Interim results Analysts' meeting. Thursday 23 August Agenda

Transcription

1 Interim results 2012 Analysts' meeting Thursday 23 August 2012 Agenda 1. Kendrion at a glance 2. Highlights for the first six months of Key figures and financial objectives 4. Review of the business units 5. Financial position 6. ERP project HORIZON 7. Priorities and outlook 2 1

2 1. Kendrion at a glance 3 The Kendrion organisation KENDRION N.V. Development, production and marketing of high-quality electromagnetic components 1,800 employees (including 200 temps) in 13 countries Revenue: approximately EUR 300 million Listed company on NYSE Euronext's Amsterdam Market 4 2

3 Organisation Kendrion breakdown of revenue first six months of 2012 Industrial Magnetic Systems PCS Passenger Car Systems Machine building Safety engineering Transportation industry Medical engineering Power engineering Elevator industry Automation IDS IMS CVS Automotive applications Hydraulic applications Industrial Drive Systems Medical technology Packaging machines Servo motors Robotics & Automation Elevator drives Crane construction Machine tools Transportation industry Consumer appliances IDS IMS Car Bus Truck/special vehicles Commercial Vehicle Systems Motor cooling systems Air conditioning compressor drives Torsional vibration dampers Magnetic clutches and brakes Controllers Fire protection technology 5 5 Global activities Kendrion 6 3

4 Kendrion committed to being a high-performer in selected business units Mission Strategy Objectives To develop business units that have strong international market positions in selected business-to-business niche markets and are market leader whenever possible Spearheads - Niche market leadership - Organic growth in the current operations - Utilisation of synergy in and between the business units - Balanced geographical spread of the operations - Enhancement of flexibility in the organisation - Targeted add-on acquisitions - Enhancement of the innovative capacity Organic growth > 10% ROS > 10% ROI > 17.5% 7 Kendrion's strategy - A clearly defined profile of a multinational, fast-growing high-tech company - Building leading positions in business-to-business niche markets - Balanced spread in activities - Automotive with bus, truck EUR 200 million and growing strongly - Industry EUR 100 million - Aiming for strong growth in the electromagnetic activities - Targeted value-added add-on acquisitions in particularly industrial activities - Further improvement of geographical spread across continents - Stronger growth outside Europe (USA, China and India) - Financially strong 8 4

5 Financial objectives Target Organic growth >10% per year ROS >10% ROI >17.5% Solvency 35% Interest-bearing debt/ebitda <3.00 Free cash flow Healthy Dividend 35-50% of net profit 9 Concrete issues to fulfil our strategic spearheads (1) - Alert response to market developments in all key markets - Market intelligence - Market segmentation - Qualified suppliers - Improving commitment from customers on projects, particularly in the Industrial segments - Expand and retain personnel - Southern Germany has low unemployment; pressure on flexibility - To attract engineers takes time - Kendrion invests in personnel development 10 5

6 Concrete issues to fulfil our strategic spearheads (2) - Targeted acquisitions - In the USA and China (markets, customers) - Niche players in Germany (technological know-how) - Enhancement of innovative capacity - Continuous new initiatives and ideas - Innovation cells - IP strategy Highlights for the first six months of

7 Highlights for the first six months of 2012 (1) - After good 1 st quarter, a 3% decline in revenue in the 2 nd quarter, for which the business unit Industrial Magnetic Systems was most responsible (-15%) - No new projects in PCS this year (crisis year 2009 limited opportunities) - In 2012 limited organic growth - Margin pressure (up-front agreed price reductions in Automotive) - Weak truck market - Growth in India without operating result (too low volumes) - Brazil - Focus on growth in truck market - Attract new staff - Opportunities for the US truck market through Kendrion FAS Controls - In due course separate business unit - In other segments growth of indirect staff 13 Highlights for the first six months of 2012 (2) - Raw material prices rather stable in first six months of Prices for permanent magnets decreased, however Kendrion does not benefit due to material clauses with customers - Increasing and improving the organisation in order to accommodate expected growth - Attract engineers and project managers - Kendrion Academy, HIPO programme - Enhancement innovative capacity ( Schatzkarte, Innovation Cells) - CSR Programme - Reduction energy consumption - Waste management - Involve all locations and build up information system 14 7

8 Revenue development per region (x EUR 1 million) June 2012 share 2011 share Germany 75 49% % Rest of Europe 33 22% 65 24% Americas 26 17% 20 8% Asia 17 11% 32 12% Other 2 1% 3 1% Total Key figures and financial objectives 16 8

9 Key figures for the first six months of 2012 (x EUR 1 million unless otherw ise stated) Q Q Difference in % Revenue % EBITA % Net profit % EBITA margin 9.3% 11.9% EBITDA margin 12.8% 15.3% (x EUR 1 million unless otherw ise stated) HJ HJ Difference in % Revenue % EBITA % Net profit % EBITDA margin 10.3% 11.8% EBITDA marge 13.7% 15.3% Solvency 40.0% 64.7% 17 Incidentals 2 nd quarter Release earn-out liability + EUR 0.7 million (other operating income) - Increase deferred tax asset + EUR 0.5 million (taxes) 18 9

10 4a. Review of the business units 19 General - Operations: electromagnetic components and systems for industrial applications - Focus markets: machine building, locking and safety, energy sector and medical sector - Highly innovative, customised solutions - Global player with operations in Germany, USA, China, Switzerland, Austria and Italy; agencies in a.o. France - > 2,000 customers - Project business (70%) and standard solutions (30%) - Competitors: besides MSM, ETO and Kuhnke there is a large number of (usually smaller) niche players in Germany, Italy, France and the USA - Fast-growing market in China, but with poor quality - Engineering, logistics and delivery time most important drivers - Competitive advantage: innovation capabilities, global possibilities, know-how for decades, reliable partner, fast delivery time 20 10

11 First six months of 2012 (1) - Difficult market circumstances in 2 nd quarter in Germany and the USA - Strong reduction of volume at two customers - Strong reduction of customer demand (high number of smaller customers) - Total revenue top 10 customers HY stable in comparison with HY Delay of new projects - Cost reduction measures Germany - Reduction temporary employees (30 less in September) - Reduction number of indirect staff - Insourcing - Reduce working hours from 40 to First six months of 2012 (2) - Trend of new projects taking more time with customers - Outlook HY better due to start up of new projects - Better revenue - Reduced cost levels in the course of the 3 rd quarter 2012 improved EBITA margin 22 11

12 4b. Review of the business units 23 General - Operations: electromagnetic brake and clutch systems for industrial drive technology - Two production sites in Germany; international service coordinated through UK sales office - Global market leader in permanent magnetic brake systems - Approximately 100 customers - Substantial project business (80% of revenue), in addition to services business (20% of revenue) - Innovative business unit with many new products - Competitors: limited number of players with revenues between EUR 10 million and EUR 50 million - Engineering, logistics and delivery time most important drivers - Competitive advantage: know-how for decades, reliable partner, fast delivery time 24 12

13 First six months of Revenue growth 12% (of which 5% due to price compensation permanent magnets) - Strong organic growth in permanent magnet brakes - Growth especially at top 10 customers, smaller customers show decline in revenue - Strong focus on market introduction of spring applied brakes (KOBRA-line) - Also several innovations (windmill and aviation industry) - New projects in China (mostly Western customers ), starting up in Aiming for further efficiency improvement (project "Fit for Production") - Margin improvement due to lower supplier prices 25 4c. Review of the business units 26 13

14 General - Operations: electromagnetic components and systems for the automotive industry - Production sites in Germany, Austria, the Czech Republic, Romania, China and the USA - Serves European Original Equipment Manufacturers; Daimler, Volkswagen (incl. Audi), and first tier suppliers (Continental, Delphi) and more and more in the USA (Eaton, Navistar) - Well spread customers (about 30), top 10 65% of the business unit s revenue - Continental biggest customer with 20% of PCS revenue (10% of revenue Kendrion) - High-tech, focus on energy efficiency, emission reduction, safety and comfort - Contracts for 6-8 years - Established strong position with high-quality electromagnetic valves for common-rail technology - Existing expertise can be extended to other markets (e.g. gasoline, off-road, trucks) - Competitive advantage: know-how for decades, focus, high entry barrier (long lead times, high investments) 27 First six months of According to plan limited revenue growth in the first six months - Margin pressure as a consequence - The organisation is in the process of launching new projects - Two new projects to be launched in the USA in the 2 nd half of 2013 (at Kendrion FAS Controls) - Other projects for existing customers in diesel, start up 2 nd half of Quite far with new interesting projects (2014 and onwards) - Last year very successful in acquiring new projects (total revenue in expected lifetime EUR 295 million) - Utilise new opportunities in the US truck market with Kendrion FAS Controls - Kendrion FAS Controls had a good start within Kendrion - Indirect staff costs increase by expanding the organisation, both in Germany as well as in the USA 28 14

15 4d. Review of the business units 29 General - Operations: components and total cooling systems for buses, trucks, special vehicles and generators - Global market leader in electromagnetic cooling systems for luxury coaches - Many customers worldwide - Sites in Germany, USA, Mexico, Brazil, China and India - USPs are energy-efficiency and convenience - Increasingly a systems provider - Service business (approximately 20% of revenue) forms an important basis - Competitive advantage: know-how for decades, strong global partner network, fast delivery and service, close to the customers 30 15

16 First six months of Organic growth 4% by India - Kendrion Linnig India lower as expected, no operating result, pressures EBITA margin - Good revenue growth in bus market China again - Currently active in the US truck market, Brasil and India, Brasil truck sales down - Kendrion sees ample opportunities for strong growth in the truck market in the coming years (cooling systems, Kendrion FAS products) - Expanded organisation with new engineers for the truck market Financial position 32 16

17 Financial position - Free cash flow under pressure in HY due to high investments, increased working capital, particularly due to year-end effect positive free cash flow expected for Strong balance sheet (net debt 30 June 2012 EUR 35 million, solvency 40%) - Approximately EUR 70 million freely available for acquisitions ERP project HORIZON 34 17

18 ERP project HORIZON - Investment between EUR 5.5 and EUR 6.0 million - PCS Villingen (Germany), India and HRM Villingen/Markdorf (Germany) live in Atlanta (USA) live in April focus on industrial companies, IDS Villingen will Go-Live as per 1 October Investments and costs are in line with the budget - Working with the standard software - Required improvements included in the IFS standard - All companies must be migrated by mid Priorities and outlook 36 18

19 Outlook - Growth slowdown in 2 nd quarter Uncertainty economic developments (Eurozone, China and the USA) - Planned margin pressure PCS continues in HY Expectation 2012: 15-20% lower net profit in comparison with the normalised net profit 2011 (EUR 20.5 million) - Confidence in future growth by number of new projects (automotive as well as industrial activities) 37 We magnetise the world! 19