Shaping the Future of Packaging - CEO Jean Pascal Bobst

Thank you very much for your time and invitation. It's a pleasure and an honor to be with you. History, but I hope to be the future as well. Being the fourth generation, you carry on the legacy. You have this legacy as a major asset to continue to build relationships on the market. On the other side, the legacy has some weight because we will speak about digitization, about the future, and to move towards this revolution requires a lot of vision, strategy, leadership, change, and this is all about Bobst. Fourth generation means also we prepare a lot for the next generation. We love people, we have very strong human values, and we look at mid- to long-term results, which I believe is an asset for our employees but as well for our clients and the industry overall.

Bobst is a 1.6 billion turnover in Swiss francs. It's 5,500 employees worldwide, more than 13 production centers where we produce machines from Europe to Asia and Brazil, and more than 30 machines installed worldwide.

Thank you. This is really a kind of all-encompassing slide giving us the way in which the organization is seeing the future of the packaging world. This is the slide we launched last year, as we should have gone all to Drupa but we couldn't, so we announced it via webinars and various one-on-one meetings with our clients. It's really about shaping the future of the packaging world. Bobst has this heart, this passion to enhance and help the packaging supply chain to be transformed—not in an arrogant way that we know everything, but our strength is that we serve four industries: the label industry, film industry, folding carton, and corrugated board industry, and this is a unique position. When you want to serve the brand owner up to the consumer supply chain, what we need to bring is no longer machines only, but full solutions. Bobst is developing solutions to start from the pre-press world up to the end of the production lines. These cornerstones and objectives are really the same between brand owners and consumers. They all want quality, efficiency, control, sustainability, and proximity. As a consumer, we want almost the same as the brand owner—when we buy a product in packaging, we want proximity, right quality, efficiency, and so on. Now, how Bobst can help and support our clients to provide these elements in each box, each pouch, each label, you can see that on the bottom: our strategy is based on four pillars—connectivity, digitization, automation, and sustainability. Each of these streams will be the main strategy of Bobst over the next years to support the implementation of this vision. The overall architecture which will be an enabler of this vision is Bobst Connect. Bobst Connect is an IoT platform, part of clouds—it's not a proprietary cloud, it will be part of a number of systems on the market. It's a competition, but that will be the enabler to connect pre-press to the finished good, to make each box unique, to move from the PDF to the Twin PDF, with everything encompassed—machine, service, data, connectivity. In a nutshell, this is our vision and our main driver for the strategy for the years to come.

Yes, absolutely. As we have a very large and comprehensive product portfolio—we speak about more than 130 different types of machines within these four industries—we want to come with comprehensive solutions. For example, for labels, to start from the creation, from the PDF, until the end of the creation of the label with 100% quality control between PDF, so the converters or brand owners in the end can really track and trace every individual label if need be. Of course, because clients don't have only Bobst machines, also competitor machines, and that's why it should be an open platform. For the client, we want to help them optimize their production flow on their site with all their different pain points and challenges, with full digitized presses or machines, hybrid presses, or analog presses for the last 10, 15, 20 years.

It's a circle. It's a way to also take our responsibilities on the market as one of the key players, key leader in the packaging and label industry, to be a strong supporter of sustainability and the global environment. Because one of the biggest drivers—we hear a lot about flexible material being bad, because we want less plastic bags and so on. In the end of the day, plastic is vital for food. Food will not be able to survive without plastic. Our contribution is to be part of this new research to recyclable plastic, and or to have a metalized paper to be able to have recyclable substrate for food which will replace some of the plastic impacts. So we do have responsibility towards society, our clients, and the brand owners, and this is what we try to optimize and develop in the years to come.

We believe over the next five to ten years, everything which and more and more which can be digitally printed, laser-cut, or converted will go that route. If today we already see a very strong trend in the label industry, which is the first and foremost digital printed industry, we can see that certainly film, folding carton, and corrugated will follow as well. We have three major success factors to see the industry shifting towards more digital printing. One is the uptime of the equipment. As of today, to come with real high productivity machines in digital printing is still a challenge. We said very clearly already in mid-2015 when we launched our first stack-to-stack Geneva corrugated machines that we were launching, but then we stopped the product because the uptime and the reliability was not good enough to have a sustainable TCO. The second parameter will be to have a comprehensive workflow and software solution. And of course, for Bobst, it's a revolution. For some competitors, it's where they come from—and I will not name them, but they know it is their DNA. For Bobst, we come from the hardware, from the die-cutting, from the printing side, and we need to have a comprehensive solution from pre-press workflow, recipe management, and alike. This is a major transformation for us. And third is to be able to guarantee the time to market for our clients and come with new business models. These new business models, every industry—folding carton, corrugated, labels, or film—will have their own route, as well from region to region, because what works well in North America is different in China or Europe.

Yes, we see very clear trends pulling more into sustainability and short runs in some areas. If you look at short runs, Europe is not the same as America. The consistency and the willingness of society to implement new packaging and have more sustainable packaging, which in the end of the day is way more expensive, is of course different from one region to another, so it's difficult to be very precise today in the very short term. But overall, we see folding carton and corrugated certainly taking over and gaining momentum versus flexible material for the sustainability and recyclability aspects. And the label business continues to grow and have strong support globally.

Step by step, but on the other side also not as fast as we might want. Again, because their current systems and current product portfolio, which Bobst delivered for decades, is very, very efficient. And today you need to look for new business models, new segments. For example, web-to-print ten years ago was none. Today it's 100 million, 300 million, 500 millions in Europe—it's huge. So you see opportunities, and those newcomers will drive change faster than others. On the other side, never forget what we call traditional will of course become more and more competitive. The aim of the game is to keep current technology and move that towards much more digitized, automated, and connected machines, so we can still compete against the newcomers coming in the scene with novelties. Both worlds will join, and eventually current technology will survive and have good living for the next years to come, but more and more fully digitized solutions will take over, as I mentioned, the availability and TCO will improve, and the business model will change, and therefore this new technology will be required.

Bobst is really committed to a full digitalization and transformation of our company and this vision. We want at least 50% of products to have achieved this vision by 2025, which represents more than 2% return of sales of investment every year for the years to come. And this is a massive commitment. Thanks to being a family-owned business, we have the strength, the passion, and the long-term vision to implement this vision. Because of course the return is expensive and we need to demonstrate the return in the end of the day. Absolutely. But we do believe that this comprehensive solution will bring the added value to our clients and in the end of the day to the brand owners, and that will make Bobst quite unique to support this transformation in the four industries.

Yes, it's an investment from both sides, of course. It's a real commitment. But truly, we want to shape, we want to change—we don't want just to make it slightly better. And for that you need the full trust, full confidence with clients to fail, to start again, to succeed together, but also to accept failure. And this is what makes our life so interesting and passionate.

As a person, yes, absolutely. As an organization, maybe not strong enough yet, because people are scared to be judged and fail. In Europe, it's also a question of culture. In America, it will be no problem—great, let's go for it. In Europe, with our DNA and history, it's oh, it's so bad. So it's not only a company culture, it's also our roots, our soul, our history. However, this is what we like to embrace—to take more risk and try out. Again, the Geneva project we stopped for the corrugated—we are coming back now with a new solution. It was very difficult, people were shocked, clients as well, but I prefer to say we stop, we start again, we learn, and hopefully with the right solution.

We really believe by being a leading supplier—when we say leading, not in an arrogant way, but it's about putting first the relationship with people, so putting the human in the center of everything we do to perform. This is our strongest asset. And then of course to be number one, number two, because we want to be able to demonstrate and lead the path forward. And therefore financially to have the best profitability. When you look at the performance of the group financially over the years, if you take out the huge investment we have made in digital, our performance is very, very strong. And that helps us to continue and go through the cycles of crisis, because the last ten years we had already four or five crises. Lehman Brothers, crises of exchange rates, 2011-2015 for stress-based operations, and COVID last year. And when you look at our numbers of last year, they are very pretty robust. Can we be very happy? No, you can always do better. But we made more than 3% return of sales and a good, small but good profit, net results, while investing more than 40 million Swiss francs per year. So I think this is strong, and this is my vision and this is my motto for the people: people, knowledge, and passion.

We have learned some lessons. I guess really two scenarios for me. If we see a lot of bankruptcy of companies due to COVID, because of airlines not being able to fly, and restaurants and hotels, and a lot of industries which will suffer so much that the impact will be negative, then we might go into a very deep recession. If we don't have these in these industries—which I have no clue what will really be the end result impact in the next six to 18 months on the economy, on unemployment and so on—then we can have a rebound pretty fast and very strong, because consumption is there, because cash is available, because technology is ready to support growth, because China is looking for minimum 6 or 8% increase this year in GDP and so on. So we do see very positive signals on the market.

I would say to my clients: let's be ready to discover a new Bobst. To discover that every semester, every year, Bobst will launch great novelties, and Bobst will be a really fully digitized company by 2025. And this vision of Bobst Connect should be the enabler, the cornerstone of the strategy, while implementing new business models. And we need you as partners, your clients, to help us develop together the right business models per industry—what is right for folding carton, for label, for film, or for corrugated. We know it's different, but we know we are all human, we know very well the full supply chain in each of these industries, and we are passionate to bring the right solution to you.

Me too, I hope a lot, and it was an honor to be with you today. Thank you very much.