Nord-Lock bolting solutions safeguard people's lives and customers' investments around the globe.

Transcription

1 Nord-Lock bolting solutions safeguard people's lives and customers' investments around the globe. Nord-Lock vision statement 10/03/2016 1

2 Insert picture here NORD-LOCK Taking the Next Step 10/03/2016 Team McGill No Chill: Jannik Pedersen, Alexander Rosenberg Christian Jelsbech and Rikke Knudsen 2

3 Executive summary Today Tomorrow Impact 20% CAGR past 5 years Turnover of approximately 400MSEK in 2015 A Adjust capacity through a new production capacity and new distribution capacity By B SEK CAGR will decrease to 10% Increasing competition Future demands for development of new products A Accelerate growth through market penetration of USA+Canada, Japan and Germany.. without eroding current EBIT-margin Potential for growth in new markets A Ace the future through Product R&D and a new innovation lab EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/2016 3

4 3 key insights about Nord-Lock implies important industry trends Growth will decrease Key industries for NL Demand for future solutions 25% 20% 15% 10% 5% 0% CAGR High market impact industry suitable for NL products Offshore Energy Transportation Key industries calls for future solutions Severe corrosion conditions Extended warranties Other innovative products 10/03/2016 4

5 Safety and cost efficiency form Nord-Lock s key value proposition Low Fast-Lock NORD-LOCK The locking company Product life-cycle cost South-lock Titlelock Ltd Maintenance High Fixtite A/S Assembly Low Safety High Price High quality of safety and long run cost efficiency EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/2016 5

6 How can Nord-Lock increase sales with 600 M SEK without eroding margins by 2019? 10/03/2016 6

7 Possible solutions High 2 1 Growth through acquisition Impact AAA solution Low 3 B2C focus Low Feasibility High EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/2016 7

8 The AAA model Adjust capacity Setting up new production plants in North America Accelerate growth Increasing focus on 3 promising markets Ace the future Avoid being disupted by understanding industry needs EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/2016 8

9 The AAA model Adjust capacity Setting up new production plants in North America Accelerate growth Increasing focus on 3 promising markets Ace the future Avoid being disupted by understanding industry needs EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/2016 9

10 Expansion necessary to reach 1B SEK.. 70 % 30 % 100 % Factory 400M SEK 572M SEK Increase in capacity is necessary to obtain remaining 428 M EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

11 Current production plant insufficient for 2019 target and locally centered EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

12 By setting up a new production plant and focusing globally NL will facilitate necessary logistic capabilities INCREASE CAPACITY IMPROVE LOGISTICS AND DELIVERY PERFORMANCE MAINTAIN HIGH QUALITY EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

13 Rationale of setting up production plants in the US Serve the NA Market Key market of significant size Functions as warehouse/distri bution center Retain High Quality U.S. production associated with high standards Low-cost production may impact (perceived quality) Avoid plagiarism risks Insignificant Cost Increase Decrease in transport costs offset the increase in labor costs Aligns with NL s goal of increasing global presence whilst retaining the main value proposition of high quality EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

14 Accelerate growth Adjust capacity Accelerate growth Ace the future EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

15 Distribute safety globally through focused expansion strategy to create new home markets Country Market size Market growth Industry fit *Industry fit analysis - Appendix USA & Canada Japan Strategic optimal focus Germany China Korea Full Empty EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

16 Further, looking in to the markets with a 15 years horizon... New home/focus markets 800 M EUR available market KO JA GE CH CA+USA EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

17 Acceleration of growth through relationship building, integrated solutions and control Relationship building Integrated solutions Control of value-chain Relationship building as driver of growth. 80% of all new business Independent distributors create no new business missing opportunity Move to more integrated solutions - leverage premium product and knowledge. E.g. support during the design phase, by conducting joint simulations and tests. E.g. with on-site support and online training Plagiarism control, more controlled value-chain Benefits the customer against safety and economic risks Increased information sharing, delivery efficiency & customer satisfaction Supporting high quality value proposition & actively differentiate market position EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

18 Increase sales presence in identified markets through organic growth to create new home markets Focused relationship sales Own sales office: Driver of new growth - high control relationship building Representative offices: Driver of new growth more control relationship building Independent distributors: Not driving growth limited control Drivers of growth & control securing high service offering Increased global presence USA + Canada Germany Japan Extensive market knowledge focus on industrial locations Organization development USA + Canada 3 new sales offices 4 new RO s Germany 2 new sales offices 4 new RO s Japan 2 new sales offices 3 new RO s Organization requirements: Requirement & education Service & product knowledge is essential 41 new sales FTE s EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

19 Ace the future Adjust capacity Accelerate growth Ace the future EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

20 Ace the future through R&D and increased focus on product innovation Product innovation emphasis Value demands: Proof of originality - Extension of warranty Corrosion preventives Lubrication systems Service agreements Recruitment - Attract new engineers & talent - New technology & competences In-house innovation centre New Structure - Formalize feedback culture - Location, with monthly office visits Collaboration - University collaborations - Customer driven research Current portfolio low value add Create foundation for continuous innovation to avoid future disruption EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

21 Increasing revenue to 1B SEK results in 36% CAGR until 2018 Assumptions 468M SEK Status quo: 10% growth Synergies will add additional growth of 2% in all markets 400M SEK 132M SEK 1,000 MSEK The AAA solution will contribute with annual additional revenue growth of 28% in the three targeted areas 2015 Status Quo Add. Rev 2018 EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

22 Liklihood Low High Risks assessment & mitigation Issue Mitigation Low Fail to recruit and educate new local sales people A Capacity constraints B Disruption by new technology C Impact High A B C Maintaining highquality service Capacity constraints Disruption by new technology Relocate sales people, and offer higher salary Contingency extension plan for Swedish plant Be on the forefront of technology through collaboration EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

23 Implementation plan - Monday morning Adjust capacity Accelerate growth Start plant design Initiate recruitment of new sales force Begin building plant Establish office Source new representation offices Establish warehouse Leverage new sales presence Ace the future Create new in-house innovation Establish cooperation's Must win battles: Secure new Expand and educate 1 capacity to facilitate 2 sales force 3 growth Create foundation for continuous innovation EXECUTIVE INSIGHTS SOLUTION IMPACT 10/03/

24 Situation Solution Impact Forecast for NL shows a 10% decrease in CAGR and a limit in current production capacity The AAA model will secure production capacity, market growth in promising markets and products catering to future needs of customers Revenue of 1B SEKK by /03/

25 Insert picture here Q&A 10/03/

26 Appendix Presentation 1. Nord-Lock 2. Contents 3. Quote 1 4.Executive summary 5.Expansion necessary to reach 1B SEK key insigts about Nord-Lock implies important industry t... 7.Safety and cost effeciency form Nord-Lock key capabilities 8.Quote 2 9.Solution space 10.The AAA model 11.Current production insufficient and locally centered 12.By setting up a new production plant and focusing globall Rationale of setting up production plants in the US 15.Distribute safety globally through focused expansion stra Further, looking in to the markets with a 15 years horizo Acceleration of growth through relationship building, int Increase sales presence in identified markets through org Ace the future through R&D and increased focus on product Increasing revenue to 1B SEK results in 36% CAGR until Risks assessment & mitigation 23.Implementation plan - Monday morning Backup slides 1.Market, industry and product requirement alignment 2.Competitor analysis 3.Rating of solutions 4.Product range expansion possibilities 5.Financial assumptions 6.Market revenue forecasts 7. Synergies, add. 2% additional revenue growth 8. EBIT margin 9.Price and safety matrix compared 10.Cashflow from new plant 11.P&L statement 12. Why not China? 13. Revenue forecasts 10/03/

27 Market, industry and product requirement alignment Market Germany USA and Canada Japan Relevant industry Transportation Energy Transportation Energy Offshore Transportation Offshore Product requirement Bolts need cope with severe corrision and industry values originality guarantee of parts Industry values originality guarantee of parts Bolts need cope with severe corrision 10/03/

28 Competitor analysis Competitors Ficitte A/S The Locking Company Fast-Lock Gmph Initial price Low High Medium low Safety High Medium high Low Price over product life cycle Very high Medium low Low 10/03/

29 Rating of solutions Solution Capabilities Alignment with strategy Impact Time Risk Overal l rating B2C focus AAA model Growth through aquisitions , , ,6 Rated on a scale of 1 to being positive and 0 being negative 10/03/

30 Product range expansion possibilities High Service agreements Lubricant systems Proof of originality Corrosion preventives Value added Non-vibration systems Seals Wedge lock systems Low High Complexity Low 10/03/

31 Financial assumptions Markets share 2015 Revenue Corrected Revenue Revenue SKK Italy 4% 1,56 0,8 8,0 Spain 6% 1,5 0,8 7,7 Benelux 7% 1,47 0,8 7,5 Korea 6% 5,4 2,9 27,5 Swe, Den & Nor 29% 6,09 3,3 31,1 Finland 69% 2,76 1,5 14,1 US & Canada 3% 12,9 7,0 65,8 Japan 3% 5,52 3,0 28,2 Germany 14% 36,96 20,1 188,5 France 3% 1,5 0,8 7,7 UK 3% 1,35 0,7 6,9 China 1% 1,42 0,8 7,2 Total (Euro) Ratio 78, Total SKK 54% 736, /03/

32 Market revenue forecasts 500,0 450,0 400,0 350,0 300,0 250,0 200,0 150,0 100,0 50,0 0, Italy Spain Benelux Korea Swe, Den & Nor Finland US & Canada Japan Germany France Market Rev. Forecasts Italy 39,0 40,2 41,4 42,6 Spain 25 25,5 26,0 26,5 Benelux 21 21,4 21,8 22,3 Korea 90 96,3 103,0 110,3 Swe, Den & Nor 21 21,8 22,7 23,6 Finland 4 4,2 4,3 4,5 US & Canada ,9 456,2 469,9 Japan ,2 202,9 213,0 Germany ,5 302,3 323,4 France 50 52,0 54,1 56,2 UK 45 46,4 47,7 49,2 China ,8 168,7 183,9 Total(EURO) Growth 5,0% 5,1% 5,1% Total SKK Current Market share 3,2% 10/03/

33 Synergies add 2% additional revenue growth Better knowledge of customers needs with more sales offices Status Quo Synergies Growth in all markets 2% 12% Shortening transportation time, with more distribution centers 10% Additional revenue, conducted through the new focus on service offerings 10/03/

34 EBIT margin in 2018 Assumptions New production plant will add 3% in depreciation Direct costs will decrease, with bigger procurement Economies of scale 29.3% 3% 2% 1.7% 30% SG&A costs is also expected to decrease due to economies of scale 2015 Depreciation Direct costs SG&A /03/

35 Price and safety matrix compared High NORD-LOCK Total cost Price South-lock Fast-Lock The locking company Titlelock Ltd Fixtite A/S Low Low Safety High Information provided in the material 10/03/

36 Cashflow from new plant 0-50 Cashflow from new plant 0-50 Assumptions Numbers are inspired by a similiar production plant project in Eastern Europe and India Cashflow from new plant Short transition time, due to location in the US Financing is possible through the private equity owner Latour /03/

37 P&L statement 1000, , ,0 400,0 200,0 400,0 117, ,2 221,0 300,0 Revenue EBIT 0, P&L statement Revenue EBIT-Margin 29,3% 29,5% 30,0% 30,0% EBIT Cashflow from new plant /03/

38 Why not China? Industry NL ability to fulfill delivery requirements Automotive Limited High Agriculture Acceptable Moderate Mining/Quarry Good Moderate Industry price sensitivity 10/03/

39 Revenue forecasts Nord-Lock Rev. Forecasts Italy Spain Benelux Korea Swe, Den & Nor Finland US & Canada Japan Germany France UK China Total Assumptions Growth strategy Revenue for all markets except the three targeted companies Revenue from the three targeted countries Total Revenue Percentage growth in three markets(excl. 12%) overall growth 30% 28% 26% Average growth rate in three countries(excl. 12% growth) 28% 10/03/