Orell Füssli Results for 2020 Demonstrate Resilience

The COVID-19 pandemic is a prime factor in companies’ financial results for the last year, and for most its impact has been negative. Orell Füssli’s results are no exception. In an opening statement it said the company ‘held its own in a difficult market environment in 2020. Although sales and profitability were lower than in the previous year and cash flow was negative due to high capital expenditure, our balance sheet allows us to pay a dividend to our shareholders’.

A robust business model, solid balance sheet, comprehensive crisis management as well as flexible and committed employees were credited with limiting the impact of the pandemic on its business.

Revenue fell by 7.9% to CHF 218.6 million in 2020, operating profit (EBITDA) by 18% to CHF 24.1 million and EBIT excluding special items by 27.9% to CHF 14.2 million. However, net income for 2020 of CHF 15 million exceeded that of 2019 (CHF 10.9 million) due to tax and financial effects.

The Security Printing Division’s revenue fell by 13.7 % to CHF 87.3 million in 2020 and its operating profit (EBIT) by 67% to CHF 5.5 million, a reduction in its operating margin from 9.1% in 2019 to 6.3% in 2020.

The company indicated that the fundamentals of the market for banknotes and value documents remained robust, with both markets showing growth of 4% and 6% respectively; the growth in the former was probably due to the use of banknotes as a store of value, a common trend in times of crisis.

However, the company noted that the business environment had become noticeably more challenging in recent years, with overcapacity in security printing leading to price pressure. In the year the new banknotes it produced for Costa Rica and the Bahamas were successfully launched and work on the next generation Swiss passport continued.

Despite COVID restricting travel to visit potential and existing customers, new orders were obtained in the export business which amounted to 63% of the total volume. However, this was not enough to compensate for the completion of the first issue of the 9th Swiss banknote series in September 2019, hence the 13.7% fall in revenue in 2020 compared with 2019.

Meanwhile its subsidiary Zeiser, which specialises in numbering and serialisation, was able to meet and beat expectations despite the challenging market conditions and following the sale of part of its non-security related business the previous year. Net sales were down by 15% to CHF 24.8 million, but operating profit (EBIT) was up by 6% to CHF 5.1 million, corresponding to an EBIT margin of 20.6%.

Sales in its banknote numbering and passport customisation businesses were both at a high level, and throughout the course of the year Zeiser was able to acquire an above-average number of orders for retrofitting numbering machines for banknotes and for new investments in the production of passport. Stable sales of banknote numbering systems is expected in 2021, with a significant increase in inkjet serialisation.

Orell Füssli is seeking to develop other opportunities in security, such as the protection of physical valuables against misuse and counterfeiting and the management and use of identities, which it perceives are gaining importance with digitalisation.

Another area of interest is the growing demand for online services where the digital ID is a key factor. This was behind its acquisition last year of the e-government solutions provider Procivis.

Forecasts for operations in 2021 are impaired by the continued disruption caused by COVID-19. However, Orell Füssli anticipates that security printing sales volumes will be slightly lower given the product mix of the current order book.

Changes to the Board

Separately, Dr Anton Bleikholm has decided not to stand for re-election to the Board and as Chairman at the upcoming AGM. He has proposed the election of Board member Dr Martin Folini as the new Chairman and of Johannes Schaede, Technical Director of Koenig and Bauer Banknote Solutions, to the Board. The AGM will take place on 11 May.