CENTROTEC The European Energy-Saving Company CENTROTEC Sustainable AG Annual Results 2014 / Outlook 2015 March 26, 2015
AGENDA Business and Market Overview Key Financial Results 2014 Major Events and Operational Achievements Outlook
CENTROTEC European supplier of complete heating, ventilation and climate solutions for buildings CENTROTEC GROUP Strategic Core Segments Climate Systems Heating systems (gas & oil) Renewable energies (solar thermal, heat pumps, biomass, biogas processing) Combined heat & power (CHP) Heat recovery ventilation Air handling & ventilation Gas Flue Systems Exhaust systems for heating boilers Air piping systems for heat recovery ventilation Air & water tightness for sustainable construction Medical Technology & Engineering Plastics Medical technology equipment (neurosurgery, aesthetic, blood handling) Medical technology components (cannulaes, HPLC) Engineering plastics (semifinished and engineered parts) Sales 2014 EUR mio. 386 103 42 531 73% 19% 8% 3
Our strategic core segments address key market trends of the building technology industry KEY MARKET TRENDS Efficient supply of heat and power in buildings Growing gas and electricity costs Environmental concerns Ventilation in residential homes Building insulation drives demand for ventilation with heat recovery in residential homes Home and Building Automation Integration of home appliances (entertainment, lighting, HVAC, security) Mobile connectivity 4
Strong decrease in German heating market since June MARKET DEVELOPMENT Monthly market growth rate of oil and gas heat generating units in Germany 2014 vs. 2013 [in percent compared to same month in previous year] 5 2 4 5 11 Annual growth rate 2014: minus 3% 0 5-6 -10-7 -8-19 Jan Feb Mar Apr May Jun Jul Aug Sep Okt Nov Dec 1 Source: BDH monthly statistic 1 higher number of working days in 2014 compared to 2013; EHI 2015 5
All key sales markets of Centrotec show negative market development MARKET ENVIRONMENT Heat Generator Market Development in units (incl. Heat pumps) [in percent compared to same month in previous year] 3% 1% Average annual growth rate 2014: minus 3% -2% -3% -5% -6% -7% -7% Switzerland Spain NL Germany France Austria Italy Belgium 6 Source: EHI 2015
AGENDA Business and Market Overview Key Financial Results 2014 Major Events and Operational Achievements Outlook
Slight sales increase over previous year. Germany remains by far most important sales region for CENTROTEC. REVENUE DEVELOPMENT Med. Tech. & Eng. Plastics by Gas Flue Systems Segment in EUR Climate Systems million 525.4 41.4 99.2 384.8 +1% 530.5 41.7 102.6 386.2 +0.8% +3.4% +0.4% Drivers of Revenue Development Good start in the year 2014 compared with weak 2013 Bad German heating market development since June Poor overall economic environment in most European sales markets 2013 2014 by Sales Region in % of Total Revenue Rest of World Rest of Europe Germany 3.3 3.9 39.4 39.1 57.3 57.0 Drivers of Regional Sales Stabilization in NL on very low level Poor development in Eastern Europe Again good growth rates (on low basis) in target markets China and North America 2013 2014 Source: CENTROTEC figures 8
EBIT below guidance EBIT DEVELOPMENT by Segment [in EUR million]* Med. Tech. & Eng. Plastics Gas Flue Systems Climate Systems 35.7 2.8 6.3 26.5 2013 *Sum of Segment EBIT differs from total due -13.1% 2014 elimination of intercompany profits: 2013: 89 TEUR; 2014: 5 TEUR 31.0 3.2 6.1 21.7 +15.5% -2.6% -18.4% Drivers of EBIT Development Climate Systems: Slower than planned sales increase Increased depreciations due to high investment level in 2013 and 2014 Negative impact from weakness of Russian ruble Gas Flue Systems: Increased depreciations due to high investment level Shift between material and production costs due to insourcing of metal pipe production Negative one-off effect from change in board Med. Tech. & Eng. Plastics Optimized processes and change in sold product range lead to reduced material costs Good overall cost control 9
Low debt and lower interest rates INTEREST DEVELOPMENT Total Other interest cost Interest costs pensions 5.1 0.2 1.0-14% 8% 4% 4.4 0.3 1.0 Drivers of interest Development Gross debt of group reduced significantly from EUR 95.1 million in 2013 to EUR 80.6 million in 2014 Average weighted interest rate reduced by more than half percent Interest costs debt 4.3-22% EUR 1.0 million of interest expenses linked to pension plans (2013: EUR 1.0 million) 3.3 Interest income 0.4-35% 0.3 2013 2014 10
Constant growth in absolute and relativ figures DIVIDENDS EPS [in EUR] 1.54 1.31 1.40 1.00 Payout ratio [in percent] +32% 14.3 20.0 11.5 6.5 Dividend [in EUR] -0.55 0.15 0.20 0.20 * 2010 2011 2012 2013 2014 0.10 0.10 Negative EPS 2010 2011 2012 2013 2014 * 2014 value suggested for approval by AGM 11
High, but significantly reduced level INVESTMENTS BY SEGMENT Investments [in EUR] Med. Tech. & Eng. Plastics 35.6 4.2-28% Key Investments Climate Systems: Completion of new production and administration building for Brink (Staphorst, NL) Gas Flue Systems 9.1 25.6 3.2 5.1-23% -44% Upgrade and renewal of production facilities in Germany and NL Invests in optimization of product portfolio Gas Flue Systems: Renewal and extension of production facilities in NL and Germany Climate Systems 22.2 17.3-22% Med. Tech. & Eng. Plastics New axial molding machine 2013 2014 12
Net earnings and operating cash flow lead to improved balance sheet ratios KEY BALANCE SHEET AND CASH FLOW RATIOS Net Debt / Equity Ratio Equity / Total Assets Ratio 0.5 0.5 48.9 0.3 0.2 0.3 0.3 0.2 0.1 0.2 0.2 0.2 0.1 37.7 38.7 39.7 42.7 41.3 40.6 41.2 45.7 45.8 45.3 45.0 1/12 2/12 3/12 4/12 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 1/12 2/12 3/12 4/12 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 Net Working Capital [EUR million] 74.3 73.7 70.4 78.9 72.1 68.8 66.0 70.1 70.3 45 40 35 10 Operating Cash Flow [EUR million] 9.5 38.4 13.6 41.3 9.2 33.8 5 0 1/12 2/12 3/12 55.3 4/12 1/13 2/13 3/13 54.9 4/13 1/14 2/14 3/14 56.3 4/14-5 -10-15 -12.6 1/12-6.4-14.2-11.7-7.1-5.6 2/12 3/12 4/12 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 13
The solvency ratio has been significantly improved through better cash and working capital management DEVELOPMENT OF EQUITY RATIO Equity / Total Assets Ratio [in percent] 45.7 48.9 Equity [in EUR million] 200.4 207.9 Main drivers Net result (EAT) of EUR 17.4 million negative effect of reduced discount rate on the accruals for pensions (-7,0 Mio. EUR) and dividends (3,5 Mio. EUR) 2013 2014 Total assets [in EUR million] 438.7 425.6 Main drivers Optimized cash management leads to lower gross debt level Reduction of receivables and stocks Liabilities from trade payables not optimized towards year s end 2013 2014 14
Share price lost more than Index SHARE PRICE VS SDAX SINCE 2013 170% 150% Preliminary figures 2012 Boiler replacement announced (EnEV) Preliminary figures 2013 Start of deterioration in German heating market Preliminary figures 2014 SDAX 130% 110% Change in board of directors CENTROTEC 90% Jan. 13 Jul. 13 Jan. 14 Jul. 14 Jan. 15 *Source: Bloomberg, latest figures March 23, 2015 15
AGENDA Business and Market Overview Key Financial Results 2014 Major Events and Operational Achievements Outlook
New setup of management team ORGANISATION Facts Reduced management board since 04/2014 Collaborative approach reflected in coleadership on board level Dr. Thomas Kneip Gas Flue Systems Climate Systems Dr. Christoph Traxler Medical Technology & Engineering Plastics New management team at Ubbink/Centrotherm group installed Reorganization of Brink group completed Strong focus on collaboration and best practice sharing within the group, while maintaining the de-central organization principles 17
By end of October, Centrotec sold its shares in the PV manufacturing company Ubbink East Africa CONCENTRATION ON CORE COMPETENCIES Facts Next step in the portfolio adjustment within the Gas Flue Systems segment Photovoltaics manufacturing company does no longer fit in the strategy Limited options to refocus on core business Shares sold to joint venture partner 18
Brink Group with new and modern Headquarter INFRASTRUCTURE Staphorst, NL Production, logistic and administration More than 200 employees Total investment of million 12.0 EUR 19
Metal production insourced by Centrotherm; new powder coating facility installed PRODUCTION CAPABILITIES New metal production and powder coating facility of Centrotherm Brilon, DE Investment of million 2.7 EUR 15 additional employees 20
Product range modernised and supplemented PRODUCT PORTFOLIO gas micro CHP unit New oil condensing solutions T2/TB2 certified air conditioning system Split heat pump series Thermal wheel heat exchanger ventilation unit Gas condensing boiler with internal indirect coil New compact decentralised ventilation appliance 03/14 04/14 07/14 10/14 11/14 02/15 Various smart home solutions 21
By middle of March 2015 acquisition of PRO-KLIMA in Croatia announced INTERNATIONALISATION Facts Producer of Air Handling units Sales of approx. EUR 13 million in 2014 120 employees Based in Samobor, close to Zagreb, Croatia Benefits Important step towards internationalisation (sales and production) Access to (south-)eastern European market Amendment of product portfolio Other cost and sales synergies 22
AGENDA Business and Market Overview Key Financial Results 2014 Major Events and Operational Achievements Outlook
Slightly growth from reduced level in Europe MARKET OUTLOOK Residential building volume compared to last year [in percent] 1.9 1.4 2.2 2.3-1.9-2.2-4.2 2010 Source: Euroconstruct 2011 2012 2013 2014 2015e 2016e 24
Heating market development not directly linked to construction market MARKET OUTLOOK Change in European heating market* [in percent to previous year] 0.6 3.7 Opportunities Recovery of weak European market: strong decline in H2/14 in Germany, but stabilization since end of 2014 Renovation gains in importance and investment volume per building is growing National action plan for energy efficiency (NAPE) in Germany (both Risk and Opportunity!) European ErP (Energy related Products) Ökodesign-Richtlinie (09/2015) -3.6-4.2 2010 2011 2012 Source: EHI; *eleven biggest European markets included -3.3 2013 2014 Risks Low oil and gas prices Long debate on NAPE without conclusion Situation in Russia and Ukraine EURO-crisis in Greece Financial instability in other European countries 25
High level of uncertainty OUTLOOK Revenue [in EUR] Med. Tech. & Eng. Plastics Gas-Flue 530.5 41.7 102.6 Flat organic development Rationale Downward pressure: Regulatory changes will not yet have big impact in 2015 Climate 386.2 Imminent crises in Ukraine and Greece are nowhere near a resolution Low oil and gas prices will lead to lower energy bills EBIT [in EUR] Med. Tech. & Eng. Plastics Gas-Flue Climate 31.0 3.2 6.1 21.7 Flat organic development Consolidation in the Air Handling Unit industry continues International position of Climate Systems business still too weak Upward drivers: In the past, most Centrotec group companies have been able to defend / grow their market share New products provide positive impulses 2014 2015 26
Thank you! This presentation contains forward-looking statements based on current expectations, assumptions and forecasts of the executive board and on currently available information. Various known and unknown risks, unpredictable developments, changes in the economic and political environment and other presently not yet identifiable effects could result in the fact that the actual future results, financial situation or the outlook for the company differ from the estimates given here. We are not obligated to update the forward-looking statements made in this presentation unless there is a legal obligation. CENTROTEC Sustainable AG Am Patbergschen Dorn 9 59929 Brilon/Germany www.centrotec.de Tel: +49 2961 96631-0 Fax: +49 2961 96631-100 ir@centrotec.de WKN: 540750 ISIN: DE 0005407506