Gorenje Group ING Industrials Conference

Transcription

1 Gorenje Group ING Industrials Conference Warsaw, 23 rd of June 2015

2 One of Leading European Manufacturers of Products for Home CORE BUSINESS Products and services for home (MDA, SDA, HVAC, kitchen furniture) EXPORT 95% of sales NUMBER OF EMPLOYEES 10,468 Gorenje Group OWN PRODUCTION Slovenia Serbia Czech Republic CONSOLIDATED REVENUE EUR 1.25 bn GLOBAL PRESENCE 90 Countries Worldwide, mostly in Europe (92%), also in USA, Australia, Near and Far East 2

3 Ownership Structure More than 50% of foreign shareholders KAD 16.37% IFC 11.80% Panasonic 9.50% KDPW Fiduciary account 8.05% Other financial investors 37.52% Natural persons 12.98% Employees 3.28% Treasury Shares 0.50% 3

4 Brands GLOBAL BRANDS LOCAL BRANDS PREMIUM (Benelux) (Benelux) MID BUDGET (Nordic) (Benelux) (E Europe) (SE Europe) 4

5 Global brand (mid and high-mid price segment, design lines) MDA and SDA brand 70 % of MDA revenue Majority of revenue: Germany, Russia, SEE, Scandinavia

6 Global premium brand Sales: EUR 100 m Main markets: USA, Australia, Scandinavia, Russia, Asia (selected markets) Short-term: extend product portfolio and strengthen position on key markets Mid-term: expand to new markets

7 Production Facilities in 3 countries Slovenia Velenje 13% Czech Republic Mariánské údolí Serbia Valjevo, Stara Pazova, Zaječar 52% Lowest labour costs Favourable customs conditions to Russia 35% 7

8 Most Important Markets: Germany, Russia and the Netherlands RUSSIA GERMANY THE NETHERLANDS SERBIA SLOVENIA CZECH REPUBLIC CROATIA DENMARK AUSTRALIJA USA UKRAINE BIH AUSTRIA POLAND BELGIUM HUNGARY FINLAND NORWAY RUMANIA SLOVAKIA SWEDEN BULGARIA GREAT BRITAIN FRANCE MONTENEGRO 8

9 Strategic Alliance with Panasonic LONG-TERM STRATEGIC ALLIANCE BUSINESS ALLIANCE R&D joint development projects (new washing machines) Production Increased production capacity utilization Exchange of manufcaturing know-how Sales Possibility of joint sales-distribution channels CAPITAL ALLIANCE Panasonic - a minority shareholder in Gorenje Standstill agreement - Panasonic not to increase its stake in share capital above 13% till 2018 GORENJE BENEFITS FROM THE STRATEGIC ALLIANCE 9 Better absorption of fixed costs Improved capital structure Accelerated investment and R&D activities Better access to new financial sources Additional annual revenues of up to EUR 80 m by 2018 Gradual improvement of EBITDA of up to EUR 20 m on a yearly basis by 2018

10 Strategic Goals GRADUALLY IMPROVE EBIT MARGIN NET DEBT/ EBITDA not more than 3.0 from 2015 onwards GRADUAL DIVESTMENT of Portfolio Companies FOCUS ON CORE ACTIVITY Segment Home revenues more than 90%of all Group revenue by 2018 To be the WORLD S LEADING design-driven innovator and manufacturer of home appliances INCREASE SALES OUTSIDE EUROPE to close to EUR 180 m INCREASE THE SHARE OF PREMIUM BRANDS SALES to more than 25% 10

11 2014 was the year of 1. unstable business environment Ukrainian and Russian crisis exchange rates volatility unstable environment in Asia 2. improved profitability revenue growth positive effects of manufacturing restructuring in better management of raw and processed material costs 3. greater financial strength better working capital management lower net debt improved maturity profile 4. strategic partnership with Panasonic 5. development of new markets and business cooperation cooperation with the company SubZero in the US development of the Asko brand development of innovative appliances for own brands faster growth in overseas markets 11

12 2014: Core Financial Indicators Q Group's revenue: EUR 336.4m (-2.0%) Home revenue: EUR 289.1m (-0.4%); organic growth +5.2% EBITDA: EUR 21.7m (-5.2%); EBITDA margin: 6.4% (-0.2 p.p.) EBIT: EUR10.8m (-14.4%); EBIT margin: 3.2% (-0.5 p.p.) Profit for the period: EUR -2.8m; Q loss: EUR -6.8m Group's revenue: EUR 1,245.6m (+0.4%) Home revenue: EUR 1,065.9m (+0.1%); organic growth +3.8% EBITDA: EUR 86.5m (+10.6%); EBITDA margin: 6.9% (+0.6 p.p.) EBIT: EUR 43.5m (+19.8%); EBIT margin: 3.5% (+0.6 p.p.) Profit for the period: EUR 1.2m (EUR +26.2m); 2013 loss: EUR -25.0m EURm Q Q Index Index Revenue , , EBITDA EBITDA margin (%) 6.6% 6.4% / 6.3% 6.9% / EBIT EBIT margin (%) 3.7% 3.2% / 2.9% 3.5% / Profit or loss before tax / Profit or loss without discontinued operation / Profit or loss of discontinued operation / Profit or loss for the period / 12

13 EURm 2014: Business Performance Group Revenue % +3.1% +0.5% -2.0% % 1, ,245.6 Q Q Q Q Q Q Q Q Sales growth: Germany, Austria, Slovakia, Hungary, Slovenia, Bosnia and Herzegovina, Romania, Bulgaria, Caucasus, Australia and North America Drop in sales: Ukraine, Scandinavia, Greece, Belgium, France, Kazakhstan Growth in markets beyond Europe: +10.7% Higher sales of premium appliances: +16.4% Growth of SDA sales under own brands: +4.3% 13

14 2014: Effects of changes in foreign exchange rates Negative effect especially from depreciation of Eastern European and non- European currencies Effect on organic revenue growth in key markets (excluding other categories adjustment of prices to the market, product structure etc.): HOME EURm Currency impact on revenue Actual revenue 2014 Actual revenue 2014 valued at exchange rate 2013 Actual revenue 2013 Actual growth % Organic Growth % West % -2.0% East % +7.2% Other % +13.2% TOTAL , , , % +3.8% While calculating the impacts of foreign currency fluctuations on the sale's organic growth, we take into account revenue generated in the local currency in the period 2014, which are evaluated with the achieved average exchange rates in each currency in the period The calculated revenue in EUR is thereupon compared with the actual generated revenue in EUR recorded in the observed period. 14

15 2014: Sales by geographical segments EURm Q % Q % Change (%) 2013 % 2014 % Change (%) Western Europe % % Eastern Europe % % Eastern Europe (w.o. Russia and Ukraine % % Other % % Total Group % 1, , % Western Europe % % Eastern Europe % % Eastern Europe (w.o. Russia and Ukraine % % Other % % Total Home % 1, , % 15

16 EURm 2014: Revenue by business segment Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 % Home % 1, ,065.9 Portfolio % % +0.1% +2.5% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 84.6% 85.9% 85.9% 85.6% 15.4% 14.1% 14.1% 14.4% Q Q Home Portfolio Higher sales: medical equipment, metallurgic products, machine and tool manufacturing and Ecology. 16

17 2014: Average number of employees Total: 10,706 10,462 10,699 10,584 10,528 10,549 10,480 10, % 10,639 10, % 12,000 10,000 8,000 6,000 4,000 2,000 0 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 % Home 9,373 9,037 9,355 9,144 9,187 9,102 9,133 8, % 9,296 9,041 Portfolio 1,333 1,425 1,344 1,440 1,341 1,447 1,347 1, % 1,343 1,427 % -2.7% +6.3% 2014: 10,468 employees (-171) : Asko Appliances AB Sweden (production relocation from Sweden to Slovenia) and partly also Gorenje, d.d.; The number grew at the facility in Valjevo, Serbia (as a result of higher volume of production since the freestanding refrigerator production was relocated) The sales network restructuring activities in reducing the number of employees in the sales network (Turkey, France, Slovakia, Czech Republic, Scandinavia, USA). Portfolio investments: The number increased as business activities of ecology and tool manufacture were expanded to new markets (Serbia) 17

18 EURm 2014: EBIT / EUR 7.2m or +19.8% EBIT Margin (%) EBIT (EURm) % 5.7 Q % 3.3% 3.8% Q Q Q % 8.1 Q % 3.7% 3.2% 2.9% 3.5% Q Q Q % 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Costs of services: -5.1% (EUR m) systematic implementation and monitoring of preventive and curative measures to achieve cost-efficiency Labour costs: -4.3% (EUR m) successfully completed production relocation in 2013 and the sales network restructuring process also in 2014 Contribution margin at the level of cost of goods and material Cost of services Employee benefits expense Amortisation and depreciation expense Other operating expenses Other operating income

19 EURm EURm 2014: EBITDA / EUR 8.3m or +10.6% EBITDA Margin (%) EBITDA (EURm) % 16.1 Q % 6.9% 7.2% 6.1% 7.0% 6.6% 6.4% 6.3% 6.9% Q Q Q Q Q Q Q % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2014: Net Profit Performance ROS (%) PAT (EURm) Q % % Q Q % % Q Q % % Q Q % Q % 0.1% % % 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% 19

20 2014: Financial Performance / Indebtedness Gross debt: EUR 367.6m (EUR -29.8m) improved cash flows from operating activities, lower volume of investments, and the lower level of working capital Net financial debt: EUR 331.8m (EUR -27.1m) Net financial debt / EBITDA: 3.8 (improvement by 0.8) Cash flows from operating and investing activities: EUR +29.4m; EUR 26.6m in Q Successfully completed share capital increases (Sep Aug. 2014): EUR 36.7m The last phase of the capital increase in form of debt-to-equity conversion (in Q3 2014): EUR 10.0m (equals the amount allowed pursuant to the resolution adopted by the AGM on 23 August 2013) Development of total and net financial liabilities over the period of in EURm and debt maturity profile % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 37.5% 36.0% 26.5% 50.0% 62.5% 64.0% 73.5% 50.0% Total financial liabilities Net financial liabilities LT financial liabilities ST financial liabilities 20 * Accounting aspect

21 2014: New products & Development New generation of high-end built-in ovens (Gorenje, Asko) Asko line of kitchen appliances Asko washing machine (11-kg capacity) Gorenje laundry dryer, energy class A+++ Free standing fridge freezers, width 600 mm and height 2000 mm Extended line of Retro refrigerators Updated oven Gorenje by Karim Rashid New collection of premium Atag cooking appliances (Magna series) New generation of refurbished range of cookers 600 mm, and a new range of induction and hi-light built-in hobs In accordance with the set strategic goals we have increased investments in R&D Home: 2.9% (+0.4 p.p.)

22 In 2015 we focus on Sales growth improved sales structure Cost cutting services labour material Deleveraging divestments improved working capital management R&D new products development & innovation Processes SCM Complexity Projects Lean, TQM, forecasting Asko premium brand development Strategic partnership with Panasonic Risk Management Organizational structure and corporate governance Strategy 2020 Responsibility towards all shareholders personal responsibility for the future of Gorenje Group 22

23 Plan 2015: Highlights Plan EUR million Change 2015 Consolidated revenue 1, , , % EBITDA % EBITDA Margin (%) 6.3% 6.9% 7.6% +0.7 p.p. EBIT % EBIT Margin (%) 2.9% 3.5% 3.5% / Profit before taxes % Results w/o discontinued operations / Results from discontinued operations / Profit for the period / ROS (%) -2.0% 0.1% 0.5% +0.4 p.p. Net financial debt % Net financial debt / EBITDA / * 23

24 Plan 2015: Highlights Revenue: -2.4% (lower especially due to uncertain conditions in Russia where lower revenue is expected after a decade of growth) Intensified adjustment of the business model for higher competitiveness (lower complexity, better efficiency) Improved efficiency and performance of support processes Further working capital optimization and net deleveraging Increasing our business volume with our strategic partner Panasonic 24

25 25 New launches: New generation of Gorenje cooking appliances New Asko dishwashers New line of Asko cooking appliances New line of Magna cooking appliances by Atag New Matrix cooking hobs by Atag Development of new premium and innovative products to support the growth of sales in upmarket segments

26 Challenging the best designer in the world New design line in 2015

27 Plan 2015: Improved EBITDA Performance EBITDA Margin (%) % 10.6% EUR 8.3m 7.4% EUR 6.4m 6.9% 7.6% 08% 07% 06% 05% EBITDA (EURm * 04% 03% 02% 01% Plan % Higher planned contribution margin, especially in the Home segment 27

28 Plan 2015: Goal - Deleveraging and maintaining a stable debt maturity profile Further net deleveraging (improved working capital management, divestment) Improvement of net financial debt / EBITDA indicator to 3.46 LT fin liab mio EUR 70.3% 2015 Plan ST fin liab mio EUR 29.7% Maintaining a stable debt maturity profile LT fin liab mio EUR 50.0% ST fin liab mio EUR 50.0% LT fin liab mio EUR 73.5% ST fin liab 97.4 mio EUR 26.5% 28

29 Q was the quarter of 1. further unstable business environment political instability and the exceptionally deteriorating macroeconomic situation in markets of Russia and Ukraine exchange rates volatility decline in revenue on markets of Russia and Ukraine and due to adjusted sales price policy in individual markets of Western and Eastern Europe for the purpose of price repositioning foreign currency fluctuations significantly affected sales (mostly in the markets of Eastern Europe) strengthening of the USD against EUR (a negative impact on SDA profitability and a negative impact on the input prices of material and raw materials) 2. cost and process optimization lower cost of services and partial employee benefits expense Projects related to the adjustments of business processes 29

30 Q was the quarter of 3. higher but seasonally dependent indebtedness working capital management (higher inventories of finished products and merchandise due to the sudden recall of orders by customers in Russia, Ukraine and the markets of Caucasus) planned growth of indebtedness improved maturity profile 4. development of strategic partnership with Panasonic Corporation 5. development of new markets and business partnerships cooperation with the company SubZero in the US development of the Asko brand development of innovative appliances for own brands 30

31 Q1 2015: Core Financial Indicators 31 Group's revenue: EUR 266.4m (-8.4%) Home revenue: EUR 222.5m (-8.2%); organic growth -5.3% EBITDA: EUR 16.2m (-22%); EBITDA margin: 6.1% (-1.1 p.p.) EBIT: EUR 4.9m (-51.9%); EBIT margin: 1.8% (-1.7 p.p.) Loss for the period: EUR -2.1m Negative cash flows from operating and investing activities: EUR 55.2m (worsened by EUR 23.4m) Increase of net debt by EUR 10.4m Net financial debt / EBITDA: 4.9 (4.7) EURm Q Q Index Plan Plan 2015 track Revenue , EBITDA EBITDA margin (%) 7.2% 6.1% / 7.6% / EBIT EBIT margin (%) 3.5% 1.8% / 3.5% / Profit or loss before tax / 10.8 / Profit or loss without discontinued operation / 7.6 / Profit or loss of discontinued operation Profit or loss for the period / 6.1 / ROS (%) 0.3% -0.8% / 0.5% / Net financial debt Net financial debt / EBITDA / 3.5 /

32 mio EUR Q1 2015: Business Performance Group revenue % Q Q Q Q Q Sales growth: Czech Republic, Slovakia, Poland, Hungary, Slovenia, Bosnia and Herzegovina, Bulgaria, Romania, Australia, and the Netherlands Downward sales: Russia, Ukraine, Germany, Austria, Scandinavia, Greece, France, Great Britain, North America Decline in markets beyond Europe: -18.2% Growth of innovative appliances in the sales structure to: 8.2% (+0.8 p.p.) Same share of premium appliances in the sales structure to: 16.0% Decline of SDA sales: -1.9% 32

33 Q1 2015: Effects of Foreign Exchange Rate Fluctuations Foreign currency fluctuations significantly affected sales mostly in the markets of Eastern Europe. Without considering other categories (i.e. exchange rate hedging, adjusting prices to markets, product structure, etc.), the impact of foreign currency fluctuations on the Group's organic growth in revenue in key markets was as follows: Home in EURm Currency impact on revenue Actual revenue Q Actual revenue Q valued at exchange rate Q Actual revenue Q Actual growth (%) Organic Growth (%) West % -5.3% East % -1.3% Other % -21.6% TOTAL % -5.3% 33 While calculating the impacts of foreign currency fluctuations on the sale's organic growth, we take into account revenue generated in the local currency in Q1 2015, which are evaluated with the average exchange rates achieved in each currency in Q The calculated revenue in EUR is thereupon compared with the actual generated revenue in EUR recorded in the observed period

34 Q1 2015: Sales by geographical segments EURm Q % Q % Change (%) Western Europe % Eastern Europe % Other % Total Group % Western Europe % Eastern Europe % Other % Total Home % 34 Geographical sales structure of the Business Segment Home shows that: our sales in Western Europe decreased by 5.6%, whereby lower revenue was planned. our sales in Eastern Europe generated 8.7% less revenue. The said decline is the result of lower sales in the markets of Russia and Ukraine. If the impact of exchange rate fluctuations is not taken into account, our organic decline in revenue in Eastern Europe amounts to 1.3%.

35 Q1 2015: Development & New products Key innovations: a new generation of built-in ovens under the Gorenje trademark that were launched on most of the markets, the new Essential washing machine, preparation for launching the new Magna premium collection of cooking appliances. Increased investments in R&D, which account for 3.0% in the Group s revenue structure (+0.6 p.p.). 35

36 EURm Q1 2015: Investment-related activities According to the approved 2015 business plan, Gorenje Group investments for the Q were planned at EUR 19.5m; actual investments amounted to EUR 9.350m, which is good EUR 2m less than in the equivalent period in Investment implementation was consistent with the agreement that the CAPEX would be adjusted to actual sales Q Q Q Q Q Home Portfolio CAPEX margin, % 3.9% 3.7% 3.7% 8.1% 3.5% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 36

37 Q1 2015: Average number of employees Total: 10,462 10, % 10,584 10,549 10,324 12,000 10,000 8,000 6,000 4,000 2,000 0 Q Q % Q Q Q Home 9,037 8, % 9,144 9,102 8,888 Portfolio 1,425 1,423 1,440 1,447 1,436 0% 37 Q1 2015: employees (-209) : The number of employees was partly adjusted to the lower sales volume in production companies (in the parent company and in Valjevo, Serbia) and also in individual companies within the Home segment (Scandinavia, Russia, Croatia, and Ukraine). Portfolio investments: The number of employees was kept on the same level.

38 Q1 2015: Financial Performance / Indebtedness Gross debt: EUR 422.5m (+EUR 4.3m) result complies with interim seasonal dynamics as the Group generates most of negative cash flows from operating and investing activities; result comprises also liabilities under the fair value of forward contracts used for hedging against interest rate and currency fluctuations. Net financial debt: EUR 403.0m (+EUR 10.3m) Net financial debt / EBITDA: 4.9 (decline by 0.2) Cash flows from operating and investing activities: -EUR 55.2m; -EUR 31.9m in Q Movement of total and net financial liabilities in Q1 for the period * (EURm) and maturity structure of financial liabilities Total financial liabilities Net financial liabilities 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 37.6% 42.8% 62.4% 57.2% 53.6% 46.4% 39.8% 60.2% LT financial liabilities ST financial liabilities 38 * Accounting aspect

39 Thank you for your attention.

40 Gorenje Representatives Mrs. Jožica Turk Executive Director Risk Management & Assistant to Board Member Mrs. Bojana Rojc Head of IR T M E jozica.turk@gorenje.com Gorenje, d.d. Partizanska cesta 12, SI-3320 Velenje, Slovenia Slovenia T M E bojana.rojc@gorenje.com Gorenje, d.d. Partizanska cesta 12, SI-3320 Velenje, Slovenia Slovenia 40

41 Forward-looking statements This presentation includes forward-looking information and forecasts i.e. statements regarding the future, rather than the past, and statements regarding events within the framework and in relation to the currently effective legislation on publicly traded companies and securities and pursuant to the Rules and Regulations of the Ljubljana Stock Exchange. These statements can be identified by the words such as "expected", "anticipated", "forecast", "intended", "planned or budgeted", "probable or likely", "strive/invest effort to", "estimated", "will", "projected", or similar expressions. These statements include, among others, financial goals and targets of the parent company Gorenje, d.d., and the Gorenje Group for the upcoming periods, planned or budgeted operations, and financial plans. These statements are based on current expectations and forecasts and are subject to risk and uncertainty which may affect the actual results which may in turn differ from the information stated herein for various reasons. Various factors, many of which are beyond reasonable control by Gorenje, affect the operations, performance, business strategy, and results of Gorenje. As a result of these factors, actual results, performance, or achievements of Gorenje may differ materially from the expected results, performance, or achievements as stated in these forward-looking statements. These factors include, without prejudice to any not mentioned herein, the following: Consumer demand and market conditions in geographical segments or regions and in the industries in which Gorenje Group is conducting its operating activities; effects of changes in exchange rates; competitive downward pressure on downstream prices; major loss of business with a major account/customer; the possibility of overdue or late payment on the part of the customers; decrease in prices as a result of persistently harsh market conditions, in an extent much higher than currently expected by the Gorenje Management Board; success of development of new products and implementation in the market; development of manufacturer's liability for the product; progress of attainment of operative and strategic goals regarding efficiency; successful identification of opportunities for growth and mergers and acquisitions, and integration of such opportunities into the existing operations; further volatility and aggravation of circumstances in capital markets; progress in attainment of goals regarding structural reorganization and reorganization in purchasing. If one or more risks or uncertainties are in fact materialized or if the said assumptions are proven wrong, actual results may deviate materially from those stated as expected, hoped for, forecast, projected, planned, probable, estimated, or anticipated in this announcement. Gorenje does not intend to assume and will not allow for any liability to update or revise these forecasts in light of development differing from the expected events. 41