Annual General Meeting KHD Humboldt Wedag International AG

Transcription

1 Annual General Meeting KHD Humboldt Wedag International AG Gerold Keune, CEO Jürgen Luckas, CFO Yizhen Zhu, EVP May 23, 2017

2 » Over 160 years of experience in the cement industry.» We offer the full line of equipment and engineered solutions for cement plants, including individual machines, spare parts, and associated plant services.» Process engineering and project execution.» Leader in energy-efficient and environmentally friendly products for the grinding and pyroprocessing sections of cement plants. 2

3 Management Board Gerold Keune, CEO Jürgen Luckas, CFO Yizhen Mario Zhu, EVP Since 2016 with KHD Since 2006 with KHD Since 2011 with KHD Study of Industrial Engineering at the Technical University of Berlin More than 20 years of professional experience in German machinery and plant engineering Management responsibility for more than 15 years CFO since April 2015 Study of Business Administration at the Saarland University Long-term experience as certified auditor and certified tax consultant with an international audit and consulting company Study of Engineering as well as Master of Business Administration (MBA) Various international management positions within AVIC Was responsible for the establishment of the cement plant business within AVIC 3

4 Agenda Business Performance 2016 Financial Performance 2016 First Quarter 2017 Outlook and Strategy Questions 4

5 YTL / Straits Cement, Malaysia The new 5,000 tpd plant was built according to the latest environmental standards. KHD s supply included: 5-stage Preheater with Low- NOx Precalciner PYRORAPID rotary kiln PYROJET burner PYROFLOOR grate cooler COMFLEX grinding systems for raw and finish grinding 5

6 Akmenes Cementas, Naujoji Akmene, Lithuania Increased capacity to 4,500 tpd and increased efficiency. KHD provided basic and detail engineering, equipment supply and supervision of erection and commissioning, including: PHM crusher dryer, SKS-L separator, and ball mill 4-stage preheater with PYROCLON LowNOx calciner, PYROTOP compact mixing chamber, and two PYROBOX LowNOx coal dust firing systems 3-tier rotary kiln with TA duct, dust settling chamber, and PYROJET kiln burner PYROFLOOR clinker cooler, with hammertype clinker crusher Supply of auxiliary equipment Monitoring and automation systems 6

7 OOO Sengilejewskij Zementnyj Sawod Uljanowsk, Russia Doubled output of previous wet process system KHD managed the project from quarry to packing KHD-supplied equipment included: Four-stage HUMBOLDT PR 7950/4 preheater PYROCLON -R Calciner PYROTOP compact mixing chamber PYRORAPID 2-pier Kiln - Ø 4,4m x 52 m PYRO-JET Burner HPJ/230GO PYROFLOOR Clinker Cooler SEPMASTER SKS-Z 2500 PRODUX-R Automation systems ROMIX Raw meal quality control PROFLOOR -CONTROL SCANEX RELATYREX 7

8 OAO Novoroscement Perwomaiskij cement plant Noworossijsk, Russia 6,000 tpd clinker Plant operation and training KHD-supplied equipment included:» 2-string, 4-stage preheater» PYROCLON ; R calciner» PYROTOP compact mixing chamber» PYRORAPID 2-pier rotary kiln Ø 5.2m x 65.0m» PYROJET Burner» PYROFLOOR clinker cooler - PFC with hammer-type clinker crusher» 2 Roller Presses RP /180;» Static V-separator, type VS» Ball mill Ø 3.8m x 12.75m» SKS Z dynamic separator» Quality control and automation with KHD expert systems 8

9 Global Cement Consumption (billion tons) 5,00 4,50 4,00 3,50 3,00 2,50 2,34 2,57 2,76 2,83 3,01 3,23 3,57 3,76 4,01 4,12 4,01 4,11 4,19 4,28 4,38 4,47 4,56 Slight increase of cement consumption in 2016 with positive outlook for the next years. Need for stand-alone grinding units will increase especially in the US and SSA. 2,00 1,50 1,00 Ongoing chances for modernization and upgrade projects in the market. 0,50 0, F 2018F 2019F 2020F 2021F Source: CW Group GCVFR 1H2017 9

10 Order Intake Overall order intake of 83.0 million was significantly lower than expected, due to further delays in project awards and customers challenges to secure financing. Segment Plant Services achieved order intake of 36.6 million (previous year: 40.9 million), which was an important contribution (44.1%) to total order intake. Order backlog as of December 31, 2016 of million (previous year: million) does not provide a sufficient basis for the full utilization of existing capacities in

11 Agenda Business Performance 2016 Financial Performance 2016 First Quarter 2017 Outlook and Strategy Questions 11

12 Key Figures at a Glance in million Order Intake Revenue Gross Profit Gross Profit Margin (in %) EBIT EBIT-Margin (in %) EBT Group net loss for the year Earnings per share (in ) Operating cash flow Cash flow from investing activities Cash flow from financing activities

13 Revenue Low order backlog at the beginning of FY 2016 led to revenue of million a 21.3% decrease in comparison with previous year ( million). Revenue of segment Capex amounting to 96.2 million was significantly below pervious year ( million). The segment Plant Services achieved growth of revenue to 39.3 million (previous year: 35.3 million). 13

14 Group earnings Adjusted gross profit* decreased from 16.2 million in 2015 to 7.6 million in 2016, due to lower revenue and difficulties in the execution of several major projects. Lower order backlog at the beginning of 2016 and unsatisfactory order intake led to an underutilization of capacities. The idle capacity costs amounted to 5.9 million (previous year: 3.3 million). Unsatisfactory adjusted EBIT* of million ( million in FY 2015) / EBIT-margin of -20.2% (previous year: -10.3%). EBT million ( -9.2 million in FY 2015). * Adjustments (only Capex segment): 1. Cost of Sales FY 2016: 5.9 million idle capacity costs; FY 2015: 3.3 million idle capacity costs, 14.6 million related to an arbitration award 2. Other operating income FY 2015: 18.0 million related to cooperation agreement 14

15 Segment earnings Segment Capex Revenue of 96.2 million was significantly lower than previous year ( million). Adjusted gross profit of -3.0 million ( 6.7 million in FY 2015); adjusted gross profit margin of -3.1% (4.9% in FY 2015 ). Adjusted EBIT amounted to million (previous year: million). Segment Plant Services Revenue of 39.3 million shows satisfying increase over 35.3 million in previous year. Satisfactory gross profit of 10.6 million ( 9.5 million in FY 2015); Gross profit margin of 26.9% equals previous year figure. Significantly positive EBIT of 3.7 million (previous year: 4.2 million). 15

16 Financial Position and Employees Total assets million ( million in FY 2015), thereof: Cash and cash equivalents of 78.1 million (previous year: million), Loan to AVIC of 100 million (previous year: 100 million). KHD with robust liquidity and equity of million (equity ratio of 52.2%). Improvements in net working capital ( 13.4 million vs million end of 2015). 707 employees at the end of 2016 (735 at the end of 2015). 16

17 Key Figures at a Glance in million Dec. 31, 2016 Dec. 31, 2015 Equity Equity ratio (in %) Cash and intercompany loan * Net working capital ** Order Backlog Employees * Intercompany loan of 100 million, thereof 50 million with entitlement to call for early repayment by giving 30 days notice ** Balance of current assets (less cash and cash equivalents and current loans granted) and current liabilities 17

18 Agenda Business Performance 2016 Financial Performance 2016 First Quarter 2017 Outlook and Strategy Questions 18

19 ACC Limited Jamul Plant, Jamul, Chhattisgarh, India This new 9,000 tpd plant marked KHD s first full-line project with ACC Limited, a major player in the Indian market. KHD supplied its energy-efficient COMFLEX technology for the raw material grinding plant, as well as core equipment for pyroprocessing and clinker grinding. 19

20 Key Figures Q in million Q Q Order Intake Revenue Adjusted Gross Profit * Adjusted Gross Profit Margin (in %) Adjusted EBIT * Adjusted EBIT Margin (in %) EBT Group net loss for the period Earnings per share (in ) * Adjustments: 2017: 1.2 million idle capacity costs, 1.3 million costs of reorganization 2016: 1.9 million idle capacity costs 20

21 Key Figures Q in million Q Q Operating cash flow Cash flow from investing activities Cash flow from financing activities in million Dec. 31, 2017 Dec. 31, 2016 Equity Equity ratio (in %) Cash Intercompany loan Net working capital Order Backlog Employees

22 Development of order backlog in million * * Q * Retrospective change of order backlog due to cancellation of project in Russia 22

23 Agenda Business Performance 2016 Financial Performance 2016 First Quarter 2017 Outlook and Strategy Questions 23

24 Outlook markets 2017 Political uncertainties, low commodity prices, the economic slowdown in China as well as the consolidation process within the cement industry will continue to have a significant impact in The International Monetary Fund expects a growth rate of 3.4% in 2017 (3.1% in 2016). Worldwide growth of cement consumption of 2% annually until 2021 slow but sustainable recovery in demand in the cement markets. As a result of the global uncertainties and ongoing mergers and acquisitions of the cement producers, investment cuts are announced or expected. Demographic trends as well as the need to expand the infrastructure are expected to result in a growing demand for cement, especially in Africa, India and Southeast Asia. 24

25 Business Strategy at KHD (1) Strategy / objectives Actions to be taken Leadership in technology Product development through investment in R&D Quality leadership through excellence in project execution Grow market share through sales initiatives Generate additional business volume in the Plant Services and Capex segment through service initiatives Global engineering for optimizing utilization of capacities Project execution: Guidelines/ Control Reinforcement of customer relationship management Increase of personnel in sales functions Strengthening of the advisory function for our customers (Plant Audits) Development of service concepts 25

26 Business Strategy at KHD (2) Strategy / objectives Improvement of profitability through cost-cutting measures Actions to be taken Decrease of structural costs through headcount reduction: - Nearly completed in the USA - In Germany with a focus on indirect functions as well as reduction of management levels (in implementation) Reduction of project costs: - Strengthening the global supply chain, especially through intensive use of the Chinese and Indian procurement market 26

27 Strengthening of Sales Our initiatives to strengthen our sales function include important corner stones: Reinforcement of customer relationship management Expansion of local sales offices Strengthening of the worldwide network of sales representatives Increase of tendering and proposal activities Regular hosting of regional technology summits Sales costs in million (plan)

28 Being closer to our Customers In 2016, KHD hosted two Technology Summits in KHD regions (India and Turkey). The first Technology Summit 2017 was held in Nepal in April. KHD hosted the entire cement industry from Nepal. Excellent feedback from customers, atmosphere of partnership. The next summit will take place in Latin America in fall. 28

29 Reorganization within KHD Group Reduction of the Management Board from five to three members. Streamlining of central functions at the Cologne headquarters. Strengthening of the Cologne location with full market responsibility for EMEA and APA (excluding India and neighboring countries HW India market area). Strengthening of product development competence at the Cologne location. Strengthening of standardized engineering work at the location New Delhi, India. 29

30 Global KHD Structure 30

31 Further Development of Products and Services Products Strengthening the KHD product portfolio through application-oriented product development. Integration of KHD know-how in comprehensive solutions: Modernization and expansion of cement plants and grinding units on EP and EPC basis. Services Expansion of the service business (spare parts, plant audits, maintenance, training, plant optimization) through increased customer visits and development of customized solutions. Improvement of service business at the construction sites (i.e. supervision of erection and commissioning) Bundling in Humboldt Wedag GmbH and thus elimination of interfaces and enhancement of efficiency. Strengthening of construction site personnel through new job openings. 31

32 R & D at KHD based on Energy, Environment and Efficiency PYROCLON REDOX Technology First contract won in Turkey Primary NOx reduction. Gasifying reactor for a broad variety of fossil and alternative fuels. Technology for new plants as well as for retrofit of existing plants. NOx level of PYROREDOX below the level of secondary measures (e.g. SNCR). No investment in SNCR and aqueous ammonia solution. 32

33 Summary of current Business Strategy KHD is investing in its future despite a difficult market environment through headcount increase in the areas of sales, product development and site services. KHD reduces costs by reducing the number of employees in indirect functions, eliminating hierarchical levels, and strengthening standard engineering at the location New Delhi, India. KHD invests in customer benefit without losing sight of the cost situation. In the medium term, both revenues should be increased and costs reduced in order to return to a positive earnings situation. The 2017 and 2018 financial years will be transitional years. From 2019 onwards, profits should be achieved again based on a significant increase in business volume. 33

34 Agenda Business Performance 2016 Financial Performance 2016 First Quarter 2017 Outlook and Strategy Questions 34

35 Questions 35

36 Disclaimer for Forward-Looking Information This document contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of the Company to differ materially from the expectations of the Company include, among other things, general business and economic conditions globally, commodity price volatility, industry trends, competition, changes in government and other regulation, including in relation to the environment, health and safety and taxation, labor relations and work stoppages, changes in political and economic stability, the failure to meet certain conditions of the offer and/or the failure to obtain the required approvals or clearances from regulatory and other agencies and bodies on a timely basis or at all, the inability to successfully integrate the operations and programs of businesses and/or companies acquired with those of the Company, incurring and/or experiencing unanticipated costs and/or delays or difficulties relating to integration of acquired businesses, disruptions in business operations due to reorganization activities and interest rate and currency fluctuations. Such forward-looking statements should therefore be construed in light of such factors. Other than in accordance with its legal or regulatory obligations, the Company is not under any obligation and the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additional information about these and other assumptions, risks and uncertainties are set out in our financial statements for the year ended December 31,