Kion Group Ag · XETR:KGX
Kion — Investor Presentation (August 2015)
68 slides from Kion's investor presentation, August 2015
Slide 1: We Keep the World Moving: Investor Relations Presentation
We Keep the World Moving Investor Relations Presentation August 2015
Slide 2: Agenda
Agenda 1. Investment Highlights 2. Update on Q2 2015 3. Margin Upside 4. Logistics 4.0 5. Appendix 2 KION GROUP AG | Investor Relations Presentation | August 2015 © 2015 KION GROUP AG. All rights reserved
Slide 3: KION Group at a Glance
KION Group at a Glance A world leader in industrial trucks KION Group is European Current key financials Revenues by product No. 1 No. 1 and Global No. 2 (a) (in €m) 2014 2013 20121 A well positioned global Revenues 4,678 4,495 4,560 Services 46% 7 player with seven unique Adj. EBITDA2 780 722 701 b
Slide 4: KION's Integrated Business Model
KIONʼs Integrated Business Model Global capital goods ecosystem of products and services New truck sales – Technology and Financial services – Sales support vehicle innovation leadership ~45% of new with benefit for truck sales aftermarket and – Tailor-made solutions carry financing and customer opt
Slide 5: Investment Highlights
Investment Highlights 1 Attractive market with growth profile above GDP 2 Global leader – strong home base and well positioned in growth markets 3 Technology leadership drives premium positioning and customer value 4 Robust integrated business model with high contribution from services 5 Profitabili
Slide 6: Attractive market with growth profile above GDP
1 Attractive market with growth profile above GDP benefiting from global mega trends Global new truck sales and GDP (CAGR)1 approx. 1.5x World GDP2 8.2% 4.1% 4.2% 3.3% 3.0% 2.8% 2.5% 2.6% 1980-1990 1990-2000 2000-2010 2010-2014 Global new trucks Global economic performance (Global GDP) Increasing fr
Slide 7: Stability from mature markets' replacement cycle
1 Stability from mature markets’ replacement cycle Stability from replacement cycle Pent-up demand following crisis Western Europe market order intake (in ‘000 units) Western Europe LTM order units (LTM Jan 2007=100) 120 > 90% Germany UK 289 100 264 France 80 Italy Spain 60 40 20 2004 2006 2008 2010
Slide 8: Momentum from strong emerging markets growth
2 Momentum from strong emerging markets growth Industrial truck market growth contributors Forklift penetration Share of market order intake unit growth 2004-2014 (in %) Number of trucks ordered per 1 million inhabitants 2014 930 China 54 Rest of World1 16 640 640 590 North America 9 390 Central/ 7
Slide 9: Strong position in core markets based on multi-brand strategy
2 Strong position in core markets based on successful multi-brand strategy Strong in core markets Successful multi-brand strategy KION market shares and positions 2014 (in %) – No. 2 worldwide(a) – No. 1 non-domestic brand in China(d) #1 35% Global brands Western – Leading in intralogistics solution
Slide 10: Multi-brand strategy will expand KION's addressable market
2 Multi-brand strategy will expand KION’s addressable market Brand expansion by 2020 Growing addressable market Illustrative – Broadened product portfolio increases market for KION Expand premium brands – Entering volume segment into upper volume as largest market segment segment Premium Successful
Slide 11: Well positioned to capture growth in Asia and other growth markets
2 Well positioned to capture growth in Asia and other growth markets Full local presence in growth markets Increasing growth markets contribution KION order intake (in units) Country/ Present Service Local Local Local 20% 23% 28% 32% 35% region since¹ network products operations R&D China 1993
Slide 12: Technology leadership drives premium positioning and pricing
3 Technology leadership drives premium positioning and pricing Product efficiency supports Purchase price only ~7% Commitment to R&D premium pricing² of total costs R&D spend¹ (€m) Cost per lorry load cycle Purchase Competitive ~7 % price pricing ~5 % Sources to Service 120 120 120 cost ~6 % maximiz
Slide 13: Strong global sales and service network
4 Strong global sales and service network provides unique access to a global customer base and barrier to entry 694 sales and/or 357 sales and/or 8 sales and/or 164 sales and/or 64 sales and/or service locations service locations service locations service locations service locations2 North America E
Slide 14: Increasing contribution from service business in emerging markets
4 Increasing contribution from service business also in emerging markets Service business in China Large installed base in China KION Chinese service revenues (in €m) – Installed base in China has grown over the past 20 years – Basis for integrated business model CAGR 113 Driver of Chinese service b
Slide 15: History of change as a basis for future value creation
5 History of change as a basis for future value creation Structural efficiency and consolidation Growth and resilience Margin expansion Reduced fixed costs and increased operational Increased revenue growth and Increase profitability and efficiency economies of scale efficiency 2008-2009 2010 onward
Slide 16: Margin upside driven by structural changes
5 Margin upside driven by structural changes Manufacturing setup Global platform strategy Example Example New plant in Pilsen Leveraging global R&D and platforms Full portfolio of – Next generation of value and torque converter economy trucks trucks STILL from Chinese – New E-trucks for Hamburg R&D
Slide 17: KION Strategy 2020: Our aspiration for profitable growth
6 KION Strategy 2020: Our aspiration for profitable growth KION target diamond Close the gap towards global market leadership Growth Being on par with the peer group regarding capital efficiency Capital Profitability efficiency Expand margin as the most profitable player in the industry Resilience R
Slide 18: KION Strategy 2020 addresses all aspects of the business
6 KION Strategy 2020 addresses all aspects of the business Regional growth strategies Aftersales and service business Expand strong position to growth markets Increase revenue from aftersales and like North America and China with services through better use of potential suitable brand strategies, co
Slide 19: Agenda
Agenda 1. Investment Highlights 2. Update on Q2 2015 3. Margin Upside 4. Logistics 4.0 5. Appendix 19 KION GROUP AG | Investor Relations Presentation | August 2015 © 2015 KION GROUP AG. All rights reserved
Slide 20: Financial Highlights H1 (Q2) 2015
Financial Highlights H1 (Q2) 2015 On course for a successful year following strong Q2 results − Order intake value rises by 8.2% to €2,565m in H1 2015 (Q2: €1,317m, +9.3% y-o-y) − Overall unit growth above market, driven by Western Europe and China − Healthy order book at €928m − Revenues grow by 8.
Slide 21: Strategy 2020 Highlights Q2 2015
Strategy 2020 Highlights Q2 2015 Implementation track record continues Multi-brand Continued focus on automation solutions strategy & − Egemin closing well under way, will be completed shortly Innovation − Linde introduces automated WH-trucks under Linde-Matic series − STILL wins second IFOY1 award
Slide 22: Market Development: Global market continues growth at slower pace
Market Development Global market continues growth at slower pace Global market order intake − Sustained order growth of 2.8% in Q2 Order intake Growth y-o-y − High order volume of 292,000 units (in ´000 units) (in %) 350 +2.8% 20 − Global development reflects weak activity in big 292 emerging market
Slide 23: Market Development: Mature markets stay strong, emerging markets struggle
Market Development Mature markets stay strong, emerging markets struggle Order intake unit growth y-o-y (in %) North America Eastern Europe Q4/14 Q1/15 Q2/15 Q4/14 Q1/15 Q2/15 18.9% 8.7% 14.0% Western Europe -9.8% -10.4% -17.3% Q4/14 Q1/15 Q2/15 8.3% 16.9% 8.6% China Q4/14 Q1/15 Q2/15 South/Central
Slide 24: Market Development: Good development across Western European markets
Market Development Good development across Western European markets Markets pre- and post-crisis (status as at 30 Jun 2015) − Ongoing healthy Indexed LTM order units (LTM Jan 2007=100) activity 120 Germany − Good momentum in UK Germany, UK and France 100 France − Italy and Spain continue 80 Italy to
Slide 25: KION Development: Strong demand momentum continues
KION Development Strong demand momentum continues KION global order intake − KION accelerates ahead of global market in Q2 Order intake Growth y-o-y − Orders are 7.6% above previous year in Q2 vs. (in ´000 units) (in %) +7.6% market growth of 2.8% 50 20 43.8 − Second highest quarterly order level of
Slide 26: KION stays on growth path in Western Europe and China
KION Development KION stays on growth path in Western Europe and China Regional development Western Europe Order intake unit growth y-o-y (in %) − Market: Normalization, good momentum H1 2015 Q2 2015 − KION: Above market growth in Q2 Market KION Market KION Eastern Europe Western 12.7% 10.6% 8.6% 9.
Slide 27: Key Financials H1 2015
Key Financials H1 2015 Continued momentum with margin close to previous year Order intake Revenues Adjusted EBIT1 Net income (in €m) (in €m) (in €m and margin in %) (in €m) +8.2% +8.4% 8.8% 8.7% 2,565 2,421 2,372 2,233 +6.6% +55.7% 197 210 94 61 H1 H1 H1 H1 H1 H1 H1 H1 2014 2015 2014 2015 2014 2015
Slide 28: Key Financials Q2 2015
Key Financials Q2 2015 Operational margin improvement offset by adverse court ruling Order intake Revenues Adjusted EBIT1 Net income (in €m) (in €m) (in €m and margin in %) (in €m) +9.3% +9.8% 9.6% 9.3% 1,317 1,256 1,205 1,144 +6.3% 109 116 +60.0% 52 33 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 2014 2015 2014 2015 20
Slide 29: Revenues: Strong growth contribution from new business
Revenues Strong growth contribution from new business H1: Revenue bridge by product categories Q2: Revenue bridge by product categories (in €m and growth y-o-y in %) (in €m and growth y-o-y in %) +8.4% +9.8% New business Services New business Services +10.5% +5.9% +13.2% +5.7% 2,421 1,256 20 -7 9 -7
Slide 30: Adjusted EBIT and EBITDA
Adjusted EBIT and EBITDA Margins reflect implementation costs for Strategy 2020 Adjusted EBIT1 − Gross margin increase driven by (in €m and margin in %) new business growth, supported by product mix and lower 8.8% 8.7% 9.6% 9.3% commodity prices 197 210 − Increase in fixed costs driven by 109 116 wa
Slide 31: Adjusted EBIT to Net Income
Adjusted EBIT to Net Income Net income growth driven by improved financing H1 H1 Q2 Q2 (in €m) 2015 2014 Change 2015 2014 Change − Financial result Adjusted EBIT1 210 197 6.6% 116 109 6.3% benefits from sustainable interest Non-recurring items -15 -9 -54.2% -10 -5 <-100% reduction after KION acquisi
Slide 32: Free Cash Flow Statement
Free Cash Flow Statement Growth supported by higher TWC and rental capex H1 H1 (in €m) 2015 2014 Change − EBITDA excludes FS segment with €44m EBITDA (excl. FS segment) 331 310 6.7% EBITDA in H1, included in leasing CF Change of TWC -166 -96 -72.5% − Increased trade working capital (TWC) and Taxes p
Slide 33: Financing Structure
Financing Structure Stable financing structure since refinancing in April 2014 Maturity profile as at 30 Jun 2015 Positive ratings action in April 2015 (in €m) − Standard & Poor’s: BB+ with stable outlook 1,045 − Moody’s: Ba2 with positive outlook Last pre-IPO bond callable in February 2016 − Remain
Slide 34: Net Debt
Net Debt Slight seasonal increase of net debt Net debt as at 30 Jun 2015 Net debt development (in €m and leverage as multiple of LTM adjusted EBITDA) − Group net financial debt increases slightly by €30m from March 2015 1.1x1 1.7x2 2.8x2 − Net financial and industrial net 738 1,974 operating leverag
Slide 35: Pension Liabilities
Pension Liabilities Decrease in net pension liabilities driven by discount rate Net pension liabilities as at 30 Jun 2015 Net pension liabilities mostly Net pension liabilities Discount rate driven by German plans (in €m) (in %) − Large UK plans are fully funded, 1,000 926 7 with offsetting pension
Slide 36: Outlook FY 2015
Outlook FY 2015 Outlook confirmed based on positive performance in H1 2015 Market KION Further moderate increase in the worldwide Growth underpinned by service in Western market volume in 2015 Europe and emerging markets − Stabilisation in Western Europe with sustained − Slightly higher order intake
Slide 37: Agenda
Agenda 1. Investment Highlights 2. Update on Q2 2015 3. Margin Upside 4. Logistics 4.0 5. Appendix 37 KION GROUP AG | Investor Relations Presentation | August 2015 © 2015 KION GROUP AG. All rights reserved
Slide 38: Margin Upside: Measures in place to drive profitability
Margin Upside Measures in place to drive profitability EBIT Benchmark KION generates best-in-class EBIT margin1 EBIT margin 2014 (in %) – Scale and synergy benefits vs. competitors 25 – Strong service business with attractive margins Median Range – Local sourcing & production in emerging Target 2018
Slide 39: Manufacturing Setup: Successful completion of footprint measures
Manufacturing Setup Successful completion of footprint measures Completed consolidation of plants in Western Europe – Closure of 6 sites completed Products Footprint 2014 Measures – Remaining footprint with clear Counterbalance – Aschaffenburg – Closure of 2 sites product focus supported by trucks –
Slide 40: Truck assembly plant setup matches market demand
Manufacturing Setup Truck assembly plant setup matches market demand Sites in Europe Sites in Asia Sites in Americas Aschaffenburg (AB) Summerville Jingjiang Hamburg Xiamen (HH) NEW Pune Pilsen Indaiatuba, Sao Paulo Reutlingen Luzzara Chatellerault – No new sites in Western – Further expansion in em
Slide 41: Efficiency programs increase competitiveness of core plants
Manufacturing Setup Efficiency programs increase competitiveness of core plants Linde core plant in Aschaffenburg Efficiency programs started Example – Plan to invest €83m by 2021 into core plants in Aschaffenburg (Linde) & Hamburg (STILL) – Target to increase efficiency Focus on competitiveness – O
Slide 42: Investment program includes new plant in CZ
Manufacturing Setup Investment program includes new plant in CZ New plant in Pilsen (CZ) Part of European investment program – First final assembly plant in Eastern Europe – Around €12m will be invested in setting up a low capital intensive facility in Pilsen STILL Hamburg – Production is scheduled
Slide 43: Product platforms are clearly differentiated by region
Global Platform/Module Strategy Product platforms are clearly differentiated by region Western Europe: Different high-end platforms Rest of World: Common volume and economy with common modules platforms – Technology leadership to maintain market – Leverage existing products and platforms leadership
Slide 44: Modular concept is already under implementation
Module Strategy Modular concept is already under implementation Common modules Module governance defined Examples – Heads of module management in charge – “Product & Module Committee” established – “Module book” released Common modules for roll-out – List of agreed common module developments and aff
Slide 45: Volume and economy portfolio is continuously expanded
Global Platform Strategy Volume and economy portfolio is continuously expanded Volume platform New platforms for outside Western Europe Example – New global products built on common platform – New IC-, E-, and WH-trucks for global volume platform – Differentiation by regional adaptation and – Develo
Slide 46: R&D leveraged by combining KION's scale with local competence
Global Platform Strategy R&D leveraged by combining KION’s scale with local competence R&D hub and spokes for global markets Develop once, use globally Localization Platform Localization – Dedicated R&D center in Xiamen with focus on for Americas developments for Asia volume platform – local teams f
Slide 47: Margin drivers under implementation – first effects in 2016
Strategy 2020 Margin drivers under implementation – first effects in 2016 Margin drivers Activities 2014 Next steps Manufacturing Manufacturing New multi-brand plant in Start of production in 2016 setup setup Pilsen, CZ Investment program at core Completion of program plants in Germany by 2021 G
Slide 48: Margin drivers impact gross margin and SG&A cost
Strategy 2020 Margin drivers impact gross margin and SG&A cost Margin drivers Activities 2014 Next steps Simplified P&L Gross margin (in % of revenues) Manufacturing Manufacturing Revenues 28.7% setup setup 27.4% 27.6% Cost of sales Globalplatform/ Global platform/ modulestrategy module strategy Gro
Slide 49: Agenda
Agenda 1. Investment Highlights 2. Update on Q2 2015 3. Margin Upside 4. Logistics 4.0 5. Appendix 49 KION GROUP AG | Investor Relations Presentation | August 2015 © 2015 KION GROUP AG. All rights reserved
Slide 50: Logistics 4.0: KION supports Industry 4.0
Logistics 4.0 KION supports Industry 4.0 with Information Logistics KION solutions offering No Industry 4.0 without Logistics 4.0 Examples Fleet data – Internet of things is described as fourth management industrial revolution: – Interconnection of machines, products and processes – Autonomous suppl
Slide 51: Fleet Data Management
Fleet Data Management Fleet data management supports efficient fleet control Fleet data management Connecting forklift trucks Illustrative – Fleet data services connect forklift trucks with Trucks with Analysis/ on-board units Connectivity report tool analysis and management tools – They support fle
Slide 52: Automation and Intralogistic Solutions
Automation and Intralogistic Solutions KION offers broad automated product and solutions portfolio Automated solutions Intralogistics solutions Examples Example Full range of automated series trucks enable Customized intralogistics solutions result from automation of the entire material flow the
Slide 53: Egemin Handling Automation: KION acquires Handling Automation division
Egemin Handling Automation KION acquires Handling Automation division of Egemin Group Joining forces in automation & intralogistics Market for automation systems is attractive – Logistics automation market is considered to show an increasingly strong demand – Following Strategy 2020, KION targets to
Slide 54: Egemin: Company background
Egemin Handling Automation Company background: Established player in automation Company overview Solutions offering – KION acquires Handling Automation division of – Focus on solutions for Belgian automation specialist Egemin Group – Automated guided vehicles – Over 60 years of industry expertise, e
Slide 55: Egemin: Comprehensive automation offering
Egemin Handling Automation Comprehensive automation offering Autom. warehouse systems Automated guided vehicles In-floor chain conveyors – Automated warehouse and – Fully automatic and flexible – Reliable transport and sorting distribution systems transport systems for systems that convey and sort –
Slide 56: Egemin: Competence in supply chain and automation integration
Egemin Handling Automation Competence in supply chain and automation integration Egemin’s integration competence Supply chain integration with automated transport and storage solutions Covering the entire supply chain From receiving and production to packaging, storage and shipping AUTOMATION IN
Slide 57: Agenda
Agenda 1. Investment Highlights 2. Update on Q2 2015 3. Margin Upside 4. Logistics 4.0 5. Appendix 57 KION GROUP AG | Investor Relations Presentation | August 2015 © 2015 KION GROUP AG. All rights reserved
Slide 58: Weichai Partnership
Weichai Partnership Aim is to leverage cooperation and increase competitiveness Current ownership structure Weichai partnership – Total investment of €1.35bn in KION and for Linde Hydraulics KG Free Treasury KION – Strategic anchor shareholder float shares investment – Technical consolidation trigge
Slide 59: Integrated Offering
Integrated Offering A full range of products, services and solutions Comprehensive product and service/solutions portfolio 2014 revenue split Products Service Solutions Financing Fleet data New trucks 54% Service contracts management Diesel and Ad-hoc-service Automation Services 46% LPG forklift tru
Slide 60: Products
Products Unique range of products serving customer needs worldwide Examples Internal combustion (IC) counterbalanced trucks Mainly used outside Electric (E) counter- balanced trucks Mainly used inside Warehouse technology: rider trucks Faster transportation of loads Specially designed for wa
Slide 61: Financial Services: Support function
Financial Services Support function within integrated business model End customer sales by financing types Higher customer sales and retention KION end customer revenues1 2014 – Financing as support for new truck sales by financing type (in %) Financing share – Typical financing contract duration is
Slide 62: Financial Services: Financing for end customers and rental fleet
Financial Services Financing for end customers and internal rental fleet Financing types Direct sale – No financing via KION, but in some cases by end customer directly – KION arranges financing via third-party provider based on framework agreements (off balance sheet) Indirect – Relationship manage
Slide 63: Financial Services: On balance sheet activities
Financial Services On balance sheet activities for end customers & Linde/STILL Overview of Financial Services activities Segment centralizes equipment finance – Financial Services segment established Long-term in 2012 End sales Corporate refinancing – Segment centrally manages leasing customer finan
Slide 64: Financial Services: Flow-through nature of end-customer business
Financial Services Flow-through nature of end-customer business Simplified Financial Services balance sheet as at 30 Jun 2015 Public data available (in €m) – Simplified balance sheet built Assets Liabilities from quarterly report1 Leased assets Flow-through nature of end with end customers customer
Slide 65: Financials: Key figures by year
Financials Key figures by year (in € m) 2011 2012 20121 2013 2014 Order intake 4,682 4,700 4,590 4,489 4,7715 Revenue 4,368 4,727 4,560 4,495 4,678 EBITDA (adjusted)2 665 747 701 722 780 EBITDA-margin (adjusted)² 15.2% 15.8% 15.4% 16.1% 16.7% EBIT (adjusted)² 365 438 408 417 443 EBIT-margin (adjuste
Slide 66: Financials: Key figures by quarter
Financials Key figures by quarter Order intake1 Revenues (in €m) (in €m) 1,317 1,306 1,105 1,205 1,193 1,284 1,167 1,248 1,205 1,149 1,144 1,082 1,139 1,178 1,089 1,165 1,144 1,256 1,046 1,116 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 2013 2014 2013 2014 2013 2014 2014 2015 2014 20
Slide 67: Financial Calendar
Financial Calendar Date Event 5 November 2015 Interim report for the period ended 30 September 2015 (Q3 2015) Financial statements press conference 17 March 2016 Publication of 2015 annual report (FY 2015) 4 May 2016 Interim report for the period ended 31 March 2016 (Q1 2016) 12 May 2016 Annual Gene
Slide 68: Disclaimer
Disclaimer This document has been prepared by KION GROUP AG (the “Company”) solely for informational purposes. For the purposes of this notice, the presentation that follows shall mean and include the slides that follow, the oral presentation of the slides by the Company or any person on behalf of t