ANNUAL REPORT 2017

Innovations for a better world.

DRIVING THE FUTURE

SteeringcolumnEcoline 84

WE DRIVE THE FUTURE

BÜHLER IN AUTOMOTIVE

Most people are aware of Bühler’s position in the food and feed industry. But did you know that over the years, our Advanced Materials (AM) segment has become a relevant partner of the automotive industry? Around 60% of the AM business is associated with this industry. 2017 has been a very successful year for AM – which is why we’ve made it the focus of this Annual Report.

Steering columnEcoline 84 die-casting machine

LED and laser light systemsSYRUSpro vacuum coater

Shock towerCarat 280 Compactdie-casting machine

Engine blockCarat 350 Compactdie-casting machine

LubricantsTriasthree-roll mill

Rearview cameraSYRUSprovacuum coater

CapacitorLeybold Optics CAP vacuum coater

Head-up displaySYRUSpro 1500 vacuum coater

Taillight refl ectorAluMet metallizer

These are just a few examples of Bühler’s AM solutions for the automotive industry.

GRAINS & FOOD

Bühler is an industrial process and technologies pro-vider for the food and feed manufacturing industries. We significantly contribute to safely feeding the world’s population as a front-runner in the global production and processing of wheat, maize, rice, pasta, cereals, cocoa, and coffee. Our Grains & Food (GF) solutions and technologies help manufacturers make safe and healthy finished products for human and animal nutri-tion. Learn more about where you will find our GF technologies on pages 32−33.

THE BÜHLER GROUP

Every day, billions of people come into contact with Bühler process technologies to cover their basic needs for food and mobility. We develop innovations for a bet-ter world with a focus on sustainability, health, safety, and energy efficiency.

ADVANCED MATERIALS

Bühler is a solution provider of die-casting, wet- grinding, and thin-film technologies for high-volume application areas, including the automotive industry, precision optics, opthalmics, electronics, paints, packaging, and inks. Our Advanced Materials (AM) solutions and technologies help manufacturers pro-duce higher-efficiency vehicles, keep foods safe, give prescription-glasses wearers improved eyesight, advance telecommunications, and make buildings more economical. Learn more about where you will find our AM technologies on pages 34−35.

Calvin Grieder, Chairman, and Stefan Scheiber, CEO.

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STATEMENT

GROWTH THROUGH VALUES

Dear colleagues, customers, and business partners,

Bühler developed favorably in 2017 thanks to substantial organic growth. Order intake increased by 10% to CHF 2.80 billion and turnover rose by 9% to CHF 2.67 billion.

For us, growth is not an end in itself. Instead, we view it as a genuine sign that our customers and the markets have responded positively to our mission of creating sus-tainable value. We have focused our efforts on achieving 30% less energy and waste in our customers’ process solutions – this is the target we set ourselves for 2020. We are fully aware that we have taken on a significant challenge.

With the introduction of numerous new technologies and solutions in 2017, we have moved closer to achieving these ambitious objectives. We have brought more than 50 new products to market that use less energy, reduce waste, and bring about greater yield and quality. The Bühler Networking Days held at Interpack in 2017 also centered on our overarching drive for innovation and sustainability.

An important strategic step in 2017 was the announcement of the acquisition of the Austrian Haas Group, the world market leader for biscuit, wafer, and waffle production systems. The integration of Haas will enable us to offer customers new, comprehen-sive solutions; and it will enable Bühler to secure a leading position in the attractive consumer food business.

Serving our customers every day in a better way has also driven our efforts to expand our service network and build our digital services platform. We have installed more than 100 service stations around the world, and our digital myBühler portal is already used by 20% of our customers − a significant step in real-time and proactive service.

Alongside other significant strategic developments – such as the start of construc-tion of the CUBIC innovation campus at the Uzwil headquarters and the moderniza-tion of our Swiss sites – keeping quality and the best delivery service in our hands has driven us to invest and expand our global local manufacturing sites as well. We built a new 200,000-square-meter site in China. In 2017, Bühler also took the plunge into the capital market for the first time in its 150-year history. We raised new capital with a corporate bond to increase our leeway to develop further projects. We are moving into 2018 with optimism and the objective of continuing our sustainable and profitable growth.

We would like to express our sincere gratitude to our customers, partners, employees and their families, and our owners. Our success is based on their trust and commit-ment. We look forward to continuing this close and fruitful cooperation in the future.

Sincerely,

Calvin Grieder Stefan ScheiberChairman of the Board Chief Executive Officer

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CONTENTS

CONTENTS

GROUP REPORT 17

OUR BUSINESS 31Bühler in your life 36

SUSTAINABILITY 95

GOVERNANCE 107

FINANCIAL REPORT 129

THE FUTURE OF MOBILITY 51

PARTNERSHIP WITH CUSTOMERS 65Lishen, China 66

City Group and Akij, Bangladesh 72

Africa Improved Foods, Rwanda 80

ZEISS Vision Care, Germany 88

Statement of the Chairman and the CEO 2

Highlights 2017 6

Interview with CEO Stefan Scheiber 10

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HIGHLIGHTS OF THE YEAR 2017

With the Chinese battery manufacturer Lishen, Bühler developed a new process for producing battery slurry – the core component of these energy storage devices. With the signing of the fi rst large-scale contracts in 2016, Bühler achieved a market breakthrough. In July 2017, Lishen presents Bühler with its award for Best Supplier for its performance.

Bühler begins modernizing its Swiss sites, with a focus on manufacturing and logistics.

February March April JuneMayJanuary

Bühler establishes the joint venture, Bühler Insect Technology Solutions (BITS), together with the technology start-up Protix to drive the industrial process-

ing of insects. In mid-year, BITS was awarded its fi rst contract for building a factory. It is scheduled to go onstream in the second half of 2018.

70 years ago, Sortex invented the optical sorting process. Today it is one of the leading providers of such systems. Optical sorting is an important process stage in ensuring food safety and in recycling applications.

Everything that can be sorted with Sortex technologies:

Agricultural seeds

Coffee Confec-tionery

Dehydrated foods

Fruits Grain Nuts Oil seeds

Pulses Plastics Rice Spices

Snacks Soup pasta

Tea Vegetables

1.1 m reachedBühler’s social media activities are popular.

20 inno-va tionsare unveiled at the event.

250 guestsattend the specialVIP event.

6 pro-cessesare shown at the event.

2017 NETWORKING DAYS @ INTERPACK

ANNIVERSARY: 70 YEARS OF SORTEX

BÜHLER INSECT TECHNOLOGY SOLUTIONS IS FOUNDED

BEST SUPPLIER AWARD FOR SLURRY SOLUTION

MODERNIZATION OF SWISS SITES

At the Interpack trade show in Düsseldorf, Germany, Bühler applies its Networking Daysconcept to create an industry platform for the development of sustainable solutions.

Food lossesand waste1.3 billion t/year

Adult black soldier fl y

Eggs

Larvae

Lipids and protein meal for animal nutrition

Fertilizer for plant nutrition

300 million t/year of nutrients could be recovered

Rearing residue processing

Larvae processing

s S

dslds

Fr

Co fec-

Plastics

Contionery

Osee

Rice

fee

its Oe

ui

Confery

offeeRearing

up to 80% nutrient recovery

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The new Bakery Inno-vation Center in Uzwil opens. Bühler customers can now test product formulas and processes, and develop solutions to consistently create top-quality products in this 1,000-square-meter facility.

Bühler celebrates 10 years of sending its apprentices in Switzerland abroad for a portion of their training.

Bühler announces that Haas, the Austrian market leader in the fi eld of wafers, biscuits, and confectionery production equipment, is joining the Bühler family effective January

2018. By teaming up with Haas, Bühler is in a position to develop and market complete solutions for making wafers, cakes, choco-late confectionery, and bakery products.

Bühler sends seven delegates to One Young World. This annual conference brings together the world’s most talented young leaders, encouraging them to bring about positive change.

July August September October November December

Apprenticeship locations abroad

Building work on the new CUBIC innovation campus begins. This project is the expression of Bühler’s commit-ment to developing innovations for a better world. The innovation center is connected to an application center to bring the worlds of engineering and business together.

Bühler founds a new business area: Digital Technologies. Its purpose is to develop new digital services and business models to keep our customers at the forefront of digitalization. One of the fi rst cloud services it launched is TotalSense, which enables rice processors to check the quality of their rice quickly, easily, and cost-effi ciently.

CHF 420 mThrough the issue of a dual-tranche bond, Bühler will enhance its invest-ment and acquisitions potential.

For the fi rst time in its corporate history, Bühler enters the capital market by launching a corporate bond.

200,100 m2

is the total size of the premises.

Bühler opens a new factory in Changzhou, China. This production, research, and de-velopment center specializes in processing equipment and plants for animal and aquatic feed and pet food. It will produce more than 10,000 machines annually.

BÜHLER BUILDS HUGE BAKERY

GROWTHIN ASIA

EMBRACING DIGITALIZATION

CONSTRUCTING THE CUBIC

FIRST CAPITAL MARKET ENTRY

YOUNG DELEGATES VISIT BOGOTÁ

10 YEARS OF APPREN-TICES ABROAD

BAKERY INNOVATION CENTER REOPENS

HAAS AND BÜHLER: TOGETHER THEY WILL BECOME NO. 1 IN CONSUMER FOODS

683,520 kgof dough per dayis the maximum total capacity of the bakery.

9–10 km of pipingare installed by Bühlerfor liquids handling.

4.5 km of pneumatic conveying linesare incorporated for dry materials handling.

1.2 km of aspiration linesare installed.

Bühler builds one of the world’s largest bakeriesin Wittenberg, Germany. The Lieken bakery has now started production.

Minneapolis

Joinville

Bangalore

Wuxi

LondonBraunschweig

Changzhou

Johannes-burg

HIGHLIGHTSBühler Annual Report 2017

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For Bühler, the strategic acquisition of Haas (effective January 2018) is a milestone in the development of its consumer food operations. Bühler is the market leader for manufacturing chocolate mass and finished products along the entire value chain. Haas is the undisputed leader in the produc-tion and manufacturing of equipment for wafers, waffles, biscuits, and con-fectionery – a very attractive market that Bühler is now part of as a result of this acquisition.

With this combination, Bühler can offer customers in the consumer food in-dustry new opportunities for innovation and growth. We can now also provide our milling customers with additional opportunities for diversification. Both family-owned companies have long histories, a reputation for delivering quality, and corporate cultures based on trust and a commitment to sus-tainability – an ideal starting point for successful cooperation and integration.

HAAS ACQUISITIONOne and one makes three

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HIGHLIGHTS

Bühler will open up its global network of around 100 service centers, application centers, and innovation partnerships for Haas customers and develop and provide complete solu-tions for the production of wafers, waffles, biscuits, and confectionery with chocolate and baked goods. Thanks to Bühler’s strong presence in Asia, new opportunities are opening up for waffle and biscuit products in this important growth market.

Like Bühler, Haas is a family-owned business with over 100 years of tradition. Founded in Vienna by a locksmith, Haas began producing wafer machines in the middle of the century. Over the decades, the company became a world leader in production equipment for wafers, waffles, hard and soft biscuits, ice-cream cones, cakes, and baked goods. With around 1,750 employees worldwide, Haas generates a turnover of EUR 300 million and is active in six countries with its own production facilities.

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“WE’VE MADE AN IMPRESSIVE LEAP” CEO Stefan Scheiber, in an inter-view with Head of Communications, Burkhard Böndel, explains how Bühler combines customer success and sustainability, the role of digital- ization – and why a strong corpo-rate culture fuels growth.

Mr. Scheiber, a lot is happening at Bühler: You acquired the Austrian wafer, waffle, and biscuit specialist Haas, you are building an innovation center in Uzwil, and you have successfully entered the electric vehicle battery market. That isn’t everything by a long shot. The list goes on. The first orders for insect processing have come in; we’ve launched the first digital service for the quality assessment of rice; we’ve opened a new factory in Changzhou, China; we are equipping our production with Industry 4.0 methods; and we have aligned our Grains & Food operations more closely with market needs.

Transformations like you’ve described don’t happen overnight.The foundations for it were laid years ago, and in many cases we are now reaping the benefits. Take batteries, for example. Five years ago, we began developing a completely unique continuous mixing process to produce battery slurry with our customers. The pilot line was launched in 2016, and in 2017 Lishen opened its new gigafactory in Suzhou using our new process.

How did you bring this change about? It’s due to our innovation culture, which is bearing fruit. Bühler reached a leading position in many areas over the past few decades. But that can quickly lead to a situation where people suppose that no further progress is possible. People then automatically adopt a defensive attitude, and they fight defensive battles. We’ve definitely broken through

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Burkhard Böndel, Head of Corporate Communications. Stefan Scheiber, Chief Executive Officer.

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this way of thinking. Of course, you can’t just change your market share as and when you like. But even where we’re already number one, there is so much untapped potential in the markets. We’ve now so deeply ingrained a motto into our consciousness that we’re making huge progress. We call that motto “play-to-win” – for our customers, the world, and also for ourselves.

In what direction is Bühler moving with this impressive dynamism? We have transformed ourselves into a solution provider for the sustainable production of food and feed as well as for applications for mobility and optics. We integrate value chains and processes with one point of contact between us and the customers. This way, we stand out from all the other providers in the market.

What are some examples of full solutions?Take the processing of grain, for example. We come in after the combine harvester with silos, conveying systems, load-ing and unloading systems. Then the raw materials go through the cleaning process, optical sorting to ensure food safety, processing with grinding and milling – through to packaging. We can supply our milling customers with plants for producing dough or pasta, and also waffles and biscuits.

In the Advanced Materials business, solutions consist of highly integrated die-casting cells, including all the peripher-ies, such as robotics. On top of that are our services, train-ing courses, and the opportunity to work together on solu-tions, such as new recipes, in our application centers. This comprehensiveness is one of Bühler’s unique selling points. We are extending it in a calculated way with new technolo-gies, application centers, and the innovation campus – the CUBIC – which is currently under construction. We no longer think in terms of organizational business areas, but from the customer’s perspective. We think in terms of pro-cess solutions, for example: from grains to pasta, or from aluminum to the finished structural element.

What do customers gain from this comprehensive approach?With our solutions, we can help our customers assure food safety, increase the quality and nutritional value of their products, reduce their energy consumption and waste, and increase their efficiency. Our sustainability objective is to enable our customers to use 30% less energy and produce 30% less waste. Such value is not created purely at the machine level, but rather by integrating value chains across entire systems. This becomes visible with major projects, such as the ones we are completing in Bangladesh. Here we are helping to fundamentally improve food supply throughout the region. For us, sustainability isn’t just an afterthought; it’s the starting point for our actions, espe- cially when developing new technologies.

What are other benefits of this setup?They are very practical: our customers don’t have to deal with 20 different people, just with one contact. That makes it easier to develop and implement complex projects. As we develop products further, we can synchronize and stan-

dardize individual elements strategically, with automation, for example. Of course, it’s only possible to offer these kinds of integrated solutions with qualified employees. This is why we run excellent training programs for our employees, and our customers also benefit from our offering. After all, top-range equipment needs to be operated properly to reap the most benefits. This training takes place in our global application centers, or the milling schools that we run on every continent. Which new opportunities does digitalization open up for the industry? We urgently need new technologies and solutions to make our world more sustainable. Approximately 30% of all food still goes to waste, too many antibiotics are being used in animal feed, and our transport systems are coming close to their limits. How can we better understand, manage, and control such complex systems and value chains? This is where data-based applications will help us in the future.

Can you give us an example? We have now launched a quality check for rice made up of a light box, an app, and a cloud solution. The rice pro-cessor prepares a rice sample, slides it into the light box, opens the app, and scans the grains with a mobile phone. The app sends the image to our cloud, where it is analyzed and a precise result is produced in minutes. The processor can then use this information to optimize their plant and negotiate prices with retailers with the documented quality data. This is a significant leap relative to existing practice. Currently, rice producers manually take samples once a day

by placing them on a grooved board and sorting the grains of rice by hand according to their quality. This is not only inconvenient, time consuming, and inaccurate; it doesn’t produce structured, traceable data.

How is Bühler adapting to these changes? We are doing this by setting up our new Digital Technol- ogies business area, accelerating the development of such services from our site in London, and investing extensively in technical platforms and specialists. In 2017, we also es-tablished our first team of data analytics experts. Our goal is to help advance digital transformation in our industries.

“In 2017, we also established our first team of data analytics experts. Our goal is to help advance digital transformation in our industries.” STEFAN SCHEIBER CEO

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How is this changing the relationship with our customers and other partners? We are moving even closer together. The enormous poten-tial of connectivity lies not only in technology, but also in people with their specific knowledge, experience, and skills. A few years ago, we completely opened up the innovation process at Bühler. Meanwhile, collaborative innovation with customers, our employees, scientific institutions, start-ups, nongovernmental organizations, and technology partners has become an established practice for us.

No individual can answer the question of how to sus-tainably nourish 9 billion people in 2050. This requires net-works where various experts come together to develop and implement new solutions. The fact that we at Bühler have contributed to establishing such networks, not least through our Networking Days, makes us proud, and we regard it as a duty.

As a relevant market player in the areas of nutrition and mobility, we have a responsibility to our customers and soci-ety. We strive to live up to that calling.

“As a relevant market player in the areas of nutrition and mo- bility, we have a responsibility to our customers and society.” STEFAN SCHEIBER CEO

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INTERVIEWBühler Annual Report 2017

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