Sfs Group Ag · SIX:SFSN
Sfs — H1 2020 Earnings Presentation
37 slides from Sfs's earnings presentation, Jul 21, 2020
Slide 1: Presentation 1H 2020 results
Presentation 1H 2020 results Heerbrugg, 21 July 2020
Slide 2: Table of contents
Table of contents 1. Key takeaways 2. Development by segment 3. Development of key financials 4. Updated guidance 2020 & Group priorities 5. Q&A Presentation 1H 2020 results | 21 July 2020 2
Slide 3: Key takeaways
Key takeaways Presentation 1H 2020 results | 21 July 2020 3
Slide 4: Key takeaways: Defended profitability despite difficult Q2
Key takeaways Defended profitability despite difficult Q2 • Priorities of 1H 2020 driven by COVID-19 pandemic, turning attention to employee safety, bal- ancing manufacturing capacity and cost management while maintaining innovation activities • After a solid first quarter 2020, development was sign
Slide 5: Development by segment
Development by segment Presentation 1H 2020 results | 21 July 2020 5
Slide 6: Headlines Engineered Components segment
Headlines Engineered Components segment Different end market developments • COVID-19 with significant impact on demand: Key figures Engineered Components • 1H 2020 reported sales –16.3% y-o-y 2020 +/– 2019 • Electronics and Medical with organic growth in CHF million (unaudited) 1H PY 1H • Acquisitio
Slide 7: Key messages Automotive division
Key messages Automotive division Challenging markets accentuated by COVID-19 • Market environment driven by reduced car sales, customer's temporary factory shut- downs and supply chain adjustments • Manufacturing capacity temporarily reduced to match levels of order intake • Established deep drawing
Slide 8: Acquisition of Truelove & Maclean (T&M)
Acquisition of Truelove & Maclean (“T&M”) Deep drawing platform in North America • Connecticut based supplier of deep drawn components mainly to automotive industry • Complement North American manufacturing technology footprint to supply customer base with deep drawn components • Core applications i
Slide 9: Key messages Electronics division
Key messages Electronics division Stable demand situation • Intact demand for smartphones and lifestyle electronics and below expectation decline of HDD components leading to organic growth • Freed-up capacity from HDD business re- duction will be used for manufacturing of medical device components
Slide 10: Key messages Industrial division
Key messages Industrial division Demand from industrial customers sharply lower • Individual business units impacted differently by COVID-19 pandemic • Relatively stable demand for plastic injection molded parts & components • Aerospace and other industrial end markets with significantly reduced ord
Slide 11: Key messages Medical division
Key messages Medical division Sustained growth across applications • Solid demand and ongoing ramp-up of new projects resulting in high single digit growth • Growth broadly based across product port- folio and production sites • New property acquired in proximity to current Tegra Medical Headquarter
Slide 12: Headlines Fastening Systems segment
Headlines Fastening Systems segment Continued investments in expanding market reach • Less pronounced impact of COVID-19 on Key figures Fastening Systems construction market and scope effects limit- 2020 +/– 2019 ing decline of segment sales to –5.8% y-o-y in CHF million (unaudited) 1H PY 1H • Inves
Slide 13: Key messages Construction division
Key messages Construction division Solid results despite difficult environment • After good Q1 with moderate organic growth, Q2 confronted with declining demand • Business with system manufacturers and distributors affected most, while demand with specialty retailers and installers increased • Marke
Slide 14: Key messages Riveting division
Key messages Riveting division Recovery slowed by the COVID-19 pandemic • Difficult market environment in key end markets further accentuated by COVID-19 pandemic, strongly impacting business • Structural measures taken during previous year, together with temporary measures, helping to adjust manufa
Slide 15: Headlines Distribution & Logistics segment
Headlines Distribution & Logistics segment Positive results despite difficult environment • Reported sales of CHF 159.6m representing Key figures Distribution & Logistics a decline of –3.4% y-o-y 2020 +/– 2019 • Multi-channel approach particularly beneficial in CHF million (unaudited) 1H PY 1H durin
Slide 16: Development of key financials
Development of key financials Presentation 1H 2020 results | 21 July 2020 16
Slide 17: Sales bridge
Sales bridge COVID-19 with massive impact on Q2 topline CHF million • Reported growth of -10.8% (PY 1.4) 1,000 • Organic -10.4% (PY -2.4) A 868 -91 30 -33 774 ,900 • Scope 3.4% A(PY 4.6) • FX impact - 3.8% (PY -0.8) A ,800 ,700 • Organic growth ,600 • Q1.2020 CHF 4m ,500 • Q2.2020 CHF -95m ,400 ,300
Slide 18: Organic sales development
Organic sales development COVID-19 with massive impact on Q2 topline Organic growth in % yoy 10% Weakening global economy COVID-19 5% 7.5% 6.7% 4.1% 0.9% 0% 1.4% 0.7% -1.0% -1.7% -5% -3.1% -10% -15% -21.0% -20% 2018 2019 2020 -25% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Presentation 1H 2020 results | 21 July
Slide 19: Sales by end market and regions
Sales by end market and regions Automotive & Europe suffer | Construction benefits 2020 data 2020 data 2019 data 2019 data by end markets by regions 17.8% 18.5% 15.5% 21.7% 16.6% 20.2% 33.1% 30.0% 8.6% 7.5% 23.2% 21.2% 19.4% 25.8% 36.6% 21.1% 42.0% 21.2% Construction Others Automotive Medical Electr
Slide 20: Operating profitability: COVID-19 leaves its mark on EBIT in Q2
Operating profitability COVID-19 leaves its mark on EBIT in Q2 in % of net sales in CHF million • EBIT margin adjusted 9.2% or CHF 71m 25% 500 • Q2 EBIT margin drops to around 6% 21.3% 19.8% 19.2% 18.6% 20% 400 • EBITDA margin 15.5% or CHF 120.3m 17.6% 15.5% • Q2 EBITDA margin stays at around 13% 15
Slide 21: Operating profitability: EBIT in 2H normally better than in 1H
Operating profitability EBIT in 2H normally better than in 1H EBIT 250 adjusted in CHF million EBIT adjusted margin in % 20% 200 14.4% 16% 14.2% 14.3% 14.2% 13.6% 12.6% 150 12% 9.2% 129.9 127.1 122.4 116.0 110.9 100 8% 109.2 71.0 50 4% 0 0% 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 Pre
Slide 22: Operating profitability: 1H20 EBITDA stronger than during crisis in 2009
Operating profitability 1H20 EBITDA stronger than during crisis in 2009 Sales in CHF million EBITDA margin adjusted 20.7% 19.1% 19.7% 19.5% 2'000 18.9% 18.5% 19.2% 18.6% 20% 17.3% 17.1% 15.5% 1781 1739 1'600 16% 1633 1437 11.7% 1383 1376 1331 1'200 12% 1193 1122 1093 1068 800 8% 400 4% 0 0% 2009 201
Slide 23: Net working capital
Net working capital Seasonal peak | Time lag of inventory decline in % of net sales in days • NWC higher at 34% of net sales 35% 175 31.2% 31.1% 30.3% • Equals 124 working days 29.8% 30% 150 • Measured at balance sheet date 32.7% 34.0% 25% 125 • Ø NWC 119.8 days outstanding (PY 117.6) 124 119 114 11
Slide 24: Capital expenditure
Capital expenditure Running Capex at 5% | Infrastructures add 230 bps in % of net sales in CHF million • CAPEX spending 7.3% 10% 250 • Building projects in Switzerland and USA 8.6% 8.1% add 230 bps in 1H 8% 200 7.3% • To increase capacity, efficiency, productivity • To support future growth 6% 6.6%
Slide 25: Free cash flow
Free cash flow Capex and NWC increase fully financed by cash flow in % of EBITDA CHF million • Good cash generation (in CHF) 60% 300 • 103m cash flow from operations (PY 105m) 51.2% 48.5% • - 57m capex in PPE (PY -56m) A 50% 250 • 46m operating free cash flow (PYA 49m) 40% 200 • Conversion rate at 3
Slide 26: Balance sheet ratios
Balance sheet ratios Strong balance sheet and financing Equity ratio in % CHF million net cash / debt • Equity ratio remains strong at 72.7% 90% 210 • Target range >60% 74.4% 75.5% 80% 72.7% 180 71.6% • Net cash at year end CHF 69m, declined to 70% 150 CHF -11m as 30 June 60% 67.2% 69.5% 120 • 46m o
Slide 27: Return on capital
Return on capital High capital intensity | Strong leverage from EBIT Return in % • Return on capital employed at 12.6% 30% • EBIT adjusted in % of Ø CE CHF 1.1bn 24.8% 24.6% 25% 22.7% • Return on invested capital at 5.3% 21.1% • EBIT after tax (flat rate of 17.5%) 20% • Invested capital CHF 2.2bn in
Slide 28: KPI summary
KPI summary Solid performance in difficult times In CHF million 1H 2020 % 1H 2019 % yoy Sales 773.7 867.8 -10.8% EBITDA margin 120.3 15.5% 152.6 17.6% -21.2% EBIT adjusted margin 71.0 9.2% 109.2 12.6% -34.9% Net income margin 53.9 7.0% 88.6 10.2% -39.1% Equity ratio 1,169.0 72.7% 1,139.2 75.5% 2.6%
Slide 29: Guidance 2020 & Group priorities
Guidance 2020 & Group priorities Presentation 1H 2020 results | 21 July 2020 29
Slide 30: Guidance 2H2020
Guidance 2H2020 Cautious development expected 2020 G 1H2020 A 2H2020 G (March*) (July**) Gross sales CHF Mio. 773.7 > 773.7 Gross sales Growth 0–2% -10.8% Organic -1.5%–0.5% -10.4% Scope 1.5% 3.4% FX n/a -3.8% EBIT adjusted 12–14% 9.2% ~ 9.2% * In March we were not in a position to assess the impact
Slide 31: SFS Group priorities
SFS Group priorities Focus on specific priorities Sustain- Megatrends Growth Employees Profitability ability Strengthening Investments in Continue with Balance produc- Implementation innovation, future growth pro- preventive meas- tion capacity with of the set goals & especially in the jects in part
Slide 32: Q&A
Q&A Presentation 1H 2020 results | 21 July 2020 32
Slide 33: Q&A Any questions?
Q&A Any questions? Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer Presentation 1H 2020 results | 21 July 2020 33
Slide 34: Coming up: Our IR agenda for FY2020
Coming up Our IR agenda for FY2020 Investor Day: 9 September 2020 Heerbrugg (CH) IR Contact: investor.relations@sfs.biz Presentation 1H 2020 results | 21 July 2020 34
Slide 35: Thank you for your attention
Thank you for your attention Presentation 1H 2020 results | 21 July 2020 35
Slide 36: Presentation 1H 2020 results | 21 July 2020
Presentation 1H 2020 results | 21 July 2020 36
Slide 37: Disclaimer
Disclaimer This presentation includes forward looking statements. These statements reflect the SFS Group's current assessment of market conditions and future events. The statements are therefore subject to risks, uncertainties and assumptions. Unforeseen events may lead to deviations of the actual r