Full Year 2010 Aalberts Industries more than doubles earnings per share
Today s agenda Headlines 2010 Profile Objectives Financial review Operational developments The Aalberts Industries share Outlook Questions and answers 2010FY 2
Headlines 2010 Revenue 20% to EUR 1,683 million Organic revenue growth 12% (at constant exchange rates) Added-value margin from 58.9% to 59.7% Operating profit (EBITA) 82% to EUR 179.9 million Net profit 116% to EUR 117.3 million Net profit per ordinary share 116% to EUR 1.10 Decrease in net debt; sharp reduction in leverage ratio to 2.3 Industrial Services very profitable Flow Control retains margins and strengthens market positions Acquisition Conbraco Industries in the US 2010FY 3
Profile Aalberts Industries N.V. Decentralised structure with significant operational management responsibilities Small holding; 13 employees Small team of group managers reporting to the holding INDUSTRIAL SERVICES 30% of total revenue Products, systems and processes for high grade industries FLOW CONTROL 70% of total revenue Products & systems to distribute and regulate liquid and gas flows 2010FY 4
Markets Industrial Services Products, systems & processes for high-grade industries Semiconductor Automotive Medical Aerospace Sustainable energy Metal & electro industry Precision engineering and other industries 2010FY 5
Markets Flow Control Products & systems to distribute and regulate liquid and gas flows New-build private residences Social housing Commercial buildings Renovation & Maintenance Construction Fire protection Energy efficiency District heating Irrigation Laboratory Beer & soft drink and other industries 2010FY 6
Objectives
Objectives Stable growth in earnings per share Continuous growth in revenue Organic growth and acquisitions Wide spread of results Lowering risk for shareholders Leading market positions in specific market segments Solid balance sheet ratios Total equity 30% of total assets Interest cover ratio 4 Gearing 1.5 2010FY 8
Financial Review
Financial headlines Consolidation of Conbraco as from 1 July 2010 Benefit from the high operational leverage in Industrial Services Stable margins in Flow Control despite strong raw material price increases and acquisition of Conbraco Limited increase of working capital Lower net interest expense due to reduced leverage ratio Net debt decreased despite acquisition of Conbraco Higher effective tax rate due to country mix 2010FY 10
Income statement in EUR million FY 2010 FY 2009 Δ Revenue 1,682.8 1,404.9 20% Added value 1,004,2 827,6 21% Operating profit (EBITDA) 248.2 168.8 47% Depreciation (68.3) (69.9) (2%) Operating profit (EBITA) 179.9 98.9 82% Net interest expense (26.7) (32.3) (17%) Other net finance cost (0.8) (2.3) Taxes (33.1) (9.5) Minority interest (2.0) (0.5) Net profit before amortisation 117.3 54.2 116% 2010FY 11
Balance sheet in EUR million ASSETS FY 2010 FY 2009 Goodwill 465.0 446.4 Other intangible fixed assets 144.2 138.4 Property, plant and equipment 530.4 493.6 Deferred income tax assets 20.6 19.7 Non-current assets 1,160.2 1,098.1 Inventories 386.7 298.4 Trade receivables 199.9 153.7 Other current assets 30.6 27.6 Cash and cash equivalents 0.1 0.1 Current assets 617.3 479.8 TOTAL ASSETS 1,777.5 1,577.9 2010FY 12
Balance sheet in EUR million EQUITY AND LIABILITIES FY 2010 FY 2009 Total equity 745.7 626.5 Non-current borrowings 414.6 468.4 Employee benefit plans 26.6 27.9 Deferred income tax liabilities 51.1 38.2 Other provisions and long term liabilities 21.1 5.7 Non-current liabilities 513.4 540.2 Current borrowings 49.8 54.0 Current portion of non-current borrowings 129.4 108.2 Trade and other payables 231.3 161.0 Other current liabilities 107.9 88.0 Current liabilities 518.4 411.2 EQUITY AND LIABILITIES 1,777.5 1,577.9 2010FY 13
Cash flow statement in EUR million FY 2010 FY 2009 Operating profit (EBITDA) 248.2 168.8 Provisions & other movements - (2.8) Changes in inventories (41.6) 66.6 Changes in trade & other receivables (23.9) 27.3 Changes in trade & other payables 52.7 (19.4) Changes in working capital (12.8) 74.5 Cash flow from operations 235.4 240.5 2010FY 14
Cash flow statement in EUR million FY 2010 FY 2009 Net finance cost paid (27.7) (38.2) Income taxes paid (22.3) (6.1) Acquisitions (72.3) (1.8) Capital expenditure (55.9) (46.8) Proceeds from borrowings 72.3 0.2 Repayments of borrowings (118.8) (83.1) Dividend paid (6.7) (10.7) Other movements (2.2) (1.8) Net cash flow 1.8 52.2 2010FY 15
Key figures in EUR million FY 2010 FY 2009 Δ EBITA as a % of revenue 10.7 7.0 Effective tax rate in % 23.7 18.4 Earnings per ordinary share (EUR x 1) 1.10 0.51 116% Average number of shares issued 106.7 106.1 1% Number of employees (x 1) 11,536 9,999 15% Capital expenditure 63.2 45.1 40% Interest cover (12 months-rolling) 10.4 5.8 Total equity 745.7 626.5 19% Total equity as a % of total assets 42.0 39.7 Leverage ratio (12 months-rolling) 2.3 3.4 Net debt 593.7 630.6 (6%) Net debt / Total equity (Gearing) 0.8 1.0 2010FY 16
Operational developments
Spread of revenue in EUR million Germany Benelux United States France United Kingdom Eastern Europe Scandinavia Spain & Portugal 2010 2009 2008 2007 Other European countries Other countries outside Europe 0 50 100 150 200 250 300 350 2010FY 18
Spread of revenue per activity in 2010 in EUR million Germany Benelux United States France United Kingdom Eastern Europe Scandinavia Spain & Portugal Other European countries Other countries outside Europe 0 50 100 150 200 250 Flow Control Industrial Services 2010FY 19
Industrial Services Very profitable
Industrial Services headlines Rapid recovery of profitability Organic revenue 27.9% (at constant exchange rates) EBITA margin to 12.5% Market conditions Semiconductor industry Automotive industry Precision engineering Medical segment Turbine industry Defense industry Energy industry Strong demand, also for new generation machines Strong recovery in almost all markets Healthy recovery Market positions expanded; new products launched Favourable developments Stable Stable 2010FY 21
Industrial Services geographical developments Area UK & Spain France Germany Poland Netherlands China United States Developments Heat treatment activities increases Reinforced sales organisations & strong recovery in several markets Strong growth in premium automotive segment & introduction of new products/processes Strong growth in volume of surface treatment for piston parts Strong growth, especially in semiconductor industry Successful in fine precision stamping parts for metal/electronics industry Strong growth in vacuum brazing and heat treatment of turbine parts; new parts for new jet engine, heat treated 2010FY 22
Industrial Services key figures in EUR million 2010 2009 Δ Revenue 464.8 361.0 29% Operating profit (EBITDA) 86.8 24.4 256% EBITDA as a % of revenue 18.7 6.8 Operating profit (EBITA) 58.1 (6.4) EBITA as a % of revenue 12.5 (1.8) Capital expenditure 21.6 10.0 116% Depreciation 28.7 30.8 (7%) Average number of employees (x1) 3,911 3,847 2% Employees at year-end (x1) 4,026 3,706 9% 2010FY 23
Flow Control Retains margins and strengthens market positions
Flow Control headlines Market positions further strengthened and expanded Organic revenue 7.5% (at constant exchange rates) EBITA margin 10.0% Market developments Residential new-build Renovation & maintenance Commercial building Industrial Utility networks, district heating and floor heating Energy efficiency controls Fire protection Ship building Beer & soft drink Laboratory Maintained existing level Stable Challenging, compensation by increased market share Strong growth in US Positive developments Increasing possibilities Excellent start in Europe & US New contracts sprinkler systems Positive developments Strong development; more sales of systems 2010FY 25
Flow Control geographical developments -1- Area Netherlands Belgium Scandinavia Russia, Poland & Czech Germany France Developments New products & increased sales in floor heating, plastic & metal piping systems and balancing valves Utility market developed favourably Market developed well Hesitant start; improved mid2010 Positions in utility markets strengthened First orders for new composite piping systems Positive trend since mid 2010 Especially district heating in Russia & Poland Healthy growth through cross selling group products Reinforced sales organisation; increased sales of group products Various product developments 2010FY 26
Flow Control geographical developments -2- Area United Kingdom Spain & Portugal Middle East United States Developments Housing and commercial market remained low Renovation & maintenance market was stable Bad market circumstances continued Export growth in new sanitary products Strong growth due to many new (group) products Market positions expanded further Joint sales & distribution approach; focused sales force per market segment: -Residential/mechanical -Industrial -Irrigation/golf, pool & spa -Retail -Fire protection Strong growth industrial segment Acquisition Conbraco positive impulse 2010FY 27
Flow Control key figures in EUR million 2010 2009 Δ Revenue 1,218.0 1,043.9 17% Operating profit (EBITDA) 161.4 144.4 12% EBITDA as a % of revenue 13.3 13.8 Operating profit (EBITA) 121.8 105.3 16% EBITA as a % of revenue 10.0 10.1 Capital expenditure 41.6 35.1 19% Depreciation 39.6 39.1 1% Average number of employees (x1) 7,115 6,376 12% Employees at year-end (x1) 7,494 6,276 19% 2010FY 28
The Aalberts Industries share Upward trend
The Aalberts Industries share in EUR million 2010 2009 2008 2007 2006 Average trading volume x EUR 1M 4.905 4.432 7.035 8.324 4.908 Closing share price x EUR 15.77 10.09 5.06 13.60 16.38 Earnings per share x EUR 1.10 0.51 1.02 1.26 1.09 Price / Earnings 14.3 19.8 5.0 10.8 14.9 Shares in issue x million 106.7 106.1 103.3 102.0 98.2 Dividend x EUR 0.28 0.13 0.28 0.32 0.28 Market capitalisation x EUR 1M 1,683 1,070 523 1,387 1,609 2010FY 30
Share price movements in EUR 2010FY 31
Outlook Further improvement of earnings per share (barring unforeseen circumstances)
Outlook A wider recovery in various markets, an active market approach and the increased order position will lead to further improvement of the earnings per share in 2011 - barring unforeseen circumstances. Solid balance sheet ratios remain maintained due to the continuing large amount of attention given to profitability and the control of working capital and costs. 2010FY 33
Questions & Answers