Interim report Q February 2017

Transcription

1 Interim report Q February 2017

2 1. NET SALES AND EARNINGS 2. MARKET DEVELOPMENT 3. REPORTING SEGMENTS 4. ORDERS AND PRODUCT RELEASES 5. SUMMARY 2

3 Net sales and earnings

4 Overview Q Organic growth of 2 per cent & recorded growth of 4 per cent Growth driven by strong demand in China across all divisions and solid development in Manufacturing Intelligence Growth hampered by a weak oil & gas sector Currency impact of -1 per cent and acquisitions added 3 per cent Improved profitability Gross margin of 60 per cent and EBIT margin of 25 per cent Profit improvement from all businesses apart from PPM 4

5 Seasonality in profit Seasonal pattern: Q1 weakest, Q3 second weakest, Q2 & Q4 strong MEUR % 750 EBIT Margin % 25% % 450 Net Sales 15% % 150 EBIT1 5% 0 0% 5

6 Key figures Q MEUR Q Q Change % Net sales ) Operating earnings (EBITDA) Operating margin, (EBITDA) % Operating earnings (EBIT1) Operating margin, % Earnings before taxes Net earnings Earnings per share, EUR ) Adjusted to fixed exchange rates and a comparable group structure (organic growth) 6

7 Key figures full year 2016 MEUR Change % Net sales 3, , ) Operating earnings (EBITDA) Operating margin, (EBITDA) % Operating earnings (EBIT1) Operating margin, % Earnings before taxes, excl. non-recurring items Non-recurring items 2) n.a. Earnings before taxes Net earnings Net earnings, excl. non-recurring items Earnings per share, EUR Earnings per share, excl. non-recurring items ) Adjusted to fixed exchange rates and a comparable group structure (organic growth) 2) Non-recurring items in 2015 relate to the implementation of a cost savings programme 7

8 Cash flow MEUR Q Q Cash flow from operations before changes in working capital excl. taxes and interest Taxes paid Interest received and paid, net Cash flow from operations before changes in working capital Change in working capital Cash flow from operations Investments tangible assets, net Investments intangible assets Operating cash flow Non-recurring cash flow Operating cash flow after non-recurring items Cash conversion of 105% in the quarter and 86% for the full year Cash conversion target of 80-90% 8

9 Working capital to sales 35% Consolidation of Intergraph 30% 25% Full impact from recurring revenue Q % 15% 10% 5% 0% 9

10 Market development

11 Sales mix Hexagon Q (Q4 2015) North America China 32% (31) Western Europe 32% (31) EMEA (excluding Western Europe) 7% (8) 14% (14) South America Asia Pacific (excluding China) 3% (3) 12% (13) 11

12 Analysis of organic growth 1) per geographic region CONTRIBUTORS TO GROWTH 1) (descending order) Q China Western Europe North America South America Asia ex. China Eastern Europe, Middle East & Africa Q >8% 0 to 8% Negative 1) Adjusted to fixed exchange rates and a comparable group structure (organic growth) 12

13 Analysis of organic growth per geographic region Share of sales 1) W EU 32% EMEA 2) 7% NA 32% SA 3% CN 14% ASIA 3) 12% Surveying 22% Power & Energy 20% Electronics & Manufacturing 13% Infrastructure & Construction 11% Safety & Security 9% Automotive 9% Aerospace & Defence 8% Other 8% TOTAL 1) Share of sales per customer segment as of 31 December 2015 and share of sales by region as of Q ) EMEA, excluding Western Europe 3) Asia, excluding China >8% 0 to 8% Negative x 13

14 EMEA market trends, Q Western Europe recorded 5 per cent organic growth. The positives were the UK, Italy, France and the Nordics Shipbuilding, positioning and public safety related business recorded solid growth The Middle East recorded negative organic growth due to the weak oil-related economy Russia declined after several sequential quarters of good growth Q4 Share of sales, % 39 Q4 Organic growth, % 0 - Organic growth, GES % 1 - Organic growth, IES % -1 14

15 Americas market trends, Q North America recorded 1 per cent organic growth Strong growth in manufacturing related business and private construction Weak public infrastructure market and decline in the oil & gas sector in the US hampered growth South America improved from previous quarters and recorded -2 per cent organic growth 16 per cent organic growth excluding Brazil Q4 Share of sales, % 35 Q4 Organic growth, % 1 - Organic growth, GES % -2 - Organic growth, IES % 4 15

16 Asia market trends, Q China recorded 12 per cent organic growth with strong demand across all industries Solid growth in Australia driven by infrastructure & construction South Korea saw double digit decline due to the weak shipyard market Q4 Share of sales, % 26 Q4 Organic growth, % 5 - Organic growth, GES % 13 - Organic growth, IES % 1 16

17 Reporting segments

18 Industrial Enterprise Solutions Q overview Organic growth of 1 per cent MI: 5 per cent organic growth driven by strong demand in the automotive and electronics industries. Solid growth in North America, China, Japan and South Korea PPM: -8 per cent organic growth due to reduced activities in the overall oil & gas market. Strong performance in China driven by customer wins CAD CAM Stationary sensors EBIT1 Sales of MEUR (420.6) EBIT1 of MEUR (115.2) and operating margin of 25.7 per cent (27.4) The operating margin (EBIT1) was negatively impacted by business mix. MI strengthened its margin Portable sensors Asset management Services Sales per geography Sales per segment 15% Power & Energy 35% 31% Americas 35% Automotive EMEA Asia 25% Electronics & Manufacturing Aerospace & Defence 34% 25% Software & services Recurring revenues Direct sales Emerging markets % 18

19 Geospatial Enterprise Solutions Q overview Organic growth of 2 per cent Geosystems: Organic growth of 1 per cent. Strong growth in China and Australia driven by increased demand in infrastructure & construction related business. Weak public construction market in North America S&I: 2 per cent organic growth driven by increased demand for public safety and Smart City solutions in the Middle East but hampered by poor order conversion in the US Positioning: 12 per cent organic growth driven by strong development of GNSS business EBIT1 Sales of MEUR (395.1) EBIT1 increased by 14 per cent to MEUR (88.8) and operating margin amounted to 24.2 per cent (22.5) Surveying Positioning Machine control Mapping 3D scanning Public safety Sales per geography The operating margin was positively impacted by new high-value applications and 19% 7% 5% Americas 11% increased software mix 38% 45% 43% EMEA Asia 12% Sales per segment 20% Surveying Infrastructure & Construction Natural Resources Public Safety Transportion & Utilities Defence % Software & services Recurring revenues Direct sales Emerging markets 19

20 Gross margin R12M quarterly data % 65 R12M 60% (60) Trend % 60 GM %

21 Operating margin R12M quarterly data 30 % EBIT1, % Target 2021: Optimistic Target 2021: Base R12M 23% (23)

22 Orders and product releases

23 Leica BLK360 the world s smallest laser scanner Leica BLK360 is the world's smallest imaging laser scanner, shooting full-colour panoramic images overlaid on a highaccuracy point cloud Designed to simplify the reality capture process primarily for engineers, architects, construction managers and surveyors involved in CAD and BIM Weighing only 1 Kg, has one button and produces full digital reality data in under three minutes Sales to begin in March through Autodesk and Hexagon channels 23

24 Hexagon s rail solutions keeping Europe on track AGP Metro Polska S.C., Poland Monitoring solutions will deliver accurate and reliable data in the construction of a metro line Infrabel, Belgium Imaging and high-accuracy solutions will be used to help capture precise rail measurements VolkerRail, The Netherlands Software used for the extraction and analysis of as-built infrastructure (Rijwegkoker project 4,500 km of rail) DB Netz AG, Germany Legacy GIS systems will be replaced with Hexagon s state-ofthe-art GIS database to hold all German rail infrastructure data 24

25 Providing geographic support to UK Ministry of Defence The 42 Engineer Regiment (Geographic) provides geographic support to all elements of UK Defence, especially Army headquarters, formations and units Invested in Hexagon scanners and robotic total stations to provide fielddeployable geographic support from raw data collection and information management to information exploitation, terrain analysis and visualisation 25

26 Building and maintaining roads in South America Grinor and Sacyr rebuilding roads in Uruguay $400 million project will be carried out over 20 years, covering 190 km of road Invested in 3D machine control systems and total stations to aid construction Sacyr Medellín-Cañasgordas road project in Colombia Invested in GNSS Smart Antennas, controllers, and total stations Quieroz Galvão construction of tunnels, bridges and drainage systems in São Paulo, Brazil Invested in robotic total stations 26

27 Hexagon s mining business maintains global footprint Alcoa, Australia MineSight mine planning solution will be used to increase efficiency and effectiveness of workflows and related operations Minera Peñasquito S.A. De C.V., México Multiple solutions will be used to design pits, dumps and blast patterns and improve ore control and reconciliation FMI-Chino Mine, USA Solutions will be used for improved activity and resource scheduling and material output New Gold Inc., Canada Geology solutions for database management, geological modelling and grade control workflow BrioGold, Brazil Scanners to support a number of operations with the goal of improving efficiency and safety 27

28 Continued growth in China CPECC Huadong Design Branch A professional design company serving refining/chemical and oil/gas storage projects, purchased SmartPlant solutions for use on its first international project FAW-Volkswagen Automotive Co. Ltd Placed a large order for coordinate measuring machines for use at its Tianjin factory to support an annual output of 300,000 passenger cars CRRC Corporation Limited World's largest supplier of rail transit equipment selected highaccuracy GNSS receivers for a next-generation onboard monitoring system Guangxi Road and Bridge Engineering Group Co., Ltd Purchased Hexagon s pioneering PaverSmart 3D system for a major road expansion project 28

29 Partnership with Huawei gaining traction in South America and Indonesia City of Cochabamba, Bolivia The partnership will provide software products, implementation services and training to deploy a comprehensive computer-aided dispatch system for police use SABESP SABESP, which provides water and sewage services to residential, commercial and industrial users in São Paulo, Brazil, purchased a security information management system Badan Nasional Penanggulangan Bencana (BNPB) BNPB, which provides guidance and direction on disaster prevention and emergency response, purchased the Huawei-Hexagon Joint Solution elte interface 29

30 Hexagon technology supports U.S. Defense Information Network The US. Naval Observatory (USNO) has purchased a large number of GPS Anti-Jam Technology (GAJT) antennas for the Defense Information Network (DoDIN) GAJT, an antenna system that ensures satellite signals for positioning, protects GPS-based receivers for precise timing from intentional and accidental interference DoDIN is the core global military network of the U.S. for sensitive voice, data, video and bandwidth services, which require precise timing 30

31 Delivering solutions for BMW 360 SIMS, Hexagon s solution for fully automated in-line quality control in manufacturing processes, is being used in a car body pilot project at BMW Brilliance Automotive in Shenyang, China Project marks several firsts: First 360 SIMS implementation in China First 360 SIMS for BMW First absolute inline measurement technology at BMW BMW s first factory in Mexico was looking for a single partner that could offer all required inspection equipment with high-level local support Purchased CMMs, laser trackers and sensors for quality control in its body shop, assembly and audit areas 31

32 Aiding construction of Hanhikivi 1 nuclear plant Fennovoima, an energy coalition founded by a group of Finland s power and energy companies, purchased solutions to build and maintain a centralised engineering database for Hanhikivi 1 nuclear power plant Fennovoima and RAOS Project (a subsidiary of Rosatom Energy International) have a joint plant supply contract for the plant, which is slated to begin producing electricity in 2024 Fennovoima aims to: Implement BIM methodology and tools Manage all engineering data throughout the project in one centralised location 32

33 Subsequent events Acquisition of MSC

34 Acquisition of MSC a game changer for Hexagon CAD CAM CAM PRODUCTION METROLOGY CAE CAE Autocorrect Metrology data Leverage lessons learned 34

35 Acquisition of MSC Software Leading provider of CAE (simulation) software. Headquartered in Newport Beach, CA. 1,200 highly-skilled professionals in 20 countries. Strong presence in automotive, aerospace and electronics Purchase price of 834 MUSD on a cash and debt free basis In 2016 MSC generated proforma sales of 230 MUSD Above group average profitability and 70 per cent of revenues are recurring Fully financed and net debt to EBITDA target of 2.5 will not be exceeded Closing is expected in April 35

36 Accounting impacts of MSC acquisition Impairment of overlapping technologies approximately 10 MEUR = reported as non recurring items (NRI) in Q No cash impact Deferred revenue (haircut) of approximately MEUR = reduces sales and profit in 2017 Will have an adverse impact on income- and cash flow statements over the next 12 months as deferred revenue is released First impact expected in Q No cash impact Cash transaction cost of approximately 2 MEUR = reported as NRI in Q

37 Subsequent events Cost savings programme

38 Changed cost structure D&A COGS OPEX EBIT Long term Gross Margin 47% EBITDA Margin 20% D&A 5% EBIT1 Margin 15% COGS OPEX D&A EBIT1 Gross Margin 60% EBITDA Margin 31% D&A 7% EBIT1 Margin 23% COGS OPEX D&A EBIT1 Long-term Continued investment in R&D Higher sales & marketing cost due to solution-centric transactions Short-term Decrease administration costs 38

39 Cost savings programme (Q1 2017) Hexagon will launch a company-wide cost savings programme in Q with a focus to reduce administration costs The programme will affect approximately 480 employees and is expected to drive cash cost savings of approximately 24 MEUR in 2017 and 43 MEUR per annum as of 2018 when fully implemented The cash flow impact of the programme amounts to approximately -34 MEUR The restructuring costs will be reported as non-recurring items (NRI) in Q

40 Financial impact of MSC acquisition and cost savings programme MEUR Q Q2-Q Sum MSC -12* c. -25** Cost savings programme Total financial impact * Transaction costs and overlapping technologies ** Haircut MEUR MSC will be accretive to earnings as of closing The cost savings programme is expected to drive cash cost savings of approximately 43 MEUR per annum as of 2018 when fully implemented 40

41 Dividend

42 Dividend The Board of Directors proposes a dividend of 0.48 EUR (0.43) per share, an increase of 12 per cent The dividend can be paid in EUR to shareholders who wish to receive it in this currency Other shareholders will receive the dividend payment in SEK 42

43 Summary

44 Summary Growth driven by strong demand in China across all business units and solid development in Manufacturing Intelligence Growth hampered by reduced activities in the overall oil & gas sector Taking actions to enable future growth Improved profitability in all businesses apart from PPM The Board of Directors proposes a dividend of 0.48 EUR (0.43), an increase of 12 per cent Signed an agreement on 2 February to acquire MSC Software, a leading provider of CAE (simulation) software In Q1 Hexagon will launch a company-wide cost savings programme to reduce administration costs 44

45 Disclaimer This presentation contains forward-looking statements. These forwardlooking statements reflect the views of Hexagon's management as of the date of this presentation. The forward looking statements may involve risks and uncertainties, including technological advances in the measurement field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by Hexagon's management and are believed to be reasonable, but are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forwardlooking statements. Hexagon disclaims any intention or obligation to update these forward-looking statements. It should also be noted that past performance is not a guide to future performance and that interim results are not necessarily indicative of the full year results. THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION; SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES OR ANY OTHER JURISDICTION WILL BE MADE BY MEANS OF FORMALLY DRAWN UP AND APPROVED PROSPECTUS. 45