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Spring Midcap Event
Paris, 2 July 2015
GESCO – an industrial group shaped by SMEs
with market and technology leaders
 Tool manufacturing/mechanical engineering ...
1.The business model
The GESCO AG investment philosophy
 Acquisition and development of industrial SMEs
 Long-term orien...
The GESCO share offers a focussed portfolio of 17 “Hidden
Champions” serving broadly diversified customer sectors
1.GESCO ...
5
1. The 4 biggest companies (sales and staff: FY 2014)
Dörrenberg Edelstahl GmbH
• Leading European
specialist for tool s...
6
1. Two very special companies (sales and staff: FY 2014)
Setter Group
• Paper and plastic sticks
for the sweets and hygi...
January 2015: Setter Group acquires Setterstix Corp. / USA
 Setterstix is the leading US producer of
paper sticks for the...
Current situation with regard to M&A
 On the one hand: M&A in the “good” SME sector is currently
a seller’s market
 A lo...
3.Financial year 2014/2015
Financial year 2014/2015
Demand was satisfactory, but there was
significant downward pressure o...
3.Financial year 2014/2015
 The economic climate
 German GDP 2014 +1.5 %
 German Mechanical Engineering Association (Ve...
3.Financial year 2014/2015
Negative impact 1: Protomaster GmbH
Manufacturer of sheet metal forming tools
Production of bod...
3.Financial year 2014/2015
Negative impact 2: MAE Maschinen- und Apparatebau Götzen GmbH
World market leader in the market...
3.Financial year 2014/2015 Group key figures
2013/2014 2014/2015 Change
Incoming orders € million 435.6 448.8 3.0 %
Group ...
50
100
150
200
250
300
350
400
450
31.03.2014 31.03.2015 31.03.2015 31.03.2014
Current liabilities
Non-current liabilities...
4.Financial year 2015/2016
Initial situation and expectations
 Economic forecasts indicate growth
(GDP:+2.1 %, VDMA: Incr...
4.Financial year 2015/2016
Q1: Very high level of incoming orders, continued poor results
 Includes operations at the sub...
4.Financial year 2015/2016
2014/2015
Actual figures
2015/2016
Target Change
Group sales € million 451.4 480 to 490 6.3 % t...
Summary:
 Overall, we expect satisfactory demand in 2015/2016
 The two restructuring measures continue to have a
negativ...
5.The GESCO share
The GESCO share as an underperformer
 Share price development in financial year 2014/2015:
+0.3 % (SDAX...
 Free float: 86.4 %
 Stefan Heimöller, entrepreneur, member of supervisory board: 13.6 %
 Investmentaktiengesellschaft ...
5. Share price development (in %) – 1 and 5 years
GESCO vs. SDAX, 1 year GESCO vs. SDAX, 5 years
21
─ GESCO
─ SDAX
80
85
9...
5. Share price development (in %) – 10 years
GESCO vs. SDAX, 10 years
22
─ GESCO
─ SDAX
0
100
200
300
400
Founded: 1989
Share capital: € 8,645,000
Shares: 3,325,000 registered shares
Free float: 86.4 %
Stock markets: Xetra; Fran...
Financial calendar and investor relations contact
 Financial calendar
25 June 2015 Annual Accounts Press Conference and A...
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Spring Midcap Event Paris, 2 July 2015

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Spring Midcap Event Paris, 2 July 2015

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Spring Midcap Event Paris, 2 July 2015

  1. 1. Spring Midcap Event Paris, 2 July 2015
  2. 2. GESCO – an industrial group shaped by SMEs with market and technology leaders  Tool manufacturing/mechanical engineering and plastics technology segments  Currently 17 operating subsidiaries under the GESCO AG umbrella  We think and act sustainably and in an entrepreneurial manner.  We are active in established industries with innovative technologies.  We provide technology “Made in Germany” to the world’s markets.  GESCO consists of flexible, independently operating and managed units that benefit from belonging to a strong group. 1.The business model 2
  3. 3. 1.The business model The GESCO AG investment philosophy  Acquisition and development of industrial SMEs  Long-term orientation, no intent to exit  Majority takeover, usually 100 %  Usually as part of succession planning  New managers hold a share of up to 20 % in their companies (“entrepreneurial companies”) 3
  4. 4. The GESCO share offers a focussed portfolio of 17 “Hidden Champions” serving broadly diversified customer sectors 1.GESCO Group → 4 3% 4% 5% 4% 5% 6% 12% 15% 15% 25% 6% Passenger and commercial vehicles Other Agricultural engineering Machine and plant construction Consumer goods Energy / supply Iron, plate and metal processing, tool construction Chemical / petrochemical industry Foundries and rolling mills Electrical, medical technology, household goods Construction, air conditioning, sanitary industry
  5. 5. 5 1. The 4 biggest companies (sales and staff: FY 2014) Dörrenberg Edelstahl GmbH • Leading European specialist for tool steel • Steel mill, trading, mould castings and surface technology • Strong internationalization • Sales € 172 m, staff 501 SVT GmbH • Systems for (un)loading liquids and gases • Specialty LNG: No. 2 worldwide • Export ratio: 80 % • Sales € 44 m, staff 182 MAE Maschinen- und Apparatebau Götzen GmbH • World market leader for straightening machines and wheel set presses • Highly innovative • Acquired US competitor in Jan. 2014 • Sales € 25 m, staff 160 Frank Walz- und Schmiedetechnik Group • Europe‘s leading forge for wearparts for the agricultural industry • 70 % of sales to OEMs, 30 % to wholesale and farmers • Sales € 28 m, staff 274
  6. 6. 6 1. Two very special companies (sales and staff: FY 2014) Setter Group • Paper and plastic sticks for the sweets and hygienic industries, world market leader for paper sticks • 90 % export ratio • 20 bn sticks produced in Germany each year • Acquired US-based Setterstix in Jan. 2015 • Sales € 15 m, staff 59 C.F.K. CNC-Fertigungs- technik Kriftel GmbH • Leading centre in high- precision wire erosion and die sinking • Cutting-edge production line, 45 machines • Advanced laser melting systems (3D printing) for functional prototypes, medical implants etc. • Sales € 8 m, staff 57
  7. 7. January 2015: Setter Group acquires Setterstix Corp. / USA  Setterstix is the leading US producer of paper sticks for the confectionary industry with approx. € 10 m sales and 40 employees  GESCO subsidiary Setter is market leader for paper sticks for the hygiene industry in the US  acquisition rounds off Setter’s position in the US market perfectly  The companies have common origins, but have been separate companies for decades 2.Portfolio development and M&A 7
  8. 8. Current situation with regard to M&A  On the one hand: M&A in the “good” SME sector is currently a seller’s market  A lot of available funds, low interest rates, few attractive investment opportunities  Comparably small number of interesting SMEs  On the other hand: The market continues to be strongly fragmented at all levels (sellers, intermediaries, buyers), there are still interesting opportunities  GESCO strengthened its team in September 2014 (Christoph Borges, Head of M&A) 2.M&A 8
  9. 9. 3.Financial year 2014/2015 Financial year 2014/2015 Demand was satisfactory, but there was significant downward pressure on earnings – all in all a disappointing year Keep in mind:  GESCO AG and GESCO Group financial year = 1 April to 31 March  Subsidiaries’ financial year = calendar year  Financial statement 2014/2015 encompasses calendar year 2014 in operating terms Financial statement 2015/2016 encompasses calendar year 2015 in operating terms 9
  10. 10. 3.Financial year 2014/2015  The economic climate  German GDP 2014 +1.5 %  German Mechanical Engineering Association (Verband Deutscher Maschinen- und Anlagenbau – VDMA): Increase in production 1 % (original forecast: 3 %)  Association of Plastic Goods Producers (Gesamtverband Kunststoffverarbeitende Industrie e. V. – GKV): Sales +2.6 %  GESCO Group  Slight increase in incoming orders  Sales unchanged, slight reduction in organic sales  Frank Walz- und Schmiedetechnik GmbH’s sales and earnings were negatively affected by the Ukraine/Russia crisis  The two companies that are being restructured, MAE and Protomaster, had a negative effect on earnings (announced at the 2014 annual accounts press conference)  significant decrease in group earnings 10
  11. 11. 3.Financial year 2014/2015 Negative impact 1: Protomaster GmbH Manufacturer of sheet metal forming tools Production of body parts and assemblies for small and medium series using those tools 2014/2015  Increased business volume from contracts concluded in previous years, challenges due to the complexity and numbers of parts; tool manufacturing partially carried out by third parties; installation of semi-automatic production systems; many external specialists and workers  Significant negative impact on the organisation, high costs leading to a large loss 2015/2016  Production ramped up  Goals: Further development of the organisation, transformation from a producer of prototypes to a small and medium-sized series manufacturer, reduction of external support, cost optimisation  Continued negative effects on results, a further loss-making year 11
  12. 12. 3.Financial year 2014/2015 Negative impact 2: MAE Maschinen- und Apparatebau Götzen GmbH World market leader in the market for automatic straightening machines and wheel presses 2014/2015  Strong growth in previous years driven by innovation, therefore new construction of administrative and production buildings  Development machines from previous years tie up considerable staff resources  Organisational realignment to a consistently higher level of sales  Delays in the processing of new orders, resulting in a decrease in sales, significant loss 2015/2016  Processing of the development machines will be completed  Organisational development will be largely completed  Positive demand on customers' side  Continued negative effects on results, significantly reduced loss 12
  13. 13. 3.Financial year 2014/2015 Group key figures 2013/2014 2014/2015 Change Incoming orders € million 435.6 448.8 3.0 % Group sales € million 453.3 451.4 -0.4 % Group EBITDA € million 48.7 46.2 -5.2 % Group EBIT € million 32.0 27.3 -14.7 % Earnings before tax € million 29.0 24.6 -15.4 % Income taxes € million -9.3 -10.4 -12.3 % Earnings after tax € million 19.8 14.2 -28.4 % Group net income for the year after minority interest € million 18.1 12.4 -31.8 % Earnings per shares acc. to IFRS € 5.45 3.72 -31.8 % Cash flow € million 36.6 33.1 -9.6 % Employees No. 2,360 2,465 4.4 % 13
  14. 14. 50 100 150 200 250 300 350 400 450 31.03.2014 31.03.2015 31.03.2015 31.03.2014 Current liabilities Non-current liabilities Equity capital Liquid assets Receivables and other assets Inventories Non-current assets Assets Equity and liabilities in € million 3.Financial year 2014/2015 Group balance sheet structure 119 81 39 141 135 73 35 183 104 117 177 89 114 404 404 161 380 380 Equity ratio 45.3 % € 31 million investment Adequate liquid assets Net liabilities to banks to EBITDA: 1.7 14
  15. 15. 4.Financial year 2015/2016 Initial situation and expectations  Economic forecasts indicate growth (GDP:+2.1 %, VDMA: Increase in production +2 %, GKV: Sales +2.6 %)  Frank Walz- und Schmiedetechnik GmbH: Continued weakness in the agricultural technology sector due to Russia/Ukraine etc.  SVT GmbH: low energy prices lead to restraint in investments of the oil industry  decreasing demand for SVT GmbH’s loading arms  Tool manufacturers are expecting decreases in results, partly due to cyclical effects  Restructuring measures at two companies continue to have a negative effect on earnings  Among others, Dörrenberg, Setter, Haseke and CFK are operating at a satisfactory level  Overall sales within the GESCO Group should increase organically, further inorganic growth will be contributed by Setterstix, but margins continue to be far too low 15
  16. 16. 4.Financial year 2015/2016 Q1: Very high level of incoming orders, continued poor results  Includes operations at the subsidiaries from January to March 2015  Incoming orders totalled approx. € 146 million (Q1 of previous year € 126.7 million): +15 % (organic +13 %)  Sales totalled approx. € 119 million (Q1 of previous year € 109.5 million): +9 % (organic +6 %)  Book-to-bill therefore considerably higher than 1, but incoming orders include major contracts partly relating to the following year  cannot be projected for the year as a whole  Orders backlog at the end of Q1 approx. € 208 million  Q1 earnings continue to be negatively impacted by the two companies that are being restructured, in particular 16
  17. 17. 4.Financial year 2015/2016 2014/2015 Actual figures 2015/2016 Target Change Group sales € million 451.4 480 to 490 6.3 % to 8.5 % Group net income for the year after minority interest € million 12.4 12.5 to 14.0 1.2 % to 13.4 % Earnings per share acc. to IFRS € 3.72 3.76 to 4.21 1.2 % to 13.4 % Target figures 17
  18. 18. Summary:  Overall, we expect satisfactory demand in 2015/2016  The two restructuring measures continue to have a negative effect on earnings  We are working to solve those issues as rapidly as possible  2015/2016 should be better than 2014/2015 – but we haven’t turned the corner yet 4.Financial year 2015/2016 18
  19. 19. 5.The GESCO share The GESCO share as an underperformer  Share price development in financial year 2014/2015: +0.3 % (SDAX +17.4 %)  Share price development in calendar year 2014: -0.1 % (SDAX +5.9 %)  Proposed dividend of € 1.75 per share (previous year € 2.20) – distribution ratio slightly above our guideline value of 40 % of EPS 19
  20. 20.  Free float: 86.4 %  Stefan Heimöller, entrepreneur, member of supervisory board: 13.6 %  Investmentaktiengesellschaft für langfristige Investoren TGV: 6.4 %  Dividend policy: payout ratio approx. 40 % of Group net income after minority interest 5. The GESCO share 20 13.6% Stefan Heimöller 6.4% Investmentaktiengesellschaft  für  langfristige Investoren TGV 36% Other institutional  investors 44% Private investors
  21. 21. 5. Share price development (in %) – 1 and 5 years GESCO vs. SDAX, 1 year GESCO vs. SDAX, 5 years 21 ─ GESCO ─ SDAX 80 85 90 95 100 105 110 115 120 80 100 120 140 160 180 200 220 240
  22. 22. 5. Share price development (in %) – 10 years GESCO vs. SDAX, 10 years 22 ─ GESCO ─ SDAX 0 100 200 300 400
  23. 23. Founded: 1989 Share capital: € 8,645,000 Shares: 3,325,000 registered shares Free float: 86.4 % Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market) Sec. identification number: A1K020 ISIN: DE000A1K0201 IPO: 24/03/1998 Index: SDAX End of financial year: 31 March Designated sponsors: equinet Bank AG Oddo Seydler Bank AG Facts and figures on GESCO AG 23
  24. 24. Financial calendar and investor relations contact  Financial calendar 25 June 2015 Annual Accounts Press Conference and Analysts’ Meeting 14 August 2015 Q1 figures (01.04. to 30.06.2015) 18 August 2015 Annual General Meeting 13 November 2015 Q2 figures (01.04. to 30.09.2015) February 2016 Q3 figures (01.04. to 31.12.2015) 30 June 2016 Annual Accounts Press Conference and Analysts’ Meeting August 2016 Q1 figures (01.04. to 30.06.2016) 25 August 2015 Annual General Meeting November 2016 Q2 figures (01.04. to 30.09.2016)  Investor Relations GESCO AG Phone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49 Oliver Vollbrecht E-mail: info@gesco.de Johannisberg 7 Internet: www.gesco.de 42103 Wuppertal Germany 24

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