ElringKlinger - Conference Call Presentation Financial Year 2013
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Conference Call Presentation Financial Year 2013

Conference Call Presentation Financial Year 2013

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ElringKlinger - Conference Call Presentation Financial Year 2013 Presentation Transcript

  • 1. 1 Analysts’ and Investors’ Conference Results Financial Year 2013 – Outlook and Strategy March 28, 2014
  • 2. 2 Financial Year 2013: Highlights Organic sales growth (ex scope changes and at constant exchange rates) of 6.0% within the target range of 5-7%, clearly exceeding market growth of 3.1%; OE business remains growth driver Adjusted EBIT increased to EUR 144.7 (135.8) mn – Adjusted EBIT margin improved to 12.3% from 12.0%; EBIT burdened by minus EUR 4.6 mn in FX effects Earnings improvement driven by underlying sales growth and advanced turnaround of acquisitions, particularly Hug Adverse earnings effects from start-up losses in E-mobility, losses at Freudenberg France, and as yet weak capacity utilization of new truck facility at Dettingen, Germany Reported EBIT boosted by significant one-off gain in Q4 arising from assumption of control at ElringKlinger Marusan Corporation (EUR 17.6 mn)
  • 3. Financial year 2013: Uneasy Markets – Western Europe at 25-year low, BRI markets shrink 3 23,1% 7,5% -0.2% -1.5% -1.9% -5.5% -7.5% -10,0% -5,0% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% India Russia Western Europe Brazil Japan USA China New car registrations 2013 (yoy change)
  • 4. 4 2013: Effects from assumption of control of ElringKlinger Marusan Corporation – strategic reasoning in € mn FY 2013 (at 50%) FY 2014 (forecast at 100%) Sales 23.4 ~50.0 2 EBIT 0.6 3.0 One-off gain 17.6 -- PPA -- -2.2 Control of ElringKlinger Marusan Corporation was assumed with effect from December 31, 2013 Fully included in statement of financial position in FY 2013, in P&L as of 2014; Remaining 50% recognized as "other current liabilities" (not non-controlling interests) at fair value (EUR 37.1 mn)
  • 5. 5 Sales revenues driven by sustainable long-term organic growth € mn 459 475 528 608 6581 579 796 1,033² 1,127 1,175 0 200 400 600 800 1000 1200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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) and Hug Group (~ EUR 29 mn sales)
  • 6. 6 Earnings before taxes 65.2 70.9 87.6 114.9 60.0 49.4 94.0 113.91 123.6 131.62 0 30 60 90 120 150 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 € mn 1 Excl. one-time gain of EUR 22.7 mn from sale of industrial park 2 Excl. one-time gain of EUR 17.6 mn resulting from the assumption of control of ElringKlinger Marusan Corporation
  • 7. 7 Group sales by segment 2013 (py) OE share higher due to new product ramp-ups (incl. Hug CARB) and structural growth Engineered Plastics 7.8% (8.1%) OEM 80.9% (80.4%) Services 0.7% (0.6%) Aftermarket 10.2% (10.5%) Industrial Parks 0.4% (0.4%)
  • 8. 8 Group sales by region 2013 (py) Asia and exports drive growth Germany 30.7% (30.1%) NAFTA 17.1% (17.5%) incl. exports: ~25% of OE sales South America and Rest of World 5.6% (6.1%) Rest of Europe 30.5% (30.4%) Asia-Pacific 16.1% (15.9%) incl. exports: ~25% of OE sales
  • 9. 9 Employees of ElringKlinger Group worldwide – strong increase in Asia due to consolidation effects AG 2,301 (2,059) Domestic subsidiaries 754 (859) International subsidiaries 3,661 (3,345) as of December 31, 2013 (py) Group 6,716 (6,263) +7.2% Germany 3,055 (2,918)
  • 10. 10 FY 2013: Sales and operating result 1 Incl. amortization of capitalized development cost of EUR 6.3 mn previously reported under R&D cost ² Incl. currency effects 3 Excl. EUR 17.6 mn one-time gain from assumption of control of ElringKlinger Marusan Corporation, EUR 1.4 mn one- time gain from step acq. of ElringKlinger Korea Co., Ltd., EUR 1.8 mn restruct. charge Nantiat, EUR 1.5 mn except. expense Aftermarket in € mn FY 2013 (reported) FY 2013 (adjusted3) FY 2012 Change in % (adjusted) Sales 1,175.2 1,175.2 1,127.2 +4.3% 2 Cost of sales 846.21 846.21 815.0 +3.8% EBITDA2 236.3 220.6 215.2 +2.5% EBIT2 160.4 144.7 135.8 +6.6% Operating result 164.9 149.2 138.6 +7.6%
  • 11. 11 FY 2013: Financial result and net income in € mn FY 2013 (reported) FY 2013 (adjusted1) FY 2012 Change in % (adjusted) Net finance cost 15.7 15.7 15.0 +4.7% EBT 149.2 131.6 123.6 +6.5% Taxes 38.0 33.1 34.4 -3.8% Net income 111.2 98.5 89.2 +10.4% Profit attributable to EK shareholders 105.4 92.7 85.7 +8.2% EPS (in €) 1.66 1.46 1.35 +8.1% 1 Excl. one-time gain of EUR 17.6 mn before taxes and EUR 12.7 mn after taxes resulting from the assumption of control of ElringKlinger Marusan Corporation
  • 12. Sales by quarter 283.8 286.0 279.8 277.6 286.8 303.3 294.0 291.1 100 150 200 250 300 350 Q1 Q2 Q3 Q4 2012 2013 € mn
  • 13. 37.5 41.2 0 10 20 30 40 50 60 Q1 Q2 Q3 Q4 2012 2013 13 Adjusted operating result by quarter € mn 36.5 1 Excl. one-time effects: Charges of EUR 1.8 mn in Q1 and EUR 1.5 mn in Q3, gains of EUR 1.4 mn in Q1 and 17.6 mn in Q4 34.21 39.0 33.71 25.6 40.11
  • 14. 0 10 20 30 40 50 60 Q1 Q2 Q3 Q4 2012 2013 14 Adjusted EBIT by quarter € mn 36.0 1 Excl. one-time effects: Charges of EUR 1.8 mn in Q1 and EUR 1.5 mn in Q3, gains of EUR 1.4 mn in Q1 and 17.6 mn in Q4 32.61 37.3 36.21 24.2 36.61 38.3 39.3
  • 15. 15 Sales of OE business up 5.4% yoy in Q4 € mn 906.6 951.0 227.3 239.6 0 200 400 600 800 1000 1200 FY 2012 FY 2013 Q4 2012 Q4 2013 Adjusted EBIT +10.0% 2012: 93.1 2013: 102.4+4.9% +5.4%
  • 16. 16 Aftermarket sales down slightly yoy in Q4 € mn 117.8 119.3 26.6 26.4 0 30 60 90 120 150 FY 2012 FY 2013 Q4 2012 Q4 2013 Adjusted EBIT -2.5% 2012: 24.4 2013: 23.8+1.3% -0.8%
  • 17. 17 Sales of Engineered Plastics up 8.3% yoy in Q4 € mn 91.3 92.6 20.5 22.2 0 20 40 60 80 100 120 FY 2012 FY 2013 Q4 2012 Q4 2013 Adjusted EBIT +1.9% 2012: 15.7 2013: 16.0 +1.4% +8.3%
  • 18. 18 Consistent cash flow generation 148.8 126.2 74.5 112.3 120.0 0 40 80 120 160 200 2009 2010 2011 2012 2013 Net cash from operating activities € mn
  • 19. 19 Development cash flows 2014 € mn -4.7
  • 20. 20 Balance sheet structure as of December 31, 2013 Equity ratio stable at above 50% 40.8 41.4 25.8 22.3 59.2 58.6 23.6 27.2 50.6 50.5 December 31, 2012 December 31, 2013 December 31, 2012 December 31, 2013 Assets in % Non-current liabilities Current liabilities EquityNon-current assets Current assets Liabilities and Equity in %
  • 21. 21 Consistent dividend policy: 5th consecutive increase of regular dividend 0.15 0.20 0.35 0.401 0.45 0.50 2008 2009 2010 2011 2012 2013 € 1 Regular dividend 1.00 0.80 0.60 0.40 0.20 0
  • 22. 22 2013: Effects of Freudenberg acquisition in € mn Freudenberg in € mn Freudenberg Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Sales 13.4 12.9 11.5 12.6 50.4 EBIT -1.3 0.5 1.1 2.7 3.0 PPA - - - - - EBT -1.5 0.3 0.9 2.4 2.1 German and Italian Freudenberg sites have reached Group margin French site: Loss-making in FY 2013 due to weak French car production (-13.6%) and restructuring costs of EUR 1.8 mn booked in Q1 Overall dilutive effect of 0.3% on Group EBIT margin in 2013 from former Freudenberg locations
  • 23. 23 2013: Turnaround at Hug – mission accomplished Strong y-o-y growth of 57.4% Drivers: CARB retrofit, inland waterway vessels and exhaust gas purification systems for large natural gas engines Successful turnaround and earnings swing in € mn Hug in € mn Hug Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Sales 11.0 18.2 13.1 15.3 57.6 EBIT 1.1 3.9 2.3 6.0 13.3 PPA -0.5 -0.2 -0.3 -0.3 -1.3 EBT 1.0 3.8 2.2 5.9 12.9
  • 24. 24 Every engine needs a Hug: boosted by US retrofit Buoyant demand from US retrofit business for Hug diesel particulate filter systems CARB legislation requires retrofit of on- road vehicles above 6.34 tons operating in California Hug market share tops 30% USP: Hug ceramic substrate & EK precious-metal free catalytic coating Expansion of production capacity in progress Hug 2014: single-digit growth in revenues, EBIT margin above Group average
  • 25. 25 Every engine needs a Hug: off-road, on rails and on the high seas Large-scale non-automotive markets Diesel locomotive retrofit in the US Strong increase in demand for nauticlean exhaust abatement systems (DPF/DeNOx/ HC) for inland water vessels Public awareness and expected emission legislation open up opportunities in ocean ships – new filter system for bunker oil Shale gas North America: Exhaust abatement systems for natural gas engine-based power plants Product pipeline: recuperation catalyst to avoid methane slippage
  • 26. Hybrids: Combination of combustion engine & electric drivetrain boosts value sold in Optimized Combustion Engine Core business:  Turbocharger sealing  Advanced HT gaskets  Thermal shielding parts  Plastic housing modules Electric Drivetrain  Lithium-ion battery components > Cell contact systems > Pressure exchange systems > EMR shielding  Fuel-cell components, APUs/ complete stacks Hybrid Value sold in max. Euro 40 to 60 Value sold in Euro 100 to 150 26
  • 27. E-Mobility: Fit for Future - Battery Components and Fuel Cell Technology Sales up 27.3% in 2013 at EUR 8.4 mn Start of in-series production of cell contact systems for first fully battery electric vehicle from German premium OE Over 100 engineers and specialists in R&D and production, plus prototyping and SGA High pre-expenses and ramp-up cost Break-even possible already in 2015 Fuel-cell: auxiliary power units for trucks in development (SOFC) First small in-series contract for PEM fuel cell stacks for material handling equipment with large German logistics Group 27
  • 28. 28 Growing Asia strategy: Opportunities from stricter CAFE/ Euro-like emissions standards Growing demand for EK product portfolio focusing on downsizing and hybridization Global LV sales growth in future will be driven primarily by Asia Capacity expansion in China: New plant for PHM at Suzhou, extension in Changchun (invest ~ EUR 25 mn) ASEAN: At 3.5 million car production in 2013, ASEAN clearly outflanks e.g. India Stepping stones in Indonesia and Thailand: First production plant operating in Greater Jakarta area Foundation of sales company in Bangkok New plant built in Gumi, Korea (invest ~ EUR 10 mn) following full takeover of JV
  • 29. 29 ElringKlinger enabling efficiency: Downsizing and lightweight design key to CO2 reduction 27 mpg Downsizing/ Powertrain improvement Body and accessories advancements 47 mpg 2011 2020 2030 2040 Lightweight construction Hybridization Source: www.plugincars.com
  • 30. 30 Entry in new market lightweight body components Combining metal&plastic: Hydro-Formed Hybrid technology Largest contract in company history from German premium OE for innovative body parts in hydro-formed hybrid technology SOP at EK in 2015 in PHM division Projected lifetime sales volume (6y) to reach EUR 120-130 mn + tooling Substantial follow-up market potential Market entry in high-growth market for lightweight body and chassis components EK Hummel features unique tooling expertise and know-how in lightweight plastic designs and composite laminates Additional capex of up to EUR 20 mn in 2014/15; some pre-investments 2013
  • 31. 31 Capex going forward back within 8 to 10% of sales range 134.3 121.6 114.3 82.2 96.8 79.4 0 40 80 120 160 200 2010 2011 2012 2013 2014e 127.2 76.0 Investments in property, plant and equipment and intangible assets Depreciation and amortization € mn Incl. new lightweight components project ~120-130 incl. PMH ~100-110
  • 32. 32 Outlook 2014: Markets show a mixed picture EK expects overall worldwide car production to increase by 2-3% in 2014 Demand once again driven by China, ASEAN and to a lesser extent North America; yet lower growth in percentage terms when compared to 2013 Europe to grow moderately in 2014, possibly a further pick-up in momentum in 2015 Mixed picture in emerging markets: Mid single-digit decline percentagewise in Brazil, Russia; India to recover from 2013 double-digit dip Truck segment in Europe likely to be volatile in H1 due to pre-buying ahead of Euro VI in Q4 2013; yet sales – better than feared – up 4% in Jan. 2014 Full year 2014: moderate decline North American truck market continues to show solid growth, expected to achieve an increase of almost 10% driven by economic recovery
  • 33. 33 Outlook 2014: Financial performance in € mn FY 2013 Guidance FY 2014 Sales 1,175.2 5-7% organic growth (plus 25 mn scope change) 2 Adjusted EBIT 144.7 160 - 165 Investments 127.2 100 - 110 (+ up to 20 mn HFT) Net debt 295.3 reduction Full consolidation of EKMA to contribute additional EUR 25 mn in sales, but Group EBIT margin dilution of 0.3 percentage points due to PPA As of 2014, EBIT will no longer include currency effects and will – as is standard – correspond to the operating result shown in the income statement Order intake up 15.4% taking the figure to EUR 1,309.8 mn with order backlog 30.6% higher at EUR 595.4 mn
  • 34. 34
  • 35. 35 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 dependent 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.