Slide 1: Press Conference & Analyst Meeting
Press Conference & Analyst Meeting 29th of April 2019 in Munich
Slide 2: Content
2 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Content 1. Business Environment 2. Beverage Market 3. Financials Q1/2019 4. Outlook 2019 5. Growth & Profitability Drivers 6. Mid-Term Targets 7. Q&A
Slide 3: Business Environment
Business Environment
Slide 4: Economic Development by Regions
4 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Economic Development by Regions GDP Development 2017 – 2020 2,8 2,4 World Economic Outlook, Oct 2018 2,3 2,4 2,2 2,2 2,3 2,3 2,0 1,8 1,8 1,9 1,6 1,7 1,5 World Economic Outlook Update, Jan 2019 1,3 World Economic Outlook Update, Apr 20
Slide 5: VUCA World
5 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 VUCA World Short-term Dynamics ▪ Main global macro-economical concern is China Significant slowdown of growth in China coincides with Volatile Rapid transformations with unpredictable patterns take place rapidly rising total Chinese d
Slide 6: Long-Term Global Megatrends
6 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Long-Term Global Megatrends World Population Middle Class* Urbanization ▪ Growth of global population by ▪ The middle class in Asia’s emerging ▪ The total population residing in 80 million people per year markets will account for 60%
Slide 7: Beverage Market & PET Focus
Beverage Market & PET Focus
Slide 8: Beverage consumption and market potential
8 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Beverage consumption and market potential Global beverage consumption by industry (in bn liter) CAGR* CAGR 18/23 Beverage consumption CAGR 13/18 +2,8 % +2,0 % 1.346 Global: 1.135 208 Beer 1.070 +1,0% 55 +0,1% 199 +1,4% 198 153 Wine/Sp
Slide 9: Beverage consumption and market potential
9 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Beverage consumption and market potential Global beverage market by packaging material (based on units filled) Share of packaging types 2017 Average annual growth of packaging types 2017-2020 6 5.2% 5 24.1% 4.2% 4 34.6% 3.1% 3 2.2% 2
Slide 10: Why PET has been and is expected to be successful
10 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Why PET has been and is expected to be successful Aseptic Filling Capability PET bottles are suitable for Recyclability sensitive beverages PET has better recycling properties than composite materials & most other plastic compounds F
Slide 11: PET under Scrutiny of Society and Policy Makers
11 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 PET under Scrutiny of Society and Policy Makers The amount of plastic in the ocean is a lot worse than we thought, study says CNN, 16th of April 2019 Plastic pollution: can the ocean really be cleaned up? The Guardian, 21st of March
Slide 12: PET as a Part of Krones' Success
12 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 PET as a Part of Krones’ Success If the public debate becomes objective, PET growth persists: ▪ The contradiction between barrier requirements & biodegradable properties remains unsolved on a commercial scale in terms of alternative
Slide 13: Challenges & Opportunities
13 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Challenges & Opportunities Water Scarcity Sustainable Packaging ▪ Increasing water stress in many ▪ Society and legislators demand developed and emerging markets sustainable packaging solutions in expected over the next two decades t
Slide 14: Customer requirements
14 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Customer requirements Challenges & Opportunities Customer requirements Solutions ▪ Water Scarcity ▪ Water efficiency in production ▪ Innovative efficiency solutions (incl. utilities) (e.g Dosaflex, Brewnomic) ▪ Food & Beverage Waste
Slide 15: Our Principles of Innovation
15 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Our Principles of Innovation 2018 2017 2016 2015 Contiform Bottling on Share2Act Edge Varioline 3 Speed Demand Study ErgoBloc LC Contiroll-aggregat Internal Automated Benefits Customer ComponentBenefits (Connectivity) ED
Slide 16: From Customer Requirements to cutting-edge Solutions
16 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 From Customer Requirements to cutting-edge Solutions Ergobloc LM Contiflow Dynafill A PET stretch blow moulding, Processing equipment that suits Filling & capping of beer in one labelling, filling and capping bloc the requirements of
Slide 17: Financials Q1/2019
Financials Q1/2019
Slide 18: KRONES Key Figures - EBT Q1 2019 burdened by cost increases
18 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 KRONES Key Figures - EBT Q1 2019 burdened by costs increases and costs for Hungary New orders (in Mio. €) Sales (in Mio. €) EBT (in Mio. €) 3,957 3,854 258.8 3,787 +5% 3,691 +4% +9% +10% +9% 237.6 3,441 3,391 +8% +6% 1,017 +7% 204.3
Slide 19: Reconciliation EBT to EBITDA
19 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Reconciliation EBT to EBITDA 23.4 86.0 34.2 78.9 8.7% -0.7 8.9% 0.3 56.2 Depreciation Financial result 6.3% 51.5 5.2% Q1 2019 EBT Q1 2018 EBITDA EBITDA also influenced by new IFRS 16 “Leases ”
Slide 20: KRONES' revenue split remains constant
20 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 KRONES' revenue split remains constant Share of revenue (Q1) CIS/Central Asia 2017 2018 2019 Europe 2.2 % 2.5 % 1.6 % 2017 2018 2019 40.2 % 40.4 % 45.0 % China 3,7% 1,6% North America 2017 2018 2019 2019 33,3% 45,0% 7.4 % 6.7 % 9.3 %
Slide 21: Personnel and material cost
21 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Personnel and material cost Personnel cost (€ million) Q1 323.3 271.5 289.8 242.7 31,2 29,9 32,0 32.7 2016 2017 2018 2019 Personnel cost to total performance (%) Material cost (€ million) Q1 453.6 491.6 449.8 374.4 48.1 49.6 50.1 49.
Slide 22: Development Sales and EBT per Segment Q1
22 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Development Sales and EBT per Segment Q1 Segments Sales (m€) Q1 EBT (m€) Q1 Targets 2019 Growth EBT margin +5% +4% +8% 8.6% 7.9% 7.6% Growth 746 774 834 3% Product filling 64 61 63 and decoration EBT margin 7% Growth EBT margin +139%
Slide 23: Working capital ratio reduced
23 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Working capital ratio reduced Working capital* in % ROCE* in % (Q1) of revenue (Q1) 28.2 26.8 26.4 17.8 15.3 13.2 2017 2018 2019 2017 2018 2019 *LTM (Last Twelve Months)
Slide 24: Higher working capital and investments caused lower free cash flow
24 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Higher working capital and investments caused lower free cash flow Q1 (€ million) 2019 2018 Earnings before taxes 51.5 56.2 Working capital development Q1 vs. Q4 (€ million) +/– Other non-cash changes +106.2 +92.2 1.018 2019 @ -200m€
Slide 25: Outlook 2019
Outlook 2019
Slide 26: Krones targets 2019
26 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Krones targets 2019 Revenue growth EBT margin Working Capital 3% 6% 26%
Slide 27: Outlook 2019 – Overcoming challenges on the cost side
27 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Outlook 2019 – Overcoming challenges on the cost side with stringent measures Sales Sales Sales 3.854 EURm 3.854 EURm 3.980 EURm ROS 5,3 % ROS 6,4 % ROS 6 % 42 246 239 204 EBT EBT Cost Measures Extra- Outlook 2018 2018 increase ordin
Slide 28: Material Costs – Continuous pressure
28 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Material Costs – Continuous pressure Big picture Germany Krones Price Index for Industrial Goods excl. Energy Price Increases of Krones Suppliers Source: Deutsche Bundesbank Source: Intern 104,0 30 # Materials (in thousands) 103,0 25
Slide 29: Growth & Profitability Drivers
Growth & Profitability Drivers
Slide 30: Growth & Profitability Drivers
30 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Growth & Profitability Drivers KPIs Focus Growth Profitability Level of Completion Annual ▪ Shift of calculation paradigm from cost- to 2018 2019 2019+ revenue Pricing value-based machine pricing model growth Concept Realization Impa
Slide 31: Pricing – Turnaround required
31 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Pricing – Turnaround required KRONES Price development Pricing 2019 (Index BPE, quarterly average) ▪ Top priority for 2019 ▪ Extensive initiative covering Bottling & Packaging Processing Technologies ▪ External support for long term
Slide 32: After-Sales Service – Sustainable Growth
32 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 After-Sales Service – Sustainable Growth 2019 Estimate of Global Machine Base: ~40.000 installed Units Continuously growing Constant development of our installed machine base value generating service workforce Δ Field % Technicians
Slide 33: Cost Savings – Successful history but diminishing returns
33 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Cost Savings – Successful history but diminishing returns KRONES Cost saving initiatives Targets 2019 ~120 ▪ Intensified product cost EURm Core Modules down initiative running ▪ Covering the full value chain • Development alternative
Slide 34: Global Markets & Customers require Krones' Global Footprint
34 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Global Markets & Customers require Krones‘ Global Footprint Globally Local Market & aligned Reduction of Customer Overhead Manufacturing Requirements Reduction Structure Costs of Currency Faster Risks Time-to- Market Integration of A
Slide 35: Global Footprint – Successful Track Record
35 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Global Footprint – Successful Track Record EMEA APAC without China Konplan Extension New Business Acquisition (Czech Republic) Krones Pakistan Acquired Sales & Service Hub (Pakistan) Joint-Venture Krones Debrecen Investme
Slide 36: Global Footprint – Krones Hungary
36 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Global Footprint – Krones Hungary Payback schedule KRONES Hungary (example personnel cost) Hungary Year 2019 2020 Cost decrease Germany China Net impact Cost Increase Hungary ▪ Ramp up of KRONES Hungary with negative impact in 2019 s
Slide 37: Global Footprint – Impressions from Hungary & China
37 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Global Footprint – Impressions from Hungary & China Debrecen, Hungary Taicang, China 37.800m² building / 150.000m² plot size 23.400m² Production & Logistics + 6.700m² Engineering & Admin Areas rounded to +/- 100m²
Slide 38: Focus Process Technology
Focus Process Technology
Slide 39: Split of Process Technology Segment
39 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Split of Process Technology Segment – further influence from Intralogistics Group AVT PT Brew, SoSp, Intralogistics Digitalization Units & Components Revenue 4.4% 2.9% 12.4% -1.8% 38.2% 0.0% growth 3.691 3.854 3.090 3.178 Revenue EUR
Slide 40: Mid-Term Targets
Mid-Term Targets
Slide 41: Mid-Term Plan
41 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Mid-Term Plan In the VUCA World our outlook has to be build on scenarios Mid-term Targets Annual revenue growth * 3-5% EBT margin 6-8% Key Factors influencing our Achievement of Targets Working • Markets: Given the macro-economical u
Slide 42: Questions and answers
42 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Questions and answers ? …
Slide 43: 43 ｜KRONES Press Conference & Analyst Meeting - 29 th of April 2019
43 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019
Slide 44: Financial calendar 2019
44 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Financial calendar 2019 April 29, 2019 Analyst Meeting and Quarterly Statement as per March 31 June 05, 2019 Annual General Meeting July 25, 2019 Conference Call Group Q2 2019 and Interim Report as per June 30 Olaf Scholz October 24,
Slide 45: Disclaimer
45 ｜KRONES Press Conference & Analyst Meeting - 29th of April 2019 Disclaimer This investor presentation contains forward-looking statements that are based on current estimates, forecasts and assumptions made by KRONES AG management to the best of its knowledge and other information currently availa