Oc Oerlikon Corporation Ag · SIX:OERL

Oc Oerlikon — Q1 2016 Earnings Presentation

29 slides from Oc Oerlikon's earnings presentation, May 10, 2016

  1. Slide 1: Moving forward in demanding market environment

    Moving forward in demanding market environment Dr. Roland Fischer, CEO Jürg Fedier, CFO Q1 2016 Business Update May 10, 2016

  2. Slide 2: Agenda

    Agenda 1 Q1 2016 Business Update 2 Q1 2016 Financial Review 3 Outlook 2016 4 Appendix Page 2 20160510_Oerlikon Q1 2016 Business Update

  3. Slide 3: Moving forward in demanding market environment

    Moving forward in demanding market environment Q1 2016 at a glance Strategic development well underway and further milestones achieved  Investing in organic growth in Surface Solutions Segment by opening up two new coating/service centers in Asia and initial sales from new strategic partnerships fo

  4. Slide 4: Surface Solutions Segment – Further milestones achieved in execution of strategy

    Surface Solutions Segment – Further milestones achieved in execution of strategy y-o-y in CHF million Q1 2016 Q1 2015 y-o-y ex FX Order intake 306 317 -3.5% -4.7% Sales (3rd parties) 294 300 -2.0% -3.5% EBITDA 62 61 +1.6% – In % of sales 20.9% 20.4% +0.5 pp – EBIT 33 34 -2.9% – In % of sales 11.3% 1

  5. Slide 5: Manmade Fibers Segment – Strengthening position outside Chinese filament business

    Manmade Fibers Segment – Strengthening position outside Chinese filament business y-o-y in CHF million Q1 2016 Q1 2015 y-o-y ex FX Order intake 124 205 -39.5% -40.7% Sales (3rd parties) 139 208 -33.2% -34.6% EBITDA 9 37 -75.7% – In % of sales 6.2% 17.6% -11.4 pp – EBIT 4 32 -87.5% – In % of sales 3.

  6. Slide 6: Drive Systems Segment – Incremental new business QOQ while end markets still weak

    Drive Systems Segment – Incremental new business QOQ while end markets still weak y-o-y in CHF million Q1 2016 Q1 2015 y-o-y ex FX Order intake 158 172 -8.1% -9.9% Sales (3rd parties) 159 183 -13.1% -15.4% EBITDA 9 18 -50.0% – In % of sales 5.8% 10.0% -4.2 pp – EBIT -2 8 >-100% – In % of sales n/a 4

  7. Slide 7: Agenda

    Agenda 1 Q1 2016 Business Update 2 Q1 2016 Financial Review 3 Outlook 2016 4 Appendix Page 7 20160510_Oerlikon Q1 2016 Business Update

  8. Slide 8: First quarter impacted by challenging key end markets

    First quarter impacted by challenging key end markets1 in CHF million Q1 16 Q1 15 y-o-y Top-line growth at constant FX (y-o-y)2 -16.6% Order intake 588 694 -15.3% 694 579 Sales 592 691 -14.3% Orders intake Order intake EBITDA 77 119 -35.3% Q1 2015 Q1 2016 at constant FX In % of sales 13.0% 17.2% -4.

  9. Slide 9: Business split – Surface Solutions Segment becoming value driver for the Group

    Business split1 – Surface Solutions Segment becoming value driver for the Group Segment sales split Segment EBITDA split2 in % of sales in % of EBITDA FY 2015 46% 30% 24% FY 2015 59% 28% 11% 2% Q1 2016 50% 23% 27% Q1 2016 -4% 80% 12%12% Surface Solutions Drive Systems Surface Solutions Drive Systems

  10. Slide 10: FX impact on Orders, Sales and EBITDA in Q1 2016

    FX impact on Orders, Sales and EBITDA in Q1 20161 Order intake Q1 2016 Sales Q1 2016 EBITDA Q1 2016 In CHF million In CHF million In CHF million -1.6% -1.9% -4.4% 588.0 578.6 592.0 580.6 77.0 -1.9 -4.1 73.6 -7.5 -7.3 -3.9 0.5 13.0 12.7 Margin in % Q1 2016 Trans- Trans- Q1 2016 Q1 2016 Trans- Trans-

  11. Slide 11: Financial impact of Metco transaction – Reality check confirms initial assumptions

    Financial impact of Metco transaction – Reality check confirms initial assumptions Top-line synergies Cash items Cost synergies (cumulative) Reality check as of March 31, 2016 >CHF 10 million Guidance Integration costs Integration FY 2016: costs <CHF 10m <CHF 10 million Q1 2016: CHF 1.2m Non-cash it

  12. Slide 12: Drive Systems Segment – A lot has happened to adjust the cost base

    Drive Systems Segment – A lot has happened to adjust the cost base but end markets require more EMEA Americas 2011 2015 2011 2015 +6% -40% -17% -38% -32% +3% Sales Fixed costs FTEs Sales Fixed costs FTEs India & China Drive Systems Segment 2011 2015 105 Sales Fixed costs 100% 100 +7% +12% 95 90 87%

  13. Slide 13: Drive Systems Segment – A multi-year project is established and under execution

    Drive Systems Segment – A multi-year project is established and under execution 1 Structural measures 2 Operational measures  Dedicated restructuring team established  Core product expansion in adjacent  Voluntary retrenchment programs applications and markets launched  Service and aftermarket e

  14. Slide 14: Agenda

    Agenda 1 Q1 2016 Business Update 2 Q1 2016 Financial Review 3 Outlook 2016 4 Appendix Page 14 20160510_Oerlikon Q1 2016 Business Update

  15. Slide 15: 2016 outlook confirmed – Focus to protect profitability in challenging environment

    2016 outlook confirmed – Focus to protect profitability in challenging environment Oerlikon expectations for financial year 2016: Guidance  Order intake and sales within the range of CHF 2.3 billion to CHF 2.5 billion Group  EBITDA margin around mid-teens  Short term: Continued competitive market

  16. Slide 16: Summary Q1 2016

    Summary Q1 2016 1. Strategic development well underway and further milestones achieved 2. Pick up in momentum toward the end of Q1 in Surface Solutions Segment is projected to continue into the next quarter, returning the Segment to its organic growth path 3. Full-year guidance for 2016 confirmed Pa

  17. Slide 17: Agenda

    Agenda 1 Q1 2016 Business Update 2 Q1 2016 Financial Review 3 Outlook 2016 4 Appendix Page 17 20160510_Oerlikon Q1 2016 Business Update

  18. Slide 18: EBITDA to EBIT bridge per Segment

    EBITDA to EBIT bridge per Segment Oerlikon Group – Q1 2016 Surface Solutions Segment – Q1 2016 In CHF million In CHF million 77 62 -32 -17 45 45 -8 33 -8 32 -4 -5 EBITDA Depr. EBITA Amor. of Other EBIT EBITDA Depr. EBITA Amor. of Other EBIT acquired Amor. acquired Amor. intangibles intangibles Manma

  19. Slide 19: 2015 key figures Oerlikon Group

    2015 key figures Oerlikon Group FY FY Q4 Q4 in CHF million 2015 2014 Δ 2015 2014 Δ Order intake1 2 537 2 647 -4.2% 597 711 -16.0% Order backlog1 431 643 -33.0% 431 643 -33.0% Sales1 2 671 2 825 -5.5% 657 774 -15.1% EBITDA1 338 475 -28.8% -15 124 n/a % of sales 12.7% 16.8% -2.2% 16.1% EBIT1 -306 323

  20. Slide 20: 2015 key figures by Segment

    2015 key figures by Segment in CHF million Surface Solutions Manmade Fibers Drive Systems Order intake 1 233 733 571 Δ to 2014 +27.8% -18.6% -26.9% Order backlog 81 237 113 Δ to 2014 +2.5% -35.1% -43.2% Sales (to 3rd parties) 1 229 794 648 Δ to 2014 +26.3% -26.0% -16.8% EBITDA 264 85 -19 Δ to 2014 +

  21. Slide 21: Balanced FX profile across the Group – Limited Swiss franc exposure

    Balanced FX profile across the Group – Limited Swiss franc exposure Sales 3rd 2016 (e) COGS 2016 (e) 2% 3% 14% 13% ≈ 9% 13% 45% 47% 30% 24% CHF EUR USD RMB Other  No major currency mismatch – natural hedge in place  Limited transaction risk  Translation effects from reporting currency CHF Page 21

  22. Slide 22: Normalized Return On Capital Employed (ROCE) excl. one-time effects at 11.1%

    Normalized Return On Capital Employed (ROCE) excl. one-time effects at 11.1 % FY 2014 Development of ROCE Oerlikon Definition of ROCE FY 2015 (as reported) In % 17.4% 17.7% EBIT (normalized)1 282 360 14.9% Post Metco - Total current income tax (norm.)1 -88 -92 - Total deferred tax income 12 9 11.1%

  23. Slide 23: R&D and CapEx on Segment level

    R&D and CapEx on Segment level1 R&D expenses FY 2015 CapEx FY 2015 Drive Systems (2 %) (% of Segment sales) Drive Systems 10% 23% Manmade Fibers (3 %) 23% CHF CHF 104m 150m 15% 62% Surface 67% Surface Solutions Solutions (6 %) Manmade Fibers Depreciation & Amortization FY 20152 CapEx / Depr. & Amort

  24. Slide 24: Asset allocation and employees on Segment level

    Asset allocation and employees on Segment level1 Net operating assets FY 2015 Employees (FTE) by Segment FY 2015 Corporate Drive Systems 2% 18% Drive Systems Surface 35% Manmade Fibers 12% CHF 45% Solutions 13 723 1 875m 70% Surface 18% Solutions Manmade Fibers Operating Assets FY 2015 Employees (FT

  25. Slide 25: Oerlikon shares

    Oerlikon shares Oerlikon shares Oerlikon shareholder structure1 as of February 17, 2016  Listed on Swiss Exchange (SIX) since 1973  Securities symbol: OERL Renova Group  Securities number 81 682 Others (incl. 0.15 % 43.0%  ISIN: CH0000816824 treasury shares) 54.0%  No. of shares outstanding: 33

  26. Slide 26: Coverage – Buy/Accumulate & Hold/Neutral

    Coverage – 8 Buy/Accumulate & 6 Hold/Neutral Broker Analyst Recommendation Date of last Target update price AlphaValue Pierre-Yves Gauthier Buy 28.04.2016 12.50 Baader Helvea Reto Amstalden Buy 18.04.2016 12.50 Bank am Bellevue Alessandro Foletti Hold 18.04.2016 9.30 Berenberg Bank Sebastian Künne H

  27. Slide 27: Financial Calendar 2016

    Financial Calendar 2016 March 01, 2016 Q4 / FY 2015 results and publication of Annual Report 2015 - Annual Press Conference April 5, 2016 Annual General Meeting of Shareholders - KKL Lucerne May 10, 2016 Q1 2016 Results - Media & Analyst Conference Call August 2, 2016 Q2 / HY 2016 results and public

  28. Slide 28: Investor Relations Contact

    Investor Relations Contact OC Oerlikon Management AG, Pfäffikon Churerstrasse 120 CH – 8808 Pfäffikon SZ Switzerland Andreas Schwarzwälder Head of Investor Relations Phone: +41-58-360-9622 Mobile: +41-79-810-8211 E-mail: ir@oerlikon.com Page 28 20160510_Oerlikon Q1 2016 Business Update

  29. Slide 29: 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

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