Media and Financial Analyst Meeting. February 28, 2011

Transcription

1 Adding Value from Fiber to Fabric Media and Financial Analyst Meeting 2010 Results February 28, 2011

2 2010 Review Dr Geoffrey Scott, CEO 1

3 Achievements 2010 Back on the growth track 31.8% sales growth with a strong EBITA margin of 26.0% Excellent net result of CHF 20.8 million Net debt reduced to CHF 76.5 million Increased investments in all R&D projects Continued progress with Toyota Industries Corporation New product launches USTER QUANTUM 3 clearer, USTER ZWEIGLE laboratory system Market Leadership Sale of 2,000,000 USTER QUANTUM clearers 50 th anniversary of the launch of the first electronic yarn clearer 2

4 Sharp Recovery of Textile Markets China continues to take the lead Improved overall economic conditions in all major markets Spearheaded by Asian markets, most notably China Stabilized economies in mid-asian markets, including India, Turkey, Bangladesh and Pakistan Revitalized investment appetite by textile producers Renewed interest in new business projects and quality improvements Increased cotton and yarn prices Sharpened producer interest in: Minimizing waste, efficiency improvements and cost reductions The right price for the right quality 3

5 Management Actions Rapid alignment to growth opportunities Maximizing sales opportunities Focus on fast growing Chinese and Indian markets Expansion of sales and service network, particularly in China Tightening i of relationships with machinery manufacturers Reactivation of all R&D projects to full speed Timely product introductions Focus on innovation as the engine of future growth Use of cash for long-term business sustainability Investments in improved production facilities Further reduction of net debt to CHF 76.5 million Opportunistic business development 4

6 Strong Testing Instrument Segment Several factors contributing to growth Cotton classing Greater emphasis on raw material quality Additional business secured for the HVI cotton classing systems in other cotton growing regions as well as China and US Laboratory yarn and fiber testing Increased emphasis on quality testing in response to high cotton and yarn prices Yarn clearer business Sharp increase of orders from machinery manufacturers Exceptionally high order levels at the end of

7 New Product Launches Improving customers operations Ground-breaking USTER QUANTUM 3, making all disturbing defects visible thanks newest stateof-the-art sensor technology USTER ZWEIGLE laboratory systems, allowing yarn hairiness to be measured with improved accuracy, reproducibility and speed USTER SLIVERGUARD to the Chinese market expanding Uster Technologies Ltd s foothold in the spinning preparation area 6

8 Review Financial i Year 2010 Thomas F. Dressendoerfer, CFO 7

9 Financial Summary 2010 Strong sales growth, net result and cash management Strong top line performance Continued sales growth in key markets such as China and India Flexible organizational structure quickly adapting to higher demand Minimal exchange rate exposure thanks to the Company s unique market position Excellent net result of CHF 20.8 million Positive business performance with a strong EBITA margin of 26.0% Resolution of a tax case with the Swiss tax authorities allowing release of accruals Change of Swiss income tax regime as of fiscal year 2008 leading to expected lower tax rate Cash flow from operating activities of CHF 42.7 million EBITA / operating cash flow conversion of 123.2% Net debt of CHF 76.5 million Net debt / EBITDA ratio of 2.1 High cash position of CHF 21.0 million 8

10 Sales and EBITA Strong sales growth and strong EBITA margin % Comments % Strong sales growth of 31.8% in mil lion CHF % % 22.5% % 40% 30% 20% EBIT TA margin EBITA restored to 26.0% Minimal exchange rate exposure 60 10% % % Gross sales EBITA margin 9

11 Gross Sales by Regions Revival of European OEM business 100% Comments 80% 12% 12% 13% 11% 28% 22% 16% 22% Strong business with European machinery manufacturers as % of sales 60% 40% 60% 66% 71% 67% Overall, Asia remains the dominant end-user market 20% 0% Americas Europe Asia 10

12 R&D and Sales Early anticipated market upswing llion CHF 200 Comments % % 15% in % of sales s High R&D investments of 11.2% of total sales Continued commitment t to innovation as a driver of future growth in mi % 10.9% R&D % Gross sales R&D in % of sales 11

13 Capital Expenditure Outsourcing of all-non-core activities illion CHF in mi % Comments % 3% % % 2% 1.5 As % of sales Low Capex requirements due to focus on assembly and test business model % 1% % Capex as % of gross sales 12

14 Cash Flow from Operating Activities Strong cash and working capital management 60 Comments n million CHF i % Continued focus on cash generation Strong cash flow from operating activities of CHF 42.7 million EBITA / operating cash flow conversion of 123.2% Cash at CHF 21.0 million Non-cash items (e.g. amortization of intangibles) Finance result Income tax paid Change in net working capital EBT Cash flow from operating activities 13

15 Balance Sheet Structure Solid financial position Assets in million CHF Liabilities in million CHF Comments Strong equity ratio of 56.2% Loan repayments of CHF 27.0 million resulting in a bank debt of 98.0 million Intangible assets Current assets Current assets Other non-current assets 0 Shareholders' equity Current liabilities Current liabilities Non-current liabilities Other non-current assets Non-current liabilities Intangible assets Shareholders equity 14

16 Proposals to the AGM Dividend payment of CHF 1.20 per share Request for conditional capital Re-election of Harald Rönn 15

17 Enhanced defficiency i in Each hstep of fthe Textile Value Chain Outlook Dr Geoffrey Scott, CEO 16

18 Adding Value from Fiber to Fabric (I) Innovation 17

19 Adding Value from Fiber to Fabric (II) Cotton classing 18

20 Adding Value from Fiber to Fabric (III) Fiber processing 19

21 Adding Value from Fiber to Fabric (IV) Yarn quality management 20

22 Adding Value from Fiber to Fabric (V) Definition of yarn profiles 21

23 Outlook Continued strong growth Ongoing market improvements Continued strong demand from Asian markets, including China and India Ongoing move towards quality and automation Further growth opportunities in additional cotton growing regions Well defined and implemented USTER growth strategy Market leadership Customer focus Innovation leadership Operational excellence Financial guidance 2011 Continued strong growth at similar levels to 2010 EBITA margin above 25% 22

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25 Additional i Slides Company Profile 24

26 USTER at a Glance Leading high technology instrument manufacturer of products for quality measurement and certification for the textile industry World market-leader eade with strong margins and high cash generation Over 60 years of experience in high-end electronic testing systems Long-established USTER STATISTICS database has become undisputed industry standard More than 2.5 million systems installed worldwide Strong brand name for quality testing products with established history of innovation Global footprint with presence in all key markets 3 technology centres in CH, US, CN 7 regional sales & service companies and 50+ agents covering all key markets Serving more than 4000 customers in 75 countries Flexible business model with low capital intensity, capable of withstanding industry fluctuations securing strong, sustainable EBITA margins (>20%) USTER HVI 1000 USTER TESTER 5 25

27 USTER Product Offering Improving quality across the entire value chain Process Step Ginning and Cotton Classing Fiber Testing Yarn Testing Yarn Clearing Fabric Quality Assurance Intelligent Sourcing USTER Products INTELLIGIN HVI Systems HVI Systems AFIS PRO TESTER TENSORAPID LVI TENSOJET CLASSIMAT SLIVERGUARD ZWEIGLE USTER Complementary Products and Services QUANTUM STATISTICS CLASSIMAT TENSORAPID TENSOJET ZWEIGLE USTERIZED Intelligent Sourcing Quality Profiles Integrated Data and Expert Systems USTER STATISTICS and USTERIZED After Sales Services and Textile Technology 26

28 USTER Product Overview I Products compliant with governmental authorities Ginning First step in textile production process in which the cotton fiber is separated from the plant Ginning and Cotton Classing Fiber quality optimization i with USTER INTELLIGIN Cotton classing Classification of cotton by government authorities to determine market value of cotton USTER HVI 1000 acknowledged as de facto industry standard Exclusive supplier of the United States Department of Agriculture (USDA) and the China Fiber Inspection Bureau (CFIB) Future classing projects provide growth opportunities USTER HVI

29 USTER Product Overview II acknowledged as industry standard requirements Laboratory Fiber Testing Allow spinners to test for all elements affecting the product quality and profit Incoming raw material inspection with USTER HVI Process optimization with USTER AFIS PRO Laboratory Yarn Testing USTER TESTER acknowledged as essential for any spinning mill serving the international market Specifically designed to allow yarn producers to achieve the required quality USTER acknowledged as the industry standard both in cotton and filament evenness testing and the testing of yarn strength USTER CLASSIMAT is another industry standard, with values used as industry benchmarks Fiber Testing Yarn Testing 28

30 USTER Product Overview III using the most advanced technologies in the market Yarn Clearing Essential final quality assurance for spinning mills to eliminate disturbing defects in yarn Supplied as an OEM product to Western and Asian machinery manufacturers (added to any rotor spinning and winding machine) Supplied directly to spinners to allow upgrading of Yarn clearing machine capability (retrofit business) Integral part of the production process New ground-breaking third generation of USTER QUANTUM clearer features latest state-of-the-art measuring technology USTER LABONLINE provides a unique capability for Total Quality Monitoring USTER QUANTUM 3 clearer 29

31 USTER Product Overview IV industry benchmarks as universal quality language USTER STATISTICS Comprehensive database of textile quality measurements 60 years of data and experience provides a unique and sustainable competitive advantage The statistics are the de facto benchmarks on fiber properties such as length, fineness, yarn evenness, hairiness and elongation for the textile industry USTER systems acknowledged d to be needed d to ensure compatibility with USTER STATISTICS; correlation with historical data is unmatched by any competitor USTER brand and USTERIZED used by many of the world s spinning mills to promote a quality image in the market 30

32 Seal of Quality Emphasize on competitive difference USTERIZED The USTER brand name is synonymous with quality in the textile industry acknowledged throughout the industry The USTERIZED seal stands for quality yarn tested and cleared with USTER products Allows manufactures to brand their products with a well known seal of quality Provides a higher level of assurance for customers Large retailers and manufacturers expect all their fabric s yarns to be from USTERIZED spinning mills Intelligent Sourcing Provides significant price premium for USTER products 31

33 Overview of USTER Technology Centers Global presence in key supply markets Knoxville, USA Uster, Switzerland Suzhou, China Overview U.S. operations base Focus on fiber testing Key account management for international cotton classing projects and customers Facts Size: 4,900m2 Ownership: Owned Head: Hossein Ghorashihi Employees: 80 Overview USTER Group Corporate Headquarters Co-ordinates Group marketing, R&D and manufacturing functions Produces USTER STATISTICS Focus on yarn testing Worldwide supply of yarn products Facts Size: 16,600m2 Ownership: Leased Head: Geoffrey Scott Employees: 171 Overview Asian operations base Focus on lower cost product development and assembly Proximity to customers and relevant institutions Global sourcing potential Facts Size: 2,320m2 Ownership: Leased Head: Naiming i Wei Employees:

34 Sales & Support Network A global network of facilities and relationships 3 Technolog Technology Centers 7 Regional Sales & Service Centers 50+ Agencies Uster, Switzerland I t b l Turkey Istanbul, T k Knoxville, USA Suzhou, China Shanghai, China Charlotte, USA Bangkok, Thailand Coimbatore, India Sao Paulo, Brazil Technology Centers Regional Service Centers Sales Agents and Local Service Stations 33

35 Goals and Strategy for Future Growth Ability to manage variable demand and maintain high profitability Focus on operational business Build on key strengths to maintain leading position in the top market segment Strengthen technological position Further expand into mid market segment to achieve long-term profitable growth Corresponding Strategy Supplement and strengthen th sales and marketing organization Promote value-added services (USTERIZED concept, USTER STATISTICS) Release new products, product enhancements and measurement metrics Grow in the local Asian mid-market Ongoing focus on Supply Chain Management and operational process optimization i to deliver sustainable margins and further years of strong financial performance 34

36 CV of Speakers Geoffrey Scott, Chief Executive Officer British citizen, born 1954 Thomas F. Dressendörfer, Chief Financial Officer German citizen, born 1958 Honors degree and PhD in biochemistry Numerous positions with international instrumentation companies in a range of industries (including Beckman Instruments, Fisons plc, Kevex Instruments and Thermo Electron Corp) Extensive international management experience within sales, marketing and after-sales, strategy and business development, product development as well as general management Masters Degree in Business Administration and Economics Responsible for Finance and Support in Uster, including IT. As a member of the Executive Management Committee reporting directly to the CEO Worked with Randstad, The Nielsen Company and Procter & Gamble, holding various key senior finance positions 35

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38 Disclaimer The materials contained herein (the Materials ) do not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, any solicitation of any offer to purchase or subscribe for, any shares in USTER Technologies Ltd, neither in the United States of America nor elsewhere. Neither this document, nor anything contained herein, shall form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of USTER Technologies Ltd, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The information contained in this document has been provided by USTER Technologies Ltd, unless otherwise noted. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of USTER Technologies Ltd, its advisors or any of their respective representatives or affiliates undertakes to update the information contained herein subsequent to the date hereof. Furthermore, none of USTER Technologies Ltd, of their respective representatives or affiliates shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection withthis document. These Materials may include forward-looking statements. t t These forward-looking statements t t arestatements t t regarding USTER Technologies Ltd s intentions, ti estimates, forecasts, projections, beliefs or current expectations concerning, among other things, USTER Technologies Ltd s results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which USTER Technologies Ltd operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. USTER Technologies Ltd cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which it operates may differ materially from those expressed, implied or suggested by the forward-looking statements contained in the Materials. In addition, even if USTER Technologies Ltd s results of operations, financial condition and liquidity and the development of the industry in which it operates are consistent with the forward-looking statements contained in the Materials, those results or developments may not be indicative of results or developments in future periods. Actual events or results may differ materially from USTER Technologies Ltd s expectations due to factors which include, but are not limited to, increased competition, regulatory, legislative and judicial developments or changes in the market and/or economic conditions. USTER Technologies Ltd does not undertake to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of the Materials. 37