Kongsberg Automotive Asa · OSL:KOA
Kongsberg Automotive Asa — Investor Day (November 2016)
41 slides from Kongsberg Automotive Asa's investor day presentation, Nov 8, 2016
Slide 1: 2016 Capital Markets Day
2016 Capital Markets Day Kongsberg Automotive Henning E. Jensen – President & CEO November 8, 2016
Slide 2: Forward-Looking Statements and Non-IFRS Measures
Kongsberg Automotive 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 circumstances, which
Slide 3: Events since last CMD (2015)
Bruce E. Taylor – Chairman of the board of directors Events since last CMD (2015)
Slide 4: Executive Summary
Executive Summary ▸ Our structural costs are out of line – we will reduce them ▸ Our products are competitive from a “feature/function” standpoint. With lower costs, we will be even more competitive which will enable us to grow at a higher rate – Our Interior and Specialty Products segments have per
Slide 5: Executive Summary (continued)
Executive Summary (continued) ▸ Restructuring programs will be funded through our operational cash flow and within the constraints of our current balance sheet; capital increases are not required. P&L with Restructuring Costs & Benefits In Mill. Euro 2015 2016 2017 2018 2019 Sales 1.016 979 1.011 1.
Slide 6: Agenda
Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our Product Portfolio ▸ Market Overview ▸ How we will achieve our vision ▸ Revenue Projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 6
Slide 7: Our Vision & Objective
Our Vision & Objective • Improve the operational platform and structural set-up of the company to secure financial Vision & strength and strategic flexibility Objectives • Double EBIT margin from 4% to 8% • Improve Net Income from €5-20M to €70 Million and deliver EPS of more than NOK 1.50 Short to
Slide 8: Agenda
Strategy review & competitive positioning of product portfolio Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market Overview ▸ How we will achieve our vision ▸ Revenue Projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 8
Slide 9: Current Business Area Structure
Strategy review & competitive positioning of product portfolio Current Business Area Structure Interior Driveline Driver Control Systems Fluid Transfer Systems Driver Control Fluid Transfer Systems Systems 9
Slide 10: Interior Segment
Strategy review & competitive positioning of product portfolio Interior Segment Two main units, exclusively focused on the passenger car market ▸ Light Duty Cables – cables are a cross KA-product line core competency; strong Light Duty Cables product technology and knowledge base ▸ Core Interior Com
Slide 11: Driveline Segment
Strategy review & competitive positioning of product portfolio Driveline Segment Exclusively focused on the passenger car market ▸ Technology shift from mechanically based systems towards electronically controlled actuation systems, KA Gear Shift Systems • Started late, but catching up • Well positi
Slide 12: Driver Control Systems
Strategy review & competitive positioning of product portfolio Driver Control Systems Focused on Trucks & Buses and Off Highway applications, with two very separate product lines Similar to the Driveline business with exception that we also supply heavy duty chassis components On Highway ▸ Significa
Slide 13: Fluid Transfer Systems
Strategy review & competitive positioning of product portfolio Fluid Transfer Systems Three very different businesses Exclusively focused on air brake applications for trucks and buses Air Couplings ▸ KA is the technology leader with strongly growing market share • Although the products themselves a
Slide 14: Positioning of our product portfolio
Strategy review & competitive positioning of product portfolio Positioning of our product portfolio ▸ Our product portfolio consists of: – two significant product/technology areas with industry scale • Interior, and • Powertrain & Chassis Products (within our Driveline and DCS segments) and – an att
Slide 15: Agenda
Market Overview Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market Overview ▸ How we will achieve our vision ▸ Revenue Projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 15
Slide 16: Real GDP Forecast – slow growth
Market Overview Real GDP Forecast – slow growth Eurozone US 8,0% 8,0% 7,0% 7,0% 6,0% 6,0% 5,0% 5,0% 4,0% 4,0% 3,0% 3,0% 2,0% 2,0% 1,0% 1,0% 0,0% 2015 2016F 2017F 2018-2022F 0,0% 2015 2016F 2017F 2018-2022F China Global 8,0% 8,0% 7,0% 7,0% 6,0% 6,0% 5,0% 5,0% 4,0% 4,0% 3,0% 3,0% 2,0% 2,0% 1,0% 1,0% 0
Slide 17: Interest rate outlook of major economies
Market Overview Interest rate outlook of major economies 7% 6% 5% 4% 3% 2% 1% 0% Today 2016 2017 2018 2019 2020 -1% 17 Source: Trading economics & Company estimates
Slide 18: Light Duty vehicle production reaching 100 million units by 2019
Market Overview Light Duty vehicle production reaching 100 million units by 2019 Light Duty Vehicles Production (Mill units) 120 CAGR CAGR 2016-2019 2016-2019: 11 % 100 3.2% 3,3 3,1 3,2 2,4 2,8 3,0 6.0% 2,7 2,8 18,9 80 18,3 1.7% 18,0 18,2 60 27,0 28,7 25,5 25,4 4.1% 40 21,5 21,9 22,6 23,4 3.0% 20 21
Slide 19: Commercial Vehicle production reaching 3 million units by 2019
Market Overview Commercial Vehicle production reaching 3 millions units by 2019 Commercial vehicles (1000 units) 3.500 CAGR CAGR 2016-2019 2016-2019: 6,6 5.8 % 3.000 104,8 5.8% 6,2 5,9 83,5 542,1 19.5% 5,6 2.500 61,3 69,0 487,5 474,3 440,5 4.6% 2.000 995,9 916,9 795,7 838,2 1.500 7.8% 1.000 750,6 77
Slide 20: Agenda
How we will achieve our vision Agenda ▸ Our vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market overview ▸ How we will achieve our vision ▸ Revenue projections ▸ Financial costs & benefits ▸ Conclusion & wrap-up 20
Slide 21: Our Improvement Plan – Three pillars
How we will achieve our vision Our Improvement Plan – Three pillars • Operationally reorganize & merge Driveline and On-Highway DCS Organizational • Grant more entrepreneurial freedom to our niche businesses through the creation of a Specialty Products Segment. Structure, • Centralize more to tighte
Slide 22: How we will achieve our vision
How we will achieve our vision How we will achieve our vision ▸ Adapt our organization to better capture the potential of our various businesses through: 1. Increased focus on our various businesses 2. Increase centralization and regionalization for stronger operational control and effectiveness ▸ I
Slide 23: Adapting our organization to better capture our business potential
How we will achieve our vision Adapting our organization to better capture our business potential ▸ KA has not previously had a centralized HQ location. We will centralize more to tighten control and realize more synergies for the big units, but also grant more entrepreneurial freedom to our niche b
Slide 24: Re-segmenting our businesses & changing the organization structure
How we will achieve our vision Re-segmenting our businesses & changing the organization structure accordingly Business Segments Ops Staff IR and Corporate/ KA FTS DCS DS Driveline Interior Systems Purchasing Quality CFO HR Legal M&A Elims Consolidated Sales € 215,0 Sales € 256,1 Sales € 249,8 Sales
Slide 25: How we will achieve our vision
How we will achieve our vision How we will achieve our vision ▸ Adapt our organization to better capture the potential of our various businesses through: 1. Increased focus on our various businesses 2. Increase centralization and regionalization for stronger operational control and effectiveness ▸ I
Slide 26: Improve operational execution & effectiveness
How we will achieve our vision Improve operational execution & effectiveness ▸ Substantial structural cost restructuring: – Reduce operational footprint from 31 to 25 plants within the next three years • Most of the closures are in Europe, mainly in the Powertrain & Chassis Products Segment – Improv
Slide 27: Improve operational execution & effectiveness, cont.
How we will achieve our vision Improve operational execution & effectiveness, cont. KA has experienced margin deteriorations because of lack of growth and the inability to properly manage economics. ▸ We will manage economics – Historically, our plans have assumed revenue growth as the main driver o
Slide 28: Restructuring Costs & Benefits
How we will achieve our vision Improve operational execution & effectiveness, cont. Restructuring Costs & Benefits In Mill. Euro 2016 2017 2018 2019 Later Total 2016-2019 Cash restructuring Costs 7 11 22 6 1 46 Non – Cash restructuring Costs 1 0 2 Total Restructuring Costs 7 12 22 6 1 48 System Impr
Slide 29: How we will achieve our vision
How we will achieve our vision How we will achieve our vision ▸ Adapt our organization to better capture the potential of our various businesses through: 1. Increased focus on our various businesses 2. Increase centralization and regionalization for stronger operational control and effectiveness ▸ I
Slide 30: Actively manage our product portfolio
How we will achieve our vision Actively manage our product portfolio ▸ We will: – keep and develop LDC – still seek to sell the headrest/armrest (HR/AR) business – reconfigure ePower – not seek to divest any other parts of our portfolio. ▸ We are: – not in a fire sale mode and we will not sell busin
Slide 31: Agenda
Revenue Projections Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market Overview ▸ How are we going to achieve our vision? ▸ Revenue projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 31
Slide 32: New Business Wins
Revenue Projections New Business Wins We continue to book business at an attractive pace. Although we will not book as much as we did in 2015, our 2016 business wins are in line with our revenue projections. New business wins per quarter (per annum value) EUR Million 140 127 120 100 80 71 68 69 60 6
Slide 33: Revenue projections
Revenue Projections Revenue projections ▸ Our Revenue plan includes known business awards and a weighting of future opportunities. – Programs are typically awarded two years in advance of the first revenues, so the figures should be fairly firm for the 2017-2018 timeframe. Revenue Plan Annual Growth
Slide 34: Revenue Projections
Revenue Projections Revenue Projections Revenues EUR million Powertrain Revenues Interior Comfort Systems EUR million 450 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 2016 2017 2018 2019 2016 2017 2018 2019 34
Slide 35: Agenda
Financial Costs & Benefits Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market Overview ▸ How we will achieve our vision ▸ Revenue Projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 35
Slide 36: Financial Overview – Introduction & Assumptions
Financial Costs & Benefits Financial Overview – Introduction & Assumptions ▸ The following financial overview is our plan for 2016 and the next three full years (without quarterly breakdowns) – The effects of our planned re-segmenting have been included both for the costs and benefits • Restructurin
Slide 37: Financial overview – Outlook – by segment
Financial Costs & Benefits Financial overview – Outlook – by segment excluding restructuring costs Including Restructuring Benefits In Mill. Euro 2016 2017 2018 2019 Sales 351 366 386 432 Powertrain EBIT -6 0 21 35 % of sales -1.8% -0.1% 5.5% 8.2% Sales 269 271 299 347 Interior Comfort Systems EBIT
Slide 38: Financial overview – Outlook
Financial Costs & Benefits Financial overview – Outlook Including restructuring costs P&L with restructuring costs & benefits In Mill. Euro 2015 2016 2017 2018 2019 Sales 1,016 979 1,011 1,073 1,171 KA excluding restructuring costs EBIT 52 35 44 89 110 % of sales 5.1% 3.6% 4.3% 8.3% 9.4% Total Restr
Slide 39: Financial overview - Outlook
Financial Costs & Benefits Financial overview - Outlook P&L with Restructuring Costs & Benefits In Mill. Euro 2015 2016 2017 2018 2019 Sales 1.016 979 1.011 1.073 1.171 Operating Costs -983 -963 -989 -1.008 -1.065 EBIT 52 35 44 89 110 % of sales 5,1% 3,6% 4,3% 8,3% 9,4% Restructuring & One Off cost
Slide 40: Agenda
Conclusion & Wrap-up Agenda ▸ Our Vision ▸ Strategy review & competitive positioning of our product portfolio ▸ Market Overview ▸ How we will achieve our vision ▸ Revenue Projections ▸ Financial Costs & Benefits ▸ Conclusion & Wrap-up 40
Slide 41: Conclusion & Wrap-up
Conclusion & Wrap-up Conclusion ▸ What we have presented to you today are ▸ Our plan for improving the performance of Kongsberg Automotive, and ▸ A brief analysis and rationale for this plan. ▸ This will lead to ▸ Significantly improved product competitiveness, particularly from a cost standpoint en