory solutions. It is service, software and automation because these are the differentiating factors in the future. Alex Waser will talk more about this. And definitely, we are prepared for the upswing that we expect to come or actually that has materialized already in the first few months of the year. So no savings there because we are prepared to increase our market share going forward. If we look at FoamPartner, we can report a strong result in 2020. We had 9% lower sales, but we could increase our profit on EBIT level to CHF 14.8 million and an EBIT margin of 5.6%. That is mainly due to the really good cost savings we could make on operational costs and personnel costs. We continued our projects which brought us the operational progress. And we also have to say that almost throughout the year, we benefited from favorable raw material costs. I'm convinced that if we can close the deal with Recticel, as announced by the end of this month, we will also have found a good solution for FoamPartner as we have done with our glass disposal to Glaston, Schmid Rhyner to Altana. I believe that also Recticel will promote a good home to our business and to our people as of April going forward. I turn then further to Mammut. Mammut closed at minus 16% in FX [ cleaned ] sales. That is clearly lower -- that is CHF 50 million lower than last year, and that also translated in a high loss -- EBIT loss of CHF 24.5 million. The good news is that our digital channels, which are the future business models, they are up by almost double. And I can tell you that this momentum of strong digital sales, despite all the lockdowns we had, also clearly continued into the year 2021. So basically, this CHF 24.5 million negative EBIT comes from 3 reasons. Reason number one is the CHF 50 million lower sales mainly through the lockdowns, but also the difficult conditions during corona. If you take the CHF 50 million at a roughly 50% gross margin, you can see that has a significant impact. Reason number two is the CHF 11.9 million restructuring costs. We did several projects because we thought it's a good moment to take a better cost position after the crisis, after the corona situation. So we took here massive costs out, which also you can see already now in the first few months because they reduced cost base by about CHF 10 million. Then the third reason for the depressed results EBIT in Mammut, the third reason is that we also here in this business unit, we continued to invest in our digital models into the future into the new business models because you cannot stop this if you want to improve in -- to be in an improved position after the corona. I go then to the transformation update. You can see the same chart which we have produced in December 9, 2019. So basically, until -- from then until the independent, I call it, a self-sufficient Bystronic, which will happen on the 21st -- at the AGM at the 21st of April, so in basically a bit more than one month, it took us only 16 months to go through this, I would say, rather radical but very consistent transformation. If we look at Mammut, we still say that we will have found a solution about Mammut within the first half of this year. I can tell you that we are in advanced discussion with potential investors. I cannot say more at this point of time. I guess you will understand. FoamPartner, I commented, closing is due by the end of this month. Bystronic is ready to be independent, and that's why it will happen in one month's time. And the whole transformation from the Conzzeta headquarters until Bystronic, I think it was a smooth transition, and Alex Waser and his team are now ready to take full responsibility as of April 22. So here, we are clearly on track. What does that mean the final steps for Conzzeta until everything is resolved? Final business disposal, that is Mammut. I mentioned about middle of the year somewhere. The management is also clear. As we have announced this morning, Alex and his team will formally take over on April 21. Subject to the general assembly approval, the name will change also a consistent way from Conzzeta into Bystronic. The ticker symbol, for the investors of you, will be changed early of May from CON into BYS. The financial reporting, the next half year reporting will be performed by the new team, by the Bystronic team, that is due then the half year results on August 6. Then the cash distribution, [ speak ] dividends, there are basically 2 relevant parameters for the distribution of dividends. That is, number one, the needs -- the capital needs of Bystronic, of a well-capitalized Bystronic; and it is, on the other hand, the disposal proceeds which we will receive. Also a point -- the last point but not least, there will be stability in the shareholder pool. So this shareholder pool will remain in place. I go then to my last slide, a slide also you know since 2016, that is the framework which I believe served Conzzeta well and it will, at least for the beginning, also a very good basis for Bystronic. If you look at the competencies, I think this is deeply engraved into Bystronic: entrepreneurship; innovation, the lifeblood of that business; collaboration and diversity with the new management team, that is now on a corporate level and not on a BU level; and always close to my heart, deliver to promise. I think over the past 5.5 years, we always tried to deliver what we have promised, to say what we do, to do what we say. And that is a mindset that is also very much adopted by Alex and the Bystronic team. If you look at the priorities, market orientation, and this is always a [ ruthless ] market orientation, really calculating backwards for the final customers' needs; internationalization, which in our terms is mainly U.S. and Asia; people development, where we will have -- or we had significant talent development, talent that could take over bigger responsibilities, is also a basis in the Bystronic team; and business excellence, which is 2 parts of operational excellence and commercial excellence, which are also absolutely basic needs for the Bystronic business. All these ingredients together in the recipe, without any doubt, will for Bystronic for the future result in more growth, more profitability and even better capital returns. With this, I would like to hand over to Kaspar Kelterborn, our CFO of Conzzeta, who will give you the financial assessment of the year 2020. Thank you very much.

Well, thank you, Michael. Ladies and gentlemen, good morning. Also a warm welcome from my side to the press conference this morning. The next couple of minutes, it will be my job to talk you quickly through the numbers of the annual closing 2020. Let me start with my first chart, the consolidated income statement. You see, we have generated net revenue of CHF 1.28 billion reported, minus 18% to 2019. We have heard it, on an organic basis, minus 10.4%. Total revenue in absolute number, a little bit lower. The variation to previous year, around on the same scale. We generated an EBIT of CHF 79.7 million; EBIT margin, 6.3%. And if you look at the line other operating income, then you see some substantial numbers in there. In there are the onetime gains from the divestments 2019 of CHF 30 million and 2020 from the divestment of Schmid Rhyner of CHF 47.4 million. Now if we take this out of the EBIT, then we talk about an adjusted EBIT of around CHF 32.3 million with an adjusted EBIT margin of 2.5%. Now if we go to the group result. Reported 67 point -- yes, CHF 67 million -- CHF 66.9 million. Also here, if we take out the onetime gains, then we talk about the group result adjusted of CHF 19.5 million. Now it is very obvious that these numbers are substantially below the numbers 2019. And this is very much driven by -- due to the challenging market conditions which we experienced, driven by the COVID-19 pandemic, which had a severe, heavy impact on our financial performance especially in the first half of 2020. I will give you now some more details on a couple of key figures. On the next chart, you see the net revenue bridge, and you see that we have lost CHF 163 million from the volumes. And here, you see the dramatic impact of these challenging market conditions which I just mentioned. The change in scope, I mentioned the divestments had an impact on our top line of around CHF 64 million. And on top of the challenging market conditions, we also had headwinds from the currency side, and that had a top line impact of around CHF 63 million. This came mainly from our main currencies, the euro, the U.S. dollar and also some Asian currencies. Now on the right side of the chart, you see also some comparable numbers on -- with respect to our regions. Europe, minus 12%, strongly impacted, of course, by the footprint of Mammut; Americas, minus 9.9%. And as you see, more dynamics especially in the second half of 2020 in Asia, which had a decrease compared to previous year on a comparable basis of 5.3%. I go to my next chart, and I want to make some comments here on the EBIT development. Now first of all, what you see here are, again, the shaded areas. These are the onetime gains, again. Now, of course, we focus on the EBIT development without these onetime gains. And you see it on the chart, it is very obvious. You see the tremendous impact of the lost volumes. But not only the volume losses impact our operating profitability, we also experienced significant margin pressure. We had a shift in the product mix towards lower value-adding products. And in there, we also have a little transaction effect. If you look at the P&L, the gross profit or how we reported the material expense ratio, then you see that ratio increased from 2019 from 46% to 48% 2020. Now let me make some comments on the cost structure. Due to the volume losses, we have initiated early at the beginning of this pandemic our cash, cost, complexity program. That program included, of course, fixed and variable cost savings. It included also governmental contributions on the one side. But on the other side also, it included strict CapEx and net working capital management. Now one part of this program, you see here the outcome on the chart. We decreased our cost structure, personnel expense and operating expense together, by CHF 23 million. But that is only one part. What you don't see on the chart, and that is the reason why I have mentioned it in the second bullet point, is that we had counter positions in the sense of onetime costs in 2020. You remember 2019, we have reported onetime gains of around CHF 7 million. In 2020, we have these onetime costs of around CHF 14 million. And there are 2 elements in there. They are in relation to 2 topics. On the one side, we have used the crisis to reorganize the Outdoor segment, optimize the international -- sharpen the international setup. That costed us around CHF 11 million, a little bit more, and that brought the structural cost base down by around the same size. The other part is related to the Conzzeta transformation. In there, we have advisory costs, project costs, but also the scale down of the corporate management structure in Zurich. So if you add this CHF 14 million to the before-mentioned savings, then you see that we have achieved gross savings of around CHF 40 million, which is what we largely have planned for and which is what we have communicated to you in the midyear conference. Let me make a third comment here on this chart. We not only had this challenging market conditions, the cash, cost, complexity program, we also continued to invest cost investments in strengthening the future growth potential of our segments. For example, at FoamPartner, we continued with the ramp-up of the new conversion center. At Mammut, you have heard it. We strongly invested in the digital channels. And also in Bystronic, of course, we had cost investments in software, in service, automation and integrated solution. I think it is worthwhile to make these comments once we look at this chart. Now I go to my next chart. And you see here and I want to give you some information -- now here it is, some information on the comparison half year 2 to half year 1, and there are some good information in here. You see the Bystronic order entry outperformed in the second half of 2020 the first half by around 28%. Clearly, higher dynamics in the market in the second half of 2020. If you look at Q4, Q4 was even better by 2.4% compared to previous year 2019. A similar picture on net sales. Here, the second half outperformed the first half 2020 by around 23%. That is not only driven by some seasonal business development at Outdoor. We clearly had a much better sales momentum in all businesses in all regions in the second half of 2020. With respect to the Q4, we have a little bit of a mixed picture, as you see on the chart. Bystronic and Mammut, we are still below previous year. That is mainly driven by a strong Q4 2019. On the other side, a good development in FoamPartner, which could outgrow Q4 2019 by 7.1%. Also, if you look at the EBIT second half, CHF 31 million, 4.5% EBIT margin, much better than in the first half despite the fact that we booked the bulk of the onetime costs into the second half. If I take these onetime costs out in the second half, then the operating run rate of the EBIT margin was even a bit above 5%. Let me continue and give you some information on what happened below the EBIT line. 3 comments here. First of all, the financial results, you see, substantially lower than previous year. Now that was mainly driven by the lower asset performance of the employer contribution reserve, which contributed in 2019 around CHF 4.9 million; in 2020, around CHF 1.9 million. That's the main difference. Financial income and financial expenses had been on the same level during these 2 years. The other information, tax substantially lower as you see here. Of course, this is due to the lower profit base, but also this is due to the fact that the divestment gains are free of tax. Now because the tax rate is a little bit distorted, I'd like to give you some guidance for '21. The tax rate, I assume, for this year will be back again to where it was, around 20% to 22%. The third comment on this chart is with respect to the minority interest. You see, they came substantially down, and that is mainly in relation to our step-up of our participation at our former DNE joint venture in China, which we own now 100%. On the next chart, this is the consolidated cash flow statement. Some good information here. You see the operating free cash flow of close to CHF 52 million for 2020, and you see the company free cash flow of around CHF 123 million. Now while the company free cash flow has been driven by the proceeds from the divestments, the operating free cash flow has been positively impacted by disciplined CapEx and the good management of net working capital. Now with respect to the net working capital, it came down by 9% to CHF 253 million. The net working capital ratio 2020 is around 19.8%, a little bit above previous year. Now the decline, of course, is volume-related, but I think what is important to do during such a crisis is to manage the credit risks. And here, I think we did a good job in the sense that we didn't experience in the year 2020 substantial bad debt losses. With respect to the CapEx, a little information. The reinvestment rate was around 0.7, substantially lower than what you have seen in the previous couple of years where it was 1.5 up to 2. And also here to give you a little guidance for '21, I would assume that, that reinvestment rate would come back to above 1, maybe 1.1 or 1.2. Now on the next chart, some comments to the cash position. You see the company free cash flow here, CHF 123 million. And you see that we have paid dividend of CHF 87 million, and we paid CHF 64 million for the DNE step-up. There, included also some remaining minority dividend payments. So cash position at the end of 2020 was CHF 273 million, slightly below end of 2019 but substantially better than half year. Half year liquidity -- half year 2020 liquidity was CHF 238 million. Operating free cash flow half year was minus 40 for the full year, now plus 52. So you see that we have generated around CHF 90 million of operating free cash flow in the second half 2020, which I think is a good performance. On the next chart, the balance sheet. Yes, I think I don't have to make much more comments here. We have talked about cash. We have talked about the net working capital. Maybe the equity ratio which you see remains on a high level, stable at around 69%. And with this, I go to my last chart, the dividend proposal. And you see a little bit of a history of the dividend payments since the announcement of the Conzzeta transformation. And you see that we have implemented what we have said in the press release back in December 2019 that our shareholders will participate on the distribution of liquidity. Now we continue with that practice [ forward ]. Our Board proposes to the AGM 2021 a distribution of CHF 124 million in form of dividends. That's per A share, 12 -- excuse me, per A share is CHF 60; and per B share, CHF 12. And of course, as we have heard it, we, on an ongoing basis, continue to evaluate our liquidity in the context of the strategic transformation on the one side, the new strategy of Bystronic and its capital needs on the other side and of course, also in the context of the overall market conditions. And with this, ladies and gentlemen, I'm through with my presentation. Thank you for your attention, and I will hand over now to Alex Waser. Thank you very much.

Thank you very much, Kaspar, and before that, Michael. Well, good morning, ladies and gentlemen, and welcome to Conzzeta. Let's talk a bit about Bystronic. We have actually prepared a few slides from our CMD from last year that I would like to continue to talk about, and also we've prepared some updates, what happened during the last month. And we would like to give you, first, an update on the key initiatives that we have done. This is the slide that we showed last year in November during our CMD, and I can tell you today that we have been very disciplined in implementing the key elements and the key initiatives here. And already now, we see the first grip and the first results, and that obviously is quite good news especially on the software and solutions side and on the service side. We are seeing results that are very encouraging. What is really the story, in short, where we are going? Bystronic has been a pioneer in the sheet metal processing, and I think we're going to continue to do that. And the story how we think we want to do this is really expanding our portfolio as we have done in the past, not only by operations but also in the segments itself. In addition to that, as you have heard, we are working quite hard on implementing some brand-new software solutions for our customers. We are addressing the service side of our business, and we have regionalized our business, and I will come a little bit later to a part of that. And where is that all bringing us towards? Well, we see the -- we are seeking growth from where we are today at about CHF 800 million towards about CHF 1.3 billion. And we see the growth actually in all the different regions. What that would mean in terms of split is that Europe, EMEA, the heart, the [ past ] heart of Bystronic, will actually, the first time, be below 50%. We see that Asia and Americas are growing steadily in that process. What's also important for us is that we're seeking growth in the service and software business, as it has been mentioned before, from about 19% in '19 to about 26%. And obviously, that's not only accretive to the business, but it also helps us to manage our volatility in our business. We are happy to talk about the order entry in the past, and Michael has mentioned it. There is a bit of a catch-up going on in the market itself. And I can also say that we have enough capacity to grow with the market. I also think it's a part or a result of what we have done during the last month. We have been preparing consistently with our teams on a high activity level. We have worked very hard with our customers, and we are now seeing that this catch-up that's going on right now, that we can participate in this situation. On the right-hand side, you can also see our financial aspiration for 2025 when it comes to organic growth of over 5%, an EBIT margin above 12% and RONOA above 25%. In an initial phase, we expect an average EBIT margin of 8% to 10% and RONOA from 15% to 20%. And that is, as you can see on the right-hand side on the box, that is without M&A. That's organic growth. The Strategy 2025 is finalized and in the process of being rolled out, as I just mentioned before. And I can tell you, there is a lot of innovative new solutions and services being developed and being launched even this year. One of the elements that we are proposing for the second part of this year is that we will offer Bystronic segment reporting that will include the regions itself. So you will see numbers in EMEA, Americas, APAC and China itself. And that might be interesting for you, and it also gives a certain transparency in the financial results and the strategic process of where we are. On the other hand, we are in the middle of materiality assessments for Bystronic CO2 footprint assessment for Niederönz, and we also are ready to share some of the news that are coming with us soon there. Bystronic stand-alone profitability will be impacted, we expect, about CHF 3 million from the total effect with Conzzeta here. What I'm really proud about is to share my new team. It's actually not a new team. Most of it are quite old veterans in our business. Some of it are new. But we have a very diverse team. Maybe I'll start from the bottom with Eamon Doherty, an Irish service specialist; or Dr. Song You that's helping us in China to grow the business very successful; or Norbert Seo that runs Asia; Bob St. Aubin that has been, all his life, an icon in this industry and is working for us to grow continuously the Americas; or Johan Elster that is an icon in Europe, growing our business and has done in the past. And as you know, we are -- we have announced to get a new CFO in our business, very proud to do this and has been planned for several months in the past. So this is the team going forward that will work on the growth initiatives, and you will see some more results with it. With this, probably one key element that you will see more with us, and I mentioned that a few minutes ago, is that we're really hardworking on ESG initiatives. And one of the elements I can say is that from our carbon footprint assessment, that 76% of our carbon emissions are related to the category of what we call use of sold products. And what this really is, is the combination of our offerings in state-of-the-art equipment, leading-edge solutions and comprehensive services enable our clients to become more efficient, more productive and also help them to reduce their carbon footprint, and we're quite proud of that. So what are the priorities and the outlook for 2025? So as you just heard, closing the FoamPartner transaction until the end of Q1 is obviously high in our agenda as well as the divestment of Mammut around mid of '21. The name change has been mentioned before, obviously subject to the AGM approval on April 21. The aspiration of Bystronic in the market is really in the direction of a pure play leading market position with an attractive sector to grow, and we see many opportunities in the future. We also see what we have done in the past with innovation, and client productivity and sustainability will be a major part of it. And in the half year reporting on August 6, we'll obviously have quite a bit more news on how the first half of the year turned out to be with a transparent segment information to it. With this, I can see a continuous improvement in client sentiment. We see that in order entry right now. Although let's not forget, we are still in a pandemic. We're still in a situation that is hard to forecast. We do see the return to sales growth between 5% and 8% in '21 and an improved EBIT margin of around 8% at the lower end of our target range. And with this, I would like to hand over to Ernst Bärtschi, the Chairman of the Board of Directors of Conzzeta. Thank you very much.

Good morning, ladies and gentlemen. Thank you very much to my colleagues who presented Conzzeta and now Bystronic. You can recognize we changed again the color from black to blue when we launched Conzzeta, and now from Conzzeta to Bystronic from blue to red because we changed our name. Stability as tradition, change as principle. This was the statement at our 100-year anniversary a couple of years ago, and it continues to be relevant with more and faster changes ahead of us. We live in periods of enhanced uncertainties and opportunities. That means digitalization, automation, regionalization, climate change with substantial new solutions, and we need alliances, agility and speed. We aim at leading positions in the true north with critical mass to avoid too little too late, with solid new solutions among the earliest competitors and with clear capital allocation, investment returns and cash flows. Our conclusions are clear priorities at high drumbeat, focused on best customer solutions, portfolio optimization as a consequence, and this means build on Bystronic with Strategy 2025. In 2014, Conzzeta had 7 businesses. There was a spin-off of Plazza, currently very successful; the divestments of ixmation, Bystronic glass and Schmid Rhyner with very good integration and positive operational development with the new owners; FoamPartner with acquisitions of Otto Bock, improved manufacturing footprint and global rollouts of new technologies at good margins; and Mammut in a complex migration towards e-commerce with massive product innovations of apparel, technical products and new shoes for mountaineering. But going forward, we will have a clear focus on Bystronic with good historic performance, good market position and significant opportunities from industry trends towards digitalization and smart factory solutions. The consequence of these moves are that our group management will step down at the AGM on April 21, 2021. Michael Willome, Kaspar Kelterborn and Barbara Senn were the managers who were in charge for all the acquisitions and divestments for all the operational excellence programs, talent developments and many other initiatives. And Dr. Oliver Pabst and Dr. Michel Riedel have been in charge for the business developments in their responsibility area. They achieved a steady improvement up to 2019, and now with corona impacts, of course, a reduction but still massive improvements even in this year. This was perceived also by the shareholders. One can see that the market outperforms -- or we outperformed the market with doubling the share price. The process for good divestments of FoamPartner and Mammut is still ongoing. We encourage our divestment teams to successfully finalize these 2 remaining transactions. The Conzzeta Board of Directors thanks Michael Willome and his team for their great performance in developing and then transforming Conzzeta. It's right now like in athletics in a 4 x 400-meter race just before the third baton change, a full concentration on both sides: the Conzzeta team and the new Bystronic team. But from now on, Bystronic will get full attention to expand their business towards new heights, and we would like to wish the best future to the management team who will step down now at the shareholders' meeting on the 21st of April 2021. Thank you, ladies and gentlemen. Now it's time for questions.

The first question from the phone comes from the line of Tobias Fahrenholz with Stifel.

Yes, first of all, also big thanks from my side for everything, Michael and Kaspar. Then to the outlook and cash usage, I mean, starting with the 2021 outlook. Should we maybe consider your 5% to 8% organic sales growth target and the 8% EBIT margin as slightly conservative considering the mentioned good start into the year and at the moment also, rather supportive FX trends? Are there maybe any kind of special one-offs in your 8% figure? Or are we only speaking about the already mentioned growth related costs for broader service and network, et cetera? Maybe you could also again remind us what we should expect here for 2021, 2022 and 2023 as kind of growth related costs. That would be the first one.

Well, if I'm not completely wrong, this might be my question. Mr. Fahrenholz, thank you. Thank you very much for this question. Yes, of course, we had originally planned a 5-year growth plan based on 2019 actually and not '18, as you know. And yes, it's correct. We had a very good start into the year. And we were positively surprised by that, but it was also a lot of work behind that to participate to that rebound. We see that as a bit of a rebound, and I wouldn't necessarily see this as a linear growth path right now. It's now mid of March. It's early in the year. And yes, I would say we are -- we had a start that was more positive than we initially planned to it. That's probably true. And your second question was a one-off. No, there is no one-off participated or planned in this year. However, as you can see, we still are in a market that is highly competitive and on the margin pressure, but we are preparing for this. But there are no one-offs planned in this market. So if things continue as they continue right now, you would be right that we might be more on the conservative side, although it's mid of March. It's early in the year, and the positive signs are actually positive. So I hope I've answered your question, Mr. Fahrenholz.

Yes. Maybe if you could add regarding these normal kind of growth investments you're doing for your service network, et cetera. Is it fair to assume a double-digit figure here for 2001 (sic) [ 2021 ] and '22 and then much less in '23?

That's actually true, Mr. Fahrenholz. We are expecting just over 2 digits in the service side and the software side. That is correct. And if that comes at the same time with our new business, new equipment sales, that could actually explain some of the rebound. But yes, I would agree to that.

Okay. And then maybe one for Mr. Bärtschi. Could you comment a little bit more on cash? How do you see the dividend strategy? Should we expect rather a one-off payment again next year? Or are you looking there for a stable, solid payout ratios in the area of 50% plus? What's your plan here? I mean there [ will come ] more cash that's...

Well, my feelings are not so relevant, to be honest. It's more the feelings of the major shareholders who are all represented in the Board. And we have no clear strategy on how we will react. We -- it has been mentioned that the needs for the future development of Bystronic is a key element. The available cash is the second element, and wish of the key shareholders is the third one. And we will conclude after the divestments of the 2 large companies on how we will react in the next years.

The next question from the telephone comes from the line of Daniel Koenig with Mirabaud Securities.

Yes, it's Daniel Koenig from Mirabaud Securities. I have also a question or several questions on Bystronic. First, a technical question. I looked up in the financial report the development of personnel expenses, and what is noticeable is for the discontinued operation, the personnel expense is going down in 2020 much more than for the continued operation. Can I ask what to expect from personnel expenses for Bystronic? And how much was this furlough scheme in there in 2020? And then I had the question on price pressure. It was mentioned in the presentation that there was price pressure at Bystronic. Can you quantify this? And has this changed now in '21? Yes, that's about it, I guess. The goodwill in the balance sheet is not related to Bystronic, or if I'm wrong.

I can maybe answer the 2 first questions, if that's okay with you. Well, first of all, the investments, you're absolutely right. We have continued to invest in our business especially on the service side. As I said during the CMD in last November, we have plans to expand our service network significantly, and that already started last year already. So our -- on our [ PEX ] line, you see actually an investment in service technicians and our service network, and we will continue to do that. That's a part of our business strategy. Has the price pressure -- your second question, has the price pressure been more extreme than in times before, let's say, pre-pandemic? Absolutely. Absolutely. We have seen pretty wild situations all over the world, and it is continuing. It is continuing in a certain -- in most markets, let's say. We don't think that this will be forever exactly the same situation. But we have internally made sure that we are able to manage these types of situation. And we can also tell you that we have not accepted all of what this price pressure would offer you in the market itself. Now the third question is goodwill.

I'll take this question. Mr. Koenig, I assume you did ask the goodwill position which you have read in the notes in the shadow accounting of our annual report. And the allocation there, we have the CHF 240 million -- in that shadow accounting CHF 240 million goodwill. And the main part of this goodwill is in relation to FoamPartner, and the lesser part is in relation to the recent acquisitions of which we had did at Bystronic.

Maybe I can add one more point, Mr. Koenig, on price pressure maybe that's interesting for you is price pressure is not in all the region equivalent to one region to another region, and it's also not equivalent to business type to business type. So we see more price pressure on single machine type of business versus on solutions. We see more price pressure on single machine business versus service and software types, and obviously, that's where we are going. So we expect the more and the higher our solutions and software part and service part is becoming, you also see a more accretive part of that. Just maybe that helps you to understand that from our business, Mr. Koenig.

The next question comes from the line of Charlie Fehrenbach with awp.

It's regarding -- it's a question, Mr. Waser, regarding to your sales target of CHF 1.3 billion. Is this for the time period until 2025? First question. And the second is could -- how much of this will be organic and how much [ through achieved ] acquisitions?

Sure, Charlie. I'm happy to answer this. The slide that I've actually shown is a 5-year growth plan. So we are seeking growth to CHF 1.3 billion. That's absolutely correct, up to 2025, and we based it as you -- when you look at the slide on 2019. And the second question is, yes, it is 100% organic. We have not included significant M&A in that at all. So the whole plan is really it's organic growth plus M&A that is not included in the CHF 1.3 billion.

The next question comes from the line of Dominik Feldges with NZZ.

Yes, I would like to ask you, first of all, I mean, obviously you are becoming now a pure machine tool business market, obviously, which is not always of such great interest to investors. I mean I see that with less successful businesses obviously, but like Tornos and Mikron, which no analyst really publish reports on it. So I mean how -- I mean, how do you want to really address the investment community, raise profile there? And who do you see really as your peers? I mean is this company obviously like [ TRUMPF ], which is obviously not listed [ mix ]. So maybe this might also make it a bit difficult for you that there are not so many peers out there which are also listed. And finally, what is -- you say you have -- want to obviously have a leading market position. What is your market share then in Blechbearbeitung as we speak?

So we have 3 questions. Dominik, very happy to answer this. But first of all, it's very sad to hear that you don't think Blechbearbeitung, or sheet metal industry, is not cool. I personally think it's very cool.

On the contrary, no. I did a story once that it is quite sexy, actually.

Okay. Okay, very well. Then I'm very happy you did. No, we feel -- we have many questions. Market share peers, we think we are #3, clear #3 worldwide with a market share that depending how you calculate it, maybe 12%, 13-ish percent, and depending on how you exactly calculate it. We see 2 peers, 2 large peers that are still in front of us, and one of them is the company that you have mentioned. There's also a Japanese company that is up there. And yes, we think we have a good story. We have a good innovation. We have a clear path forward. We know how to -- or we think we have a good plan forward how to create customer value. And I think when you look at what would be something you could compare maybe [indiscernible] [ and machining ], we are at about that size. If I'm not mistaken, we are a little -- even a little bit bigger last year. But we are not comparing us with a Swiss company. We're comparing us with global players. And there, it's clear what we would like to do is to become #2 in that market in that period, and we think that's possible with the solutions, with the software and the service part that we are in the middle of actually doing. So that is how I would answer your question, and I think there is absolute potential out there. And we are in a good position, but not only from a technical standpoint, but also from what Conzzeta or the shareholder are offering us in terms of where we are coming from and our ability to invest in the future organically but also inorganically. I hope I have answered your question, Dominik.

Just for my record, again, because it escapes me, but I've heard it when I visited, obviously, TRUMPF once. But the Japanese -- I mean, it's not a secret. What's the Japanese competitor? Who is the Japanese competitor?

AMADA.

Which one?

AMADA.

AMADA. Exactly. Yes, it rings a bell.

That was the last question from the phone.

Okay. There is also one question that we received in writing from Mr. [ Lavoie ] from CH Media. It's a question about Mammut, and I read it for the presenters. You invested quite a lot in Mammut. In which areas especially? Can you be a bit more concrete? How concrete are the negotiations with the interested parties to buy Mammut? How many parties are interested? That's the question.

I take this one, and thank you very much that I also get a question. We invested -- if you take the investments into Mammut, I would talk about 2 different pieces. The one piece is mainly the direct-to-consumer business, which over the past 2 years we added about 35 people. You don't need a lot of assets for this, but you need people. That is our own web shop. That is the whole digital type of business, 35 people we added there and that's why we are growing with 80-plus percent and also this year. And the second type of investment, if you want, was last year, the restructuring charges we took of more than CHF 11 million. That is partially in Korea, for instance, where we went more or less out of a direct contribution because we saw that the price points there are that much depressed that it doesn't make sense for us. We moved our regional headquarter Asia from Hong Kong to Shanghai. So there were associated onetime costs. So as I said before, we just used the moment in this corona year with lockdowns. We clarified our distribution channels. We closed a few shops which were not profitable in Germany. So we used the moment to reduce our cost base that going forward, we have this CHF 10 million-plus reduced cost base. So I think these are the 2 types of investments we did over the last 1, 2 years into Mammut. And then I look at your next questions. I think I would like to repeat what I've said before that we are in advanced discussions with interested parties, and I used the [ blue alpha parties ]. That is correct. And if I say advanced discussions, so you can assume that they're reasonably concrete. But you will also understand that in this phase, I cannot give you any more comments. And as usual and as we have always done it in the past, we make a deal and then we announce it and not before.

Okay. There is another question that we received in writing. It's from Mr. von Arx from Valex Capital. What is the growth rate globally in the sheet metal processing business for 2020 to 2025? [ Do you prefer ] the growth rates regionally strongly? That's the question to Alex.

Yes, I'm very happy to address this question, Mr. von Arx. Well, the growth rate, obviously, in '20 was -- had a big minus. We see from the information that we had available that our competitors were anywhere between minus 25% to minus 10%. So we are probably on the lower end of that. But long term, this business has a growth potential of probably 3% to 5%. That depends a little bit. However, I need to say, that's not a linear situation because there's a strong trend towards automation. There is a strong trend towards integrated software solutions and also service. The more integrated, the more services is actually needed. So what we have said in our CMD back in November is that we would like to grow above the market, so winning market share. That's really where we have positioned ourselves. And we think if the pandemic has accelerated one thing in our industry, in the sheet metal industry, then for sure it's that everybody has realized how important integrated solutions are, how important automation is and I expect this to continue for the next few years. So sorry not to give you black-and-white answers. But we are in a growing business. It's not vastly growing, but our pocket's growing and I think I addressed these pockets. So thank you, Mr. von Arx. I hope I answered your question.

We have a follow-up question on the telephone coming from Mr. Charlie Fehrenbach with awp.

[Foreign Language] Sorry, a question about Mammut. I've heard about from representatives from a well-known Swiss holiday resort that there's interest in Mammut from Swiss, from local side. I mean I assume you cannot comment this directly, but you maybe can give a guess if there is a chance that Mammut goes to a Swiss owner or to a foreign owner, how big the chances are for each.

I can really -- Charlie, I'm afraid I cannot comment on this. I mean we are talking to many people. They obviously -- as I have said a long time ago, they come from all over the world. There are different aspects of we would like to sell Mammut, who is a good owner, who will invest into the business after the closing of such a deal. It's exactly the same like we have done in the past. I think in the past, we always have found good buyers. As I mentioned, for the business and for the people, that is an important aspect for us, and we will do exactly the same for Mammut. Now where this buyer comes from regionally, I just can simply not tell you. I -- mainly because I also don't know it. But it's the money, that is one thing for sure, but it is also a good owner that takes good care of the business, of the people and continues to invest into this business. I think you have to take the answer like that, and we will see what the next few weeks and months will bring.

We have a second follow-up question from Mr. Daniel Koenig with Mirabaud Securities.

Yes, I had 2 questions. A, I was wondering on the minority, now DNE is 100% in the minority. These are basically the stakes of the 2 Italian investments and that's it. And I was wondering how they are performing and what to expect in the years to come. And then the other question was on the U.S. What is the latest with your investments there in the [ north up ] there?

Maybe I can answer quickly the minorities. That is correct. That are mainly from the Italian companies there which we purchased recently. That's correct.

There was a question about our investment in the U.S. I think you're referring to our Chicago brand experience center. If that's -- okay. Yes, we have finalized that brand experience center, as we called it. It's combined the plant and the brand experience center. We have been fully up operationally and running. We are producing actually 2D laser systems in that plant. At the same time, it has a large, we call it, brand experience center where we are able to show fully fledged systems. And yes, it's open. It's running. It has been open since quite a few months already. Unfortunately, officially, we couldn't open it because we aren't really able to travel to that. But yes, it's fully operational and running, and we see significant interest from customers in that area now.

There are no more questions from the telephone.

In writing, we have received a follow-up question from Mr. [ Lavoie ] on Mammut, and I read the question. Did the pandemic reduce the price that you can ask for Mammut?

I can give you -- I can obviously not give you indications on prices and so because these are ongoing discussions, but I can give you the thinking how we talk to interested parties. What definitely didn't help was last year the result. As you have seen, we have CHF 50 million less in sales, and we have a negative EBIT. So obviously, this doesn't help. But what helps a lot is our strategy which we started 3 or 4 years ago, and that is to invest into digital. I remind you, 3 years ago, our web shop was not existent. Our digital sales were basically 0, and last year, we had more than CHF 40 million. And as I have mentioned, in the first 2 months, 2.5 months now, this rapid growth of almost doubling the business continues. So we have established a different business model in one way, while still keeping, of course, our most prominent B2B customers also happy. It will always be an equation between B2B business and [ D2C ] business. So the investments into digital, they -- clearly, they pay off, and that increases the value for a company such as Mammut. The second point -- and it was always our ambition to be a stronger Mammut after the crisis than before. And the second point besides the digital progress we have made is to reduce cost position. I have mentioned before, we are going into 2021 with about CHF 10 million reduced cost position, which will translate into increased profitability, which obviously increases the value of the company. I think you have to look at the whole discussion from these 2 or, if you take, 3 angles.

Any more questions? Okay. I think we don't have any more questions, so that concludes our today's presentation. I thank you for your interest, and I also thank to the presenters. And I wish you a good and successful rest of the day. Thank you very much.

Thank you.

Thank you.

Thank you very much.