Letter to our Shareholders

In the year 2009, the “real economy” continued to be hit in an unprecedented way as a consequence of the financial crisis. The machine industry as a whole, along with Bobst Group, suffered heavily, not only in sales of new equipment, but also in the services area. Due to this drastic economic slowdown, Bobst Group witnessed a massive decline in its commercial activities. A significant reduction of orders, affecting all three business areas, impacted the turnover of the Group, which decreased by 35.4% to CHF 1'055 million in 2009, against CHF 1'633 million in 2008. For 2009, the Group recorded an operating loss of CHF 175.2 million, which includes CHF 69.1 million transformation and one-time costs. The Group’s net profit of CHF 55.9 million in 2008 turned into a net loss of CHF 160.7 million in 2009. Despite this very difficult economic situation, the year ended with some positive signs appearing in the market place. Customers are once more looking for funding to acquire new, technologically innovative equipment to reduce waste and cut set up times. The set of actions implemented in 2008 needed to be revisited in the light of the dramatic negative developments. As a consequence, a review of our way of doing business led to a profound reshaping of our approaches, entitled the “Group Transformation Program”. While the Board of Directors regrets that employees had to leave the Group in the course of this transformation process, it nevertheless wants to express its appreciation for their services over the years. The Group has taken its responsibilities to alleviate the human impact by implementing good social plans in all countries affected by the decisions taken. This transformation is ambitious in its search for synergies, growth, and simplification of processes. Once most of these changes have been achieved, the Group will have undergone a period of reconstruction and will then be able to restore growth and regain its profitability, provided the economy recovers. We expect this process to last until the end of 2011. However, we believe that in 2010 we may be close to an operational break-even – a challenging objective. To fully benefit from possible synergies, from all the Group’s competencies, and to lastingly reinforce the relationship with our customers, Bobst Group has reorganized its structure by technological processes within three Business Units (BU): BU Sheet-fed combines all the product lines of the folding carton and the corrugated board industries; BU Web-fed covers the activities linked to the flexible materials industry and the product lines Web-fed Solutions (previously Champlain in folding carton); BU Services expands Bobst Group’s services offering by developing the sales of supplies and by supporting the customers in their operational activity. This expansion increases exchanges and supports the work of the two other Business Units. The introduction of this new operating mode to promote synergies and provide better market monitoring, as well as the development of our customer services, will place these objectives within our reach. This new structure by Business Units and the improvement in our processes will provide our customers with extended service, advice, solutions, and follow-up, thus making Bobst Group the favored and lasting partner in mature as well as emerging markets. This is a key factor for our growth and our future success. The production footprint underwent major changes such as the closing of FAG (Avenches, Switzerland), the integration of Rapidex (Angers, France) within Martin (Lyon, France), and the planned introduction of the “lean” instead of “series” production concept, currently in a pilot phase. The move from our Prilly facilities to Mex (Switzerland) is progressing according to plan, and the “lean” production philosophy is expected to demonstrate appropriate savings and synergies. The Board of Directors will review and decide on the launch of this strategy during the first semester of 2010. We are aware of the effort and commitment which these changes require. They will deploy their full effect only if motivated teams support them. This transformation is based on the spirit as well as on the professional and human qualities of our personnel. This is what will assure our success in the coming years. In line with the new organization, the Group Executive Committee (GEC) has also undergone changes. As of October 1, 2009, two new members were appointed, Mr. Erik Bothorel for the Business Unit Web-fed and Mr. Pierre-Yves Mueller for Group Supply, Production and Logistics. Mr. Michel Fiaux left the company at year-end and Mr. Daniel Jourdan has become head of Martin (Lyon, France). We thank them both for their contribution. At the forthcoming Annual General Meeting of Shareholders on April 28, 2010, the mandates of Mrs. Maia Wentland Forte, and of Messrs. Ulf Berg and Charles Gebhard, will come to an end. Mrs. Wentland Forte will not present herself for re-election. She has been a Board member since 2006 and the Board thanks her for her valuable contribution over the years. In agreement with the Board of Directors, Messrs. Berg and Gebhard will be proposed for re-election. The Board has asked Mr. Gebhard, born in 1941, to stay on for another term of three years due to the Group transformation currently taking place. In view of these exceptional circumstances, the Board of Directors has adapted its board regulations to authorize a member aged more than 70 years, the age limit for Board members, to stand for re-election for another term. Our industry will take some time to recover, and 2010 will still be a difficult year, even though global consumption should increase in the next quarters. We believe that we have taken the necessary measures to keep our best competencies, while bringing the Group to a break-even situation. Based on this difficult year 2009, the Board of Directors will recommend no dividend payment. Our major strengths are people and technology, our Group culture, and the strong relationship we have with our customers. With the right leadership and spirit, we will make a successful transition. On behalf of the Board of Directors and the Group Executive Committee, we warmly thank the management and all employees for their outstanding efforts and commitment during this very unusual and challenging year 2009.
Charles Gebhard	Jean-Pascal Bobst
Chairman of the Board	Chief Executive Officer