Knorr-bremse Ag · XETR:KBX
Knorr-bremse — Q3 2020 Earnings Presentation
33 slides from Knorr-bremse's earnings presentation, Nov 19, 2020
Slide 1: Financial Results Q3/20
FINANCIAL RESULTS Q3/20 FRANK MARKUS WEBER I CFO NOVEMBER 19, 2020
Slide 2: The main topics
The main topics Strong Financials in Q3/20 1) → Proof of equity story once again CVS – strong market recovery and solid margins 2) → Growing faster than the market again RVS – robust profitability 3) → Stringent measures implemented Earlier Reporting 4) → 8 days improvement Q3/20 vs. Q3/19 Dr. Jan M
Slide 3: Markets still impacted by COVID-19, but somehow recovering
Markets still impacted by COVID-19, but somehow recovering Rail market current view Truck market current view No cancellations of contracts, but facing Market recovery in Europe, North and South America postponements continued in Q4/20, short time work programs suspended Stimulus packages will suppo
Slide 4: Recent KB activities
Recent KB activities KB to equip 30 high- Major contract with Extension of maintenance KB Switzerland integrates speed ICE trains for Siemens Mobility for service contract with RailVision’s obstacle Deutsche Bahn entrance systems for 94 Bombardier in Europe detection systems into London underground
Slide 5: After nine months: overall strong performance despite especially tough Q2 (9M/20)
After nine months: overall strong performance despite especially tough Q2 situation (9M/20) REVENUES OF € 4.59bn 17.5% EBITDA MARGIN (-13.6% yoy) (PY: 18.5%) € 2.56bn € 2.03bn 22.2% 12.8% € 169m FREE CASHFLOW (-52.6% yoy) 42% Cash Conversion Rate ORDER INTAKE € 4.36bn ORDER BOOK € 4.46bn (-15.5% yoy
Slide 6: Last quarter: continuously strong performance in a tough environment (Q3/20)
Last quarter: continuously strong performance in a tough environment (Q3/20) REVENUES OF € 1.53bn 17.5% EBITDA MARGIN (-10.4% yoy) (PY: 18.3%) € 822m € 712m 21.6% 14.3% € 182m FREE CASHFLOW (+9.9% yoy) 129% Cash Conversion Rate ORDER INTAKE € 1.63bn ORDER BOOK € 4.46bn (+3.6% yoy) (+1.2% yoy) 6
Slide 7: Book-to-bill >1 achieved again and order book improved vs. 2019
Book-to-bill >1 achieved again and order book improved vs. 2019 Order intake Order book €m €m 0.92 Book-to-bill 1.06 1.2% +3.6% 4,402.9 4,457.7 3.4 -48.0 1,627.9 1,571.8 M&A impact 100.7 R.H. Sheppard € +22m (Q3/20) +6.4% Powertech € -18m (Q3/19) Q3/19 Organic M&A net FX Q3/20 30.09.19 30.09.20 disp
Slide 8: Q3/20 yoy with significantly less revenue shortfall vs. Q2/20 yoy
Q3/20 yoy with significantly less revenue shortfall vs. Q2/20 yoy Revenue €m By region -10.4% 1,711.1 1,711 2.2 27 1,533.5 1,534 -30% 19 SA -124.3 -55.5 477 CVS Asia/ 47% CVS 483 -7.3% +1% Pacific 46% M&A impact 421 R.H. Sheppard € +22m (Q3/20) 323 NA -23% Powertech € -20m (Q3/19) RVS RVS 53% 54% 78
Slide 9: Even enhanced profitability vs. Q2/20, shows resilience of KB once more
Even enhanced profitability vs. Q2/20, shows resilience of KB once more EBITDA/ E. Margin EBIT/ E. Margin €m Development in Q3/20 18.3% ▪ Operating leverage burdened by lower revenue and 17.5% 14.6% mitigation costs 12.7% -14.2% ▪ Cost measures taken to mitigate COVID-19 impact on employees, custome
Slide 10: KB continued to invest in its supply chain and in future growth
KB continued to invest in its supply chain and in future growth CapEx1 NWC ROCE (annualized) €m % of sales €m Scope of days % 69.5 34.1% 5.4% 55.1 1,181.1 4.7% 22.2% 1,084.5 80.3 82.1 Q3/19 Q3/20 30.09.19 30.09.20 30.09.19 30.09.20 ▪ Effects of mgt. program for adaption ▪ CUSTOMER FIRST – higher sto
Slide 11: Strong cash conversion rate demonstrates significant measures and earnings quality
Strong cash conversion rate demonstrates significant measures and earnings quality Free Cashflow1 Cash Conversion Rate €m Development in Q3/20 +9.9% ▪ Cashflow impacted by COVID-19 pandemic and lower profits, but countermeasures successfully implemented 181.8 165.5 129% ▪ Free Cashflow improved from
Slide 12: COVID-19: stringent implementation of countermeasures is ongoing
COVID-19: stringent implementation of countermeasures is ongoing MARKET Most operators and rail car OEMs back to operation level, Strong demand recovery on 90%+ pre Covid-19 level in Truck stimulus programs put in place and Trailer. AM demand increasing. China stable, India market development still
Slide 13: RVS: increased order book mirrors resilient rail industry
RVS: increased order book mirrors resilient rail industry, despite underlying normal quarterly OI fluctuation Order intake Order book €m Order book increased by 3.1 %yoy 1.04 Book-to-bill 0.88 ▪ Order book well supported by resilient and stable rail +3.1% industry despite COVID-19. No cancellations
Slide 14: RVS: increased profitability despite slightly lower revenues
RVS: increased profitability despite slightly lower revenues Revenue EBITDA / EBIT €m EBITDA EBIT Revenue decreased 10.2% yoy in Q3/20 as EBITDA margin expected EBIT margin ▪ AM: Pull-in effects into Q2/20 and lower 21.6% riderships in trains burdened the development in -10.2% 20.6% 915.4 Q3/20yoy 8
Slide 15: CVS: strong OI based on significant market recovery
CVS: strong OI based on significant market recovery Order intake Order book €m Strong bounce-back of order intake and book-to-bill ratio 0.78 Book-to-bill 1.27 ▪ EU/ NA: Good market recovery leads to solid increase after a very weak Q2/20, demand in Q3/20 fueled by +45.2% -4.4% catching-up of missed
Slide 16: CVS: performance significantly improved vs. Q2/20, but still below 2019 levels
CVS: performance significantly improved vs. Q2/20, but still below 2019 levels Revenue EBITDA / EBIT €m EBITDA EBIT Strong recovery of revenue development in Q3/20 vs. EBITDA margin Q2/20, China volume normalizes on high-level EBIT margin ▪ EU & NA: Improvement continued in Q3, yoy comparison -10.7%
Slide 17: CVS: outperforming major markets and solid near-term outlook
CVS: outperforming major markets and solid near-term outlook Truck production rate1 Q3/20 vs. NA EU2 APAC China Expected market development Q3/19 ▪ China: after record level in Q2/20, solid development in Q3/20, market still supported by some governmental measures TPR (Heavy3) -40% -29% +25% +35% ▪
Slide 18: Management agenda – promise and deliver
Management agenda – promise and deliver Topic Goal Measures ▪ Integration of FCF targets into the management ▪ Enhance Cash Flow focus and staff bonus systems are planned Cash Flow ▪ Cash conversion rate as KPI ▪ Strengthen ESG within corporate ▪ Integration of ESG targets into the ESG strategy via
Slide 19: Guidance of July for 2020 confirmed
Guidance of July for 2020 confirmed Current Assumptions Guidance Group Revenue1 Op.1,2 EBITDA margin €m ▪ Stable economic environment 6,937 18.8% 5,900 - 6,200 16.5 - 17.5% ▪ No significant negative financial impact from COVID-19 pandemic ▪ Current FX rates FY19 FY20e FY19 FY20e 1) Including Sheppar
Slide 20: First careful thoughts on 2021
First careful thoughts on 2021 Market outlook Strategic focus KB First financial indications ▪ SCI global outlook: ▪ Europe ▪ Revenue: - Passenger: strong recovery - Lower ridership in trains likely Solid growth - Freight: moderate recovery to continue ▪ EBITDA margin: - Supporting framework Slight
Slide 21: Q&A / Backup
Q&A / Backup 21
Slide 22: Financial calendar
Financial calendar Upcoming events Event Date Virtual roadshow Morgan Stanley 20/11/2020 and 24/11/2020 Virtual roadshow Kepler Cheuvreux 26/11/2020 Goldman Sachs Industrial Conference 30/11/2020 Berenberg EU Conference 2020 01-02/12/2020 Société Générale Industrial Conference 03/12/2020 ODDO Confer
Slide 23: Investor relations contact
Investor relations contact Andreas Spitzauer Phone: +49 89 3547 182310 Mobile: +49 175 5281320 Email: Andreas.Spitzauer@knorr-bremse.com Sophia Kursawe Phone: +49 89 3547 187311 Mobile: +49 151 62330709 Email: Sophia.Kursawe@knorr-bremse.com 23
Slide 24: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, an
Slide 25: Backup
a) KNORR-BREMSE Backup
Slide 26: 9M/20 – Group
9M/20 – Group Order intake Order book €m €m 0.97 Book-to-bill 0.95 1.2% -15.5% 4,457.7 4,402.9 5,153.0 4,355.0 -734.6 -4.3 -59.1 -14.3% M&A net disposals • R.H. Sheppard € +29m (9M/20) • Hitachi € +20 (9M/20) • Powertech € -54m (9M/19) 9M/19 Organic M&A net FX 9M/20 30.09.19 30.09.20 disposals 26
Slide 27: 9M/20 – Group
9M/20 – Group Revenue €m By region -13.6% 5,312.7 5,313 83 -35% 4,589 4,589.3 54 SA 1,491 -654.3 -7.7 -61.4 +2% M&A net disposals Asia/ 1,518 Pacific -12.3% • R.H. Sheppard € +29m (9M/20) 1,262 -26% • Hitachi 936 NA € +22m (9M/20) • Powertech € -59m (9M/19) -16% 2,478 2,082 EU 9M/19 Organic M&A net
Slide 28: 9M/20 – Group
9M/20 – Group EBITDA/ EBITDA Margin EBIT/ EBIT Margin €m 18.5% 17.5% 14.7% 982.2 12.9% 804.2 783.0 592.1 9M/19 9M/20 9M/19 9M/20 28
Slide 29: 9M/20 – Group
9M/20 – Group OCF & FCF CapEx1 NWC ROCE2 (annualized) €m OCF FCF €m % of sales €m % -52.6% 5.0% -33.4% 34.1% 1,181.1 554.4 3.7% 230.0 809.1 22.2% 355.3 369.4 195.2 168.5 9M/19 9M/20 9M/19 9M/20 30.09.19 30.09.20 9M/19 9M/20 1) 9M/19 adjusted for Sale & Lease back 2) 9M/19 adjusted for Wülfrath 29
Slide 30: 9M/20 – RVS
9M/20 – RVS Order intake Order book €m 1.03 Book-to-bill 0.93 3.1% -16.9% 3,400.5 2,875.9 3,296.9 2,390.0 -397.8 -54.0 -34.1 -13.8% Powertech € -54m (9M/19) 9M/19 Organic M&A net FX 9M/20 30.09.19 30.09.20 disposals 30
Slide 31: 9M/20 – RVS
9M/20 – RVS Revenue EBITDA / EBITDA margin EBIT / EBIT margin €m -8.2% 21.7% 22.2% 2,791.4 18.6% 18.4% -133.5 2,562.5 -58.8 -36.6 -6.2% -4.8% 605.6 -8.9% 568.1 518.0 472.0 Powertech € -59m (9M/19) 9M/19 Organic M&A net FX 9M/20 9M/19 9M/20 9M/19 9M/20 disposals 31
Slide 32: 9M/20 – CVS
9M/20 – CVS Order intake Order book €m 0.90 Book-to-bill 0.97 -13.9% 2,279.6 -4.4% +49.7 +24.8 1,962.6 1,119.6 1,070.6 -341.9 -15.0% R.H. Sheppard € +29m (9M/20) Hitachi € +20m (9M/20) 9M/19 Organic M&A net FX 9M/20 30.09.19 30.09.20 disposals 32
Slide 33: 9M/20 – CVS
9M/20 – CVS Revenue EBITDA / EBITDA margin EBIT / EBIT margin €m -19.7% 15.6% 2,523.8 12.8% 11.7% 7.8% -34.0% +51.1 +24.7 2,026.3 393.8 -46.3% -523.9 294.2 -20.8% 259.8 R.H. Sheppard 158.0 € +29m (9M/20) Hitachi € +22m (9M/20) 9M/19 Organic M&A net FX 9M/20 9M/19 9M/20 9M/19 9M/20 disposals 1) Opera