Investor Presentation Schaltbau Holding AG

Transcription

1 Investor Presentation Schaltbau Holding AG May 2018 THE SMART EVOLUTION OF MOBILITY Picture credits: istockphoto LP

2 Executive Board Investor Presentation May Bringing Schaltbau back on track experienced management team Our common objectives Dr Albrecht Köhler Thomas Dippold Dr Martin Kleinschmitt Return to profit CEO (since 19 May 2018) CFO (since Jan 2017) CRO (since Aug 2017) Stick to stringent cost management Freelance interim CEO / COO ( ) Deputy CEO GAZ Grp. ( ) Managing Director Knorr Bremse rolling stock bus. unit ( ) Leading general management and operations roles at Dt. / Daimler Benz Aerospace ( ) CFO Faber-Castell AG ( ) CFO Semikron International ( ) Head of Controlling SCHOTT AG ( ) Partner at Noerr LLP and CEO Noerr Consulting AG Vice Chairman of the Board SAF- HOLLAND S.A. Interim management of various SMEs as CFO/CRO (since 2001) CFO Herlitz AG ( ) Secure financing capabilities

3 Business and Market Overview

4 End markets Selected products Segments The Schaltbau Group at a glance Investor Presentation May Business overview Mobile Transportation Technology Components Stationary Transportation Technology ~52% (1) ~25% (1) ~23% (1) (2) Disposed Doors and boarding systems for trains, stations, buses and commercial vehicles Interior fittings, information, surveillance and communication systems, master controllers, driver desk equipment and sanitary systems for rolling stock High- and low-voltage components for rolling stock, electric vehicles and other applications Master controllers and driver desk equipment Platform screen doors, point heating systems, level crossing systems, shunting equipment, signal technology and tunnel security lighting Industrial brakes for container cranes and wind turbines Automotive Rolling Stock Industry Infrastructure (1) Source: Company information, segmental split based on FY 2017 financials (2) Put up for sale in November 2017

5 Comments Key products Subsidiaries Key operating entities Investor Presentation May Snapshot of Schaltbau Connect Contact Control Group c. 25% of Group sales (1) Connectors Switches Contactors Master controller & driver desk Brake control High share of international sales, broad customer distribution Performed very well in 2017 and Q1 2018, high order intake with strong and sustainable margins Highly efficient operations Has developed from a pure component supplier to an application specialist providing components, assembly and service Transfer of existing know how from rail applications into new markets such as switchgear for renewable energy power plants (1) FY 2018 forecast, pre consolidation

6 Comments Key products Subsidiaries Key operating entities Investor Presentation May Snapshot on Schaltbau Bode Group c. 50% of Group sales (1) Rail door systems Interiors Established #3 player in an oligopolistic market, strong train door systems quality track record Performance improved significantly in Q and Q1 2018, strong order intake Largely inefficient operations with restructuring roadmap established Service organisation with high flexibility Has expanded customer range by leveraging train door system experience into bus and automotive applications such as Deutsche Post DHL s e- mobility vehicle StreetScooter (1) FY 2018 forecast, pre consolidation

7 Comments Key products Subsidiaries Key operating entities Investor Presentation May Snapshot of Pintsch Bamag Group c. 17% of Group sales (1) Level crossing Marshalling yards Axle counting Point heating Established top 3 player in various oligopolistic submarkets, some of which are quite small though (e. g., conveyor technology for hump yards, platform screen doors); also, currently Pintsch Bamag s solutions lack technological leadership, with significant investments necessary to maintain long-term competitiveness Performance improved significantly in Q and Q1 2018, order intake shows volatility Partially inefficient operations with restructuring roadmap established, improvement of terms & conditions with large customers ongoing Rail infrastructure market offers significant growth potential and major innovation opportunities related to digitalisation and interconnection of field elements and systems (e. g., point diagnostics) (1) FY 2018 forecast, pre consolidation

8 Market and competitive environment Investor Presentation May Megatrends drive sustainable growth in global rail markets MobileTransportation Technology / Components Vehicles Stationary Transportation Technology Infrastructure & Rail Control Services Megatrends Digitisation / Automation Urbanisation All common railway vehicles Railway crossings, rail control and signal technology for tracks, trains and control centers Maintenance incl. spare parts and renovation Emission reductions Connectivity Electrification / e-mobility Market growth (1) : ~1.9% Market size: ~ 60bn Market growth (1) : ~2.8% Market size: ~ 52bn Market growth (1) : ~2.8% Market size: ~ 73bn Safety Regional expected market growth (1)(2) Western Europe: ~3.0% Asia / Pacific: ~2.6% NAFTA: ~2.2% CIS: ~1.1% Eastern Europe: ~3.1% Africa / ME: ~2.3% Latin America: ~1.8% Globalisation / China Regulation and Liberalisation Source: Unife, Roland Berger (1) Average annual market growth from until over six years (services for rail control not considered) (2) Vehicles, rail control and services; infrastructure and services for rail control not considered

9 Market and competitive environment Investor Presentation May Railway market with oligopolistic supplier structure in many segments Overall rolling stock OEMs in the market Selected suppliers in the Schaltbau railway market / (3) 14% bn (1) 5% 4% 4% 3% Other OEM (2) Other 70% Source: Company information (1) Revenue 2015; (2) Incl. Hitachi Rail, Stadler, CAF, Pesa. ABB and Thales Transport not considered (mainly in infrastructure or control command and signalling technology); (3) Pre Wabtec takeover 10.

10 Striving for sustainable and profitable growth Management Agenda 2017 & Q fulfilled

11 Key developments Investor Presentation May Management agenda 2017 & Q fulfilled: higher financial flexibility for ongoing restructuring activities and organic growth in core business areas Stabilisation of financial situation Major cost reduction programmes initiated Strengthening of future competitiveness Stabilisation of operative business Divestiture of non-core industrial brakes business (Pintsch Bubenzer) effective 1 March 2018 Two successful capital increases in May 2017 and February 2018 Reduction of short- and midterm financial debt Optimisation of production and logistic processes Strict focus on reduction of personnel cost and material expenses by improving purchasing conditions Reduction of complexity of Group organisation, improved steering and limitation of risks Restructuring agreement in Stationary Transport Technology for 2018 and 2019, total savings of 4 million Investments mainly into mobility/logistics applications and further rolling stock development Digitisation: product development to be increasingly aligned towards customers needs Extended business model: services for the entire lifecycle of rolling stock and commercial vehicles Focus on local presence in international markets Strong order intake, revenue and EBIT development since Q Orders at hand at the end of Q near record level achieved at year-end 2017

12 Financials FY 2017 Investor Presentation May Sales and earnings targets 2017 (as adjusted over time) achieved Sales +1.5% vs million Order intake +7.8% vs million EBIT 2.4 million before one-off effects One-off effect of revaluation of Schaltbau Sepsa: Goodwill impairment Schaltbau Pintsch Bubenzer: million reported million -1.1 million

13 Financials FY 2017 Investor Presentation May Strong order intake in FY 2017 mainly due to contribution from Mobile Transportation Technology Order intake grows by 7.8% Mainly driven by Mobile Transportation Technology, also impacted by a full-year contribution from Schaltbau Sepsa (consolidated since 30 September 2016) and relocation of the Refurbishment business (was part of Stationary Transportation Technology before) Very positive order intake development in Components Significant decrease of order intake in Stationary Transportation Technology due to lower order placements in Germany as well as a more conservative approach on international projects Order book increases by 18.3% to million (end of 2016: million) Order intake in million Mobile Transportation Technology Stationary Transportation Technology Components

14 Financials FY 2017 Investor Presentation May FY 2017 sales increase in line with management expectations Sales up by 1.5% Significant increase in second half of 2017 mainly due to completion of major projects Slight decrease in comparable sales of 4% mainly driven by strong decline in industrial brakes volume (Pintsch Bubenzer) and a lower volume in level crossing technology Full-year contribution of Schaltbau Sepsa offsets organic decline Sales in million Sales 2017 by market in % Germany Germany Rest of Europe Rest of Europe Rest of World Rest of World Mobile Transportation Technology Stationary Transportation Technology Components

15 Financials FY 2017 Investor Presentation May Extraordinary Schaltbau Sepsa revaluation impacts Group EBIT in 2017 EBITDA improved year-on-year Reported EBIT at million, EBIT margin at -4.4% One-off effect of revaluation of Schaltbau Sepsa amounting to million Goodwill impairment Schaltbau Pintsch Bubenzer amounting to -1.1 million Additional expenses for restructuring activities of around 8 million EBIT and EBITDA in million % +3.2% -2.8% % EBIT EBITDA -23.0

16 Financials FY 2017 Investor Presentation May Net result 2017 impacted by higher financing costs Strong decline in Schaltbau Group s net profit mainly driven by: Decreased EBIT Higher interest expenses due to higher interest margins as well as higher drawing of existing credit lines 20,0 10,0 0, per share Net profit in million per share One-time effects related to refinancing activities -10,0-20, ,0-40,0-50,0-60, Group net profit Schaltbau Shareholders

17 Financials Q Investor Presentation May Q order intake remains at a high level Reduction in order intake by 12.6%, 21.6 million Order intake in million Strong performance in Mobile Transportation Technology; Q order intake was significantly impacted by extraordinary order intakes at Schaltbau Bode Order intake development in Components and Stationary Transportation Technology remains solid Order book at a high level of million (end of 2017: million) Q Q Mobile Transportation Technology Stationary Transportation Technology Components

18 Financials Q Investor Presentation May Sales growth in Q driven by increases in Mobile Transportation Technology and Components Sales grow by 12.3% vs. Q1 2017, an increase of 13.6 million in absolute terms Significant volume increase in Mobile Transportation Technology (in particular at Schaltbau Bode) Strong sales volume development in Components Sales in Stationary Transportation below prior year, sales like-for-like slightly below Q % of total sales in Q were generated in European countries other than Germany, and 20.1% outside of Europe Sales in million Q Q Q Q like-for-like* like-for-like* Mobile Transportation Technology Stationary Transportation Technology Components * Excluding Pintsch Bubenzer and Sepsa

19 Financials Q Investor Presentation May Significant EBIT improvement in Q EBIT increases by 10.5 million to 2.0 million; EBIT margin at 1.6% Primarily driven by higher sales volume vs Q and a positive impact from favorable product mix in Components Comparable EBIT up by 6.6 million EBIT margin -7.7% EBIT margin like-for-like* -5.2% EBIT in million EBIT margin 1.6% 2.0 EBIT margin like-for-like* 1.7% 1.9 Earnings per share at (Q1 2017: -2.00) Q Q EBIT EBIT like-for-like * Excluding Pintsch Bubenzer and Sepsa

20 Priorities until 2020 Investor Presentation May Restructuring roadmap Schaltbau: Major milestones successfully achieved further road to go Create financial headroom Achieve satisfactory debt level Ensure profitability on market level Stabilize operational performance Selective investments Step up investments in market opportunities and digital business models EXPLOIT GROWTH OPPORTUNITIES REDUCE COMPLEXITY REDUCE COSTS REDUCE DEBT

21 Restructuring in detail Investor Presentation May Comprehensive restructuring measures initiated Operational restructuring measures Subsidiary Selected measures Current status Group Group-wide procurement optimization Holding Mobile Transportation Technology Components Stationary Transportation Technology Personnel adjustments, restructuring of central functions (e.g. Controlling) Expansion of after sales business, new business with composites for interiors Purchase price reduction & quality management Restructuring of production concept & production control ( state-of-the-art production ) General purchase price reductions Efficiency increase / reduction of personnel cost ratio Raising value for the customer through expanded module offering Execution of order for >300 trains (Italian prototype) Expansion of services & after-sales business Planned expansion of refurbishment & services business Improvement of terms and conditions with large customers Efficiency increase in production through lean management Relocation of production site Sprockhövel to Dinslaken (end of 2019)

22 Strategic Agenda

23 Strategic agenda Investor Presentation May Goals of Schaltbau Group 1 Maintain a leading market position 2 3 Focus on profitable sustainable business activities Implement restructuring concept to increase profitability Sustainable and profitable growth 4 Create new business opportunities via collaboration between product areas and business segments 5 Increase customer focus and strengthen client relationships

24 Strategic agenda Investor Presentation May Main pillars of Schaltbau Group strategic agenda Sustainable and profitable growth Technical innovation, quality and system integration Operational excellence (performance culture) Comprehensive market and customer handling (customer focus) Systematic lifecycle business models incl. After Sales / Service Internationalisation Think global / Act local Solid financing to enable strategic and operational flexibility Corporate culture und governance / Qualified employees / Ready-for-change organisational culture

25 OEMs Strategic agenda Investor Presentation May Strategic positioning going forward 1 Regions 2 Products 3 Customers 4 Operations DACH and rest of Europe as core markets (c. 70% of revenue) Representation in China via several JVs and customer relations of German subsidiaries (c. 17% of revenue) Increasing importance of the US Regional production and R&D activities to react to market changes and meet increasing local content requirements Interconnected (digital) products which communicate with each other Common communication standard for all solutions as prerequisite towards the development of smart products Leverage product know-how / applications to new business areas (e.g. intelligent door systems for automotive division) Expansion of business with railway and automotive OEMs in Mobile Transportation Technology Maintain strong relationship with Deutsche Bahn in infrastructure business Customer relations exist on various levels as well as with different companies of the Group coordination / development under Key Account Management Continuous efficiency improvements along the entire value chain Targeted production optimisation through implementation of lean production approaches Further efficiency advantages through consolidation of productions Europe as core market with additional bases in China and USA Supplier with digital product portfolio Focus on railway and automotive industry Achieve operational excellence throughout the value chain 5 Management principles Decentralised entities with enhanced management/leadership structure (SMC) Greater transparency, more standardised coordination throughout the Group

26 Guidance Investor Presentation May Sales guidance 2018 Sales Guidance for 2018 with a range of million (without Sepsa and taking into account sale of Pintsch Bubenzer in February 2018) in million million Organic Growth of around million expected for FY 2018: Strong growth in Mobile Transportation driven by Schaltbau Bode Group Positive sales outlook for Component business Sales FY 2017 Pintsch Bubenzer* Sepsa** Organic growth Sales guidance FY 2018 * Adjusted by FY 2017 and 01-02/2018 sales ** Adjusted by FY 2017 sales

27 Guidance Investor Presentation May Targets 2018 Solid order book from stabilised order intake in 2017 serves as stable basis for profitable growth Initial positive effects from restructuring measures implemented in the financial year 2017 expected to contribute to an improvement in EBIT margin: Increase in profitability through optimized production processes and improved purchase conditions should lead to a decline in material and personnel expenses Non-operating special effects from extraordinary impairments arising out of restructuring measures or disposal of subsidiaries will possibly continue to occur in 2018 Outlook (in million) Guidance FY 2018 * 2017 Order intake ** Sales ** Mobile Transportation Technology Stationary Transportation Technology Significant improvement Significant decline Components Slight increase EBIT margin Around 3% ** 0.5%*** * Compared to FY 2017 ** Excluding Pintsch Bubenzer and Sepsa *** Excluding extraordinary items

28 Investor Presentation May Schaltbau Vision 2020 Disposal of non-core business Operational excellence throughout the organization 2020 Overall increased share of service and international revenues State-of-the-art product and service offering in terms of quality and innovation Our clear goal is to focus Schaltbau Group on its strategic core competencies and to consistently increase profitability. That is why we intend to dispose non-core business areas as well as those which are not sustainably profitable. These alignments should result in reduced revenues and simultaneously increased profitability until 2020, enabling Schaltbau to return to historical profitability levels and future growth.

29 Backup Financial Figures FY 2017 and Q1 2018

30 Financials FY 2017 Investor Presentation May Mobile Transportation Technology: FY 2017 growth driven by consolidation effects Order intake up 70.2 million vs Positive development at rail door systems as well as interiors for rail vehicles Significant new orders, e. g. from Hitachi Rail Italy for delivery of 39 vehicles including options of up to 300 vehicles Sales growth of 43.1 million vs Full-year contribution from Schaltbau Sepsa (+ 19 million) and reclassification of Schaltbau Refurbishment (+ 12 million) Organic business growth at Rawag and Alte EBIT margin of -10.0% vs. +2.3% in 2016 Revaluation of Schaltbau Sepsa ( 24.2 million) Negative operating contribution from Schaltbau Sepsa Group ( -8.7 million) and other foreign subsidiaries almost compensated by positive margin at Bode and Rawag Order intake and revenue in million % +19.4% Order intake Revenue EBIT in million EBIT * * Operating EBIT 2017: -2.2 million; effect from revaluation of Schaltbau Sepsa: million

31 Financials FY 2017 Investor Presentation May Stationary Transportation Technology: Weak order intake and revenue development in FY 2017 Significantly lower order intake volume Decline in new business with level crossing technology as well as railway signal technology (axle counting and shunting technology) Sales decrease by 28.8 million vs Mainly driven by rail infrastructure products and brake systems Shift of Refurbishment business ( 11.9 million) to MTT EBIT margin of -4.6% (FY 2016: -18.8%) Cost-cutting measures compensate negative volume effects to just a small extent Impairment at Schaltbau Pintsch Bubenzer ( -1.1 million) Provisions for contingent losses high in 2016 ( 16.4 million) Order intake and revenue in million % -19.4% Order intake Revenue EBIT in million EBIT

32 Financials FY 2017 Investor Presentation May Components: Strong business performance in FY 2017 Order intake clearly improved ( million) Higher order intake volume for snap-action switches for rail vehicles both in the new vehicles business and in aftersales business Positive development at SPII in Italy; stabilisation of business in China despite investment shift from locomotives and passenger coaches to metro systems; North America below prior year due to project delays Sales decrease of 6.8 million vs Significantly lower revenue at SPII partially offset by sales increases at Schaltbau GmbH EBIT margin improves to 16.4% (2016: 12.5%) Moderate sales decrease overcompensated by positive product mix effects and improved cost structure Order intake and revenue in million % -4.9% Order intake Revenue EBIT in million % EBIT

33 Financials FY 2017 Investor Presentation May Slight decrease in Group assets in FY 2017 due to divestiture effects Non-current assets 40.0 million below prior year, reduction of both tangible and intangible assets Depreciation on Schaltbau Sepsa due to classification as assets held for sale ( 24.2 million) Classification of Pintsch Bubenzer as assets held for sale ( 16 million) Foundation of joint venture Zhejiang Yonggui Bode Transportation Equipment in China; payment of initial capital contribution Current assets significantly higher ( million): Classification of Schaltbau Sepsa and Schaltbau Pintsch Bubenzer as assets held for sale 15.6 million cash inflow from capital increase in May 2017 reported under other receivables and assets Assets in million End of End of Non-current Current

34 Financials FY 2017 Investor Presentation May Equity & liabilities: negative group result impacts equity in FY 2017 Higher non-current liabilities due to restructuring of financial debt: syndicated loan line amounting to million and debenture stock classified as long-term liabilities Current liabilities down to million due to the aforementioned reclassifications; bridge financing of 25.0 million and current account liabilities classified as short-term Equity decreases by 36.5 million despite 15.5 million capital increase, due to negative net group result; equity ratio of 15.6% (end of 2016: 23.3%) Net financial debt increases to million (end of 2016: million) Leverage (net financial debt/annual EBITDA) at 7.9 (2016: 9.1); mid-term goal: Further reduction of net financial debt relative to EBITDA to reach a leverage figure around 3 In Q1 2018, the situation improved significantly, driven by the sale of Pintsch Bubenzer and a major equity injection Liabilities in million End of End End of of Equity Non-current Current

35 Financials FY 2017 Investor Presentation May Positive operating cash flow in FY 2017 Positive operating cash flow ( million) reflects stringent working capital management (operating cash flow in FY 2016: million) Cash outflow for investments increases vs ( million), proceeds from capital increase deposited on escrow account ( 15.6 million) Financing cash flow 2017 mainly reflects: 15.5 million cash inflow from capital increase and 4.1 million from new loans Cash flow 2017 in million EUR Thereof: 15.5 m. EUR escrow account for debt redemption 6.0 million repayment of loans and 11.4 million cash outflow for interest payments ,7-0, Cash EoFY 2016 CF op. CF invest CF fin. Currency Cash EoFY 2017 Free cashflow= CF op.+cf invest.

36 Financials Q Investor Presentation May Mobile Transportation Technology: Q sales growth driven by positive development at Schaltbau Bode Order intake down 21.4 million, but still above expectations Prior year s figure includes significant major orders, e.g. for Schaltbau Bode (Siemens and Hitachi) Positive development at Schaltbau Rawag Sales growth of 12.3 million Significant increase driven by Schaltbau Bode group EBIT at -0.3 million EBIT performance significantly improved Q performance impacted by negative operating contribution from Schaltbau Alte (additional temporary workers, warranty expenses and ramp-up costs) Further improvements in productivity expected in the coming quarters * Excluding Pintsch Bubenzer and Sepsa Order intake and sales in million % 20 0 Order intake Q Q Sales Q Q like-for-like* Sepsa 1,0 0,5 0,0-0,5-1,0-1,5-2,0-2,5-3,0-3,5-4,0-4,5-5,0-5,5-6,0 EBIT in million EBIT EBIT like-for-like* Q Q1 2018

37 Financials Q Investor Presentation May Stationary Transportation Technology: Stabilisation and first improvements in Q Order intake stable Sales decrease by 6.3 million mainly driven by Pintsch Bubenzer sales; sales like-for-like down by 1.3 million Lower sales volume at Pintsch Bamag due to push-outs in rail infrastructure products (PSD in Brazil, Denmark) EBIT remains on a negative level Negotiations with workers counsel on restructuring agreement with a positive outcome, total savings of 4.0 million EUR for 2018 and 2019 Further restructuring benefits will materialize in the quarters to come, estimated EBIT level for FY 2018 significantly favorable in comparison to FY 2017 * Excluding Pintsch Bubenzer and Sepsa Order intake and sales in million % Order intake Q Q Sales Q Q like-for-like* Bubenzer 2,5 2,0 1,5 1,0 0,5 0,0-0,5-1,0-1,5-2,0-2,5-3,0-3,5-4,0-4,5-5,0-5,5-6,0 EBIT in million EBIT EBIT like-for-like* Q Q1 2018

38 Financials Q Investor Presentation May Components: Ongoing strong operational performance in Q Order intake remains on a high level; book-to-bill at 1.10 Sales strongly improved by 7.7 million Ongoing high demand of connectors, snap-action switches and contactors High order book indicates positive sales level for fiscal year 2018 EBIT improves to 8.3 million EBIT exceeds expectations; strong development driven by high sales volume and favorable product mix Strong EBIT level expected to be maintained throughout 2018 Order intake and sales in million % EBIT in million Order intake Sales Q Q EBIT

39 Financials Q Investor Presentation May Equity base strengthened substantially in Q1 2018, net debt reduced significantly Equity increases by 40.1 million following the successful completion of the capital increase in February 2018 and a significantly improved net group result; equity ratio at 26.9% at the end of Q (up from 15.6% at year-end 2017) Reduction of net debt by 54.3 million in Q Repayment of 25.0 million in bridge financing as well as repayment of deferred loan and interest liabilities Additional repayment of current account liabilities Restructuring of equity and net debt in million ,8% 60-34,3% Equity 0 Net debt 31/12/ /03/ /12/ /03/2018

40 Financials Q Investor Presentation May Cash flow in Q is affected by sale of Pintsch Bubenzer, capital increases and higher inventories Increase in working capital is mainly driven by higher inventories Change in cash outflow for investments relates mainly to the payments received from the sale of Pintsch Bubenzer as well as cash receipts from escrow account Financing cash flow in Q mainly reflects: 46.6 million cash inflow from capital increase in million Free cash flow Cash flow from financing million cash outflow due repayment of loans Cash flow Liquid funds (at period-end) Q Q1

41 Financial calendar and contact details 2018 Annual General Meeting of Shareholders Interim Report H Quarterly Statement 9M June 8 August 8 November IR contact Wolfgang Güssgen Head of IR & CC guessgen@schaltbau.de T Schaltbau Holding AG Hollerithstrasse Munich Germany Picture credits: istockphoto LP

42 Appendix Investor Presentation May Disclaimer This presentation contains forward-looking statements. These statements are based on the current views, expectations and assumptions of the management of Schaltbau Holding AG and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those described herein due to factors affecting Schaltbau Holding AG such as, among other things, changes in the general economic and competitive environment, capital market risks, currency exchange rate fluctuations and competition from other companies, and changes in international and national laws and regulations, in particular with respect to tax laws and regulations. Schaltbau Holding AG does not assume any obligation to update any forward-looking statements. The information contained in this presentation is for background purposes only and does not purport to be full or complete. No reliance may be placed, for any purpose, on the information contained in this announcement or its accuracy or completeness. The information in this presentation is subject to change.