Kongsberg Automotive ASA · OSL:KOA
Kongsberg Automotive ASA — Q1 2023 Earnings Presentation
42 slides from Kongsberg Automotive ASA's earnings presentation, May 9, 2023
Slide 1: Kongsberg Automotive Q1 2023 Earnings Call
KONGSBERG AUTOMOTIVE Q1 2023 EARNINGS CALL MAY 9, 2023
Slide 2: Forward-Looking Statements and Non-IFRS Measures
Kongsberg Automotive Q1 2023 Earnings Call FORWARD-LOOKING STATEMENTS AND NON-IFRS MEASURES FORWARD-LOOKING STATEMENTS This presentation contains certain “forward-looking statements”. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in
Slide 3: Today's Presenters and Agenda
Kongsberg Automotive Q1 2023 Earnings Call TODAY’S PRESENTERS AGENDA EXECUTIVE SUMMARY MARKET UPDATE FINANCIAL UPDATE SHIFT GEAR UPDATE OUTLOOK Q&A JOERG BUCHHEIM FRANK HEFFTER CEO // Zurich (Switzerland) CFO // Zurich (Switzerland) KONGSBERG AUTOMOTIVE // 3
Slide 4: Executive Summary
EXECUTIVE SUMMARY KONGSBERG AUTOMOTIVE // 4
Slide 5: Executive Summary – Q1 2023
Executive summary EXECUTIVE SUMMARY – Q1 2023 REVENUES CONTINUING THE POSITIVE TREND SLOW START TO EARNINGS AND CASH FLOW > Kongsberg Automotive maintains its solid revenue growth plan €228.8M €4.1M 1.3x > Despite prolonged COVID REVENUES ADJ. EBIT L E V E R A G E R A T I O 1,2 effects impacting als
Slide 6: Business Segments Update: Powertrain & Chassis
Executive summary AT A GLANCE BUSINESS SEGMENTS UPDATE POWERTRAIN & CHASSIS ADJUSTED EBIT MARGIN, % > Q4 2022 with high customer compensations ADJUSTED EBIT 1 , MEUR 7.8% > Q1 2023 » P&C remains on low levels with improvement measures yet to take full effect 4.1% 9.6 » Labor price increases combined
Slide 7: Business Segments Update: Specialty Products
Executive summary AT A GLANCE BUSINESS SEGMENTS UPDATE SPECIALTY PRODUCTS > Q3 2022 with high customer compensations ADJUSTED EBIT MARGIN, % ADJUSTED EBIT 1 , MEUR 15.8% > Q1 2023 > Despite fading but still noticeable prolonged COVID effects (≥ 0.3 MEUR -Labor efficiency and inflation 8.6% 9.3% w/ U
Slide 8: The China Effect
Executive summary THE “CHINA EFFECT” A SET OF NEXT-GENERATION SMART ACTUATORS COMBINED WITH SPECIFIC COUNTERMEASURES WILL HELP KA ADDRESS THE “CHINA EFFECT” REVENUES, MEUR In Q1, KA was affected by a revenue drop 20 MEUR in China (2022 2023) caused mainly by: 15-20% REVENUE DROP > Short term, temp
Slide 9: Countermeasures Already Initiated
Executive summary COUNTERMEASURES ALREADY INITIATED CONSOLIDATION, "MOVE WEST" IN CHINA AND SMART ACTUATORS MOVE WEST – RELOCATION OF CONSOLIDATION OF TEAMS SMART ACTUATORS SHANGHAI PLANT …leads to broader portfolio in …leads to overhead …leads to more business line with electrification trend – cost
Slide 10: Countermeasures – Move West in China
Executive summary COUNTERMEASURES – "MOVE WEST" IN CHINA FAW Changchun Total Truck Volume 2023: 150K NORTHERN CYCLE Total Transmission 2023: 100K Customers covered: CNHTC, Foton FAW Qingdao Total Truck Volume 2023: 350K Total Transmission 2023: 100K SHIYAN KA SHANGHAI WESTERN CYCLE Customers covered
Slide 11: Growth Runway
GROWTH "RUNWAY
Slide 12: Footprint Optimization
Growth runway FOOTPRINT OPTIMIZATION FOCUSING ON CAPACITY, GROWTH AND COSTS ACROSS ALL REGIONS 18 NORWAY SWEDEN KONGSBERG RAUFOSS MULLSJO HVITTINGFOSS LJUNGSARP GOTHENBURG POLAND CANADA NETHERLANDS KOLUSZKI SHAWINIGAN ENSCHEDE BRZESC KUJAWSKI PRUSZKOW COUNTRIES USA UK WORLDWIDE GRAND RIVER NORMANTON
Slide 13: New State of the Art Digitalized Factories
Growth runway NEW STATE OF THE ART DIGITALIZED FACTORIES FOR SUPPORTING AMBITIOUS GROWTH INCREASING EXPOSURE IN LOW-COST COUNTRIES BRZESC KUJAWSKI (POLAND) SHIYAN (CHINA) GROWTH AND CONSOLIDATION AT BEST COST COST IMPROVEMENT 6 100 M² 2 800 M² FLOW CONTROL SYSTEMS POWERTRAIN & CHASSIS OPERATIVE SINC
Slide 14: On Track with the Systematic Growth Plan from 2021
Growth runway ON TRACK WITH THE SYSTEMATIC GROWTH PLAN FROM 2021 BROADEN CUSTOMER BASE IN CURRENT SYSTEMATIC APPROACH TO… 1 APPLICATION FIELDS FULLY EXECUTED First development contracts with new Tier 1s in 2 … ENTER NEW AMER and APAC FIRST NEW CUSTOMER CUSTOMER TARGETS DEFINED Entering new OEMs with
Slide 15: Product Commercialization
Growth runway NEXT-GENERATION GREEN PRODUCT SOLUTIONS IN OFH, EV, AND 4 INDUSTRIAL GROWTH MARKET SEGMENTS PRODUCT COMMERCIALIZATION AND ROLLOUT ELECTRONIC POWER THERMAL INDUSTRIAL SMART ACTUATORS TOP 3 in smart actuators STEERING MANAGEMENT Further scaling Smart Farming – OFH SYSTEMS Become System s
Slide 16: New Products for Growth in EV Applications
Growth runway NEW PRODUCTS FOR GROWTH IN EV APPLICATIONS INCREASING EXPOSURE TO COMMERCIAL VEHICLES AND OFF HIGHWAY GEAR SHIFT SYSTEMS AND CABLES FLUID GEAR SHIFT SHIFTERS TRANSFER SYSTEMS CLUTCH ACTUATION AND CABLES PEDALS AND SYSTEMS STEERING ELECTRONIC RESERVOIRS GEAR CONTROL COLUMNS HAND CONTROL
Slide 17: Next-Generation Product Portfolio Boosts EV Exposure
Growth runway NEWLY RELEASED NEXT-GENERATION PRODUCT PORTFOLIO WILL BOOST KA'S EXPOSURE TO EV SIGNIFICANTLY 2022-2026 CAGR FOR EV AND ICE IN KA’S P&C AND SPP AREAS GROWTH RATE EV +141% GROWTH/DECREASE RATE ICE +78% Ø 64% +30-36% +28-45% +19% +2% -5% -1% -7% -9% P&C SPP FCS SPP FCS CV PASS. CARS COUP
Slide 18: Market Update
MARKET UPDATE KONGSBERG AUTOMOTIVE // 18
Slide 19: Market Trends: Delayed Market Recovery in China
Market update MARKET TRENDS DELAYED MARKET RECOVERY IN CHINA MARKET DEVELOPMENT REGION Q1-23 vs. Q1-22 2023 vs. 2022 GLOBAL COMMERCIAL VEHICLES PRODUCTION, thousand units China -10.8% +25.9% 1,090 -2.5% APAC w/o China -2.3% 0.0% 963 781 816 778 795 Europe +4.8% +5.5% 665 708 697 North America +13.8%
Slide 20: Market Forecasts
Market update MARKET FORECASTS GROWTH IN COMMERCIAL VEHICLE DEPENDS 60% ON CHINA GLOBAL COMMERCIAL VEHICLES PRODUCTION, sales in thousand units INCLUDING CHINA EXCLUDING CHINA +7% +18% +3% +10% +6% -1% 3,628 3,852 3,753 2,344 2,505 2,342 3,184 3,399 2,159 2,127 2,196 2,999 2022 2023 2024 2025 2026 2
Slide 21: Development of the Global Market Situation
Market update DEVELOPMENT OF THE GLOBAL MARKET SITUATION COMPONENT AVAILABILITY AND MATERIAL COST REMAIN VOLATILE CURRENT TRIGGERS MACROECONOMIC FACTORS AFFECTING FOR DISRUPTION GLOBAL MARKET ENVIRONMENT Availability and cost of semiconductors remain a SEMICONDUCTOR SHORTAGE serious issue, causing p
Slide 22: Macroeconomic Uncertainty: Positive Development in Commercial Vehicles
Market update MACROECONOMIC UNCERTAINTY POSITIVE DEVELOPMENT FOR KA WITHIN COMMERCIAL VEHICLES IN KEY REGIONS REVENUE GROWTH VS MARKET GROWTH IN Q1* OUTPERFORMANCE IN KEY MARKETS KA MARKET EURO P E > KA has outperformed the growth in the commercial vehicle market KA MARKET in both Europe and the Ame
Slide 23: Book-to-Bill
Market update BOOK-TO-BILL > New wins are more weighted towards Q3 and Q4, this follows the DESPITE MACROECONOMIC UNCERTAINTY KA IS ON TRACK OEM’s nomination timings AND EXPECTS STRONGER BOOKINGS IN COMING QUARTERS > OFH with a great new business on Electrical Power Steering > Couplings is on overal
Slide 24: Financial Update
FINANCIAL UPDATE KONGSBERG AUTOMOTIVE // 24
Slide 25: Revenues
Financial update REVENUES POSITIVE REVENUE TREND IN Q1 QUARTERLY REVENUES (continuing operations), MEUR 246 2020 229 226 2021 218 219 215 215 209 206 2022 193 2023 187 179 112 Q1 Q2 Q3 Q4 2020 2021 2022 2023 2020 2021 2022 2020 2021 2022 2020 2021 2022 KONGSBERG AUTOMOTIVE // 25
Slide 26: Adjusted EBIT
Financial update ADJUSTED EBIT EARNINGS IMPACTED BY THE “CHINA EFFECT” AND PRODUCT MIX QUARTERLY ADJ. EBIT (continuing operations), MEUR and % of revenues 21.4 2020 9.8% 2021 18.0 2022 8.6% 2023 12.9 12.6 12.8 6.0% 7.0% 5.2% 11.0 8.9 5.1% 8.1 8.2 4.7% 7.6 4.2% 4.0% 3.5% 4.1 4.1 1.8% 1.8% -19.7% -22.
Slide 27: Adjusted EBIT Bridge from Q1
Financial update ADJUSTED EBIT BRIDGE FROM Q1 IMPACTS FROM UNFAVOURABLE REGIONAL & PRODUCT MIX AND ELEVATED COST ADJUSTED REVENUES (continuing operations), MEUR 228.8 -2.8 P&C 218.8 +19.1 > Sales in Europe and the Americas increased by -10.2 MEUR 23.0; adjusted EBIT increased by MEUR +23.8 2.5. -19.
Slide 28: Net Income Bridge
Financial update NET INCOME BRIDGE INTERESTS AND OTHER FINANCIAL ITEMS WEAKENING OF THE NOK AFFECTS THE BOTTOM LINE > Interest expense reduced (MEUR +0.8) due to bond repurchase and higher interest income (MEUR +0.3) > Other financial items in Q1 2022 were impacted by one- time expenses in relation
Slide 29: Net Financial Items
Financial update NET FINANCIAL ITEMS NET CURRENCY EFFECTS, MEUR Net currency effects (accumulated) Net currency effects (periodic) 16.4 18.5 15.0 14.5 12.1 7.8 6.9 7.7 4.4 4.3 3.5 3.3 -0.9 0.8 -1.5 -4.0 -11.2 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 OTHER FINANCIAL ITE
Slide 30: Free Cash Flow
Financial update FREE CASH FLOW DECREASED CASH POSITION DUE TO FX, BUILD UP OF RECEIVABLES AND WEAKER MARGINS FREE CASH FLOW 1 , MEUR Q1 2023 FCF DETAILS Operating activities -9.6 Therein: NWC increase -16.4 Investing activities -6.1 +84.5 Investment expenditures -6.8 +76.5 Financing activities -11.
Slide 31: Liquidity Development
Financial update LIQUIDITY DEVELOPMENT NET WORKING CAPITAL, TAX PAYMENTS RELATED TO DIVESTMENTS, NEGATIVE FX AND SHARE BUY-BACK LIQUIDITY DEVELOPMENT, MEUR CASH UNUTILIZED SECURITIZATION FACILITY UNDRAWN RCF -0.5 +3.6 +12.5 -16.4 287.9 -8.8 -6.1 -5.6 mainly non- -3.4 212.9 -2.5 repetitive -6.0 254.7
Slide 32: Net Working Capital
Financial update NET WORKING CAPITAL RECEIVABLES IN LINE WITH REVENUE DEVELOPMENT NET WORKING CAPITAL 1 , MEUR Trade receivables Inventory Trade payables Revenues The Increase of new working capital 246.0 in Q1 2023 was mainly driven by: 225.5 228.8 218.8 215.3 > Increase in accounts receivables amo
Slide 33: Free Cash Flow Improvement Activities
Financial update FREE CASH FLOW ACTIVITIES TO IMPROVE CASH FLOW PERFORMANCE THROUGHOUT 2023 INVENTORY: ACCOUNTS PAYABLE: > Resolve PCBA and other component shortages > Renegotiate payment terms and incoterms > Stringently reduce bank build inventory following the moves > Increase consignment stock a
Slide 34: Financial Ratios
Financial update FINANCIAL RATIOS CONTINUING AND DISCONTINUED OPERATIONS EXCLUDING IFRS16 INCL. IFRS 16 EFFECT ADJUSTED GEARING RATIO 1,2 , NIBD 3 /ADJUSTED EBITDA, LTM ADJUSTED ROCE 2 , %, LTM 6.3 2.4 5.3 2.0 2.0 4.7 4.9 1.5 4.3 4.4 4.0 4.4 1.1 1.1 1.3 3.5 3.6 0.8 0.4 -0.3 Q1 2022 Q2 2022 Q3 2022 Q
Slide 35: Shift Gear Update
SHIFT GEAR UPDATE KONGSBERG AUTOMOTIVE // 35
Slide 36: Shift Gear I Q1 2023 Results
Shift Gear update GEAR I SHIFT GEAR I PERFORMANCE Q1 2023 RESULTS IMPROVEMENT 52,9 > KA successfully established a digital IN MEUR tracking tool which provides a full “on time” transparency. This allows faster reaction to pass costs to customers. > Q1 with historically more negative than 15,7 14,0 1
Slide 37: Improvement Projects for 2023 – Generating Additional Savings
Shift Gear update IMPROVEMENT PROJECTS FOR 2023 – GENERATING ADDITIONAL SAVINGS In 2023 KA is implementing more than 320 Continuous Improvement Projects initiatives globally FCS RAUFOSS P&C VRABLE P&C MULLSJÖ OFH WILLIS AUTOMATION OF AUTOMATION OF CABLE MACHINING AND MOLDING FLOW AUTOMATIC SOLDERING
Slide 38: Outlook
OUTLOOK KONGSBERG AUTOMOTIVE // 38
Slide 39: Development Since the Capital Markets Day in 2021
Outlook DEVELOPMENT SINCE THE CAPITAL MARKETS DAY IN 2021 ADJUSTED FOR DIVESTMENT TO BRP - CMD TARGET ACHIEVEMENT DELAYED BY TWO YEARS CMD TO 2023 GUIDANCE BRIDGE, MEUR and % of revenues 88.5 +1.6 80.0 +7.0 >8% >8% -16.0 +31.4 -18.0 -10.0 +18.5 -6.0 30.0 3% CMD guidance Off-Highway P&C SPP Others Up
Slide 40: Outlook
Outlook OUTLOOK ON TARGET TO MEET GUIDANCE UNLOCKING ADDITIONAL VALUE UPCOMING EVENTS FOR Q2 THROUGH STRATEGIC REVIEW KA reiterates its full year guidance of revenues and adjusted EBIT of In Q2 2023, KA has started the KA is pleased to invite its MEUR 880-900 and MEUR 25-30, strategic review of the
Slide 41: Q&A
Q&A KONGSBERG AUTOMOTIVE // 41
Slide 42: Mobility Solutions for the Future
MOBILITY SOLUTIONS FOR THE FUTURE