20150217 SHW Preliminary Full Year Results 2014€¦ · • Awarded with a global bulk order for a...
Transcript of 20150217 SHW Preliminary Full Year Results 2014€¦ · • Awarded with a global bulk order for a...
1
Recent highlights
• Awarded with a global bulk order for a leading U.S. OEM:
growth secured beyond 2020 and re-entry into the North American market
• First internationalisation milestone of brake discs:
Joint Venture agreement with Shandong Longji for the Asian market signed
• Implementation of 3 year investment and improvement programme in Powder
Metallurgy on track; margin improvement in H2/2015 expected
• Brazilian subsidiary started operations successfully; profitable from scratch
• Group sales 2014: +17.6 percent to € 430 million
• Adjusted EBITDA 2014: + 13.8 percent to € 40.6 million
• Continuous further improvement of working capital ratio (decreased by 154bp y-o-y)
• Management and Supervisory Board intend to propose a dividend of € 1.00 per share
• Good start into 2015: January group sales up by approx. 13 percent y-o-y to € 36.2m
2
Nomination as global pump series supplier secures long-term growth
Nomination as sole pump supplier for global engine platform for a leading U.S. OEM in China, North-America and Europe
Lifetime volume: up to 5 million variable oil pumps
Lifetime value: up to €160 million
Start of production: North America and Europe (2018), China (2019)
Back-up supplier for comparable programme (lifetime value: approx. € 240 million)
40%
60%
Europe
China /North America
3
SHW Longji Brake Discs JV – a capital optimised cooperation
* Amount is based on the RMB/EUR exchange as of 27.01.2015
Chinese OEM market for quality brake discs offers significant growth potential (Light vehicle production 2014 - 2019: increase by 40 percent from 21.3 million to 29.9 million units)
Sino-Foreign Equity Joint Venture: SHW (51 percent) / Shandong Longji (49 percent)
Business focus: Ready-to-install brake discs for passenger cars and light commercial vehicles (OEM/OES)
Total equity: RMB 215.5 million (approx. € 31.9 million*) SHW: cash contribution splitted over two years Shandong Longji: foundry plus associated machinery, equipment and land use rights
JV partner guarantees to fill the existing production capacity with fixed profit margin
Production capacity from existing aftermarket business will be shifted to OE business as required SHW Longji
Brake Disc JV
JV profitable from day one
Capital efficient and profitable milestone of brake discs internationalisation
4
Efficiency measures implemented in Powder Metallurgy
1. Management changes Integration of Powder Metallurgy with lead functions in Bad Schussenried
Chief Operation Officer installed with extended responsibility
Change of plant management
2. Capacity expansion and capex installations Measures on track (see following slide)
3. Optimisation of SHW production system Continuous Total Productive Maintenance (TPM) installed
Significant reduction of setup times by implementation of SMED (Single Minute Exchange of Die)
Output and labour productivity is scheduled to increase by 30 to 40 percent by end of 2015
Margin improvement scheduled to start at the end of Q2/2015
5
Powder Metallurgy – result-improving measures
Specification Commissioningdate Effect Status
Building expansion Q4/2014 Capacity
Sizing press Q1/2015 Capacity
Powder press Q1/2015 Capacity
Machining cell Q2/2015 Capacity / Ratio
Double disc grinding machine Q3/2015 Capacity / Ratio
Palletizing systems Q3/2015 Ratio
High-speed sizing press Q1/2016 Capacity
Large investments 2014 – 2016
6
Strong sales lead to “growth pains”
€m 2014 2013 Change in %
Group sales 430.0 365.6 +17.6%
Incoming orders 452.7 388.8 +16.4%
Adj. EBITDA 40.6 35.7 +13.8%
Depreciation (excl. PPA) 18.1 14.0 +29.1%
Adj. EBIT 22.5 21.7 +3.9%
Adj. Net income for the period* 15.0 14.1 +5.8%
Adj. EPS** (in €) 2.56 2.44 +5.8%
Working Capital Ratio (%) 7.2 8.7
Capex 34.8 32.8 +6.0%
Free cash flow -5.6 0.4
Net Debt -14.4 -2.9
ROCE (%) 17.7% 19.7%
No. of employees (average) 1,167 1,058 +10.2 %
* Reported Net income for the period: € 10.7m / € 13.4m** Reported EPS: 1.83 / 2.29
7
GroupSales by quarter (€m)
12.4%18.1%16.9%+23.9%
Q4
108.696.7
Q3
109.492.6
Q2
107.391.8
Q1
104.884.6
20142013365.6
17.6%
430.0
2013 2014
Sales (€m)
Improving profitability and strong growth
Q1
11.111.0
6.0
Q2
8.8 9.47.6
Q3
11.1 11.3
Q4
20142013
Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)*
7.1% 8.4% 12.0% 10.3% 12.0% 10.3% 7.8%
* Readjustment of Q2 / Q3 figures due to non-recurring serial start-up costs
8.7%
2014
40.635.7
9.8%
2013
+13.8%
9.4%
8
Increased sales with leading key accounts
14.7
1.9
14.7
2.2
14.7 17.5
2.3
2.2
14.7 17.5
2.3
ThyssenKrupp 11.1
Ford 11.4
Audi 22.4
BMW 40.1
Daimler 60.3
VW 92.9
19.9Volvo Cars
72.4
PSA
32.6
23.4
12.3
6.2Hilite
Other 71.4
36.0
13.2
83.8
9.7
113.4
11.49.3
Porsche 21.820.5
20132014
Sales by customer (€m)
SHW well positioned with German OEMs
9
Pumps and Engine ComponentsSales by quarter (€m)
+20.4%
72.4
Q4
+22.5%
68.6
Q2
+27.2%
80.669.9
Q3
17.2%
84.8
Q1
63.3
85.682.6
20132014
Sales (€m)
Q1
7.58.8
9.5
4.8
Q2
9.0
7.46.2
Q4
9.3
Q3
20142013
Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)*
2014
33.129.3
10.7%
2013
+12.9%
9.9%
274.2
2013
21.7%
333.6
2014
7.6% 9.3% 12.8% 10.9% 13.6%10.8% 8.6% 8.7%
* Readjustment of Q2 / Q3 figures due to non-recurring serial start-up costs
Outstanding growth profile and improving profitability despite capex programme for Powder Metallurgy
10
Brake DiscsSales by quarter (€m)
23.8 24.3
Q3
22.7
-2.2%
21.224.2
Q1
23.2
Q2
24.7
+4.6%6.5%+14.0%
Q4
23.8
Sales (€m)
Q3
2.22.0
Q2
2.5
1.9
2.7
Q4
1.51.7
Q1
2.6
Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)
20132014
20142013
9.1
2013
7.9
8.7%
9.4%
2014
+14.8%
96.5
5.5%
2014
91.5
2013
7.0% 7.2% 11.1% 10.1% 8.7% 9.1% 7.7%11.3%
EBITDA-margin > 10 percent from 2015 onwards
11
Net Working Capital / Sales (LTM)
Medium-term target: 11%
Q1/2014
11.8%
Q4/2013
8.7%
Q3/2013
16.1%
Q2/2014 Q3/2014
11.7%
10.1%
Q2/2013
15.6%
Q1/2013
16.8%
Q4/2014
7.2%
Sales increased by 17.6 percent in 2014; Working Capital Ratio reduced by 17.2 percent y-o-y to 7.2 percent
12
Capex – Depreciation
14.714.7
Capex by quarter (€m)
Q4
10.1
6.3
Q3
6.7
9.3
Q2
8.89.0
Q1
9.28.2
59.2%-27.4%-2.4%12.1%
20142013
Capex (€m)
31.6%32.3%
Q4
4.0
Q3
4.8
22.5%+30.1%
4.9
3.7
Q2
4.5
3.4
Q1
4.0
3.0
Depreciation (€m) Depreciation by quarter (€m)
20142013
2013
32.8
9.0%
+6.0%
2014
34.8
8.1%
18.3
4.2%
2013
+28.8%
2014
14.2
3.9%
Capex ratio will decrease to around 7 percent in 2015
13
Cash flow
5.(€m) Q4/2014 Q4/2013 12M/2014 12M/2013
Cash flow from operating activities 18.3 22.6 29.9 30.4
Cash flow from investing activities -7.8 -6.4 -35.5 30.0
Free cash flow 10.5 16.2 -5.6 0.4
Other (esp. dividends) 0.0 -0.1 -5.8 -22.9
Change in net cash 10.5 16.1 -11.5 -22.5
Improvement of operating cash flow due to positive development in working capital
14
Sound financial profile
Balance sheet as of 31 December 2014 (€m) Balance sheet as of 31 December, 2013 (€m)
Other short termliabilities(35.8%)
Pensions(13.4%)
Currentassets
(43.0%)
Non-currentassets
(56.8%)
Equity(40.3%)
37.9
209.5m
Equity & Liabilites
75.0
14.67.3
28.1
84.5
Assets
0.3
119.0
90.2
Cash(0.1%)
Other short termliabilities(36.0%)
Pensions(13.1%)
Currentassets
(45.3%)
Non-currentassets
(53.2%)
Equity(44.1%)
37.9
187.3m
Equity & Liabilites
67.4
5.77.2
24.5
82.5
Assets
2.8
99.7
84.8
Other long term liabilities(3.9%)
Cash(1.5%)
Other long term liabilities(3.5%)
Bank debt (7.0%)*Bank debt(3.1%)
Equity ratio above industry average* Net financial debt amounts to € 14.4m in 2014
15
2.9%
2019
19.4
2018
19.3
2017
18.7
2016
17.7
2015
17.6
2014
16.8
Source: PwC Autofacts – January 2015
Positive market environment in all major automotive marketsLight vehicle production (< 6 t) – Europe (m units) Light vehicle production (< 6 t) – North America (m units)
2.9%
2019
19.6
2018
18.8
2017
18.3
2016
17.5
2015
17.2
2014
17.0
7.0%
2019
29.9
2018
29.0
2017
27.4
2016
25.0
2015
23.1
2014
21.3
9.2%
2019
6.1
2018
6.0
2017
5.6
2016
5.1
2015
4.4
2014
4.0
CAGRCAGR
CAGR CAGR
Light vehicle production (< 6 t) – China (m units) Light vehicle production (< 6 t) – South America (m units)
SHW benefits from challenging CO2 regulations in all regions
16
Key focus points of management
Strong focus on diligent execution of fully identified efficiency measures in all plants,
especially Powder Metallurgy
Pumps & Engine Components:
• Further market penetration with new technical solutions for transmission oil pumps
(e.g. two stroke vane pump)
• Start of operation in China in the course of H2/2015
• Evaluation of Best Cost Country (BCC) locations in Eastern Europe for
capacity expansion
• Actively monitoring and evaluating potential M&A opportunities
Brake Discs:
• Further automation of aluminium casting assembly process and
capacity expansion for composite brake discs
• Evaluation of further cooperation potentials in the NAFTA region
17
Profit enhancements to be achieved by
• Doubling of composite brake discs sales
• Additional sales volume of pumps and engine components
• Turnaround of Powder Metallurgy
• Reinforcement of the structural organization in 2014 will yield first positive results in 2015
Economies of scale and productivity improvements
Guidance 2015 2014*
Sales approx. € 460 million € 430 million
Adjusted EBITDA € 46 to € 50 million € 40.6 million
Capex € 30 to € 33 million € 35.4 million
Working Capital Ratio sustainable 11 % of sales 7.2 % of sales
* Preliminary figures 2014
18
Closing remarks
New supplier contract with a leading U.S. OEM for its global engine platform further secures long-term future growth of SHW’s pumps business and re-entry into the North American market
Development of Powder Metallurgy business is on track with positive impact on margin expected in H2 2015
Successful completion of Joint Venture negotiations with Shandong Longji
Significant improvement in Working Capital
CO2 reduction continues to be a key topic in the sector
Continuous improvements of profitability
Sound growth story: fastest organically growing automotive supplier
19
Michael SchicklingHead of Investor Relations & Corporate Communications
SHW AGWilhelmstrasse 6773433 Aalen-Wasseralfingen Telephone: +49 (0) 7361 502-462E-Mail: [email protected]
Anja Kathrin SiehlerSenior Manager Investor Relations & Corporate Communications
SHW AGWilhelmstrasse 6773433 Aalen-Wasseralfingen Telephone: +49 (0) 7361 502-469E-Mail: [email protected]
Our Team
20
DisclaimerNo offer or investment recommendation
This document, which has been issued by SHW AG (the “Company” or “SHW”), does not constitute an offer to sell, or the solicitation of an offer to subscribe for orbuy, any shares in the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract orinvestment decision in relation thereto.
The contents of this presentation are may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part,for any purpose. Neither the Company nor any other party is under any duty to update or inform you of any changes to such information. In particular, it should benoted that financial information relating to the Company contained in this document has not been audited and in some cases is based on management informationand estimates.
This material is given in conjunction with an oral presentation and should not be taken out of context.
Certain market data and financial and other figures (including percentages) in this document were rounded in accordance with commercial principles. Figuresrounded may not in all cases add up to the stated totals or the statements made in the underlying sources. For the calculation of percentages used in the text, theactual figures, rather than the commercially rounded figures, were used. Accordingly, in some cases, the percentages provided in the text may deviate frompercentages based on rounded figures.
Future Oriented Statements
Certain statements in this presentation are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties andassumptions that could cause actual results or events to differ materially from those expressed or implied by the forward‐looking statements. These risks,uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein.
No obligation to update the information
The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events orotherwise, except as otherwise required by applicable laws and regulations. You should not place undue reliance on forward-looking statements, which speak asonly of the date of this presentation. Statements contained in this presentation regarding past trends or events should not be taken as a representation that suchtrends or events will continue in the future.