Barco Nv · EURONEXT:BAR
Barco Nv — Investor Day (September 2008)
55 slides from Barco Nv's investor day presentation, Sep 12, 2008
Slide 1: Turning the trend
Turning the trend Analyst & Investor Day Kuurne, 12 September 2008 Slide 1
Slide 2: Introduction
Introduction Barco today Observations Turning the trend Introduction Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Martin De Prycker Inventory CEO Receivables Key take aways Q&A Slide 2
Slide 3: Introduction
Introduction Introduction Barco has gone through a lot of changes since 2000 Barco today – Focus on fewer but faster growing markets Observations – With truly global presence for sales, R&D and operations Turning the trend – But achieved lower results than shareholders were used to Top line growth
Slide 4: Barco today
Introduction Barco today Observations Turning the trend Barco today Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Distribution of sales Inventory Environment Receivables Key take aways Key metrics Q&A Slide 4
Slide 5: Sales 2007: €747m (continuing operations)
Sales 2007: € 747 m (continuing operations) Introduction Barco today Observations Other Markets Media & 17% Entertainment Turning the trend 36% Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Medical Imaging Inventory 17% Receivab
Slide 6: Environment - Society trends
Environment - Society trends Introduction Strong focus on health and personal well-being Barco today – Cost of healthcare, lifetime expectancy, screening campaigns, ... Observations Turning the trend Increasing budgets for leisure and entertainment Top line growth – Sports, games, events, theme
Slide 7: Environment - Customer trends
Environment - Customer trends Introduction Increased specialization and complexity Barco today – Amount of images to be visualized on the increase Observations – Higher resolution Turning the trend – Real-time Top line growth Improve profit margin Ongoing digitization, away from ‘analog’ Cost re
Slide 8: Environment - Economic trends
Environment - Economic trends Introduction Unfavorable currency evolution in recent years Barco today Observations Turning the trend Worldwide economic uncertainty slows down growth Top line growth Improve profit margin Credit crisis delays capital investments in certain markets Cost reduction
Slide 9: Key metrics (continuing operations)
Key metrics (continuing operations) P12M 2007 2006 €m Change €m Change €m Introduction Sales* 743 (1)% 747 +10% 681 Barco today Gross Profit 279 (4)% 290 +5% 276 Observations % Sales 37.5% 38.8% 40.6% Turning the trend R&D 74 +7% 69 +14% 61 Top line growth % Sales 9.9% 9.2% 8.9% Improve profit margi
Slide 10: Observations
Introduction Barco today Observations Turning the trend Observations Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Top line Inventory Gross profit and fixed cost evolution Receivables Key take aways Bottom line Q&A Working capit
Slide 11: Top line - Focus on growth markets
Top line - Focus on growth markets In m€ 900 Introduction Barco today 800 Observations +7.9% 810 Turning the trend 700 +5.4% 751 Top line growth +6.0% 712 Improve profit margin +7.7% 672 600 Cost reduction plan 624 R&D efficiency +9.7% 500 747 Operations efficiency Reduce working capital +6.1% Sales
Slide 12: Gross profit & fixed cost evolution
Gross profit & fixed cost evolution Introduction Gross profit erosion from 44% (2003) to 39% (2007) Barco today – Product mix change Observations – Dollar evolution and our inability to sufficiently increase Turning the trend dollarization Top line growth – Price pressure from US based competition
Slide 13: Bottom line - EBIT
Bottom line - EBIT In m€ Introduction Barco today 80 Observations 71.4 69.1 Turning the trend 68.3 70 Top line growth 10.6% EBIT 11% 60.7 8.4% Improve profit margin Reported 60 with Cost reduction plan 52.1 8.1% margin % R&D efficiency 50 Operations efficiency 7.3% 57.5 EBIT Reduce working capital 4
Slide 14: Working capital evolution
Working capital evolution Introduction Increase from 31% (2003) to 41% (2007) as percentage of Barco today sales mainly due to significant inventory growth in 2007 Observations Turning the trend Top line growth Improve profit margin Root causes: Cost reduction plan R&D efficiency – Bullish sales
Slide 15: Turning the trend
Introduction Barco today Observations Turning the trend Turning the trend Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital How to further grow top line? Inventory How to improve profit margin? Receivables Key take aways How to impr
Slide 16: Top line growth
Introduction Barco today Observations Turning the trend Top line growth Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Focus markets Inventory Markets with high growth potential Receivables Key take aways Q&A Slide 16
Slide 17: Top line growth (1)
Top line growth (1) Introduction Barco has focused its growth on four large markets with Barco today significant growth potential: Observations Turning the trend Top line growth Improve profit margin Media & Security & Medical Avionics & Cost reduction plan Entertainment Monitoring Imaging Simulatio
Slide 18: Top line growth (2)
Top line growth (2) Market size CAGR Barco sales Market share Introduction m€ 2007 07-11* 2007** 2007 Barco today Media & Entertainment 1,529 9% 316 21% Observations Turning the trend Security & Monitoring 1,350 6% 232 17% Top line growth Improve profit margin Medical Imaging 475 8% 130 27% Cost red
Slide 19: Top line growth (3)
Top line growth (3) Introduction Highlight: 5 markets which could deliver up to 50% of Barco today Barco’s growth over the next years Observations Turning the trend Top line growth Market size CAGR Barco Sales Market Improve profit margin m€ 2007 07-11 2007 share 2007 Cost reduction plan Digital Cin
Slide 20: Digital cinema - Business environment
Digital cinema - Business environment Introduction More than 100,000 screens to be digitized over the next 10 Barco today years. Conversion driven by Observations – Additional revenues Turning the trend – 3D movies (next year 13 releases) Top line growth – Cost savings by studios Improve profit ma
Slide 21: Digital cinema - Business strategy
Digital cinema - Business strategy Introduction Continue to invest in digital cinema to be ready when kick Barco today start happens Observations – Sales & Marketing: push/pull Turning the trend Top line growth – R&D: expand/cost down product portfolio Improve profit margin – Manufacturing: furthe
Slide 22: Out of home media - Business environment
Out of home media - Business environment Introduction Digitization in billboard market started in 2007 in NA and Barco today China Observations Turning the trend Top line growth Barco introduced dedicated LED billboard, designed and Improve profit margin manufactured in China Cost reduction plan
Slide 23: Out of home media - Business strategy
Out of home media - Business strategy Introduction Fully exploit cost-effective China product base Barco today Observations Offer dedicated ROI-maximizing and CO2-minimizing digital outdoor systems to the out of home media industry Turning the trend Top line growth Improve profit margin in US, E
Slide 24: Video & Lighting integration - Business environment
Video & Lighting integration - Business environment Introduction Convergence of video and lighting markets at Barco today – Product level Observations – Customer level Turning the trend Top line growth Improve profit margin Analog to digital transition within lighting Cost reduction plan – Digit
Slide 25: Video & Lighting integration - Business strategy
Video & Lighting integration - Business strategy Introduction Fully exploit product synergies with High End Systems Barco today – Creative LEDs Observations – Moving Luminaires Turning the trend Top line growth Offer Barco’s full portfolio of video and lighting products not only Improve profit m
Slide 26: Medical Modality - Business environment
Medical Modality - Business environment Introduction Custom imaging products for Modality Vendors Barco today (CT scanner, NMR, ultrasound,…) Observations Turning the trend Top line growth Customers : Siemens Healthcare, Philips Healthcare, GE Improve profit margin Healthcare, Toshiba Medical Sy
Slide 27: Medical Modality - Business strategy
Medical Modality - Business strategy Introduction Further expand imaging modality customer base Barco today Observations Widen product portfolio of medical displays Turning the trend Top line growth Improve profit margin Further concentrate on digital X-ray detector electronics Cost reduction
Slide 28: Broadcast - Business environment
Broadcast - Business environment Introduction Broadcast market growing at significant pace thanks to Barco today – HD TV conversion Observations – IPTV rollout Turning the trend – OPEX reduction Top line growth Improve profit margin Multi-view display equipment Cost reduction plan – Strongly gro
Slide 29: Broadcast - Business strategy
Broadcast - Business strategy Introduction Lead evolution to network-centric broadcast production Barco today chain Observations – Obtain leading market position Turning the trend Top line growth Expand new product line of reference monitors Improve profit margin – Resume leading market position
Slide 30: Improve profit margin
Introduction Barco today Observations Turning the trend Improve profit margin Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Dirk De Man Inventory CFO Receivables Key take aways Q&A Cost reduction plan Increase R&D efficiency Inc
Slide 31: Cost reduction plan
Introduction Barco today Observations Turning the trend Cost reduction plan Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Inventory Receivables Key take aways Q&A Slide 31
Slide 32: Cost reduction plan - Overview
Cost reduction plan - Overview Introduction Analysis Barco today – Improvement of bottom line required Observations – Anticipate further worsening of economic climate Turning the trend Top line growth Target structural fixed cost reduction of € 30 m (10% of Improve profit margin Cost reduction p
Slide 33: Cost reduction plan (1)
Cost reduction plan (1) Introduction Exploit maximum internal synergies Barco today Observations Turning the trend – Create one common operations organization Top line growth Global purchasing Global manufacturing & supply chain Improve profit margin Repair & spare parts Cost reduction plan
Slide 34: Cost reduction plan (2)
Cost reduction plan (2) Introduction Simplify organization structure Barco today Observations Turning the trend – Simplify division structure Top line growth Integrate Presentation business unit into Media & Entertainment division sales channels Improve profit margin Integrate Simulation and A
Slide 35: Cost reduction plan (3)
Cost reduction plan (3) Introduction Cost containment actions Barco today Observations Turning the trend – Reduce R&D by being more selective and only start projects Top line growth with higher return on investment Improve profit margin Cost reduction plan – Be more selective in marketing expendit
Slide 36: Cost reduction plan (4)
Cost reduction plan (4) Introduction Sale of non strategic activities Barco today Observations Turning the trend – BarcoVision (expected to close end 09/2008) Top line growth Improve profit margin – Maritime Safety & Surveillance -> Thales (01/09/2008) Cost reduction plan R&D efficiency – … Operat
Slide 37: R&D efficiency
Introduction Barco today R&D efficiency Observations Turning the trend Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Jan Willem Brands Inventory CTO Receivables Key take aways Q&A Slide 37
Slide 38: Increase R&D efficiency - Observations
Increase R&D efficiency - Observations Introduction R&D investments have been reduced as % of sales but not Barco today enough to offset gross profit margin erosion Observations Turning the trend Barco solutions are characterized by: Top line growth – Differentiation on product performance Impro
Slide 39: Increase R&D efficiency - Actions
Increase R&D efficiency - Actions Introduction Improve R&D efficiency Barco today – Roll-out improved product development process worldwide Observations Standardized tools & methods, streamlined planning & tracking Turning the trend – Focus on key R&D parameters Top line growth On-time perform
Slide 40: Operations efficiency
Introduction Barco today Operations efficiency Observations Turning the trend Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Piet Berkhout Inventory President Global Operations & Supply Chain Receivables Key take aways Q&A Slide
Slide 41: Increase operations efficiency - Observations
Increase operations efficiency - Observations Introduction Fragmented supply chain Barco today – Lack of integrated strategy on manufacturing and supply Observations chain (incl. purchasing) Turning the trend – Integrated into divisions (10 sites) Top line growth – Strong local links between R&D a
Slide 42: Increase operations efficiency - Global spread
Increase operations efficiency - Global spread Introduction Kortrijk Kuurne Barco today Sacramento Observations Xenia Karlsruhe Turning the trend Beijing Noida Top line growth Duluth Improve profit margin Austin Cost reduction plan Toulouse R&D efficiency Operations efficiency Location Main supply c
Slide 43: Increase operations efficiency - Observations
Increase operations efficiency - Observations Introduction Key figures for operations and purchasing Barco today Observations Turning the trend – Indirect cost of purchasing, manufacturing and logistics: Top line growth € 52 m (7% of sales) Improve profit margin Cost reduction plan – Indirect labo
Slide 44: Increase operations efficiency - Actions
Increase operations efficiency - Actions Introduction One centrally managed manufacturing and purchasing Barco today organization, under new leadership, able to cope with Observations Turning the trend larger production series in an efficient way Top line growth Improve profit margin Target sett
Slide 45: Reduce working capital
Introduction Barco today Observations Turning the trend Reduce working capital Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Improve inventory management Inventory Better cash collection (Customer to Cash) Receivables Key take a
Slide 46: Inventory
Introduction Barco today Observations Turning the trend Inventory Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Inventory Receivables Key take aways Q&A Slide 46
Slide 47: Improve inventory management
Improve inventory management Introduction Current actions Barco today – Integrate business and goods movement planning to pro- Observations actively manage inventories in line with demand Turning the trend – Further outsource and streamline specific in-house Top line growth manufacturing operation
Slide 48: Receivables
Introduction Barco today Observations Turning the trend Receivables Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Dirk De Man Inventory CFO Receivables Key take aways Q&A Slide 48
Slide 49: Better cash collection - Observations
Better cash collection - Observations Introduction Insufficient focus on cost of capital when negotiating Barco today terms & conditions with customers Observations Turning the trend Top line growth Substantial amount of overdues due to diverse Improve profit margin commercial, administrative an
Slide 50: Better cash collection - Objectives
Better cash collection - Objectives Introduction Objective : reduce days outstanding of customer Barco today receivables by 20% of which 5 in 2008 Observations Turning the trend Top line growth Approach : Project team to tackle the full process from Improve profit margin order generation to cash
Slide 51: Better cash collection - Status today
Better cash collection - Status today Introduction Overall Barco today – Process designed Observations – Roles and responsibilities assigned Turning the trend – Awareness created and training given Top line growth – People recruited in key functions Improve profit margin Cost reduction plan R&D ef
Slide 52: Better cash collection - Results to date
Better cash collection - Results to date Introduction Receivables Days Outstanding reduced by 3.4 % Barco today – Equivalent to € 15 m of cash Observations Turning the trend Top line growth EMEA Improve profit margin – Overdue receivables: reduction by 15% Cost reduction plan – Of which > 30 day
Slide 53: Key take aways
Introduction Barco today Observations Turning the trend Key take aways Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Martin De Prycker Inventory CEO Receivables Key take aways Q&A Slide 53
Slide 54: Key take aways
Key take aways Introduction Growth potential is delayed only due to the economic Barco today slowdown Observations Turning the trend Top line growth – Transition to new technologies will keep on happening Improve profit margin – Barco visualization solutions will continue to improve the ROI Cost r
Slide 55: Q&A
Introduction Barco today Observations Turning the trend Q&A Top line growth Improve profit margin Cost reduction plan R&D efficiency Operations efficiency Reduce working capital Inventory Receivables Key take aways Q&A Slide 55