We prioritize sustainable, profitable growth

Transcription

1 We prioritize sustainable, profitable growth

2 Updated growth target reflects prioritization of profitability over overly expensive growth Previous financial targets for 2020 Updated targets Net sales At least EUR 3.5 billion with minimum mid-single digit organic growth annually Mid-single digit organic growth annually Profit Annual EBIT growth ahead of net sales growth Unchanged (but prioritized) Cash flow conversion Free cash flow / Net profit at least 0.8x Unchanged Net debt / EBITDA Net debt / EBITDA ratio max 3.0x Unchanged 2

3 Directional P&L structure for 2020 Starting point Last three years Directional Target Gross Margin 40.4% 43.9% 45.2% 46.3% 46-47% OPEX 37.3% 36.6% 37.1% 38.0% 36-37% 3

4 Gross Margin to 46-47% driven by strategic building blocks Last 3 years GM Development GM building blocks for the next 3 years ( ) Strategic Gross Margin building blocks: Better channel mix Sweeting brand mix Continuous operations improvement (automation, lead-times, etc.) Partly expected to be offset by negative FX impact, especially in USD +370bps vs Sustainable Gross Margin of 46-47% 2014 June LTM Brand mix FX B2C Pricing 2017 June LTM

5 Following years of significant acceleration investments, we return to normalized OPEX spend Last 3 years OPEX Development Topline driven OPEX growth driven by more expensive B2C growth Topline driven Investment driven Maintenance We still have legacy costs related to old GTM model Investment driven OPEX: approx. 1/3 is amortizations of development CAPEX Maintenance OPEX: Successful restructuring, invested back into acceleration FY-14 FY-15 FY-16 6/17 LTM Net Sales Growth 5.5% 6.0% 4.1% 1.1% OPEX Growth 4.8% 8.4% 7.0% 4.0% 5

6 OPEX allocation follows the business potential Businesses where the potential is highest, we have invested back at up to full topline growth rate. However, going forward, we re looking at improving OPEX leverage. Businesses where growth is slow or uncertain, we are at low or even zero overhead growth mode 6

7 We have three key levers to 36-37% OPEX OPEX efficiency improvement target approx. 200bps Three key levers 1. Right-sized acceleration investments (Digital, USA) 2. Further OPEX leverage through fluidity (stop, continue, accelerate) 3. Further restructuring for faster productivity improvement 7

8 August 2016 restructuring successfully completed Targets set in August 2016: EUR 20m annual cost reduction, to be reallocated to fund the acceleration To be executed by the end of 2017 One-off expenses EUR 20-25m (pre-tax) Status Q2 / 2017: Achieved full run-rate savings of EUR 15m Fitness, Winter Sports Equipment, Operations One-off expenses EUR 15m 8

9 Restructuring expansion as announced in February 2017 Financial target: Reduce OPEX by approx. 100 EBIT margin bps in the coming 24 months Actions: On-going GTM transformation Write-down of non-performing digital assets Production and warehousing capacity optimization Financial impacts: Total one-off impact approx. EUR 45m of which non-cash approx. EUR 20m Expenses will be recorded by end of H1/2018; cash impact mainly in 2018 Expected payback less than 2 years 9

10 Cash flow and Asset efficiency targets for 2020 Last three years 2020 Target Free Cash Flow, % of net profit 57% 100% 51% 80% Net Debt / EBITDA 1.7X 2.0X 1.9X 3.0X Capital Turnover 1.82X 1.85X 1.77X 2X 10

11 Cash flow has ensured organic growth, solid shareholder cash return and maintaining strong balance sheet Last 3 years, EURm (H2/2014- H1/2017) Net Debt / EBITDA 2.35X 2.17X Operating Cash Flow Working Capital CAPEX Free Cash Flow Dividends / Share buybacks M&A Net Debt change 11

12 Our strategy enables solid cash flow for fund allocation 1, Next 3 years, EURm ( ) Our key priorities for cash* Business: Secure organic growth Enable criteria based M&As Shareholder returns: Ensure sustainable steadily increasing dividend as per dividend policy Share buy-backs 200 Target is to maintain solid, yet not lazy, balance sheet structure 0 Operating Cash Flow Working Capital CAPEX Free Cash Flow Dividend Available cash for strategic choices *Not in order of priority 12

13 Following years of significant development CAPEX, we rebalance capital allocation CAPEX Development E 3.5% of Net Sales 3.4% of Net Sales L-T Target % of Net Sales 3.1% of Net Sales 34% 38% Manufacturing/ Operations 35% 2.3% of Net Sales 50% 32% 32% 31% 26% Development 20% 34% 22% 25% 22% GTM 35% 16% 14% 11% 15% Other 10% E Target 13

14 CAPEX allocation increasingly toward the consumer % of Net Sales Manufacturing/ Operations 35% Baseload investments CAPEX for continuous operations improvement Development 20% Right-sized development CAPEX mainly focusing on digital business model and Sports Instruments new product lines GTM 35% Own retail CAPEX approx. 10% of retail sales (incl. new openings and refurbishment) E-commerce CAPEX light Other 10% Target IT investments 14

15 Our organic growth has been asset efficient Capital Employed Development, last three years (EURm) Capital Turnover improvement 1,500 1,250 1, ,425 Capital Turnover* All-in 1.83X 1.87X Organic 1.83X 1.98X 1, *) Last 12 months sales as of and divided by capital employed at and Capital Employed 6/2014 M&A Fixed Assets Trade W/C Other int-free FX Capital Employed 6/

16 We drive value creation also through asset efficiency improvement Trade Working Capital down approx. 200bps (% of net sales) Most critical: 50+% of total Capital Employed Right-size CAPEX CAPEX growth < Topline Growth Further leverage of intangible assets with indefinite life-time 40% of total Capital Employed 16

17 Strategy addresses all value creation levers TSR drivers Profit Growth Change in valuation multiple Cash flow contribution Growth is becoming more expensive and market environment continues to be volatile We secure profit growth through increased focus on margin improvement We continue to drive portfolio toward higher margin, better asset efficiency and faster growth This is lowering the risk profile & earnings volatility (B/S solidity, 365 offering, own B2C) We right-size CAPEX and improve asset efficiency through trade W/C management 17

18 M&A continues to be in the toolbox

19 Acquisitions remain in our toolbox, criteria unchanged We evaluate acquisitions through clear criteria set Financial impact: faster growth, higher Group profitability, better long-term asset efficiency Target should have leadership position (on the podium) or proven capability No increase in portfolio complexity Valuation multiple not exceeding our own (unless exceptional synergies or future potential) We scan cases annually with size between EUR 2 300m We have a solid track-record in M&A and our balance sheet is strong Total acquisition spend approx. EUR 130m; approx. 1.1X current Net Sales 19

20 We have a solid M&A track-record with further potential still to be realized Target Net sales 2017E Overall acquisition performance Comments + Cost synergies realised as expected - Topline impacted by US wholesale market N/M + Capabilities & platform for Suunto + Sales growth exceeding the plans - Growth related operational constraints + Capabilities & know-how leverage - Performance impacted by new factory start-up + Cost synergies realising as expected + Further growth potential remains + Cost synergies realising as expected 20

21 Balance Sheet enables growth Additional debt capacity (gray bar) to 3 X EBITDA max.target Lowering net debt together with improving EBITDA enables use of further leverage for acquisitions Reminder, FMCG investment grade criteria = net debt max 2.0x EBITDA EURm Projected Net Debt Additional Debt Capacity 21

22 Summary

23 Prioritizing Sustainable Profitable Growth, whilst accelerating the transformation Company logic and drivers largely unchanged, growth continues Building blocks are robust and they drive transformation External context calls for adjustments to growth targets: we prioritize profitable growth The reprioritized growth model creates value We continue building financial strength

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25 Disclaimer Statements in this presentation, which are not historical facts, such as expectations, anticipations, beliefs and estimates, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of Such statements involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Amer Sports assumes no responsibility to update any of the forward-looking statements contained herein. No representation or warranty, express or implied, is made or given by or on behalf of Amer Sports or its employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. 25 Amer Sports CMD 2016