IMPROVED MARKET POSITION AND GROWTH
The 2018 business year was characterized by continued organic growth in all segments with a gain in market share. Based on the successful integration of the Austrian Haas Group, Bühler established a third business pillar: Consumer Foods, effective January 2019. With this strategic step, we improved our market position in this important growth market. Haas already contributed positively to Bühler’s performance in the first year. While maintaining a healthy financial position, our profitability margin stands slightly below last year’s level and does not fully reflect the earnings potential of the company.
The leading technology and market position of the Bühler businesses was further strengthened by ongoing, substantial investments and accelerated development with a focus on digital platforms and services. It is for this reason that we have made extensive strategic investments in recent years, for example, in the construction of our new CUBIC innovation campus and the application centers in Uzwil, Switzerland. We have also invested in our global production network, opening a battery application lab in Wuxi, China; moving our Die Casting revision business to a new location in Brescia, Italy; and modernizing our Uzwil site. Despite the somewhat gloomy economic conditions of 2018, we remain optimistic that we will continue on a sustainable course of economic growth.
All businesses showed organic growth
All Bühler businesses have shown a continuation of organic growth by increasing their order intake, the most important indicator for growth. With a growth rate of 3.2%, the order intake of Grains & Food (GF) again surpassed the CHF 2 billion threshold, reaching CHF 2.2 billion. The order intake of Advanced Materials (AM) increased by 7.3% to CHF 721 million, and Haas contributed CHF 382 million. Turnover grew even more strongly: GF by 9.2% to CHF 2.2 billion, AM by 5.6% to CHF 705 million, and Haas added CHF 373 million. As a result of the combined organic and acquired growth, we were able to raise order intake on the Group level by 17% to CHF 3.3 billion compared to the previous year. Turnover increased by 22% to CHF 3.3 billion, which resulted in an order backlog of CHF 1.92 billion (+5.9%).
All regions contributed to this positive performance, whereby turnover growth in Europe (+28%) and Asia (+40%) stand out. Europe accounts for 31% of the global turnover and Asia for 30%. This is all the more encouraging as it demonstrates that Bühler has the ability to harness the potential of developing markets as well as those that are more saturated. Our geographic range is broad and well-balanced: Europe 31%, Asia 30%, North America 14%, Middle East & Africa 14%, South America 6%, and South Asia 5%.
Structurally, our portfolio mix also achieved further gains. Services (+19.5%) and the single machine business (+5.7%) together account for turnover of CHF 971 million. The ecommerce platform, myBühler, is developing into an important service business. At the end of 2018, 4,000 Bühler customers were connected. Turnover also increased by 25.2% in projects and plants.
Strong financial position remains
EBIT increased in absolute terms by 13% to CHF 231 million, which represents an EBIT margin of 7.1% (previous year: 7.6%). Profitability was impacted by necessary adjustments at our Changzhou, China, site. After years of overproportional growth in China, this move ensures its alignment with Bühler’s global standards and systems and sets the foundation for further expansion. Without this one-time effect, the EBIT margin would have been 8%.
With a slightly improved tax rate of 20.1% (previous year: 20.2%) and a financial result of CHF 4.6 million (previous year: CHF 13 million), net profit grew by 9% and reached CHF 188 million (previous year CHF 173 million). Starting from a healthy level, Bühler’s financial situation remained strong. The expenses for research and development (R&D) were further increased to CHF 145 million (4.4% of Group turnover) in line with our strategy to be an innovation leader in our industries.
The investments into the asset base were also expanded to CHF 118 million (+18%). Operating cash flow increased by 28% to CHF 202 million. Net liquidity remained high at CHF 448 million (+1.1%, excluding the corporate bond). The equity ratio dropped slightly to 42.2% (previous year: 44.5%) mainly due to effects from the Haas acquisition.