Elringklinger - Company Presentation January 2014

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Company Presentation January 2014

Company Presentation January 2014

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  • 1. 1 ElringKlinger Group ElringKlinger Group KeplerCheuvreux 13th German Corporate Conference January 21, 2014
  • 2. It’s all about emissions – Focus on green technologies Optimized combustion engine remains dominant mid-term Structural growth in core business: turbo charging, heat shielding, lightweight Driver: Hybrids Battery-electric + fuel cell Value sold in increases Almost every engine will require exhaust abatement: off- road, buses, ships, trucks Diesel particulate filters & coating, full exhaust abatement systems Exhaust abatement Downsizing/ Lightweight E-Mobility Minus CO2 Minus particulates Minus CO, CH, NOX 2
  • 3. ElringKlinger Group: Major divisions (share of sales 2012) Cylinder-Head Gaskets (15%) Shielding Technology (25%) Housing Modules (20%) After- market (10%) Engineered Plastics (8%) Specialty Gaskets (16%) E-Mobility (1%) Exhaust abatement (3%) 3
  • 4. It’s all about cutting CO2 – Legislation driving business Source: A.T. Kearney Powertrain Study May 2012; EK research 130 75 ~178 102 ~160 112 0 40 80 120 160 200 2015 2025 2015 2025 2015 2025 CO2 limit in g/km EU US China 2012: ~136 g/km 2012: ~232 g/km 2008: 185 g/km 4
  • 5. 1 2 3 4 5 6 7 8 9 10 112005 2009200820072006 201320122010 2011 2014 2015 Growth prospects: Emerging markets following Euro emission standards (CO, HC, NOx, particulate matter) US Mexico (Gas) Brazil (FF) Brazil (Diesel) Argentina Europe China (Bejing) China (Nationwide)* Thailand S. Korea India (Capital area) India (Nationwide) TII, B8 Tier 1 Tier 1 Euro 3 Euro 2 Euro 4 Euro 2 Euro 2 Euro 2 Euro 3 Euro 3 Euro 2 TII, B5 (LEV) Euro 4 LEV Euro 4 Euro 3 Euro 5 Euro 3 Euro 4 Euro 4 Euro 3 Euro 3 Euro 4 Euro 3 TII, B4 TII, B2 Euro 5 ULEV Euro 5 Euro 6 Euro 5 Euro 4 (Gasoline) Euro 4 Euro 5 Euro 5 Euro 4 Source: CMS * tbd: alternatively as of 2013/Euro 5 drafted 5 Euro 4 Euro 5 (Diesel)
  • 6. 6 ElringKlinger enabling efficiency Cutting fuel consumption by: 27 mpg Powertrain improvements/ Downsizing Body and accessories advancements 47 mpg 2011 2020 2030 2040 Lightweight construction Hybridization Source: www.plugincars.com
  • 7. ElringKlinger enabling Downsizing – Going small in CO2 Trend towards smaller engines: Same output from lower displacement up to 30% lower fuel consumption Direct injection, soaring injection pressure Gasketing becomes even more demanding Rising temperatures Number of thermal shielding parts increases Turbo-charging essential 7
  • 8. Turbocharged: Gaskets, V-rings and heat shields for turbochargers Turbocharging market growing by 75% from 2011-2017 to 39 mn units; Penetration plus units per car increase (CAGR > 10%) EK provides inlet/outlet gaskets for cold side (compression) and hot side (turbine) V-ring coupling and sealing component Thermal shielding module Potential for the aftermarket 8
  • 9. Lightweight design: Substituting metal by plastic Weight reduction at a lower cost = lower fuel consumption = less CO2 output EK designs and produces polyamide housing modules incl. sealing system: cam cover modules, oil pans, gearbox casings, TC air ducts, oil suction pipes Ramp-up of truck parts liaised to EURO VI introduction OEM-accepted cost per kg saved: 3 to 10 Euros (ICE) / 5 to 14 Euros (HEV) Hummel acquisition adds unique tooling competence: New composite materials for additional light weight products 9
  • 10. Total shielding Shielding package all in one: Engine + underbody + exhaust system Increasingly complex heat management in downsized engines Structural growth: Number of heat shields in and around the engine and exhaust system goes up Trend: Combining thermal shielding with acoustical functions Added-value: Integration of gasketing and sensors (e.g. TC control sensor) 10
  • 11. 11 Exhaust abatement technology – Every engine needs a Hug US retrofit business on the rise CARB (California Air Resources Board) certification for DPF-retrofit business Mandatory for on-road vehicles above 6.3 tons in California Hug market leader in core market California: Market share ~35% USP: Hug ceramic substrate & ElringKlinger precious-metal free catalytic coating material First prototypes in development for US and European truck OEM
  • 12. 12 Every engine needs a Hug – low emissions on the high seas Increasing retrofit business for inland water vessels and yachts with nauticlean diesel soot particulate filters (DPF/DeNOx/HC) Public awareness and expected emission legislation opens up new opportunities also in ocean ships Emissions caused by ocean cruisers (e.g. per day): NOx: 5,250 kg = 422,000 cars Soot: 450 kg = 1,000,000 cars CO2: 480,000 kg = 84,000 cars Projects for ocean liners in negotiation
  • 13. 13 Every engine needs a Hug – shale gas on the rise Hug offers filter technology for natural gas engine-based power plants First contracts for complete exhaust abatement systems to be used in power plants in North America Currently under development: Recuperation catalytic converter for large- scale natural gas engines incl. breaking up of methane
  • 14. E-Mobility: Battery Technology for Hybrids/ BEVs and Fuel Cells High pre-expenses: almost 100 engineers and specialists plus prototyping and general cost In-series production contracts for 3 European OEMs: EUR 6.6 (4.5) mn sales in 2012 Several development projects with car manufacturers as well as battery producers Fuel-cell: Auxiliary power units for trucks Non-automotive fuel-cell applications for use in material handling equipment 14
  • 15. Hybrids: Combination of combustion engine & electric drivetrain increasing value sold in Optimized Combustion Engine Core business: Turbocharger and engine sealing Exhaust gaskets Thermal shielding parts Plastic housing modules Electric Drivetrain Lithium-ion battery components > Cell contact systems > Pressure exchange systems > EMR shielding > Cell casing Fuel-cell components, APUs/ complete stacks Hybrid Value sold in max. Euro 40 to 60 Value sold in Euro 100 to 150 15
  • 16. ElringKlinger Group – A global production network Mexico China South Korea Japan (JV) Indonesia (JV) Thailand (JV) India Great Britain Germany Switzerland Italy France Spain Hungary Turkey Romania Brazil South Africa Canada USA 16
  • 17. 17 Employees ElringKlinger Group worldwide – merger of Hummel-Formen has number of employees in the AG increase AG 2,266 (2,060) Domestic subsidiaries 756 (860) International subsidiaries 3,534 (3,364) as of September 30, 2013 (py) Group 6,556 (6,284) +4.3% Germany 3,022 (2,920)
  • 18. 18 Group Sales by region Q3 2013 (py) Almost 55% of OE sales in Asia and the Americas Germany 31.5% (31.1%) NAFTA 17.1% (16.8%) incl. exports: ~25% of OE sales South America & Others 5.4% (6.4%) Rest of Europe 29.4% (28.9%) Asia and Australia 16.6% (16.8%) incl. exports: ~24% of OE sales
  • 19. 19 Sales revenues driven by long-term organic growth € mn 417 459 475 528 608 6581 579 796 1,033² 1,127 0 200 400 600 800 1000 1200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1 Incl. acquisitions of SEVEX (~EUR 46mn sales) and Marusan (~EUR 14 mn sales) ² Incl. acquisitions of Flat gaskets business of Freudenberg (~EUR 53 mn sales), Hug Group (~EUR 29 mn sales) and Hummel-Formen (~EUR 1.6 mn sales)
  • 20. 20 Earnings before taxes 50.5 65.2 70.9 87.6 114.9 60.0 49.4 94.0 113.91 123.8 0 30 60 90 120 150 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 € mn 1 Excl. one-time gain of EUR 22.7 mn from sale of industrial park
  • 21. 21 Normalization of capex towards 8 to 10% of sales 137.9 95.0 134.3 121.6 114.3 61.7 71.2 82.2 96.8 79.4 0 40 80 120 160 200 2008 2009 2010 2011 2012 Investments in plant, property and equipment, invest. prop. and intangible assets Depreciation and amortization € mn
  • 22. 22 Balance sheet structure as at September 30, 2013 Solid Equity Ratio at 49.3%, shift to long-term debt 22.625.9 42.940.9 0 28.123.7 57.159.1 49.350.4 September 30, 2012 September 30, 2013 September 30, 2012 September 30, 2013 Assets in % Non-current liabilities Current liabilities Shareholder‘s equityNon-current assets Current assets Liabilities and shareholder’s equity in %
  • 23. 23 A though year 2013: Western Europe at 25-years low – Russia, Brazil and India down significantly In 2013 global car sales overall estimated to have grown by approx. 3% thanks to dynamic growth in Asia (China/ASEAN) and the US Germany Western Europe Russia Brazil India -10% -8% -6% -4% -2% 0% Car registrations 2013 (yoy change in %)
  • 24. 24 Preliminary results 2013 marked by one-time effects – negative FX effects burden Expected one-time gain related to the assumption of control of Japanese JV amounting to EUR 16 to 18 mn Sales 2013 growing 4.3%, organic growth at 6.1% EBIT expected in the range of EUR 160 to 162 mn, clean EBIT adjusted for one-offs comes in at approx. EUR 146 mn Negative FX effects related to strong Euro impact EBIT especially in H2 2013 – operating result coming in higher One-offs 2013: > EUR 16 to 18 mn expected one-time gain as a result of the assumption of control of Japanese JV > EUR 1.8 mn restructuring charge at ElringKlinger France > EUR 1.5 mn exceptional expenses associated with market penetration efforts in the Aftermarket segment > EUR 1.4 mn one-time gain related to full take-over of Korean JV
  • 25. 25 Pushing growth in Asia: Assumption of control of JV ElringKlinger Marusan Corporation ElringKlinger concludes contract with JV partner assuming control of the 50:50 JV ElringKlinger Marusan, Tokyo, as of December 31, 2013 This results in an expected one-time gain in the range of EUR 16 to 18 mn, recognized already in BY 2013; no effect on 2013 sales Expected impact in 2014: Full consolidation of ElringKlinger Marusan (until 2013: proportionate rate of 50%) > Additional sales revenue contribution of EUR 25 mn > Additional EBT approx. EUR 1.5 mn > PPA approx. EUR 1.5 mn Key role in the Group’s Asia strategy (ASEAN region) > More than 20% of OE sales (incl. exports) generated in Asia > Strong growth in development projects with Asian customers
  • 26. 26 Markets 2014 ElringKlinger expects overall worldwide LV production in 2014 to grow by around 2 to 3% Signs of stabilization in Western European car sales, but no fast recovery: December car sales e.g. in France +9.4%, Spain +18.2%, Italy +1.4%, but ytd still -5.7% (France) and -7.5% (Italy) China/ASEAN and North America continue to be the drivers in the short but also medium term High degree of uncertainty in European truck sales due to pre-buying in H2 2013 related to start of EURO VI > EURO VI demand ramping up stronger as from Q2 2014 > Strong pick-up in US class 8 orders: up 40% yoy in December 2013 Product launches and structural growth in ElringKlinger’s core business units enable the Group to outgrow vehicle markets
  • 27. 27 Outlook 2014: Financial performance Based on the development of global vehicle production described, the ElringKlinger Group expects to see organic sales growth of 5 to 7% in 2014 Full consolidation of ElringKlinger Marusan will contribute additional EUR 25 mn in sales Group EBIT margin should continue to improve slightly in 2014 Overall ElringKlinger is planning a further increase in adjusted EBIT in 2014 – targeting a range of EUR 160 to 165 mn (2013: approx. EUR 146 mn)
  • 28. 28 Outlook mid-term: margin drivers Strong trend at exhaust system specialist Hug to continue Improving operating performance at Freudenberg France; Restructuring of Freudenberg France completed, signs of slight recovery in French car market (December 2013: +9.4%) E-Mobility: Sales ramping up against high level of pre-expenses – break-even in 2014/15 depending upon BEV take-up rates at customers Product ramp-up (PHM) gaining momentum in truck segment liaised to EURO VI as of Q2 2014 Internationalization of Engineered Plastics division in the US and China Expansion of Aftermarket business in France, Italy and the US
  • 29. 29 ElringKlinger Group Thank you for your attention!
  • 30. Disclaimer – Forward-looking Statements and Predictions This presentation contains statements about the future. These statements are based on current expectations, market evaluations and predictions by the Management Board, and on information that is currently available to them. The statements about the future should not be interpreted as guarantees of the future developments and results that they refer to. Whilst the Management Board are convinced that the statements that have been made, and the convictions and expectations on which they are based, are realistic, they rely on suppositions that may conceivably prove to be incorrect; future results and developments are dependant on a multitude of factors, they involve various risks and imponderabilities that can affect whether the ongoing development deviates from the expectations that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy. 30