GLOBAL EXPERT IN ELECTRICAL POWER AND ADVANCED MATERIALS JANUARY 2017

Transcription

1 GLOBAL EXPERT IN ELECTRICAL POWER AND ADVANCED MATERIALS JANUARY 2017

2 MERSEN IN BRIEF SALES STAFF LEADERSHIP POSITIONS 772 M* 6,191** WORLD N 1 & N 2 37 % AMERICAS 34 % EUROPE 29 % ASIA AND REST OF THE WORLD * 2015 data ** 2016 Half-year figures PRESENCE IN 35 COUNTRIES GRAPHITE-BASED ANTI-CORROSION EQUIPMENT BRUSHES AND BRUSH-HOLDERS FOR INDUSTRIAL ELECTRIC MOTORS HIGH-TEMPERATURE ISOSTATIC GRAPHITE APPLICATIONS PASSIVE COMPONENTS FOR POWER ELECTRONICS INDUSTRIAL FUSES 2

3 MERSEN: OUR MISSION WE DEVELOP THE BEST TECHNOLOGIES FOR THE INDUSTRIES OF THE FUTURE WE PROVIDE INDUSTRIAL COMPANIES AROUND THE WORLD WITH INNOVATIVE SOLUTIONS ENHANCING THE PERFORMANCE OF THEIR PRODUCTS AND SERVICES 3

4 LEADERSHIP POSITION ON OUR 2 EXPERTISES ~ 60% SALES ~ 40% SALES ADVANCED MATERIALS GLOBAL PRESENCE ELECTRICAL POWER ANTICORROSION EQUIPMENT GRAPHITE SPECIALTIES POWER TRANSFER TECHNOLOGIES LEADERSHIP POSITIONS 15-30% MARKET SHARES CUSTOMIZED SMALL SERIES STRONG EXPERTISE HIGH VALUE-ADDED ELECTRICAL PROTECTION & CONTROL SOLUTIONS FOR POWER MANAGEMENT 4

5 WITH FINANCIAL COMPLEMENTARY MODEL ADVANCED MATERIALS CYCLICAL BUSINESS (CHEMICAL, GRAPHITE) HIGH EBITDA: 17% (5Y. AVERAGE) CAPITAL INTENSIVE (DEPRECIATION: 7.4% OF SALES) STRONG OPERATIONAL LEVERAGE: OVERCAPACITY IN GRAPHITE + LOW LEVEL IN CHEMICAL QUICK ADAPTABILITY TO ECONOMIC ENVIRONMENT STRONG CASH GENERATION OPERATIONAL EXCELLENCE PROGRAM ELECTRICAL POWER LESS CYCLICAL BUSINESS EBITDA: 14% (5Y AVERAGE) LOW CAPITAL INTENSIVE (DEPRECIATION : 2.4% OF SALES) 5

6 A GLOBAL NETWORK PROVIDING OPPORTUNITIES AND ROBUSTNESS EUROPE 35% NORTH AMERICA 36% USA 32% 14 INDUSTRIAL FACILITIES 1,900 EMPLOYEES FRANCE 9% GERMANY 9% GREAT BRITAIN 3% SPAIN 3% ITALY 3% 21 INDUSTRIAL FACILITIES 2,200 EMPLOYEES REST OF THE WORLD 5% ASIA-PACIFIC 24% CHINA 9% JAPAN 4% SOUTH KOREA 4% INDIA 3% 13 INDUSTRIAL FACILITIES 1,600 EMPLOYEES Staff at June 30, 2016 % based on 1st half 2016 Sales 6 INDUSTRIAL FACILITIES 500 EMPLOYEES 6

7 SERVING DIVERSIFIED MARKETS, 40% WITH STRONG POTENTIAL Process industries 35% Sintering Assembly manufacturing Water & Waterwaste treatment Pulp & Paper Metallurgy Furnace Industry Glass Industry Dies & Mould Industry Mining Cement Rubber & Plastic Solar Wind Hydro electric Conventional Energies 20% Electronics 18% Semi-conductors manufacturing Power electronics Chemicals 10% Transportation 17% Phosphoric acid Chlor-alkali Active Pharmaceuticals Ingredients (API) Specilaty chemicals Isocyanates Acid recovery and concentration Aeronautic Space Urban railroad industry High-speed train Electric Vehicles Based on 2015 sales figures 7

8 A LARGE CUSTOMER PORTFOLIO CLIENT PROXIMITY (>65% ON-DEMAND PRODUCT) KEY CUSTOMERS REGULAR AFTER MARKET REPLACEMENT (~65% OF SALES) HIGH BARRIER OF ENTRY High quality Homologation & standards Worldwide presence LARGEST CUSTOMER : < 4% OF SALES 10 LARGEST CUSTOMERS : < 13% OF SALES Non exhaustive List 8

9 PILLARS OF OUR STRATEGY Enhance performance through new organization Increase synergies in the segments Lean on the 3 new corporate positions to deploy strategy Develop talents targeted toward some key functions Emphasize collaboration within the Group Maintain «best in class» safety standards Implement Operational Excellence plan Cash initiative Strengthen efficiency Increase our sales Expanding markets (solar, wind, electronics) Effective innovations Selective acquisitions Tap potential on new markets (EV, ) 9

10 EXPANDING MARKETS THAT HAVE HELPED TO OFFSET THE DECLINE IN CHEMICALS CAGR LT TREND Aerospace Electronics Wind Solar Chemicals % -15% + + =+ Rail, EV & process industries + (EV) Reported sales 10

11 INNOVATION: CENTRAL TO OUR GROWTH MODEL NEW POSITION IN THE EXECUTIVE COMMITTEE MATERIALS FORMULATION CONTINUOUS FLOW REACTOR IN SIC LASER OPTICS HYBRID TECHNOLOGY 1 IMPROVE INNOVATION MONITORING 2 ANTICIPATE CUSTOMER ISSUES 3 BRING PRODUCTS TO THE MARKET QUICKLY Solar Electronics Specialty chemicals Laser Energy storage Disruptive innovations 11

12 AN ACTIVE PORTFOLIO MANAGEMENT Consolidate our core businesses to strengthen our PURSUE PLANS FOR SELECTIVE ACQUISITIONS leadership Expand in geographical regions recording strong growth Acquire growth platforms in adjacent business segments Acquire key expertises JV Harbin DIVESTITURE OF PRODUCT LINES HAVING NO SYNERGIES WITH THE REST OF THE GROUP Proposed divestment of high-voltage switches business (St Loup de Naud plant in France Sales of 5m) 12

13 AN AMBITIOUS STRATEGY TO MAKE THE GROUP MORE ROBUST AND COMPETITIVE 2017 Announcement Transform Rationalization of industrial footprint (mainly Europe) and adjustment to the low level of business in the chemicals market Reorganization segments to strengthen synergies, sales efficiency and innovation Launch Operational Excellence Plan aiming at improving competitiveness in Sept 2016 Stepping up of the Operational Excellence plan 13

14 OPERATIONAL EXCELLENCE PLAN ACTIONS LAUNCHED AT THE BEGINNING OF 2016: Enhance manufacturing processes Deploy lean on sites of excellence Save on purchasing Increase the redesign to cost approach Reduce certain items of fixed costs STEPPING UP THE REDUCTION IN FIXED COSTS AND IMPROVEMENT OF MANUFACTURING (SEPT 2016): Reorganization of the manufacturing footprint serving chemicals Streamlining of product lines in EP that are not sufficiently profitable or competitive Purchasing Fixed Costs Redesign to cost Manufacturing 40m to 45m reduction in gross cost by m non recurring costs mainly in

15 STRONG CASH-FLOW GENERATION FREE CASH-FLOW YIELD IN % FREE CASH-FLOW IN M 7.3% % 50 FORTHCOMING DRIVERS : Operational excellence Controlled capex Inventories optimization 2.7% 17 Average Average (1) Average (1) (2) FCF yield: Free cash-flow/ Sales Free cash flow: Operational Cash-flow - Capex (1) Continuous activity (2) excl. Exceptional items 15

16 ROBUST BALANCE SHEET WITH DIVERSIFIED FINANCING NEW PRIVATE PLACEMENT - 60 MILLION (NOV. 2016) European and Asian investors, 150% over subscribed 7 years bullet maturity INCREASE AVERAGE MATURITY OF UTILIZED GROUP S FINANCING: 4.5 YEARS MORE THAN 180MILLION AVAILABLE COMMITTED CREDIT LINES* LEVERAGE RATIO AT JUNE 2016 (NET DEBT/EBITDA): 2.2 * Excluding committed lines as back-up for commercial paper program 16

17 OVER THE MEDIUM TERM, AN AMBITION OF GROWTH BOTH IN SALES AND PROFITABILITY MERSEN S STRENGTHS MARKETS AND GEOGRAPHIES DIVERSIFICATION VIBRANT EXPANDING MARKETS AMBITIOUS COMPETITIVE PLAN ABILITY TO ADAPT QUICKLY 17

18 H RESULTS

19 KEY HIGHLIGHTS FOR H EFFECTIVENESS OF THE NEW ORGANIZATIONAL STRUCTURE AND OUR REALIGNED TEAM: Organic growth in H2 (+1.4%) leading to a flat 1 st semester SUCCESSFUL IMPLEMENTATION OF THE OPERATIONAL EXCELLENCE PLAN: Operating margin before non recurring items at 7.8%, a significant improvement compared to H (7.1%) Strong generation of cash-flow NO CHANGE TO FULL-YEAR GUIDANCE 19

20 SLIGHT ORGANIC GROWTH IN H1 THANKS TO A SOUND ACTIVITY IN Q2 Organic growth H1 +0.2% Organic growth Q2 +1.4% ELECTRICAL POWER H1 Organic Growth +0.9% ADVANCED MATERIALS H1 Organic Growth - 0.3% STRONG GROWTH IN SOLAR (+36%) AND TRANSPORTATION (+14%) RAIL AND EV GROWTH IN POWER ELECTRONICS DECLINE IN PROCESS 390m STRONG GROWTH IN RENEWABLE ENERGIES +16% STRONG DECLINE IN CHEMICALS (-16%) BUT TO A MORE LIMITED EXTEND IN Q2 INDUSTRIES PROCESS INDUSTRIES STABLE 2016 Half-year sales figures 20

21 STRONG GROWTH IN ASIA, IMPROVEMENT IN EUROPE AND CHALLENGING INDUSTRIAL ENVIRONMENT IN THE US Europe +0.5% vs H GROWTH IN SOLAR AND TRANSPORTATION NEGATIVE REFERENCE EFFECTS IN CHEMICALS North America -5% vs H GROWTH IN WIND AND TRANSPORTATION SIGNIFICANT DECREASE IN CHEMICALS AND OIL&GAS WEAK DEMAND FROM ELECTRICAL DISTRIBUTION Rest of the World +18% vs H GROWTH IN BRAZIL (RENEWABLE ENERGIES) BUSINESS MARKET IN Asia-Pacific +5% vs H GROWTH IN RENEWABLE ENERGIES AND TRANSPORTATION GROWTH IN POWER ELECTRONIC MOROCCO 21

22 OPERATING MARGIN In m and % of sales In % Current Operating Margin H1 2015* 8.6% % 7.8% 7.1% Volume / mix effects -0.4% Price effects -0.7% Competitiveness +1.9% Inflation and other -1.6% Current Operating Margin H1 2016* 7.8% H1 2015* H2 2015* H * Restated (cf press release) 22

23 INCREASE IN H OPERATING RESULT VS H FOR BOTH SEGMENTS ELECTRICAL POWER in m and % of sales EBITDA MARGIN H ADVANCED MATERIALS in m and % of sales % 11.5% 11.5% 13,9% EP 14,7% AM 9.8% % 8.0% H1 2015* H2 2015* H H1 2015* H2 2015* H INCREASE IN MARGIN H VS H POSITIVE VOLUME/MIX EFFECTS NEGATIVE PRICE EFFECT IN THE US GAINS IN COMPETITIVENESS IMPROVEMENT DESPITE CHALLENGING CONDITIONS H VS H NEGATIVE VOLUME/MIX EFFECT NEGATIVE PRICE EFFECT IN GRAPHITE GAINS IN COMPETITIVENESS * Restated (cf press release) 23

24 NET RESULTS million H H restated Operating Income before non-recurring items In % of sales 7.8% 8.6% Non recurring income and expenses (3.5) (1.1) Amortization of intangible assets (0.7) (0.5) Net Finance income (6.0) (6.5) Income tax (7.0) (8.8) Net income from continuing operations Net income/(loss) on assets held for sales and discontinued operations (1.0) (0.1) Net income Net income attributable to equity holders of the parent Mainly restructuring costs Effective tax rate 34% 24

25 STRONG CASH-FLOW FROM OPERATING ACTIVITIES CASH-FLOW BEFORE CAPITAL EXPENDITURE IN M 28.5 STRONG IMPROVEMENT IN CASH-FLOW BEFORE CAPITAL EXPENDITURE: Optimized management of inventories Low level of tax paid Cash-out Transform in H1 2015: 13m 2 CAPITAL EXPENDITURE 13m vs 17m in H (including Transform) Some project delayed to H2 H H

26 REDUCTION IN NET DEBT Net debt/ebitda 2.2 IN M Net debt/equity 46% Dec Operating cash-flow Capex Financial interests Buy-back shares Currency effect & other Jun-16 26

27 2016 OUTLOOK ASSUMPTIONS FOR H2: Growth in renewable energies and transportation No recovery in chemicals Persistently unfavorable pricing environment Caution due to global economic environment (US, Brexit) Continuation of competitiveness plans (non recurring costs) 9 MONTHS SALES: Organic growth -0.2% Positive trend in Europe (+2%) and Asia (+5%) Low performance in North America (-6%): industrial environment, electrical distribution No change in FY guidance Like-for like sales of the same order of magnitude as in 2015 Operating margin before non-recurring items around 7.5% 27

28 APPENDIX SHAREHOLDERS STRUCTURE MAIN COMPETITORS GRAPHITE MANUFACTURING PROCESS FUSE MANUFACTURING PROCESS

29 SHAREHOLDERS STRUCTURE INDIVIDUAL SHAREHOLDERS 12% 2% EMPLOYEE SHAREHOLDERS & TREASURY SHARES Main shareholders As of December 2015 INTERNATIONAL 38% 48% FRENCH INSTITUTIONAL INVESTORS ARDIAN 17.6 % BPIFRANCE INVESTISSEMENT 15.4 % INSTITUTIONAL INVESTORS SOFINA 8.2 % 29

30 MAIN COMPETITORS ADVANCED MATERIALS ELECTRICAL POWER ANTICORROSION EQUIPMENT SGL CARBON (GER) GRAPHITE SPECIALTIES* TOYO TANSO (JP), TOKAI CARBON (JP), SGL CARBON (GER) POWER TRANSFER TECHNOLOGIES MORGAN ADVANCED MATERIAL (UK), SCHUNK (GER) ELECTRICAL PROTECTION & CONTROL EATON/ BUSSMANN (US)/ GERMAN COMPANIES FOR SEMI CONDUCTORS SOLUTIONS FOR POWER MANAGEMENT COOLING DEVICES: AAVID (US) FUSES: EATON (US) BUSBARS: ROGERS (US), METHODE (US) * Not totally comparable because limited overlap between competitors 30

31 FROM GRAPHITE MANUFACTURING TO FINISHED PRODUCTS 31

32 FUSE MANUFACTURING PROCESS 32

33 APPENDIX ESG GOVERNANCE HUMAN CAPITAL RELATED PARTIES ENVIRONMENT

34 STRONG GOVERNANCE A BOARD OF DIRECTORS WITH 12 MEMBERS 2 representatives of Ardian 2 representatives of Bpi 1 representative of Sofina 7 independent 3 SPECIALIZED COMMITTEE (Audit & Account, Strategy, Governance & remuneration) RISK MAPPING PROCESS carried out every year under board supervision INTERNAL AUDIT ORGANIZATION under audit & account committee supervision ABIDES BY THE AFEP-MEDEF S CODE OF CORPORATE GOVERNANCE 34

35 STRONG COMMITMENT TO HUMAN CAPITAL WORKING CONDITIONS Safety is a Group top priority Ethic code released in 10 languages Signatory of the UN Global Compact since 2009 Collaboration Excellence SKILLS DEVELOPMENT Mersen Academy HR information system HR ROADMAP FOR MAINLY FOCUSED ON: Reinforcing a common culture around values Mobilizing collective intelligence through an organization promoting collaboration Further strengthening the management culture Agility and entrepreneurial spirit People-Conscious Partnering with our customers 35

36 SAFETY: TOP STANDARDS Frequency rate (Mersen + Temp) Cumulative number of lost-time occupational accidents per million man-hours Severity rate (Mersen + Temp) Cumulative number of working days lost to occupational accidents per million man-hours

37 RELATED PARTIES ETHIC CODE ALSO APPLIES TO CUSTOMERS AND SUPPLIERS CUSTOMER KPI USED IN EVERY PLANT On time delivery to promise / to request Quote follow up SUPPLIER Selection process (environmental standards) Quality KPI LOCAL MANAGEMENT STRUCTURES REFLECT THE DIVERSITY 91% of plant managers are local 37

38 ENVIRONMENTAL POLICY CLEAR COMMITMENTS STATED IN A GLOBAL ENVIRONMENTAL POLICY Compliance with regulations Identification of potential hazard Minimization of consumption Eco-design ENVIRONMENTAL MANAGEMENT SCHEME Management procedures deployed through a network of trained correspondent with the supervision of the risk and audit organization 50% of industrial plants* are ISO certified * Included in the reporting 2015 figures 38

39 ENVIRONMENT POSITION ON GREEN MARKETS STRONG POSITION ON «GREEN» MARKETS: 40% 85 SOLAR WIND HYDRO 140 ENERGY EFFICIENCY (ELECTRONICS) 80 RAIL EV Based on 2015 sales figures 39

40 ESG SIGNATORY OF THE UN GLOBAL COMPACT SINCE 2009 PART OF GAIA INDEX 40