Strong quarterly growth and improved operating profitability outlook raised

Transcription

1 Strong quarterly growth and improved operating profitability outlook raised Dr. Roland Fischer, CEO Jürg Fedier, CFO Q2 208 Business Update August 7, 208

2 Agenda Q2 208 Business Update 2 Q2 208 Financial Review 3 Outlook 4 Appendix Page 2

3 Strong quarterly growth and improved operating profitability outlook raised 2 Achieving strong top-line growth Improving EBITDA margin Group order intake up 26.8 % Group sales up 36.6 % Driven by growth in Surface Solutions (~7 %) and sustained recovery in Manmade Fibers (~82 %) Group s EBITDA margin increased to 7. %, after full absorption of costs related to the AM business and discontinued effects Drive Systems Surface Solutions slightly exceeding guided corridor (20.2 %) and substantial improvement in Manmade Fibers (.8 %) 3 Delivering on strategy Divestment of Drive Systems Segment announced on July 30, 208 Focus on Surface Solutions and advanced material undisputed String-of-pearls acquisitions and investments to strengthen Surface Solutions leadership position executed 4 Increasing growth and profitability guidance for 208 Group order intake expected to grow exceeding CHF 2.6 billion (>5 %) and sales to around CHF 2.6 billion (around 20 %) Group s EBITDA margin to exceed 5.5 % Continuing operations Page 3

4 Surface Solutions Segment Delivering strong top-line growth and maintaining high profitability level OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 2% 3% 4% Sales 2Q8 46% 29% Profitable growth in orders and sales driven by Tooling, Automotive and Aviation Acquisitions and material surcharges in total added ~CHF 6 m to top-line in 2Q8 Continued growth for tools, strong increase in Aviation and General Industry and good momentum on epd Additive Manufacturing acquired DiSanto Technology Inc. and performed in line with expectations 2Q8 EBITDA profitability of 20.2 % slightly exceeding guided corridor (Guidance 8 20 %) Strong momentum in General Industry globally (IP ) Tooling market with continued good demand in all regions, supported by strategic initiatives and adoption of new coating solutions Automotive business remains robust in Europe, US and Asia Aerospace market with continued growth Power Generation with ongoing challenging market environment, especially large gas turbines Europe and North America with strong growth, good development in Asia Tooling 5% y-o-y y-o-y in CHF million 2Q8 2Q7 y-o-y HY8 HY7 y-o-y ex FX ex FX Order intake % 2.4% % 9.8% Automotive Aviation 26% 26% Sales 2Q8 3% Sales (3 rd parties) % 2.7% % 0.0% EBITDA % % General Industry Power Generation 5% 23% 23% In % of sales 20.2% 20.7% 9.7% 20.9% EBIT % % In % of sales.4%.6% 0.7%.9% IP = Industrial Production Page 4

5 Manmade Fibers Segment Strong order intake maintained, sales increased and margin improved OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 3% 3% 4% 0% Sales 2Q8 73% Excellent market position strengthened maintaining leading position Strong order intake driven by large filament project orders from China and Europe and related texturing activities Strong order growth in BCF (North America), good development in CP 2 Successful ramp-up in production capacities, supplier management and efficiency resulting in increased sales and profitability EBITDA margin of.8 % heading towards guidance Strong demand in filament equipment market in China driven by strategic decisions of Tier customers (aiming for capacity, technology and efficiency leadership) Texturing equipment demand accelerated, in particular in China, as a result of increased filament activities Good demand in BCF from the US and Turkey, showing signs of normalization Project opportunities in staple fibers and nonwovens Strong project pipeline increases lead times party already into 202 pricing continues to improve Filament spinning/ Texturing BCF carpet yarn/ Polymer processing Staple fibers/ Nonwovens 2% 26% 9% Sales 2Q8 70% 23% in CHF million 2Q8 2Q7 y-o-y y-o-y y-o-y HY8 HY7 y-o-y ex FX ex FX Order intake % 35.8% % 67.% Sales (3 rd parties) % 69.5% >00% 94.6% EBITDA 32 3 >00% 59 3 >00% In % of sales.8% 2.2%.5%.2% EBIT 26-2 n/a 48-7 n/a In % of sales 9.5% -.2% 9.2% -2.9% Bulked continuous filament (carpet yarn); 2 Continuous Polymerization Page 5

6 Drive Systems Segment Confirming promising growth path with improved top-line and profitability OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 33% 3% 6% Sales 2Q8 2% 40% Attractive new projects and innovation in the agriculture, transportation, automotive and construction markets Sales growth driven by agriculture (India, US, Europe), transportation (India, China) and automotive (including e-mobility) Sales growth in all regions, Asia (India, China) and the Americas contributing most to growth, Europe solid 2Q8 with further improved EBITDA margin (for the quarter and the first six months) due to higher volumes and sustainable benefit of reshaping measure Continued global improvement in agriculture; high levels in Europe; stable in the US and Asia, especially India Construction market remains strong in the US and Asia, especially India; Europe stable Transportation market with CV strong in China and India; moderate increase in Europe; heavy trucks with high increases in the US while rail remains weak Automotive / e-vehicles with ongoing positive market sentiment, especially in India and China Energy and mining market with increasing demand at low levels, due to higher oil and coal prices Agriculture 6% Construction Transportation 9% 26% Sales 2Q8 3% Automotive Energy / Mining 9% 23% 25% CV = Commercial Vehicles Page 6

7 Agenda Q2 208 Business Update 2 Q2 208 Financial Review 3 Outlook 4 Appendix Page 7

8 Overall Group performance builds on strong top-line growth in both Segments Surface Solutions Segment with continued strong order intake in CHF million 2Q8 2Q7 y-o-y HY8 HY7 y-o-y Order intake % '434 ' % Sales (3 rd parties) % ' % EBITDA % % In % of sales 7.% 4.2% 6.4% 4.9% EBIT >00% % In % of sales 0.8% 6.7% 0.% 7.0% and sustained high level of profitability Manmade Fibers further improved orders and sales; profitability moving towards guidance Drive Systems reported as discontinued operations; creating a positive impact on EBITDA of ~CHF 9 m (transaction cost) Group with book-to-bill > for 2Q8 Currencies provided tailwinds on orders and sales Top-line development at constant FX (y-o-y) Sales growth 2Q8 vs. 2Q7 (y-o-y) 2Q8 vs. Q8 (q-o-q) % % 634 Reported 36.6% 0.% Performance 29.8% 8.4% FX translation 6.8%.7% Order intake Q2 207 Order intake Q2 208 at constant FX Sales Q2 207 Sales Q2 208 at constant FX 208 continuing operations, 207 restated for divestment of Drive Systems and IFRS 5 Page 8

9 FX impact on Orders, Sales and EBITDA in Q2 208 Order intake Q2 208 Sales Q2 208 EBITDA Q2 208 In CHF million In CHF million In CHF million 5.0% 4.9% 5.6% Margin in % Q2 208 reported Transaction effects Translation effects Q2 208 FX impact adj. Q2 208 reported Transaction effects Translation effects Q2 208 FX impact adj. Q2 208 reported Transaction effects Translation effects Q2 208 FX impact adj. 208 continuing operations, 207 restated for divestment of Drive Systems and IFRS 5 Top-line impact mainly related to currency translation as a result of reporting currency CHF Appreciation of EUR and to a lesser extent CNY against CHF vs. devaluation of USD against CHF Impact on EBITDA margin insignificant Page 9

10 Business split Improvement in Manmade Fibers reflected in Group split Segment sales split Segment EBITDA split Q % 4% Q % 28% % Q % 3% Q % 02% 4% in % of total sales in % of EBITDA Surface Solutions Manmade Fibers Surface Solutions Other Manmade Fibers Regional sales split Service business Q % 32% 7% 4% Q % 6% Q % in % of total sales 40% 4% 5% Q % in % of total sales 53% APAC North America Service & Spare Parts Europe RoW Goods, Equipment & Components 208 continuing operations, 207 restated for divestment of Drive Systems and IFRS 5 Page 0

11 Result from continuing operations positively impacted by higher EBIT, lower tax rate and improved financial result in CHF million H 208 H Δ Order intake % Sales % EBITDA in % of sales % % 5.8 % Result before interest and taxes (EBIT) in % of sales % % 00.0 % Financial result % Result before taxes (EBT) in % of sales % % >00 % Income taxes in % of EBT % % % Result from continuing operations in % of sales % % >00 % Result from discontinued operations % Net income 47 >00 % Continuing operations 2 Restated for divestment of Drive Systems and IFRS 5 Page

12 Strong unleveraged balance sheet with an equity ratio of 44 % in CHF million H 208 FY 207 Cash and cash equivalents Trade and trade notes receivables Inventories Property, plant and equipment Goodwill and intangible assets Assets held for sale Total other assets 4 50 Total assets Trade payables Current contract liabilities Non-current loans and borrowings Non-current post-employment benefit provisions Liabilities held for sale Total other liabilities Total liabilities Total equity Total equity ratio 44 % 46 % Net cash continuing operations, 207 restated for IFRS 5 Page 2

13 Group CapEx to depreciation ratio in mid-term target corridor CapEx Depreciation & amortization CapEx / depr. & amort. ratio In CHF million In CHF million In CHF million +30% +7% Mid-term target corridor H 207 H 208 H 207 H 208 Excluding amortization of acquired intangible assets; 208 continuing operations, 207 restated for divestment of Drive Systems and IFRS FY 202 FY 203 FY 204 FY 205 FY 206 FY 207 H 208 Surface Solutions Segment ratio of.34 investments in Additive Manufacturing (CHF 2 m CapEx) and capacity / footprint expansion Manmade Fibers Segment ratio of 0.92 Page 3

14 Consolidated cash flow statement H 208 in CHF million Receivables -95 Inventories -7 Payables/liabilities 6 Contract liabilities 09 Total -50 CAPEX PP&E -94 CAPEX intangibles -7 Acquisition of subsidiaries, net of cash acquired -2 Proceeds from sale of financial investments 30 Interest received 3 Total -90 Dividends paid -7 Repayment of debt -3 Interest paid -9 Other -6 Total -35 Cash and cash equivalents at the beginning of the period Operating activities before changes in net current assets Changes in net current assets Investing activities Financing activities Conversion adjustments to cash and cash equivalents Cash and cash equivalents at the end of the period Page 4

15 Return On Capital Employed (ROCE) H 208 FY EBIT Total current income tax Total deferred tax income -4 NOPAT % 5.7% 8.2% 0.7% In % Net Operating Assets Current income tax receivables Deferred tax assets Current income tax payables Deferred Tax liabilities Capital Employed % FY 205 FY 205 FY 206 FY (norm.) 2 (reported) 2-months rolling, continuing operations 2 Normalized EBIT excl. one-time restructuring cost of CHF 2 million and impairments of CHF 476 million; Current income taxes adjusted accordingly 3 Restated for IFRS 5 H 208 Higher ROCE as a result of increased NOPAT Mainly driven by higher profitability in Manmade Fibers Capital employed grew under-proportional Page 5

16 Agenda Q2 208 Business Update 2 Q2 208 Financial Review 3 Outlook 4 Appendix Page 6

17 Sales Order intake 208 Group outlook increased Raising top-line targets and improving attractive profitability level EBITDA margin >5 % Underlying Group / Segment assumptions CapEX 2 2'2 FY 207 restated up to FY 208E old restated 2'068 2'400 FY 207 restated 69 FY 207 restated 5.6% FY 207 restated around 25 % FY 208E old restated around 230 FY 208E old restated around 5 % FY 208E old restated exceeding FY 208E raised around FY 208E raised around 230 FY 208E confirmed exceeding 5.5 % FY 208E confirmed Oerlikon Group 2 Guidance based on restated results 207 (divestment of Drive Systems and IFRS 5) applicable in 208 Top-line growth of >5 % in order intake and around 25 % in sales Book-to-bill > Sizeable CapEx for further growth EBITDA margin to exceed 5.5 % 3 Smaller acquisitions included in guidance Impacts from Drive Systems divestment: Closing expected late 208 / Q 209 ~CHF 600m cash proceeds expected at closing Group tax rate FY 208 expected slightly below 30 %, going forward converging towards 25 % Cumulative exchange differences (CTA) of CHF -285m (non-cash) at closing Surface Solutions Segment Order intake to increase around 6 % Sales growth up to 0 % driven by continued positive regional and end-market environment Additive Manufacturing business and smaller acquisitions included Confirming EBITDA margin in corridor of % excluding AM investments (reported 8 20 % corridor) Manmade Fibers Segment Order intake to exceed CHF. bn due to ongoing strong project pipeline Sales slightly exceeding CHF. bn due to prudent, successful capacity ramp-up EBITDA margin to exceed.5 % operating leverage / improvements, partly offset by projects from early recovery, higher cost (ramp-up) Continuing operations 2 Including around CHF 32 m (207) and > CHF 30m (208) related to Additive Manufacturing (AM); 3 Including full absorption of all related investment expenses in AM and discontinued effects Drive Systems Page 7

18 Q&A Achieving strong top-line growth 2 Improving EBITDA margin 3 Signing divestment of Drive Systems 4 Increasing growth and profitability guidance for 208 Page 8

19 Agenda Q2 208 Business Update 2 Q2 208 Financial Review 3 Outlook 4 Appendix Page 9

20 Oerlikon Group Key financial figures Strong performance in the first half of 208 in CHF million Key financial figures H 208 H Δ Order intake % Sales % EBITDA margin 6.4 % 4.9 %.5 pp Cash flow from operations % Net working capital n/a R&D % Total equity % Net cash % ROCE 0.7 % 8.2 % pp EPS (reported) >00 % Continuing operations 2 Restated for divestment of Drive Systems and IFRS 5 3 Key figures as of December 3, 207 Page 20

21 Oerlikon Segments Key financial figures in CHF million Key financial figures H 208 H 207 Δ Surface Solutions Order intake % Sales % EBITDA margin 9.7 % 20.9 % -.2 pp Net operating assets % Manmade Fibers Order intake % Sales >00 % EBITDA margin.5 %.2 % 0.3 pp Net operating assets n/a Restated for IFRS 5 2 Key figures as of December 3, 207 Page 2

22 Group Restated key financial figures Divestment Drives Systems / IFRS 5 in CHF million Key financial figures (divestment Drive Systems / IFRS 5) Q 208 restated 207 restated Q 207 restated Q2 207 restated Q3 207 restated Q4 207 restated Oerlikon Group Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 5.7 % 5.6 % 5.8 % 4.2 % 6.7 % 5.5 % EBIT EBIT margin 9.2 % 8. % 7.4 % 6.7 % 9.2 % 8.8 % Financial income Financial expenses -9 Result before taxes (EBT) 59 Income taxes -64 Result from continuing operations 95 Result from discontinued operations 56 Net Income 5 Page 22

23 Segments Restated key financial figures (IFRS) in CHF million Key financial figures (IFRS 5) Surface Solutions Segment 207 restated Q 207 restated Q2 207 restated Q3 207 restated Q4 207 restated Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 20. % 2. % 20.7 % 20.4 % 8.2 % EBIT EBIT margin 0.8 % 2. %.6 % 0.4 % 9.2 % Manmade Fibers Segment Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 8.0 % -0.2 % 2.2 %.2 % 2.2 % EBIT EBIT margin 4.7 % -5.4% -.2 % 8.5 % 9.2 % Page 23

24 Balanced FX profile across the Group Limited Swiss Franc exposure Sales 3rd 208 (e) COGS 208 (e) 2% 4% 2% % 5% 47% 9% 47% 22% 2% EUR USD CNY CHF Other Continuing operations No major currency mismatch natural hedge in place Limited transaction risk translation effects from reporting currency CHF Main currencies in Others are JPY, INR and KRW Page 24

25 EBITDA to EBIT bridge for Oerlikon Group EBITDA to EBIT bridge Q2 208 EBITDA to EBIT bridge Q In CHF million In CHF million EBITDA Depr. & Imp. EBITA Amor.of acqu. intangibles Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor.of acqu. intangibles Other Amor. EBIT Amortization of identified acquired intangible assets mainly attributable to Metco transaction Continuing operations 2 Restated for divestment of Drive Systems and IFRS 5 Page 25

26 EBITDA to EBIT bridge per Segment Q2 208 Surface Solutions Segment Manmade Fibers Segment In CHF million In CHF million EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT Page 26

27 R&D and CapEx on Segment level R&D expenses H 208 CapEx H 208 Surface Solutions (6%) Manmade Fibers (3%) (% of Segment sales) 25% CHF 6m Surface Solutions (9%) Manmade Fibers (2%) Corporate 5% % CHF 79m 75% (% of Segment sales) 84% Depreciation & Amortization H CapEx / Depr. & Amort. H Surface Solutions % 4% Surface Solutions.3.3 Manmade Fibers Manmade Fibers Corporate CHF 80m Segments % Group average Continuing operations 2 Reported 3 Excluding amortization of acquired intangible assets Page 27

28 Asset allocation and employees on Segment level Net operating assets H 208 Employees (FTE) by Segment H 208 Surface Solutions Manmade Fibers Corporate -4% -% CHF 543m Surface Solutions Manmade Fibers Corporate 27% 2% % 05% Operating Assets H 208 Employees (FTE) by Region H 208 Surface Solutions 2% Europe 4% Manmade Fibers Corporate 26% CHF 2 667m North America Asia / Pacific 27% % 72% RoW 3% Continuing operations Page 28

29 Active net working capital management and increased current contract liabilities In CHF million; as % of sales 4% 4% 4% 5% 4% 6% -3% FY 202 FY 203 FY 204 FY 205 FY 206 FY 207 H 208 Continuing operations Net working capital is defined as trade receivables + inventories trade payables current contract liabilities With the adoption of IFRS 5 customer advances are now referred to as current contract liabilities Net working capital decreased to -3 % of sales due to increased current contract liabilities (up by CHF 4 million to CHF 489 million) Restated for IFRS 5 Page 29

30 Constant range of investments in R&D at high level of CHF 55 million in H 208 In CHF million; as % of sales % 4% 3% 4% 4% 4% 4% FY 202 FY 203 FY 204 FY 205 FY 206 FY 207 H 208 Continuing operations 0 R&D essential to secure technological leadership Constant range of around 4 % of sales Focus on Surface Solutions Segment representing 75 % of Group R&D expenditure Page 30

31 Oerlikon Transformation Streamlining the portfolio and focus on Surface Solutions Divestitures Acquisitions Coating Segment: Rox acquisition Coating Segment: Metco acquisition Surface Solutions Segment: Laser Cladding Services acquisition Manmade Fibers Segment: Trützschler Nonwovens acquisition Solar Segment: Segment sold Textile Segment: Natural fibers businesses sold Advanced Technologies Segment: Segment sold Surface Solutions Segment: Citim & DMX acquisition Vacuum Segment: Segment sold Recentis & Scoperta acquisition Primateria & DiaPac acquisition DTI, DIARC Technology Oy & Sucotec AG acquisition Drive Systems Segment: Closing expected late 208 / Q 209 Page 3

32 Oerlikon shares Oerlikon shares Oerlikon shareholder structure Listed on Swiss Exchange (SIX) since 973 Securities symbol: OERL Securities number Liwet Holding AG Baillie Gifford & Co % 43.03% as of July 3, 208 ISIN: CH Black Creek IM Number of shares outstanding: shares Re-entry to Swiss SMIM (April 7, 202) Addition to STOXX Europe 600 (June 8, 202) BlackRock Inc. Others (incl. 0.5 % treasury shares) 4.0% 2.93% 2.77% as of July 3, 208, indexed; 00 percent = closing price per December 29, Oerlikon share price development Oerlikon SMI SMIM STOXX Europe 600 STOXX Europe 600 Industrial Based on latest notifications by Liwet (as of May 25, 208 of shares), Black Creek (as of January 20, 208 of voting rights), Baillie Gifford (as of July 25, 207, of voting rights) and BlackRock (as of July 30, 208 of voting rights) Page 32

33 Coverage 6 Buy / Add 7 Hold / Neutral 0 Sell / Underperform Broker Analyst Recommendation Date of last update Target price AlphaValue Heinz Steffen Add Baader Helvea Reto Amstalden Buy Berenberg Bank Sebastian Künne Hold Credit Suisse Patrick Laager Neutral Jefferies Graham Phillips Hold Kepler Cheuvreux Torsten Sauter Hold MainFirst Alexander Hirsbrunner Neutral Mirabaud N.N Octavian Alessandro Foletti Buy RBC Capital Markets Wasi Rizvi Outperform Societe Generale Christophe Quarante Hold UBS Fabian Haecki Buy Vontobel Michael Foeth Buy ZKB Armin Rechberger Marketweight Consensus 7.7 Page 33

34 Financial Calendar 208 / 209 August 7, 208 Q2 / HY 208 results and publication of Interim Report Media & Analyst Conference Call October 30, 208 March 5, 209 April 9, 209 Q3 / 9M 208 results - Media & Analyst Conference Call Q4 / FY 208 results - Media & Analyst Conference in Zurich Annual General Meeting of Shareholderrs - KKL Lucerne Page 34

35 Investor Relations Contact OC Oerlikon Management AG, Pfäffikon Churerstrasse 20 CH 8808 Pfäffikon SZ Switzerland Andreas Schwarzwälder Head of Investor Relations Senior Vice President Phone: Mobile: Page 35

36 Disclaimer OC Oerlikon Corporation AG, Pfäffikon, (together with its affiliates hereinafter referred to as Oerlikon ) has made great efforts to include accurate and up-to-date information in this document. However, Oerlikon makes no representation or warranties, expressed or implied, as to the truth, accuracy or completeness of the information provided in this document, Neither Oerlikon nor any of its directors, officers, employees or advisors, nor any other person connected or otherwise associated with Oerlikon, shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this document. The contents of this document, including all statements made therein, is based on estimates, assumptions and other information currently available to the management of Oerlikon. This document contains certain statements related to the future business and financial performance or future events involving Oerlikon that may constitute forward-looking statements. The forward-looking statements contained herein could be substantially impacted by risks, influences and other factors, many of which are not foreseeable at present and/or are beyond Oerlikon s control, so that the actual results, including Oerlikon s financial results and operational results, may vary materially from and differ than those, expressly or implicitly, provided in the forward-looking statements, be they anticipated, expected or projected. Oerlikon does not give any assurance, representation or warranty, expressed or implied, that such forward-looking statements will be realized. Oerlikon is under no obligation to, and explicitly disclaims any obligation to, update or otherwise review its forward-looking statements, whether as a result of new information, future events or otherwise. This document, including any and all information contained therein, is not intended as, and may not be construed as, an offer or solicitation by Oerlikon for the purchase or disposal of, trading or any transaction in any Oerlikon securities. Investors must not rely on this information for investment decisions and are solely responsible for forming their own investment decisions. Page 36