Elringklinger - Conference Call Q2 2014

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Second Quarter 2014 Conference Call

Second Quarter 2014 Conference Call

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  • 1. Conference Call Results Q2 2014 August 7, 2014
  • 2.  Group sales increased 12.6 % yoy to EUR 333.5 (296.1) mn; organic growth at 10.2 % again clearly outperforming world car production; Higher share of tooling sales in preparation for ramp-ups  Sales up 2.9 % sequentially despite 4 days less of production (calendar effect)  Consolidation of EKMA in 2013 retroactively changed to equity method (IFRS 11) resulting in slightly lower comparable sales and EBIT basis; EKMA contributes an additional EUR 5.7 mn in sales in Q2 2014  Continued high pre-expenses and start-up losses in battery technology (EBIT EUR -1.9 mn), slightly better than in Q1 (EBIT EUR -2.2 mn)  Hug delivered solid earnings up y-o-y (EBIT margin 20%+); however at a more normalized level compared to Q1 (EUR 4.0 mn as compared to EUR 7.7 mn)  EBIT(=operating result) up by 1.2 % to EUR 41.5 (41.0) mn incl. EUR 0.9 mn ppa on high previous year’s basis Q2 2014: Key developments 2
  • 3. H1 2014: China and USA drive global car markets – BRI markets drop sharply, production in Brazil -17% 3 New car registrations H1 2014 (yoy change) 14.5% 11.0% 5.5% 4.3% -3.2% -7.3% -7.6% -10% -5% 0% 5% 10% 15% 20% Russia Brazil India USA Western Europe Japan China
  • 4. 281.01 296.11 287.51 285.41 324.0 333.5 100 150 200 250 300 350 400 Q1 Q2 Q3 Q4 2013 2014 286.8 303.3 294.0 291.1 Sales by quarter 1Previous year's figures adjusted due to retroactive application of IFRS 11; at equity treatment of ElringKlinger Marusan Corporation in 2013 € mn 4
  • 5. EBIT by quarter (=operating result as of 2014) 32.81 41.01 38.6 34.22 42.1 41.5 0 10 20 30 40 50 60 Q1 Q2 Q3 Q4 2013 2014 € mn 5 1 Previous year's figure adjusted due to retroactive application of IFRS 11; at equity treatment of ElringKlinger Marusan Corporation 2 excl. EUR 17.6 mn one-time gain
  • 6. Q2 2014: OEM sales up 13.7 % driven by core business, higher tooling sales, EKMA 241.21 274.2 0 100 200 300 400 2013 2014 1Previous year's figures adjusted due to retroactive application of IFRS 11; at equity treatment of ElringKlinger Marusan Corporation (- EUR 7.2 mn) in Q2 2013 EBIT 30.5 (30.6) € mn 6
  • 7. Q2 2014: Aftermarket sales up 14.8% 29.0 33.3 0 10 20 30 40 50 2013 2014 EBIT +15.3% 6.8 (5.9) € mn 7
  • 8. Q2 2014: Sales Engineered Plastics down 0.9% 22.9 22.7 0 10 20 30 40 2013 2014 EBIT -12.2% 3.6 (4.1) € mn 8
  • 9. Group Sales by segment Q2 2014 (py): OE share up driven by structural growth and new product ramp-ups Industrial Parks 0.3% (0.4%) Services 0.7% (0.7%) OEM 82.2% (81.4%) Engineered Plastics 6.8% (7.7%) Aftermarket 10.0% (9.8%) 9
  • 10. Group Sales by region Q2 2014 (py): Europe up, Brazil down sharply South America & Others 4.4% (5.9%) Rest of Europe 33.1% (31.8%) Germany 29.1% (30.7%) Asia-Pacific 16.1% (14.6%) incl. exports: ~25% of OE sales NAFTA 17.3% (17.0%) incl. exports: ~25% of OE sales 10
  • 11. Employees worldwide – 53.8% outside Germany AG 2,405 (2,090) Domestic subsidiaries 801 (864) International subsidiaries 3,735 (3,480) Group 6,941 (6,434) +7.9% Germany 3,206 (2,954) as of June 30, 2014 (py) 11
  • 12. 12 Q2 2014: Sequential improvement in net cash from operating activities€ mn 17.8 18.8 36.2 36.3 0 10 20 30 40 50 Q1 2013 Q1 2014 Q2 2013 Q2 2014
  • 13. Q2 2014: Investments vs. depreciation and amortization 29.01 30.8 18.01 19.1 0 10 20 30 40 Q2 2013 Q2 2014 Investments in plant, property and equipment, invest. prop. and intangible assets Depreciation and amortization 1 Previous year's figures adjusted due to retroactive application of IFRS 11, resulting from at equity consolidation of ElringKlinger Marusan Corporation in 2013 € mn 13
  • 14. 14 Cash flow bridge first half 2014 62.9 +55.0 +33.6 -59.9 -32.8 60.1 0 40 80 120 160 200 Cash at Dec 31, 2013 Net cash from operating activities Investments Dividends paid Change in financial liabilities Others Cash at June 30, 2014 € mn 1.3
  • 15. 41.5 42.5 26.7 24.1 58.5 57.5 24.6 26.1 48.7 49.8 June 30, 2013 June 30, 2014 June 30, 2013 June 30, 2014 Balance sheet structure as at June 30, 2014 Equity ratio slightly higher Non-current liabilities Current liabilities Shareholder‘s equity Non-current assets Current assets Assets in % Liabilities and shareholder’s equity in % 15
  • 16. 16 Q2 2014: Sales and EBIT (=operating result) in € mn Q2 2014 Q2 2013 Change in % Sales 333.5 296.1 +12,6% Cost of Sales 241.7 210.7 +14.7% EBITDA 60.6 58.9 +2.9% EBIT 41.5 41.0 +1.2% Previous year's figures adjusted due to retroactive application of IFRS 11, resulting from at equity consolidation of ElringKlinger Marusan Corporation in 2013
  • 17. 17 Q2 2014: Financial Result and Net Income in € mn Q2 2014 Q2 2013 Change in % Net finance cost -2.1 -5.5 -61.8% EBT 39.5 35.4 +11.6% Taxes 9.7 6.8 +42.6% Net income 29.7 28.6 +3.8% Profit attrib. to EK shareholders 28.5 26.2 +8.8% EPS (in €) 0.45 0.41 +9.8% Previous year's figures adjusted due to retroactive application of IFRS 11, resulting from at equity consolidation of ElringKlinger Marusan Corporation in 2013
  • 18. 18 Q2 2014: Solid performance of Exhaust Gas Purification division, following extraordinary Q1 2014 in € mn Hug Group Q2 2014 Q2 2013 Q1 2014 ∆ Q2 Sales 19.5 18.2 20.7 +1.3 EBIT 4.0 3.9 7.7 +0.1 PPA -0.3 -0.2 -0.3 -0.1  As expected, project-related and product-mix related business leads to higher sales/earnings volatility over the quarters  Original sales target (high single digit %-growth) might be slightly exceeded  EBIT margin above Group average
  • 19.  Geopolitical risk factors have clearly increased (Russia, Mid East, Northern Africa, South America)  EK still expects overall worldwide car production to grow by 2-3%; several market researchers have been lowering their forecasts  Regional divergence is increasing: Demand primarily driven by China, NA  Modest Western European recovery from still historically low levels to continue  Mixed picture in BRI markets: Sharp drop in vehicle sales in Brazil and Russia (June 2014: -17 % each); India showing first signs of recovery  Truck sales in Europe following Euro VI pre-buying better than feared; for the full year nevertheless moderate decline; EK increases value sold-in Outlook 2014: Markets show a mixed picure 19
  • 20. Outlook 2014: Financial performance in € mn FY 2013 Guidance FY 2014 Sales 1,175.2 5-7% organic growth (+ close to EUR 25 mn scope change) 2 Adj. EBIT1 149.2 160 - 165 Investments 127.2 100 - 110 (+ up to EUR 20 mn for HFHT) 20  Full consolidation of ElringKlinger Marusan Corporation to add close to EUR 25 mn in sales but 0.3 PP dilution to Group margin  Order intake Q2 up by 3.5% at EUR 380.0 (367.0) mn, up 14.7% sequentially  Backlog exceeds prior year by 13.9 % (EUR 649.1 mn) 1 EBIT=operating result as is standard as from Dec. 31, 2013
  • 21. 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. 22