The Turn around Process in TTS Group ASA

Transcription

1 TTS GROUP ASA The Turn around Process in TTS Group ASA Hordaland på Børs 13 August 2015 Björn Andersson, CEO Photo: Jan Rolf Jacobsen/Norlines

2 Agenda TTS, what business and products Struggling financial performance in 2013 Need for a strategic change Reengineering phase Roll out strategy Numerical Q1, 2015 Summary

3 The TTS Group TTS provides cargo handling solutions and access systems to the international marine and offshore industries. TTS resources are focused on design and engineering, assembly and testing. Subsidiaries in 13 countries. Worldwide workforce of approximately 1,100 persons. Headquarters is in Bergen, Norway. Listed on Oslo Stock Exchange since 1995.

4 >> 2012 Business as usual 2013: Free fall losses >> refocus and adjustment needed EBITDA 2013: MINUS MNOK 130 MNOK 80 TTS EBITDA Q Q Q Q Q Q Q Q

5 TTS launched its new Global strategy in 2014 Roll out version for Continue to build on the solid position in China The leading position in China provides shipping market access. China with ~40% of total shipping order book, Korea at ~30% TTS aims to continue to leverage its strong market and cost position in China and Far-East, and grow into Korea Increase the scope of manufacturing co-operation in China 2 Focus on ship type more integrated package sales Currently delivering single products to a high number of vessels TTS aims to move from product focus to ship type focus, and provide more value per sale, through bundling of products and systems. Move closer to the end user -> Key Account ownership across TTS 3 4 Enhanced service offering through strategic hubs Focus on profitability Focus on major clusters of customer bases and create relationship for services on a ship s lifetime Increase ability to serve the customer on the spot and in a timely manner Develop service entities with technical and design knowledge for all TTS products TTS aims to reach operating income margins on par with industry average over a business cycle Marine business units delivering decent margins, despite one time lossmaking orders. Further improvement expected in 2015 to reach average industry margins in 2017 Offshore business unit currently underperforming. Work started in 2014 to turn this around and capture a fair share of the market

6 New vision launched for TTS Group Vision The global supplier of handling systems to the maritime and offshore industry with the strongest focus on end user satisfaction Values that drive us System & Technology competence Reliability & Customer satisfaction Health Safety & The Environment A preferred global supplier means: Strategy Be on the makers list and get market share > 30 % in each market segment where we are positioned Product technology among the top 3 in each segment where we compete Customer oriented solution that support the life cycle of the vessel from new design to recycling. Wider product offerings to support package sales and reduce sales costs Profitability on par with industry average

7 Our long-term goal Building a global BNOK 6 System and Service provider company in the maritime and offshore industry within 2020 Grow by internal efficiency and capture market share Add peripheral products to complement Product costs on par with the market Key accounts to support customer relationships Major focus to penetrate our installed base and third party equipment 7

8 Restructuring from product- to ship-type Current TTS product portfolio Product expansion opportunities *) Includes 50 % of net profit after tax in the JVs RoRo/Cruise/Navy Turnover: MNOK 599 EBITDA: MNOK 77 Container/Bulk/ Tank Turnover: MNOK 403 EBITDA: MNOK -5 *) Multipurpose/ General Cargo Turnover: MNOK 138 EBITDA: MNOK -32 Shipyard Solutions Turnover: MNOK 192 EBITDA: MNOK 32 Services Turnover: MNOK 530 EBITDA: MNOK 96 Offshore Turnover: MNOK 572 EBITDA: MNOK -50 Cargo handling solutions for - Car carriers - Cruise ships - Specialized vessels Port handling equipment RORO product dev. Cruise (davits, tenders, gangways, winches, new innovations) Navy (hangar doors, turntables, cranes, hatch covers) Cargo handling solutions incl winches, cranes and hatch covers for - Container ships - Bulk carriers - Tankers Winch development Cargo control systems Heavy lift cranes, mooring winches, hatch covers and side loading systems for - Multipurpose vessels - Cargo ships E-cranes Increased leg encircling crane portfolio Cargo control systems Production lines and systems for - Shipyards cargo handling - Transfer systems for docking and launching. Green scrapping Complete services within - maintenance, - spare parts - interval agreements - life time services Increased # spare parts hubs Increased # servicing hubs Offshore cranes for - offshore vessels - offshore installations Increased AHC crane size range LARS for ROV Skidding systems Change from product focus to ship type focus Key account 20% of ship owners owns 80% of the global fleet One face to the market More value per sale, packaged deliveries Broader service offering per ship type -> Leading to TTS as total service provider Product platform to support life time services >> TTS a total Service provider

9 TTS revenue growth potential Potential for growth towards 2020, goal of BNOK 6 turnover BNOK revenue Growth in current product sales Package sales gain New products Growth in lifecycle services 2020 revenue potential 9

10 Increase service revenues through increased presence at strategic hot spot hubs Competitive advantage through on-the-spot presence where TTS equipment is sailing Increase ability to serve the customer on the spot and in a timely manner Service entities with technical and design knowledge for all TTS products Hub advantages: Customer accounts (sales) Service capability on all TTS products Stock of critical parts Workshop Technical knowledge (design) Hub development areas: Bremerhafen Houston Brazil Singapore Dubai Antwerp

11 Leveraging TTS current strong market position Unique position in China > 50% market share for hatch covers and hose handling cranes, growing market share for winches and cargo cranes Close to 1 BNOK JV revenues in 2014 Strong manufacturing platform All time high order intake in 2014 Strong product portfolio and position in core market segments Solid global brand image to be built upon Growing markets in many segments Untapped sales potential on package sales per ship Growth platform established 4,8 BNOK in Order backlog in 2014 including JVs Order books across all divisions are growing Organization restructured from product structure to ship type structure Service footprint expanded by strategic hubs Dedicated employees and a good working culture

12 Our journey to continued revenue growth, increased profitability and improved cash flow Revenue improving actions Continue to build on the solid position in China Launch ship-type organisation with global service Use high market share segments to launch package sales and complement with peripheral products Cost reducing actions Product benchmarking to reach top of the range performance Technical standardization and group sourcing across business units Incorporate a flat organization structure and new business processes in Offshore and Container, Bulk & Tank Risk reduction actions Focus on core products in well defined segments Implement group bid reviews and authorization matrix Best in class work processes across business units Working capital & capex reduction actions Cash flow actions > adjustment of working capital days Simplification of work process 2015 CAPEX budget significantly reduced No dividend plans

13 TTS currently addressing NOK 28 bn of the global market TTS market by product group Estimated annual market size (NOKbn) Estimated market 16,0 Marine Offshore Solutions size for marine product categories 0,5 totalling NOK 14,0 15bn 2,2 0,2 Largest product 12,0 0,4 types within 3,1 marine are roro 10,0 equipment, 0,8 winches, hatch 8,0 6,0 6,6 covers and cranes 1,7 14,7 Estimated market 13,0 size for offshore & heavy lift segments at NOK 4,0 13bn 2,9 7,2 Largest market for 2,0 0,7 offshore cranes, drillship cranes -- 1,5 and offshore winches

14 Contracting, fleet growth and new build prices Fleet growth Growth (dwt) 10,0% 9,5% 8,7% 9,0% 8,0% 6,9% 6,9% 6,9% 7,0% 7,1% 7,0% 6,1% 5,7% 6,0% 5,0% 3,7% 4,0% 3,4% 3,0% 2,7% 3,0% 2,5% 2,1% 2,0% 1,0% New build prices USDm VLCC Aframax Capesize Panamax Contracting by region CGT Asia Europe RoW Asia share (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Contracting by ship type # of vessels Tankers Bulkers Container Gas MPP & GC Car carriers Passenger & cruise Offshore Other

15 Product example TTS is already on the vessel ambition to increase value per contract TTS global market share TTS has a potential to double sales per vessel Illustration MNOK sales per containership RoRo Equipment 40% 10 1,5 0,5 31 Heavy Load Cranes 30% 4 15 Hatch Covers 30% Cargo & Service Cranes 25% TTS current sales per ship Potential package sales Potential new TTS products Recurring equipment deliveries Lifecycle services Total ship equipment delivery Deck Winches 20% Hatchcovers Winches Lashing bridges Lashing gears Service

16 TTS has a strong position in the biggest global shipbuilding market China and Korea account for ~70% of global shipbuilding TTS China market share Strategy % of global shipbuilding backlog (CGT) Hatch covers 90,0% 80,0% 65,0% 70,0% Uniquely positioned to capitalize on China partnerships and through BU presence in Korea 60,0% 50,0% 40,0% 30,0% Hose handling cranes 55,0% A new Chinese JV is established for Multipurpose & General Cargo 20,0% 10,0% -- Cargo cranes 22,0% Moving from part time to full time chairmen for all Chinese JV s: TTS Hua Hai China Korea Japan TTS Bohai TTS SCM

17 Our journey to continued revenue growth, increased profitability and improved cash flow Revenue improving actions Continue to build on the solid position in China Launch ship-type organisation with global service Use high market share segments to launch package sales and complement with peripheral products Cost reducing actions Product benchmarking to reach top of the range performance Technical standardization and group sourcing across business units Incorporate a flat organization structure and new business processes in Offshore and Container, Bulk & Tank Risk reduction actions Focus on core products in well defined segments Implement group bid reviews and authorization matrix Best in class work processes across business units Working capital & capex reduction actions Cash flow actions > adjustment of working capital days Simplification of work process 2015 CAPEX budget significantly reduced No dividend plans

18 Short term :Focusing on costs and control Mid term : Focusing on Customer and core product clusters >> Shiptype packages 2014 Organizational adjustments and merging units Integration of Container/Bulk/Tank business unit initiated. Focus on efficient operation/process Downsizing in Offshore. Multipurpose General Cargo finalized. New work process implemented. Enhance market focus Key account structure implemented. Corporate driven controller structure implemented. Momentum - cost reduction projects Cost savings operational cost ~ MNOK 70 + sourcing cost ~MNOK Customer driven growth market shares to increase Ship-type focus Increase product leverage per ship Profitability through cost efficiencies substantial lower sourcing costs Closing gaps /product development reinforced competitive position Lean and mean business substantial better focus on segments where higher productivity are achieved In 2014 MNOK 130 were released in operation & sourcing costs In 2015 we will eliminate another MNOK 100

19 Operating cost reducing actions The divisional layer is removed >> a flat Business Unit structure reporting directly to CEO Business processes across legal entities One company structure avoiding duplicate functions and administration Sourcing and standardisation across the business units In total ~70 MNOK annual cost reduction achieved in 2014 Further ~35 MNOK annual cost reduction initiated in 2015 Headcount reductions Annual cost savings initiated Employees NOKm Offshore Container, Bulk & Tank RoRo, Cruise and Navy

20 Our journey to continued revenue growth, increased profitability and improved cash flow Revenue improving actions Continue to build on the solid position in China Launch ship-type organisation with global service Use high market share segments to launch package sales and complement with peripheral products Cost reducing actions Product benchmarking to reach top of the range performance Technical standardization and group sourcing across business units Incorporate a flat organization structure and new business processes in Offshore and Container, Bulk & Tank Risk reduction actions Focus on core products in well defined segments Implement group bid reviews and authorization matrix Best in class work processes across business units Working capital & capex reduction actions Cash flow actions > adjustment of working capital days Simplification of work process 2015 CAPEX budget significantly reduced No dividend plans

21 Risk reduction actions and events Finalization of loss projects Avoiding new high product risk contracts and poor commercial contracts New bid review processes are implemented, both CEO and the Board involved on lower bid size than previously TTS best in class work processes introduced in Offshore New BU leader for Offshore with experience from project management and the offshore industry

22 Our journey to continued revenue growth, increased profitability and improved cash flow Revenue improving actions Continue to build on the solid position in China Launch ship-type organisation with global service Use high market share segments to launch package sales and complement with peripheral products Cost reducing actions Product benchmarking to reach top of the range performance Technical standardization and group sourcing across business units Incorporate a flat organization structure and new business processes in Offshore and Container, Bulk & Tank Risk reduction actions Focus on core products in well defined segments Implement group bid reviews and authorization matrix Best in class work processes across business units Working capital & capex reduction actions Cash flow actions > adjustment of working capital days Simplification of work process 2015 CAPEX budget significantly reduced No dividend plans

23 TTS Group ASA Turnover and EBITDA development EBITDA 60,0 10 % 40,0 20,0 5 % 0,0-20,0-40,0 Act Q Act Q Act Q Act Q Act Q Act Q Act Q Act Q Act Q Act Q Act Q % -5 % -60,0-10 % -80,0-100,0-15 % -120,0-20 % EBITDA EBITDA margin Note: - Restated 2012 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities. - EBITDA Q of MNOK 36,1 is excluding pension effect of MNOK 101,0

24 Cash flow optimization Group wide project to reduce working capital started in 2Q 2014 Focus on improving outstanding days for receivables and payables, as well as inventory optimization Average AR shorter and AP longer, saving a total of 113 MNOK from 2Q to 4Q Project continues in 2015, lead by dedicated senior finance manager Bid process focused on moving new contracts towards more cash neutral cost/revenue streams Dedicated follow up of large milestone payments from group cash manager with focused accountability by project managers 2015 CAPEX budget significantly reduced No dividend plans

25 TTS GROUP ASA Q1 Results 2015 Oslo, 13 May 2015 Björn Andersson, CEO Henrik Solberg-Johansen, CFO Photo: Jan Rolf Jacobsen/Norlines

26 TTS Group ASA 1 st quarter 2015 key figures Turnover 1Q MNOK 599 up from MNOK 554 1Q last year EBITDA 1Q of MNOK 1, up from MNOK -28 in 1Q 2014, in line with Q3 2014, but reduced compared to 4Q 2014 Order intake 1Q MNOK 301 excl. 50/50 companies. Total order intake 1Q MNOK 590 (incl 100% of 50/50 companies)* Order backlog 1Q 2015 MNOK 4 418, incl. 100% of 50/50 companies (*)TTS holds 50% of the 50/50 companies 26

27 TTS Group ASA Turnover and EBITDA development Turnover Q Q Note: - Restated 2012 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities - EBITDA Q of MNOK 36 is excluding positive pension effect of MNOK

28 MNOK Book to bill TTS Group ASA Order intake and order backlog Q Q Q Q Q Q Q Q Q ,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 - Order intake per quarter including 100 % of 50/50 s Book to bill = Order intake / Revenues Order intake (ex JV) Order intake JV (100 %) Book to bill (incl 100 % JV) Order backlog per is MNOK including 100 % of 50/50 owned companies Divided per year of delivery; Group ex JVs JV 100 % 28

29 TTS Group ASA Balance Sheet MNOK Non-current assets Current assets TOTAL ASSETS Equity Gross interest bearing liabilities Other liabilities and provisions TOTAL EQUITY AND LIABILITIES Net interest bearing debt / Covenants Net interest bearing debt increased to MNOK 348. Total cash reserve is MNOK 214 as per Equity ratio including subordinated convertible debt is 26.5 % at the end of 1Q 2015 Covenants at 1Q 2015 are met 29

30 TTS Group - Turnover and EBITDA 1Q 2015 TTS Group ASA Turnover: MNOK 593 EBITDA: MNOK 1 RoRo/Cruise/Navy Container/Bulk/ Tank Offshore Multi Purpose/ General Cargo Shipyard Solutions Services Turnover: MNOK 160 EBITDA: MNOK 15 Turnover: MNOK 72 EBITDA: MNOK 2 *) Turnover: MNOK 79 EBITDA: MNOK -24 Turnover: MNOK 94 EBITDA: MNOK -4 Turnover: MNOK 51 EBITDA: MNOK 4 Turnover: MNOK 136 EBITDA: MNOK 13 Turnover and EBITDA 1Q 2015 *) Includes 50 % of JVs

31 Summary Positive quarter and improved overall turnover ex Offshore Positive 1Q EBITDA for the third quarter after four negative previous quarters Turnover ex. Offshore continues to improve EBITDA margin ex. Offshore at industry average level Offshore affected by downturn in the market Improvement processes on track We have a road map for the improvement processes going forward in 2015 that has not changed. Up to now we have: Finalized the cost cutting programs in MPGC, CBT and Offshore (Offshore continues cost cutting due to weak market development in 2015) Value chain development in several product segments (sourcing, product development, sales) Positive view on significant market segments The marine market remains good Contracting of new vessels continues to be on a cyclic low level, and the marked is particularly under pressure in some segments, especially Bulkers Car carriers continue with several repeats Container ships grow, especially feeder-size and mega size Multipurpose/General cargo has improved from 2Q 2014 Offshore market under heavy pressure 31

32 2015 EBITDA expectations in line with historical margins Revenues excluding Drilling Equipment, Offshore and JVs (NOKm) EBITDA margin 10,0% ,0% 8,0% Avg. margin ~6% 7,0% 6,0% 5,0% 4,0% ,0% 500 2,0% 1,0% Note: Illustrative graph based on historical reported segment figures

33 For further information, please visit us at TTS GROUP ASA 33