TKH Group N.V. Cert · EURONEXT:TWEKA
TKH Group N.V. Cert — TKH Group — H1 2016 Earnings Presentation
57 slides from TKH Group N.V. Cert's earnings presentation, Aug 16, 2016
Slide 1: Half year results 2016
Half year results 2016 TKH Group NV 16 August 2016 1 | Half year results 2016 | 16-08-2016
Slide 2: Content
Content 1 About TKH Group 2 Developments 1 half year 2016 st 3 Notes to the results 1 half year 2016 st 4 Strategic developments, business drivers & outlook 5 Four core technologies & seven vertical growth markets 2 | Half year results 2016 | 16-08-2016
Slide 3: Profile
Profile Turnover 2015 € 1,375 million Turnover H1 2016 € 650 million Geographical distribution of turnover (in %) Number of employees (FTE) 5,433 Technology company Four core technologies Vision & security, communication, connectivity and manufacturing systems The core technologies are combined with
Slide 4: Mission
Mission TKH intends to be an innovative and leading technology (niche) player in creating combinations of technologies to total solutions through which customers are fully relieved and that lead to larger efficiency, more comfort and larger safety. TKH aims to be an attractive employer, to continuou
Slide 5: Strategy TKH
Strategy TKH Value creation Focus on 4 core technologies in 3 business segments Telecom Building Industrial Solutions Solutions Solutions Growth drivers Communication, safety, care and efficiency Innovations > 15% turnover 5 | Half year results 2016 | 16-08-2016
Slide 6: Developments 2006 - 2015
Developments 2006 - 2015 1) 1) Excluding one-off one-off income and expenses 6 | Half year results 2016 | 16-08-2016
Slide 7: Developments 1st half year 2016
DEVELOPMENTS 1st HALF YEAR 2016 7 | Half year results 2016 | 16-08-2016
Slide 8: Highlights 2nd quarter 2016
Highlights 2nd quarter 2016 Turnover drops 6.6% to € 333.3 million – organic decline 3.2% Telecom Solutions + 11.8% organic Building Solutions + 2.6% organic Industrial Solutions - 12.0% organic, in line with previously reported lower order intake China EBITA down 11.2%, largely due to lower turnove
Slide 9: Highlights 1st half year 2016
Highlights 1st half year 2016 Turnover down 5.8% at € 650.1 million – organic decline 3.0% Telecom Solutions + 5.6% organic Building Solutions - 0.5% organic Industrial Solutions - 7.3% organic Innovations: 16.8% of turnover EBITA down 12.3%, largely due to lower turnover in Industrial Solutions Net
Slide 10: Highlights 1st half year 2016
Highlights 1st half year 2016 Solutions segmentation 10 | Half year results 2016 | 16-08-2016
Slide 11: Telecom Solutions
Telecom Solutions (in million € unless stated otherwise) 1st half year 1st half year Δ in % 2016 2015 Turnover 84.1 80.4 + 4.5 EBITA 9.2 8.0 + 16.0 ROS 11.0% 9.9% Organic turnover growth: 5.6% Increase turnover fibre optic networks by strong demand in China and growth in Germany and France Increase
Slide 12: Telecom Solutions
Telecom Solutions Segment fibre networks systems: turnover +10.5% Optical fibre (cable), connectivity systems and components, active equipment Strong demand in China and growth in Germany and France Decline demand in the Netherlands – still not being offset by installation of fibre optic networks in
Slide 13: Telecom Solutions
Telecom Solutions Segment indoor telecom systems and copper network systems: turnover -2.2% Home networking systems, broadband connectivity, IPTV-software solutions, copper cable, connectivity systems and components, active equipment Continued decline in investment levels in copper networks Growing
Slide 14: Building Solutions
Building Solutions (in million € unless stated otherwise) 1st half year 1st half year Δ in % 2016 2015 Turnover 274.0 287.5 - 4.7 EBITA 28.9 30.0 - 3.7 ROS 10.6% 10.4% Organic turnover decline: 0.5% – Organic turnover growth 2.6% in Q2 Reluctance to invest has negative impact on turnover in China an
Slide 15: Building Solutions
Building Solutions Segment vision & security systems: turnover -2.5% Vision technology, systems for CCTV, video/audio analysis and detection, intercom, access controls and registration, central control room integration, healthcare systems Organic turnover decline 0.1% due to reluctance to invest in
Slide 16: Building Solutions
Building Solutions Segment connectivity systems: turnover -8.0% specialty cable (systems) for shipping, rail, infrastructure, wind energy, as well as installation and energy cable for niche markets, structured cable systems Organic turnover decline 1.1% – drop in market volume due to fewer large-sca
Slide 17: Industrial Solutions
Industrial Solutions (in million € unless stated otherwise) 1st half year 1st half year Δ in % 2016 2015 Turnover 292.1 320.0 - 9.3 EBITA 32.8 42.7 - 23.2 ROS 11.2% 13.3% Organic turnover decline: 7.3% – lower order intake manufacturing systems 2015 due to reluctance to invest in China Decrease in E
Slide 18: Industrial Solutions
Industrial Solutions Segment connectivity systemen: turnover +2.5% specialty cable systems and modules for the medical, robot, automotive and machine building industries Organic turnover growth 7.2% Positive turnover development in medical and robot industries Investments in R&D are bearing fruit Re
Slide 19: Industrial Solutions
Industrial Solutions Segment manufacturing systems: turnover -16.5% Tire manufacturing systems, can washers, machine control systems, product handling systems and test equipment Organic turnover decline 16.2% Due to previously communicated reduced order intake in 2015 Relatively large share in engin
Slide 20: Notes to the results 1st half year 2016
NOTES TO THE RESULTS 1st HALF YEAR 2016 20 | Half year results 2016 | 16-08-2016
Slide 21: Change in turnover
Notes to the results 1st half year 2016 Change in turnover (in € million) 21 | Half year results 2016 | 16-08-2016
Slide 22: Geographical distribution of turnover
Notes to the results 1st half year 2016 Geographical distribution of turnover (in %) 22 | Half year results 2016 | 16-08-2016
Slide 23: Development of turnover per solution
Notes to the results 1st half year 2016 Development of turnover per solution (in million € unless stated otherwise) Impact prices raw Turnover Turnover materials and H1 2016 H1 2015 Delta currencies Organic Telecom Solutions 84.1 80.4 + 4.5% - 1.1% + 5.6% Building Solutions 274.0 287.5 - 4.7% - 3.3%
Slide 24: Notes to the results 1st half year 2016
Notes to the results 1st half year 2016 Gross margin increased to 46.4% (H1 2015: 46.0%) Margin improvement in Building and Industrial Solutions Improved product mix, larger share vision & security systems (Building) and larger component of engineering activity compared to production (Industrial) Lo
Slide 25: EBITA per Solution
Notes to the results 1st half year 2016 EBITA per Solution (in million € unless stated otherwise) H1 2016 H1 2015 EBITA ROS % EBITA ROS % Telecom Solutions 9.2 11.0 8.0 9.9 Building Solutions 28.9 10.6 30.0 10.4 Industrial Solutions 32.8 11.2 42.7 13.3 Other - 6.1 - 6.9 Total 64.8 10.0 73.8 10.7 25
Slide 26: Notes to the results 1st half year 2016
Notes to the results 1st half year 2016 Increase amortisation charges with € 0.5 million Increased investment level in R&D in the past years Decrease amortisation of ‘purchase price allocations’ One-off income and expenses of € 0.5 million Impairment of tangible assets and capitalised R&D expenditur
Slide 27: Income statement
Notes to the results 1st half year 2016 (in million €) H1 H1 2016 2015 Δ in % Turnover 650.1 690.0 - 5.8 Costs of raw materials / consumables -348.2 - 372.9 Gross margin 301.9 46.4% 317.1 46.0% - 4.8 Operating costs - 237.1 - 243.3 - 2.6 EBITA 64.8 10.0% 73.8 10.7% - 12.3 Amortization - 16.0 - 15.5
Slide 28: Balance sheet as of 30 June 2016
Balance sheet as of 30 June 2016 (in million €) 30-06-2016 31-12-2015 30-06-2015 Assets Non-current assets 634.1 630.4 626.8 Inventories 206.1 194.2 221.5 Construction contracts 74.8 74.2 110.2 Receivables 195.6 172.9 217.3 Cash 81.5 179.0 57.1 Total 1,192.1 1,250.7 1,232.9 Liabilities Equity 518.3
Slide 29: Notes to the balance sheet June 2016: working capital
Notes to the balance sheet 30 June 2016 Change in working capital (in € million) Working capital Use of non recourse factoring: 30-06-16 € 44.7 mio 31-12-15 € 43.0 mio 30-06-15 € 40.7 mio Use of supply chain finance: 30-06-16 € 20.8 mio 31-12-15 € 11.8 mio 30-06-15 € 16.7 mio 29 | Half year results
Slide 30: Notes to the balance sheet June 2016: net debt
Notes to the balance sheet 30 June 2016 Change in net debt (in € million) Financial covenants Net debt is based on financial covenants as agreed with banks Net debt / EBITDA: 1.3 Interest coverage ratio: 23.7 30 | Half year results 2016 | 16-08-2016
Slide 31: Cash flow statement
Cash flow statement (in million €) H1 H1 H2 2016 2015 2015 Operating result 48.3 57.9 60.5 Depreciation, amortization and impairment 26.6 26.9 28.8 Gains on disposal of tangible assets -1.2 Share and option schemes 2.0 1.6 0.9 Change in provisions - 1.2 - 3.8 3.1 Change in working capital - 30.6 - 5
Slide 32: Ratios
Ratios H1 H1 FY 2016 2015 2015 Working capital / Turnover 1) 14.4% 18.2% 11.4% Net debt / EBITDA 2) 1.3 1.6 0.9 ICR (EBITDA / Financial costs) 2) 23.7 21.7 22.5 Solvency 44.2% 40.2% 42.2% Net earnings per ordinary share before amortisation € 0.98 € 1.13 € 2.40 and one-off income and expenses 3) Net
Slide 33: Strategic developments, business drivers & outlook
Strategic developments, business drivers & outlook 33 | Half year results 2016 | 16-08-2016
Slide 34: Business drivers
Business drivers Focus on four core technologies Vision & security, communication, connectivity and manufacturing systems Merge the four core technologies into specific solutions for identified niche vertical markets with special focus on high growth opportunities within the business segments Teleco
Slide 35: TKH – vertical growth markets – growth drivers
TKH – vertical growth markets – growth drivers Advantage of focus on defined vertical growth markets Focus leads to maximum traction to realise growth potential Choice for growth verticals is determined on the return potential based on internal and external benchmarking – ROS and ROCE in combination
Slide 36: Financial objectives TKH
Financial objectives TKH Progress realisation targets on track – short term negative effect due to investments in R&D and sales organisation in preparation for further growth ROS H1 2016: 10.0% (full 2015: 11.0%) ROCE H1 2016: 18.6% (full 2015: 22.1%) Targets medium term ROS target: 11 to 12% ROCE t
Slide 37: Growth scenarios vertical growth markets
Growth scenarios vertical growth markets Growth verticals Growth 2012 2014 2015 (in € miljoenen) scenarios Fibre Optics Network 80 99 101 120 150 Parking 20 35 50 75 100 Tunnel & Infra 30 25 42 100 150 Marine, Oil & Gas 20 50 58 100 125 Care 30 34 39 70 100 Machine Vision 95 103 114 150 175 Tyre Bui
Slide 38: Acquisitions (after balance sheet date)
Acquisitions (after balance sheet date) Airfield Ground Lighting (‘AGL’) activities of Hella – Building Solutions – connectivity systems Consolidation as of 1 August 2016 Acquisition operating side in Denmark and main assets in Lippstadt (Germany), including intellectual property rights for portfoli
Slide 39: Outlook
Outlook The outlook for the second half of the year in the market segments in which TKH operates is generally more positive Telecom Solutions Turnover in line with H1 Demand for optical fibre in China will be lower in H2 2016, but expected to be largely compensated by higher demand in Europe Differe
Slide 40: Outlook
Outlook Industrial Solutions Turnover will be higher as a result of well-filled order book in both connectivity and manufacturing systems Order intake for manufacturing systems in H2 expected to exceed H1 Result H2 expected to be higher than H1 On balance, and barring unforeseen circumstances, TKH e
Slide 41: Appendix I: TKH Technologies
Appendix I: TKH TECHNOLOGIES 41 | Half year results 2016 | 16-08-2016
Slide 42: Core technologies
Core technologies Vision & Security Communication Emergency Personal alarm systems systems Manufacturing systems Connectivity 42 | Half Drag year Chain results 2016 | 16-08-2016 systems MultiMediaConnect
Slide 43: Appendix II: Vertical growth markets
Appendix II: VERTICAL GROWTH MARKETS 43 | Half year results 2016 | 16-08-2016
Slide 44: Business drivers
Business drivers TKH focuses on distinguishing potential for an above- average performance Niche player strategy - focus on high quality solutions with high margins High pricing power by innovative unique solutions Attractive margins because of high yield on investments for customers Commodity produ
Slide 45: TKH – vertical growth markets – Fibre Optic
TKH – vertical growth markets – Fibre Optic Growth drivers The impact of information and communication technology on the way we live our lives Stormy development of e-learning, gaming, social media - increasing need for bandwidth Data usage by smartphones and tablets continues to grow The transition
Slide 46: TKH – vertical growth markets – Care
TKH – vertical growth markets – Care Growth drivers Life expectancy is continually increasing and healthcare spending will increase sharply due to more and better, but also more expensive care Changing healthcare funding: shifting from the government to the institutions and healthcare insurers Innov
Slide 47: TKH – vertical growth markets – Parking
TKH – vertical growth markets – Parking Growth drivers Revenue from car parks is under pressure due to low supply and mobility - need to reduce OPEX Increase capacity utilisation and revenues by means of differentiated parking fee and increase comfort and convenience for parkers Use of technologies
Slide 48: TKH – vertical growth markets – Tunnel & Infra
TKH – vertical growth markets – Tunnel & Infra Growth drivers The next few years, investments in tunnel technology in Europe for new and existing tunnels. Due to strict legislation and regulations in the field of security, ever increasing demands are made concerning the technical equipment Increasin
Slide 49: TKH – vertical growth markets – Marine, Oil & Gas
TKH – vertical growth markets – Marine, Oil & Gas Growth drivers Doubling of shipping volume in 2030 – thus demand for larger cargo ships and need for efficient external site management Increase in the building of quality ships, cruise liners and luxury yachts Increase of remote control of unmanned
Slide 50: TKH – vertical growth markets – Machine vision
TKH – vertical growth markets – Machine vision Growth drivers Demand for vision technology is increasing due to the trend towards automation and robotics in factories – demand for more efficient production processes Increased miniaturization complicates quality control and inspections of products by
Slide 51: TKH – vertical growth markets – Tire building
TKH – vertical growth markets – Tire building Growth drivers High priority of the tire manufacturing industry to replace existing technology with an emphasis on high productivity, efficiency, waste reduction, quality improvement and smaller batches The number of tire sizes for passenger cars has inc
Slide 52: Appendix III: Change in revenue presentation
Appendix III: Change in revenue presentation 52 | Half year results 2016 | 16-08-2016
Slide 53: Change in revenue presentation 2015
Appendix Change in revenue presentation 2015 The ‘Change in inventories finished goods and work in progress’ has been reclassified from turnover to cost of sales. The impact of the reclassification on the turnover and added value per half year en full year is shown hereafter: New presentation (2015)
Slide 54: Change in revenue presentation 2015: Telecom Solutions
Appendix Change in revenue presentation 2015 Telecom Solutions New presentation (2015) Old presentation (2014) Telecom Solutions x € 1,000 H1 2015 H2 2015 FY 2015 H1 2015 H2 2015 FY 2015 Total turnover 80,443 85,686 166,128 81,469 84,773 166,242 Cost of sales 47,706 53,303 101,009 48,732 52,390 101,
Slide 55: Change in revenue presentation 2015: Building Solutions
Appendix Change in revenue presentation 2015 Building Solutions New presentation (2015) Old presentation (2014) Building Solutions x € 1,000 H1 2015 H2 2015 FY 2015 H1 2015 H2 2015 FY 2015 Total turnover 287,525 294,090 581,615 287,823 284,248 572,071 Cost of sales 148,802 155,458 304,259 149,100 14
Slide 56: Change in revenue presentation 2015: Industrial Solutions
Appendix Change in revenue presentation 2015 Industrial Solutions New presentation (2015) Old presentation (2014) Industrial Solutions x € 1,000 H1 2015 H2 2015 FY 2015 H1 2015 H2 2015 FY 2015 Total turnover 322,016 305,376 627,392 320,972 305,567 626,539 Cost of sales 176,363 161,597 337,960 175,31
Slide 57: 57 | Half year results 2016 | 16-08-2016
57 | Half year results 2016 | 16-08-2016