IR Corporate Presentation September 2018

Transcription

1 IR Corporate Presentation September 2018 KSB SE & Co. KGaA Dr. Matthias Schmitz (CFO) Dieter Pott (Head of Finance and Accounting) IR Corp. Presentation September 2018 / 1

2 About us KSB Group is one of the world s leading manufacturers of pumps and valves for many applications, providing a comprehensive range of service offerings. Process engineering/ industry (incl. chemical/ petrochemical industry, transport) Water transport Waste water treatment Energy conversion Building services Solids transport IR Corp. Presentation September 2018 / 2

3 About us Ownership structure & No of shares outstanding 16% Ordinary shares: 886,615 Johannes & Jacob Klein (formerly Klein Pumpen GmbH) Key Figures (EUR million) Order intake 2, ,265.3 Sales revenue 2, ,205.0 EBITDA EBITDA margin 7.4 % 8.5 % 84% Preference shares: 864,712 Johannes & Jacob Klein (formerly Klein Pumpen GmbH) Freefloat Freefloat 80% 20% EBIT EBIT margin 4.1 % 5.3 % Equity ratio 37.9 % 39.3 % Future Perspectives Global market volume ~ EUR 84 billion in 2016 Average annual growth rate 2 to 4 % IR Corp. Presentation September 2018 / 3

4 Strategy Markets, regional presence and economic development Growth-oriented and result-oriented measures Outlook Appendix IR Corp. Presentation September 2018 / 4

5 Our focal points Focus on Customers in Sales and After Sales worldwide Agility and Flexibility in Structures and Processes Profit Orientation based on Key Performance Indicators High Engineering Competence powered by Innovation and Excitement of Creativity IR Corp. Presentation September 2018 / 5

6 Our Mission KSB We create the future of Fluid Handling We strive for higher customer benefit. We inspire with competence power of innovation and creative will. It keeps us successful, independent and being a reliable partner since IR Corp. Presentation September 2018 / 6

7 Strategic measures Competitive cost structures EIP 10/10/10 Reducing complexity (companies, products) Global Footprint including optimising Supply Chain Shared Service Center Focussing on profitable growth Aftermarket ETA-Flagship Expanding business in core markets Start Additive Manufacturing (Lasercusing) for spare parts Strategic cooperation in mining Uniform systems and lean processes PACE Excellence in accounting and controlling Global SAP platform KSBase Cloud for Service Reaching competitive cost structures and striving for profitable growth at the same time IR Corp. Presentation September 2018 / 7

8 Strategy Markets, regional presence and economic development Growth-oriented and result-oriented measures Outlook Appendix IR Corp. Presentation September 2018 / 8

9 A fragmented addressable market of roughly EUR 84 billion in pumps, valves and service 2016 Market size (EUR million) by geography Europe World Americas 6,415 11,800 11,663 Asia 20,862 55,715 P V 6,459 13,959 MEA P V 28,292 P V 3,754 9,094 P V P V Source: KSB estimates Figures for centrifugal pumps and valves include spare parts and service CAGR > 4% 2 4% <2% IR Corp. Presentation September 2018 / 9

10 Industry 12,547 24,787 Size of target markets in pumps, valves and service Energy supply 2,279 4,605 Water / wastewater 5,704 6,621 Building 4,973 12,295 Mining 3,750 9,264 Centrifugal pumps incl. spare parts and service Valves incl. spare parts and service Megatrends driving growth in KSB's markets Environmentalism + Increasing regulation + Energy efficiency Urbanization + Need for more infrastructure Water scarcity + Growing demand for water reuse, treatment and efficiency Digitization Source: KSB estimates CAGR > 4% 2 4% <2% IR Corp. Presentation September 2018 / 10

11 Being present in all big markets globally Share of regions (as per 31 December 2017) Order intake Sales Europe 49 % 51 % Asia 29 % 29 % America 16 % 15 % MEA 5 % 5 % KSB production sites KSB sales and service sites IR Corp. Presentation September 2018 / 11

12 Order intake grew in 2017 by EUR million % % % % 2, ,473.6 Main segment drivers: + water, + wastewater, + industry and + mining customers KSB Group Pumps Valves Service Regional growth drivers: + Asia / Paciific ( %) + America (+ 9.0 %) + Europe (+ 2.8 %) (EUR million) IR Corp. Presentation September 2018 / 12

13 Order intake grew in H1/2018 by EUR 12.6 million % % +/- 0% % Negative currency translation effects of EUR million 1, Order intake grew by 6.3 % without these effects KSB Group Pumps Valves Service Main growth segment drivers: + industry, + construction and + mining customers (EUR million) IR Corp. Presentation September 2018 / 13

14 Strong growth of order intake in Asian entities in 2017 Total order intake: EUR 2,265.3 million % % Middle East / Africa % (in EUR million) (in EUR million) (in EUR million) (in EUR million) Asia / Pacific 21 % 7 % % % 16 % Europe Asia / Pacific Americas Middle East / Africa Currency effect in total EUR -7.3 million Americas Europe IR Corp. Presentation September 2018 / 14

15 Sales increased by EUR 39.3 million in % % % % Minor impact of currency translation of EUR million 2, ,444.4 Regional growth driver: + Asia / Paciific ( %) KSB Group Pumps Valves Service (EUR million) IR Corp. Presentation September 2018 / 15

16 Sales decreased in H1/2018 by EUR 38.8 million % % +/- 0 % % 1, Negative currency translation effects of EUR million Sales grew by 1.1 % without these effects Service segment grew most significantly in China Discrepancy of sales versus order intake in the pumps KSB Group Pumps Valves Service (EUR million) segment derived from the duration of several project orders IR Corp. Presentation September 2018 / 16

17 Focus on European and Asian entities in sales in % Sales in total: EUR 2,205.0 million Middle East / Africa % Asia / Pacific 21 % 7 % % % 15% % Europe Asia / Pacific Americas Middle East / Africa Currency effect in total EUR -5.8 million Americas Europe IR Corp. Presentation September 2018 / 17

18 Income Statement (EUR million) H1/2016 H1/2017 H1/2018 Sales revenue 2, , , , ,054.5 Total output of operations 2, , , , ,100.8 Staff costs % of total output Cost of materials % of total output Other expenses / income (net) EBIT IR Corp. Presentation September 2018 / 18

19 EBIT decreased by EUR 35.7 million in H1/2018 (EBIT in EUR million) 4.1 % % H1/ % 5.3 % Increase in Return on Sales (ROS) FY 2016 to FY % H1/2018 Decrease in (ROS) H1/2017 to H1/2018 EUR - 25 million were attributable to additions to provisions from an old legacy project in the United Kingdom EUR -3.5 million were related to currency translation effects (FX) EUR -2.5 million were related to the implementation of IFRS EBIT Earnings H1/2017 before Interest 2017 and taxes H1/2018 IR Corp. Presentation September 2018 / 19

20 Capital Expenditure increased by 24 % resp. EUR 19.7 million Capex in total: EUR million Intangible assets Middle East / Africa 17 % Property, plant and equipment Asia / Pacific 21 % % Americas 12 % Europe (EUR million) IR Corp. Presentation September 2018 / 20

21 Net financial position declined in H1/2018 by EUR 60.3 million mainly from reduced cash and cash equivalents Available financial resources Financial liabilities Short-term debt Long-term debt Financial liabilities H1/ H1/2018 (EUR million) IR Corp. Presentation September 2018 / 21

22 Dividend increased by 35 % to EUR 7.50 per share for % 39.1 % 24.7 % 29.4 % 35.3 % Pay out ratio Group: 12.00* Dividend per share / EPS 8.50* +35 % 5.50* 5.50* 7.50* (*EUR / Preference shares: EUR) IR Corp. Presentation September 2018 / 22

23 Strategy Markets, regional presence and economic development Growth-oriented and result-oriented measures Outlook Appendix IR Corp. Presentation September 2018 / 23

24 Continuation of current projects (2017) Concentration of production (floor space productivity) Spare parts production at Bochum > Pegnitz, FT (D) Improved capacity utilisation at foundry in (< Shanghai) Concentration of production at Jundiaí (BRA) Reduction in number of companies (reduction of complexity) KSB AMRI, Houston has been sold (USA) 4 service companies have been merged (F) Valve companies have been integrated (BRA, CHN) Efficiency improvement programme 2/3 of the measures have been processed; the programme is to be continued beyond 2018 (Shared Services, costs of materials, effectiveness) IR Corp. Presentation September 2018 / 24

25 Investments (2017) Construction of a new plant in Shirwal (India) Production and testing of heavy-duty pumps for power station applications Automatic moulding unit in Pakistan State-of-the-art foundry in the country for higher output and quality Set-up of a 3D printing centre in Pegnitz Transition from the test phase to parts production via selective laser melting Expansion of the plant in La-Roche Chalais (F) Modernisation and expansion of capacity for the production of specialised butterfly valves IR Corp. Presentation September 2018 / 25

26 Innovations (2017) Butterfly valve for longdistance water transport (APORIS) Process pumps for the oil industry (BB3) Pump for waste water disposal (AMAREX KRT) Pump for sterile applications (Vitacast) Desert-proof pipeline valve for large flow rates and high pressures Specialised (heavy-duty) pumps for refinery applications to API standard Electrically and hydraulically optimised submersible motor pump (high-efficiency modular system) Optimised close-coupled pump set for use in the food and beverage industry IR Corp. Presentation September 2018 / 26

27 Strategy Markets, regional presence and economic development Growth-oriented and result-oriented measures Outlook + Challenges + Forecast Appendix IR Corp. Presentation September 2018 / 27

28 Outlook / Challenges Continued low demand from customers in energy markets Geopolitical risks and structural problems in single markets Price pressure spreading as competitors in weak markets squeeze into new business Weak business in important emerging countries (e.g. Brazil, Russia) and increasing demand for local content Uncertainty due to geopolitical discussions about free trade and due to adverse currency translation effects IR Corp. Presentation September 2018 / 28

29 Intensification of service business (aftermarket) Expansion of service branches New service centres in China, Italy, Poland, Russia, Saudi Arabia and USA, incl. acquisitions Optimisation of spare parts processes Web-Shop and quicker spare parts logistics Expansion of the range of services Expansion of engineering services (retrofit, re-engineering, service contracts) è Target: Order intake growth of 8-10 % per year in the aftermarket business IR Corp. Presentation September 2018 / 29

30 Digital transformation Cloud-based monitoring system (KSB Guard) Sensor and transmission module for attachment by magnet to pump (IoT, platform) Pump drive focused on Industry 4.0 (MyFlow) Electronic output adjustment via app (integrated overall concepts) Additive manufacturing Pump and valve elements made from metal via 3D printing IR Corp. Presentation September 2018 / 30

31 Outlook / Forcast 2018e Increasing demand in all markets Industry Water/Wastewater Energy Mining Building 40 % 19 % 19 % 11 % 11 % Industry will develop well in general petrochemical industry under pressure due to low oil prices Worldwide renewal of water and wastewater infrastructures Strong growth in Asia, Middle East and Africa Growing number of power plant projects in China and India Focus on nuclear power plants in China Increasing activity due to rising raw material prices Positive development due to low interest rates and rising real estate prices Share in KSB Order Intake (2017) IR Corp. Presentation September 2018 / 31

32 Strategy Markets, regional presence and economic development Growth-oriented and result-oriented measures Outlook Appendix + Management + New legal form + Financial Calendar 2018 / 2019 IR Corp. Presentation September 2018 / 32

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34 Members of the Executive Board Mechanical engineer on the board since 13 November 2017 appointed until 30 November Dr Stephan Timmermann Consultant Member of the Board of MAN Diesel & Turbo SE Managing Director Schwäbische Hüttenwerke GmbH CEO MAB Logistics GmbH Integrated engineering/business administration degree on the board since 1 June 2017 appointed until 31 May 2020 Dr Matthias Schmitz CFO H.C. Starck GmbH, Munich CFO Linde Material Handling GmbH (Kion Group) Head Controlling Mahle GmbH, Division Pistons KSB AG, last position: Head Controlling KSB Group IR Corp. Presentation September 2018 / 34

35 Members of the Executive Board Mechanical engineer and degree in business on the board since 1 July 2017 appointed until 30 June 2020 Ralf Kannefass Industrial consultancy Stieler Kannefass Board Member of Cassidian / EADS (today Airbus Defence & Space) Siemens AG, last position: CEO of Siemens Energy, Oil & Gas Turbo Equipment Mechanical engineer, Dr-Ing. on the board since 15 September 2017 appointed until 14 September 2022 Dr Stephan Bross At KSB for 24 years, earlier positions: Head of Corporate Units Pumps and Valves Head of Service Head of Product Management and Development Engineered Pumps Member of the Supervisory Board from 2010 to 2017 IR Corp. Presentation September 2018 / 35

36 Old Structure KSB Foundation Kühborth-Stiftung GmbH Legal Form Change of legal form into a KGaA (Kommanditgesellschaft auf Aktien / limited partnership by shares) 0.6 % 99.4 % Johannes und Jacob Klein GmbH* (majority shareholder) Old structure: Supervisory Board nominated and controlled Board of Management Annual General Meeting Other Shareholders (free float) Supervisory Board KSB AG with Board of Management Shareholders voted in Annual General Meeting on agenda items as required by the German Corporation Act (Aktiengesetz) and had further influence on the company through their vote for members of the Supervisory Board * Formerly Klein Pumpen GmbH (80% of voting shares) IR Corp. Presentation September 2018 / 36

37 New Structure KSB Foundation Kühborth-Stiftung GmbH Legal Form Change of legal form into a KGaA (Kommanditgesellschaft auf Aktien / limited partnership by shares) 0.6 % Johannes und Jacob Klein GmbH* (majority shareholder) 99.4 % 99.4 % 0.6 % Klein, Schanzlin & Becker GmbH Change of legal form approved in Annual General Meeting on 10 May 2017 Annual General Meeting Other Shareholders (free float) Supervisory Board KSB Management SE with Administrative Board KSB SE & Co. KGaA KSB SE & CO. KGaA managed by the general partner KSB Management SE (with Non-executives and Executive Directors) Implementation on 17 January 2018 * Formerly Klein Pumpen GmbH (80% of voting shares) IR Corp. Presentation September 2018 / 37

38 Change of legal form what will change for our shareholders? Share capital Majority votings in Annual General Meetings, e.g. + nomination of Supervisory Board members + dividend payments + change of statutes In the past Share capital of KSB AG was divided into ordinary shares (with voting right) and preference shares (with advantages with regard to the dividend) The majority shareholder could pass resolutions alone due to his share of > 80% of the voting rights With new legal form No change, shareholders of KSB AG became shareholders of KSB SE & Co. KGaA, their respective shares (quantity and class) did not change The majority shareholder can pass resolutions alone due to his share of > 80% of the voting rights. Some resolutions will, in addition, require the approval of the general partner KSB Management SE (e.g. dividend payments, changes of statutes) IR Corp. Presentation September 2018 / 38

39 Change of legal form what will change for our shareholders? Nomination of members of the Board of Management/ Executive Directors In the past Indirectly influenced by majority shareholder, who elected Supervisory Board members, who in turn nominated members of the Board of Management With new legal form Indirectly influenced by Klein, Schanzlin & Becker, a new subsidiary of the foundation, which nominates the Non-executive Directors in KSB Management SE, who in turn nominate the Executive Directors Option of a capital increase Currently no plans (last capital increase was in 1992) Currently no plans. Should this become an option in the future, the majority shareholder would either have to participate or his shareholding would dilute. His structural influence through the general partner would remain. IR Corp. Presentation September 2018 / 39

40 Income Statement (EUR million) H1/2016 H1/2017 H1/2018 Sales revenue 2, , , , ,054.5 Total output of operations 2, , , , ,100.8 Other income Cost of materials Staff costs Depreciation and amortization expense Other expenses Other taxes EBIT Financial income / expense (net) Income from / expense to investments accounted for using the equity method EBT Taxes on income Net profit IR Corp. Presentation September 2018 / 40

41 Statement of Cash flows (EUR million) H1/2016 H1/2017 H1/2018 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Changes in cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents Effects of changes in consolidated Group Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period IR Corp. Presentation September 2018 / 41

42 Balance sheet: Assets (EUR million) H1/2016 H1/2017 H1/2018 Non-current assets Intangible assets Property, plant and equipment Non-current financial assets Investments accounted for using the equity method Deferred tax assets Current assets 1, , , , ,567.5 Inventories Trade receivables and PoC Contract assets Other financial assets Other non-financial assets Cash and cash equivalents Assets held for sales Total 2, , , , ,292.1 IR Corp. Presentation September 2018 / 42

43 Balance sheet: Equity and Liabilities (EUR million) H1/2016 H1/2017 H1/2018 Equity Non-current liabilities Deferred tax liabilities Provisions for employee benefits Other provisions Financial liabilities Current liabilities Provisions for employee benefits Other provisions Financial liabilities Trade payables Contract liabilities Other financial liabilities Other non-financial liabilities Income tax liabilities Liabilities held for sales Total 2, , , , ,292.1 IR Corp. Presentation September 2018 / 43

44 Financial Calendar 2018 / November 2018 Interim Statement Q3/9M January 2019 Preliminary unaudited figures FY March 2019 Full-Year Consolidated Financial Statements 2018 Financial Press Conference am, Frankenthal 25 April 2019 Interim Statement Q1/3M May 2019 Annual General Shareholders Meeting, Frankenthal 14 August 2019 Half-Year Interim Report Q2/6M November 2019 Interim Statement Q3/9M 2019 IR Corp. Presentation September 2018 / 44

45 Investor Relations Dieter Pott Head of Finance and Accounting Phone: +49 (0) IR Corp. Presentation September 2018 / 45