Half year presentation. Rorschacherberg, 27 July 2017

Transcription

1 Half year presentation Rorschacherberg, 27 July 2017

2 Agenda Market and business review Financial review Outlook 1

3 Agenda Market and business review Financial review Outlook 2

4 Significant improvement in sales and profit Order backlog remains good despite drop in order intake Sales advance 10% to CHF 202 million EBIT margin nearly doubled to 4.0% Net profit climbs to CHF 6.4 million or 3.2 percent of sales, plus 133% Order intake down 39% to CHF 142 million from prior-year period, 5% decline in local currency over the preceding 12-month period Order backlog of CHF 284 million secures capacity utilization for almost one year Consistent implementation of strategy 3

5 Order backlog remains good despite drop in order intake CHF m % -39% H H Order intake H2 prior year Order intake H1 Order intake H2 Order backlog Order intake Last Twelve Months 391m CHF or -5% to same prior year period (fx adjusted) Order backlog normalized with -18%, unchanged to H New EUR-CHF fx rate from Jan-2015 (due to depegging of CHF) 4

6 Flat development of German machine tool industry supported by automotive Order intake machine tool industry Germany (cutting) as of May 2017 Index Note: 12 month moving; index base sales 2010 = 100; Source: monthly index statistics VDMA, VDW. Order intake Last Twelve Months to same prior year period +0.2% 5

7 Order intake lower in most industries, transportation stable on low level CHF m H1 16 H1 17 Aerospace 49% Energy 13% Industrial 26% Transportation 12% 6

8 Order intake lower mainly in Asia and Europe CHF m H1 16 H1 17 Americas 10% Asia 25% Europe 65% 7

9 Consistent implementation of strategy First pillar: Innovation Leading application competence EMO September 2017: New applications according to Starrag Integrated Production System including dedicated automation concepts (Industry 4.0) New generation of machine tools Technology Days Precision Engineering February 2017: New high precision machine tools for medical technology and micromechanics 8

10 Consistent implementation of strategy Second pillar: Geographical footprint Expansion in China and USA as first priority: Aerospace, Industrial, Energy Consistent strengthening of dealer network in key markets 9

11 Consistent implementation of strategy Third pillar: Operational excellence Further enhanced customer service readiness New product Service Plus presented at Turbine Technology Days July 2017: service package with high availability at a fixed price Simplified go to market One brand strategy: step by step from 10 single brands to one Group brand Starrag 10

12 Leading application competence attracts many interests Major customer events in H1: from first contacts to closed orders February: Technology Days Precision Engineering in Tuttlingen/DE April: CIMT China International Machine Tool Show Beijing in Beijing/CN June: Turbine Technology Days in Rorschacherberg/CH 11

13 Showcase: Innovation on the move Compact Bumotec s181 Mill-turn machining center with two working stations Example of Application Endoscopic clamp (surgical instrument) Stainless steel AISI 316L Machining process 5 axis simultaneous machining Bar machining (ø 14mm) Cycle time 399 seconds -38% Result 38% Increase in productivity Smallest footprint (3.5 m 2 ) 12

14 New plant in Vuadens/CH with many advantages Plant for manufacturing ultra precision machine tools with latest manufacturing processes Move from Geneva and Sâles completed More production space at unchanged cost m 2 land ideally located along highway Bern-Lausanne m 2 in shopfloor and m 2 in office space Zero CO 2 footprint thanks to extensive geothermal probes and m 2 of solar panels Capacity reserve shall be rented out Old plant in Sâles/CH for sale 13

15 Main focus of Starrag Group Clear strategic positioning Focus on prioritized market segments and regions Value proposition (solutions) International footprint (China, USA) Reliable operational performance Simplification Accountability Speed Creation of long-term value Innovation All stakeholders 14

16 Agenda Market and business review Financial review Outlook 15

17 Simplification of internal and external financial reporting Accounting standards switched from IFRS to Swiss GAAP FER from 2017 Reduction of the under IFRS ever increasing complexity and cost saving (next round of major IFRS changes effective from 1-Jan-2018) Swiss GAAP FER is a recognized accounting standard applying the true and fair principle meeting the needs of Starrag Group giving a precise picture of Starrag Group s financial situation Major differences Intangible assets from acquisition (including Goodwill) set off against retained earnings Pension benefit obligation better reflecting the economics of the Swiss pension system Classification of financial statements adjusted (e.g. advance payments to suppliers included in inventories under Swiss GAAP FER) 16

18 Equity ratio = 53.4% Equity ratio = 51.0% EBIT margin = 1.9% EBIT margin = 2.4% Impact of change from IFRS to Swiss GAAP FER CHF m 250 CHF m Net equity (IFRS) Goodwill Acquired intangibles Pension benefit obligation (PBO) Deferred taxes Net equity (Swiss GAAP FER) Net profit (IFRS) H Amortization Intangibles Personnel expenses (PBO) Deferred taxes Net profit (Swiss GAAP FER) H Decrease of equity ratio from 53% (IFRS) to 51% (Swiss GAAP FER) as of No change on other important key figures such as sales revenue, EBITDA, cash flow and net debt. 17

19 Significant increase in sales revenue Record high order intake 2016 with large order backlog at beginning of year CHF m Nominal +10.3% FX impact -1.0% FX adjusted +11.3% 50 0 H Organic FX Translation H

20 EBIT improvement driven by higher sales EBIT margin nearly doubled from 2.4% to 4.0% CHF m Contribution Better margins with changed product mix Savings in material purchase Selective cost overruns on individual orders in prior year Lower average percentage of completion of orders in progress and thus higher material share Cost savings FTE decreased from to H Contribution Cost savings, net Salary increases One time FX translation H Salary increases Higher unit labour costs in Germany mainly driven by collective labour agreements One-time Restructuring costs in prior year 19

21 Net profit: Increase by 133% CHF m Change Operating result EBIT % Interest % FX result % Other financial result % Profit before tax % Income tax % Net profit % Earnings per share in CHF % Significantly lower effective tax rate of 13% versus 26% in H thanks to one time credit from prior years of 0.8m CHF 20

22 Balance sheet continuously strong CHF m 400 Assets Liabilities Cash Receivables Inventories Fixed assets Financial liabilities Operating liabilities Shareholders' equity (IFRS) (FER) (FER) (IFRS) (FER) (FER) Total assets Net debt Equity ratio 53.4% 51.0% 51.3% 21

23 Cash flow from operations impacted by financing of orders in progress Net profit Depreciation Change in long-term provisions Non-cash items Cash flow (before change in net working capital) Change in net working capital Cash flow from operations Capital expenditure Free Cash flow Dividend paid Interest in subsidiary acquired FX translation Change in cash, net of financial debt H1 2016: Increase in receivables by 15.3m CHF and decrease in short-term operating liabilities by 9.1m CHF leads to negative cash flow despite reduction of inventories by 8.8m CHF 22

24 Overview of key figures (I) 23

25 Overview of key figures (II) 24

26 Agenda Market and business review Financial review Outlook 25

27 Generally positive economic environment despite uncertainties but Starrag target markets with different trends Aerospace Positive market development with solid opportunity pipeline Timing of decisions varying for customer internal reasons Energy Bottom overcome but still on low level Limited visibility continuing Transportation Agriculture and construction equipment remain slow Electric mobility with no impact Industrial Strengthened market coverage in US and CN Luxury goods bottoming out and first signs of recovery 26

28 Financial outlook 2016 H1 16 H1 17 Guidance 2017 (in local currencies) Order intake FY 2017 << FY 2016 Sales revenue FY 2017 >> FY 2016 EBIT margin 2.5% 2.4% 4.0% Net profit margin 1.6% 1.5% 3.2% FY 2017 >> FY 2016 From the current standpoint, the operating margin for 2017 is expected to be much higher than the 2016 margin. 27

29 Corporate calendar / Contact Preliminary information on annual results Presentation of 2017 results for analysts and media in Zurich Annual general meeting in Rorschach Half-year report 2018 Walter Börsch, CEO Phone Gerold Brütsch, CFO Phone Further Information: / media@starrag.com / investor@starrag.com 28

30 We are pleased to answer your questions. Thank you

31 Legal note Starrag Group is making great efforts to include accurate and up-to-date information in this presentation, however we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this presentation and we disclaim any liability whatsoever for the use of it. The information provided in this presentation is not intended nor may be construed as an offer or solicitation for the purchase or disposal, trading or any transaction in any Starrag Group securities. Investors must not rely on this information for investment decisions. All statements in this presentation which do not refer to historical facts are forecasts for the future which offer no guarantee whatsoever with respect to future performance; they embody risks and uncertainties which include - but are not confined to - future global economic conditions, exchange rates, legal provisions, market conditions, activities by competitors and other factors which are outside the company's control. 30