Tognum Investor Presentation January 2010

Transcription

1 Tognum Investor Presentation January 2010

2 Legal disclaimer This presentation is for information purposes only and does not constitute an offer to sell or a solicitation for an offer to buy any securities. The shares of Tognum AG will not be registered under the U.S. Securities Act of This presentation includes certain forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes", "estimates", "anticipates", "expects", "assumes", "predicts", "intends", "may", "will" or "should", and similar expressions. Such forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Such forward-looking statements do not represent any guarantees of future performance. Tognum's actual results of operations, including its financial condition and profitability as well as the development of the general economic conditions in which it operates, may differ materially from (and be more negative than) those made in or suggested by the forward-looking statements contained in this presentation. This presentation also includes certain market and market share data. To our knowledge, there is no single, comprehensive source that reliably describes the overall market and its sub-markets or the competitive situation in the market breakdown presented herein. Unless indicated otherwise, all the statements herein concerning the market and competition are therefore based on our own estimates, some of which have in turn been derived from a variety of sources. It is possible that the actual market conditions and competition may differ from the situation described herein, or that other market participants may come up with different estimates of the market and competitive conditions. Slide 2 Tognum Investor Presentation January 2010

3 Tognum: Custom-made products Integration of system and service offerings We at Tognum set the standard as the preferred partner for the best solutions in power and propulsion Engines Onsite Energy & Components Marine Industrial Oil&Gas Defense After Sales Onsite Energy Systems Components Only Pure Play in high-speed and high-performance diesel engines for off-highway applications Technology & innovation leadership Leading global specialist for customised drive solutions incl. complete propulsion systems and decentralised energy systems Slide 3 Tognum Investor Presentation January 2010

4 Only pure play in high-speed off-highway engines Low-speed engines Medium-speed engines Tognum market Highspeed engines > 560 kw < 560 kw Note: Shapes represent approx engine volumes Source: Secondary research Slide 4 Tognum Investor Presentation January 2010

5 Uniquely balanced portfolio in attractive markets Split by region (2008) Split by markets and applications (2008) 7% 18% 25% 29% 21% Rest of World Asia/Pacific NAFTA Europe w/o Germany Germany Components Onsite Energy Oil & Gas Marine Industrial Defense After Sales / Other Propeller Shafts Injection Systems Fuel Cell Systems Diesel Systems & Engines Gas Systems (CHP) Onshore / Offshore Yachts / Pleasure Craft Naval / Governmental Commercial Rail Mining C&I Agriculture Trucks Medium / Light Heavy Spare Parts Service / Repairs Highly attractive end markets with high barriers to entry Broad & well balanced portfolio with >20 different application areas Long-term growth perspectives in the fields of energy/power, raw materials/infrastructure and industrial development in emerging countries Slide 5 Tognum Investor Presentation January 2010

6 End market cycles with different impact on Tognums balanced business portfolio high Economic dependency low Onshore Drilling Pleasure Craft (<30 m) Injection Systems (L Orange) Mining Commercial Marine C&I Naval / Governmental Marine Yachts (>30 m) Rail Diesel Systems & Engines Defense Agriculture Onshore Well Servicing Offshore projects Gas Systems (CHP) Low impact Medium impact High impact longer Duration of impact shorter Slide 6 Tognum Investor Presentation January 2010

7 Tognum is well positioned for long-term growth and stays focused on flexibility and efficiency Tognum s strategy - Maintaining leadership in product innovation - Broadening business and customer portfolio - Integrating system and service offerings Strategic initiatives Additional initiatives for higher flexibility and better cost position Onsite Energy After Sales Propulsion Portfolio Regional Expansion Robust Action Plan Slide 7 Tognum Investor Presentation January 2010

8 (1) Onsite Energy Exploiting the market potential Revenue growth target Main initiatives 2008 CAGR >10% 2019 Objectives: Capitalise on market growth Systems integration Market share gains Mid- to long term trends: Addressing grid instability Rising energy demand, focus on decentralised energy CAGR = Compound annual growth rate A B C D E Complement diesel engine portfolio (launch of series 1600 in 2009) and expand gas portfolio Internationalisation/regional expansion Sales channel development and expansion in new regions (e.g. Asia) Increase power generation focused network density Increase in After Sales Expansion of Nuclear Power Plant business Increase of value-add of our products (increase in systems business with modularised generator sets) Provide green energy technologies with Gas and Fuel Cell Slide 8 Tognum Investor Presentation January 2010

9 (2) After Sales Expanding services and remanufacturing Description - Highly profitable After Sales business previously limited to spare parts & services : 21% share of revenues of After Sales Important growth drivers: - Growing installed base of MTU engines - High technological requirements for parts - Proactively tapping business potential MTU_ValueSpares MTU_ValueExchange MTU_ValueService Spare Parts Consumables MTU_ValueCare MTU Exchange Parts MTU Exchange Engines MTU Exchange PowerPacks MTU Engine Overhaul MTU Customised Care MTU Extended Coverage MTU Annual Check Technical Information Training Service Units Achievements and Opportunities - Extend service and maintenance contracts : 125m/UK High Speed Trains (population of >150 engines) : 111m/Malaysian Navy (population of 70 engines) - Centralise spare parts business : opened global spare parts logistics centre - Strengthen repair and service network : opened repair + spare parts centre in Southern France - Acquisition of SKL Motor as European remanufacturing centre in 2008: - Remanufacturing of engines & parts - Penetrate growing engine population: S Ramping up own engine series in lower power range will offer long-term After Sales potential Slide 9 Tognum Investor Presentation January 2010

10 (3) Product Portfolio Continuous development Key targets - Continuous development of S S4000: - Due to future emission regulations for existing markets - To extend the existing portfolio for new markets / applications - Expansion of key technologies and development of new technologies - Boost innovation process to - Cut life cycle cost - Reduce fuel consumption - Develop exhaust after treatment systems Increase in competitiveness while ensuring and strengthening technology leadership S 1600 engine concept - New engine platform developed since First specific off-highway engine in power range from 270 kw 720 kw - Extension of MTU product portfolio: Expanding into lower power ranges in Genset After Sales potential previously not available - Modular engine architecture, lean production concept - Rental of assemply location in ramp-up phase - Key characteristics: Higher stiffness than on-highway engines Multiple power outlets Ready for upcoming emission standards - Series production started in Q4 09 initially serving Powergen, followed by Oil&Gas and Industrial applications Slide 10 Tognum Investor Presentation January 2010

11 (3) Product Portfolio - Key Technologies Tognum with integrated approach EXISTING: Combustion process Fuel injection Turbo charging Electronics Build-up of R&D expertise plus JV in exhaust after treatment with Swiss-based Hug Engineering IN PROGRESS: Exhaust aftertreatment Exhaust before Treatment NO O 2 NO 2 (NH 2 ) 2 CO + H 2 O Add-on Urea SCR- Kat Meeting emission regulations by Developing engine and exhaust aftertreatment as one system System optimisation after Treatment N 2 H 2 O Benefits Fuel consumption Cost Maintenance Size and weight Reducing LCC (life cycle cost) Slide 11 Tognum Investor Presentation January 2010

12 (4) Regional Expansion Covering development, production and sourcing Further strengthening of worldwide presence following regionally diverse revenue mix Sales Implementation of regional strategy focused on Asia/China, Eastern Europe, Middle East and Latin America Production Integrating production locations worldwide (Assembly in U.S. and China, parts production in Turkey, reorganisation of production logistics in Germany, future production in U.S.) Sourcing Expanding global sourcing approach to address local content requirements with focus on U.S. and China Development Establishing regional service and development centres in order to address local demand and requirements Slide 12 Tognum Investor Presentation January 2010

13 (5) Propulsion Focusing on drive systems and automation - Smart integration of engines, auxiliary components and electronics for customised system solutions Marine automation system Hybrid drive system for trains Description Main initiatives - Strengthen application, propulsion and integration know how - Extend consulting competence in application engineering - Establish global presence in engineering sales and services - Expand existing propulsion system portfolio of - engine management - propulsion & drive automation - with - power management - electrical drive components - peripheral sub-systems Slide 13 Tognum Investor Presentation January 2010

14 Tognum TOP Process optimisation and efficiency improvement TOP Total Operational Performance Established in 2004 TOP establishes a continuous improvement process for higher efficency and competitiveness Cost reduction through systematic process analysis Manufacturing and assembly Procurement Distribution and logistics After Sales Research and development Overhead Quality control 2007/2008: >200 projects completed Impact TOP targets for fulfilled by over 100% Yearly savings: 30m, total savings in the past years: over 100m Increased management focus on continuous process improvements Results achieved feed into operative planning Extensive internal commitment due to internal communication Implemented in subsidiaries Investments in research and development, new engines Future savings help offset input cost increases (e.g. cost of materials) Slide 14 Tognum Investor Presentation January 2010

15 Tognums Robust Action Plan to stabilise our business Market Price increases of 4%/7% on EUR/USD list prices for 2009 Strengthening of project competence and focus on major projects New client wins New application ideas Focussing of distribution effort Refocusing of R&D on the development of products with a current market demand Employment Full use of existing working hour models Fully implemented in direct labour Extended to administrative staff Adjustment of production plan, while ensuring maximum flexibility Creation of internal Tognum job market Elimination of approx. 300 temporary workers Board approval required for staffing/replacement Cash and risk management Established a cross-functional round table for early risk identification and preparation of counter measures Strict handling of customer receivables and supplier liabilities More intensive supplier management Monitoring of inventory levels as indicator of short term market performance Reduction of working capital Cost reduction / investment planning Freezing of budgets and postponement of investments for non-strategic projects Elimination of external consultancy services Greater focus on increasing efficiency ( Tognum TOP ) No further increase in production capacity at the moment (new plant in U.S. now on hold ) No reduction of current development budget and no postponement of strategic projects Slide 15 Tognum Investor Presentation January 2010

16 Rotorion divestment - effective 31. October 2009 Strategic rationale Rotorion profitability below Tognum s off-highway business Divestment of this non-core activity is accretive for Tognum Enables clear focus on core off-highway growth strategy Transaction secures Rotorion s book value for Tognum Enables share in future development of the propeller shaft business Slide 16 Tognum Investor Presentation January 2010

17 Rotorion divestment Transaction structure Rotorion financials in m Full Year Full Year Q1 Q2 Q3 1. Rotorion Revenues Adj. EBIT 7 (2.5) (0.1) (1.9) 0.4 Adj. EBIT Margin 3.3% (1.1%) (0.3%) (5.0%) 0.8% 2. Tognum Revenues 2,835 3, Adj. EBIT Adj. EBIT Margin 13.8% 13.0% 9.9% 3.2% 6.2% 3. Pro Forma Tognum excl. Rotorion Revenues 2,612 2, Description - Positive effect on net working capital as of 30 Sept: 42.1m - Contribution in kind against - 25% shareholding in IFA Holding - Deferred purchase price/receivables of c. 65m - No short-term cash and P/L impact expected - Tognum representation in IFA advisory board Adj. EBIT Adj. EBIT Margin 14.7% 14.1% 10.6% 3.8% 6.8% Assets held for Sale Liabilities included in disposal groups (30.5) Net Assets Rotorion (as of 30 September 2009): 89.7 Slide 17 Tognum Investor Presentation January 2010

18 2009 orders Marine: 20V S 8000 engines to US Army and US Navy for first three Joint High Speed vessels Defense: MTU delivers engines for Boxer armoured vehicle Rail: Received 11m follow-up order from Rotem for Irish Rail; total of V 4000 engines for Siemens and Bombardier locomotives Onsite Energy: 11m order for replacement of emergency power systems at German Nuclear Power Plant; supply of emergency gensets to Russian nuclear power plant for the first time worth 26m; 10m order for 20 gensets based on S4000 for continuous power in Yemen Slide 18 Tognum Investor Presentation January 2010

19 Customers continue to place orders at shorter notice and make draw-downs in smaller batch sizes Order Intake 1 (in m) Revenues 1 (in m) Q4 Q3 Q2 3, % 22% 27% 25% 3, % -29.8% 27% 24% 2,835 Q , % 1,765.2 Q % Q % 3, % -23.4% 24% % 25% Q % % Q % % Growth rates 9M before negative fx effects: Order Intake -32%; Revenues: -25% Slide 19 Tognum Investor Presentation January 2010

20 Positive net income despite decline in revenues Increased R&D expenses and sales effort EBIT adj. 1 (in m) Net profit adj. 1 (in m) RoS 9M 14.8% 14.0% 6.6% EPS 9M % % % Q % % % % Q3 Q2 Q % 27% 26% % 25% 25% -64.2% Q4 Q3 Q2 Q % 26% 29% 24% % 28% 22% -66.7% Excludes any effects from purchase price allocation and fx valuation Slide 20 Tognum Investor Presentation January 2010

21 Balance sheet development As at and Total assets (in m) Net Working Capital* (in m) 2, % 2, % Equity (in m) Tognum Group funding structure (in m) Equity ratio 26% % Net Debt Pensions Equity * Net Working Capital: includes inventories, trade receivables, trade payables and advance paments received; as at taking subsequent reclassification of receivables into account Slide 21 Tognum Investor Presentation January 2010

22 9M 2009 net debt development Net financial debt (in m) and leverage (based on LTM adj. EBITDA) 0.7x 1.0x (335.8) Net financial debt Q3 Q2 Q (109.7) (28.8) Cashflow from operating activities (37.5) (43.4) Cashflow from investing activities (92.0) June 2009 Dividend payment 13.7 Net fx valuation effect (270.4) Net financial debt Net debt/adj. LTM EBITDA Unrecognised actuarial gain Pensions Net financial debt 1.5x x Slide 22 Tognum Investor Presentation January 2010

23 Long-term financing Syndicated loan facility EUR 450m + USD 260m Available until mid-2013 Currently available credit lines amounting to over EUR 300m Financing costs: EURIBOR/LIBOR + 30BP Collateral: none except covenants with EBITDA multiple Slide 23 Tognum Investor Presentation January 2010

24 Outlook 2009 Continuing volatile market environment in both high-speed diesel engines as well as propulsion and power solutions Increased utilisation of production capacity in Q based on order backlog particularly for large engines and project business Decline in revenue performance of 15-20% vs. FY 2008 Adj. EBIT margin between 6% and 9% Positive adj. EPS will be below FY 2008 level; tax rate at around 30% Stable dividend payout ratio of >30% of group net income Slide 24 Tognum Investor Presentation January 2010

25 Tognum AG shareholder structure Total free float of ~75%; MDAX weight ~1.9%** Institutional and Retail Investors 68.1 % Incl. ING Groep, NL: >5 %* First Eagle Investment Management, USA: >3 %* Institutional Shareholders*** from North America c.15% Continental Europe excl. Germany c.14.5% UK & Ireland c.10% Germany c.7% Retail Investors c. 27,000 investors (April 2009) Daimler AG >25 %* Top Management and Members of Supervisory Board 6.9 %* (Free float) * According to their releases of Voting Rights and Directors Dealings ** As of December 16, 2009 according to Deutsche Börse AG *** Identified ownership in February 2009 (Source: Global Shareholder Intelligence Report) Slide 25 Tognum Investor Presentation January 2010

26 Back-up Production & Financials Slide 26 Tognum Investor Presentation January 2010

27 Flexible engine & production concept Core engine (S4000) Gas Marine Mining Rail Genset Slide 27 Tognum Investor Presentation January 2010

28 Flexibility in capacity adjustments Outsourcing / subcontracted production capacity Plant capacity layout Temporary workers Additional shifts/sunday work Flexible work time model Reduce temporary employment Fewer shifts Internal workforce Internal machinery Capacity adjustments: high flexibility required in 2009/2010 Slide 28 Tognum Investor Presentation January 2010

29 Order backlog After-Sales as well as long-term sales expectation not captured in order backlog Drivers Order backlog + Long-term Memorandum of understanding + Long-term contracts + Long delivery periods + Close connection and interdependence with OEMs + System business Most applicable for application C&I PowerGen Yacht (<30m & >30m) Defense Naval Marine (other) High-power range engines Industrial All applications Duration = Business set-up allows for high visibility of sales Backlog not representative because not all elements of sales visibility included Level of visibility Delivery point Order size ( ) ( ) ( ) Strongly dependent on specific client Slide 29 Tognum Investor Presentation January 2010

30 Segmental performance Engines in m 9M/08 % of revenue 9M/09 % of revenue Change Q3/09 % of revenue Order intake 1, , % External revenues 1, % Segment revenues 1, , % Marine % % -29.8% % Industrial % % -41.2% % Oil & Gas % % -39.4% % Defense % % -31.5% % After Sales/Other (E) % % -1.3% % Adj. EBIT % % -70.5% % Slide 30 Tognum Investor Presentation January 2010

31 Segmental performance Onsite Energy & Components in m 9M/08 % of revenue 9M/09 % of revenue Change Q3/09 % of revenue Order intake % External revenues % Segment revenues % Diesel Systems & Engines % % -34.8% % Gas & Fuel Cell Systems % % -4.8% % After Sales/Other (OE) % % +10.9% % Injection Systems % % -20.9% % Propeller Shafts % % -30.8% % Adj. EBIT % % -57.5% % Slide 31 Tognum Investor Presentation January 2010

32 Segmental performance Distribution in m 9M/08 % of revenue 9M/09 % of revenue Change Q3/09 % of revenue Order intake % 97.8 External revenues % Segment revenues % Products % % -36.5% % After Sales (D) % % +9.9% % Adj. EBIT % % +3.5% % Slide 32 Tognum Investor Presentation January 2010

33 Consolidated performance Tognum Group in m Engines OE&C Distribution Holding/ Consolidation Tognum Group 9M/08 Order intake 1, ,512.0 Revenue 1, ,303.9 EBIT adj M/09 Order intake 1, ,764.1 Revenue 1, ,765.2 EBIT adj Q3/09 Order intake Revenue EBIT adj Slide 33 Tognum Investor Presentation January 2010

34 Margin development Strong R&D focus reflected in financials Cost of goods sold (adj.) Selling expenses (adj.) R&D (adj.) G&A (adj.) EBIT (adj.) 2.9% 3.7% 5.4% 14.0% -7.4 pp 6.6% 3.5% -64.2% pp 5.8% 8.4% (-8.4%) (+20.0%) (+18.8%) 73.8% +2.0 pp 75.8% 1, % 1, M/2008 9M/2009 9M/2008 9M/2009 Slide 34 Tognum Investor Presentation January 2010

35 Q3/2009 adjustment bridge in m Reported Q3/2009 Adjustments Adjusted Q3/2009 Revenues Cost of sales (410.6) 8.6 (1) (402.0) Gross profit SG&A (57.7) (57.7) Research and development costs (33.3) (33.3) Other operating income (expenses) Results from operating activities Share of profit from investments - equity method Other financial income 11.5 (7.7) (2) 3.8 Other financial expenses (5.4) (5.4) Earnings before interest and taxes Interest income Interest expenses (11.6) (11.6) Earnings before taxes Income taxes (6.4) (0.1) (3) (6.5) Net profit (loss) (1) PPA depreciation & amortisation ( 12.0m) Adjusted for hedges for FX cashflows ( -3.4m) (2) Valuation of FX loans ( -7.7m) (3) Higher income taxes resulting from higher EBIT at 29% tax rate ( -0.1m) (4) PPA depreciation & amortisation ( 12.0m) Depreciation and amortisation (34.1) 12.0 (4) (22.1) EBITDA 66.2 (11.1) 55.0 Slide 35 Tognum Investor Presentation January 2010

36 Thank you very much! Investor contacts: Dieter Royal Head of Corporate Finance & Investor Relations Michael Frank Petra Heid Dragica Sikić Phone: + 49 (0) Fax: + 49 (0) mailto:ir@tognum.com Financial calendar 2010* March 11 FY 2009 numbers & conference call March 26 Publication of 2009 Annual Report April 13/14 Analyst Conference May 07 Q1/10 final report & conference call May 18 Annual General Meeting 2010 * All dates are preliminary and subject to change Tognum AG, Friedrichshafen/ Germany