Bystronic AG (BYS) Earnings Call Transcript & Summary

Good morning, everybody. A warm welcome to our Bystronic full year results for 2025. I'm happy to welcome as well Heinz Baumgartner, our Chair, dear investors. We will go through the presentation. I have Javier Perez today here, our new CFO. He will maybe introduce himself later as well. So please take a minute to go through the disclaimer. I will read it in the same time and then continue in the expectation that you are as fast as me by reading it. Perfect. So we will start with the business review. Javier will then take over for the financial review. We will do an outlook together, and we will take a little bit more time for the Q&A session. Let me start with the business review. You have seen the numbers already this morning. I will elaborate a bit more later on the regions and so on. So we had an order intake of CHF 634.5 million, which is a 5% increase at constant exchange rate. We had, as expected, a little bit lower net sales compared to last year at constant exchange rate by 2.2%. I will elaborate on the reasons why and so on as well. I think what was an achievement, of course, we are not happy with the numbers, but it was with an extremely improved EBIT, which is minus CHF 19.8 million compared to the CHF 84 million we had in the previous year. Adjusted EBIT without the one-offs was the CHF 47 million, which is in comparison to last year, a big improvement because we have even much less net sales. The operating free cash flow was slightly higher than in 2024 despite the fact that we had the payments of the one-offs with severance payments. The cash out was this year, but we will elaborate on this one as well. So in overall, the numbers are in line with what we have expected. Again, on the EBIT side, slightly higher on the net sales, slightly lower than we had expected. What is really positive in my eyes, it's the first time after a few years for not saying many years to have a positive book-to-bill ratio. So order intake is higher for 2025 than the net sales, which, of course, results as well in a higher backlog. If we go to the quarterly view, you see that there is not a real recovery in the market. At least we have now over, I would say, 7 quarters a stabilization in order intake. The last quarter in 2025 was good. And with that, I'm coming to the regions, starting with Americas. We had a solid demand. We had a lot of headwinds, the whole tariff discussion. It was a hit for us, but due to our local production, we could mitigate some of the costs. Nevertheless, especially in net sales, we had a few weeks during the summer period, all the famous 1st of August when everything was announced. We had some customer postponing. We even stopped some deliveries because it was very uncertain how to calculate and so on. This had a certain impact. But in terms of order intake, it was really stable. And I think we were even able to somehow pass some of the tariffs to the customers. Of course, what was sold and in delivery was a pain for us, and it cost us a hell of a money, and we will shortly elaborate this when we talk about EBIT as well. Meanwhile, I can say when we made the presentation last week, there was a stabilization of the tariff discussions. So over the weekend, we have now a new development. Nobody can exactly say what it means. But in overall, for us, it will not have an additional negative impact and will not have an additional positive impact because whether it is the 10% or the 15%, adding the existing tariffs, we stay more or less in the same range. In EMEA, we saw a slight recovery. We had very good performance in Italy and in Spain over the whole year. And we had a quite good development in the first -- in the last quarter, even in DACH. Germany and Switzerland were quite strong, but really pushed by smart factories. Now the definition of Smart Factory is wide, but I'm saying about larger systems, not single machine. So there is a strong trend towards automated system, less single machines. So exactly what our strategy pays in. And the last quarter was really strong, and they made it up for the -- let's say, for the full year. China is quite stable. We see even a positive development at DNE. That's our second brand. As you know, we made a new repositioning of our DNE brand. We decoupled DNE completely from Bystronic with look and feel, different sales channels and so on. And we even relocated the whole company from Shenzhen to Foshan. So we have now a state-of-the-art factory where we could increase the efficiency of building machines. We are coming close to 1,000 machines building out of this factory, which is very, very positive. But even the Bystronic brand in China seems to stabilize, but even towards smart factories. The weak point is definitively APAC without China. So Southeast Asia, especially South Korea is slow. It was slow over the full year. And we are right now investigating what to do in this region, which was a quite important region in the past for Bystronic. So a little bit how we developed the order intake. I already mentioned a few times that we -- if you look at the numbers, you will recognize that we are doing less business in the single machines, so in the standard machines. So a big driver in order intake and growth is definitely driven by the smart factories. So larger projects, there is a really growth as a big demand and growing demand for smart factories. Our software solution pays in a lot. So I think we can make a differentiation with our overall system. As you know, we still have a lot of small customers. I don't want to call it mom-and-pop shops anymore because they have smart factories as well, where they like to have the full software solution we offer. What is very strong, and this is a sign of recovery is bending. We cannot sell more bending because we don't have more capacity. So the request for bending solutions and even here for automated bending solution is extremely high. We will invest heavily even in this year in bending solution as a fully automated bending solutions. I already mentioned the DNE relaunch. I think I don't have to repeat it again. But here on the picture, you see the factory. It's a 50,000 square meter factory, one floor, located in Foshan and not anymore in the city center of Shenzhen. Of course, we have even a cost advantage, but the reason behind is really to build more efficiently machines and not having it divided over different floors. A highlight of 2025 was definitively our Tube business. As you know, we established Tube as our own business unit in our organization. We put ahead of this business unit, and we really focused on the market. The Tube market for small tubes is not a sheet metal market. This is something we had to recognize. And of course, what was a big highlight in terms of order intake, but not in net sales was the large Tube machine, the 330, which I think is really breaking through and contributing a lot in terms of order intake. Why I'm saying in net sales, delivery times. I mean we can tell it, but you will not have the final acceptance within the year where we do the sales recognition. So that's something you see in the net sales as well and it's normal. I explained it before. If you have single machines, which you deliver within 3 to 6 weeks and you do an installation within 2 weeks, you will have the sales recognition very close to the order intake. As more you go to systems, you will have a sales recognition just delayed, right? And that's something you see in the net sales. That's something you will see even in the coming quarters because there will be -- when you do a shift from single machines to systems, you will have a small down until it recovers and it stabilizes. Okay. I think the organization -- the reorganization is nearly done. I mean there are always some minor adjustments to do. I think what makes me extremely happy is that we finally have the EC, the Executive Committee, finalized with Javier as CFO; with Alberto Martinez, having a huge experience in our sheet metal business, leading the division Systems; and with Wilfried de Backer, having somebody having a very long-standing experience in service business for the division Service. I think we have now a very strong market focus. So we aligned our organization to the needs of the market. I think we are much leaner. You see it in the cost savings. So of course, we are now more agile, and we are able to do very fast decisions. We increased our efficiencies, bundled our competencies. We consolidated our group function. I think there, we still have some potential, but I think now together with Javier, we will tackle new topics as well. So in optimization of our production setup, we did a lot. I think there is still some room. Innovation, as I told already last time, we integrated R&D into the divisions. So Tube, which is not a division part of the System division, but they have a dedicated R&D, which are very close to the market. We have R&D in our division System. And of course, we put a huge focus on automation solution. Well, meanwhile, the headquarter of the automation development is in Switzerland. So we finalized this move. Expansion of Smart Factories, I think I don't have to repeat it. Last point, opportunities. You know that I was very open during the last conferences. We had quality issues. We had reputation issues. Some of you might ask why Service is slightly lower. That's because we decided we want to move more towards the customer. Maybe we squeezed a little bit too much our Service business. And with that, we disappointed some customers. So -- and of course, the price pressure in the past led a little bit to a situation where we did not put the quality on the first priority. I think we are back now there. We see this even in terms of warranty costs and so on. Is there still possibility for improvement? Definitively, yes. And I mean, I mentioned it with the R&D market-oriented product portfolio. And last but not least, the focus on Tube Laser cutting systems remains very important for us. I think it's last time I'm showing something about the restructuring. The EBIT we are showing was only possible because the restructuring went better than expected. When I'm saying this, it's not that in overall we are doing more, but it was more in effect already in 2025 than we anticipated. So we will have less of these savings in 2026. The target to achieve the CHF 60 million annualized savings, I think it's achieved. Unfortunately, it's a sad number. We reduced by 600 FTEs, even slightly more. And as I mentioned already, I mean, nearly 85% of these savings are already achieved in '24 and in '25. So that I think in overall, we are satisfied with the outcome of the restructuring. Yes. Okay, shortly on the ESG, I think we can be proud here. I mean we have plus 24% in renewable electricity. We have minus 6% in waste and circularity. And we still have a waste of 2,150 tonnes. In -- so our Scope 1 and 2, we reduced by 14%, which is, by the way, in line with the STBi. And for me, I would say the most important one on this slide, not because of CO2 and so on, but the workforce injuries went down. So our total recordable insurance rate went down by nearly 1/3, so by 28% to a rate of 1.15, which is, I would say, in our business, a good benchmark, definitively. So coming to our strategy, I want to just elaborate that now because we did an acquisition, we are not only moving towards acquisitions. We still want to be in a growth mode in our core business. We did ongoing investments in our productivity, in our automation solution for our sheet metal market. We are offering a broader range of products for our full life cycle management. It goes in combination, by the way, even with our service offerings. We still see some white spots in the world. So we will focus on expanding regional markets. And of course, we still aim to gain back some market shares. I don't have final numbers. One year ago, I told you that we lost market shares. I can tell you today, with certainty that we gained market shares back. We will elaborate these numbers and maybe during some roadshows or so we can even share more information on this one. And then something which was the main focus of mine. I'm coming from a world having a lot of OEMs. Bystronic does not have a lot of OEMs. The few ones they have. They were more concentrated on smaller mom-and-pop shops. I think here, the focus on OEMs as well is here. Then we made some strategic partnerships. I think these 2 are, in my eyes, quite important. You know that Japan is always a difficult market for European. So either you are Japanese or you don't make business basically. So we have a strong alliance with Komatsu. Basically, the final signing will be in 2 weeks from now at the Komatsu headquarter, where together we want to establish a kind of a sales force and enter to the Japanese mainland. We see quite huge chances here. Then we partnered up with SSAB on green steel solutions. So we still push towards our ESG targets. And last but not least, beside of the organic growth and becoming again profitable with our core business, of course, we are targeting more M&A. You all read it. On the next slide, I will elaborate a little bit. We definitively want to have a diversification on one hand, but only on our DNE. So we don't want to become Conzzeta again. So we are definitively not buying back Mammut, so don't worry. It has to have our DNE. And so that's very important. Why I want to have this? We have to become more resilient and not being depending only, let's say, from the sheet metal market. But again, it has [Technical Difficulty]. And the second one, what we are targeting as well is, of course, even in our core.

Please wait while you are joined to the conference.

Okay. So even in our core business, we still have some white spots, which we could fill with products. So maybe shortly on the recent acquisition we did, I think you know that we just closed it by the end of January. It will be in our books starting from the 1st of February. We acquired the business -- the machine tool business from Coherent. I know this company from my past quite well. So it was really a target that we were seeking for it. So they made around about CHF 80 million. So far, we only shared the USD 100 million. Now I can say it's CHF 80 million, around about 400 employees. Out of them, around 300 in Japan. [Audio Gap]

It's homeland of one of your main competitors. So could you elaborate how -- what's the reasoning behind that expansion plan? And how do you think you can compete there versus some other?

Yes. The point is that this competitor is even a competitor of Komatsu. Komatsu has a wide range of products in the -- for the sheet metal processing industry, but they don't have a strong laser to compete against AMADA. And we do believe that together, we might have a chance to get bigger orders in Japan. That's really a strategic alliance for Japan Mainland at the beginning.

Thanks. And related to that, but specifically towards the U.S., do you see that the weaker yen versus the strong Swiss franc has a competitive impact for U.S.-related business so that AMADA would have an advantage pricing-wise due to their weak currency?

Yes, of course. I mean this was a big driver over the last few years. I mean that's the truth. I mean the Japan yen decreased, I don't know, 30% year-over-year in average, right? It was a big competitive advantage, but we should not underestimate that we are quietly strong localized already. So there are import taxes. And I do believe that the company will make -- who will make the race is the one who have the right mix between import and localization. And AMADA is doing the same. So AMADA is localized quite heavily, like we are. So from this point of view, I don't believe that this will be a further big advantage. And I can tell you, price-wise, we are more or less in the range. So it's not that we are more expensive than AMADA. So we are tracking the pricing quite closely. So I would even say that we are slightly below.

And last question for now. Thanks. Since you don't expect the market recovery for now, could that also result in an additional cost savings since you actually -- when you announced the cost savings, you expected a recovery of orders already by second half '25?

As per today, otherwise, I would have announced it, we are not expecting a restructuring in the way we did last year. We are further improving our setup and adjusting our setup. As I mentioned before, we -- the project and the product mix we have is not anymore the same like we had in the past. In the past, we produced single machines in high batches in a line. And now we are going more towards project. So it is rather a transformation to meet these requirements from the market. And with that, of course, we're always working on improvement on our cost base.

[ Thomas Morris, VBAG ]. What is the reason for the weak sales, Korean market? Is that due to the political unrest, which we have seen? Or is there a structural change in the market?

We are right now checking it. We are -- the first view is that, of course, it is becoming less a Western country. So Korea -- South Korea was always a Western country for me, very strongly related to the U.S. They were buying stuff. I mean, when you went to South Korea, you see German cars, you see American cars. I think the most McDonald's outside of the U.S. are definitely in South Korea, Kentucky Fried Chicken. And now we see a little bit switch towards Chinese low-cost products, right? Is this a trend? Is this a reality? We are checking it right now. On the other hand, we see that there's a big demand for Smart Factories. So when I'm talking about Smart Factories, it's whole systems, not only a single machines. And there, we still see a huge potential for Bystronic. But of course, we -- from our side, we have to decide, is it more a Bystronic premium product market or is it more a Chinese? Then the DNE would maybe be the better fit. So far, we serve it very strongly with Bystronic premium product. So this is something we have to analyze. We are right now -- so some of our people are right now over there. We're doing a market study to understand it, but I personally believe it's more structural change in the behavior of the South Koreans.

Yes, I'm not sure if I fully understand the guidance. You mentioned a step toward profitability, but that means you expect not to reach profitability yet in '26?

There is something -- it's a good question. It's too early to say it. I mentioned today that we are going towards a system supplier, which was always our strategy, which in my eyes is the right strategy. It depends a lot in how much net sales we can recognize this year. So again, the delivery times are in a completely different sphere than we had in the past in the machines, right? So for me, the much more -- the more important indicator will be the top line in bookings, in order intake. And the net sales depending of when we have the order intake within this year. So if we get the CHF 700 million order intake in the last quarter, we will not make net sales. And this has to be -- and this is, I think, a change in paradigm. This is a change in how you have to look at Bystronic. So we have long delivery time. I think Javier will maybe mention something on this. We are even checking whether our sales recognition is the right one as we do it today, right? So because we only do it after the final acceptance test. So if we have a customer which wants to have a different screw, we have to wait until we change the screw so that we can do. So we are checking a few things on here, but it all comes with the volume in this case. So if we will have the net sales, there's a big chance that we can achieve it. If the net sales will stay a little bit behind just because of this reason, then it will be very challenging.

Torsten Sauter, Kepler Cheuvreux. Can you remind us of the ForEx sensitivity of the business in its new scope? I understand that the euro, the dollar, in particular, are much weaker versus the Swiss franc in the new setup and you have a lot of production and overheads in Switzerland. And when I look at the results for 2025, I see in the financial result, quite significant hedging and intercompany financial ForEx-related items. Should I expect them to be in the same magnitude more or less in 2026, given the current spot rates?

I would say, yes, there will be not a big movement. Obviously, with Rofin coming in as from February, there will be also a slightly change. But I would say that their split of currencies is actually similar.

And just if I may, you have stopped disclosing regional or geographic revenues, right? This is no longer available, right?

We did not show this, in fact. As I mentioned this that, let's say, for Bystronic, it's 50% for Europe, 35% North America and let's say, APAC plus China, it's 15%.

[indiscernible], Commerzbank. I would like to go back to the question of -- I'm sorry, I forgot your name. You mentioned that now you're looking for more sales to coming back to a positive financial result. Well, more sales also says that you have more bills to pay and you have more payouts. For you, where is the point where you can get a positive result? What is the target of sales in total, where you can say if you have those sales, then we have a positive result?

So you're looking for the breakeven point, right?

Yes, yes.

Let's say, we will still have some positive impacts from the restructuring and not a huge amount, which will be in '26. And I don't know if you should say it, but if we can get somewhere between CHF 650 million and CHF 700 million, then, let's say, excluding Rofin, if you add Rofin, then for sure, we will be positive, yes.

But I think...

With CHF 650 million of sales, you can reach additional EBIT of...

Without Rofin, yes.

[indiscernible] million. In combination with ongoing savings still plus roughly CHF 40 million more in sales. Yes.

Yes. Maybe a question from my side, [ Mark Bosa, VBAG ] as well. Concerning the change from like single machine to projects, and you talked about the sales recognition, I would wonder about the cash flow side. Can you elaborate on the shift towards like prepayments, then milestone payments and then payments in percentages on the time axis in order for us to understand?

I mean this is absolute no change there. We are quite safe, I would say. I mean we are getting usually around about 30% down payment and 60% before delivery. This will not change even if we sell a system. So basically, we have 90 -- usually, in average, we have 90% of the cash in-house before we deliver. We have only a few big OEMs like John Deere, where we might make an exception. But in general, we have 90%. There is no shift even if we go for systems. And we are not aiming to change yet to POC or whatever. So what we are doing with the sales recognition is not in any connection with the payment and not in any connection with the customer.

And this is probably an important message, right? So payments is one thing and, obviously, sales recognition is a different thing.

And then just to come back to the previous question, the CHF 650 million breakeven on an EBIT basis or on a net basis?

On an EBIT basis.

EBIT, okay. I might have missed it, but the midterm guidance, you didn't reiterate that, that still stands.

It stands, yes.

5% to 7%.

Yes.

Okay. And a detailed question, just out of interest, you mentioned data centers were a big supportive driver this year. How much of sales does that make up of orders?

I mean we have -- I would say it's difficult because many of our customers are supplying parts. I mean not 100% of their volume goes only to data center, right? But I mean this would be a rough estimate, but I would say 10% of the System business. So overall of the group, we are talking about 6%, 7%. And why we did mention it is especially for the large Tube machine where we got large orders last year because of data centers in the U.S. really, which are really -- as on the Tube, I can say there, we have a few projects dedicated only to the build of data centers. Whereas on the flat sheet metals, it's a product mix, right, which is difficult to predict.

I would still have another question concerning the visibility due to the business kind of shift towards more project orientation that is longer lasting, but where visibility should increase, no? Is that correct?

It is correct, right? So we have a much better visibility. That's why we are cautious. So we see the project. We have a kind of a better planning, but it requires a longer waiting because the customer, they plan for a longer time instead of buying a single machine, right? So this is different, but it's the world I'm used from my past. And again, this is the only -- there will be a kind of a time until the shift is done, right, especially net sales, right? And that's why I look very much on the order intake.

And concerning the capital employed, there is a little change there, no? Even though time...

There should be no change, no. Let's say, the volume per project is obviously bigger than selling a single machine. But from -- you mean now the working capital impact should be really minor.

Okay. Do you consider factoring solutions in order to smoothen out certain balance sheet days?

If you consider what?

Factoring -- using factoring, for instance. That's not a topic.

No. Right now, not. It's also an expensive financing method, right? Yes.

Do we have any questions in the call? We have no questions from the phone so far. We have a last -- second registration from Walter Bamert, Zürcher KB.

Can you help me with modeling the Rofin? So you gave CHF 80 million revenues. And I think the company has a decent profitability stand-alone. But perhaps you have purchase price allocation issues and perhaps also you reinvest some money to put it on, let's say, more fit for the future with more R&D or whatever. So that could also lead to a lower profitability. So what should we expect for this year and, let's say, 5 years out in the future?

Okay. Walter, let me answer on this. You bring it to the point, right? I mean when we made the announcement of the acquisition, I said it has to be higher than our corridor. Coming back what [indiscernible] asked, right? So of course, it should be higher than what we expected in the midterm for Bystronic. It's a completely different market. For the first year, I would say we have integration costs. We will have some investments, and we should not forget that partially it is a carve-out. So the big chunk is coming, of course, with the company we bought in Germany. But the rest of the world is a carve-out. It's combined with certain costs. But even though I would say we are in the lower range of the midterm guidance we gave even already for the first year. This is our target.

Okay. And investments into the future, any plans are made already?

Can you repeat it? I missed the first question.

Will you step up the R&D, for example, of this company or other activities where you say we need to invest first...

Yes, definitively. I mean the first target is to have a smooth integration, so a smooth decoupling from the owner from Coherent. I think this is the first target. So for me, it's like taking a baby out of an incubator, cutting all the tubes and see whether it still can walk. We are pretty confident. So we will be very cautious at the beginning. But yes, we see huge synergies. And as I mentioned, they are bringing technologies we do not have yet in-house like marking, laser marking, laser drilling, which can be combined to our products. So it's not only that we have a market access to new markets like semiconductor and health care. But of course, in terms of R&D, we will invest quite significantly. I think Bystronic always spent a lot of money. I think we can ask our Chair. I think we are quite on the big side in spending in R&D. So innovation is key. So we see huge potential there, and we will invest, yes.

Just for online, it's better.

Yes, to be on the safe side with microphone. Conceptually speaking, you're moving up the share of automation business compared to single machines business. In this transition and kind of outside-in perspective is a little bit clouded when you go into project-related and execution-related business mix. How should we look at the risk inherent strategy compared to selling standard machines basically?

It's always risks and chances, right? The risk is that we have an organization who cannot carry projects, that we have an organization who does not have the visibility or the transparency to track the project. And the chances is we have a great CFO now who helps me to bring me this transparency. I know the System business quite well. I think next week, there will be the announcements even from Andritz, and I think you will see great numbers, so you can make good money with projects. We are benchmarking even with peers and so on. And the biggest chance I see is that we have a kind of a USP with our solutions, especially driven by the software, right? And the difference is, Torsten, nobody of you asks how much the costs are of the engine of your car, right? So basically, you -- either you buy BMW or BYD or Daimler or Volkswagen, and this is the price for the system you get, right? And you want just to drive from A to B. And that's exactly what we have with our customer. So my expectation is that we -- even on the margins of the single machines, which are still part of the system. So we should not forget, we still have the same components combined together to one system and nobody talks anymore about the single engine, which is built in there. So that's a big chance.

For those projects, not for now, no. But this would be like the path to evaluate, right?

As I don't know, you stole the microphone from Torsten, maybe. Okay.

He didn't want.

One question from the chat from Aurelien Sivignon from ODDO BHF regarding Rofin and diversification. After Rofin deal, would you say it's time now to focus on consolidation and integration? Or do you see further opportunities for diversification in 2026?

I mean, we talked a lot together, right? If I would be alone, Heinz, I would drive the diversification even more, right? And I'm always saying, "Hey, of course, we have to make an integration. Of course, we have to stabilize the business, but I'm always saying opportunities are not always there." So if the opportunity is coming tomorrow and it is the perfect right fit, then we have to do it, right? It's not that we can say, "Okay, now let's stabilize everything and so on and in 3 years, we start again." The opportunities might not be there in 3 years. So that's my clear focus. Of course, you need to have a stable management, which we have today. I think, again, we still have negative numbers, and I'm absolutely not happy. But if you see the change despite the lower net sales to this profitability, negative profitability we showed, we need a big, big step in the right direction. So -- and now we can always say, "Let's wait, let's wait, let's consolidate and so on." Again, if there is the right opportunity, we will make both decisions and try to make it. And I can only say that the cooperation with the Board of Directors is great in this direction as well. So we are perfect in time.

I guess there are no further questions. Exactly, yes. Very good.

Perfect. So anything I have to say, just thank you very much. It's, by the way, a pleasure to see so many attendees here, and thank you very much. I mean we will anyway stay connected. Please feel free to reach out to us if you have any questions. Javier is here, and we will have still the chance to talk for out here, right? I think there's an up/low. And yes, thank you from my side.

Thank you so much.

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