Analyst conference. Full year review Christian Buhl, CEO Roland Iff, CFO March 13, 2018

Transcription

1 Analyst conference Full year review 2017 Christian Buhl, CEO Roland Iff, CFO March 13, 2018

2 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 2

3 Key figures 2017 Net sales growth (in local currencies, organic) Adj. EBITDA margin Adj. net income growth Adj. earning per share growth +3.5% 28.2% +3.5% +3.7% (-10 bp) Free cashflow development -13.2% Dividend proposal 2017 CHF Start of share buy-back program of maximum CHF 450 million in June 2017 Sanitec integration Major integration tasks completed Synergies of EUR 45 million captured (+4.0%) SLIDE 3

4 End consumer Pull Showroom Pull Technical Pull Sales & marketing nd year of integrated sales organisation Geberit sales force Geberit Push Wholesalers Market activities 2017 Example Germany Customer visits Push : Technical pull : Installers / Planners Showrooms / Architects / DIY/ / General contractors / Investors End consumers Showroom pull : events with customers internal customers at trainings technical customer service calls and customer service s SLIDE 4

5 Sales & marketing 2017 Key events in Germany Geberit NeuheitenTreff 30 "Geberit NeuheitenTreff" events with customers in urban areas New concept for customers along entire value chain Presentation of new & combined product portfolio behind and in front of the wall Geberit Drainage Competence 68 "Geberit Drainage Competence" events with customers in rural areas Regional concept for installers & planers Focus on market launch Geberit Silent-Pro, wastewater competence & system technology SLIDE 5

6 Marketing 2017 Expenditure Marketing expenditure, in CHF million In % of net sales Digital Others % Continuous investments in customer relations and brand reputation Marketing spend of 3.7% of net sales % 25% of total marketing spend for digital tools and digital channels % 4.0% 3.8% 3.7% 3.7% SLIDE 6

7 Sales & marketing 2017 Key digital activities for professionals and end consumers Building Information Modelling (BIM) Build-up of dedicated team responsible for completing and maintaining BIM data for Geberit assortment Development of intelligent plug-ins for Autodesk BIM software, e.g., for planning of Pluvia drainage system Web-based inspiration tool for end consumers Support for inspiration phase Personal consulting via live-chat Lead generation and management Web-based specification tool for planners, installers and architects Facilitation of specification process for small and large construction projects Selection, configuration and planning of country-specific and industry-specific products SLIDE 7

8 Innovation 2017 R&D Expenditure R&D expenditure, in CHF million In % of net sales +8% Increasing investments in innovation pipeline R&D expenditure of 2.7% of net sales in patents filed in % 2.7% 2.4% 2.6% 2.7% SLIDE 8

9 Innovations 2017 Successful product introductions Tuma Comfort Piave, Brenta Setaplano Volex Acanto Mid-level shower toilet with comfort functions Electronic tap system with slim & modern design Easy to clean floor even shower surface Supply piping press system Versatile bathroom series A compact allrounder Easy installation & maintenance" Safe & fast installation" For European expansion markets" Innovative technical features" SLIDE 9

10 CAPEX investments 2017 CAPEX, in CHF million In % of net sales New products Modernization & rationalization Capacity expansion % 34% 2017 capital expenditures 14.3% above previous year Increased spend for capacity expansion 57% Investments 2017 correspond to 5.5% of net sales % 5.0% 5.7% 5.0% 5.5% SLIDE 10

11 Investments 2017 Key projects New logistics centre in Pfullendorf (DE) Finalisation of logistics capacity expansion New concept for long good storage Innovative technologies and further process innovations CAPEX: EUR 40 million ( ) Capacity expansion & efficiency increase of factory in Pfullendorf (DE) Additional new building for cistern production New blow moulding machines with payback of 3 years New further automated assembly line for concealed cisterns CAPEX: EUR 15 million ( ) SLIDE 11

12 Investments 2017 Continuous improvement projects in our ceramics plants Modernisation of kiln in Wloclawek (PL) Upgraded shuttle kiln and kiln cars to reduce energy consumption by 5% Payback of 3.7 years CAPEX: EUR 1 million (2017) New glazing lines in Wloclawek (PL) New automated glazing lines to increase efficiency Payback of 4.6 years CAPEX: EUR 0.7 million (2017) Lean processes in Ekenäs (FI) Implementation of lean processes with various measures to optimise material flow from casting to kiln 20% higher productivity CAPEX: EUR 1.7 million (2016, 2017) SLIDE 12

13 Employees 2017 Slight increase due to volume growth in Sanitary Systems Number of employees by region 2017 Number of employees by business processes % 2% 28% 4% 8% 2% Germany Rest of Western Europe Eastern Europe Asia / Africa America 23% 39% Production Sales & Marketing Administration R&D Apprentices 24% 62% employees as of 2017 Increase of 117 individuals, or 1.0% compared to the end of 2016 SLIDE 13

14 Sustainability 2017 Improvement of our environmental footprint Environmental impact % Absolute energy consumption reduced by 4.2% in 2017 Environmental impact in relation to net sales declined organically by 6.1% in 2017 CO 2 emissions in relation to net sales reduced organically by 5.8% in Environmental impact organic, in UBP billion Environmental impact increase due to Sanitec acquisition, in UBP billion Environmental impact in relation to net sales currency-adjusted, in % (Index: 2007 = 100) Environmental impact in relation to net sales reduced by 45% since 2007 The environmental impact is measured in impact points (UBP) according to the Swiss impact assessment method of ecological scarcity (version 2013) SLIDE 14

15 Social responsibility 2017 Social project with Geberit apprentices in Ukraine Vocational school with 500 students in Odessa, Ukraine Renovation of the sanitary facilities as well as other common/recreation rooms Geberit apprentices from Germany, Austria and Switzerland working on site SLIDE 15

16 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 16

17 Sales 2017 Organic growth in local currencies of 3.5% Net sales, in CHF million Total variance: + CHF 99 million (+ 3.5%) Net sales FY 2016 Organic growth in local currency Currency effect Divestment (Koralle / Varicor) Net sales FY % + 1.2% - 1.2% SLIDE 17

18 Sales 2017 Negative one-time effects in Q2 and Q3 Quarter Net sales Variance to prior year CHF million % CHF % c.a., org. Comment Q % 6.7% More working days + Q % -0.8% Q % 3.3% 3 working days less Mera base effect of CHF 4 million 1 working day less Mera base effect of CHF 8 million Q % 5.3% Pre-buying effect in Switzerland + Full year 2' % 3.5% Mera base effect of CHF 12 million Notes: Variance to prior year in % CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 18

19 Sales 2017 Positive development in all regions Net sales in CHF million and organic growth 2017 by region in % (c.a.) America (3.3% of net sales) +3.6% Europe (90.9% of net sales) +2.9% Middle East / Africa (2.8% of net sales) +16.8% Far East / Pacific (3.0% of net sales) +13.3% Total +3.5% SLIDE 19

20 Sales 2017 Development in European countries / regions (1/2) Country / Region Net sales CHF million Variance to prior year % CHF % c.a., org. Comment Germany % 0.7% Limited growth due to capacity constraints of sanitary installers Nordic Region Central / Eastern Europe Switzerland Benelux % 1.2% 9.0% 6.7% -0.8% 3.7% 5.8% 4.0% Strong previous year growth Slowdown of market growth in Sweden and Norway Mixed picture of market environments Sales growth in all key markets Double digit growth of Installation Systems Slightly growing market environment Outperformance driven by upselling strategy and innovations Ongoing market recovery in Netherlands Positive sales growth in Netherlands and Belgium Notes: Prior year comparison in CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 20

21 Market environment Germany Demand higher than capacities Planning permissions, in dwellings Construction completions, in dwellings Construction backlog, in dwellings Construction time, in months Single dwelling unit Multiple dwelling unit Planning permissions: Extrapolated 11 months numbers; Construction completions: Estimates Ifo Institute Source: Statistisches Bundesamt SLIDE 21

22 Market environment Germany Increased bottleneck of sanitary installers Vacancy time of open installer 1 jobs in Germany 129 days 142 days 156 days Construction Specialist 2017 (130 days) All jobs in Germany 2017 (100 days) 54% of all sanitary installer companies with open positions in 2017 (2016: 46%) New record level of installer order book of 10.6 weeks per end of 2017 increase of 14% vs Plumbing, Heating, Air Conditioning Source: Bundesagentur für Arbeit SLIDE 22

23 Sales 2017 Development in European countries / regions (1/2) Country / Region Net sales CHF million Variance to prior year % CHF % c.a., org. Comment Germany % 0.7% Limited growth due to capacity constraints of sanitary installers Nordic Region Central / Eastern Europe Switzerland Benelux % 1.2% 9.0% 6.7% -0.8% 3.7% 5.8% 4.0% Strong previous year growth Slowdown of market growth in Sweden and Norway Mixed picture of market environments Sales growth in all key markets Double digit growth of Installation Systems Slightly growing market environment Outperformance driven by upselling strategy, innovations and pre-buying effects Ongoing market recovery in Netherlands Positive sales growth in Netherlands and Belgium Notes: Prior year comparison in CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 23

24 Sales 2017 Development in European countries / regions (2/2) Country / Region Net sales CHF million Variance to prior year % CHF % c.a., org. Comment Italy % 6.6% Strong market outperformance due to dedicated sales & marketing initiative France Austria UK / Ireland Iberian Peninsula % 3.9% 9.4% 9.0% -10.4% -5.6% 13.8% 11.9% Recovering market environment Double digit growth of Installation Systems Strong market growth Market outperformance despite already high market shares Declining market due to weak non-residential sector Geberit with dis-proportional exposure to non-residential Ongoing market recovery in Spain Double digit sales growth in Spain and Portugal Notes: Prior year comparison in CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 24

25 Sales 2017 Development in international regions Country / Region Net sales CHF million Variance to prior year % CHF % c.a., org. Comment America % 3.6% Stagnation of the institutional market sector Further improved profitability of Chicago Faucet Company Far East / Pacific % 13.3% Moderate growth of residential construction sector in China in H Double digit sales growth in China, India and in Australia Middle East / Africa % 16.8% Stabilisation of overall construction market in the Gulf region Double digit sales growth in all key markets of Geberit Notes: Prior year comparison in CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 25

26 Sales 2017 Development by product line Product area / line Net sales Variance to prior year CHF million % CHF % c.a., org. Comment TOTAL 2' % 3.5% Sanitary Systems 1' % 6.6% Installation Systems % 8.9% Cisterns and Mechanisms % -1.7% Faucets and Flushing Systems % 4.3% Waste Fittings and Traps % 12.4% Piping Systems % 3.8% Supply Systems % 1.0% Building Drainage Systems % 8.6% Strong growth of Installation Systems driven by synergies with Sanitary Ceramics Negative base effect from Mera backlog elimination in 2016 Double digit growth of Waste Fittings and Traps driven by new product introductions Strong growth of drainage piping systems driven by upselling and new product introductions Sanitary Ceramics % -2.3% Negatively affected by closure of two ceramic plants in Bathroom Ceramics % -2.1% France Weaker market environment in Nordic Region Ceramics Complementary Products % -3.2% Notes: Prior year comparison in CHF includes 6 months of sales from Koralle and 12 months from Varicor neither Koralle nor Varicor contributed to sales in 2017 SLIDE 26

27 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 27

28 Key figures 2017 CHF million % YoY Net sales 2' ' % Adj. EBITDA % Margin 28.2% 28.3% Adj. EBIT % Margin 24.3% 24.4% Adj. net income % Margin 20.8% 20.8% Currency adjusted organic net sales growth of 3.5% One-off adjustments mainly in restructuring cost and amortisation of ceramics technology Synergies of EUR 45 million fully captured in 2017 Adj. EPS (CHF) % Free cashflow % Margin 16.6% 19.8% SLIDE 28

29 Income statement 2017 CHF million 2017 % 2016 % % YoY Net sales 2' % 2' % 3.5% Cost of materials % % 7.1% Personnel expenses % % 6.4% Depreciation % % 3.6% Amortisation % % 3.5% Other operating expenses, net % % 2.3% Total operating expenses, net 2' % 2' % 5.4% Operating profit (EBIT) % % -2.9% EBITDA % % -1.7% Adj. EBITDA % % 3.2% Adj. operating profit (adj. EBIT) % % 2.9% SLIDE 29

30 FY 2017 Solid results Adjustments / one-off Reported EBITDA margin 28.3% 0.3% + 1.3% - 0.9% - 0.6% % 28.2% 28.0% 1.7% 26.5% Adj. EBITDA margin FY 2016 Volume and product mix effect Other cost effects Price effects, net Currency effect M&A net (Koralle / Varicor) Adj. EBITDA margin FY 2017 Positive impact from volume and product mix effect Higher raw-material prices leading to negative net price effect Tarif increases and higher expense for marketing lead to negative other cost effect CHF 45 million one-off restructuring cost from closure of two ceramic production plants in France SLIDE 30

31 One-off cost related to Sanitec acquisition 2017 Integration cost Restructuring costs 1 One off & recurring cost from acquisition / deconsolidation One-off (gain) / loss from divestment 2 Total cost on EBITDA level Depreciation and amortisation Total cost on EBIT level Tax effect Total cost on net income level 2017 CHF million Costs related to closure of two French ceramics production plants 2 Varicor transaction SLIDE 31

32 Adj. net income and adj. EPS 2017 Slightly above prior year s level CHF million 2017 % 2016 % % YoY Operating profit (EBIT) % % -2.9% Financial result, net % % -1.1% Profit before income tax expenses % % -2.9% Income tax expenses % % 2.8% in % pre-tax profit 13.9% 13.1% Net income % % -3.8% EPS (CHF) % Adj. net income % % 3.5% Adj. EPS (CHF) % SLIDE 32

33 Free cashflow 2017 Negative impact from investments and NWC CHF million % YoY EBITDA % Financial result, net Income tax expenses Changes in deferred taxes 1 and current income tax liabilities and provisions Changes in non-current provisions Changes in other non-current assets and liabilities Net cashflow % in % net sales 24.3% 24.9% Purchase of PP&E and intangible assets, net Changes in net working capital Payments charged to non-current provisions Free cashflow % in % net sales 16.6% 19.8% 1 Only portion booked to the income statement SLIDE 33

34 Balance sheet 2017 FX impact increased all balance sheet positions CHF million Cash and cash equivalents Net working capital Property, plant and equipment Deferred tax assets Other non-current assets and non-current financial assets Goodwill and intangible assets 1' '681.1 Total assets 3' '601.1 Debt Accrued pension obligations Deferred tax liabilities Tax liabilities and tax provisions Other non-current provisions and nun-current liabilities Equity 1' '635.2 Equity ratio 49.1% 45.4% Net debt Gearing 26.3% 28.2% SLIDE 34

35 Dividend Proposed increase of 4.0% CHF thousand Net income Geberit AG 501' '771 Balance brought forward 3'169 3'813 Withdrawal from free reserves - - Total available earnings 505' '584 Transfer to free reserves 120'000 20'000 Proposed / paid dividend 383' '415 2 Balance to be carried forward 2'045 3'169 Total appropriation of available earnings 505' '584 1 The Board of Directors proposes to the Geberit AG annual general meeting on April 4, 2018 a dividend of CHF per share with dividend right. This corresponds to a payout ratio of 63.4%. The actual amount of shares with dividend rights may change prior to the annual general meeting. 2 Dividend of CHF per share SLIDE 35

36 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 36

37 Sanitec integration Integration roadmap successfully executed Integration roadmap Major integration tasks completed as of Get the basics Integration planning Organisational design Clarity for people Sales system integration 2016 Go live as one company One face to the customers Harmonize processes and tools Majority of synergies captured Capture the strategic benefits Capture remaining synergies Optimised business processes Combined product innovations All synergies of EUR 45 million captured ahead of plan Total integration costs of CHF 45 million Further solidification and improvement of combined business required, e.g., - ERP systems - Combined products - Cultural integration SLIDE 37

38 Sanitec integration Major integration tasks completed (1/2) Organisation One single company since 2016 with a functional organisation no divisions and matrices Exit of 10 sales and corporate locations Alignment of legal structure and elimination of > 20 legal entities Sales and marketing One customer oriented sales organisation with new showroom pull CRM systems and sales processing fully integrated Evolutionary development and roll-out of CI/CD IT-Systems Replacement of first ex-sanitec ERP system as of January 1, 2017 further roll-out plan defined IT infrastructure fully harmonized Products Insourcing of products largely completed, e.g., ceramics for shower toilets and fill & flush valves Further streamlining of ceramics portfolio Geberit branded ceramics launched in selective markets SLIDE 38

39 Sanitec integration Major integration tasks completed (2/2) Operations Two ceramics production plants closed in France Roll-out of Geberit production system (GPS) First improvement projects implemented Business portfolio Divestment or closure of all non-core businesses with limited synergies due to different customer focus and/or made to measure products (e.g., Koralle, Varicor) Synergies Total synergies of EUR 45 million captured as of 2017 ahead of plan Total integration costs of CHF 45 million according to plan SLIDE 39

40 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 40

41 Building construction outlook Europe Overall favourable but mixed construction market environment Confident about demand in Germany bottleneck of qualified sanitary installers continues to limit growth Stable market on high level in Switzerland Growing market in Austria but at slower pace Mixed picture in Nordic Region positive for Denmark and Finland, cool down in Sweden and Norway Positive outlook for Benelux ongoing recovery in NL leads to shortages of sanitary installers Growing construction market in France Slightly improving environment in Italy Robust residential sector but declining non-residential sector in UK Mixed picture in Eastern Europe Recovery on Iberian Peninsula from low level SLIDE 41

42 Building construction outlook North America Moderate improvement of institutional sector Moderate improvement of construction in the healthcare and educational sector Further growth of residential construction sector SLIDE 42

43 Building construction outlook Asia Pacific Mixed picture across the region Moderate increase of the residential construction market in China Cautious for the residential sector in India due to new regulations and policies introduced last year Stagnation of the building construction market in Australia Mixed picture in South East Asia SLIDE 43

44 Building construction outlook Middle East / Africa Improving construction market in Gulf region Improving construction market in the Gulf region Stagnating building construction market environment in South Africa Mixed picture in Northern Africa / Near East SLIDE 44

45 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 45

46 New product introductions 2018 Geberit AquaClean Tuma Classic Entry-level shower toilet with Compact design Rimfree WC ceramic easy to clean Unlimited warm water comfort Established WhirlSpray shower technology Two variants: Complete solution (seat + ceramic) or seat only SLIDE 46

47 New product introductions 2018 Washbasins VariForm Comprehensive portfolio of countertop washbasins Four geometric shapes: round, oval, elliptic and square Universal and timeless design with particularly slim rims Replacement of many local ranges by one group range SLIDE 47

48 New product introductions 2018 New basic fill valve Type 333 New basic fill valve for flushing cisterns Fits to Geberit and OEM flushing systems Low noise level Dirt and chemical substances resistant SLIDE 48

49 New product introductions 2018 Geberit sanitary flush Rapid Automated flushing system for supply piping systems Helps to avoid hygiene risks Compact design for pre-wall installation, battery-driven Fast installation when hygiene is acutely at risk SLIDE 49

50 New product introductions 2018 Geberit energy retaining valve ERV Energy saving valve on top of drainage stack Saves up to 50l of heating oil per year and drainage stack Maintenance-free with insect screen and frost resistance Odour stop on the roofs used as a terrace SLIDE 50

51 Investments 2018 Capacity expansion and renewals Complete renewal of production site in Langenfeld (DE) Complete renewal of the production site for metal piping systems 2 new buildings: Production hall (15 400m 2 ) and admin building (5 500m 2 ) Start of production as of 2019 CAPEX: EUR 35 million ( ) Building extension in Ozorkow (PL) New factory building for metal fittings production Start of production in 2019 CAPEX: EUR 9 million ( ) SLIDE 51

52 Investments 2018 Capacity expansion and renewals Capacity and efficiency increase in Lichtenstein (DE) Additional automated welding line for Installation systems Optimisation of existing capacity by improved processes Payback of 2 years CAPEX: EUR 5 million for capacity and efficiency ( ) SLIDE 52

53 Marketing & Brands outlook 2018 Brand portfolio simplification Phase-out of 4 ceramic brands (Keramag, Sphinx, Allia, Pozzi- Ginori) and replacement with Geberit brand, starting in 2019 Key benefits: Improved customer support Simplified cross- and upselling Reduced complexity in operations and logistics More capacity for development of new products New Geberit AquaClean shower toilet campaign New flexible B2C marketing campaign my confidence More focus on product and benefits Educative, provocative and lifestyle oriented Roll-out in all European campaign markets including Sweden SLIDE 53

54 Reporting outlook 2018 No more integration and restructuring cost on EBITDA level 2018 will be the last year with adjustments for amortisation charges for intangibles of about CHF 36 million Due to the completed Sanitec integration, sales reporting will be shown as of 2018 by three newly organised product areas: Installation & Flushing Systems Installation Systems Piping Systems Building Drainage Systems Bathroom Systems Bathroom Ceramics & Furniture Shower Toilets Cisterns & Mechanisms Supply Systems Showers & Bathtubs Taps & Control SLIDE 54

55 Agenda Review Sales development Financial Results Sanitec integration Building construction outlook Geberit outlook Summary R. Iff SLIDE 55

56 Summary Geberit with a successful year 2017 Solid organic sales growth Strong sales growth of Installation Systems due to synergies with ceramics business Stable profitability despite substantially higher raw material prices Operating results on new record levels Sanitec integration completed synergies captured earlier than initially planned Successful new product introductions proving our innovation leadership Increased investments in operations, product pipeline and customer relations for future value creation SLIDE 56

57 Summary Outlook Favourable but mixed construction market outlook Increasing raw material prices and personnel cost (labour tariffs) Fundamentals of Geberit remain very solid Uniquely positioned in Europe with sustainable organic growth perspectives Further solidification and improvement of combined business behind and in front of the wall Strong cash generation enabling attractive dividend pay-out combined with share buy-back programs SLIDE 57

58 Important dates in 2018 April 4, 2018 Annual meeting April 10, 2018 Dividend payment May 3, 2018 Interim report on the first quarter 2018 Conference call August 14, 2018 Interim report on the second quarter 2018 Conference Call October 30, 2018 Interim report on the third quarter 2018 Conference call SLIDE 58

59 Disclaimer While Geberit is making great efforts to include accurate and up-to-date information, we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this handout and disclaim any liability for the use of it. The statements in this presentation relating to matters that are not historical facts are forward-looking statements that are not guarantees of future performance and involve risks and uncertainties, including but not limited to: future global economic conditions, foreign exchange rates, regulatory rules, market conditions, the actions of competitors and other factors beyond the control of the company. All financial information included is audited except quarterly sales, analyses to impact of currencies, non-organic impact, oneoff adjustments as well as the development of the EBITDA margin. Quarterly figures are prepared under the same recognition and measurement principles applied for the audited annual financial statements. SLIDE 59