Q EARNINGS REVIEW GORENJE GROUP

Transcription

1 WebCast, June 4th Dr. Peter Groznik, CFO 1 EARNINGS REVIEW GORENJE GROUP

2 : Highlights / Gorenje Group Change Plan Plan track Comparable* Change Consolidated revenue % 1, % % EBITDA % % % EBITDA Margin (%) 7.3% 5.9% +1.4 p.p. 7.3% / 7.3% 6.5% +0.8 p.p. EBIT % % % EBIT Margin (%) 3.1% 2.4% +0.7 p.p. 3.6% / 3.1% 2.5% +0.6 p.p. 2 PBT % % % Net income % % / ROS 0.7% 0.5% +0.2 p.p. 1.0% / 0.7% 0.1% +0.6 p.p. * Comparable: Effect of the elimination of the sale of Istrabenz Gorenje on the profitability of the Gorenje Group

3 : Highlights / Gorenje Group Change Plan Plan track Comparable* Change ROA 0.7% 0.6% +0.2 p.p. 1.1% / 0.7% 0.1% +0.6 p.p. ROE 2.1% 1.9% +0.2 p.p. 3.3% / 2.1% 0.3% +1.8 p.p. ROIC 3.2% 2.7% +0.5 p.p. 5.2% / 3.2% 1.1% +2.1 p.p. FCF/narrow* % % % Financial debt % % % 3 Net financial debt** % % % Net financial debt / EBITDA*** / 3.8 / 4.9 / / * Net income + depreciation and amortization expense CAPEX + divestment + change in inventories + change in trade receivables + change in trade payables ** Financial debt Cash and cash equivalents *** Net financial debt / EBITDA for the last 12 months * Comparable: Effect of the elimination of the sale of Istrabenz Gorenje on the profitability of the Gorenje Group

4 : Executive Summary (1) Challenging business conditions were faced this year: continuing European debt crisis, high raw material prices (could not be transferred in full to selling prices), high unemployment rate, consumer spending restraint and payment indiscipline. Impairment of sales volume (change in geographic and product structure of sales): Sales volume growth in Russia, Germany, Czech Republic, Serbia, America and Australia; Decreases in sales in all other markets of Central, North, West, East and South- East Europe (also the Slovenian market); 4 Net income increased by 12.9% compared to ; Production performance of the Asko Group is still negative and below the plan, but better than last year; improvement will be achieved through the implementation of a relocation plan in progress.

5 : Executive Summary (2) Reassessment of the restructuring program of HI will be completed by early June due to unrealized planned effects in. Business Segment Home: improved net profitability at 2.4% lower sales volume. Business Segment Ecology: decrease in net profitability, but top the plan. Business Segment Portfolio Investments: net income close to planned for and its reached level in. In achieved negative FCF, but with 8.5 of improvement, compared to (comparable: an improvement of 4.8 ). Negative FCF is mostly attributable to the seasonally conditioned movement of sales and production. Comparability with : without the effects of the excluded company Istrabenz Gorenje in, which in contributed 1.6 of net income. 5

6 : Events that affect the comparability of data Effect of the elimination of the sale of Istrabenz Gorenje on the profitability of the Gorenje Group comparable Consolidated revenue EBITDA EBITDA Margin (%) 7.3% 5.9% 7.3% 6.5% EBIT EBIT Margin (%) 3.1% 2.4% 3.1% 2.5% Net income ROS 0.7% 0.5% 0.7% 0.1% 6 Effect of the sale of Istrabenz Gorenje on the financial position of the Gorenje Group comparable NET ASSETS Net non-current assets Net working capital Working capital ST liabilities NET INVESTED CAPITAL Equity Net debt capital

7 : Revenue in Revenue Group Q2 Q3 Q4 Revenue by Business Segments Q2 Q3 Q4 Portfolio Ecology Home Portfolio 24.3% Portfolio 9.3% Ecology 7.7% Home 68.0% Ecology 8.6% Home 82.1%

8 : Sales by Region in Gorenje Group Business Segment Home Region Comparable* Change Region Change Western Europe (43%) (42%) -1.4% Western Europe (50%) (52%) -4.7% Eastern Europe (49%) (51%) -9.9% Eastern Europe 98.2 (40%) 98.1 (39%) +0.1% 8 Other 23.3 (8%) 23.3 (7%) -0.2% Other 23.3 (10%) 23.3 (9%) +0.1% Total sales % Total sales % Comparable: In order to present comparable data, the effects of the sale of Istrabenz Gorenje are eliminated

9 : EBIT / Gorenje Group EBIT Margin 2.4% 2.4% 1.8% 3.6% 3.1% EBIT () Q2 Q3 Q4 9 Development Development Comparable EBIT January March Contribution margin at the level of costs of goods and material Costs of services Labor costs Depreciation and amortization Other operating expenses Other income EBIT January March

10 : EBITDA / Gorenje Group EBITDA Margin 5.9% 5.9% 5.9% 6.8% 7.3% EBITDA () Q2 Q3 Q4 : PAT Performance / Gorenje Group % ROS 0.5% 0.4% 0.4% 0.7% PAT () Q2 Q3 Q4

11 : Business Segment Home Change Plan Plan track Revenue % % CM % % CM. % 44.5% 45.2% -0.7 p.p. 42.3% +2.2 p.p. EBIT % % EBIT Margin. % 2.3% 2.2% +0.1 p.p. 3.7% -1.4 p.p % 2.2% 2.3% 2.5% 2.3% Q2 Q3 Q4 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 11 Revenue EBIT Margin, % Development EBIT January March 5.7 Contribution margin at the level of costs of goods and material -4.5 Costs of services -0.2 Labor costs 2.1 Depreciation and amortization 0.1 Other operating expenses -0.6 Other income 3.0 EBIT January March 5.6

12 : Business Segment Ecology Change Plan Plan track Revenue % % CM % % CM. % 43.0% 37.9% +5.1 p.p. 42.9% +0.1 p.p. EBIT % % EBIT Margin. % 5.4% 6.0% -0.6 p.p. 3.0% +2.4 p.p % 4.9% 5.4% 3.8% 1.9% Q2 Q3 Q4 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 12 Revenue EBIT Margin, % Development EBIT January March 1.7 Contribution margin at the level of costs of goods and material 0.2 Costs of services -0.5 Labor costs -0.2 Depreciation and amortization 0.1 Other operating expenses 0.1 Other income 0.1 EBIT January March 1.5

13 : Business Segment Portfolio Investments Plan Plan track Comparable Change Change Revenue % % % CM % % % CM. % 32.5% 10.2% p.p. 38.3% -5.5 p.p. 32.5% 17.8% p.p. EBIT % % % EBIT Margin. % 8.2% 1.7% +6.5 p.p. 2.9% +5.3 p.p. 8.2% 1.7% +6.5 p.p % 1.7% 2.4% -2.2% % Q2 Q3 Q4 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 13 Revenue EBIT Margin, % Development Development Comparable EBIT January March Contribution margin at the level of costs of goods and material Costs of services Labor costs Depreciation and amortization Other operating expenses Other income EBIT January March

14 : FCF (narrow) Performance Plan Comparable Net income Depreciation and amortization = Net cash flow CAPEX Divestment Investment into net current assets Change in inventories Change in trade receivables Change in trade payables = Free cash flow (narrow) Q2 Q3 Q Q2 Q3 Q4 Free Cash Flow Q2 Q3 Q Q2 Q3 Q Q2 Q3 Q4 Q2 Q3 Q4 Inventories Trade receivables Trade payables

15 : Gorenje Group Financial Position Net non-current assets Equity Inventories as % of last 12M sales 18.2% 18.3% Trade receivables as % of last 12M sales 19.2% 20.0% Trade payables as % of last 12M sales 11.4% 12.6% Net working capital as % of last 12M sales 26.0% 25.6% Non-current financial liabilities Short-term financial liabilities Cash and cash equivalents Net debt capital Other working assets / liabilities Financial investments NET ASSETS NET INVESTED CAPITAL Gorenje Group structure of financial liabilities ST financial liabilities 35.7% ST financial liabilities 48.8% LT financial liabilities 64.3% LT financial liabilities 51.2%

16 : Key Management Actions for Sales increase: CEE (Russia, Ukraine, Czech, ), SEE, Germany, Nordic, Overseas Net Working Capital Management: Inventories, Trade Receivables, Trade Payables; Divestment activities Production transfers: knowledge management, social and commercial issues Cost Management: material costs, service costs, labor costs Financial Stability Management Focus on top money losers: 16 Asko Group: radical restructuring phase Gorenje NO: quick sales improvement Gorenje France: change of management, new business model Gorenje Istanbul, Turkey: continue with the business, new business model Gorenje Zagreb, Croatia: payment risk management Strategic plan implementation, organization & HR development

17 STRATEGY GORENJE 2015 ALIGNING FOR THE FUTURE 17

18 Strategic Plan 2015: Uncertainty in the markets impedes operations Market uncertainty High volatility in the raw material / commodity markets Challenges for Gorenje Unpredictable changes in material costs Stringent competition in the industry prevents increasing downstream prices Euro debt crisis Pressure on profit margins Conservative stance by endbuyers as they find it hard to secure loans 18 Problems in the European financial system (high revaluation adjustments, Basel III implementation) High unemployment rate Possibility of further problems with retail chains due to payment defaults

19 Strategic Plan 2015: New Organization, New Vision, New Business Model Previous Gorenje Group organization - three divisions: New Gorenje Group organization - three business segments: HOME APPLIANCES HOME INTERIOR ECOLOGY, ENERGY, AND SERVICES CORE ACTIVITY SUPPLEMENTARY PORTFOLIO INVESTMENTS HOME Products and services for the home ECOLOGY Ecology-related services OTHER 1 - REFRIGERATION APPLIANCES 2 - COOKING APPLIANCES 3 - WASHING MACHINES, DRYERS, DISHWASHERS.) COMPLEMENTARY PRODUCTS SUPPLEMENTARY PRODUCTS Water heaters, radiators, and air conditioners Change in the new organization: Kitchens Other furniture Ceramics Bathrooms Changes in the new organization: Ecology Energy Tools and industrial equipment Trade Engineering Brokerage Tourism Changes in the new organization: MDA (major domestic appliances) SDA (small domestic appliances) HVAC (heating, ventilation, air conditioning) SERVICES related to the home KITCHEN FURNITURE Comprehensive waste management Tool-making Engineering Hotels and hospitality services Trade Design services A wide product range major domestic appliances, small domestic appliances, HVAC, services. Gorenje's core activity is manufacturing HOME products; in 2015, it will represent approximately 90% of total operations. Focus on kitchen furniture Preparing a new business model New Vision field of ENERGY divested further development of the field of ECOLOGY SERVICES seen as portfolio investments. KEY ORIENTATION SUPPORT role New Business Model 19 VISION FOCUS TO BECOME WORLD BEST DESIGN DRIVEN INNOVATOR OF HOME PRODUCTS HOME DIFFERENTIATION THROUGH DESIGN INNOVATION MISSION GLOBALIZATION STRATEGIC ALLIANCES R&D, SALES, PRODUCTION TO CREATE INNOVATIVE, DESIGN-DRIVEN PRODUCTS AND SERVICES THAT BRING SIMPLICITY TO OUR USERS. INTERNATIONAL DRIVEN PERMANENT CREATION OF VALUE FOR THE CUSTOMERS, SHAREHOLDERS, AND EMPLOYEES BRAND/ PRODUCT PORTFOLIO RESEARCH AND DEVELOPMENT NICHE MANAGEMENT AMBITION CREATIVITY RESPONSIBILITY HONESTY SIMPLICITY INDUSTRIAL KNOW-HOW DESIGN SCOPE & FLEXIBILITY CULTURE FUNDAMENTAL VALUES OPERATIONAL EXCELLENCE

20 Strategic Plan 2015: Multi-brand strategy to cover all price segments BUILT-IN PREMIUM SPECIALIST BUILT-IN SPECIALIST PREMIUM MID+ WET PREMIUM SPECIALIST BUILT-IN LOCAL SPECIALIST CONCEPTS MID 20 MAINSTREAM LOWER (BUDGET) SEGMENT BUDGET FREE STANDING LOCAL BUILT-IN (FREE STANDING) LOCAL LOWER (BUDGET) SEGMENT FOR BENELUX

21 Strategic Plan 2015: Europe domestic market, strengthening global presence through % market share in Finland 10% market share in Denmark 9% market share in Norway 6% market share in Sweden Top 1 foreign brand in Germany 7 % market share in Russia 4% of the Group revenue comes from the USA & Australia Leading brand in Slovenia & in the Balkans Luxury residential towers furnished with designer appliances in Hong Kong 21 5% market share in the segment of dishwashers in Australia Sales in 90 markets around the world: Europe = traditional domestic market, the USA, Australia, China, the Middle East

22 Strategic Plan 2015: The difference is built on design and innovation 22

23 Strategic Plan 2015: Gorenje Group key strategic goals Profitability of operating volume Creating value, short term FCF (narrow) at least EUR 40 million, in 2015 Turnover (sales revenue) > EUR 1.5 billion in 2015 (CAGR 3.8 %)* Share of brands/ concepts in the premium price segment over 25% in 2015 Creating value, long term EBIT above 5% in 2015 MAJOR STRATEGIC GOALS Turnover (sales revenue) beyond Europe more than EUR 150 million in Debt management Net debt/ebitda not more than 3.0 from 2014 on * Base year (eliminated effect of Istrabenz-Gorenje divestment) New business model, organizational structure/human resource management, and corporate governance Core activity shall represent approximately 90% in 2015 Financial/business goals Markets/marketing goals Business platforms

24 Strategy without implementation is an illusion. Therefore Annual update of the strategy. The Management Board shall monitor strategy implementation on a monthly basis: Key strategic goals Key implementation projects 24 The Management Board shall report at each Supervisory Board session on strategy implementation activities. STRATEGIC PLANNING Annual review and adjustment of strategy once per year, to be performed by the Strategic Business Council.

25 Factors affecting forward-looking statements This Presentation contains forward-looking statements and information that is, statements related to future, not past, events, within the meaning of the Securities Market Act and the Rules and Regulations of the Ljubljana Stock Exchange. These statements may be identified by words such as expects, looks forward to, anticipates, intends, plans, believes, seeks, estimates, will, project or words of similar meaning. Such statements include, among others, the financial goals and targets of parent company Gorenje, d.d., and Gorenje Group for future periods and future business and financial plans. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. A variety of factors, many of which are beyond Gorenje's control, affect Gorenje s operations, performance, business strategy and results and could cause the actual results, performance or achievements of Gorenje to be materially different from any future results, performance or achievements that may be expressed or implied by such forwardlooking statements. These factors include, but may not be limited to the following: consumer demand and market conditions in the geographical areas and industries in which Gorenje Group operates, effects of currency fluctuations, competitive pressures to reduce prices, significant loss of business from major retailers, the possibility that customers may delay the conversion of booked orders into revenue or that prices will decline as a result of continued adverse market conditions to a greater extent than currently anticipated by Gorenje's management, the success in developing new products and marketing initiatives, developments in product liability litigation, progress in achieving operational and capital efficiency goals, the success in identifying growth opportunities and acquisition candidates and the integration of these opportunities with existing businesses, continued volatility and a further deterioration of the capital markets, progress in achieving structural and supply-chain reorganization goals. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Gorenje does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated. 25