General Meeting of Shareholders Kendrion N.V. Agenda

Transcription

1 General Meeting of Shareholders Kendrion N.V. Speakers: Piet Veenema / Frank Sonnemans Date: Monday 14 April 2014 Agenda 1. Kendrion at a glance 2. Highlights for the year Status integration Kuhnke 4. Review of the Division Industrial and its business units 5. Review of the Division Automotive and its business units 6. Financial results 2013 and financial objectives 7. Dividend 8. EC fine 9. ERP project HORIZON 10. Corporate Social Responsibility 11. Remuneration 12. Outlook 2 1

2 1. Kendrion at a glance 3 The Kendrion organisation KENDRION N.V. Development, production and marketing of high-quality electromagnetic components 2,800 employees (including 100 temps) in 15 countries Revenue: approximately EUR 400 million Listed company on NYSE Euronext's Amsterdam Market 4 2

3 Kendrion breakdown of revenue Global activities Kendrion 6 3

4 Kendrion committed to being a high-performer in niche markets Mission Strategy Objectives To develop business units that have strong international market positions in selected business-to-business niche markets and are market leader whenever possible Spearheads - Niche market leadership - Organic growth in the current operations - Utilisation of synergy in and between the business units - Balanced spread of the operations - Enhancement of flexibility in the organisation - Targeted add-on acquisitions - Enhancement of the innovative capacity - Corporate Social Responsibility and Sustainability Organic growth > 10% ROS > 10% ROI > 17.5% 7 Kendrion's strategy - Kendrion is a focused company since A clearly defined profile of a multinational, fast-growing high-tech company - Build leading positions in business-to-business niche markets - With a well-balanced spread of activities and risks - With activities around the globe - With strong financial targets 8 4

5 Towards a leading market position in electromagnetic components Proven acquisition track record Founded 1859 Acquisition Acquisition Name change Acquisition 2007 Acquisition 2008 Acquisition 2010 Acquisition 2011 Acquisition Turnover development 10 5

6 Strategy update - New Mid-term Plan "Designed to grow" - Turnover target 2015: EUR million - Achievement of financial objectives (costs and cash) - Expansion of the business in USA, China and India - Targeted acquisitions with industrial focus - Focus on "green"; new label "greensigned by Kendrion" - Increasing focus on mechatronic systems 11 Kendrion on its way to become innovation leader - Kendrion Academy - Innovation Rhythm (Inspiration Days, Innovation Days) - Kendrion Symposium - Innovation Awards and Innovation Board - Technology radar - Treasure mapping - Global technology scouting 12 6

7 2. Highlights for the year Highlights for the year Acquisition of Kuhnke AG on 14 May Broadening of the company's core activities (mechatronics) and geographical spread (Romania) - Improving market conditions during the second half of the year - Improvement in revenues and results over the quarters - Strong financial position, satisfactory free cash flow - Enhancement of the innovation capacity - Strong basis for further growth 14 7

8 3. Status integration Kuhnke 15 Status integration Kuhnke - High complementary acquisition in terms of product offering, customer base, engineering know how and geographical coverage - Good understanding from Kuhnke management and employees - Legal structure changes (incl. streamlining of the Kuhnke Support structure) almost finished - New business unit structure fully in place (ICS and ACS) - More entrepreneurship, increasing speed - Reduction number of employees with more than 50 - Negotiations with Works Council and unions went well - Smooth organisational, managerial and financial integration - Problems with new Automotive line mostly solved in Q4 - Good cooperation with the other business units within Kendrion 16 8

9 4. Review of the Division Industrial and its business units 17 Turnover Division Industrial per business unit 18 9

10 Locations of the Division Industrial Kendrion (Villingen), Germany Kendrion (Donaueschingen /Engelswies), Germany Kendrion Kuhnke, Germany Kendrion Kuhnke, Sweden Kendrion (Switzerland), Hausen am Albis Kendrion (Linz), Austria IDS IMS ICS ICS IMS IMS Kendrion (Mishawaka), USA IMS IDS Kendrion (Aerzen), Germany IMS ICS IDS Kendrion (Donaueschingen /Engelswies); Kendrion (Villingen), Italy IMS IDS IDS IMS ICS Kendrion (Suzhou), China Kendrion (UK), Bradford Kendrion Kuhnke, Spain Kendrion Kuhnke, Romania 19 General remarks Division Industrial - Improving market conditions during the year - Organic growth HY2 3%, HY1-3%, resulting in -0.4% for full year - Stable organisation, innovative - Growth mainly driven by machine equipment market in Germany - USA: start of several new projects - China steadily growing, adapted focused strategy 20 10

11 Snapshots Industrial Magnetic Systems (IMS) 21 Snapshots IMS Electromagnetic components tailored to the individual needs of advanced industries - Positive development, several new projects will start in Very positive development in the textile machine industry - USA: interesting new - fuel cell related - project - HY transfer of substantial business to Romania 22 11

12 Snapshots Industrial Control Systems (ICS) 23 Snapshots ICS (formerly named Kuhnke Automation) Customised, mechatronic solutions designed to optimise automatic processes - Good start within Kendrion, many sales initiatives - Several issues solved (MBO France, new set-up Italian activities) - Good turnover development, especially caused by good aircraft interior business - Promising new projects (motorised locking units, isolated valves for analytical equipment) 24 12

13 Snapshots Industrial Drive Systems (IDS) 25 Snapshots IDS Electromagnetic brakes and clutches for the industrial drive technology - Improving market conditions, due to machine equipment market - Start of manufacturing activities in China and sales activities in Italy - Successful introduction of the new KOBRA products, "greensigned label" - Customer base increased (Schindler, Schneider Electric, ebm-papst) - Lean production programme in process 26 13

14 5. Review of the Division Automotive and its business units 27 Turnover Division Automotive per business unit 28 14

15 Division Automotive Locations of the Division Automotive Kendrion (Villingen), Germany Kendrion (Markdorf), Germany Kendrion Kuhnke, Germany Kendrion Kuhnke, Romania Kendrion (Prostejov), Czech Republic Kendrion (Eibiswald), Austria PCS CVS HDS ACS ACS PCS PCS Kendrion (Shelby), USA HDS PCS CVS PCS Kendrion (Nanjing), China CVS CVS Kendrion (Mexico), Mexico HDS Kendrion (Suzhou), China CVS Kendrion (Sao Paulo),Brazil Kendrion (Pune), India 29 Applications of the Division Automotive Chassis Gasoline direct injection Steering Common Rail injection systems Gear shifts Transmission Differential gear Headlights regulation Mobile and standard PCS Engine management Rear hatch drive hydraulic ACS Electronics Pneumatic systems Sound design Solenoid technology Sensor technology Visualisation CVS A/C compressor drives Clutches for auxiliary units Engine cooling system for Genset Belt drive systems Engine-cooling systems Fire-prevention technology HDS Common Rail injection systems Engine valves and actuators Pressure switch Engine-cooling systems Lighting Transmission valves and solenoids 30 15

16 Chassis Possible functions: Swift regulation of the shock absorber Realisation of chassis set-up Specific characteristics: Integrated in the shock absorber tube 31 Common Rail injection systems Possible functions: Regulation of the pump pressure in the rail Control of diesel volume flow to the high pressure pump Specific characteristics: Easy regulation of the pump pressure in the rail without high pressure valve 32 16

17 Transmission Possible functions: Actuation of clutch for gear shifting Activation and deactivation of 4-wheel drive Parking lock solenoid for transmission locking in parking position Specific characteristics: Inside the gear box, valve housing above oil level, temporarily under oil Integrated temperature sensor and electronics in the valve possible 33 General remarks Division Automotive - Improved sales in Western Europe - Organic growth HY2 4%, HY1-6%, resulting in -1.8% for full year - Fast growing activities, many innovations - Experienced divisional management and staff - Strong sales initiatives outside Europe 34 17

18 Snapshots Passenger Car Systems (PCS) 35 Snapshots PCS Project solutions for specific customer applications in the automotive and special vehicle industries - Biggest project received ever (damper business) - In total in 2013 EUR 300 million new business - New lines in the USA now up to speed - New R&D department installed 36 18

19 Snapshots Automotive Control Systems (ACS) 37 Snapshots ACS (formerly named Kuhnke Automotive) Intelligent automotive control systems for comfort, safety, energy saving and functionality - Problems with new seat valves line mostly solved during Q4 - Focus in the German plant on quality management and efficiency improvement - Further increase of the autonomy of the Romanian plant - Good profit contribution in the fourth quarter

20 Snapshots of Commercial Vehicle Systems (CVS) 39 Snapshot CVS Individual energy-saving systems for commercial vehicles and off-highway applications - Strong turnover development in the second half-year Active sales organisation leads to new turnover outside Europe - Adapted strategy for the Chinese operations initiated - New project organisation implemented - Very good profit contribution 40 20

21 Snapshots Heavy Duty Systems (HDS) 41 Snapshots HDS Customised project solutions for the commercial vehicle sector - Difficult market conditions in both the USA and India - Therefore disappointing profit development in Further streamlining of the product portfolio in the USA - New projects acquired in India - Good profit improvements expected in

22 6. Financial results 2013 and financial objectives 43 Key figures 2013 (x EUR 1 million unless otherw ise stated) Q Q Difference in % Revenue % Normalised EBITA % Net profit % Normalised net profit * % ROS 6.8% 3.4% 1 The quarterly figures are unaudited (x EUR 1 million unless otherw ise stated) Difference in % Revenue % Normalised EBITA % Net profit % Normalised net profit * % Solvency 40.1% 44.8% ROS 6.8% 7.8% ROI 10.8% 12.4% EBITA and net profit adjusted for non-recurring items 44 22

23 Financial results (1/3) Normalised net profit EUR million full year 2013 full year 2012 Q Q Net profit Release earn-out Kendrion (Shelby) Inc. - (4.4) - (1.1) Net acquisition costs and other expenses Tax gain Kuhnke acquisition structure (1.6) Release earn-out Kuhnke (4.4) Restructuring and integration costs of Kuhnke net of tax * Release provision for EC fine (0.8) - (0.8) - Normalised net profit Financial results (2/3) - Strong fourth quarter with 7% organic sales growth and normalised EBITA of EUR 6.7 million, with increasing contribution from Kuhnke - Turnover increase by 24% to EUR 354 million due to Kuhnke acquisition (completed 14 May 2014). Organic growth of -1.2% in Step up of organic growth during the year: Q1: -8%, Q2: -3%, Q3: 0%, Q4: +7% - Added value margin (48%) at same level as last year, with no major changes in main raw material prices - Normalised EBITA of EUR 23.9 million (2012: EUR 22.3 million), 7% of sales - Integration of Kuhnke according to plan, but performance in 2013 held back by problems with new automotive line. Restructuring costs will start to contribute to results in

24 Financial results (3/3) - Net finance costs for the year increase to EUR 5.2 million (2012: EUR 4.9 million) due to the additional debt related to the Kuhnke acquisition - Income tax expenses for the year showed an income of EUR 1.0 million (2012: EUR 1.5 million costs). Income tax was positively influenced by tax gains related to the Kuhnke acquisition, the recognition of compensable fiscal losses and the earn-out release (non-tax item) - Normalised net profit EUR 14.3 million, 5% higher than last year (2012: EUR 13.6 million) 47 Financial position EUR million Reported free cash flow (29.6) 9.0 Acquisition of subsidiaries Net acquisition costs and other expenses paid Restructuring and integration costs of Kuhnke paid Normalised free cash flow Satisfactory free cash flow of EUR 11.7 million: - High investments in 2013 of EUR 18.5 million, EUR 5.5 million above depreciation - Further improvements in working capital - Net debt of EUR 49 million at year-end, a strong improvement over Q3 (EUR 63 million) Good financial position: - Net debt covenant: 1.22 (including EC fine 2.18) - Solvency per ultimo 2013: 40% 48 24

25 Financial targets Target Realisation 2013 Organic growth >10% per year -1.2% ROS >10% 6.8% ROI >17.5% 10.8% Solvency 35% 40.0% Interest-bearing debt/ebitda < Free cash flow Dividend Healthy 35-50% of net profit 82% of normalised net profit 50% of normalised net profit Dividend 50 25

26 Dividend - Dividend policy 35-50% of net profit - Solvency of at least 35% - Proposed optional dividend for 2013 of 50% of normalised net profit (EUR 14.3 million) - Dividend of EUR 0.55 per share (2013: EUR 0.58 per share) EC fine 52 26

27 EC fine - Fine imposed in in 2005 (EUR 34 million) - Reason: involvement of former subsidiary Fardem Packaging price arrangements - Kendrion recognised a provision in 2011, following judgement of General Court of the European Union - Final verdict 26 November 2013, Kendrion lost its case - Total fine (including interest) as per end 2013 amounted to EUR 43.4 million and was paid on 3 April Kendrion decided to initiate proceedings for the failure to adjudicate within a reasonable time ERP project HORIZON 54 27

28 ERP Project HORIZON - Running according to plan - Major migrations are finished - Kendrion (Shelby) and Kendrion Kuhnke will be finished in Corporate Social Responsibility 56 28

29 Corporate Social Responsibility - Sustainability is a key focus area - Kendrion pursues an active policy in the field of Corporate Social Responsibility, with a specific focus on areas including - Energy savings and CO 2 reduction - Supply chain stewardship - Health & Safety - Materials and waste - First Kendrion CSR Award - Introduction of "greensigned by Kendrion" - CSR Report 2013 available now - Kuhnke introduced in programme in More long-term strategic focus step by step Remuneration 58 29

30 Remuneration policy - Promotes achievement of Kendrion's short and long-term objectives on financial and non-financial basis - Performance oriented design, variable income challenging but not excessive - Simple and transparent - Supervisory Board periodically tests the package - Claw-back possibility for 2 years 59 Variable remuneration package Fixed Variable Element Base salary Annual incentive Long-term incentive Way of payment Cash Performance related restricted shares 3-year performance related restricted shares Performance measure N.a. - Net profit - Relative Total Shareholders Return - ROI (compared to the average of the AScX and SDAX) - Free cash flow Total 50% Total 50% -Non-financial individual performance criteria including sustainability - Energy / CO2 reduction - Waste & recycling - Employee satisfaction - Management development/succession planning Total 50% Total 50% Pay-out at minimum performance 100% 0% 0% Target pay-out 100% CEO: 40% as % of gross fixed remuneration CEO and CFO: 50% of nr of shares awarded based on CFO: 35% as % of gross fixed remuneration annual incentive Maximum pay-out 100% CEO: 50% as % of gross fixed remuneration CEO and CFO: 50% of nr of shares awarded based on CFO: 50% as % of gross fixed remuneration annual incentive 60 30

31 12. Outlook 61 Outlook - Improving market conditions - Continued attention to integration of Kuhnke - Confidence in future growth to EUR million in Good order book - Good start of the year No concrete outlook 62 31

32 We magnetise the world! 32