Mersen Sa · EURONEXT:MRN
Mersen Sa — Investor Day (December 2024)
81 slides from Mersen Sa's investor day presentation, Dec 5, 2024
Slide 1: Capital Market Day, December 5, 2024
CAPITAL CAPITAL MARKET MARKET DAY DAY 5December décembre5, 2024 2024
Slide 2: Safe Harbor
SAFE HARBOR This presentation contains forward-looking information that is subject to various risks and uncertainties, both expected and unexpected, which could have a significant impact on the Company's future performance. Readers are also invited to visit the Group's website where they can consult
Slide 3: Today's agenda
Today’s agenda 01 02 03 04 05 A new A winning Our medium-term A strong Significant dimension positioning growth drivers financial profile potential
Slide 4: A path to growth and value creation
A path to growth and value creation 1 An extensive and well-established Group, more dynamic and less cyclical Well positioned in buoyant medium-term energy transition markets and supported by traditional markets that provide resilience 2 3 Long-term prospects for sustainable and profitable growth, r
Slide 5: A new dimension
01 A new Luc Themelin Chief Executive dimension Officer
Slide 6: An improved growth profile
An improved growth profile REPORTED SALES (€M) Average 1,083 +23% Average 1,400 879 1,211 1,200 1,000 800 600 400 200 2017 2018 2019 2020 2021 2022 2023 6 Capital Market Day – December 5, 2024
Slide 7: Positioned in dynamic markets
Positioned in dynamic markets REPORTED SALES (€M) Renewable energies Silicon semiconductors 26% of average total 20% of average total SiC semiconductors 2021-2023 sales 2021-2023 CAGR 1,400 2017-2019 sales Electric vehicles 15% 1,200 1,000 800 2021-2023 CAGR Aeronautics 16% Rail 600 400 Process indu
Slide 8: A more profitable Group
A more profitable Group Average EBITDA +27% €179m Average EBITDA €141m Average +60 bps EBITDA margin Average 16.6% EBITDA EBITDA margin (€m) 16.0% EBITDA 250 17% margin 203 17% 200 16% 16% 150 15% 100 15% 14% 50 14% 0 13% 2017 2018 2019 2020 2021 2022 2023 2017 and 2018 restated (IFRS16) 8 Capital M
Slide 9: A more cash-generating model
A more cash-generating model NET CASH GENERATED BY OPERATING ACTIVITIES Average +33% €134m Average €m 200 €101m 180 160 140 120 100 80 60 40 20 0 2017 2018 2019 2020 2021 2022 2023 2017 and 2018 restated (IFRS16) 9 Capital Market Day – December 5, 2024
Slide 10: The electric vehicle market: a slowdown in certain markets
A slowdown in certain markets The electric vehicle market The electric vehicle market Markets Mersen’s Assumptions The electric vehicle market is less buoyant than previously anticipated, For the Group, this means Growth in the pushing its sales target of particularly in Europe and electric vehicle
Slide 11: … but our growth story continues
… but our growth story continues The Group is positioned in high-growth markets whose long-term potential remains intact Capital expenditure plan, largely underway, will ensure the Group is ready for the rebound Rapid decision to accelerate the plan to optimize profitability and cash flow, given the
Slide 12: A winning positioning
02 A winning Luc Themelin Chief Executive positioning Officer
Slide 13: Three strategic pillars for profitable growth
Three strategic pillars for profitable growth 1 2 3 Key position in our Unique sets of Towards a more customers' value expertise sustainable society chain 13 Capital Market Day – December 5, 2024
Slide 14: Our expertise – Mersen Inside Materials
Our expertise – Mersen Inside Materials 1 Vertical integration Custom parts, mainly World number 1 for Optimized industrial consumables isostatic graphite footprint Production of isostatic graphite, a material with Wear or replacement parts Production capacity of Graphite production sites essential
Slide 15: Our expertise – Mersen Inside Electrical Power
Our expertise – Mersen Inside Electrical Power 2 Design and Two business Number two Global manufacturing models worldwide for operations fuses R&D - via electrical Covers all standards Design distribution Unique offering for Development - in project mode, for power electronics: the Testing Electrica
Slide 16: An innovative Group thanks to its R&D capabilities
An innovative Group thanks to its R&D capabilities 18 R&D CENTERS R&D Testing Simulation organization facilities center Global network High-power testing Cutting-edge expertise centers that benefits everyone 180 210 EXPERTS & R&D AND Partnerships with Certification SPECIALISTS INNOVATION customers c
Slide 17: Mersen, at the heart of several R&D consortiums
Mersen, at the heart of several R&D consortiums Mersen's expertise Semiconductors Busbars Components for converters Busbars Semiconductors MAUTIV'8 Components for converters 17 Capital Market Day – December 5, 2024
Slide 18: Innovation case study: SiC semiconductor technology
Innovation case study: promising technology for the SiC semiconductor market A UNIQUE HIGH-TECH Value PRODUCT proposition High-quality monocrystalline SiC layers (a few µm) A polycrystalline SiC (p-SiC) substrate with very low resistivity and high thermal conductivity A dedicated workshop in Gennevi
Slide 19: Innovation case study: fuse for high-power DC applications
Innovation case study: development of a fuse for high-power DC applications Value proposition A solution for the New design energy storage market High-power fuse, standard design high-power fuse and high-power charging stations Easy assembly Exceptional current density Compact, lightweight 19 Capita
Slide 20: A diversified portfolio of customers and markets
A diversified portfolio of customers and markets Share of 2023 sales to the Group’s main 5% 25% 36% 42% customers Top 1 customer Top 10 Top 20 Top 30 • Electrical distribution • Electrical distribution • Electrical distribution • Electrical • Semiconductors distribution • Semiconductors • Semiconduc
Slide 21: A customer portfolio combining long-term relationships and recent wins
A customer portfolio combining long-term relationships and recent wins TOP 10 CUSTOMERS New customers ≥ 40 years 3 3 ≥ 10 years Length of relationship 4 ≥ 20 years Non-exhaustive 21 Capital Market Day – December 5, 2024
Slide 22: A comprehensive and balanced footprint
A comprehensive and balanced footprint to optimize customer relations Europe 33% 38% North America Asia-Pacific 38% 26% 33% Rest of the world 22% 3% Proportion of 2023 sales Proportion of 2023 headcount 7% 22 Capital Market Day – December 5, 2024
Slide 23: United States: A key country to accelerate growth
United States: A key country to accelerate growth Electrical distribution Sales in the Average Semiconductors United States (€m) €336m +29% Energy storage Aeronautics Process industries Average €261m 450 410 400 350 300 250 200 150 100 50 0 2017 2018 2019 2020 2021 2022 2023 23 Capital Market Day –
Slide 24: India: A growing presence
India: A growing presence Rail Average +43% Wind power 2.8m rupees Sales in India in millions Average of rupees 1.9m 4 rupees 3.2 3 2 1 0 2017 2018 2019 2020 2021 2022 2023 24 Capital Market Day – December 5, 2024
Slide 25: Committed to CSR across the value chain
Committed to CSR across the value chain PRIORITY CSR COMMITMENTS AMBITION RESPONSIBLE • Improve social and environmental practices PARTNER throughout our value chain LIMIT THE ENVIRONMENTAL IMPACT • Decarbonize and mitigate the impact of climate change OF OUR SITES • Promote equal opportunity and di
Slide 26: Our products shape a more sustainable society...
Our products shape a more sustainable society... A FEW EXAMPLES WITH OUR CUSTOMERS: Reduced energy and water consumption Eco&Flex Synthesis Unit for the production of liquid HCl Reduced energy consumption This new-generation synthesis unit limits the Helping to protect people or manufacturing costs
Slide 27: ... and so do our end markets
... and so do our end markets 56% of sales for SUSTAINABLE DEVELOPMENT markets 27 Capital Market Day – December 5, 2024
Slide 28: Our medium-term growth drivers
03 Our medium-term Luc Themelin Olivier Chief Executive Raymond Salvador Lamas growth drivers Officer VP, GS Sales SVP, SPM
Slide 29: Major growth trends for our markets
Major growth trends for our markets Electric vehicles Development of grids – Energy transmission Sustainable development of the planet Energy Energy Renewable storage Energy efficiency efficiency Energies Smart grid infrastructure Nuclear power Direct Data current storage 29 Capital Market Day – Dec
Slide 30: Renewable energies will transform the world's energy mix by 2030
Renewable energies will transform the world's energy mix by 2030 Renewable energy as a percentage of global electricity production By 2025, renewable energies will overtake coal 2023 30% to become the leading source of electricity production 2030 46% By 2030, renewable energy sources will account fo
Slide 31: Sustained growth in solar panels
Sustained growth in solar panels, driving energy storage and transportation markets Annual capacity installations (GW) x3 1,400 1,200 1,000 800 600 1 164 1 012 880 400 765 665 580 505 200 440 228 Median scenario 138 170 99 106 115 2017 2018 2019 2020 2021 2022 2023 2024e 2025e 2026e 2027e 2028e 2029
Slide 32: Mersen, a major supplier across the solar power value chain
Mersen, a major supplier across the solar power value chain Electricity generation MANUFACTURING STAGES Silicon ingot Cell Electrical panel Storage Power manufacturing manufacturing protection conversion MERSEN PRODUCTS 95% of the market in China Installation-related market CUSTOMERS 32 Capital Mark
Slide 33: New solar cell manufacturing projects
New solar cell manufacturing projects, potential opportunities for Mersen Solar cell manufacturing plant projects (vertical integration, from polysilicon to solar cells) 2 projects 10 GW each India United States France 2 projects 3 GW & 5 GW 1 project Turkey 5 GW 1 project South-East Asia 1 GW 6 pro
Slide 34: Renewable energies: Medium- to long-term potential unchanged
Renewable energies: Medium- to long-term potential unchanged 2024 sales In the short term By 2029 Sales > €200m ~ €140m Materials Materials Solar: Maintain our leadership in the Leverage our industrial capabilities and customer manufacture of large solar parts in China. relationships to build strong
Slide 35: Major growth trends for our markets
Major growth trends for our markets Electric Development of grids Vehicles – Energy transmission Sustainable development of the planet Energy Energy Renewable Energy efficiency storage Energies efficiency Smart grid infrastructure Nuclear power Direct Data current storage 35 Capital Market Day – Dec
Slide 36: Electric vehicles: Mersen is positioned in several segments
Electric vehicles: Mersen is positioned in several segments Heavy industrial vehicles Bus & trucks Passenger cars 36 Capital Market Day – December 5, 2024
Slide 37: Strong growth in the emerging EV passenger vehicle market
Strong growth in the emerging EV passenger vehicle market Number of BEVs + PHEVs Growth driven in million Growth driven by early by China 18 adopters and European regulatory constraints 16 19,2% Share of 14 global market 16,6% 12 13,6% 10 8 16,5 8,4% 14,2 6 10,5 4 4,2% 6,8 2,6% 2 1,4% 2,2% 3,2 2,1 2
Slide 38: BEV and PHEV production in millions
Market growth strongly linked to China For Mersen, the addressable market remains significant 50 Growth in 2025 is linked to application of the 45 European CAFE BEV and PHEV production in millions standard and the launch 40 of several new models Chinese market 35 21,5 20,4 30 19,3 25 17,9 20 16,0 13
Slide 39: Two Mersen product ranges for EV batteries
Two Mersen product ranges for EV batteries Busbars Battery and auxiliary circuit protection fuses Battery Charging station manufacturers Car/bus manufacturers or subcontractors manufacturers 39 Capital Market Day – December 5, 2024
Slide 40: Mersen's value proposition for the EV market
Mersen's value proposition for the EV market Fuses Busbars Customized solutions for 2 applications: New range of fuses dedicated to EV market (150-800V) Cell interconnection Production capacity automated, IATF Thermal protection thanks to insulation certified layers Smart busbars, providing data for
Slide 41: The first automatic busbar production line for ACC modules
The first automatic busbar production line for ACC modules 41 Capital Market Day – December 5, 2024
Slide 42: Mersen is connected to major carmakers outside China
Mersen is connected to major carmakers outside China Europe North America Asia Light vehicles Heavy vehicles 42 Capital Market Day – December 5, 2024
Slide 43: A three-year delay in the EV market, but positive outlook beyond
A three-year delay in the EV market, but positive outlook beyond this timeframe 2024 sales Sales ~ €100m In the short term ~ €30m By 2029 • Harness growth in the European market • Important addressable market outside China, boosted in the short term by CAFE with the US market more dynamic than regul
Slide 44: Major growth trends for our markets
Major growth trends for our markets Electric vehicles Development of grids – Energy transmission Sustainable development of the planet Energy Energy Renewable efficiency storage Energy Energies efficiency Smart grid infrastructure Nuclear power Direct Data current storage 44 Capital Market Day – Dec
Slide 45: SiC power components, a benefit for the electric vehicle market
SiC power components, a benefit for the electric vehicle market SiC power components market 48% 70% 76% 2019 2023 2029 est. USD 511 million USD 2.7 billion USD 10 billion Electric vehicles Source: Yole – Power SiC Markets and Applications 2024 Industrial and renewable energies 45 Capital Market Day
Slide 46: The advantages of SiC over Si
The advantages of SiC over Si Performance Cost SiC for more efficient power Higher, but falling, costs: conversion: • A SiC converter costs 1.7x more than a Balancing • ~20% reduction in system size Si converter for a 400V battery, and 2x more for an 800V battery and weight performance Future cost r
Slide 47: A growing number of SiC semiconductors in electric vehicles
A growing number of SiC semiconductors in high-performing electric vehicles 50 to 100 SiC MOSFETs OBC (On Board in an 800 V electric vehicle Charging) SiC MOSFET SiC MOSFET DC DC/DC charging converter station Inverter A/C Compressor SiC MOSFET SiC MOSFET SiC MOSFET Source: Yole 47 Capital Market Day
Slide 48: Mersen, a supplier to all players in SiC manufacturing
Mersen, a supplier to all players in the SiC semiconductor manufacturing process 48 Capital Market Day – December 5, 2024
Slide 49: p-SiC project
p-SiC project 2022 2023 2024 2025 2026 2027 2028 2029 2030 Installation of production lines Approval of technical principles Mersen's production capacity: Improvement of 400,000 p-SiC wafers (eq. 6’) per year yields depending on SmartSiC qualifications Capex: ~€60m A technical team at Mersen of arou
Slide 50: Mersen is connected to the entire EV market
Mersen is connected to the entire EV market EVs SiC transistors Wafers SiC transistors EVs 50 Capital Market Day – December 5, 2024
Slide 51: High inventory levels between 2022 and 2024
High inventory levels between 2022 and 2024, impacting market growth rates SiC POWER WAFER MARKET SALES In USD millions Year-on-year growth (%) 72% 3,000 62% Original scenario 2,500 46% 40% Updated 2,000 Mersen Scenario 1,500 1,000 500 0% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2
Slide 52: A three-year delay compared with the original plan
A three-year delay compared with the original plan 2024 sales In the short term By 2029 Sales > €220m ~ €100m • The strong growth until mid-2024 led to a • Very important potential mainly linked to build-up of high inventory levels throughout EV market the chain • 2025 lower than originally forecast
Slide 53: Major growth trends for our markets
Major growth trends for our markets Electric vehicles Development of grids – Energy transmission Sustainable development of the planet Energy Energy Renewable Energy efficiency storage Energies efficiency Smart grid infrastructure Nuclear power Data Direct storage current 53 Capital Market Day – Dec
Slide 54: Silicon semiconductor market prospects boosted by AI
Silicon semiconductor market prospects boosted by AI In USD billions 1200 >1,000 1000 ~50% 800 linked to IoT and high-speed 600 computing (AI) 400 200 0 2023 2024e 2025e 2026e 2027e 2028e 2029e 2030e Source: WSTS Forecast summary for 2024 and 2025 – Applied Materials May 2024 for 2030 54 Capital Mar
Slide 55: Mersen present at technical stages of silicon semiconductor manufacturing
Mersen present at the technical stages of silicon semiconductor manufacturing Polysilicon & ingot pulling Wafer epitaxy Atomic layer Photolithography Etching Ion implantation deposition OUR PRODUCTS CUSTOMERS OUR North America Europe Asia END USERS Global Wafers ShinEtsu Siltronic Sumco Texas Instru
Slide 56: Unchanged medium-term potential for the silicon semiconductor market
Unchanged medium-term potential for the silicon semiconductor market 2024 sales In the short term By 2029 Sales > €100m ~ €50m • Important drop in 2024 due to inventory • Considerable demand for high-speed levels computing (AI) and data centers • Recovery expected in H1 2025 Strategy: Action plan •
Slide 57: A solid financial profile
04 A solid financial Thomas Baumgartner Chief Financial profile Officer
Slide 58: A solid financial profile
A solid financial profile 1 2 3 A solid historical An adjustment of A sound financial performance the mid-term plan structure 58 Capital Market Day – December 5, 2024
Slide 59: An improved growth profile
An improved growth profile REPORTED SALES (€M) Average 1,083 +23% Average 1,400 879 1,200 1,000 800 600 400 200 2017 2018 2019 2020 2021 2022 2023 59 Capital Market Day – December 5, 2024
Slide 60: A more profitable Group
A more profitable Group Average EBITDA +27% €179m Average EBITDA €141m Average +60 bps EBITDA margin Average 16.6% EBITDA EBITDA margin (€m) 16.0% EBITDA 250 17% margin 17% 200 16% 16% 150 15% 100 15% 14% 50 14% 0 13% 2017 2018 2019 2020 2021 2022 2023 2017 and 2018 restated (IFRS16) 60 Capital Mark
Slide 61: Two profitable segments
Two profitable segments OPERATING INCOME BEFORE NON-RECURRING ITEMS (€M) Operating margin Synergies between segments before non-recurring items in % 15.7% • Sales and Marketing synergies between the 15.8% 120 two segments to develop new businesses • Optimization of manufacturing and sales 100 14.4%
Slide 62: A more effective cash-generating model
A more effective cash-generating model NET CASH GENERATED BY OPERATING ACTIVITIES Average +33% €134m Average €m 200 €101m 180 160 140 120 100 80 60 40 20 0 2017 2018 2019 2020 2021 2022 2023 2017 and 2018 restated (IFRS16) 62 Capital Market Day – December 5, 2024
Slide 63: A solid base to finance investments
A solid base to finance investments Solid base = Traditional markets (72% of 2023 sales): EBITDA LESS CAPEX (€M) – TRADITIONAL MARKETS aeronautics, rail, process industries, chemicals A capacity to generate substantial cash flows in 100 71 73 1 traditional markets 90 51 80 Resilience thanks to a div
Slide 64: Manufacturing capacity fully utilized from 2022 onwards
Manufacturing capacity fully utilized from 2022 onwards Capex decision driven by strong medium-term customer demand Capex Graphite (€m) 100% manufacturing capacity utilization rate 120 90% 85% 100 80 60 40 20 0 2020 2021 2022 64 Capital Market Day – December 5, 2024
Slide 65: The new equation
The new equation 1 2 3 4 The electric vehicle market The electric vehicle market The electric vehicle market The electric vehicle market Delays on some Excess inventories An investment Heightened market prospects plan launched in geopolitical (EV and silicon (solar power, early 2023, with a tensions
Slide 66: Investments postponed and adapted to market trends
Investments postponed and adapted to market trends Capex for the growth plan (€m) Electric vehicle market ... with consequences for Reduction of €-30 to -40 m vs inital plan less buoyant than the SiC semiconductor expected, particularly in market... Europe... 2023 95 2024 est. 120 2025 est [65-75] .
Slide 67: A peak in investment in 2024
A peak in investment in 2024 Industrial capex 250 (€m) 200 150 100 On average~ 6.5% of sales 50 0 2022 2023 2024 2025 2026 2027 2028 2029 67 Capital Market Day – December 5, 2024
Slide 68: Acceleration of cost and cash flow optimization measures
Acceleration of cost and cash flow optimization measures Structural and contextual Strengthened action plan Cost/gain optimization measures for inventory management updated • Closure of workshop in the Netherlands and transfer of business to other European countries • Plan adapted to each plant • €1
Slide 69: A global presence that is an asset in the current geopolitical context
A global presence that is an asset in the current geopolitical context Limited impact of trade barriers Europe 1 80% local suppliers 33% 38% North America Asia-Pacific 2 Very limited foreign exchange risks 38% 26% 33% Borrowings in local currency (little Rest of the world 22% 3 currency effect on fi
Slide 70: A doubling of EBITDA over the duration of the plan
A doubling of EBITDA over the duration of the plan EBITDA (€m) [EBITDA less capex] (€m) 350 EBITDA 350 x1.8 300 300 [EBITDA less capex] x2.5 250 250 200 200 150 150 100 100 50 50 0 0 2022 2023 2029 2022 2023 2029 70 Capital Market Day – December 5, 2024
Slide 71: A financial structure that remains solid
A financial structure that remains solid Net debt (€m) Leverage Bank 500 4,0 covenants at 3.5 3,5 400 3,0 2,5 300 Group leverage 2,0 policy 200 1,5 1,0 100 0,5 0 0,0 2017 2018 2019 2020 2021 2022 2023 2024 71 Capital Market Day – December 5, 2024
Slide 72: Acquisitions: A disciplined approach
Acquisitions: A disciplined approach Over the 2017-2024 >200 Completed in period opportunities considered 2024 and turned down • Mainly consolidation A selective business • Expertise, know-how approach • Vertical markets and/or regions with sustained growth • Profitable and solid Strict financial •
Slide 73: Substantial free cash flow to finance acquisitions
Substantial free cash flow to finance acquisitions during the year AVAILABLE LIQUIDITY At June 30, 2024 6 Drawn credit lines (€m) 115 ~€320m (undrawn Group syndicated loan) 100 +~€100m cash 2 56 Maturity 6 30 6 4.3 years* 20 15 3 10 1 Fixed rate 2024 2025 2026 2027 2028 2029 2030 2031 ~58% of gross
Slide 74: Key takeaways
Key takeaways 1 2 3 A financial Accelerated Medium-to- model focused adaptation long-term plan on creating measures unchanged value (EBITDA, cash) 74 Capital Market Day – December 5, 2024
Slide 75: Significant potential
05 Significant Luc Themelin Chief potential Executive Officer
Slide 76: The medium-term plan remains unchanged but is postponed
The medium-term plan remains unchanged but is postponed by 2 years of approx. SALES 2029 €1,700m OPERATING MARGIN BEFORE EBITDA MARGIN BEFORE NON-RECURRING ITEMS NON-RECURRING ITEMS ROCE 12% ±50 pts 19% ±50 pts 13% ±50 pts of sales of sales of sales 76 Capital Market Day – December 5, 2024
Slide 77: Major growth trends for our markets beyond 2027
Major growth trends for our markets beyond 2027 Electric vehicles Development of grids – Energy transmission Sustainable development of the planet Energy Energy Renewable energies Energy efficiency storage efficiency Smart grid infrastructure Nuclear Power Direct Data current storage 77 Capital Mark
Slide 78: The potential of the nuclear market for Mersen
The potential of the nuclear market for Mersen Numerous (~150) small modular reactor Around 15 projects accessible to (SMR) projects in several countries Mersen (i.e., excluding China, Japan and Russia) Technologies that have yet to be Timetable demonstrated, in particular: 2025: Perform irradiation
Slide 79: The potential of the smart grids and microgrids market for Mersen
The potential of the smart grids and microgrids market for Mersen Smart grids Balance the grid and optimize electricity from Microgrids production to consumption Local smart grid (buildings, Required in an environment with multiple companies, villages, etc.) energy sources Mersen’s offering Schedule
Slide 80: An attractive equity story
An attractive equity story 1 An extensive and well-established Group, more dynamic and less cyclical Well positioned in buoyant medium-term energy transition markets and supported by traditional markets that provide resilience 2 3 Long-term prospects for sustainable and profitable growth, reaching s
Slide 81: Q&A
CAPITAL CAPITAL Q&A MARKET MARKET DAY DAY 5December décembre5, 2024 2024