Results for half year ended 30 September 2018

Transcription

1 CARCLO PLC Results for half year ended 30 September November 2018

2 Introduction 2

3 Financial highlights Revenue flat at constant currency Underlying PBT down 22% due to CTP underperformance and production inefficiencies in new LED programmes Basic underlying eps 3.7p 2018/ / / / /15 Revenue CTP delayed new medical programmes all now underway Revenue - m H1 Revenue - m H1 LED successful in winning new programmes, including two midvolume electric vehicles All scheduled new vehicle production programmes launched in H1 2018/ / / / / Operating profit Operating profit - m H1 Operating profit - m H2 Full year results anticipated to meet expectations 3

4 Income statement m Half year ended 30 September 2018 Half year ended 30 September 2017 Revenue Operating profit Divisional underlying operating profit Central costs (1.7) (1.6) Underlying operating profit Exceptional items (0.2) - Operating profit Net financing charge (0.9) (0.9) Profit before tax Income tax expense (0.8) (1.3) Profit for the period Revenue decreased by 1% to 71.5m Underlying divisional operating profit decreased 12% to 6.2m Interest charge flat, including 0.4m IAS 19 pension finance charge Underlying earnings per share decreased 18% to 3.7p Effective tax rate 24% (2017: 27.5%) Basic earnings per share 3.5p 4.5 p Underlying earnings per share 3.7p 4.5 p Dividend per share Nil Nil 4

5 CTP H1 performance M 2018/ /18 Change Revenue (0.9) Operating profit (0.7) Operating margin 5.9% 7.4% (150bps) Revenue lower than anticipated due to programme delays but flat on constant currency basis Underlying operating profit decreased by 22% Revenue m * Underlying operating profit Sep 15 Sep 16 Sep 17 Sep 18 Sales Profit * Profit* m US performance continued to be impacted by unpredictable staffing levels New operations director and continuous improvements director Delayed new programmes impacted performance Benefits from operational improvements programme launched in January started to contribute towards end of H1 5

6 CTP markets and strategy Focus on operational improvements with all sites now following standardised lean processes, supported by significant employee training Significant actions taken in US with new leadership team in place and strengthening of engineering and manufacturing teams Czech business being downsized in H2 to match forecast demand Emphasis has shifted to optimisation of existing manufacturing processes away from reliance on new business development and subsequent tooling revenues Certain key customers delayed production ramps on new product launches even though product validations were on schedule 6

7 LED H1 performance M 2018/ /18 Change Revenue Operating profit (0.4) Operating margin 11.9% 13.2% (130bps) Overall revenue remained flat Underlying operating profit decreased by 10% as the business carried start-up costs Increased investment in overhead to match expected future growth Revenue m Sep 15 Sep 16 Sep 17 Sep 18 Sales Profit * Profit* m Two new mid-volume programmes won Significant new vehicle launches incurred start-up variances New operations director and strengthened operations team Margin improvement expected as production accelerates * Underlying operating profit 7

8 LED markets and strategy Two new design wins in the first half continued to demonstrate the successful shift towards a balanced low and mid-volume strategy Significant amounts of new equipment installed in Buckingham as previously won programmes entered production Strengthening of operations team as the business has grown Additional warehousing and office space secured to increase capacity North American factory expansion expected for new mid-volume contract New European contract will be built in Buckingham Market shift to electric vehicles has continued to add opportunities 8

9 Aero performance M 2018/ /8 Change Revenue Operating profit Operating margin 19.4% 12.6% 680bps Revenue increased by 9% as newer programmes started to reach planned volumes These revenues provided greater customer diversity Underlying operating profit increased by 69% with the higher sales and an improved product mix Revenue m Profit* m Sep 15 Sep 16 Sep 17 Sep 18 Sales Profit * 0.0 * Underlying operating profit 9

10 Aero markets and strategy New aircraft build rates have remained strong Business is focused on maintaining stable revenues and profits Good demand from broad range of Tier 2 s with greater product diversity than in prior years 10

11 Cash flow statement m m Net debt at 1 April 2018 (31.5) Underlying cash from operations 6.9 Working capital (5.3) Interest and tax (0.6) Net capital expenditure (4.7) Free cash flow (3.7) Exchange movements (0.7) Working capital build due to sub contract tooling activity and preproduction build on new midvolume contract Capex relates to investment in production machinery in Wipac to support the new mid-volume contract and normal replacement cycle in CTP Movement in net debt (4.4) Net debt at 30 September 2018 (35.9) 11

12 Balance sheet m 30 September September March 2018 Tangible and other non-current assets Intangible assets Net debt increased due to preproduction build on new midvolume contract Tooling prepayment due to be received H2 Current assets Current liabilities (29.5) (25.2) (29.2) Non-current liabilities (4.7) (6.0) (4.6) Net debt (35.9) (29.6) (31.5) Retirement benefit scheme (29.5) (29.8) (29.8) Net assets

13 Pension Accounting deficit decreased by 0.3m due to slightly higher discount rate on increased corporate bond yields Triennial actuarial valuation as at 31 March 2018 currently underway Cash contributions of 1.2m paid in H2 13

14 Technical Plastics LED Technologies Aerospace Outlook 14

15 Operational improvements programme COMP Cash Initiative, Operational Excellence, Management & Pricing Cash Initiative focussed on improved commercial terms and lower levels of inventory strong progress was made in CTP in the first half Operational Excellence has resulted in adoption of lean principles. Significant training of staff took place in H1. Major efficiency related projects are underway and tangible cost savings are now starting to be delivered which will be more significant in the second half. Numerous automation projects have been implemented with further projects planned over the medium term Management there has been a major change across our management team with a strengthening of our operational teams, particularly in our largest site in the USA Pricing we have successfully agreed a number of customer related pricing changes as contracts have been renewed and several of these will benefit the business from the start of the second half 15

16 Stronger H2 performance expected CTP performance is expected to be stronger in H2 due to: Ramp up in volumes on new medical programmes now in production New tooling programmes planned for H2 Delivery of operational improvements and cost savings implemented in H1 Benefits of price increases agreed with customers LED second half performance will benefit from: Acceleration in production volumes on new vehicles launched in H1 Elimination of initial start-up inefficiencies Award of additional new programmes in line with planned timescales 16

17 H2 actions CTP Operational improvement implementations Delivery of lean cost savings and continued development of opportunities through kaizan approach Final resolution of remaining US labour issues and a return to a highly efficient US plants Czech resizing implementation LED Elimination of start-up inefficiencies and a return to stable manufacturing Validation of original mid-volume contracts Planning for North American facility 17

18 Outlook The Board expects the Group to report a stronger performance in the second half of the financial year. This reflects the full effect of the new programmes, improved operational performance and expected higher design and tooling profits at Technical Plastics, along with the benefit from the ramp up in production volumes and anticipated improvement in production efficiencies within Wipac. As is normal within the Group s business, the achievement of its anticipated performance for the full year is dependent on key customers, particularly in Wipac, awarding new programmes in line with planned timescales in the second half. Medium term prospects continue to be encouraging with robust demand from the medical sector and the opportunity for strong growth from the automotive sector as recently won automotive lighting programmes go into production. The Board anticipates that the Group will trade in line with its expectations for the full year, and that it remains on track to grow substantially over the medium term. 18

19 Forward looking statements - Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward looking statements. 19