Mersen Sa · EURONEXT:MRN
Mersen Sa — Shareholder Meeting (May 2019)
51 slides from Mersen Sa's shareholder meeting presentation, May 17, 2019
Slide 1: Shareholders' Annual General Meeting, May 17, 2019
SHAREHOLDERS’ ANNUAL GENERAL MEETING MAY 17, 2019
Slide 2: Agenda
AGENDA ▪ INTRODUCTION ▪ STRATEGY: A SUSTAINABLE GROWTH TRAJECTORY ▪ 2018 RESULTS ▪ REPORT BY THE BOARD AND THE COMMITTEES ▪ REPORT BY THE STATUTORY AUDITORS ▪ SUMMARY PRESENTATION OF RESOLUTIONS ▪ DIALOG WITH SHAREHOLDERS ▪ VOTE OF RESOLUTIONS 2 Shareholder’s Annual General Meeting – May 17, 2019
Slide 3: A Sustainable Growth Trajectory
A SUSTAINABLE GROWTH TRAJECTORY
Slide 4: 2018: An Excellent Year...
2018: AN EXCELLENT YEAR... OPERATING MARGIN SALES ROCE* BEFORE NON-RECURRING ITEMS Like-for-like growth +10% vs. 2017 +120 points vs. 2017 +200 points vs. 2017 879 809 92 800 759 759 775 75 57 11.8% 9.8% 10.4% 9.2% 7.3% 7.5% 2016 2017 2018 2016 2017 2018 2016 2017 2018 Sales (€m) Operating income be
Slide 5: ...Busy in Terms of External Growth
... BUSY IN TERMS OF EXTERNAL GROWTH FTCAP CALY MERSEN GALAXY TECHNOLOGIES LGI CIRPROTEC IDEALEC 100% Acquisition Joint venture Partnership 100% Acquisition Minority stake 60% Mersen To develop Mersen’s To step up global To look to the future To capture the solar To drive innovation services for the
Slide 6: Growth Across All Regions Leading to a Balanced Breakdown
GROWTH ACROSS ALL REGIONS LEADING TO A BALANCED BREAKDOWN… NORTH AMERICA +8% EUROPE +8% 33%* vs. 2017 34%* vs. 2017 SOUTH AMERICA - +17% AFRICA vs. 4%* 2017 ASIA-PACIFIC +13% 29%* vs. 2017 * % of total sales Like-for-like growth in 2018 (as a %) 6 Shareholder’s Annual General Meeting – May 17, 2019
Slide 7: Brisk Momentum in All Markets, Particularly Growing Markets
... THANKS TO A BRISK MOMENTUM IN ALL MARKETS, PARTICULARLY OUR GROWING MARKETS GROWING MARKETS ~40% 34% 19% ENERGY PROCESS INDUSTRIES +12%* VS. IN 2017 +7%* VS. 2017 RENEWABLE ENERGIES 19% ELECTRONICS 2018 SALES +13%* VS. 2017 SEMICONDUCTORS POWER ELECTRONICS 11% 17% CHEMICALS TRANSPORTATION +6%* V
Slide 8: Focus on Certain Growing Markets
FOCUS ON CERTAIN GROWING MARKETS
Slide 9: Solar: An Energy Seeing Strong Growth
SOLAR: AN ENERGY SEING STRONG GROWTH NUMBER OF PANEL INSTALLATIONS GROWING SHARPLY 2018-2022 CAGR (est.) Annual (GW) +5-7% 140 2018 Forecasts [115-125]* 120 2011-2017 CAGR 109 100 +23% 80 60 2016 Forecasts 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 est. 2020 est. 2021 est. 2022 est. Source
Slide 10: High Growth Potential in the Solar Sector
HIGH GROWTH POTENTIAL IN THE SOLAR SECTOR PARTICULARLY FOR PROTECTION AND CONVERSION SOLUTIONS PROTECTION 19% CONVERSION 12% €90m-€100m 2023 (est) Solar sales POLYSILICON 19% 2018 INGOTS 50% €58m 2018 10 Shareholder’s Annual General Meeting – May 17, 2019
Slide 11: Stationary Battery Market Driven by Solar and Wind Power
A STATIONARY BATTERY MARKET DRIVEN BY SOLAR AND WIND POWER IN THE MEDIUM TERM ANNUAL INSTALLED CAPACITY OF STATIONARY BATTERIES IN MWH 35000 2018-2023 CAGR +50% 30000 Direct current grids (industrial buildings, utilities) 25000 20000 15000 Solar, wind 10000 5000 Power quality 0 2017 2018 2019 2020 2
Slide 12: Mersen Solutions for Stationary Storage Batteries
MERSEN SOLUTIONS FOR STATIONARY STORAGE BATTERIES Protection Connection Protection Protection Mersen solutions Li-ion Battery Battery Battery Battery Power battery module rack pack container conversion cell DC AC 2.6W 10-100W 1000W 10-100kW 1 to 100MW 12 Shareholder’s Annual General Meeting – May 17
Slide 13: Change in Our Offer for E-Vehicles
CHANGE IN OUR OFFER FOR E-VEHICLES BUSBARS – CAPACITOR- COOLING HYBRID PROTECTION FUSES DEVICES End to technical development partnership Strong demand for battery Clear increase in demand for with the VW Group protection solutions and battery connection solutions following changes in specifications
Slide 14: Strong Potential in Energy Storage
STRONG POTENTIAL IN ENERGY STORAGE E-VEHICLES STATIONARY 80% BATTERIES 20% €40m-€60m 2023 (est.) €15m 2018 14 Shareholder’s Annual General Meeting – May 17, 2019
Slide 15: Strong Position on the Fast-Growing SiC Semiconductors Market
STRONG POSITION ON THE FAST-GROWING SIC SEMICONDUCTORS MARKET COMPOUND SEMICONDUCTORS MATURE MATURING OTHER MARKET MARKET TECHNOLOGIES RAW MATERIAL/ GaN/ Silicon SiC GaN GaAs InP Sapphire SUBSTRATE COMPONENTS Microprocessor Memory Power component RF Opto LED chip (IGBT, MOSFET, JFET) component elect
Slide 16: SiC Semiconductors Market Set to Accelerate After 2020-2022
SIC SEMICONDUCTORS MARKET SET TO ACCELERATE AFTER 2020-2022 IN LINE WITH EV MARKET GROWTH SIC COMPONENTS MARKET IN USD MILLIONS 1200 2020-2022 CAGR 1000 +30%-40% Other Speed drivers 800 EV 600 2016-2019 CAGR +18% 400 Renewables 200 Rail Power supply 0 2016 2017 2018 2019 2020 2021 2022 Source: Yole
Slide 17: Mersen Monocrystalline SiC Solutions
MERSEN MONOCRYSTALLINE SIC SOLUTIONS Induction coil 2,400°C +/- 2°C €50m-€60m Quartz tubing 2023 (est.) SiC INSULATION GRAPHITE CRUCIBLE Reservoir of SiC powder €20m 2018 17 Shareholder’s Annual General Meeting – May 17, 2019
Slide 18: 2019 Objectives
2019 OBJECTIVES Like-for-like growth* Operating margin before in sales versus 2018 non-recurring items Between 2% and 5% Between 10.5 and 10.7% (vs. 10.4% in 2018) 2019 Contribution from 2018 Capex acquisitions ~2% Between €60m and €70m * At constant exchange rates and scope of consolidation 18 Shar
Slide 19: Program of Investments to Underpin Growth in 2020-2022
PROGRAM OF INVESTMENTS TO UNDERPIN GROWTH IN 2020-2022 2019 €60m-€70m SiC semiconductors Solar power Growing markets EV 45% SiC laser mirrors Digital transformation Information systems 5% Reduced environmental Environment, Safety, Compliance 10% footprint Other Maintenance, Productivity 40% 19 Share
Slide 20: Medium-Term Growth Based on Social and Environmental Responsibility
A MEDIUM-TERM GROWTH BASED ON AN AMBITIOUS APPROACH OF SOCIAL AND ENVIRONMENTAL RESPONSIBILITY A SOCIALLY RESPONSIBLE FOCUSING ON MARKETS AND REDUCING ENVIRONMENTAL A SHARED CSR CULTURE GROUP PRODUCTS FOOTPRINT Autonomy of the teams to implement Strengthen best practices the policy Building on Merse
Slide 21: Our CSR Medium-Term Ambitions
OUR CSR MEDIUM-TERM AMBITIONS Ecological footprint 55% of sales linked to sustainable development by 2021 of our products Ecological products Improve by +15 pts the part of waste recovered by 2021 of our facilities CSR footprint of our Improve and secure the social and environmental suppliers perfor
Slide 22: 2018 Results
2018 RESULTS
Slide 23: Sharp Rise in Profitability
SHARP RISE IN PROFITABILITY +120 bp 10.4% As a % 2017 operating margin before 9.2% Higher prices to 9.2% non-recurring items offset the increase in Volume/mix effects +1.7% the cost of raw Price effect +1.2% materials: net positive Raw material impact -0.8% 92 75 Impact of the competitiveness plan*
Slide 24: Contrasted Performances by Segment
CONTRASTED PERFORMANCES BY SEGMENT ELECTRICAL POWER ADVANCED MATERIALS Operating income before Operating income before 69 non-recurring items (m€) 40 39 non-recurring items (m€) 50 Operating margin before Operating margin before non-recurring items (%) 11.0% 10.0% non-recurring items (%) 11.1% 14.1%
Slide 25: Strong Growth in Net Income
STRONG GROWTH IN NET INCOME In €m 2017 2018 Operating income before non-recurring items 74.6 91.6 Non-recurring income and expenses (10.3) (3.8) Non-recurring expenses contained Net financial income/(costs) (10.0) (10.3) (end of the competitiveness plan) Income tax (15.1) (18.3) Sharp drop in effect
Slide 26: Improved Free Cash Flow Even with Increase in Investments
IMPROVED FREE CASH FLOW EVEN WITH INCREASE IN INVESTMENTS FCF in €m Free cash flow Positive volume effect before financial interest and acquisitions 33.3 Drop in tax paid 27.5 Drop in exceptional* costs (€7m vs. €14m in 2017) Slight increase in WCR (21% of sales vs. 20% in 2017) Capex increase (€58m
Slide 27: Major Investment in 2018
MAJOR INVESTMENT IN 2018 (CAPEX, ACQUISITIONS AND SHARE REPURCHASES) 24 1 216 8 In €m 178 (91) 38 58 o/w solar energy and semiconductors €33m in free cash flow before interest Dec. 2017 Operating cash flow Capex Acquisitions Share repurchases Dividend and interest Other Dec. 2018 27 Shareholder’s An
Slide 28: Strong Financial Structure
STRONG FINANCIAL STRUCTURE NET DEBT/EBITDA 1.6 Net debt in €m 250 NET DEBT/EQUITY 39% 3 2,5 200 Net debt/EBITDA 2 150 1,5 100 1 50 0,5 0 0 2015 2016 2017 2018 28 Shareholder’s Annual General Meeting – May 17, 2019
Slide 29: Return to Shareholder: Dividend Up by 27%
RETURN TO SHAREHOLDER: DIVIDEND UP BY +27% 0.95 Dividend policy: 1 30%-40% of 0.75 attributable net profit 0,8 0,6 0,4 2018 PAY-OUT 0,2 35% 0 2015 2016 2017 2018 29 Shareholder’s Annual General Meeting – May 17, 2019
Slide 30: A Good Start of the Year: Growth in All Regions in Q1 2019
A GOOD START OF THE YEAR: GROWTH IN ALL REGIONS IN Q1 2019 NORTH AMERICA +11% EUROPE +6% 35%* vs. Q1 2018 35%* vs. Q1 2018 Electronics Chemicals Process Industries Transportation SOUTH AMERICA - +27% AFRICA vs. Q1 Q1 2019 sales 4%* 2018 €240m ASIA-PACIFIC +5% 26%* vs. Q1 2018 +8% like-for-like +15%
Slide 31: Report by the Board and the Committees
REPORT BY THE BOARD AND THE COMMITTEES
Slide 32: Change in Board Structure
CHANGE IN BOARD STRUCTURE REPRESENTATIVES OF BPI INDEPENDENT Magali Joessel, permanent representative Olivier Legrain Isabelle Azemard Michel Crochon REPRESENTATIVES OF ARDIAN Carolle Foissaud Dominique Gaillard Ulrike Steinhorst Yann Chareton Denis Thiery EMPLOYEE REPRESEN
Slide 33: Denis Thiery
DENIS THIERY CFO IN VARIOUS COMPANIES (WANG FRANCE 1984- 1991, MOORINGS 1991-1997, NEOPOST 1998 – 2007) CEO OF NEOPOST FROM 2009 TO 2018 CHAIRMAN OF THE BOARD OF DIRECTORS OF NEOPOST SINCE 2018 EXPERIENCE IN EXECUTIVE MANAGEMENT, STRATEGY, INTERNATIONAL ENVIRONMENT AND FINANCE Independent admini
Slide 34: Work Performed by the Board of Directors
WORK PERFORMED BY THE BOARD OF DIRECTORS MEMBERS AS OF DEC. 31, 2018: ISABELLE AZEMARD, YANN CHARETON, PIERRE CREUSY, MICHEL CROCHON, CATHERINE DELCROIX, CAROLLE FOISSAUD, DOMINIQUE GAILLARD, HENRI-DOMINIQUE PETIT, MAGALI JOËSSEL1, ULRIKE STEINHORST PRESIDENT OF THE BOARD: OLIVIER LEGRAIN NUMBER
Slide 35: Work Performed by the Audit and Accounts Committee
WORK PERFORMED BY THE AUDIT AND ACCOUNTS COMMITTEE MEMBERS AS OF DEC. 31, 2018: YANN CHARETON, CATHERINE DELCROIX, CAROLLE FOISSAUD, MAGALI JOESSEL 1 PRESIDENT OF THE COMMITTEE: HENRI-DOMINIQUE PETIT NUMBER OF MEETINGS IN 2018: 5 ATTENDANCE RATE: 90 % 1 Representing Bpifrance Investissement 35 S
Slide 36: Work Performed by the Governance and Compensation Committee
WORK PERFORMED BY THE GOVERNANCE AND COMPENSATION COMMITTEE MEMBERS AS OF DEC. 31, 2018: ISABELLE AZEMARD, PIERRE CREUSY, DOMINIQUE GAILLARD, OLIVIER LEGRAIN, HENRI-DOMINIQUE PETIT PRESIDENT OF THE COMMITTEE: ULRIKE STEINHORST NUMBER OF MEETINGS IN 2018: 3 ATTENDANCE RATE: 100 % 36 Shareholder’s
Slide 37: Work Performed by the Strategy Committee
WORK PERFORMED BY THE STRATEGY COMMITTEE MEMBERS AS OF DEC. 31, 2018: PIERRE CREUSY, CATHERINE DELCROIX, DOMINIQUE GAILLARD, MAGALI JOESSEL1, OLIVIER LEGRAIN, ULRIKE STEINHORST PRESIDENT OF THE COMMITTEE: MICHEL CROCHON NUMBER OF MEETINGS IN 2018: 2 ATTENDANCE RATE: 87% 1 Representing Bpifrance
Slide 38: Reports by the Statutory Auditors
REPORTS BY THE STATUTORY AUDITORS
Slide 39: Summary Presentation of Resolutions
SUMMARY PRESENTATION OF RESOLUTIONS
Slide 40: Dividend – Resolution 3
DIVIDEND – RESOLUTION 3 0.95 € PER A SHARE (0.095 € PER B, C AND D SHARES), WHICH CORRESPONDS TO A TOTAL AMOUNT OF €20 MILLION Increase by 27% vs 2018 Corresponds to a distribution rate of 35% of Group’s net income restated from 2018 exceptional items PAYMENT IN CASH ON JULY 5, 2019 40 Shareho
Slide 41: Related-Party Agreement – Resolution 4
RELATED-PARTY AGREEMENT – RESOLUTION 4 APPROVAL OF A COMMITMENT MADE TO LUC THEMELIN WHICH WAS AMENDED AS FOLLOWS: Clarification of the maximum amount of the severance and non-compete indemnity that would be due, namely 24 months of total gross compensation Annulment of the severance indemnity
Slide 42: Compensation Paid to Corporate Officers for 2018 – Resolution 7
APPROVAL OF COMPONENTS OF THE COMPENSATION AND BENEFITS PAID OR GRANTED TO CORPORATE OFFICERS FOR 2018 – RESOLUTION 7 Olivier Legrain – Chairman of the 2018 2017 Comments Board of Directors Fixed compensation 80,000 49,676 Chairman of the Board since May 17, 2017. 2017 amount calculated prorata temp
Slide 43: Compensation Paid to Corporate Officers for 2018 – Resolution 8
APPROVAL OF COMPONENTS OF THE COMPENSATION AND BENEFITS PAID OR GRANTED TO CORPORATE OFFICERS FOR 2018 – RESOLUTION 8 Luc Themelin – Chief Executive Officer 2018 2017 Comments Fixed compensation 440,000 440,000 Unchanged from 2015 Annual variable compensation 466,189 466,400 35% relating to the Grou
Slide 44: Compensation Paid to Corporate Officers – Resolution 9
APPROVAL OF COMPONENTS OF THE COMPENSATION AND BENEFITS PAID OR GRANTED TO CORPORATE OFFICERS FOR 2018 – RESOLUTION 9 Chairman of the Board Comments Fixed compensation Unchanged from previous years: €80,000 Annual variable compensation NA Multi-annual variable compensation NA Stock options attributi
Slide 45: Compensation Paid to Corporate Officers – Resolution 10
APPROVAL OF COMPONENTS OF THE COMPENSATION AND BENEFITS PAID OR GRANTED TO CORPORATE OFFICERS FOR 2018 – RESOLUTION 10 Chief Executive Officer Comments Fixed compensation €440,000, unchanged from previous years. Amount set following a study by Mercer consulting. Annual variable compensation Unchange
Slide 46: Stock Repurchase Program – Resolution 11
STOCK REPURCHASE PROGRAM – RESOLUTION 11 AUTHORIZATION FOR THE BOARD OF DIRECTORS TO REPURCHASE A MAXIMUM OF 10% OF THE COMPANY’S SHARE CAPITAL In compliance with AMF regulations Valid for a period of 18 months maximum Maximum purchase price: €50 per share 46 Shareholder’s Annual General Meet
Slide 47: Employee Share Ownership Authorizations – Resolutions 12 and 13
AUTHORIZATIONS DESIGNED TO PROMOTE EMPLOYEE SHARE OWNERSHIP – RESOLUTIONS 12 AND 13 ISSUE OF ORDINARY SHARES FOR EMPLOYEES OUTSIDE FRANCE (RESOLUTION 12) BONUS SHARES ALLOTMENT FOR EMPLOYEES (RESOLUTION 13) 47 Shareholder’s Annual General Meeting – May 17, 2019
Slide 48: Attribution d'actions aux salariés non dirigeant – Résolution 14
ATTRIBUTION D’ACTIONS AUX SALARIÉS NON DIRIGEANT – RÉSOLUTION 14 AUTHORIZATION GRANTED TO THE BOARD OF DIRECTORS TO ALLOT BONUS SHARES: A maximum of 84,000 ordinary shares (unchanged from 2018) DEFINITIVE ALLOTMENT SUBJECT TO PERFORMANCE CRITERIA Growth in the EBITDA margin and sales organic g
Slide 49: Allotment of Shares to Certain Employees and Corporate Officers – Resolution 15
ALLOTMENT OF SHARES TO CERTAIN EMPLOYEES AND/OR CERTAIN CORPORATE OFFICERS – RESOLUTION 15 WITHDRAWAL OF PREVIOUS BONUS SHARE PLANS CONSIDERED TO BE TOO COMPLEX AUTHORIZATION GRANTED TO THE BOARD OF DIRECTORS TO ALLOT BONUS SHARES: A maximum of 63,000 ordinary shares (a maximum of 15% for the CEO
Slide 50: Questions
QUESTIONS
Slide 51: Vote of Resolutions
VOTE OF RESOLUTIONS ORDINARY GENERAL MEETING