Preliminary Key Financial Figures 2015 - SHW AG

Returning to the path of profitable growth
Preliminary Key Financial Figures 2015
24th February 2016
Preliminary key financial figures 2015
Preparing the return to profitable growth
> 2015 in a nutshell
> Financial figures 2015
> Financial goals 2016 and beyond
> Strategic roadmap for returning to profitable growth
1
2015 in a nutshell
1.
2015 represents another year of strong sales growth with profit margin at previous
year's level
2.
Positive net liquidity position due to strong operating free cash flow and capital
increase
3.
Dividend of € 1.00 per share intended
4.
Operational efficiency measures show first positive results in the Powder Metallurgy
and are scheduled to be completed by the end of Q1 2016 with further profitability gains
5.
SHW succeeded in expanding its international footprint to China and North-America
6.
Successful ongoing development of new products to further penetrate the fast growing
market for transmission oil pumps
2
Positive market development expected to continue
Light Vehicle Production
(< 6 t) (m units)
SHW Group Sales (€m)
Global
7.8%
102.7
CAGR
430.0
2.7%
463.5
> Global vehicle production
expected to increase on
average by 2.7 per cent to
102.7 m units until 2020
> SHW grew faster than the
market in 2015
87.4
2014
2020
2014
2015
Transmission Production
(m units)
Engine Production
(m units)
Global
Europe
120
> Combustion engines incl.
hybrids continue to dominate
> Europe stays most important
Diesel market
27
24
21
18
15
12
9
6
3
0
100
80
60
40
20
0
2015
2020
2025
> Global automatic
transmission solutions
expected to grow on
average by 2.5 per cent until
2025 to 59.8 m units
2015
2020
2025
Source: IHS, February 2016
SHW well positioned to benefit from market trends and global mobility demand
3
Financial figures 2015
€m
2015
2014
Group sales
463.5
430.0
+7.8%
Incoming orders
445.0
453.5
-1.9%
Adj. EBITDA
43.5
40.6
+7.0%
Depreciation (excl. PPA)
22.5
18.3
+23.5%
Adj. EBIT
21.0
22.5
-6.5%
Net income for the period
14.4
10.7
+34.4%
EPS (in €)
2.26
1.83
+23.7%
DPS (in €)
1.001
1.001
7.0
7.2
Capex2
23.9
34.8
Operating free cash flow
18.1
-5.4
Net cash / Net debt
12.3
-14.4
ROCE (%)
16.2
17.7
1,287
1,173
Working Capital Ratio (%)
No. of employees (average)
1
2
in %
> Sales grew by 7.8 per cent
due to continuous high
customer demand
> EBITDA margin with 9.4 per
cent at previous year’s level
> Net income positively
influenced by income from
investments
> Intended dividend of € 1.00
per share
-31.2%
+9.7%
> Clear improvement of
operating free cash flow and
capital increase led to net
change in net cash of € 26.7
million
Intended proposal to the Annual General Meeting on the 10th of May 2016
Additions to tangible and intangible assets
Figures in line with the readjusted guidance
4
Group figures
> Sales driven by high
customer call-offs from
mainly European OEMs
Sales and EBITDA
Sales by quarter (€m)
Sales (€m)
7.8%
430.0
463.5
2014
2015
Adj. EBITDA (€m)
123.1
118.3
117.0
109.4
107.3
108.6 105.0
104.8
Q2
Q1
Q3
> Stable adj. EBITDA margin
of 9.4 percent amounting to
€ 43.5 million
Q4
Adj. EBITDA by quarter (€m)1
7.0%
40.6
43.5
9.4%
9.4%
2014
2015
11.0 11.1 11.9 11.3
10.0 9.4 10.5
8.8
8.4% 9.4%
Q1
10.3% 9.7%
Q2
2014
1 Readjustment
10.3% 8.5%
Q3
8.7% 10.0%
Q4
2015
of Q2 / Q3 figures in 2014 due to non-recurring serial start-up costs
Results within target range
5
Customer sales
113.4
117.4
VW
83.8
81.3
Daimler
32.6
Audi
36.0
36.9
23.4
30.8
Volvo Cars
Thyssen
Krupp
12.3
23.4
13.2
16.8
Hilite
9.7
10.6
PSA
12.0
7.1
Other
> VW ‘Dieselgate’ had no
visible effect on SHW sales
in 2015
21.8
22.9
Porsche
Ford
> Dependency on the VW
group expected to decrease
by internationalisation and
diversification towards
transmission oil pumps from
2018 onwards
47.1
BMW
> Strong business
relationships with European
premium OEMs
71.7
69.2
2014
2015
International growth and diversified product range will lead to a
more balanced customer structure
6
Business Segment: Pumps and Engine Components
Sales and EBITDA
Sales (€m)
2014
2015
Sales by quarter (€m)
> Sales Industry: -7.0 per cent
9.5%
333.6
2014
365.2
2015
80.6
9.3
33.1
35.2
9.9%
9.6%
2015
82.6
98.2
Q2
85.6 93.3 84.8 81.1
Q3
Q4
Adj. EBITDA by quarter (€m)1
6.5%
1 Readjustment
92.5
Q1
Adj. EBITDA (€m)
2014
> Sales Passenger Cars:
+12.7 per cent
9.0 9.0
9.3
9.2
7.8
7.5
7.4
9.3% 10.0%
10.9% 9.1%
10.8% 8.3%
8.7% 11.4%
Q1
Q2
Q3
Q4
of Q2 / Q3 figures in 2014 due to non-recurring serial start-up costs
> Sales Powder Metallurgy2:
+8.3 per cent
> Slight decline of adj. EBITDA
margin to 9.6 per cent due to
non timely realisation of
efficiency measures in
Powder Metallurgy
> Operations in Canada and
China develop according to
plan; difficult market
environment in Brazil
2 Including
inter-company sales
Operational and logistical bottlenecks significantly reduced –
SHW is now on the home straight to realise sustainable profitability gains
7
Business Segment: Brake Discs
Sales and EBITDA
2014
Sales (€m)
Sales by quarter (€m)
1.9%
98.3
96.5
2014
2015
2015
24.2 24.5 24.7 24.9 23.8 25.1 23.8 23.9
Q1
Adj. EBITDA (€m)
Q2
Q3
Q4
Adj. EBITDA by quarter (€m)
> Total number of brake discs:
4.24 m units
> Number of composite brake
discs: +48 per cent to 0.38 m
units
> Adj. EBITDA further positively
impacted by product mix
effects in favour of composite
brake discs and higher
degree of automation
8.0%
9.1
9.8
1.7
9.4%
2014
2.1
2.5
3.0
2.7
2.2
2.7
2.1
10.0%
2015
7.2% 8.7%
10.1%11.9%
Q1
Q2
9.1%10.8%
Q3
11.2% 8.3%
Q4
The Brake Discs business segment reached the 10 per cent margin threshold
8
Net working capital ratio
Development of net working capital ratio
11.7%
11.3%
11.3%
> Despite sales increase of 7.8
per cent, net working capital
increased only by 5.4 per
cent to € 32.5 million
10.5% 10.4%
9.7%
7.2%
Medium-term
target: 11%
7.0%
> Consequent working capital
management and seasonal
influences resulted in a low
working capital ratio at year
end
> Average working capital ratio
further reduced in 2015
Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015
SHW is building a track record of meeting its working capital goals
9
Capex and depreciation
Capex (€m)
Capex by quarter (€m)
-31.2%
34.8
9.2
23.9
8.0%
5.2%
2014
2015
8.8 8.1
6.2
4.2%
2014
2014
6.7
5.0
4.6
8.8% 5.3%
8.2% 6.6%
6.2%14.2%
9.3% 4.4%
Q1
Q2
Q3
Q4
Depreciation by quarter (€m)
Depreciation (€m)
23.5%
22.5
18.3
10.1
5.0
4.0
5.5
4.5
6.0
6.0
4.8
4.9
> Reduced capex in 2015
correlates with sales
forecast in 2016 and is an
effect of diligent investment
discipline
> Delays in implementing
efficiency measures led to
corresponding slight
investments deferrals
> Depreciation ratio increased
due to high investment
levels in previous years
4.9%
2015
3.8% 4.3%
4.2% 4.5%
4.4%15.1%
4.5% 5.7%
Q1
Q2
Q3
Q4
2015
Higher investments in 2016 / 2017 as
basis for profitable growth in the subsequent years
10
Cash Flow
(€m)1
Cash flow from operating
activities
Q4/2015
Q4/2014
23.9
18.3
40.9
29.9
Cash flow from investing
activities
- tangible and intangible
assets
-2.3
-7.8
-22.8
-35.2
Operating free cash flow
21.7
10.6
18.1
-5.4
Cash flow from investing
activities
- financial assets
-0.1
-0.3
-9.0
-0.3
Total free cash flow
21.6
10.3
9.1
-5.6
Other (esp. capital increase)
0.0
0.0
17.6
-5.8
Change in net cash
21.6
10.3
26.7
-11.5
1 Figures
12M/2015 12M/2014
> Strong operating cash flow
due to higher net profit,
depreciation, provisions and
lower capital expenditure
result in a positive operating
free cash flow of € 18.1
million
> Due to strong operating free
cash flow and capital
increase SHW managed to
achieve a positive net cash
position
include rounding adjustments
Operating free cash flow indicates stabilised operations
11
Sound financial profile
As of 31.12.2014
209.5m
As of 31.12.2015
230.5m
209.5m
Equity
Current
assets
90.2
230.5m
Equity
Current
assets
80.2
84.5
116.2
28.1
7.3
14.6
Other longTerm liabilities
Noncurrent
assets
Bank debt
135.5
26.3
Pensions
15.1
Other longTerm liabilities
2.5
119.0
Bank debt
75.0
70.4
Other
shortterm
liabilities
Cash
0.3
Cash
> Current assets decreased due
to an optimised accounts
receivable and inventory
management
> Equity ratio temporarily
increased to 50.4 per cent
prior dividend distribution
Pensions
Noncurrent
assets
> Non-current assets increased
due to investments accounted
for using the equity method
14.8
Assets
Other
shortterm
liabilities
Liabilities
> Long-term liabilities increased
due to pending second
instalment of paid in capital
into Brake Disc JV
> Positive net cash of 12.3 €
million due to positive
operating free cash flow and
capital increase
Financial headroom for internationalisation and inorganic growth
12
Financial goals – SHW Group
Phase I: Consolidation
SHW Europe
463.5
440 - 460
Phase II: Strong profitable growth
SHW International
440 - 460
570 - 600
630 - 660
480 - 505
Sales
(€m)
14%
13%
12%
11%
10%
9%
As of 2018:
EBITDA
43.5
EBITDA margin ≥12%
43 – 47
(€m)
2015
2016E
2017E
2018E
2019E
2020E
After years of strong sales growth SHW now enters into a phase of consolidation to
pave the way for the next strong and profitable growth phase from 2018 onwards
13
Financial goals – Capex and depreciations
Phase I: Consolidation
23.9
32 - 35
Phase II: Strong profitable growth
32 - 35
26 - 29
27 - 30
29 - 32
CAPEX
(€m)
DEP
22.5
21 - 23
25 - 27
26 - 28
2017E
2018E
31 - 33
31 - 33
2019E
2020E
(€m)
2015
2016E
Investments in the consolidation phase trigger a strong and sustainable sales
and profitability growth from 2018 onwards
14
Financial goals – Strong balance sheet
Capital
structure
> Sustainable and strong capital structure with a balance sheet equity ratio of at least 30
per cent to 40 per cent
Debt ratio
> Leverage potential to increase net debt / adj. EBITDA ratio to a maximum of 2.8
Liquidity
> High flexibility in terms of financial and strategic headroom: syndicated loan facilities
plus additional baskets
Free cash
flow
> Focus on optimising operating free cash flow
Dividend
policy
> Results-oriented dividend policy with a pay-out ratio of 30 per cent to 40 per cent of the
net income for the year taking into account the financing requirements of SHW
15
SHW’s strategic roadmap
Phase I: Consolidation
Phase II: Strong profitable growth
Operational excellence
Impact of internationalisation on sales
Innovation
2015
2016
2017
2018
2019
2020
After a phase of consolidation SHW will get back on the track for profitable and
capital efficient growth
16
Our strategic priorities – Enhance operational excellence
Production network optimisation Eastern Europe
Relocation phase
Production phase
H1/2016
2017
> Evaluation of target
> Partial start of production
locations
> Legal set-up and building
of infrastructure
> Further relocation of
assembly lines
> Sales expected to amount
H2/2016
to a double-digit million
> Relocation and
euro amount
commissioning of first
> Low single-digit million
infrastructure investment
costs
> Annual sales in Eastern
Europe to be expected
above 100 €m in 2020
> Further added value
potential by increasing
vertical integration
assembly line
Earnings improvements should reach high single-digit million Euro range by 2020
17
Our strategic priorities – Drive internationalisation I
Bad Schussenried
Aalen-Wasseralfingen
Toronto
Germany
Germany
Canada
LongKou
China
Neuhausen ob Eck
Germany
Tuttlingen-Ludwigstal
Germany
Shanghai
China
Sao Paulo
Brazil
SHW is present in all strategic markets
18
Our strategic priorities – Drive internationalisation II
Pumps & Engine Components
2015
2016
2017
2018
2019
2020
NAFTA
Re-entry into the market
China
SOP for North American OEM
SOP for North American OEM
Start of operating activities
SOP for Chinese OEM (transmission pumps)
Others
Production capacity shift to Eastern Europe
SOP for North American OEM in Europe
SOP Eastern Europe
Brazilian subsidiary and ramping up of production
First equity investments
Further expansion of production network
Phase of competition and penetration
Enhanced international presence as catalyst for further international growth
19
Our strategic priorities – Drive internationalisation III
Brake Discs
2015
2016
2017
2018
2019
2020
NAFTA
Development of market entry strategy
Market entry
SOP and ramp-up
China
SOP JV for unprocessed Brake Discs
Switch to production of processed Brake Discs
Others
Ongoing evaluation of further cooperation possibilities
First equity investments
Further expansion of production network
Phase of competition and penetration
Enhanced international presence as catalyst for further international growth
20
Our strategic priorities – Leverage innovation leadership I
> SHW’s prototypes delivered to OEMs and Tier 1 suppliers
Two stroke
vane pump
> R&D experts were able to optimise performance of two stroke vane pump:
> Weight reduction
> Efficiency increase up to 85 per cent
> CO2 emission reduction in NEDC of up to 2g per CO2/km
> Electrical double stage oil pump combines two pumps in one solution
Scalable power
pack for electric
transmission oil
pumps
> Offers two pressure stages:
> High pressure stage enabling gearing
> Low pressure stage serving as coolant and lube oil pump
> Savings in space and thus weight reduction
Primary and secondary transmission oil pumps
are a further strategic growth segment for SHW
21
Our strategic priorities – Leverage innovation leadership II
Standard casted
ventilated disc
SHW Patent
Weight reduction
about 2 kg/disc
High end casted
wave disc
Weight reduction
> 2 kg/disc
Weight reduction, improved comfort + performance
> SHW is innovation leader for weight reduction of automotive parts
> Composite brake discs with aluminium pot reduce weight
> Weight reduction of unsprung masses improves driving performance
The megatrend weight reduction is a key driver for the Brake Discs division
22
Your key takeaways
We have delivered results according to our guidance corridor and stabilised the adj.
EBITDA margin on previous year’s level
We prepare the ground for SHW’s return to strong, profitable and capital efficient
growth
On our way to 2020, we will enhance our operational excellence, drive
internationalisation and leverage our innovation leadership
With our focus on CO2 saving and weight reduction technologies, we have an
excellent exposure to fundamental industry trends
We are committed to a transparent and continuous dialogue with our stakeholders
23
Financial Calendar 2016
Dates
Events
24 March
Annual Report 2015
03 May
Interim Report (January – March 2016)
10 May
Annual General Meeting
Congress Centre Heidenheim
29 July
Interim Report (January – June 2016)
28 October
Interim Report (January – September 2016)
24
Contact Investor Relations
Michael Schickling
Head of Investor Relations & Corporate Communications
Telephone: +49 (0) 7361 502-462
E-Mail: [email protected]
Anja K. Siehler
Senior Manager Investor Relations & Corporate
Communications
Telephone: +49 (0) 7361 502-469
E-Mail: [email protected]
25
Disclaimer
No 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 or
buy, 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 or
investment 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 be
noted that financial information relating to the Company contained in this document has not been audited and in some cases is based on management information
and 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. Figures
rounded 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, the
actual figures, rather than the commercially rounded figures, were used. Accordingly, in some cases, the percentages provided in the text may deviate from
percentages 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 and
assumptions 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 or
otherwise, except as otherwise required by applicable laws and regulations. You should not place undue reliance on forward-looking statements, which speak as
only of the date of this presentation. Statements contained in this presentation regarding past trends or events should not be taken as a representation that such
trends or events will continue in the future.
26