Think digital, act digital. Spring Roadshow April 2018

Transcription

1 Think digital, act digital Spring Roadshow April 2018

2 Agenda 1. Business model 2. Strategy 3. Key performance indicators 4. Financial year Outlook TAKKT share and dividend policy 7. TAKKT equity story 2

3 Business model 3

4 TAKKT is a portfolio of B2B direct marketing specialists 4

5 TAKKT is organized into two segments and seven divisions TAKKT EUROPE TAKKT AMERICA Kaiser+Kraft group Ratioform group newport group Hubert group Central group D2G group NBF group 5

6 Our divisions are product specialists and sell equipment and specialties with an average order value of 460 EUR TAKKT EUROPE TAKKT AMERICA Kaiser+Kraft group Ratioform group newport group Hubert group Central group D2G group NBF group plant, warehouse and office equipment packaging solutions new business models and start-ups merchandising and food equipment restaurant equipment display products office equipment 6

7 newport group established as an additional division to develop new business models strategic target sales brands and start-up investments Bundle the web-based brands OfficeFurnitureOnline, BiGDUG, certeo and Mydisplays and TAKKT start-up investments TAKKT start-up investments Provide an environment for the younger, fast-growing business models Allow a more independent positioning in their branding, product assortments and technology Enable a better focus on the requirements of smaller business customers 7

8 Our market position value-add services for customers beyond pure distribution Digital solutions Customers are offered tailored web shops and access to e-procurement solutions New solutions are developed based on new technologies and in collaboration with the customers More portals with self-service features being built Innovative solutions can be tested through investments in start-ups Easy procurement process Customers choose from preselected products Customers place the order using their preferred sales channel (online, print, tele and field activities) Own warehouses ensure fast deliveries Added values for our customers Full service Services range from personal advice, needs analysis, planning and offers through to delivery and assembly of the products Long warranty periods Availability guarantee and ordering of spare parts over several years Personal advice Experts help customers select the relevant product Sales representatives prepare personalized offers Product managers provide customized solutions and products on request 8

9 Our multi-channel strategy offers multiple touch points for our customers according to individual preferences Customer Characteristics Channels Large corporates Mid-sized corporates Frequent and regular demand Focus on efficiency of procurement process and services Customer lifetime value (loyal) Less frequent, irregular demand Small businesses Focus on price Transaction-oriented and less loyal 9

10 B2B direct marketing: business model at a glance Most efficient way to market and distribute in the B2B market Constant gain of market share versus local, store-based retail network Clear business model which will benefit from the trends towards e-commerce and digitalization High profitability (EBITDA margin 12-15%) with a comparably low capital need (capex 1-2% of sales) 10

11 Strategy 11

12 Corporate goals and strategy by 2020 Grow profitably Long-term organic sales growth by an average of four to five percent per year Growth through opportunistic acquisitions (on average ca. five percent per year) EBITDA margin between 12 and 15 percent Digitalize the business model Implementation of the digital agenda Double e-commerce business from around EUR 450 million (2016) to EUR 900 million (2020) Diversify risk Significant contributions to sales on at least two continents Diversified share of sales with the manufacturing, trade and service sectors and government institutions Balanced product range Act sustainably Industry role model for sustainability Sustainability as built-in rather than an add-on in the day-to-day corporate management 12

13 Grow profitably: Direct marketing is steadily gaining market share vs store-based business 70-90% 10-30% multi-channel models web-focused models platform models (marketplaces) TAKKT companies either run a multi-channel or a web-focused model TAKKT companies partially use marketplaces as an additional sales channel Store-based businesses Direct-marketing 13

14 Grow profitably: M&A activity as further driver for growth Acquisition criteria Medium-sized market leaders or smaller add-ons Often family-owned businesses High gross profit and EBITDA margins Scalable business model in B2B direct marketing Acquisition goals Additional growth Diversification of product range, customers and regions Gaining new expertise Talent acquisition

15 Grow profitably: Acquisition of OfficeFurnitureOnline strengthens newly established newport group Product range Company and acquisition details OfficeFurnitureOnline (OFO) generated sales of roughly 40 million pounds and an EBITDA margin in the low double-digit percentage range in 2016/2017. OFO primarily sells office furniture over the web shop and in addition some warehouse and business equipment under the brand Equip4Work. For an online business, OFO was able to acquire a very loyal customer base of primarily smaller to medium-sized businesses. The purchase price (cash free, debt free) was GBP 35 million with a further potential and variable earn out of up to GBP 10 million. Founding family will remain responsible for management of the company. 15

16 Grow profitably: Balance between growth and profitability Simplified P&L structure (in % of sales) >40% TAKKT sees the combination of 4-5% organicgrowth on average and EBITDA margin of between 12-15% as best balance to develop a sustainable and profitable portfolio % Starting point is a high gross profit margin which is aimed to be above 40%. gross profit margin marketing and personnel other cost (e.g. warehousing, IT) EBITDA margin target corridor 16

17 Digitalize the business model: our vision 2020 We want to double our e-commerce business until 2020 by creating an outstanding customer experience through digitalization. We strive to transform our organization in a step change by putting digital first and focusing on customer centricity. VISION 2020 We will invest up to EUR 50 million until 2020 in our people and new technologies. The implementation of our digital agenda will increase our midterm organic sales growth. 17

18 Digitalize the business model: Current measures of TAKKT s digital agenda are structured along six focus areas Strategy & Innovation Customer Journey Organization & Culture Data & Analytics Technology Process Automation Marketplaces Newport group TAKKT start-up investments Focused customer segmentation Personalized marketing Self service features Recruitment of 100 talents New ways of working New workspace Better use of customer data Business Intelligence New ERP systems Improve web-shop technology Vendor Integration Smart shipping solutions Digitalization of workflows 18

19 Digitalize the business model: Our plan is to invest up to 50 million until 2020 for the implementation of our digital agenda and up to 20 million for start-up investments In EUR million e 2019e 2020e Additional personnel expenses year-on-year Other expenses Capital expenditure Digital Agenda investments TAKKT Start-up investments

20 Diversify risks: Diversification on regions, customers and product ranges Regions Costumer groups Product ranges 29% 23% % 20% 14% % 28% 12% 14% 2% 18% 9% % 15% 23% North America Germany Europe without Germany Manufacturing Trade Services Non-profit and public organizations Others Storage and Transport Plant and Environment Office Food and Dining Packaging and Shipping Sales Promotion Balanced contribution to sales from two continents Low dependency from single customer groups Broad product portfolio multi-purpose use 20

21 Act sustainably: Role model for sustainability in our industry Efficiency of the direct marketing model Direct marketing is more carbon-efficient than local stores Lower carbon footprint by increased efforts to further reduce or compensate for emissions (e.g. carbon-neutral shipping) Activities along the value chain Expansion of the supplier evaluation program Carbon-neutral print advertising Emissions from parcel and cargo shipments to be offset to a large degree Compliance and reporting Compliance with UN Global Compact since 2012 Reporting according to most recent GRI standards at comprehensive application level Ambitious targets for 2020 TAKKT has defined non-financial performance indicators and determined goals and measures to be achieved by 2020 Focus areas entail sourcing, marketing, logistics, resources & climate, employees and society 21

22 Key performance indicators 22

23 Overview of key performance indicators Financial key figures Organic sales development Number of orders and average order value Gross profit margin EBITDA margin TAKKT cash flow margin Capital expenditure ratio Value-based figures TAKKT value added Return on Capital Employed (ROCE) Product range figures Share of private labels in order intake Share of direct imports in purchase volume Internal covenants Equity ratio Debt repayment period Interest cover Gearing (debt-equity ratio) Digital agenda indicators Launched and completed measures Newly created positions Additional personnel expenses Other expenses Capital expenditure and start-up investments Organic e-commerce growth Share of e-commerce in order intake Sustainability indicators A total of 16 indicators across the six focus areas sourcing, marketing, logistics, resources & climate, employees and society 23

24 Financial key figures in EUR million Organic sales development in percent Number of orders in thousand 2,171 2,182 2,225 2,409 2,465 Average order value in EUR Gross profit margin in percent EBITDA margin in percent TAKKT cash flow margin in percent Capital expenditure ratio in percent

25 Product range figures Share of private labels in order intake (in %) Share of direct imports in purchase volume (in %) 13.9% 14.7% 15.9% 18.3% 20.7% 9.6% 10.0% 12.1% 13.7% 15.5%

26 Value-based figures TAKKT value added (in EUR million) Return on Capital Employed (in %) 36.9 * * * 12.5% 14.4% 15.7% 16.5% 14.6% 26.5 * * * Adjusted for amortization of intangible assets resulting from acquisitions and the related tax impact

27 Internal covenants Equity ratio (in %) Debt repayment period (in years) 39.0% 43.8% 49.1% 55.2% 61.2% Interest cover Gearing

28 Digital agenda indicators Number of digital talents >100 Organic e-commerce growth (in percent) 10.6% % Q1/17 H1/17 9M/ e Launched and completed measures Share of e-commerce in order intake (in percent) % 46.8% 36.5% % 30.1% 39.0% Launched Completed * 2017 * Better measurement of order intake to e-commerce channels led to structural increase by c. 5pp. 28

29 Sustainability indicators Focus area Key figure Sourcing Marketing Logistics Resources and Climate Employees Society Share of sourcing volume from certified suppliers 23.7% 36.3% 40.5% 46.8% Share of direct imports sourcing volume from certified suppliers 39.8% Share of sales from sustainable product ranges 4.4% 6.6% 9.6% 9.8% 9.3% Carbon-neutral web shops for major companies 7 Paper consumption print advertising materials per order Share of carbon-neutral advertising materials 12.1% Share of carbon-neutral parcel delivery 91.4% Share of carbon-neutral general cargo delivery 44.7% Major companies with carbon footprint Major companies with a certified environmental mgmt. system Major companies with a certified energy management system 4 Energy consumption at GER / US locations per order in megajoule 70.6 Share of retained digital talents 90.9% Share of women in top executive positions 10.5% Percentage of employees who have the opportunity to take a paid leave for local volunteer involvement 5.4kg 8.5% 18.4% 37.9% 41.2% 65.7% Percentage of employees who took part in local volunteer projects 15.1% 29

30 Financial year

31 TAKKT Group: Sales growth slowed down by US activities Sales (in EUR million) EBITDA (in EUR million) and margin (in %) 1, , % 13.5% Sales decrease by 0.8% with negative currency effects (-1.3%) as well as a positive acquisition effect from Mydisplays acquisition (+0.1%). Organic sales growth with 0.4% in the middle of the adjusted guidance corridor of 0% to 1%. EBITDA margin at 13.5% (15.2%). Positive effect in previous year from adjustments of variable purchase price liabilities for Post-Up Stand and BiGDUG totaling EUR 8.6 million. Adjusted EBITDA margin at 13.5% (14.5%). Decreased profitability due to slow sales growth as well as increased digital agenda costs (-0.5%). Overall digital agenda costs of EUR 7.7m (EUR 2.4m) 31

32 TAKKT EUROPE: Good growth in Europe Sales (in EUR million) EBITDA (in EUR million) and margin (in %) % 16.9% Sales increase of 2.1% with negative currency effects (-0.8%) as well as a positive acquisition effect from Mydisplays acquisition (+0.3%). Organic sales growth of 2.6%. PSG with slightly higher growth than BEG. EBITDA margin at 16.9% (19.0%). Positive effect in the previous year from adjustments of outstanding variable purchase price liabilities for BiGDUG totaling EUR 4.5 million. Adjusted EBITDA margin at 16.9% (18.2%). Declining profitability mainly due to increased digital agenda costs and pricing initiative at PSG in Germany. 32

33 TAKKT AMERICA: Uncertainty in food retail und food service markets weighs on performance Sales (in EUR million) EBITDA (in EUR million) and margin (in %) % 12.0% Sales decrease by 3.7% with negative currency effects (-1.8%). Organic sales decrease by 1.9%. MEG with high single-digit decline due to weak customer demand in food service and food retail industries. Low single-digit organic growth for REG, DPG and OEG. EBITDA margin at 12.0% (13.7%). Positive effect in previous year from adjustments of outstanding variable purchase price liabilities for Post-Up Stand totaling EUR 4.1 million. Adjusted EBITDA margin at 12.0% (13.0%). Declining profitability due to negative sales growth and increased digital agenda costs. 33

34 Currency fluctuations had an overall negative impact on reported Group sales Sales development (in EUR million) 1, , % -1.9% organic growth organic growth 2016 Currency Acquisitions TAKKT EUROPE TAKKT AMERICA

35 TAKKT Group EBITDA margin declined as expected and achieved the forecasted level EBITDA margin development (in %) 15.2% % % 2016 One-time gains 2016 Digital agenda Slow growth 2017 in 2016 like for like costs 35

36 Profit benefits from a non-cash one-time gain from the revaluation of deferred tax liabilities as a consequence of the US tax reform Profit for the period (in EUR million) EBITDA Depreciation Financial Current Deferred 2017 Margin (in %) result tax tax 8.1% -1.8% +0.2% +0.1% +0.2% +1.7% 8.6% 36

37 High cash flow margin TAKKT cash flow (in EUR million) and margin (in %) in EUR million profit depreciation /- deferred taxes expense/income TAKKT cash flow % Decrease in TAKKT cash flow in line with EBITDA development. 9.8% in EUR million EBITDA financial result current taxes TAKKT cash flow

38 Cash flow generation in EUR million TAKKT cash flow Change in net working capital as well as other adjustments Increase comparable to prior year. Cash flow from operating activities Capital expenditure in non-current assets Proceeds from disposal of non-current assets Increase in capital expenditures due to investments into the digital agenda of EUR 13.2 million in Proceeds from disposal of consolidated companies Free TAKKT cash flow (for acquisitions, payout to shareholders and loan repayments)

39 Significant decrease in net financial liabilities Development of net financial liabilities (in EUR million)

40 Outlook

41 Organic growth overview Organic growth Q1/17 Q2/17 Q3/17 Q4/ TAKKT Group +5.5% +4.7% +5.2% +4.1% -2.3% -0.1% -0.1% +0.4% TAKKT Europe +3.3% +0.7% +3.5% +6.6% -2.5% +4.6% +2.2% +2.6% TAKKT America +8.1% +10.0% +7.0% +1.5% -2.2% -3.8% -2.6% -1.9% 41

42 Brand consolidation and a new contract will weigh on organic sales growth and EBITDA margin in 2018 TAKKT EUROPE TAKKT AMERICA Impact on the Group Organic sales growth Negative effect on organic growth from consolidation of gaerner with Kaiser+Kraft brand in 4 markets Negative effects on organic growth from phase-out of DallasMidwest within NBF group New contract with a major Hubert customer Minus one percentage point EBITDA margin New contract with a major Hubert customer will have negative impact on profitability Minus half a percentage point April 2018 Spring Roadshow 42

43 Outlook 2018: organic growth expected to be higher than in the previous year TAKKT EUROPE GDP growth similar to 2017 Industry indicators, especially PMI point to a positive environment in the first half of 2018 TAKKT AMERICA Slightly higher GDP growth than 2017 Industry indicators currently imply similar economic environment as in previous year Uncertainty in some market segments Forecast TAKKT Group Organic sales growth 2 4% EBITDA margin 13-14% If the business environment is worse than expected, TAKKT will only be able to achieve a minimal increase or even a slight decrease in organic sales in In the event of very positive economic data, TAKKT should benefit from this and be able to increase organic sales by over four percent. TAKKT expects Group EBITDA margin in the middle third of the target corridor. Stronger growth should have a positive impact. Acquisition of OfficeFurnitureOnline as well as a new frame contract with a major Hubert customer will weigh on margins. Expenses for the implementation of the digital agenda are expected to be comparable to prior year. 43

44 Outlook 2018: acquisitions as additional growth driver while FX effects are expected to impact growth negatively Positive effects between 4 to 5pp on reported growth are expected from acquisitions Mydisplays acquired in July 2017, OfficeFurnitureOnline acquired end of January Fluctuations in the EUR/USD rate have a significant impact on the Group s key figures reported in euros (translation risk) A softer USD by 5% against the previous year will negatively impact reported sales in euro by 2 to 2.5pp The year-to-date average EUR/USD rate (1.2284) is currently 9 percent weaker than the average rate for the full year 2017 (1.1272) Expected development of all key figures and indicators can be found in the forecast report of the annual report. April 2018 Spring Roadshow 44

45 TAKKT share and dividend policy 45

46 TAKKT share performance, shareholder structure and analyst recommendations Total Shareholder Return: TAKKT and indices Shareholder structure % 50.2% Franz Haniel & Cie. Free float Analyst recommendations Buy Hold TAKKT DAX MDax SDAX Average price target of EUR

47 TAKKT dividend policy Reliable dividend policy Future payout ratio within a corridor of 35 to 45 percent of the profit TAKKT aims for a consistent and reliable dividend stream Willingness to return funds to shareholders via a special dividend when equity ratio is high and funds cannot be reinvested. Payment of special dividend in 2007, 2008 and Attractive dividend Annual payment of base dividend increased or stable since IPO in 1999 Payout proposal for 2017 EUR 0.55* per share Dividend per share in Euro * * Proposal of the Management Board and Supervisory Board to the Shareholders Meeting 47

48 TAKKT equity story 48

49 TAKKT equity story at a glance TAKKT is a worldwide, diversified portfolio of B2B direct-marketing specialists for business equipment Gross profit margin > 40% (target) 38.5% 40.5% 41.4% 43.3% 42.5% Group companies are market-leaders in attractive market niches with high operational margins EBITDA margin 12-15% (target) Growth opportunities through organic initiatives (digital agenda) as well as upside from opportunistic acquisitions EBITDA margin corridor between 12 and 15% 11.2% 11.2% 14.3% 14.2% 13.5% TAKKT cash flow margin > 8% (target) 7.4% 7.3% 10.4% 9.9% 9.8% Reliable dividend payouts (in EUR) Business model generates high free cash flows and allows stable dividend payouts Stable, long-term oriented shareholder structure with Franz Haniel & Cie. GmbH as majority shareholder Dividend EPS

50 TAKKT investor relations IR Contact Christian Warns / Benjamin Bühler Phone: / Fax: investor@takkt.de is headquartered in Stuttgart, Germany. Upcoming Events April Spring Roadshow, London & Frankfurt 18. Bankhaus Lampe Conference, Baden-Baden 26. Earnings Call Q1/2018 May 8. Shareholders Meeting, Ludwigsburg Basic data TAKKT share ISIN / WKN / Ticker DE / / TTK No. shares 65,610,331 Type No-par-value bearer shares Share capital EUR 65,610,331 Listing September 15, 1999 Index SDAX, prime standard Designated sponsors Equinet, Oddo Seydler, Hauck & Aufhäuser Historic share price development (Xetra) Jan Mar May Jul Sep Nov Jan Mar