Oerlikon FY 2007 Presentation
Transcript of Oerlikon FY 2007 Presentation
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Managing for profitability
Zurich, March 27, 2008
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Page 2 2007 annual presentation
Disclaimer
This presentation is based on information currently available to
management. The forward-looking statements contained herein
could be substantially impacted by risks and influences that are not
foreseeable at present, so that actual results may vary materially
from those anticipated, expected or projected.
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Page 3 2007 annual presentation
Executive summary of fiscal year 2007
Fiscal year 2007 results
Business strategy and outlook
Agenda
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Page 4 2007 annual presentation
Strong Sales improvement since 2005
20072004 2005 2006
Annual Sales development
Further substantial top-line growth expected
(in CHF m)
1,8501,605
2,206
5,629
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Page 5 2007 annual presentation
Sustainable EBIT improvement since 2004
20072004
496
2005
-329
2006
Annual EBIT development
Three consecutive years with strong EBIT improvement
(in CHF m)
329
34
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Page 6 2007 annual presentation
Key financials(1) in 2007 with massive growth - (YoY)
(1) Oerlikon incl. former Saurer Group for the months of November and December 2006
2,491
2006
6,041
2007
+3,550
Orders received Sales EBITOrders on hand
(in CHF m)
1748
2006
1,841
2007
+93
2,206
2006
5,629
2007
+3,423
325
2006
496
2007
+171
+ 143% + 5% + 155% + 53%
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Page 7 2007 annual presentation
Pro forma(1) key financials with double digit growth
5,220
2006(1)
6,041
2007
+821
Orders received Sales EBITOrders on hand
(in CHF m)
1,748
20072006(1)
1,841
+93
4,684
20072006(1)
5,629
+945
510
+ 15.7% + 5.3% + 20.2% + 15.3%
430
2007
496
2006(1)
+66
(1) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006
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Page 8 2007 annual presentation
Strong cash conversion adds to financial leeway
Operative CF improved from CHF 382 m (2006) to CHF 682 m (2007)
Total available liquidity at CHF 1.7 bn as of Dec. 31, 2007
Financial measures provide flexibility for the future
-35
credit
facilit
y
shortterm
fin.
liabilitie
s
longterm
fin.
liabilitie
s
a
vaila
ble
debt
cash
mark.
sec.
incl
.
treas
urys
hares
totalav
ailabl
e
liquidity
2,500
-1,748
717
484
504 1,705
(in CHF m)
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Page 9 2007 annual presentation
Oerlikon profitability indicators*
20
30
-10
-20
-30
2004 2005 2006
RONA
0
10
-70
ROE
Profitability indicators
(in %)
Return on Equity (ROE) improved
by more than 20% in 2007
Return on Net Assets (RONA)
surged by almost 50% in 2007
* 2006 2007 Continued operations
2007
ROE: EBIT / Equity attributable to shareholders of the parent
RONA: EBIT / Net assets
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Page 10 2007 annual presentation
80
90
100
110
120
130
140
150
01/07 02/07 03/07 04/07 05/07 06/07 07/07 08/07 09/07 10/07 11/07 12/07
Index[Dec.0
6=100]
Institutional Retail
Significant expansion of our shareholder base(1)
51%Others
28%Victory
14%Renova
7%
Oerlikon
Oerlikon treasury shares and 2 keyshareholders hold around 49%
Free float increased to 29% from 25%
(1) As per Dec. 31, 2007
Currently > 9,000 investors in our share register
Total shareholder base rose by20% or ~1,300 shareholders (2)
Institutional shareholder base
increased by 42%(2)
Retail investor base plus 18% (2)
(2) Change in number of registered shareholders, Dec. 31 2006 vs. Dec. 31 2007
Shareholder base development
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Page 11 2007 annual presentation
Enhancement / stabilization / realignment of overall company- Efficiency increase, customer proximity and profitability enhancement
- Refocusing of R&D activities, horizon expansion, installation of Scientific Advisory Board
Refined mid term strategy- Smooth migration to industrial conglomerate of related technologies with common base:
high-tech components & machinery, engineering solutions and related services
- Strong focus on high margin niche markets - differentiating through technology & services
- Clean Technologies further developed, Solar ramp-up accelerated, introduction of micromorph tandem line
- Clear prioritization of portfolio activities, smooth integration of recent acquisitions- First successes in portfolio streamlining with divestment Blu-ray and Optics
Operative initiatives well on track- Purchasing program exceeds expectations
- Cross-segment R&D projects filling pipeline for tomorrow
- Joint expansion of global footprint accelerated, successful regional initiatives
Solidified financial performance and position- Organic growth accelerated, strong improvement of cash conversion through working capital initiative
- CHF 2.5 bn credit facility secured, attractive conditions and re-affirmation of investment grade status
Executive summary of fiscal year 2007
Oerlikon achieved or even exceeded major 2007 targets
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Page 12 2007 annual presentation
Oerlikon priorities 2008 and beyond
Realize potential of Solar business- Further establish micromorph tandem cell as industry leader- Delivergrid parity by 2010 with today's technology- Drive global thin-film ramp-up (incl. expansion of offering)
Focused growth strategies value generation in key businesses- Coating Services: drive global/offering scale technology leadership- Drive Systems: full potential niche strategy- Vacuum: strategic growth production and sales in Asia
- Space: increase scale and scope in attractive niche Manage cyclical businesses and improve profitability
- Textile: completion of value chain - product portfolio and market segment expansion- Esec: leverage product innovations and improve sales and pricing
Portfolio: selected acquisitions in focus BUs consequent portfolio streamlining- Coating: continue selected expansion- Blu-ray / DVD: Divestment completed, Optics divestment in progress
Center: Efficient center, wave 2 purchasing (i.e. LCC), R&D / innovations
Leadership: further strengthen strong leadership systematic approach tocontinuously upgrade our talent pipeline, continued communication
Target 2008: Sales > CHF 6 bn, further EBIT increase
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Page 13 2007 annual presentation
Executive summary of fiscal year 2007
Fiscal year 2007 results
Business strategy and outlook
Agenda
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Page 14 2007 annual presentation
Orders received and on hand by Segment
(in CHF m)
2006(1)
2007 Delta 2006 2007 Delta
Group
continuing operations5,220 6,041 +16% 1,748 1,841 +5%
Coating 1,195 1,346 +13% 478 510 +7%
Vacuum 444 477 +7% 59 78 +32%
Components 297 376 +27% 169 200 +19%
Textile 2,329 2,655 +14% 867 821 -5%
Drive Systems 952 1,185 +24% 175 231 +32%Other 3 3 -7% 0 0
Discontinued operations 140 96 -31% 26 19 -27%
Orders received Orders on hand
(1) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006
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Page 15 2007 annual presentation
Double digit sales growth driven by all Segments
Textile
8
2006(1) Coating
28
0
DriveSystems
2007othersVacuumCompo-nents
(1) Oerlikon incl. former Saurer Group 2006 and restatement
Note: Discontinued operations with CHF 103 m Sales not included
+22% +6% +2% +27% +17%Growthrate
4,684
5,629
570
178
161
+20%
Asia
Regional Sales 2007
CHF 5.6 bn
Others
EMEA
18%
Americas38%
41%
3%
Sales by Segments
Sales well balanced worldwide
(in CHF m) (in %)
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Page 16 2007 annual presentation
140
80
Others/Consol
12
Coating
8
Vacuum
22
Components Textile
7
DriveSystems
430(1)
496
Keydrivers
(1) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006
Note: Continued operations
Double digit EBIT growth mainly driven by an extraordinarily
successful year for Textile
20072006(1)
EBIT margin
430
496
Improvedvolume (+14%)
and marginof Balzers
Volume(+6%);enhancedproductportfolio
Excellent yearfor Space(volume +16%);US$-impact on
Esec margin
Significantlyimprovedvolume of
Schlafhorstand Barmag
Improvementin volume(+17%);
clean technew market
Non-recurringfinancial
gains in 2006
+15%(in CHF m)
+9% + 17% -39% +205% +10%
+15% +12% +10% +8% +7%
Growthrates
79
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Page 17 2007 annual presentation
Cash flow strong operating cash flow embedded in
measurement matrix
(1) Before change in net current assets and tax
678
479
2006(2) 2007
+199
Operating cash flow(1)
Measurement matrix
Implementation for FY 2007
Sales, EBIT and cash flowtargets for incentive system
Incentive system harmonized,
simplified and broadened:
- Top management:
60% fix, 40% variable
- Senior management:
70% fix, 30% variable
(in CHF m)
(2) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006
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Page 18 2007 annual presentation
1,071
Cash flow highly improved working capital intensity
20072006
1,160(3)
-89
Working capital(1)
7177
2006 2007
5054
20072006
4941
20072006
Working capital needsreduced by CHF 230 m
DIO(2) DSO(2) DPO(2)
(1) receivables gross payables + inventory gross(2) DIO: Days Inventory Outstanding; DSO: Days Sales Outstanding; DPO: Days Payables Outstanding(3) Excluding CHF 277 m accounts payable for Saurer squeeze out
(in CHF m)
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Page 19 2007 annual presentation
347349 235
202
(1) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006; (2) w/o impairment
Cash flow - stable capex in growing business environment
Depreciation & amortizationCapex
+0%
2006(1) 2007 2006(1) 2007
+16%
1.7
1.5
2006(1) 2007
Capex / Depreciationratio
(in CHF m) (in CHF m)
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Page 20 2007 annual presentation
Group financing
Total CHF 2.5 bn: CHF 600 m term loan for 3 years, CHF 1,900 m revolving facility for 5 years
Very attractive margins: 40/45 BP indicate clear investment grade rating
One financial covenant (net debt/EBITDA)
No assets pledged
Successful syndication of credit facility
Successful tender offer for Saurer Bond
More than 95% of the outstanding nominal amount have been tendered
Benefits from interest and credit market developments
Financing based on floating interest rates interest rate levels have decreased
Risk on increasing interest rates limited through interest rate cap
Oerlikon not affected by recently increased credit spreads: Oerlikons credit margins were fixed
at very attractive levels before credit crisis
Net debt / EBITDA ratio 1.8 (py 2.2) strongly supports investment grade rating of Oerlikon
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Page 21 2007 annual presentation
Financial result
20072006
-24
1
-19
-7
-4
-73
-20
-31
-49
-128
(in CHF m)
(1) Pro forma presentation assuming an initial consolidation of the Saurer Group as per January 1, 2006; (2) w/o impairment
(1)
Interest on provisions for post-employment benefit plans
FX result
Interest result 2007 increase: interest
expense for loans for
Saurer acquisition Normalization: favourable
refinancing terms andconditions
2007normalized
-4
-20
-5
-68
Other financial result 2007 increase: one-time
financing fees for bridgeloan Saurer acquisition
-97
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Page 22 2007 annual presentation
Active tax management
Increase currentincome taxes
Following the acquisition of Saurer AG the current income taxes increased
During the year 2007 activities were implemented to mitigate the increase of tax rate
Full benefit in future years
Increase deferredtax income
Improved performance of Oerlikon allowed recognition and utilization of unrecognisedtax loss carry forwards from previous periods, resulting in a high deferred tax income
Total income taxrate
Total income tax rate of 0,33% (2006) and 5.10% (2007) of Earnings Before Taxes(EBT)
Outlook Expected total income tax rate for the upcoming years will step-by-step
increase to 10-15%
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Page 23 2007 annual presentation
Net profit and Earnings per Share
2006 2007
(1) Net profit less minority interests (2007: CHF 4 m; 2006: CHF 2 m)
(2) Based on the average weighted number of shares entitled to vote and receive dividends amounted in 2007 to 13 093 428 and in 2006 to 12 773 290
Net profit attributable to shareholders(1) Earnings per share (EPS)(2)
24.023.8
20072006
304 314
+ 3%
(in CHF m) (in CHF)
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Page 24 2007 annual presentation
Balance sheet shows strong equity basis
effective equity ratio of 35%
Equity
1,887
1,512
2006 2007
2,229
2007TreasuryShares(1)
(in CHF m)
342
Equity ratio
2007 2007 incl.Treasuryshares
24% 30%35%
2006
(in %)
(1) Calculated with share price of 326 CHF; number of treasury shares as of 31.12.2007: 1 048 146
Note: Share buyback program started: Oerlikon repurchased 2 660 shares in total at an average price of CHF 395. As of December 31, 2007, the company held a total 1 048 146shares (7.40 percent of the shares issued).
+ 25%
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Page 25 2007 annual presentation
All Segments contributed to double digit sales growth
Extraordinarily successful year for Textile
Strong EBIT growth in Coating, Vacuum and Drive Systems
Significantly increased cash flow from operating businessand working capital as well as investment management
Solid group financing with very attractive margins
Strong equity basis and equity ratio
Executive summary - Fiscal year 2007 results
Oerlikon continues with strong profitable growth in 2007
IncomeStatement
Cash flow
Balance sheet
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Page 26 2007 annual presentation
Executive summary of fiscal year 2007
Fiscal year 2007 results
Business strategy and outlook
Agenda
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Page 27 2007 annual presentation
Six areas of high tech competencies
serving customers around the globeOerlikonVacuum
OerlikonTextile
OerlikonCoating
Oerlikon
Solar
OerlikonDrive Systems
Oerlikon
Components
Suzhou(China)
Cordob(Argentina)
Mnchengladb.(Germany)
Employees Asia5,000
Employees Europe11,900
Employees Americas2,100
Lafayette, IN(USA)
Balzers / Trbbach(Switzerland)
Oerlikon locations
Rivoli(Italy)
Greater Noida
(India)
erven Kostelec(Czech Republic)
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Page 28 2007 annual presentation
Focus 2007: Build platform for profitable growth and
seize opportunities for future expansionInnovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Leveraging joint scaleand scope
Positioning individual businessesfor sustainable profitable growth
Focusing and strengtheningportfolio
2008 priorities and outlook2007
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Page 29 2007 annual presentation
Oerlikon Group - strong platform for key business levers
Innovation + Cross Segment R&D
Close to core and beyond
Regional Expansion
Global competence withcustomer proximity
Our Employees
Training anddevelopment
1
3 4
Operational Excellence
Customer focus and competitiveness
2
ComplianceControlledProcesses
ContinousImprovement
OperationalExcellence
Integrated Supply Chain& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
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Page 30 2007 annual presentation
2007 - another year full of great innovations
InnovationIntroductions1
Oerlikon Balzers: New high performance coating BALINITALDURAallows for treatment of ultra durable steels and increases
productivity by up to 50 percent.
Oerlikon Solar: Introduction of the micromorph tandemtechnology, which increases the productivity of thin-film solarmodules by 50 percent and allows for efficiencies in excessof 10 percent.
Oerlikon Barmag: POY1-solution WINGS2 initiates paradigm shiftthrough completely new plant concept. Fastercommissioning and improved ergonomics will be achievedwhile space requirements are reduced.
Oerlikon Space: New laser system for data communicationtransmits information at a rate exceeding 10 Mbit/s over adistance of up to 1.5 million kilometres.
1 Partly Oriented Yarn
2 Winder Integrated Godet System
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Page 31 2007 annual presentation
Cross-segment R&D projects are gaining traction
InnovationCross Segment1
Nanotechnologyapplications for textiles
Vacuum pumps for Racetrack,Clusterline and Solar MFG
Magnetic bearings for turbomolecular vacuum pumpsGraphical control software
Advanced coatingapplications for automotiveindustry
Textile & Coating
Drive Systems & Coating
Cross-segment R&D projects every day we are discovering more
Coating, Solar & Vacuum
Vacuum & Textile
Example: joint software platform for Textile,Coating and Solar machines
Applications:
Oerlikon Coating application INNOVA
Oerlikon Solar application TCO 1200
Oerlikon Solar application Sun Simulator
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Page 32 2007 annual presentation
Scientific Advisory Board (SAB) to support Oerlikon in
reaching the next level of innovative power
InnovationRealignment1
1. 2. 3. 4. 5.
1. Prof. Dr. Albert Pisano
2. Prof. Dr. Peter Chen3. Prof. Dr.-Ing. Georg Frber
4. Prof. Dr. Dr. h.c. Werner Martienssen
5. Prof. Dr.-Ing. Christian Brecher
Strong commitment to R&D, CHF 274 m in 2007
Innovative brain force, informal CTO network Large list of research project proposals
Professional utilization of external funding
Improved coordination of R&D within the company
EXECUTION DISCIPLINE
CREATIVITY
Media
Academia PilotDevelopment Product
Development
Trend andTechnologyMonitoring
Advisor
s
Competitors
CTOs
> 5 Years < 2 Years2-5 Years
Time 2 Market
SAB Segment /BUR&D
Corp.R&D-
Customers
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Page 33 2007 annual presentation
Clean Technologies offer huge potential for profitable growth
Oerlikon Balzers: High-tech coatings for engine partsincrease lifetime 10-fold and reduce fuel consumption
Oerlikon Fairfield: Successful entrance into the fast growingmarket for wind turbines with signing of a multi-yearcontract for Winergy (Siemens).
Oerlikon Vacuum: Establishment as the preferred supplierof vacuum systems for the solar industry,both in crystalline wafer and thin-film technology
Market growth Solar
Market growth Wind
Market growth Hybrids
Oerlikon Solar: Turn-key mass manufacturing solutions andrelated services for thin-film silicon based solar modules,both amorphous or micromorph technology
Oerlikon offerings today
Oerlikon Graziano: Zero-emission vehicles made byNorwegian manufacturer TH!NK Technology will beequipped with customized gears from Oerlikon Graziano
>30%
>15%
>20%
2007 2010
2007 2010
2007 2010
InnovationClean Tech1
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E ll
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Page 35 2007 annual presentation
*Savings calculated based on Last Price method, include all ~500 initiatives, do not necessarily include all other factors which change material or overhead cost
Extended group purchasingprogram 2007
~100 initiatives, 100% implemented
Significant cross-BU synergies:
12 direct cross-BU areas 10 indirect spend areas
Aggressive implementation
within each BU Organization being adapted with
clear responsibilities by businessand dedicated commodity managers
Next wave complex sourcing 2008 and beyond
2008 target more aggressive
based on complex levers esp. enforced low cost country sourcing
value engineering/design-to-cost
structural improvements
Next wave global sourcing initiated
executed
0
100
200
300
400
2007
~120
2008
Carry over
>150
2008
>100
2009
Carry over
>180
Purchasing savings potential(in CHF m)
Implemented in 2007:Extended group
purchasing program
In preparation for 2008:Next wave
complex sourcing
2007 20092008
ExcellenceSourcing2
E ll
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Page 36 2007 annual presentation
ExcellenceStreamlining2
Optimization of cost position reliably like a Swiss watch
Dissolution of matrix organization and regional headquarters
Redirecting research & development organization
Streamlining of corporate functions,
downsizing of central headquarter
Real Estate consolidation
Review of central MIS/IT Approach
Push for shared services organization
Outsourcing of non-core functions, e.g. facility management
R i
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Page 37 2007 annual presentation
Strong footprint in Asia and expanding in China
China China - Suzhou Expansion Phase II
India
Localization 1985, 2,500 employees CHF 1 bn sales (+40%) in 2007 Textile: Staple yarn, chem. fiber Coating: market growth >50% Vacuum: Mechanical TMP Esec: Wire / die bonder
Solar: Thin-film techn.
RegionsFocus Countries3
Russia
Sales initiative (2007: CHF 50 m)- Local Sales & Marketing
- Coating Services & Systems- Textile (filament & nonwoven)- Drive Systems (synchro & axles)
Co-operation with Renova
First Coating Center SOP Q1 2009 Establishment of legal entity in Moscow
1500 employees 5 production sites, 5 coating centers Textile, Drive Syst., Coating, Vacuum Sourcing initiatives Prod. expansion Drive Systems (>30% growth)
Sales initiative target 2007 of CHF 400 moverachieved
30,000 sqm expansion on schedule CHF 15-20m investment ~17 months construction time > CHF 40 m p. a. EBIT impact Business Units engaged:
Textile (Schlafhorst, Components)Graziano Drive Systems
Coating (new center, 2,000 sqm., 11.07)
Regions
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Page 38 2007 annual presentation
Regional cross-segment cooperation
RegionsCooperation3
Czech Republic (Textile & Drive Systems): Textile transferred production to China Drive System took advantage of existing infrastructure and qualified work force
- Oerlikon Graziano phased in the production of automotive components forAWD cars (GM and FIAT)
- Oerlikon Fairfield launched the production of Torque HUB CR family.
China (Textile & Drive Systems): Oerlikon Drive systems to leverage Suzhou infrastructure and services
for the localization of Fairfield Torque Hub and Graziano Synchronizers in 2008- further enjoying the successful share of infrastructure and services
Singapore (Solar and Textile & Components):
Oerlikon Solar receives support from existing Texparts and Esec infrastructure for itsendeavour to build up the next solar manufacturing site. This includes- infrastructure support (legal entity registration, tax, trade control, IT, HR etc.)- attraction, selection and hiring of qualified management and staff- identification, selection and qualification of suppliers
Employees
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Page 39 2007 annual presentation
More than 600 employees joined in 2007
EmployeesTalents4
Employee development activities on all levels- Training centers all over the world (> 2,000 participants)
- Middle Management Program Oerlikon Leadership Challenge- Expert development Program Oerlikon Project Management
In-house vocational educationThe Apprenticeship Career Ladder
- > 450 apprentices / 20 different professional fields / 18 locations- > CHF 5 m invest p. a.
Talent management- Internal talents identified / developed and Oerlikon Talent Pool established- External talents recruited in close co-operation with universities- Best-in-class Global Trainee Program
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Page 40 2007 annual presentation
Focus 2007: Build platform for profitable growth andseize opportunities for future expansion
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Leveraging joint scaleand scope
Positioning individual businessesfor sustainable profitable growth
Focusing and strengtheningportfolio
2008 priorities and outlook2007
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Page 41 2007 annual presentation
MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales
994+22% 816
2006 2007
Margin: 17% 15%
Coating: Very strong business momentum evenaccelerated by globalization and technology leadership
Oerlikon with strong marketleadership in coating services
Differentiated engineering nicheoffering in Semiconductor
Continued double digit growth of CoatingServices market, driven by increasedpenetration of high-end coatings and strongdemand in emerging economies
Strong demand for high-tech coating equipment,innovations key to enter new application fields
Difficult market outlook for BU Systems with
Semiconductor capex expectations reduced for1HY 2008 - stronger replacement needsexpected as of 2HY 2008
Further regional expansion through opening ofnew coating centers focus on Asia (esp.China, Japan, India)
Additional acquisitions in adjacent markets
Further improvement of gross profit margin injob coating, optimized asset utilization
Downscaling of front end semiconductorbusiness and data storage activities
(in CHF m)
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Coating centers strong growth worldwide esp. strongpresence in industrializing regions in Asia and CEE
Coating centersAsia 17 (21%)
Coating centersEurope 41 (50%)
Coating centersAmericas 24 (29%)
8 new coating centers added in 2007 (2 through VST Keller)
Further 6-8 centers planned for 2008 (focus Asia)
2831
35
42 44
47 47
56
61
82
7772
96 97 98 99 00 01 02 03 04 05 06 07
Number of coating centers
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MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales
2006 2007
Margin: 11% 12%
Vacuum: Further strengthened position in process industry,additional growth opportunity from Solar
458430+6%
Steady market growth well above GDP expectedmainly driven by process industry and solarapplications (thin-film and crystalline)
Above average growth expected in Asia and Europe
Gradual market shift from mechanical to magneticturbomolecular pumps as well as from oil to dry infore-vacuum
Oerlikon with confirmedleadership position
Strongholds in processindustries and in Europe,increasingly in Solar
applications
Further ramp up of Solar-related business as fullvacuum solution provider
Shift of Solutions business to Asia
Provision of innovative solutions for our customers with
new products and technologies Extension of China factory providing the basis for
significant and sustainable sales growth in China andthe rest of Asia
(in CHF m)
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MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales
2006* 2007
Margin: 3% 8%
Textile: Record year from boost in Staple Fiber
2,719
2,148+27%
* pro forma 12 months figures (sales net)
Oerlikon with confirmed globalleadership in 07: # 1 in all itsmajor segments: (Staple,Filament, Fibers)
Unique broad textile value
chain offering with intrinsic riskmitigation
2007 with record market conditions, especiallyfor Staple segments
Demand from major textile markets cooling in2008 in several regions including Turkey, Indiaand China - mainly for Staple equipment
Filament and Fibers and Nonwoven market
slightly more stable
New technologies like POY1-solution WINGS2
roll-out to customers
Differentiation strategy will be continued andnew market segments in mid-end approached
Footprint consolidation, further growth in Asiaand additional innovations
1 Partly Oriented Yarn
2 Winder Integrated Godet System
(in CHF m)
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MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales
2006* 2007
Margin: 8% 7%
Drive Systems: Strengthened in agriculture and construction
* pro forma 12 months figures (sales net)
1,113952+17%
Stable overall growth and strong growth of the
agricultural tractor and machinery market expected
Above average growth in specialty industries includingwind power generation
Stable to improved pricing in high-tech niche markets
Increasing market share in gear systems for oil & gasexploration and wind-power systems
Expansion in the Asian market, esp. China
Consolidation of low cost country supply chain
Integration of FAL (India) production with GrazianoIndia to meet demand and enhance profitability
Enhanced position in hybrid and zero emission vehiclemarkets
Oerlikon with stable marketleadership in component nichemarkets (e.g. agriculture)
(in CHF m)
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MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales*
Components: Focus on expansion in high margin segments
2006 2007
Margin: 16% 10%
344336+2%
* continuing operations
Space with strong position(30%+ market share) withincurrently accessible markets
Leading position in DieBonding equipment
Space: Overall stable growth expected until2010, with high visibility in space programsOerlikon is participating (e.g. Ariane, ESA)
Esec: Slowdown in Semi market in 1HY 2008,however expected to return to positive growthin 2009 (possibly already in 1HY 2008)
Space: further organic growth, potential forexternal growth to overcome current marketbarriers
Esec: Introduction of new WB 3200 and DA
2100 platform and further cost reductions tocounter negative USD development; return topositive growth in 2HY 2008
Execute on Optics
(in CHF m)
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MarketDynamics /GrowthDrivers
Business
Priorities
Competitive situation
Sales*
Solar: Provider of cost-effective proven equipment, process andturnkey manufacturing solutions to the thin-film solar market
2006 2007
141+119%
309
Sustainable ramp-up of global operations andsupply chain to match substantial demand growth
Continuous improvement / innovation of keycomponents, further increase in module efficiency
Focused completion of offering along value chain
CHF 700 m sales in 2008, CHF 1 bn level in 2009,positive cash flow despite ramp-up phase
Implement Giga Campus concept
Solar equipment market growth in valueexpected in excess of 30% p. a.
Thin-film new equipment installation in MWexpected to grow by as much as 60% p. a.
Market will be characterized by cell efficiencyincreases, throughput gains and cost decreases
Market leader with largestinstalled customer base inthin-film
Only Oerlikon Solar customerswith thin-film SI factories in
production today
Employees: 359 510
* Pro forma total Sales of future Solar Segment
(in CHF m)
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Solar: Innovations and scale pave the way to grid parity
Cost of ownership
Capex per WattModule efficiency
Economies of scale through larger fabs
Grid parity
2010200920082006 2007
$/Wp
2012
2007
for 20 MWp fabs< 1.5 $/Wp (
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Installed solar cell manufacturing capacity
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
GWp
Crystalline Silicon Thin-film
Solar will outpace the already fast growing PV market
0
200
400
600
800
1'000
1'200
2006 2007 2008p 2009p
(in CHF m)
Sales* targets
>1000
>700
>300
>140
Order intake 2007 > CHF 650 m
*Sales 06-07 pro forma, 08- Solar will be reported as separate segment
2006-2015 CAGRThin-film 74.8%C-Si 49.4%Total market 54.0%
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Page 50 2007 annual presentation
Focus 2007: Build platform for profitable growth andseize opportunities for future expansion
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Leveraging joint scaleand scope
Positioning individual businessesfor sustainable profitable growth
Focusing and strengtheningportfolio
2008 priorities and outlook2007
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Oerlikon leverages all portfolio enhancement measures
Optimizebusiness
performance
Determine strategicposition / options
Strengthen currentbusinesses
Divest / spin-offbusinesses
Add newbusinesses
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Page 52 2007 annual presentation
Focus 2008: Focused profitable growth and rapidportfolio optimization
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Innovation + Cross Segment R&D
Closeto coreand beyond
Regional Expansion
Global competencewithcustomerproximity
Our Employees
Traininganddevelopment
1
3 4
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Operational Excellence
Customerfocusand competitiveness
2
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Compliance Controlled
Processes
ContinousImprovement
OperationalExcellence
Integrated Supply Chain
& Lean Manufacturing
Safety &Certifications
Business ProcessManagement
Quality Circles
Leveraging joint scaleand scope
Positioning individual businessesfor sustainable profitable growth
Focusing and strengtheningportfolio
2008 priorities and outlook2007
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Oerlikon Textile
Oerlikon Coating
Oerlikon Solar
Oerlikon Vacuum
Oerlikon Drive Systems
Oerlikon Components
FY 2008 outlook flexibility is of the essence!
Oerlikon SegmentsMarketoutlook Outlook 2008
mixed
excellent
excellent
good
very good
mixed
Expected slowdown in textilestaple fibre market
Ongoing short termvisibility and
cyclicality insemicon industry
Strong demand insolar and coating
Solid growth inagriculture andconstruction
Uncertainty remainson FX and globalGDP development
mixed
excellent
excellent
very good
very good
mixed
Marketvisibility
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Oerlikon priorities 2008 and beyond
Portfolio Performance People
Focused growth strategiesvalue generation in key businesses
- Solar: focus on global ramp-up andtechnology lead
- Coating Services: drive global
expansion and offering scale (i.e.VST Keller
- Drive Systems: push selected marketstrategy and Asia expansion
- Vacuum: strategic growth productionand sales in Asia
- Textile: Completion of value chain -product portfolio and mid-marketsegment expansion
Center: Efficient center, wave 2purchasing (i.e. LCC), R&D / innovations
Selected acquisitionsin focus BUs:- Solar: Expand along
the value chain- Space: increase scale
and scope- Coating: Access to
new technologies ormarkets
- Vacuum: Consolidate
Portfoliostreamlining:- Optics- other non-core
assets
Targeted internationaltalent recruitment
Systematic leadershipdevelopment
Raising the performancebar
Continued communication
Integrity: New global Codeof Conduct and establish-ment of whistleblower line
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Key take away - Oerlikon set up for sustainable profitable growth
2007 a record year for Oerlikon with sales exceeding CHF 5.6 bn, +20% vs. 2006
Oerlikon well positioned in attractive high-margin segments leveraging joint scale as
one of the largest Swiss industrial groups
Special focus on booming clean technology
Portfolio streamlining and strengthening under way
Operative platforms strengthened, securing innovative power through optimized R&D
and reinstalling cost consciousness, bottom line and cash orientation
2008 Sales expected to exceed CHF 6 bn, mainly driven by Solar, Coating
2008 EBIT adversely impacted by exchange rates and raw material prices;
still expectation to further increase earnings
Mid to long term perspectives for all segments very positive;
10% EBIT margin targeted in 2009
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Calendar of events and contact details
April 23, 2008Key figures for the first quarter of 2008
May 13, 2008
Annual general meeting
August 26, 2008Semi-annual media and analyst conference
October 22, 2008Key figures for the third quarter of 2008
Calendar of events Contact details
Corporate Investor Relations
Frank HeffterT: +41 58 360 96 22
Roland BischofbergerT: +41 58 360 97 14
F: +41 58 360 91 93
www.oerlikon.com/ir
mailto:[email protected]://www.oerlikon.com/irhttp://www.oerlikon.com/irmailto:[email protected]