INVESTOR RELATIONS PRESENTATION

Transcription

1 INVESTOR RELATIONS PRESENTATION Corporate Communications & Investor Relations Dürr AG Bietigheim-Bissingen, January

2 DISCLAIMER This publication has been prepared independently by Dürr AG/Dürr Group ( Dürr ). It may contain statements which address such key issues as strategy, future financial results, events, competitive positions and product developments. Such forward-looking statements are subject to a number of risks, uncertainties and other factors, including, but not limited to those described in Dürr s disclosures, in particular in the chapter Risks in Dürr s annual report. Should one or more of these risks, uncertainties and other factors materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performances or achievements of Dürr may vary materially from those described in the relevant forward-looking statements. These statements may be identified by words such as expect, want, anticipate, intend, plan, believe, seek, estimate, will, project or words of similar meaning. Dürr neither intends, nor assumes any obligation, to update or revise its forward-looking statements regularly in light of developments which differ from those anticipated. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. Our financial reports, presentations, press releases and ad-hoc releases may include alternative financial metrics. These metrics are not defined in the IFRS (International Financial Reporting Standards). Dürr s net assets, financial position and results of operations should not be assessed solely on the basis of these alternative financial metrics. Under no circumstances do they replace the performance indicators presented in the consolidated financial statements and calculated in accordance with the IFRS. The calculation of alternative financial metrics may vary from company to company despite the use of the same terminology. Further information regarding the alternative financial metrics used at Dürr can be found in our financial glossary on the Dürr web page ( 2

3 AGENDA 1. Executive Summary 2. Our five divisions 3. Group strategy 4. Group financials, markets and outlook 3

4 1. EXECUTIVE SUMMARY Worldwide leading supplier of efficient production technologies with outstanding digital expertise. Major customer groups: automotive, furniture and general industry Innovation leader driven by automation, digitization and networked production Highly cash generative; flexible production facilities with pronounced focus on NWC; strong ROCE Expanding service business with healthy margins and further growth potential Group structure with efficient processes; further growth via acquisitions. HOMAG can be seen as a blueprint for further acquisitions 4

5 1. EXECUTIVE SUMMARY Dürr: global leader in strong competitive position Customers Fast facts Market shares between 30 and 60% in different machinery and engineering activities Strong emerging markets presence with 40-50% share of global incoming orders Share of current incoming orders: 55% automotive business, 45% general industry, e.g. furniture, machinery Net exposure to combustion engine technology negligible High entry barriers with limited number of competitors Business drivers: Greenfield: growing markets Brownfield: replacement potential Service: installed base Automation, digitization & networking 5

6 AGENDA 1. Executive Summary 2. Our five divisions 3. Group strategy 4. Group financials, markets and outlook 6

7 2. OUR FIVE DIVISIONS Divisional breakdown 2016 (2015) Dürr AG Paint and Final Assembly Systems Application Technology Clean Technology Systems Measuring and Process Systems Woodworking Machinery and Systems Incoming orders 1,094 m (1,126 m) Incoming orders 583 m (538 m) Incoming orders 177 m (166 m) Incoming orders 683 m (578 m) Incoming orders 1,165 m (1,058 m) Sales 1,140 m (1,365 m) Sales 561 m (600 m) Sales 167 m (159 m) Sales 624 m (604 m) Sales 1,082 m (1,039 m) EBIT 77 m (100 m) EBIT 76 m (61 m) EBIT 6 m (6 m) EBIT 80 m (70 m) EBIT 45 m (37 m) Operating EBIT 82 m (100 m) Operating EBIT 59 m (61 m) Operating EBIT 6 m (6 m) Operating EBIT 80 m (70 m) Operating EBIT 71 m (63 m) EBIT margin 6.8% (7.3%) EBIT margin 13.6% (10.1%) EBIT margin 3.7% (3.6%) EBIT margin 12.8% (11.6%) EBIT margin 4.1% (3.5%) Operating EBIT margin 7.2% (7.3%) Operating EBIT margin 10.5% (10.1%) Operating EBIT margin 3.7% (3.6%) Operating EBIT margin 12.8% (11.6%) Operating EBIT margin 6.6% (6.1%) 7

8 2. MARKET SHARE DÜRR/COMPETITORS 1 Paint and Final Assembly Systems Paint Dürr 50%, Eisenmann 10-15%, Taikisha/Geico 20% local competitors: AE, Giffin, Gallagher Kaiser, Trinity (Toyota) Final Assembly Dürr, Rofa, Scivic, Siemens, Eisenmann Application Technology Dürr ~50%, ABB ~20%, Fanuc ~15%, Yaskawa ~10%; local competitor: Doolim Clean Technology Systems Dürr 40-50% 2, John Zink/KEU 20%, CTP 10% Measuring and Process Systems Balancing Dürr 46%, CEMB 16%, Kokusai 8% Filling Dürr 48%, Fives 16%, SAT 8% Testing Dürr 50%, Burke Porter Group 21%, Fori 10% Woodworking Machinery and Systems Dürr 31%, Biesse 12%, scm group 11%, Schelling/IMA 7%; local competitors: Nanxing, KTD 1 own estimates, average of last 3 years 2 market share relating to business with exhaust-gas purification systems for automotive paint shops 8

9 2. PAINT AND FINAL ASSEMBLY SYSTEMS Paint shops and final assembly systems Turn-key paint shops for the automotive industry (OEMs, suppliers) Final assembly systems (e.g. conveyor equipment, control systems) Service and modernization of existing sites in m e 9M M 2017 Incoming orders Sales revenues 1,126 1,094 1,100-1, ,365 1,140 1,100-1, EBIT EBIT margin 7.3% 6.8% % 6.3% 5.7% ROCE >100% >100% >100% >100% % 3 1 adjusted for the Ford Mexico order cancelled in Q including extraordinary expenses in connection with the closure of a smaller plant in Austria ( 4.9 m) 3 annualized 9

10 2. APPLICATION TECHNOLOGY Paint application, glueing and sealing technology High-tech systems and software for automated paint application, glueing processes and seam sealing (e.g. robots, atomizers, color change systems, quality assurance) Interior painting automation potential Economic lifetime of paint robots: years replacement cycle just beginning Strong service potential (e.g. spare parts) due to increased installed base in m e 9M M 2017 Incoming orders Sales revenues EBIT EBIT margin 10.1% 13.6% % 11.3% % ROCE 32.3% 40.0% % 31.6% % 4 1 adjusted for the Ford Mexico order cancelled in Q ²including extraordinary income of 17 m 3 including extraordinary income of 5 m 4 annualized 10

11 2. APPLICATION TECHNOLOGY Addressing new markets: General industry Application products: components & automated paint solutions Complete range of application products for general industry (e.g. plastics, wood, furniture, construction) Pre-installed and ready2spray robot system, jointly developed by Kuka and Dürr. Kuka will provide the compact robot and Dürr the paint application technology. integrated solution is unique to the market. Target: 50 m revenue by 2019 Competition 1 8% 7% 31% Nordson Others 23% Graco Finishing Brands 31% Iwata 1 Market size ~ 3 bn 11

12 2. PAINT BUSINESS 1 TYPE Greenfield BUSINESS DRIVERS Expansion of capacity in new and existing locations Replacement of old and non-productive plants Brownfield Increased quality requirements especially in the emerging markets Efficiency enhancements: cost reductions (e.g. energy, material); cycle times Flexibility: addition of new models/facelifts to existing painting lines Automation: e.g. interior painting of vehicles Environmental regulation: stricter emissions laws Service Continuous demand: spare parts, upgrades, training Wear & tear of aging installed base: smaller modernizations and upgrades 1 Divisions Paint and Final Assembly Systems and Application Technology 12

13 2. PAINT BUSINESS 1 Brownfield with growing importance Incoming orders 2008: 950 m Incoming orders 2016: 1,677 m Incoming orders 2020e 24% 30% 30% 35% 44% 15% 61% 26% 35% Greenfield Brownfield Service Incoming orders increased by 75% within 8 years, mostly due to higher demand in brownfield & service business 1 Divisions Paint and Final Assembly Systems and Application Technology 13

14 2. CLEAN TECHNOLOGY SYSTEMS Exhaust air purification systems & energy efficiency systems Drivers: energy prices, regulation, environmental issues Customer split: 25% automotive; 25% chemistry, petrochemistry, pharmacy; 50% other industries Streamlining at loss making energy efficiency technologies started in m e 9M M 2017 Incoming orders Sales revenues EBIT EBIT margin 3.6% 3.7% % 4.2% 1.5% ROCE 11.7% 13.6% 15-20% 12.9% 2 4.3% 2 1 adjusted for the Ford Mexico order cancelled in Q annualized 14

15 2. MEASURING AND PROCESS SYSTEMS Highly profitable machinery niches with global presence High market shares in all businesses Positioned globally with a high degree of localization Strong footprint in China with local production, R&D etc. in m e 9M M 2017 Incoming orders Sales revenues EBIT EBIT margin 11.6% 12.8% % % 12.7% 1 ROCE 24.6% 24.9% 20-25% 20.5% % 2 1 Ecoclean business was sold as of March 31, Ca. 150m less orders and sales in FY 2017 vs. FY 2016 ²annualized 15

16 2. MEASURING AND PROCESS SYSTEMS Three strongly performing machinery niche players Balancing Balancing of rotating parts and components for many manufacturing industries, service centers Assembly & testing End of line assembly and testing equipment for the automotive industry Filling Filling of appliances (refrigerators, air conditioners and others) Filling automotive end of line 16

17 2. WOODWORKING MACHINERY AND SYSTEMS World market leader HOMAG Group acquired to capture automation trend in the industry Product range from stand-alone machines through to complete, automated production lines for efficient woodworking Major customers: Furniture industry, construction supplies and timber home construction Strong need for automation: Batch one production, fully digitized process from order to delivery 31% market share, biggest customer: IKEA (~ 5% of sales) in m e 9M M 2017 Incoming orders Sales revenues 1,058 1,165 1,250-1, , ,039 1,082 1,150-1, EBIT EBIT margin 3.5% 4.1% % 5.4% 7.2% ROCE 8.9% 11.3% 13-18% 13.5% % 1 ¹ annualized 17

18 2. WOODWORKING MACHINERY AND SYSTEMS Transformation for substantial value creation "Fix the house" 2016/2017 Innovation push Internationalization Standardization 2017/2018 Sustainable profitable growth 2018/2019 Optimize portfolio Standardization Efficiency improvement in functions and processes Develop project business ONE HOMAG Expansion China & USA Innovation & product modularization Localization of engineering & development ERP rollout Profitable project business Digitization (e.g. tapio) Expansion of product range (e.g. surface technology) Service excellence 18

19 2. WOODWORKING MACHINERY AND SYSTEMS Project business: Clear margin improvement since 2014 Final acceptance 02/ /2015 Final acceptance 09/ /2016 Final acceptance 09/ /2017 Absolute change of EBIT margin between budget and FAC Absolute change of EBIT margin between budget and FAC Absolute change of EBIT margin between budget and FAC EBIT margin according to budget EBIT margin according to budget EBIT margin according to budget 19

20 2. WOODWORKING MACHINERY AND SYSTEMS Enabling HOMAG to tap market potential in China China accounts for >40% of world furniture production HOMAG: China order share increased from 9% in 2014 to ~15% in 2017e Tier-1 and tier-2 sales split will turn from dominant tier 1 contribution towards higher tier-2 share in m HOMAG China order intake Measures Expansion of product range towards simpler and cheaper solutions & standardization of machines Expansion of manufacturing capacity to a production volume of ~150 m within the next years Rollout of new sales concept with strong key account management, also in China Service capacity increase due to machinery sales growth Increase local engineering & development capacity H

21 AGENDA 1. Executive Summary 2. Our five divisions 3. Group strategy 4. Group financials, markets and outlook 21

22 3. DÜRR STRATEGY 2020 Dürr strategy 2020 targets: up to 5bn sales, 8-10% EBIT margin, >30% ROCE 22

23 3. STRATEGY Innovation: R&D efforts focused on tangible customer value Cost per unit in a paint shop Reduction of resource consumption/emissions in paint shops of a German OEM 20% Energy Water VOC Paint² 2, % 3% 28% 8% Invest Energy Personnel Service Material Ø cost per unit in a current paint shop = ,800 1,600 1,400 1,200 1, % -71% 1-73% kwh/unit m³/unit kg/unit % l/unit 1 Compared to years ago 2 In spray booth only 23

24 3. STRATEGY Innovation: 4 smart dimensions e.g. on-demand energy supply for ovens, smart pumps with reduced maintenance efforts Smart Products Smart Processes e.g. virtual commissioning, virtual engineering, additive manufacturing e.g. predictive maintenance, documentation/maintenance via pad, internet, QR code Smart Services Smart Factories e.g. itac.mes.suite, ADAMOS IIoT platform, digital market places LOXEO and tapio 24

25 3. STRATEGY Innovation: Full line IIoT offering reinforces leading market position against pure software providers Founding partners ADAMOS GmbH: DMG Mori, Dürr, Software AG, Carl Zeiss, ASM Establish ADAMOS as industry standard On edge, on premise and in the cloud Leading edge technologies Large combined installed base "White label" solution allows for company-individual IIoT market places ADAMOS App Factory develops new apps ADAMOS: Adaptive Manufacturing Open Solutions Next step: Scaling up ADAMOS by integrating additional partners from the machinery industry 25

26 3. STRATEGY Innovation: 2 digital market places supported by ADAMOS Starting 01/2018 Since 10/2017 Market places for IIoT apps / digital services Suppliers' and competitors' machines can also be connected LOXEO and tapio use Dürr's/Schenck's/HOMAG's design customer loyalty No software vendor lock-in ADAMOS App Factory: full app pipeline high attractiveness Digital services are crucial to increase customers' Overall Equipment Efficiency (OEE) ADAMOS allows Dürr to operate this attractive business (and not to leave it to Siemens & Co.) 26

27 3. STRATEGY Globalization: High investments in network of locations reinforcement of local activities in m Capex Acquisitions Total Extension of global presence: Reinforcement of new markets but also investments in established markets of North America and Germany with good prospects 15 production, test and engineering centers: extended, modernized or newly built Campus concept transferred to key locations: more efficient processes, open communication and sustainable energy concept Capex spending in 2017e: m New Dürr Campus in Shanghai, China 27

28 3. STRATEGY HOMAG takeover as a blueprint for larger acquisitions Criteria for major acquisitions: Target areas: mechanical engineering, automation technology, measuring systems, environmental World market leadership, innovation leadership No restructuring cases but acquisition targets with earnings improvement and synergy potential Making use of Dürr s excellent positioning in global/emerging markets Corporate culture should fit Additional possible acquisitions: Bolt-on acquisitions in existing divisions Cross-functional technology acquisitions (e.g. software) 28

29 3. STRATEGY Service: Long-term target 30% of sales Sales revenues (in m) In % of group sales Strengthening service business and capacities in emerging markets (e.g. China, India, Mexico) with disproportionately high potential Service pricing, dedicated offerings, complaint management system, decentralized ware-housing, delivery speed 2016: Service sales +11%, reaching 27.5% of total sales despite group sales down 5% CAGR since 2008: 12% 29

30 3. STRATEGY Service Service type in % of revenues 17% Number of paint robots sold (cumulative figure) 12,000 Modifications and upgrades 10,000 42% 8,000 Spare parts and repairs 6,000 41% Maintenance, assessments, seminars 4,000 2,

31 3. STRATEGY Efficiency: Global processes, localization & portfolio optimization Further globalization of Dürr processes Global processes with full utilization of SAP/CAX/CRM/SharePoint Global IT platforms, integrated systems, one single database, continuous capex spending Expansion of sourcing offices and manufacturing in China, India, Mexico, Brazil Rigorous localization of Dürr products in the emerging markets Supplemental product portfolio with low-cost/low-end solutions; local added value Reduction of specifications Consistent portfolio optimization to improve profitability Aircraft assembly technology sold in 2014 French production facility sold in 2014 Austrian workshop closed in 2016 Small German HOMAG site closed in 2016 Cleaning machinery: sold in Q Energy efficiency streamlining started in H

32 AGENDA 1. Executive Summary 2. Our five divisions 3. Group strategy 4. Group financials, markets and outlook 32

33 4. EARNINGS ON THE RISE Net income strongly increased in m M M 2017 Incoming orders 2, , , , ,894.0 Orders on hand (end of period) 2, , , , ,605.3 Sales 2, , , , ,677.0 Gross profit on sales Gross margin (%) EBIT EBIT before extraordinary effects EBIT margin (%) EBIT margin (%) before extraordinary effects Net income adjusted for the Ford Mexico order cancelled in Q

34 4. CHANGED PREPAYMENT PATTERN Only a timing issue in 2017 in m M M 2017 EBT Other aggregated items of cash flow Net working capital changes Cash flow from operating activities Interest Capex Free cash flow NWC increase due to a changed payment pattern of customers (lower prepayments) Payments and milestones payments as planned; no prefinancing of customer plants 34

35 4. SOLID FINANCIAL RATIOS 12/31/ /31/ /31/ /31/ /30/2017 Equity in m Equity ratio in % Net financial status in m Net working capital in m DWC (days working capital) ROCE in % Equity ratio increased to 25.9% in 9M 2017; equity ratio of 30% as long-term goal Net financial status expected to reach m at year end 2017 ROCE for FY 2017 should stay in our target range of 30-40% 1 annualized 35

36 4. FURTHER GROWTH IN THE CAR MARKET Growth drivers until 2021: China, India, South East Asia, Russia & Iran in m units % Ʃ 92.2 Ʃ % % % CAGR +9% +5% Ʃ % % % % % % Others China Asia (w/o China) Europe Americas 1 Light vehicles production Source: PwC, Autofacts Last update: October

37 4. TRADITIONAL OEMS WITH HIGH INVESTMENTS 1 IN 2017 AND 2018 Capex mix could shift towards e-mobility, self-driving, connected cars in bn e 2018e BMW Daimler FCA Ford GM Renault PSA VW Total Capex spending incl. capitalized R&D, Source: Deutsche Bank 37

38 4. WOODWORKING MACHINERY MARKETS Strong growth in markets for rest of decade CAGR +4% in m 5,000 Ʃ 4,229 4,000 Ʃ 3,550 +8% , % 2,000 3,135 2,682 +4% 1, e HOMAG Sales Share Machinery for wooden houses Machinery for doors, windows, flooring Furniture machinery market 42% 5% Furniture production breakdown 12% 41% China US Germany Other 83% 14% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sources: CSIL, Euroconstruct, Holzbauverband, competitor data, regional expert evaluation 38 38

39 4. DÜRR GROUP OUTLOOK 2017 Stable outlook despite Ecoclean deconsolidation; sales and incoming orders outlook conservative in m 4,000 3,500-3,600 3,600-3, Sales 3,500 3, Incoming orders 2,500 2, Gross margin (in %) EBIT margin (in %) 1,500 1, e 0 1) Including book gain Ecoclean sale, without book gain: % 39

40 4. FINANCIAL CALENDAR 01/08/2018 German Investment Seminar 2018, New York 01/11/2018 ODDO BHF Forum 2018, Lyon 01/16/2018 UniCredit / Kepler Cheuvreux German Corporate Conference, Frankfurt 02/28/2018 Preliminary figures for fiscal 2017: Press conference, Stuttgart 03/22/2018 Publication annual report 2017 (no conference call) 03/22/2018 MainFirst Corporate Conference, Copenhagen 05/09/2018 Annual General Meeting, Bietigheim-Bissingen 05/16/2018 Interim statement for the first quarter of /09/2018 Interim financial report for the first half of 2018 Dürr Corporate Communications & Investor Relations Contact Günter Dielmann guenter.dielmann@durr.com Mathias Christen mathias.christen@durr.com Stefan Tobias Burkhardt stefantobias.burkhardt@durr.com

41 Appendix 41

42 NEW MANAGEMENT BOARD STRUCTURE Ralf W. Dieter CEO Carlo Crosetto CFO Dr. Jochen Weyrauch Member of the Board Paint and Final Assembly Systems Woodworking Machinery and Systems Application Technology Public Relations Human Resources Research and Development Quality Internal Auditing Corporate Compliance Finance / Controlling Investor Relations Risk Management Legal Affairs / Patents Global Sourcing Corporate Social Responsibility Measuring and Process Systems Clean Technology Systems Information Technology Corporate Development (including M&A) 42

43 KEY DATA OF THE SHARE WKN / ISIN / DE Bloomberg / Reuters Due / dueg Class of shares Common bearer shares Index Category e.g. MDAX (Performance); CDAX (Performance); FAZ Index, Stoxx 600 Trading centers / stock exchange Capital stock Stuttgart (regulated market) Frankfurt (regulated market) Several open markets 88.6 million Number of shares 34,601,040 Market capitalization as of 2017/12/31 3,687 m 43

44 SHAREHOLDER STRUCTURE/DIVIDEND POLICY Free float at 71.2% % Heinz u. Heide Dürr Stiftung Heinz Dürr GmbH 71.2% 1 3.5% Institutional and private investors Thereof the Goldman Sachs Group: 4.7% 2 Thereof Deutsche Bank AG: 4.7% 2 Thereof Morgan Stanley: 4.0% 2 Thereof Deutsche Asset Management: 3.2% 2 Thereof Alecta Pensionsförsäkring: 3.2% 2 Thereof AXA S.A.: 3.0% 2 Thereof Dürr Board of Management: 0.2% 2 1 Free float calculated according to Deutsche Börse AG 2 According to the relevant laws 44

45 SHARE PRICE DEVELOPMENT Dürr indexed DAX indexed MDAX indexed Remarkable long-term outperformance compared to DAX & MDAX Dürr highly benefited from China boom due to its strong emerging markets presence HOMAG takeover in 2014 took some time to be understood, but then levered the Dürr share. In 2015, China fears impacted the stock markets and Dürr, too. Skeptical view on Dürr in early 2016 changed with strong quarterly results Digitization as further value driver 45

46 DIVIDEND POLICY Earnings per share Dividend per share in Dividend policy: 30-40% payout ratio Total payout Payout ratio 0.0m 5.2m 20.8m 38.9m 50.2m 57.1m 64.0m 72.7m - 32% 32% 35% 38% 38% 38% 39% Share buy-back approval on annual shareholder meeting 2016, possible in

47 ANALYSTS VIEW ON DÜRR 38% 14% 48% 23 equity research analysts cover Dürr ø Target Price: Range of targets between 75 and % recommend to buy or hold the Dürr share Buy Hold Sell 47

48 FIXED INCOME Key data Bond / Bonded loan ( Schuldscheindarlehen ) Bond Bonded loan ( Schuldscheindarlehen ) WKN / ISIN A1YC44 / XS Issued volume EUR 300 million EUR 300 million Coupon 2.875% 1.6% in average Maturity / Repayment April 3, , 7, 10 years (issued March 2016) Nominal value EUR 1, Stock exchange / listing regulated market Luxembourg Stock Exchange, unofficial trading German stock exchanges - Rating Since 2010 it does exist neither a company rating nor a bond rating - Syndicated loan held by Dürr AG: 465 million Bilateral credit facilities of a smaller volume and liabilities from finance leases 48

49 EQUITY STORY Good reasons to be invested in Dürr World market leadership: In ~95% of its product portfolio with market shares between 30 and 60% high entry barriers Service potential: Increased installed base is starting point for a growing and profitable service business. Market positioning: About 40-50% of the business volume from emerging markets. Best positioned in competition. Growth: Organic growth expected at ~3% p.a.. Further acquisitions should contribute to the expansion. Technology leader: Dürr enables customers to reduce costs per units and thus to increase production efficiency. Industry 4.0 / smart factory: Leading due to intelligent solutions (e.g. ADAMOS, MES) Value creation: ROCE exceeds cost of capital significantly ROCE 2016 at 41.1%, cost of capital 2016 at 7.2%. Continuity: Continuous improvement of earnings since 2010; 6th consecutive record year with steady increase of dividend. 49

50 VALUE MANAGEMENT Key figures FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Incoming orders 2, , , , ,701.7 Sales revenues 2, , , , ,573.5 EBIT Operating cash flow Free cash flow ROCE EVA The most important performance indicators at Dürr: Incoming orders Sales EBIT ROCE (EBIT/Capital employed). Cash flow from operating activities Free cash flow Economic Value Added (EVA) Also non-financial performance indicators tracked, e.g. Employee and customer satisfaction Training/education Ecology/sustainability R&D/innovation 50

51 INVESTOR RELATIONS PRESENTATION Corporate Communications & Investor Relations Dürr AG Bietigheim-Bissingen, January