Post on 31-Jul-2020
Schouw & Co. Full Year 2016Investor presentation
MARCH 2017CEO JENS BJERG SØRENSEN | IR KASPER OKKELS
2016 highlights04.03.20162016 Annual Report 2
Revenue DKK
14.4bnGrowth 14.4% // 2015: 12.6bnIncrease mainly due to acquisitions
EBIT DKK
1,038mGrowth 24.9% // 2015: 831mDKK ~50m from non-recurring items
Cash flow from operations DKK
1,598mGrowth 36% // 2015: 1,171mFree cash flow 1,203m
NIBD/EBITDA
-0.7xNIBD increase: Specma, GPV, dividends, capexNIBD reduction: cash flow, Kramp divestment
Long-term value creation
investingAcquisitions; Specma, GPV, Etola, BHE (2017)Capex; capacity in Malaysia, Norway, the Czech, etc.
Return on invested capital
20.2%ROIC incl. goodwill 16.6%Growth in ROIC seven years in a row
Another strong year in 2016Revenue DKKbn ROIC (excl. GW) %
EBITDKKm Cash flow from operations DKKm
10.03.20162016 Annual Report 3
2016
9.9
2013
11.8
2015
11.712.6
14.4
2012
11.3
20142011
+14%
831708685679
557
+25%
1,038
20152014 201620132011 2012
18.3%20.2%
20152012 20142011
+1.9pp
15.2%16.9%
2016
13.8%
2013
16.1%
1.598
1.171
628667771
375
2016
+36%
20152013 201420122011
-0.7x’16 NIBD/EBITDA
DKK -2.8bn’11-16 ∆NIBD
Delivering on our strategic goals10.03.20162016 Annual Report 4
GROWTH PROFIT RETURN GEARING DIVIDENDS PORTFOLIO
Considerable growth every
year
Benchmark level
profitability
ROIC > 15% (dependent on risk)
Investment grade capital
structure
Constant or increasing dividends
5-7 strong businesses
+14% ‘15-16 rev. growth
+8% ‘11-16 rev. CAGR
+25% ‘15-16 EBIT growth
+13% ‘11-16 EBIT CAGR
20.2%2016 ROIC ex gw
+6.4pp ‘11-16 ∆ROIC ex gw
5businesses
activeM&A agenda
DKK 12’16 dividend/share
+200%’11-16 ∆dividend
NIBD reduction despite significant investments10.03.20162016 Annual Report 5
2016 Net Interest-Bearing Debt DKKbn Major investments1
Hydra acquires Specma to become a leading hydraulic company in the Nordics
DKK
650m
DKK
400m
Schouw & Co. acquires GPV, a strong EMS player in Northern Europe
DKK
400m
FPC adds another production line in Malaysia to cater the growing hygiene market in Asia
Divi-dends
0.2
Specma & GPV
NIBD 2015
0.8
-0.5
1.1
1.6
Kramp and SMB
1.1
Capex
-1.0
Other
0.1
CF opera-tions
NIBD 2016
BioMar adds new production line in Norway to expand production by 30%
DKK
500m2
M&
AC
AP
EX
Notes: 1) Timing of cash flow effect not considered; 2) Initial investments amounted to DKK ~350m (de-bottlenecking and follow-up investments of up to DKK 150m)
280
330
380
430
480
530
580
630
Ja
n
Feb
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Sep Oct
No
v
Dec
Ja
n
Feb
Schouw & Co.C20 CAP (Schouw & Co. indexed)MidCap (Schouw & Co. indexed)
Improvement in all key financial metrics
Revenue and income DKKm 2016 2015
Revenue 14,369 12,566
EBITDA 1,472 1,214
- margin 10.2% 9.7%
EBIT 1,038 831
- margin 7.2% 6.6%
Associates 566 86
Cash flows DKKm 2016 2015
Cash flows from operating activities 1,598 1,171
Cash flows from investing activities -395 -569
Of which investment in PPE -828 -354
Cash flows from financing activities -925 -324
Invested capital and financing DKKm 2016 2015
Working capital 1,727 1,598
Net interest bearing debt (NIBD) -1,028 -511
Total equity 7,814 6,677
ROIC excl. goodwill 20.2% 18.3%
ROIC incl. goodwill 16.6% 15.1%
NIBD/EBITDA -0.7 -0.4
10.03.20162016 Annual Report 6
2016 2017
+36%∆ 2016
-13%∆ 2016
-1%∆ 2016
Revenue EBITCash flow
(from operations)
Invested capital (excl. goodwill)
62%12%
9%
12%5%
55%
23%
8%
10%4%
58%22%
7%
8%5%
BioMar remains the biggest business in the portfolio10.03.20162016 Annual Report 7
DKK14,369m
DKK1,038m
DKK1,598m
28%
27%
23%
15%
7%
DKK5,416m
BioMar FPC Hydra/Specma
GPVFIN
All businesses contributing to strong performanceRevenue DKKm EBIT DKKm
Cash flow from operations DKKm Net working capital DKKm
10.03.20162016 Annual Report 8
668
68
Hydra/Specma
79
FPC
+14%
GPV1
6
2016FIN
14,369
Others
25
BioMar2015
12,566107
1,076
44
134
549
1
22
FIN GPV1
4
FPC
+25%
1,038
Others 2016Hydra/Specma
831
BioMar
7
2015
247
77
2016
+36%
11 17
1.171
36
26
Hydra/Specma
BioMar2015 GPVFPC Others
1.598
FIN
35 181
339 279
Others
3
GPVHydra/Specma
18
FIN
22
FPC
0
BioMar
+8%
2016
1.727
2015
1.598
Notes: 1) April - December
Acquisitive
FIN only business not delivering ROIC target10.03.20162016 Annual Report 9
Notes: 1) GPV figures full calendar year. 2016 EBIT includes DKK -6m in PPA
GPV1BioMar FPC FIN Hydra/Specma
15%target
RevenueDKKm
EBITDKKm
ROIC ex gw
%
-1%
8.8678.974
2015
35.8%
22.7%
2016
+13.1pp
0%
1.7921.797
-2.3pp
2016
18.4%
2015
20.7%
+6%
1.222 1.301
8176
+6%
-0.1pp
7.7%7.8%
2015 2016
1.747
+190%
603
11178
+42%
2015
16.1%
28.9%
-12.8pp
2016
6153
+15%
15.9%
na
2015 2016
877
+3%
855
581
447
+30% -3%
246253
Revenue DKKm ROIC %EBIT DKKm & %
8,8678,451
201620152014
-1.2%
2012
8,9748,227
2013
8,702 581
447434394
438
+30.1%
2016
6.6%
2015
5.0%5.1%
2013
5.3%
2014
4.5%
2012
+13.1pp
2016
16.6% 16.4%
35.8%
2015
22.9% 22.7%
2014
20.1%
2012 2013
22.8%16.6% 14.7%
24.4%
Excl. GW Incl. GW
BioMar: All-time high ROIC performance10.03.20162016 Annual Report 10
Financials• Solid EBIT improvement by DKK 134m
• Flat revenue and volume development
• Driven by margin management, increased sales of functional feed and one-offs
• R&D farming and subsidies add DKK 50m
• Debtor provisions DKK 44m lower than LY
• Record-high ROIC performance (35.8%); strong EBIT and DKK ~340m lower NWC (extended supplier credits and increased supply chain financing)
Segments• Salmon North Sea and EMEA compensate
decline in Chile (due to algal bloom)
• EBIT increases in Norway driven by volumes and functional feed sales
• Greece restructured with active participation from BioMar
• Reinforced the strong position in Denmark
• Acceleration JV in China with M&A
2017 outlook• Platform for further growth established
• New capacity in Norway, Turkey and China
• Positive volume expectations despite challenging market conditions
• Recovery in Chile, focus on functional feed and increase in salmon feed volumes
• 2017 sales expected DKK ~9.4bn
• Progress in underlying operational EBIT expected at DKK 510-550m guidance
Revenue DKKm ROIC %EBIT DKKm & %
1,792
-0.3%
2016
1,797
20142013
1,787
1,459
20152012
1,554246253
171164156
10.7% 9.6%
2013
13.7%
-2.8%
2012 2015
14.1%
2014
10.6%
2016
19.2%
2014 20152013
13.5%14.4%
2012
-2.4pp
13.6%13.4%
18.4%20.7%
2016
12.6% 12.8%
17.1%
Excl. GW Incl. GW
FPC: On par with record 2015 performance 10.03.20162016 Annual Report 11
Financials• 2015 positively impacted by FX and raw
material development (DKK ~50m)
• 2016 on par with LY’s strong performance
• Performance sustained due to increased focus on value add (particularly in Asia)
• Lower COGS by efficiencies in production
• Strong ROIC at 18.4%
Segments• Revenue increase in Malaysia and Innowo
Print balancing out revenue decline in Denmark
• Solid EBIT driven by Malaysia and Innowo Print by increased value-added focus
• Lower activity/profit in Denmark due to upgrade of a production line
• Good commercial progress in Malaysian print activities
2017 outlook• Significant investment program
• Continued demand increase in Asia
• Focus on value-added products (softness, light material, print)
• Revenue expected to reach DKK 2.0bn
• EBIT expected at DKK 230-260m
Revenue DKKm ROIC %EBIT DKKm & %+6.5%
2016
1,301
20152014
1,0481,222
901
20132012
933
817662
3728
2012
3.1% 4.0%
2016
+5.6%
2013 20152014
6.2%6.2%5.9%
7.7%7.0%
2015
5.1%
2012 20162014
7.5%
-0.1pp
2013
8.4%7.8%
3.8% 3.5%
7.0%
4.7%
Incl. GWExcl. GW
FIN: M&A activity has lifted revenue10.03.20162016 Annual Report 12
Financials• Continued progress in sales and EBIT
• Revenue increase due to Turkish acquisition and increased European sales
• EBIT% and ROIC at 2015 level
• Decline in South Africa offsetting solid progress in European business
• ROIC is lower than 15% target due to underperformance in South Africa and relatively large tied-up capital
Segments• Good performance on all European sites
• Solid performance from the Czech site driven by efficiency improvements
• Challenging market environment in the US and South Africa
• Strong sales development in auto, construction and wipes
• South Africa is loss making (EBIT -17m)
2017 outlook• Strong market position from investments
in capacity expansion, value add and innovation
• Stable market activity expected
• Focus on NPI and continued transformation from ‘volume to value’
• Revenue expected to reach DKK 1.4bn and EBIT to land at DKK 80-100m
Revenue DKKm ROIC %EBIT DKKm & %
603566480527
1,747
+189.8%
201420132012 20162015
111
786046
6712.9%
20162014
6.3%
2015
+41.7%
9.6%
2013
10.6%12.7%
2012 2015
+-12.8pp
2016
28.9%
13.6%16.1%
22.6%
28.9%22.6%
2013 20142012
18.2%21.3%
18.2%21.3%
Incl. GWExcl. GW
Hydra/Specma: Specma acquisition a game-changer10.03.20162016 Annual Report 13
Financials• Specma has lifted revenue with DKK 1.1bn
and EBIT with DKK 49m before PPA
• Pre-acquisition activities delivered growth in both revenue and EBIT
• EBIT% and ROIC adversely impacted by Specma’s relatively weaker performance
• ROIC still over 15% target
• Harvesting of synergies (primarily sourcing) progressing as planned
Segments• Stronger position after Specma acquisition
• Better platform to service international customers
• Strong development in wind and auto but soft in marine and mining
• Pressure from global customers on lower prices
2017 outlook• Continued integration and further
utilisation of the combined platform • Solid position to long-term growth• Positive outlook in wind and auto offsetting
challenges in some of the other segments (particularly marine)
• Revenue expected to reach DKK 1.8bn• EBIT expected at DKK 100-120m
Revenue DKKm ROIC %EBIT DKKm & %
855
+2.6%
2016
877
201520142012 2013
6153
+13.9%
2016
6.1%
2014
6.9%
2013 20152012
15.9%15.9%
2015 2016201420132012
Excl. GW Incl. GW
GPV: Strong performance from the newest member10.03.20162016 Annual Report 14
Financials• Solid performance of the newest business
• Best-in-class EBIT margin performance
• Good sales and production efficiency
• ROIC performance above target
• ROIC including goodwill already above 15% in first year of ownership
Segments• Strong performance in Thai operation
• Solid demand in many segments
• Effect from long-term customer relations
• Mexico commercially operational Q1 2017 supporting customers in the region
• Increased activity in DK-electronics following acquisition of BHE
2017 outlook• Sales growth from production in Mexico
and acquisition of BHE
• Ongoing focus of translating pipeline into long-term business
• Revenue development driven by internal strengths and sound market conditions
• Negative EBIT from one-off integrations costs in 2017 from BHE acquisition
• Revenue expected to reach DKK ~975m and EBIT to land at DKK 50-60m
Attractive growth prospects across our industries10.03.20162016 Annual Report 15
Fish feeds Hygiene nonwovens
Industrial nonwovens
Hydraulics EMS
2420
~4%
2015 2020
2.0
~5%2.5
20202015
3,3
2,3
2015
~8%
2020
71
53
2020
~6%
2015
446
331
~6%
20202015
Global GDP growth (2015-20)
3.7%
Volume (million tonnes) Value (USDb)Volume (million tonnes)Volume (million tonnes) Value (USDb)
Sources: IMF (GDP); Euromonitor (nonwovens); GTAI (EMS); Internal analysis (Fish Feed; Valentum research (Hydraulic)
Profit guidance 201710.03.20162016 Annual Report 16
DKK million
2017
outlook
2016
actual
2015
actual
BioMar 510-550 581 447
Fibertex Personal Care 230-260 246 253
Fibertex Nonwovens 80-100 81 76
Hydra/Specma 100-120 111 78
GPV 50-60 44
Other c. -30 -24 -23
Total EBIT 1000-1060 1,038 831
Associates etc. c. 20 566 86
Financial items, net c. -25 -27 -46
Profit before tax 995-1055 1,578 871
*1 *1
Notes: *1) Including DKK 24m from PPA effect in Specma; *2) GPV only recognised in 9 months of 2016; *3) Group expectations; *4) Associates in 2016 includes sale of shares in Kramp and SMB
*2
BioMar
Fibertex Personal Care
GPV
Fibertex Nonwovens
Hydra/Specma
Schouw & Co. Sum of EBIT ranges is 940-1,060m.
Ending in the lower end is less likely, hence Group estimate DKK 1,000-1,060m
Fast integration of BHE results in negative 2017 effect from the acquisition
Ramp-up production in Mexico
2017 will be a year of consolidation and integration between Hydra and Specma
Double-digit investment in ‘next level’
Progress set to continue with effect from new capacity and acquisitions
Uncertain market conditions in S. Africa
Installation of Line 8 and phasing in print activities bring additional costs
DKK ~50m positive one-offs in 2015
2016 effect from R&D farming activity and R&D grants. Total of DKK ~50m
2016 provisions DKK 44m below 2015
*4
*3
Summing up04.03.20162016 Annual Report 17
Best EBIT and ROIC performance ever in Schouw & Co.
Strong progress on all key financials
Well-proved ownership model – delivering on goals
Financial versatile despite significant investments
Well-balanced portfolio with active M&A agenda
All businesses contributing to strong performance
ROIC target realised for all businesses except FIN
Attractive growth rates in all industries
Performance driven by margin management, focus on value-add and global production platform
Well-positioned for further growth through CAPEX programs, M&A agendas and adaptable organisations
Schouw & Co. level
Business level
Schouw & Co. strategy recap
Vision and mission
We strive to be among the best in creating value in a proper and
trustworthy manner
We put together a portfolio of leading Danish industrial businesses, which we develop through value-creating, active and long-term
ownership
VISION MISSION
DIVERSIFIED
PORTFOLIO ACTIVE AND
DEVELOPING
OWNERSHIP
OPENNESS
FINANCIAL
VERSATILITY
STRATEGIC
ELEMENTS
PROFITABLE
GROWTHEFFICIENT
USE OF
CAPITAL
FUTURE-PROOFING
ACTIVE
OWNERSHIP
MODEL
Modus Operandi
Diversified portfolio
INDUSTRYB2B with preferences for pro-cessing industry & logistics
SIZEMinimum revenue, or potential of, DKK 1bn
GEOGRAPHYHQ in Denmark, but internationally focused
OWNERSHIPPreferences for 100% (minimum majority share)
LEADING POSITIONOpportunity to set the agenda within niche segments
MANAGMENTStrong and ambitious management
NEW OWNER NEEDNeed for at new owner to support transformation
ACTIVE OWNERSHIPPossibility to exercise active ownership
Investment criteria
Results are created by people