Analysts' meeting Interim results 2013 Kendrion N.V. Agenda

Transcription

1 Analysts' meeting Interim results 2013 Kendrion N.V. Speaker: Piet Veenema / Frank Sonnemans Date: Wednesday 21 August 2013 Agenda 1. Kendrion at a glance 2. Key figures first six months of Highlights for the first six months of Review of the division Industrial and its business units 5. Review of the division Automotive and its business units 6. Kuhnke acquisition 7. Financial position 8. ERP project HORIZON 9. 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 160 temps) in 14 countries Revenue: approximately EUR 400 million Listed company on NYSE Euronext's Amsterdam Market 4 2

3 Kendrion breakdown of revenue HY * * Kuhnke activities normalised to turnover HY Global activities Kendrion 6 3

4 Kendrion committed to being a high-performer in selected business units 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 geographical spread of the operations - Enhancement of flexibility in the organisation - Targeted add-on acquisitions - Enhancement of the innovative capacity Organic growth > 10% ROS > 10% ROI > 17.5% 7 Kendrion's strategy - A clearly defined profile of a multinational, fast-growing high-tech company - Build leading positions in business-to-business niche markets - Balanced spread of activities - Automotive with bus, truck EUR 260 million and growing strongly - Industry EUR 150 million - Ambitious growth targets (EUR million in 2015) - Selective value-adding acquisitions for expansion preferably in industrial activities - Further improvement of geographical distribution across continents (USA, China, India) - Financially strong - Strategy redescribed in Mid-term Plan "Entering another league" 8 4

5 Key actions for achieving our strategic spearheads - Alert response to market developments in all key markets (market intelligence) - Increase customer's (financial) commitment in new projects - Expand and retain workforce, especially in qualified engineering - Enhancement of innovative capacity, including actions by the Kendrion Academy - Corporate Social Responsibility (CSR) - Focus on working capital management - Ongoing strengthening of risk management - Targeted acquisitions 9 2. Highlights for the first six months of

6 Highlights for the first six months of Still difficult market conditions in almost all markets - However, improvement in revenue and results continues - Raw material prices stable or tendency to slightly go down - Full attention to acquisition and integration of Kuhnke (per mid May 2013) - Excellent fit, good understanding from Kuhnke management and employees - Going to entrepreneurial business units - So far post acquisition running according to plan - Legal, organisational, managerial and financial integration - Streamlining of the support functions (dismissal of about 40 employees) - Continuously new sales initiatives - Enhancement of the innovation capacity (including Innovation Cells) - New website being developed to improve our internet appearance Key figures HY and financial objectives 12 6

7 Key figures first six months (x EUR 1 million) Q Q Difference in % Revenue % EBITA % Net profit % (x EUR 1 million) HY HY Difference in % Revenue % EBITA % Net profit % 1) EBITA and net profit adjusted for non-recurring items: Q2 2013: Non-recurring costs relating to the Kuhnke acquisition (EUR 1.8 million), along with a non-recurring tax gain of EUR 1.6 million Q2 2012: Release of earn-out provision for FAS Controls Inc (EUR 0.7 million) and a non-recurring tax gain of EUR 0.5 million 13 Incidentals Q One-off costs acquisition Kuhnke (due diligence EUR 1.3 million, PPA EUR 0.5 million) - One-off tax benefit because of acquisition Kuhnke (EUR 1.6 million) Q included the release of the earn-out provision for FAS Controls Inc. of EUR 0.7 million and a non-recurring tax gain of EUR 0.5 million 14 7

8 Review of the Division Industrial and its business units 15 Turnover Division Industrial per business unit * * Kuhnke (ICS) activities normalised to turnover HY

9 Locations of the Kendrion 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 IMS Kendrion (Aerzen), Germany IDS Kendrion (Donaueschingen /Engelswies); Kendrion (Villingen), Italy IMS IDS IDS IMS ICS Kendrion (Suzhou), China Kendrion (UK), Bradford Kendrion Kuhnke, Romania 17 General remarks Division Industrial - During the year more positive feeling about industrial activities - Positive tendency German industrial activities, although growth not as fast as earlier expected (VDMA) - In USA industrial revival is visible - More difficult to gain new projects in China 18 9

10 Snapshots Industrial Magnetic Systems (IMS) 19 Snapshots IMS Electromagnetic components tailored to the individual needs of advanced industries - Picking-up again, positive effect textile machine industry - Succesful development of our activities in the USA - Organic growth Q2 7%, HY1 2% - Preparation of increased activities in Rumania 20 10

11 Snapshots Industrial Control Systems (ICS) 21 Snapshots ICS (formerly named Kuhnke Automation) Customised, mechatronic solutions designed to optimise automatic processes - Good start within Kendrion - Real entrepreneurial, strong management - Good growth opportunities 22 11

12 Snapshots Industrial Drive Systems (IDS) 23 Snapshots IDS Electromagnetic brakes and clutches for the industrial drive technology - Difficult first half-year, mainly because of one customer - Good start of activities elevator market China - Full attention to introduction of the new Kobra products in Q Organic growth Q2-8%, HY1-9% - Expectation that the market conditions will improve in HY

13 Review of the Division Automotive and its business units 25 Turnover Division Automotive per business unit * * Kuhnke (ACS) activities normalised to turnover HY

14 Locations of the Kendrion Division Automotive Kendrion (Villingen), Germany Kendrion Linnig, Germany Kendrion Kuhnke, Germany Kendrion Kuhnke, Romania Kendrion (Prostejov), Czech Republic Kendrion (Eibiswald), Austria PCS CVS ACS ACS PCS PCS Kendrion (Shelby), USA CVS HDS PCS CVS PCS Kendrion (Nanjing), China Kendrion (Mexico), Mexico CVS HDS CVS HDS Kendrion (Suzhou), China CVS Kendrion (Sao Paulo),Brazil Kendrion (Pune), India 27 General remarks Division Automotive - Slow down of sales in Western Europe, especially in diesel cars - Our most important end-customers (VW group, Daimler) still doing relatively well - Bus and truck markets in Europe, China and in India under pressure - Positive signs from the truck market in the USA for HY

15 Snapshots Passenger Car Systems (PCS) 29 Snapshots PCS Project solutions for specific customer applications in the automotive and special vehicle industries - Difficult market conditions, lots of pressure on the organisation - Organic growth Q2-2%, HY1-7% - More positive outlook HY2 because of new projects in the USA (start-up according to plan) 30 15

16 Snapshots Automotive Control Systems (ACS) 31 Snapshots ACS (formerly named Kuhnke Automotive) Intelligent automotive control systems for comfort, safety, energy saving and functionality - Difficult start within Kendrion because of start-up problems new big project. Most of the issues solved now, which will lead to better results - Excellent possibilities in Romania - Intensive and active involvement of Kendrion divisional management 32 16

17 Snapshots of Commercial Vehicle Systems (CVS) 33 Snapshot CVS Individual energy-saving systems for commercial vehicles and off-highway applications - Rather stable turnover and profit development - Organic growth Q2-2%, HY1-6% - Difficult market conditions in Europe compensated by revenues in rest of the world 34 17

18 Snapshots Heavy Duty Systems (HDS) 35 Snapshots HDS Customised project solutions for the commercial vehicle sector - Difficult market conditions in Q2, both in the USA and India - Many new projects under preparation - Organic growth Q2-14%, HY1-6% - Improved expectations for the market in the USA 36 18

19 6. Kuhnke acquisition 37 Kuhnke acquisition - Kuhnke consolidated as from the date of closing (14 May 2013) - Total purchase consideration amounts to EUR 46.3 million - Additional earn-out consideration valued at EUR 5.3 million, based on latest forecasts at acquisition date. Final amount will depend on reaching certain pre-determined thresholds over Integration is going according to plan: - Financial integration into Kendrion completed - New business units formed (Industrial Control Systems and Automotive Control Systems) - Streamlining of support functions underway, number of support staff to be reduced by 40 people, half of which as a result of outsourcing 38 19

20 7. Financial position 39 Financial position - In control of working capital - Free cash flow EUR -8.4 million, due to high investments and seasonal patterns - Positive free cash flow expected for the full year After acquisition of Kuhnke solvency 37% - Increase in net debt to EUR 66.1 million (Q1 2013: EUR 25.3 million) largely due to the Kuhnke acquisition. The increase includes the impact (EUR 8 million) of the accounting treatment of certain Kuhnke assets and corresponding liabilities that, contrary to German GAAP, under IFRS need to be recognized on the balance sheet - Approximately EUR 60 million available for acquisitions 40 20

21 8. ERP project HORIZON 41 ERP project HORIZON - Running according to plan - Third business unit (IMS) went live per 1 April Last "old" business unit (CVS) will go live per 1 October Conversion of the acquisitions FAS Control and Kuhnke in HY

22 9. Outlook 43 Outlook - Economical circumstances remain difficult - However, positive signs in our most important markets (Germany, USA) - Automotive developments difficult to predict - Continued attention to the integration of Kuhnke - Confidence in future growth by several new projects - No concrete outlook 44 22

23 We magnetise the world! 23