Baader Swiss Equities Conference 12 January 2018, Bad Ragaz Reto Welte, CFO Dätwyler Group
Datwyler Group Highlights Focused industrial supplier with global presence Leading positions in global and regional market segments Two divisions Sealing Solutions Technical Components Distributor and solution provider to health care, automotive, building and manufacturing industries Revenue of more than CHF 1,200 million More than 7,000 employees Established in 1915 Listed on the SIX Swiss Exchange, Zurich 2
Datwyler Group 100 years successful corporate history 3
Datwyler Group Continuity thanks to majority shareholder Directors of Dätwyler Holding Inc. representing registered shareholders (bound by a shareholders agreement) 100% Dätwyler Führungs AG The Board of Directors of the listed Dätwyler Holding Inc. holds the majority of the capital and the votes on a fiduciary basis without any beneficial ownership. 100% Free float Pema Holding AG Investments in Datwyler Companies only. 21.60% of votes 43.97% of capital 78.40% of votes 56.03% of capital Dätwyler Holding Inc. 4
Datwyler Group Strategic focus Focus on attractive market niches Improving productivity continuously Building leading market positions Increasing value added Offer system/time critical solutions and services 5
Datwyler Group Half of turnover replaced, margins doubled Revenue 2000 1750 1500 1250 1000 750 500 250 0-250 -500-750 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenue Acquisitions Divestments EBIT margin 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% EBIT margin 6
Datwyler Group Key Financials first half 2017 Sales growth of 3.8%, thereof 2.2% organic Adjusted EBIT-margin at 13.5% (PY 13.4%), before one-off costs of CHF 6.6 million Net result slightly lower due to higher tax expenses Net revenue (in CHF million) EBIT (in CHF million) EBIT margin in % Net result (in CHF million) 654.4 579.1 621.1 644.5 68.5 67.4 10.5% 11.6% 81.7 80.1 13.2% 12.4% 48.3 42.1 56.6 53.3 H1 2014 H1 2015 H1 2016 H1 2017 H1 2014 H1 2015 H1 2016 H1 2017 H1 2014 H1 2015 H1 2016 H1 2017 7
Datwyler Group Liquidity supports planned growth Assets CHF million Liabilities and equity CHF million 1 217.1 1 220.7 1 217.1 1 220.7 317.5 284.0 Cash and cash equivalents 208.5 351.9 Current liabilities 224.6 239.9 Trade and other accounts receivable 203.1 51.9 178.7 191.4 Inventories 805.5 816.9 Equity 496.3 505.4 Non-current assets 66.2% 66.9% Equity ratio 31.12.2016 30.6.2017 31.12.2016 30.6.2017 8
Datwyler Group Sustainable management approach Goal of sustainable profitable growth for the benefit of all stakeholders Balancing economic, social and environmental responsibility Code of Conduct for employees and suppliers Member of the UN Global Compact Sustainability reporting according to the standards of the Global Reporting Initiative (GRI) Reporting to the Carbon Disclosure Project 9
Datwyler Group Two focused divisions Sealing Solutions Technical Components Products Sealing systems and solutions, elastomer and aluminium/plastic closures, stoppers and plungers; precision moulded elastomer and metal components; special seals, profiles and gaskets Distribution of maintenance, automation electronic and ICT components and accessories (online distribution and branded wholesale) Markets Revenue 2016 GLOBAL Health care, automotive, civil engineering and consumer goods CHF 753.3 million EUROPE Manufacturing companies, trades, retailers, resellers, universities, private consumers CHF 462.6 million Employees 6,000 1,200 10
Sealing Solutions division 11
Sealing Solutions Leading positions in attractive global market segments 2 Consumer Goods CHF 250 m. CHF 1,600 m. Health Care CHF 2,400 m. High market and growth potential CHF 650 m. Automotive Civil Engineering 12
Sealing Solutions Health Care: growth drivers and success factors Growth drivers Ageing society in western industrial nations Increasing requirement for medicines in emerging countries Increase in chronic diseases such as diabetes and cardiovascular diseases Trend for injectable medicines and stricter regulations from the authorities Health Care sealing components: Success factors and measures Leading FirstLine production technology Expansion of FirstLine activities New offer strategy from customers' perspective Expansion of key account management Almost 50 years' experience within the industry Market potential CHF 1,600 million Market growth 5% - 7% 13
Sealing Solutions Example Health Care: Growth market pre-filled syringes 16 14 12 10 8 6 4 2 0 Global market potential for pre-filled syringes in USD billions 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Average annual market growth of 9.7% over the next 10 years Source: VisionGain 2016 Ideal containers for biotech medicines and vaccines given the risk that properties may change during transfer from bottles to syringes Correct dose every time improves patient safety Technological developments allow higher levels of self-administration Trend for automatic administration systems (including use of WiFi / Bluetooth) Europe leading the way so far, but USA catching up Datwyler elastomer stoppers are systemcritical components Expansion of FirstLine capacities in Belgium and India New FirstLine plant in the USA from mid- 2018 14
Sealing Solutions Automotive: growth drivers and success factors Growth drivers Sophisticated, environmentally friendly technologies (e.g. SCR systems) Car ownership increasing fast in emerging countries Trend for customers to outsource engineering aspects Automotive sealing components / O-rings: Success factors and measures Own plants in the three key business regions EU, Asia and NAFTA Experience and customer relationships going back many years New mixing plants in China (since 2015) and the Czech Republic (from 2018) Tapping into new technologies and niche markets through acquisitions (Origom / Ott) Market potential CHF 2,400 million Market growth 4 % - 5% 15
Sealing Solutions Example Automotive: Growth market SCR system 14 Number of diesel vehicles with SCR- Systems in millions worldwide Emissions scandal and worldwide tightening of emissions regulations mean diesel emissions require additional treatment 12 Selective Catalytic Reduction (SCR) is the leading technology and the most effective 10 8 6 4 2 0 2016 2017 2018 2019 2020 2021 2022 Average annual market growth of 17.0% over the next 6 years Source: PwC AutoFacts 2016, internal estimates Five system-critical sealing components for the conveyor and dispensing module in each SCR system Enormous challenges in terms of geometry, tolerances, cleanliness, adhesion and resistance to high temperatures, pressure and aggressive media The two leading providers are long-standing customers Despite electrification, diesel engines will still have an important role to play in the near future 16
Sealing Solutions Core competences CORE COMPETENCES Materials Engineering Processes 17
Sealing Solutions Division first half 2017 Acceleration of profitable growth thanks to leading global positions Revenue growth of 9.7%, thereof 6.2% organic, thanks to leading positions and start of series production of new components. Higher EBIT for the fifth consecutive time since the merger of the former two divisions. EBIT-margin at 18.7%. Health Care with above market growth in high quality components for prefilled syringes. Automotive with strong revenue growth, specially in China and in Selective Catalytic Reduction applications 686.4 705.9 16.0% 17.8% 753.3 18.1% Civil Engineering significantly above prior year. Continuing growth of the Nespresso project. 346.6 352.1 383.1 420.2 Integration of 2016 acquired German company Ott on track. 16.6% 17.6% 18.9% 18.7% 2014 2015 2016 2017 Net revenue full year in CHFm Net revenue half year in CHFm EBIT as % of net revenue 18
New Health Care plant in the USA on track Serve the growing needs of leading US health care companies for high qualitative components Greenfield manufacturing plant setting new industry standards Ultra-modern clean room technology and fully automated production cells Investment of more than CHF 100 million
Technical Components division 20
Technical Components Business model high service distribution Manufacturer directly Distribution Volumes EDE Electronic Design Engineers Prototyping High Service Distributor Volume Distributor MRO Maintenance Repair, Operation High Service Distributor R&D Pilot Small OEM Large OEM Service Maintenance Repair Education Prototype Small series Customer Customer needs needs - - in in the the course course of of the the product product life life cycle cycle 21
Technical Components Leading position in Europe with three strong brands > 650 000 Customers CHF 462 m Revenue > 55% Share of ecommerce > 180 000 Webshop visits per day 18 Languages of webshops and catalogues Omni-Channel Approach Ecommerce, catalogue, call center, field sales, technical support > 1 500 Suppliers > 250 000 Products on stock > 1 100 Employees > 11 000 Packages per day CHF 170.- Average order value 99% On-time delivery 22
Technical Components Four important market segments CHF 6 bn Estimated target market size MRO Europe high service distribution CHF 6 bn Estimated target market size Automation Europe high service distribution Maintenance, Repair, Operations Automation Focus on MRO & Automation Wholesale Consumer Electronics CHF 3 bn Estimated target market size Wholesale/ Consumer Electronics Europe CHF 3 bn Estimated target market size EDE&Production Europe high service distribution Electronic Design Engineers 23
Technical Components Maintenance, Repair, Operations (MRO) Growth drivers Vendor and inventory reduction Total cost of ownership (TCO) Capex limitations ambitions to extend life time of machinery Industry 4.0 Success factors and measures Brand awareness Regional presence Competent technical support Comprehensive and state of the art product range High quality of own brand Intuitive search in the web-shop 24
Technical Components Example MRO: Growth market Industry 4.0 160 140 120 100 80 Market potential of global industrial internet of things in billion US-$. Highly fragmented market Forcasted growth above historic market average, both for new facilities and for retrofit Enough niches for Datwyler distributors to be able to participate in the growth of the European market Anticipation of 5% growth per year of the relevant market 60 40 20 0 Europe (estimate) 2015 2016 2017 2018 2019 2020 Quelle: MarketsandMarkets 2016 Average yearly market growth of 8.0% in the next five years 25
Technical Components Automation Growth drivers Importance of efficient processes Increased focus on productivity Just in time delivery Industrial robotics Success factors and measures Technology roadmap: fastest integration of innovative components Range focussed application specific product packages Key account management Quality own brand as alternative 26
Technical Components Example Automation: Growth segment industrial robotics 90 80 70 60 Market potential of global industrial robotics in billion US-$ High technology, low volumes Wide range required, computing through to mechanical components Highly innovative products Positive penetration effect into standard business 50 40 30 20 10 0 Europe (estimate) 2016 2017 2018 2019 2020 2021 2022 Quelle: MarketsandMarkets 2016 Average yearly market growth of 11.9% in the next six years 27
Core competences Distribution and logistic Easy to do business with International expansion Ecommerce as main channel Product management
Technical Components Division first half 2017 Encouraging B2B demand weak B2C business Organic revenue decline of 4.1% due to weak demand affecting B2C-business and home/consumer electronics wholesaler Nedis. Encouraging demand in the core B2B-business of Distrelec and Reichelt and for the new house brand RND. Lower sales volume lead to an EBIT decline despite strong cost control and improved commercial margins. Adjusted EBIT-margin of 3.6% before one-off costs of CHF 6.6 million. New Distrelec Entreprise Hub in Manchester on track; planned annual cost savings of CHF 3 million. 526.5 4.6% 268.8 459.3 462.5 0.1% 2.0% 227.0 238.0 224.3 Reichelt with profitable growth and further potential, specially by accelerating the international expansion. 4.6% 2.3% 3.9% 0.7% Nedis with serious drop in revenue in a very challenging and competitive market environment. Strategy is under review and new improvement measures are being implemented. 2014* 2015 2016 2017 Net revenue full year in CHFm Net revenue half year in CHFm EBIT as % of net revenue * excluding Maagtechnic 29
New Distrelec Enterprise Hub in Manchester Central steering of product, supplier, purchasing, e-commerce and marketing management Significantly increase quality and productivity of proposition delivery Boost the range of products and services on offer to customers Expected one-off costs of CHF 8 million, planned annual cost savings of CHF 3 million
Datwyler Group outlook for 2017 Focus on accelerating organic growth Datwyler Group: Revenue between CHF 1'270 and 1'310 million Adjusted EBIT margin in the upper half of target range of 11% - 14%, total one-off costs of approximately CHF 10 million Sealing Solutions division: Above market growth in all four segments thanks to strong positions Accelerate growth by intensifying sales, technical services and marketing activities, by expanding capacities and by upgrading production processes Technical Components division: Enhance segmentation of markets and customers Align value proposition and offering strategy more effectively with current and future customer needs New Distrelec Enterprise Hub, accelerated internationalisation of Reichelt, strategy under review at Nedis 31
Questions and Answers 32
Disclaimer This presentation contains forward-looking statements that reflect the Group s current expectations regarding market conditions and future events and are therefore subject to a number of risks, uncertainties and assumptions. Unanticipated events could cause actual results to differ from those predicted and from the information contained in this presentation. All forward-looking statements in this presentation are qualified in their entirety by the foregoing. Dätwyler Holding Inc. Gotthardstrasse 31, 6460 Altdorf / Switzerland T +41 41 875 11 00, F + 41 41 875 12 28 info@datwyler.com, www.datwyler.com CS Equity Mid Cap Conference 2017 / Datwyler, www.datwyler.com