Q Interim Report

Transcription

1 Q Interim Report David Woolley (CEO) & David Bessant (CFO) 1

2 Agenda Q Highlights DW Summary of financial results DB Q Outlook DW Q&A DW & DB 2

3 Q Highlights Activity in Q showed only minor improvement over Q4 2012, up 7% in constant currency, 4% of which related to more working days in Q Compared to the same quarter last year, Q sales were down 23% in constant currency Difficult trading conditions persisted in all territories, and have done so for at least the last three quarters The level of customers shutdowns experienced and the amount of de-stocking from major OEMs reduced significantly from the last quarter Based on the last two quarters, the situation seems to have at least stabilised 3

4 Q Highlights (continued) The consolidation of two European hydraulic facilities into one European Centre of Excellence announced in Q4 2012, continues on time and on budget (total restructuring charge of MSEK 36) Cost control has remained very much the short-term focus However, investments in equipment, engineering and new product development have also been preserved to protect our long-term growth strategy Results for Q1 2013:- EBIT margin maintained at 13.0% (14.6) despite low sales Gearing in the period was 69% (69) following IAS 19 restatement 4

5 Summary of financial results 5

6 Q Results MSEK Jan-Mar Jan-Dec Change 2012 Net Sales ,129 Change in constant currency -23% 8% -9% Gross income Operating income (1) Operating margin (1) 13.0% 14.6% 13.9% Restructuring Other one-off items Reported EBIT Net income Adjusted EPS (1) (SEK) Reported EPS (SEK) Capital employed 1,016 1,130 1,019 ROCE (1) 24.5% n/a 26.7% ROE 23.6% n/a 26.5% Net debt Gearing (Debt/Equity) 69% 69% 73% (1) Earnings before items affecting comparability Enterprise Value of SEK 3.5bn based on 31-Mar-13 share price SEK

7 Market development Key messages Whilst the latest market indices for Q now finally indicate a year-on-year decline (down 11%*), they continue to be more optimistic than the actual demand levels from our customers, down 23% in constant currency Published indices for our North American end-markets are at least now more representative of sales our order experience over the last three quarters European end-markets remain soft with hydraulics products for Construction equipment and Lift trucks fairing worse Overall demand seems to have stabilised as customer de-stocking draws to a close Market forecasts for FY 2013 predict modest growth (up 2%*), based on much stronger demand in H However, our customer schedules do not support this assertion yet. * Blended growth rate using Concentric s sales mix by end-market and customer location 7

8 Q Results Americas Region Amounts in MSEK Q1 FY Net sales - total (including inter-regional sales) ,221 Operating income (1) Operating margin % (1) Return on capital employed % (1) 36.3 n/a 40.3 (1) Before items affecting comparability Sharp year-on-year sales decline compared to peak of H Sales in constant currency were -30% down year-on-year for Q1, driven by the continued weak demand experienced across most end-sectors Average sales on a working day basis was down to MSEK 3.7 (5.4) for Q1 Operating margins holding up under pressure Operating margins for the quarter were down, reflecting a drop through rate of 16% on the year-onyear sales reduction 8

9 Q Results Europe & RoW Region Amounts in MSEK Q1 FY Net sales - total (including inter-regional sales) ,027 Operating income (1) Operating margin % (1) Return on capital employed % (1) 18.4 n/a 19.6 (1) Before items affecting comparability. Demand remains soft in Europe, India and China Sales in constant currency were -14% down year-on-year in Q1, as demand weakens year-on-year for later cycle hydraulic products for construction equipment and off-highway applications Average sales on a working day basis was down to MSEK 3.9 (4.6) for Q1 Operating margins holding up under pressure Operating margins for the quarter were down, reflecting a drop through rate of 21% on the year-onyear sales reduction 9

10 Robust Financial Position 31 March Amounts in MSEK Balance Sheet Working Capital As % of annualised sales 2.2% 2.0% Capital Employed (1) 1,016 1,130 Net Debt Equity Gearing (Debt/Equity) ratio 69% 69% (1) Excluding cash and cash equivalents and any tax items Cash Flow EBITDA Interest & tax paid Net CAPEX -3-9 Change in working capital Cash in flow before financing 2 67 Comments Working capital after maintained Net debt and equity restated for previously unrecognised pension liabilities Includes MSEK 7 restructuring spend 10

11 IAS 19 Restatement Amounts in MSEK Adjustments Restated Q1-12 FY-12 Q1-12 FY-12 Income Statement Underlying Operating Income Underlying EBIT-Margin 14.6% 13.9% Sale of Statesville Pension amortisation Pension curtailment gains Restructuring costs (36) Operating Income EBIT-Margin 14.6% 13.2% Net financial expenses (2) (6) (10) (38) Earnings before tax EBT margin 13.0% 11.4% Net Income Net Margin 9.1% 8.0% EPS Balance Sheet Total Assets (deferred tax adjs) ,930 1,818 Net Debt (408) (446) Net Debt/Equity % 72.6% Equity (293) (328) Equity/Total Assets ratio % 33.8% Comments Operating income adjusted for pension amortisation charges under corridor method Returns on pension assets are restricted to discount rate for liabilities Net of deferred tax assets and unrecognised pension liabilities reduces equity 11

12 Q Outlook 12

13 Q Outlook Orders received during the first quarter of 2013 were again, slightly above sales, indicating that end-customer demand seems to have stabilised, with no further significant destocking anticipated from the major OEMs. Latest market indices suggest 2% growth in 2013 year-on-year, blended across our end-markets, based on much stronger demand in the second half of However, current customer schedules do not indicate any significant improvement in order levels yet. Our ambition remains to outperform the market through organic growth from our leading technology addresses at the key market drivers, such as tougher emissions legislation and increased demand for fuel efficient solutions. 13

14 Any Questions? 14

15 Appendix Market Data 15

16 Q1 & FY 2013 Market Data End-markets & Regions Q1-13 vs. Q1-12 FY-13 vs. FY-12 North Europe China/ North Europe China/ America India America India Agricultural machinery Diesel engines -10% -14% -5% +3% +2% +11% Construction equipment Diesel engines -11% -7% -24% +5% +3% +6% Hydraulic equipment +4% -26% n/a +5% -16% n/a Truck Light vehicles +9% n/a n/a +16% n/a n/a Medium/Heavy vehicles -16% -9% -10% +1% -5% -1% Industrial applications Other Off-highway -9% -5% -14% +5% +5% +8% Hydraulic lift trucks -23% -27% n/a +2% -5% n/a Source: Based on statistics from Power Systems & Research, Off-Highway Research and International Truck Association Q update 16

17 Q1 & FY 2013 Market Data Applied to Concentric Q1-13 vs. Q1-12 FY-13 vs. FY-12 North Europe Group North Europe Group America & RoW America & RoW Blended market rates -9% -13% -11% +4% -2% +2% Concentric actual rates -30% -14% -23% Source: Based on statistics from Power Systems & Research, Off-Highway Research and International Truck Association Q update Applying our sales mix by end-market and customer location to these indices, the blended market growth rate for Q1 was estimated at -11%. In comparison, Q1 actual sales were down -23% year-on-year in constant currency. The latest market indices suggest modest year-on-year growth (+2%) blended across our end-markets, predicated upon demand in the second half of 2013 being significantly stronger. However, based upon the current customer schedules, there is no evidence of any significant improvement in order levels yet. As noted in previous quarters, movements in the market indices tend to lag our order intake experience by 3-6 months. 17