Packaging Technology

Securing a successful future with the PA 2020 strategy Speech by Friedbert Klefenz,
President, Bosch Packaging Technology,
on the occasion of the press conference in Düsseldorf
May 8, 2014

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  • May 08, 2014
  • Packaging Technology
  • Presentations

press release

Ladies and Gentlemen,

I would also like to welcome you to Interpack 2014, and to Bosch Packaging Technology's annual press conference.

Today, we would like to give you an overview of our performance. We will review the 2013 business year and our achievements until now. At the same time, Interpack is well known as an event that takes a look at things to come. Indeed, it addresses the trends and developments that will have an impact on our industry in the coming years, as well as our objectives for the future. As market leader, it goes without saying that we are keen to share our view of things with you. And I can already say this much: things are looking good for us. Just as our industry is growing, we also aim to grow – but at a significantly faster pace.

Bosch Packaging Technology grows by 22 percent
Fast growth doesn't only apply to our plans for the future. If we look back at the past year, we see that our growth was already



rapid. 2013 was a very successful year for Bosch Packaging Technology. We generated sales of 1.1 billion euros. This figure was some 200 million euros higher than our 2012 sales. This represents sales growth of 22 percent. After adjusting for consolidation effects, we achieved 6.4 percent growth. Without adjusting for currency effects, our sales were 10 percent higher than the previous year. We also grew considerably faster than the relevant market. As a result, we were able to further strengthen our market leadership once again.

In 2013, our workforce grew by 12 percent. Around the world, our team of more than 5,600 associates ensures that our work reflects our philosophy: processed and packaged as promised.



As our order intake shows, our workforce's outstanding efforts are paying off. At the end of 2013, we had 1.1 billion euros on the order books, 131 million euros more than the previous year. I would like to take this opportunity to extend my sincere thanks to the entire team for these good results. With their excellent performance, all of our associates contributed to our success.

At Bosch Packaging Technology, good results always mean two things. The first is obvious: we did good business, we have a strong strategic position, and our customers have embraced our products, services, and solutions.

The second goes beyond the walls of our company and affects millions of people around the world. Good business results also mean that a growing number of innovative packaging technologies are being used across the globe. In turn, this means that more people have access to food and medication packaged in a manner that ensures products are clean and safe.

Save Food – Invented for life
This development is very important to us. For this reason, we have been involved in the "Save Food" initiative from the start.



It was launched here in Düsseldorf three years ago. As part of a program that goes by the same name, actors from politics, business, and non-governmental organizations are fighting food loss and food waste. Today, a third of the world's food goes to waste, often as a result of inadequate packaging and storage. A third of all food – enough to feed the hungry around the world.

Protective packaging can improve the situation, as the example of Indonesia shows. The country is made up of more than 17,000 islands. As a result of this geography, transport is difficult. Even supplying basic staples such as flour is complicated.

It is common for Indonesian traders to stand at the country's markets with large, 25-kilogram sacks. Flour is then sold in individual portions to each customer, and sacks of flour are open for days. In a tropical climate, inadequate hygiene and insects pose a significant threat.

A mill in Makassar, a city of more than a million inhabitants in eastern Indonesia, is a shining example of how things can be done differently. Here, Bosch packaging machinery fills 150 tons of flour into one-kilogram bags each day. This ensures hygienic production, clean filling, and safe packaging. As a result, the ground wheat can be stored for a longer time without problems. Moreover, it can be transported over longer distances. Flour from Makassar is now supplied to 25 million people in Southeast Asia.

From safely packaged food to precisely dosed and hygienically processed medications, we are proud to be helping improve the supply for millions of people. In turn, this makes a significant contribution to social well-being. It also reflects the Bosch leitmotiv "Invented for life".

Regional shifts in the market for packaging machinery
The Indonesian example not only illustrates that a safe supply is increasingly possible. It also testifies to the regional changes in our sales markets. Today, Europe is by far our biggest market. In 2013, we generated almost 40 percent of our sales here, compared with 30 percent in Asia. Another quarter of our sales were generated in the Americas. In terms of regional growth, we experienced the greatest increase over the previous year in North America. Here, sales accounted for 12 percent of our total sales growth.



We aim to continue growing strongly in established markets such as North America and Europe. But the significance of the Asian markets is growing. By the end of the decade, we intend to generate far more than a third of our sales in Asia. Africa and the Middle East are also becoming more important for us. By 2020, we aim to make almost ten percent of our sales in these regions.

This means that the overall market for packaging machinery will keep growing. However, in the coming years, there will be a shift in the importance of regional markets.

Pharma and food still the biggest drivers of growth
Our distribution of sales per segment is also shifting. Last year, we generated more than 90 percent of our sales in our two largest fields of business: the pharmaceutical and food sectors. In the latter, sales were mainly concentrated in the dry food segment. The success of these two sectors was decisive for our growth. The pharmaceutical arm of our business did especially well, with a nine percent increase in sales.



For the coming years, we expect the pharma sector to keep growing strongly. This will be the result of new developments from research-based pharmaceutical companies and the growing importance of generic drug manufacturers. At the same time, this field of business is placing growing demands on the packaging industry as a result of increasingly complex substances and the ever-greater demands of manufacturers and lawmakers. This calls for major innovative strength. Last year, Bosch Packaging Technology spent about 4.5 percent of sales on research and development. This placed the company at the upper end of the industry average once again.

Over the years, we have built a sound reputation as a reliable partner for the food industry, too. Our customers in this sector appreciate our expertise in the area of processing and packaging technology. For this reason, we have set ambitious goals here as well. Among other things, we have placed a strong emphasis on expanding our business in the areas of liquid food and selected beverages. In the liquid food segment, we aim to significantly increase our share of sales in the future.

One stop shopping: a partner for all projects
Ladies and gentlemen, in addition to a shift in regional markets and fields of business, the nature of our business will also change. Full-service packages are becoming ever more important. Increasingly, customer expectations can only be met by companies with broad expertise and a strong regional presence. As market leader, we are well prepared for the developments ahead. We offer a growing number of solutions that can be flexibly combined with one another, and which our customers can purchase from a single source.

These include single units, modular systems, and full packages. Our portfolio comprises everything from processing and packaging machinery to technologies for product handling, automation, and inspection.

In short, we offer true one stop shopping. The customer contacts us once and receives, if desired, a full turnkey solution for their project. This not only includes machinery and equipment, but also the planning and design of production lines, as well as assembly, maintenance, and service.

Largest order in the company's history
Last year, we received a very special order that showed what these solutions could look like - and it happened to be the biggest order in our company's history. We are currently building two packaging lines for a biscuit manufacturer in Mexico, each of which is 150 meters long. Each line operates with six horizontal filling and sealing machines with fully automatic cartoning, and each line can package more than 17,000 biscuit per minute. In other words, if you eat one biscuit



a day, the machines can package almost fifty years' worth of biscuit in just one minute . A cookie monster's paradise!

PA 2020 strategy
Ladies and gentlemen, as you can see, all signs point to change. The entire packaging machinery industry is in a period of transition. At Bosch Packaging Technology, we do not simply want to react to this change. Rather, we aim to help shape it.

As you know, we intend to increase our sales to 1.5 billion euros by the end of 2015. Last year's figures show that we are on the right path.

But our plans go well beyond 2015. Last year, we defined our strategy to the end of this decade, our PA 2020 strategy. Today, we are unveiling the main contents of this strategy to the public for the first time. It comprises two main pillars: we aim to expand both our markets and fields of business.

On the expansion of markets: On the path toward 2020, we continue to systematically build on our market presence. In the future, Europe and North America will continue to be global drivers of innovation, and both regions have a sound economic base. In addition to this, we also expect to see above-average growth in Asia and Africa. And we aim to open up markets in Eastern Europe and Latin America as well. In the course of this development, new locations will be integrated into our network. Primarily in Asia, existing locations will be expanded. Our goal today and for the future is to achieve a strong, networked, and international assembly, service, and sales network.

Allow me to say a few words about the expansion of our fields of business: we intend to build on our offer and our presence in the pharmaceutical, food, and confectionary sectors, and perhaps also in related fields. In addition, with acquisitions and innovations, we will further enhance our technical expertise and value-added chain. We also aim to offer our customers turnkey facilities even more frequently as part of comprehensive packages. With these packages, customers no longer need to plan and build their facilities. Rather, they can start production immediately after the handover. Lastly, we plan to venture further into the area of packaging materials, consumables, and packaging solutions. You are probably already familiar with our valves for coffee packaging or our PreVas single-use filling system for the pharmaceuticals sector. PreVas stands for pre-validated, pre-assembled, and pre-sterilized. With the help of this innovative single-use filling system, valuable active substances can be bottled very flexibly with a high hygienic standard.

Ladies and gentlemen, allow me to mention that we want to achieve these targets while significantly increasing our profitability.

Expressed in Twitter talk, our aims could be summarized as follows:

#PA2020strategy: opening up new markets and fields of business; significantly increasing sales and headcount, improving profitability. #interpack

As you can see, we are determined to keep building on our leading role as packaging industry supplier, and on setting new benchmarks in the sector. Since this also applies to our machinery, Mr. König will now present a few of our technical highlights.

We look forward to your questions following his presentation.
Thank you.

Based in Waiblingen near Stuttgart, Germany, and employing 6,200 associates, the Bosch Packaging Technology division is one of the leading suppliers of process and packaging technology. At over 30 locations in more than 15 countries worldwide, a highly-qualified workforce develops and produces complete solutions for the pharmaceuticals, food, and confectionery industries. These solutions are complemented by a comprehensive after-sales service portfolio. A global service and sales network provides customers with local points of contact.

Additional information is available online at www.boschpackaging.com

The Bosch Group is a leading global supplier of technology and services. It employs roughly 375,000 associates worldwide (as of December 31, 2015). The company generated sales of 70.6 billion euros in 2015. Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in some 60 countries. Including sales and service partners, Bosch’s global manufacturing and sales network covers some 150 countries. The basis for the company’s future growth is its innovative strength. Bosch employs 55,800 associates in research and development at 118 locations across the globe. The Bosch Group’s strategic objective is to deliver innovations for a connected life. Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm. In short, Bosch creates technology that is “Invented for life.”

Further information is available online at www.bosch.com and www.bosch-press.com, http://twitter.com/BoschPresse.

RF00224 - May 08, 2014

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