Sfs Group Ag · SIX:SFSN
Sfs — Investor Day (August 2018)
60 slides from Sfs's investor day presentation, Aug 23, 2018
Slide 1: SFS Investor Day Heerbrugg, 23. August 2018
SFS Investor Day Heerbrugg, 23. August 2018
Slide 2: Agenda
Agenda Part I: Warm-up and Update Divisions Electronics / Automotive 13:15h – 14:30h 1 SFS DNA Jens Breu 2 Megatrends Jens Breu 3 Update Division Electronics (incl. Q&A) George Poh 4 Update Division Automotive (incl. Q&A) Alfred Schneider Part II: Plant Tour 14:30h – 15:30h Part III: 1H 2018 Results
Slide 3: Part I: SFS DNA
Part I: SFS DNA SFS Investor Day 2018 | 23. August 2018 | Public 3
Slide 4: Mission critical products for selected niche applications
Mission critical products for selected niche applications We are by your side – 24/7 SFS Investor Day 2018 | 23. August 2018 | Public 4
Slide 5: SFS value proposition: Inventing success together
SFS value proposition Inventing success together SFS Investor Day 2018 | 23. August 2018 | Public 5
Slide 6: SFS Value Engineering – Housings used for autonomous driving
SFS Value Engineering – Best practices Housings used for autonomous driving Generation of Generation 1 Generation 5 component (around 2000) (today) Production volumes in millions (Illustration) Cold forming Machining Cold forming Technology SFS Investor Day 2018 | 23. August 2018 | Public 6
Slide 7: SFS Value Engineering – Smart tools in riveting technology
SFS Value Engineering – Best practices Smart tools in riveting technology Tool App / Software SFS Investor Day 2018 | 23. August 2018 | Public 7
Slide 8: SFS Value Engineering – M2M by SFS
SFS Value Engineering – Best practices M2M by SFS turnLOG App / Software eLogistics SFS Investor Day 2018 | 23. August 2018 | Public 8
Slide 9: Part I: Megatrends
Part I: Megatrends SFS Investor Day 2018 | 23. August 2018 | Public 9
Slide 10: Megatrends – Overview: Underlying growth drivers
Megatrends – Overview Underlying growth drivers EC FS D&L Megatrend Strategy • Own digital solution Digital (eShop, M2M, smart tools) revolution • Part of customer solution (autonomous driving, smart homes) • Digitization to improve supply chain (M2M, industry 4.0, plant profiles) Economic • Globali
Slide 11: Megatrends – Overview: Underlying growth drivers
Megatrends – Overview Underlying growth drivers EC FS D&L Megatrend Strategy • Energy constraint Resources (efficient and sustainable manufacturing, products constraints to improve thermal performance in construction) • Electrification of drive systems (close monitoring of design activities, capturi
Slide 12: Part I: Update Electronics
Part I: Update Electronics SFS Investor Day 2018 | 23. August 2018 | Public 12
Slide 13: Electronics – Differentiation factors
Electronics – Differentiation factors Vertically integrated technology platform in Asia Key differentiation factors Unisteel's 6-7-8 tree • Time to market: Strong product development capabilities and quick turnaround times Time to volume: Ability to scale up to large volume quantity without compromi
Slide 14: Electronics – Cold forming as new key offering
Electronics – Cold forming as new key offering First large scale technology transfer into Asia Characteristics Machining1 Cold forming Customer benefits • Raw material Production volumes low high Savings on • Production time • Quality control Complexity of parts low – medium medium • Process capabil
Slide 15: Electronics – New Nantong facility
Electronics – New Nantong facility State-of-the art manufacturing on one site • Size of 77'000m2 – 1 hour north of Shanghai Waste water plant • 2nd largest site after Heerbrugg (148'000m2) Surface treatment • consolidation of existing factories Stamping • growth capacity of approx. 30% to 35% • full
Slide 16: Electronics – Our Priorities
Electronics – Our Priorities • Increase penetration of cold forming technology with new customers and programs • Finalize build-up of new site in Nantong and enable a smooth transition of existing operations • Closely monitor relevant markets like mobile devices, lifestyle electronics and hard disk
Slide 17: Electronics – Q&A
Electronics – Q&A Jens Breu George Poh Chief Executive Officer Head of Division Electronics SFS Investor Day 2018 | 23. August 2018 | Public 21
Slide 18: Part I: Update Automotive
Part I: Update Automotive SFS Investor Day 2018 | 23. August 2018 | Public 22
Slide 19: Automotive – Strategy
Automotive – Strategy Leading position in selected applications Share of wallet Market leaders SFS aims to become SFS focuses on partner of choice of its key Innovation trends customers and strives to SFS' value proposition companies with a strong Growing markets competitive position in maximise sha
Slide 20: Automotive – Market approach
Automotive – Market approach Focus on attractive niche applications in the market Market Engine / Brake Airbag / Sensor / approach powertrain systems seat belt electronics Drivers Relevance Safety 4 Efficiency 3 Autonomous 4 driving SFS Investor Day 2018 | 23. August 2018 | Public 24
Slide 21: Automotive – Differentiation factors
Automotive – Differentiation factors Global platform of full technology offering Heat Cold forming Machining Assembly Full treatment technology span Global footprint - Manufacturing - Key account teams Leadership - Engineering / app- in lication specialists technologies KAIZEN KAIZEN / LEAN as part
Slide 22: Automotive – Trends and opportunities
Automotive – Trends and opportunities Attractive opportunities for SFS Autonomous Safety Efficiency driving Drivers • Seatbelt/Airbag • Variable valve actuation • Camera • ABS/ESC • Fuel injection • Radar/Lidar Chances • Integrated Brake • Clutch/gear • Ultrasonic sensor for System SFS • E-Drive • E
Slide 23: Automotive – Autonomous driving
Automotive – Autonomous driving Increasing demand for sensors Level of Degree of Steering / Monitoring Number of sensors automation automation Timing acceleration environment (Illustration) Full Level 5 automation > 2025 System System High Level 4 automation 2025 System System Conditional Level 3 au
Slide 24: Automotive – Summary
Automotive – Summary Well positioned to benefit from trends Market trends SFS' position • Safety • Dedicated key account teams and application • Efficiency specialists • Autonomous driving • Innovation activities fully aligned with market trends • Proven position as trusted development partner Custo
Slide 25: Automotive – Our Priorities
Automotive – Our Priorities • Complete ramp up of existing significant customer projects in the pipeline • Gain additional substantial projects in relevant applications • Define new layout of Heerbrugg plant after relocation of Construction division is finalized • Closely monitor developments in ele
Slide 26: Automotive – Q&A
Automotive – Q&A Jens Breu Alfred Schneider Chief Executive Officer Head of Division Automotive SFS Investor Day 2018 | 23. August 2018 | Public 33
Slide 27: Part II: SFS Plant Tour
Part II: SFS Plant Tour SFS Investor Day 2018 | 23. August 2018 | Public 34
Slide 28: Part III: 1H 2018 Results
Part III: 1H 2018 Results SFS Investor Day 2018 | 23. August 2018 | Public 35
Slide 29: Key takeaways 1H 2018
Key takeaways 1H 2018 SFS Investor Day 2018 | 23. August 2018 | Public 36
Slide 30: Key takeaways: Continued dynamic growth
Key takeaways Continued dynamic growth • Continued dynamic growth momentum • gross sales reached CHF 855.9m, 9.9% higher than 1H 2017 • maintained good organic growth pace (7.1%) • growth driven by all segments and regions • Attractive earnings generation temporarily burdened by special operational
Slide 31: Development by segment
Development by segment SFS Investor Day 2018 | 23. August 2018 | Public 38
Slide 32: Headlines Engineered Components segment
Headlines Engineered Components segment Growth maintained • Growth continued; sales reached CHF 473m, an increase of 10.5%, whereof organic 7.6% • Automotive and Electronics confirm their role as growth drivers • Medical pleasingly returned back to growth • Attractive earnings power still burdened •
Slide 33: Key messages Automotive division
Key messages Automotive division Driven by stable innovation trends • Continued to significantly outgrow the industry by ramping up new projects • Stable trends, e.g. electrification of cars, create innovation and growth opportunities • Time-consuming pass-through of increased raw materials cost des
Slide 34: Key messages Electronics division
Key messages Electronics division On the growth track • Continued strong sales growth in mobile devices and HDD applications • Weaker USD, higher raw material prices and substantial advance outlays for new projects weighed on divisional profitability • These new projects mainly deploying cold formin
Slide 35: Key messages Industrial division
Key messages Industrial division Mixed performance by application area • Some areas like industrial applications showed strong to very strong growth rates, while the aircraft business experienced a slowdown • Reason for this is on the one hand the lower production rates of the A380 and on the other
Slide 36: Key messages Medical division
Key messages Medical division Back on the growth path • Medical division returned to growth track as expected thanks to its strong pipeline of innovative customer projects • Achieved sales records at three out of the four manufacturing locations within the first six months of 2018 • For 2H 2018 the
Slide 37: Headlines Fastening Systems segment
Headlines Fastening Systems segment Growth driven by innovation • Strong sales growth momentum maintained with +12.0%, whereof organic growth of 6.9% • Expanded market position thanks to its offering of compelling products and services • Increased profitability to EBIT margin of 9.4% • Experienced t
Slide 38: Key messages Construction division
Key messages Construction division Market position strengthened • Successfully expanded its position in an ongoing favorable market environment thanks to its innovative products • Significant progress in areas of flat roof, hinge technology and cladding systems • Substantial progress with various pr
Slide 39: Key messages Riveting division
Key messages Riveting division Broadly based sales growth achieved • Solid sales growth was broadly based • Solutions for the automotive industry again showed the fastest growth • With the iBird Pro, GESIPA presented a new generation of battery-powered rivet setting tools offering extensive IoT func
Slide 40: Headlines Distribution & Logistics segment
Headlines Distribution & Logistics segment Accelerated sales growth achieved • Achieved accelerated sales growth of 5.9% significantly above Swiss GDP • Growth was broadly based across the various product categories • EBIT margin reached 7.2% (PY 7.0%) • Considerable increase in procurement costs co
Slide 41: Key messages Distribution & Logistics segment
Key messages Distribution & Logistics segment Market profile sharpened • New online store (www.sfs.ch), launched in February, received positive customer feedback and generated attractive growth • Positioned Allchemet as single partner offering the full product range of SFS for customers in commercia
Slide 42: Development of key financials
Development of key financials SFS Investor Day 2018 | 23. August 2018 | Public 49
Slide 43: Sales bridge: Dynamic organic growth of 7.1%
Sales bridge Dynamic organic growth of 7.1% CHF million • Reported growth of 9.9% yoy (PY 13.0%) 900 778.6 55.3 -2.2 24.2 855.9 • 7.1% organic growth (PY 7.4%) • -0.3% change in scope (PY 6.9%) 800 • 3.1% FX impact (PY -1.3%) 700 • Organic growth by segment • 7.6% Engineered Components (PY 9.3%) • 6
Slide 44: Sales breakdown
Sales breakdown Automotive and Europe with slightly higher share by end market by region PY 41.5% PY 17.9% PY 23.1% PY 26.4% PY 6.5% PY 17.9% PY 26.1% PY 21.5% PY 19.1% SFS Investor Day 2018 | 23. August 2018 | Public 51
Slide 45: Operating profitability
Operating profitability Temporary effects burden results by ~1% Reported EBIT CHF million Adjusted EBITA / EBITDA % • EBIT 1H18 500 25% • CHF 116m or 13.6% of net sales 21.3% (PYCHF 111m or 14.2% adjusted of net sales) 19.7% 19.8% 19.6% • first time with zero amortization of 400 18.5% 20% intangible
Slide 46: Net working capital
Net working capital Stable development at seasonally high point NWC Days outstanding NWC in % of net sales • NWC at end of June 300 36% • seasonally higher than at year end • at 32% of net sales under control 250 31.2% 31.1% 32.5% 32.0% 30% 30.3% 31.0% • cash-2-cash cycle stable at 117 days 200 24%
Slide 47: CAPEX
CAPEX Growth projects and Nantong factory well under way CAPEX CHF million CAPEX in % of net sales • CAPEX spending 250 10% • at 8.1% of net sales or CHF 70m • pace since year end kept 200 8% • increase capacity, efficiency and productivity 8.1% 8.1% • support future growth projects 7.1% • expect >8
Slide 48: Free cash flow
Free cash flow Strong cash flow fully finances NWC and CAPEX FCF in CHF million FCF in % of EBITDA • Cash flow remains strong and covers the 300 60% cash out for increase in NWC and CAPEX 51.2% • CHF 143m cash flow before NWC (PY 125) 250 47.6% 50% • CHF -39m increase NWC (PY -44) • CHF -70m CAPEX (
Slide 49: Balance sheet
Balance sheet Solid equity and strong financial flexibility Net Cash CHF million Equity ratio in % • Equity remains strong and healthy 200 80% • stable and solid above 70% 78.4% 74.0% • value at CHF 1.1bn 71.6% 67.2% 68.3% 71.1% 150 60% • Net cash production influenced by 128 • CHF 104m cash flow fr
Slide 50: Return on capital
Return on capital Stable development with potential for improvement Return on capital in % • ROCE stable development above 20% 30% 27.8% • EBITA measured at Ø CE 25.9% 24.2% 23.1% • target range >20% 25% 24.3% 20.6% • ROIC remains flat just below 10% 20% • EBITA less tax as % of invested capital ROC
Slide 51: SFS Group key message
SFS Group key message Dynamic growth, good profitability and solid financing • Financial development on track in CHF million • Sales growth 9.9% yoy, organic 7.1% 1H 2018 1H 2017 yoy • EBIT margin of 13.6% burdened by Sales 855.9 778.6 9.9% temporary operational effects of ~1% Net sales 854.6 779.5
Slide 52: Guidance 2018
Guidance 2018 SFS Investor Day 2018 | 23. August 2018 | Public 59
Slide 53: SFS Group Guidance: 2H sales and EBIT margin stronger than 1H
SFS Group Guidance Historically 2H sales and EBIT margin stronger than 1H • Net Sales Sales and EBIT in CHF million • is historically stronger than 1H • seasonality in construction industry 1H16A 2H16A 1H17A 2H17A 1H18A • important product launches by electronic Net sales 688.2 748.5 779.5 855.3 854
Slide 54: SFS Group Guidance: Growth expectation raised
SFS Group Guidance Growth expectation raised and EBIT margin confirmed • Raising growth expectation to 7 - 9% Sales growth and EBIT margin • 7 - 8% growth expected in 2H; of which • 4 - 5 % organic growth; slightly lower due to 2017A 2018G 1H18A 2H18G 2018G base effect yoy Sales 13.7% 5 - 7% 9.9% 7
Slide 55: SFS Group Priorities
SFS Group Priorities • Stay firm with supply chain partners on forwarding cost due to raw material price increases, tariffs or foreign exchange fluctuations • Closely monitor development of SFS subsidiary in Turkey • Seamless transition into new Nantong facility, while considering platform also for
Slide 56: Q&A
Q&A SFS Investor Day 2018 | 23. August 2018 | Public 63
Slide 57: Q&A
Q&A Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer SFS Investor Day 2018 | 23. August 2018 | Public 64
Slide 58: Thank you for your attention
Thank you for your attention SFS Investor Day 2018 | 23. August 2018 | Public 65
Slide 59: SFS Investor Day 2018 | 23. August 2018 | Public
SFS Investor Day 2018 | 23. August 2018 | Public 66
Slide 60: Disclaimer
Disclaimer This presentation includes forward looking statements. These statements reflect the SFS Group's current assessment of market conditions and future events. The statements are therefore subject to risks, uncertainties and assumptions. Unforeseen events may lead to deviations of the actual r