Kitron Asa · OSL:KIT
Kitron Asa — Investor Day (March 2021)
35 slides from Kitron Asa's investor day presentation, Mar 17, 2021
Slide 1: Capital Markets 2021
CAPITAL MARKETS 2021 Kitron Group | 2021-03-17
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, eShort term Incentivemates and projections of the Company or assumptions based on information currently available to the Company. Such f
Slide 3: Agenda & Introduction
Agenda & Introduction AGENDA Kitron in Brief Markets & Growth Long Term Financial Targets Growth and Profitability Summary, Q&A and Wrap up Peter Nilsson Cathrin Nylander Israel Losada President & CEO CFO Salvador COO /CSO Kitron Group | 2021-03-17
Slide 4: Kitron in Brief
KITRON IN BRIEF CEO Peter Nilsson Kitron Group | 2021-03-17
Slide 5: Kitron at a glance
Kitron at a glance Core Business Customers Kitron is a leading Scandinavian Electronics Manufacturing Kitron’s customers are often market leaders in their business. Services (EMS) company, with global operations, delivering Our partnerships generally date back a decade or more. improved flexibility,
Slide 6: Financials in brief
Financials in brief Revenue 2020 2020 Results NOK Million 2020 vs 2019 • 2020 is another record year. • Sales driven by • Revenue growth 20% + • EBIT margin 7.9% (6.1%) Revenue 3 963.9 20.1 % Medical/Corona pandemic • Full year 2020 EPS: 1.19 +61% EBIT 312.6 55.1 % and growth on electrificatio
Slide 7: Sustainability
Sustainability Kitron’s approach to ESG Taxonomy Taxonomy eligible • Kitron's approach to Sustainability • 20% eligible revenue revenue and corporate responsibility is • Based on customer end products 30% guided by our Ethical Code of 25% conduct, our commitment to the UN • Primarily: 20% Global Com
Slide 8: Kitron's culture drives performance
Kitron's culture drives performance Vision Leadership values • Your ambition. Our passion: ▪ Our culture is based on three values: • Speaks to Kitron's commitment to o Commitment. We keep our promises. We know our numbers. customer success, employee development We are committed to being the best we
Slide 9: Market Overview
MARKET OVERVIEW CEO Peter Nilsson Kitron Group | 2021-03-17
Slide 10: European Market - Trends
European Market - Trends The European EMS competitive landscape European Market – regionalization of supply chains • A few big players, long tail of small, • Supply chains are being local firms. Total sales ~€35B regionalized. The drivers are: • Ongoing consolidation: o Time-to-market: o Within Euro
Slide 11: Growth Strategy
GROWTH STRATEGY CEO Peter Nilsson Kitron Group | 2021-03-17
Slide 12: Five strategies to fuel growth
Five strategies to fuel growth Connectivity Electrification Industry M2M IOT, Sensors, Wireless, Battery tech and Power grid Automation, Transportation, Networking transmission, Power management Recycling, Infrastructure • Expand customer base • Grow existing / diversify customer base • Expand custo
Slide 13: General distinguishing features by market sector
General distinguishing features by market sector High Volume, Automation, Utilization Low Low Cost of failure High six to eighteen months Life cycle three to thirty years high Demand and product affect by general business cycle low Connectivity Electrification Industry Medical Devices Defense/Aerosp
Slide 14: Market sector overview and 2025 targets
Market sector overview and 2025 targets Electrification Industry Medical Devices Defense/Aerospace CAGR target growth 15% CAGR target growth 15% CAGR target growth 11% CAGR target growth 6% CAGR target growth 5% Share of total 2021 12% Share of total 2021 25% Share of total 2021 22% Share of total 2
Slide 15: Margin improvement 2025 target upped to 8%
Margin improvement 2025 target upped to 8% 2020 margin affected by economies of scale and exceptional utilization 7.9 % 8.0 % Revenue 6 000 EBIT margin Organic 2020 target 3 964 1 632 1.5 % 2013 2014 2015 2016 2017 2018 2019 2020 2021 2025 2013 2014 2015 2016 2017 2018 2019 2020 2021 2025 2025 Targe
Slide 16: Long Term Financial Targets
LONG TERM FINANCIAL TARGETS CFO Cathrin Nylander Kitron Group | 2021-03-17
Slide 17: Increased ambition to 6 billion in 2025
Increased ambition to 6 billion in 2025 2020 Revenue 6000 ▪ Revenue in 2020 almost 1 billion NOK over Organic 2020 target organic target 3 billion 3964 2025 ▪ Organic ambition: NOK 6 billion ▪ Annual organic trend growth 2021–2025: 1632 approximately 10% ▪ M&A adds potential upside ▪ Assuming no maj
Slide 18: New sector development
New sector development Connectivity Electrification Industry 500 1200 1000 450 900 1000 939 400 800 716 343 331 350 700 800 300 600 MNOK MNOK MNOK 250 600 500 200 382 400 308 400 150 300 100 200 200 50 100 0 0 0 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 202
Slide 19: Margin improvement - 2025 target upped to 8%
Margin improvement - 2025 target upped to 8% 2020 2025 ▪ 2020 margin affected by economies of scale ▪ Target 8% and exceptional utilization due to temporary ▪ Acquired businesses or start-ups may high volumes in medical devices temporarily be below margin ambition EBIT 480 EBIT margin 7.9 % 8.0 % 31
Slide 20: Capital efficiency: Ambitions maintained
Capital efficiency: Ambitions maintained Net working capital Cash conversion cycle 100 98 Net working capital NWC as % of revenue 32% 1200 1064 27% 20% 60 20% NOK million 522 2013 2014 2015 2016 2017 2018 2019 2020 2021 2025 2013 2014 2015 2016 2017 2018 2019 2020 2021 2025 ▪ Target NWC 20% of reven
Slide 21: Improving return on capital
Improving return on capital Return on capital employed 25.0 % ▪ Exceptional results in 2020 ▪ Capital efficiency improvements affected by growth 9% ▪ ROOC% Long-term target 20-25% 2013 2014 2015 2016 2017 2018 2019 2020 2021 Return on operating capital Return on equity 25% 24.0 % 19% 5% 5% 2013 2014
Slide 22: Cash flow strengthening, normal capex
Cash flow strengthening, normal capex ▪ Strong underlying operating cash flow trend Operating cash flow ▪ Component shortages in 2018 – going into 237 2019. Component shortages also in 2021 but on a different level. ▪ Normal capex expected to be approximately ~2% of revenue. 32 2013 2014 2015 2016 2
Slide 23: Solid financial platform
Solid financial platform ▪ Net interest-bearing debt NOK 758 million ▪ NOK 635 million excl. IFRS 16 ▪ NIBD/EBITDA 1.8 NIBD/EBITDA 2019 2020 Cash and cash Equivalents 204 153 ▪ 1.6 excl. IFRS16 Long term debt to credit institutions 166 105 ▪ Net gearing 0.86 4.4 Lease liability IFRS 16 116 102 Long
Slide 24: Strong dividend history
Strong dividend history ▪ Strong commitment to dividends ▪ Proposed for 2020: Earnings and dividends ▪ Ordinary dividend NOK 0.70 per share. 119 ▪ To be payable in two equal tranches, one in May and ▪ one in October. 72 70 NOK 1/100 63 57 50 “Kitron’s dividend policy is to pay out an annual dividend
Slide 25: Driving Competitiveness and Efficiency
DRIVING COMPETITIVENESS AND EFFICIENCY COO Israel Losada Salvador Kitron Group | 2021-03-17
Slide 26: Kitron operations during COVID-19
Kitron MANUFACTURING All sites up and running SUPPLY CHAIN Vs) Supply shortages related to demand increase Na) “s SS TECHNICAL SERVICES Design, test development and electronics engineering services available Q & Kitron < KiBLON 21-20. 0p200 LOGISTICS LS Delays and price increase ON TIME SUPPLY Keepi
Slide 27: Semiconductors' shortages
Semiconductors’ shortages ~90% world capacity Semiconductors – Demand increase Integrated circuits - Foundries • Most semiconductor manufacturers o TSMC (Taiwan) – 50% are fabless. They buy their wafers from Pure Play Foundries o Samsung (South Korea) – 19% 2018 2019 2020 2021 Q1 Q2 Q3 Q4 • Very few
Slide 28: Supporting long term goals
Supporting long term goals Economies of scale Footprint utilization Higher utilization levels of equipment Increase the output from and facilities (economies of scale) and existing facilities, Loading more further leverage of purchase power value creation into them with supply partners Competitive o
Slide 29: Operational foundation for continued growth
Operational foundation for continued growth ▪ 6 modern facilities with a footprint potentially > 60 000 Sqm ▪ Footprint utilization around 85% o Capacity in US and China, Europe at upper end. ▪ Higher efficiency ▪ Increased planned revenue max per facility around MEUR 125-150 ▪ To manage capacity in
Slide 30: Profitability expansion
Profitability expansion Increased economies of scale Increasing EBIT Increased production capacity utilization margin to 8% Capability Investments Automation and Digitalization Maintaining current EBIT margin of 7% Efficiency projects Lean and Operational Excellence 30
Slide 31: Summary
SUMMARY Kitron Group | 2021-03-17
Slide 32: Key take-aways
Key take-aways ▪ New market sector segmentation: Focus on high growth sectors Electrification and Connectivity CAGR 15% ▪ Overall achieve 10% growth each year with 5% CAGR on existing customer base and adding an additional 5% on new program acquisition. ▪ Focus on existing capacity utilization and m
Slide 33: Q&A
Q&A
Slide 34: Appendix
Appendix
Slide 35: Appendix: Definition of alternative performance measures
Appendix: Definition of alternative performance measures Order backlog Return on capital employed (ROCE) Cash conversion cycle (CCC) All firm orders and 4 months of committed customers forecast at EBIT/(Total assets - short term debt) Days of inventory outstanding + Days of receivables outstanding –