Oc Oerlikon Corporation Ag · SIX:OERL
Oc Oerlikon — Investor Presentation (November 2019)
62 slides from Oc Oerlikon's investor presentation, Nov 5, 2019
Slide 1: Investing in a global industry leader with profitable growth and a transforming portfolio
Investing in a global industry leader with profitable growth and a transforming portfolio Investor Presentation November 2019
Slide 2: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 5 Appendix Page 2 Oerlikon Investor Pres
Slide 3: Oerlikon's investment proposition
Oerlikon’s investment proposition A UNIQUE PROPOSITION… … WITH TWO ATTRACTIVE INVESTMENT PILLARS Oerlikon creates innovative surface solutions, advanced materials and polymer processing, addressing customers’ challenges and helping them succeed in their industries. Over 1000 engineers are dedicated
Slide 4: Enable organic growth at attractive margins in Surface Solutions
Enable organic growth at attractive margins in Surface Solutions PROFITABLE GROWTH 4-6% revenue CAGR with sustainable EBITDA margin profile of 21-23%* Leader with unique competences #1 and #2 ▪ Presence across entire surface solutions value chain market positions ▪ Dedicated business models to match
Slide 5: Oerlikon's strategic portfolio priorities
Oerlikon’s strategic portfolio priorities PORTFOLIO TRANSFORMATION OPPORTUNITY CHF 2 609 million sales (2018)1 Surface Solutions Segment Manmade Fibers Segment CHF 1 511 million CHF 1 099 million World market leader with widest ranging portfolio of surface technologies, From melt to yarn, fibers and
Slide 6: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 5 Appendix Page 6 Oerlikon Investor Pres
Slide 7: Attractive end market exposure
Attractive end market exposure Diversified exposure to early and late cycle markets Solving customer problems at center of value proposition
Slide 8: Diversified industry exposure – Delivering customer value
Diversified industry exposure – Delivering customer value by delivering unique functionality to surfaces CUSTOMER VALUE AEROSPACE AUTOMOTIVE Oerlikon’s surface solutions are used to enhance material and surface properties to serve a diverse array of functions to address industry challenges. Separati
Slide 9: Leading Technologies
cerlikon Leading Technologies pas
Slide 10: Oerlikon builds on a leading, wide-ranging portfolio of surface technologies
Oerlikon builds on a leading, wide-ranging portfolio of surface technologies NITRIDING ▪ Nitriding involves ionizing a nitrogen- hydrogen gas mixture in a vacuum PVD and PACVD/CVD ▪ PVD is a vacuum deposition method, where a highly pure, solid coating material goes from a condensed state to vapor an
Slide 11: Diversified business model serving customer needs
Diversified business model serving customer needs Range of ways to market across service, equipment and materials Continued focus on technological leadership to foster market leading positions
Slide 12: Business model – Matching customer challenges with standard and customized solutions
Business model – Matching customer challenges with standard and customized solutions Materials solutions Equipment solutions Service solutions ▪ Powders and consumables used in thermal ▪ Engineered thermal spray & coating systems ▪ Providing engineering, surface coatings and pre-and post- spray ▪ Sp
Slide 13: Business model – Leading positions and priorities
Business model – Leading positions and priorities FY 18 Revenue & Revenue CAGR Strategic market position 2015-18 priorities CHF 0.62bn revenue Material >30% market share in materials (Aero & Defense) +9% Expand materials portfolio & reduce time to market (Scoperta acquisition) ~20% market share in m
Slide 14: Business model – Global coating center network
Business model – Global coating center network 152 SERVICE CENTER FOR GROWTH ▪ Diversified regional exposure allows servicing of global and local customers ▪ Ongoing network expansion aligned to customer +1.7% +5.1% demand and regional dynamics +2.3% +8.4% ▪ Asset light capacity expansion through bo
Slide 15: Driving profitable growth
Driving profitable growth Levers of growth in customer alignment, innovation, regional expansion and M&A Additive Manufacturing as adjacent structural growth opportunity
Slide 16: Three drivers of profitable growth
Three drivers of profitable growth 1. MID-TERM MARKET GROWTH 2. OERLIKON STRUCTURAL GROWTH 3. M&A OPPORTUNITIES ▪ Unlevered balance sheet ▪ Net cash position of ~CHF 400m ▪ Continued FCF generation End market exposure to cyclical Oerlikon has the ability to outgrow Supporting structural growth but g
Slide 17: Structural growth drivers in detail
Structural growth drivers in detail Achievements (Examples) Potentials Customer alignment GROUP ▪ Building a client facing structure along industries ▪ Identify and address untapped markets and applications ▪ Alignment in sales and management structure POWER Leverage existing customer AERO TOOL AUTO
Slide 18: From surface to structure – Leveraging Oerlikon's core competencies to scale the AM value chain
From surface to structure – Leveraging Oerlikon’s core competencies to scale the entire AM value chain LEVERAGING LEADING CAPABILITIES OF SURFACE DELIVERING ADVANCED MATERIALS & COMPONENTS SOLUTIONS IN AM OFFERING: GLOBALLY 1. AM-specific metal powders including, Ni, Co, Cu, Fe, Ti & Al alloys 2. Ap
Slide 19: Oerlikon Transformation – Streamlining the portfolio and focus on Surface Solutions
Oerlikon Transformation Streamlining the portfolio and focus on Surface Solutions Total investments Coating Coating Surface Solutions Surface Solutions Surface Solutions Surface Solutions Surface Solutions Acquisitions Segment: CHF 1.1BN Segment: Segment: Segment: Segment: Segment: Segment: Rox Metc
Slide 20: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 5 Appendix Page 20 Oerlikon Investor Pre
Slide 21: Manmade Fibers – Supplying Industry Solutions from Melt to Yarn, Fibers and Nonwovens
Manmade Fibers – Supplying Industry Solutions from Melt to Yarn, Fibers and Nonwovens #1 IN CONCENTRATED MARKET UNIQUE CUSTOMER BENEFITS FOR MANMADE FIBER APPLICATIONS 42% of FY18 ▪ The polyester chain is quite consolidated on both the customer and competitor front – largest competitor is Group reve
Slide 22: Oerlikon in the middle of the polyester value chain
Oerlikon in the middle of the polyester value chain ENERGY AND UPSTREAM POLYESTER CHAIN END MARKETS PETROCHEMICALS px SPINNING PLANT POLYESTER YARN textile PTA PLANT MEG PLANT processing APPAREL naphtha REFINERY CRUDE OIL polyester HOME TEXTILES melt naphtha polyester melt TECHNICAL TEXTILES ethylen
Slide 23: Customer example – Engineered Plant Solutions as One-Stop Service
Customer example – Engineered Plant Solutions as One-Stop Service FROM MELT … … TO FIBERS 250 m 80 m 50 m 3 X 225 TONS PER DAY 2.700 staple fiber bales of 250 kg each 180 m … TO TEXTURED YARN 120 x DTY HQ 576 machines 130 m …... 24x 45 m DAILY OUTPUT: 40 000 BOBBINS 30 m 1.800 m (15 KG EACH) 600 TON
Slide 24: Competitive landscape – Market share by application
Competitive landscape Market share by application Textile Applications Special Filament Plant Engineering #1 position #1 70-80 % position market share 45-50 % market share Gain market share in fragmented applications 10-20 % market share Oerlikon Manmade Fibers TMT Machinery Others Page 24 Oerlikon
Slide 25: Extend the core business, develop solutions and improve customer services for growth
Extend the core business, develop solutions and improve customers services for growth Industrie 4.0 / Digitization Products and Engineering (incl. Customer Services Recycling) Automation Corporate Social Responsibility Yarn / Material (e-save) Page 25 Oerlikon Investor Presentation November 2019
Slide 26: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 5 Appendix Page 26 Oerlikon Investor Pre
Slide 27: Oerlikon Group – Key financial figures
Oerlikon Group – Key financial figures1 in CHF million Key financial figures H1 2019 2018 2017 2016 2015 2014 Order intake 1’352 2’731 2’211 2’413 2’537 2’647 Sales (3rd parties) 1’324 2’609 2’068 2’331 2’671 2’825 EBITDA margin 16.2 % 15.6 % 15.6 % 14.3 % 12.7 %3 16.8 % Cash flow from operations2 -
Slide 28: Oerlikon Segments – Key financial figures
Oerlikon Segments – Key financial figures in CHF million Key financial figures H1 2019 2018 20171 2016 2015 2014 Surface Solutions Order intake 759 1’574 1’412 1’236 1’233 965 Sales (3rd parties) 750 1’511 1’370 1’238 1’229 973 EBITDA margin 16.6 % 18.6 % 20.1 % 22.2 % 21.4 % 18.8 % Net operating as
Slide 29: Result from continuing operations impacted by lower EBIT and financial result
Result from continuing operations impacted by lower EBIT and financial result in CHF million H1 2019 H1 2018 Δ Order intake 1’352 1’434 -5.7 % Sales 1’324 1’269 4.3 % EBITDA 214 208 2.9 % in % of sales 16.2 % 16.4 % Result before interest and taxes (EBIT) 115 128 -10.2 % in % of sales 8.7 % 10.1 % F
Slide 30: Strong unleveraged balance sheet with an equity ratio of 48%
Strong unleveraged balance sheet with an equity ratio of 48 % in CHF million H1 2019 FY 2018 Cash and cash equivalents 717 764 Trade and trade notes receivables 354 305 Inventories 376 343 Property, plant and equipment 610 667 Right-of-use assets 223 - Goodwill and intangible assets 1’116 1’139 Asse
Slide 31: Group CapEx to depreciation ratio back in mid-term target corridor
Group CapEx to depreciation ratio back in mid-term target corridor1 CapEx Depreciation & amortization1 CapEx / depr. & amort. ratio1 In CHF million In CHF million In CHF million +5% -16% 79 63 60 1.8 1.71 66 1.6 1.47 1.4 1.43 1.44 1.16 1.2 1.09 1.01 1.05 Mid-term target corridor 1.0 0.8 0.6 0.4 0.2
Slide 32: Consolidated cash flow statement H1 2019
Consolidated cash flow statement H1 2019 -142 in CHF million 547 -678 194 -206 858 Receivables1 -58 Inventories -40 717 Payables/liabilities -38 -1 Contract liabilities -73 Other 3 Total -206 CAPEX PP&E -54 Dividends paid -341 CAPEX intangibles -17 Repayment of debt -319 Disposal of Group companies,
Slide 33: R&D and CapEx on Segment level
R&D and CapEx on Segment level R&D expenses H1 2019 CapEx H1 2019 Surface Solutions (7%) Surface Solutions (7%) 8% 23% 15% Manmade Fibers (3%) Manmade Fibers (2%) CHF CHF (% of Segment sales) 66m 65m Corporate (% of Segment sales) 77% 77% Depreciation & Amortization H1 2019 CapEx / Depr. & Amort. H1
Slide 34: Asset allocation and employees on Segment level
Asset allocation and employees on Segment level Net operating assets H1 2019 Employees (FTE) by Segment H1 2019 Surface Solutions 4% Surface Solutions 3% 0% Manmade Fibers Manmade Fibers 26% CHF 11’020 Corporate 1’850m Corporate 71% 96% Operating Assets H1 2019 Employees (FTE) by Region H1 2019 3% 4
Slide 35: Attractive dividend of CHF 1.00 per share proposed
Attractive dividend of CHF 1.00 per share proposed – ordinary dividend CHF 0.35 / extraordinary dividend CHF 0.65 Underlying EPS Dividend proposal for FY 2018 In CHF per share In CHF per share extraordinary dividend ordinary dividend 97% 0.85 1.00 Payout ratio of ordinary dividend 0.76 0.72 0.61 70%
Slide 36: Automotive – a structural growth market for the Surface Solutions Segment
Automotive – a structural growth market for the Surface Solutions Segment DRIVERS FOR EXPECTED FUTURE OUTPERFORMANCE CAGR 2015-2018 INNOVATION ▪ Recent launch of ePD (embedded Physical Vapor Deposition), S3 (Segmented Synchroniser System) Oerlikon ▪ Brake Disc: rust and dust free brake disc Automoti
Slide 37: Investments in future profitable organic growth across all businesses
Investments in future profitable organic growth across all businesses Surface Solutions Segment Manmade Fibers Segment Investment in competence centers, in particular for ePD, CVD Investment in Factory 4.0 and digitalization solutions and Oil & Gas Further investments in regional expansion, mainly i
Slide 38: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 6 Appendix Page 38 Oerlikon Investor Pre
Slide 39: Third quarter performance reflecting challenging market developments
Third quarter performance reflecting challenging market developments ▪ Group Q3 order intake -4.3 % vs. the prior year, mainly due to 1 Lower top-line challenging market environment, particularly in Surface Solutions equipment ▪ Group sales -7.9 % y-o-y, Surface Solutions delivering flat organic sal
Slide 40: Surface Solutions Segment – Flat organic sales development in adverse markets
Surface Solutions Segment – Flat organic sales development in adverse markets OPERATIONAL PERFORMANCE MARKET DEVELOPMENT 4% ▪ Decline in orders and sales across all markets, driven by ▪ Tooling industry shows reduced activity in difficult end Asia / Pacific slowdown in Automotive, Tooling and Power
Slide 41: Manmade Fibers Segment – Sustained high top-line levels
Manmade Fibers Segment – Sustained high top-line levels – profitability in line with expectations OPERATIONAL PERFORMANCE MARKET DEVELOPMENT ▪ Strong order intake sustained in Textile Applications, ▪ Continued strong project pipeline in Textile Applications; 7% 3% Asia / Pacific especially in filame
Slide 42: Group performance impacted by challenging market environment
Group performance impacted by challenging market environment in CHF million 3Q19 3Q18 y-o-y 9M19 9M18 y-o-y ▪ Surface Solutions Segment sustained a good sales level in 3Q19, reporting a 1.1 % decline in sales while organic sales Order intake 627 655 -4.3% 1’979 2’090 -5.3% were flat year-over-year S
Slide 43: FX impact on Orders, Sales and EBITDA in Q3 2019
FX impact on Orders, Sales and EBITDA in Q3 2019 Order intake Q3 2019 Sales Q3 2019 EBITDA Q3 2019 In CHF million In CHF million In CHF million -2.7% -2.6% -2.3% 627 645 633 650 84 86 0 18 0 17 0 2 13.3 13.2 Margin in % Q3 2019 Transaction Translation Q3 2019 FX Q3 2019 Transaction Translation Q3 20
Slide 44: Business split – Segment splits in line with business performance
Business split – Segment splits in line with business performance Segment sales split Segment EBITDA split Q3 2019 58% 42% Q3 2019 66% 34% 0% Q3 2018 54% 46% Q3 2018 -2% 67% 35% in % of total sales in % of EBITDA Surface Solutions Manmade Fibers Surface Solutions Manmade Fibers Other Regional sales
Slide 45: Return On Capital Employed (ROCE)
Return On Capital Employed (ROCE) Q3 20191 FY 20183 EBIT 204 243 12.1% - Total current income tax -57 -63 11.1% - Total deferred tax income 4 -4 8.2% 8.3% NOPAT 151 176 5.7% Net Operating Assets 1’870 1’526 + Current income tax receivables 17 17 -19.8% + Deferred tax assets 129 110 - Current income
Slide 46: 2019 Group outlook unchanged
2019 Group outlook unchanged Underlying Group / Segment assumptions intake Order 2’731 up to Oerlikon Group Surface Solutions Segment 2’700 ▪ Order Intake and sales expected to deliver ▪ Order intake and sales expected to be FY 2018 FY 2019E around the same level of performance as for the maintained
Slide 47: Q&A
Q&A 1 Third quarter performance reflecting challenging market developments 2 Initiation of Share Buyback Program 3 Full year guidance 2019 unchanged Page 47 Oerlikon Investor Presentation November 2019
Slide 48: EBITDA to EBIT bridge for Oerlikon Group
EBITDA to EBIT bridge for Oerlikon Group EBITDA to EBIT bridge – Q3 2019 EBITDA to EBIT bridge – Q3 2018 In CHF million In CHF million 84 103 -25 -32 78 -10 52 62 -6 -10 -7 36 EBITDA Depr. & Imp. EBITA Amor.of acqu. Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor.of acqu. Other Amor. EBIT intangible
Slide 49: EBITDA to EBIT bridge per Segment – Q3 2019
EBITDA to EBIT bridge per Segment – Q3 2019 Surface Solutions Segment Manmade Fibers Segment In CHF million In CHF million 55 -27 28 -4 24 -1 22 -1 29 -9 -5 15 EBITDA Depr. & Imp. EBITA Amor. of acqu. Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor. of acqu. Other Amor. EBIT intangibles intangibles
Slide 50: Agenda
Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Financials 4.1 Group overview 4.2 Latest quarterly results 5 Appendix Page 50 Oerlikon Investor Pre
Slide 51: Aerospace – Making aerospace safer, more powerful and more efficient
Aerospace – Making aerospace safer, more powerful and more efficient INDUSTRY CHALLENGES SOLUTIONS 14% of FY18 Surface Solutions revenue ▪ Focus on turbine efficiency: both cost and 2020 ▪ Customized solution of materials and equipment for KEY FACTS emission reduction goals drive the reduction of th
Slide 52: Automotive – Advancing productivity, sustainability and profitability
Automotive – Advancing productivity, sustainability and profitability in the industry INDUSTRY CHALLENGES SOLUTIONS 26% of FY18 Surface Solutions revenue ▪ Focus on increasing manufacturing productivity and ▪ Delivering solutions and equipment for thin film and KEY FACTS operating efficiency of cars
Slide 53: Tooling – Enabling sharper, stronger and more durable tools
Tooling – Enabling sharper, stronger and more durable tools INDUSTRY CHALLENGES SOLUTIONS 29% of FY18 Surface Solutions revenue ▪ Focus on quality, cost and overall factory output ▪ Delivering over 35 different thin film coatings extend KEY FACTS of any product service life, lower manufacturing cost
Slide 54: Power Generation – Empowering the way to effectively generate energy
Power Generation – Empowering the way to effectively generate energy INDUSTRY CHALLENGES SOLUTIONS 5% of FY18 Surface Solutions revenue ▪ Focus on increased efficiency to improve client’s cost ▪ Delivering highly productive and reliable customized KEY FACTS curve position solution of coatings, mater
Slide 55: General Industry – Enable industries to build more powerful, complex products
General Industry – Enable industries to build more powerful, complex and efficient products INDUSTRY CHALLENGES 26% of FY18 ▪ Food/packaging: hygiene, productivity and reliability Surface Solutions revenue ▪ Consumer Goods: Providing design, reliability and KEY FACTS scratch-resistance for product d
Slide 56: Oerlikon shares
Oerlikon shares Oerlikon shares Oerlikon shareholder structure1 as of October 31, 2019 ▪ Listed on Swiss Exchange (SIX) since 1973 Liwet Holding AG ▪ Securities symbol: OERL 41.34% ▪ Securities number 81 682 BlackRock Inc. ▪ ISIN: CH0000816824 Black Creek IM 52.74% ▪ Number of shares outstanding: 33
Slide 57: Analyst coverage
Coverage – 6 Buy / Add – 7 Hold / Neutral – 0 Sell / Underperform Broker Analyst Recommendation Date of last update Target price AlphaValue Luis Pereira Buy 13.08.2019 12.00 Baader Helvea Christian Obst Hold 31.10.2019 12.50 Berenberg Bank Marta Bruska Hold 05.03.2019 n/a Credit Suisse Patrick Laage
Slide 58: Financial Calendar 2019 / 2020
Financial Calendar 2019 / 2020 November 5, 2019 Q3 / 9M 2019 results - Media & Analyst Conference Call March 3, 2020 Q4 / FY 2019 results - Media & Analyst Conference in Zurich April 7, 2020 Annual General Meeting of Shareholders - KKL Lucerne May 5, 2020 Q1 2020 results - Media & Analyst Conference
Slide 59: Board of Directors
Board of Directors Prof. Dr. Michael Gerhard Dr. Suzanne Geoffery David Alexey V. Paul Adams Süss Pegam Thoma Merszei Metzger Moskov Chairman Vice Chairman 1963, German citizen 1962, Austrian citizen 1962, Swiss citizen 1951, Canadian citizen 1969, Swiss and French citizen 1971, Cypriot and Russian
Slide 60: Executive Committee
Executive Committee Dr. Roland Fischer Jürg Fedier Dr. Helmut Rudigier Anna Ryzhova Chief Executive Officer Chief Financial Officer Chief Technology Officer Chief HR Officer Dr. Roland Fischer (German citizen) was Jürg Fedier (Swiss citizen) was appointed Chief Dr. Helmut Rudigier (Austrian citizen)
Slide 61: Investor Relations Contact
Investor Relations Contact OC Oerlikon Management AG, Pfäffikon Churerstrasse 120 CH – 8808 Pfäffikon SZ Switzerland Andreas Schwarzwälder Head of Corporate Communications, Investor Relations & Marketing Phone: +41-58-360-9622 Mobile: +41-79-810-8211 E-mail: a.schwarzwaelder@oerlikon.com Page 61 Oer
Slide 62: Disclaimer
Disclaimer OC Oerlikon Corporation AG, Pfäffikon, (together with its affiliates hereinafter referred to as “Oerlikon”) has made great efforts to include accurate and up-to-date information in this document. However, Oerlikon makes no representation or warranties, expressed or implied, as to the trut