Knorr-bremse Ag · XETR:KBX
Knorr-bremse — Q4 2023 Earnings Presentation
37 slides from Knorr-bremse's earnings presentation, Feb 22, 2024
Slide 1: Preliminary Financial Results 2023
STRICTLY CONFIDENTIAL PRELIMINARY FINANCIAL RESULTS 2023 MARC LLISTOSELLA I CEO FRANK WEBER I CFO February 22, 2024
Slide 2: Key take-aways for today
Key take-aways for today Turnaround achieved – margin increased Resilience – extremely high and secured order book Rock-solid balance sheet BOOST on track – Kiepe sold Stable management team Guidance FY23 achieved 2
Slide 3: Operational highlights fully supporting KB's strategy
Operational highlights fully supporting KB’s strategy Innovation Contract wins Cultural Change Cube Control Digital Train Important Rail contracts won New Leadership Principles ▪ CRRC, China (Metro) ▪ Alstom, India (Metro) ▪ Hitachi Rail (EU/ITA) iTEBS X System ATLAS-L4 Achievements in Truck New Div
Slide 4: Recap Strategy Update BOOST1 program
Recap Strategy Update BOOST1 program BOOST 2026 Strategic Products People Processes initiatives Revitalizing the core Culture development Efficiency programs (PCPP) Portfolio right-sizing Organizational transformation Brownfield Fix-it program Talent mgmt. (HR Connect) NWC optim. (Project Collect) (
Slide 5: FY23: Strong top and bottom line – turnaround achieved
FY23: Strong top and bottom line – turnaround achieved OPERATING REVENUES OF EBIT MARGIN ORDER INTAKE € 7.93bn 11.3% FREE CASHFLOW € 8.25bn (+11% yoy) (PY: 11.1%) € 552m* (+2% yoy) (PY: € 219m) € 3.75bn 14.3% ORDER BOOK1 96%* € 7.08bn (PY: 43%) (+3% yoy) CASH CONVERSION € 4.18bn 10.0% RATE 1) Incl.~
Slide 6: Guidance FY23 achieved
Guidance FY23 achieved Revenue [€m] Op. EBIT Margin Free Cashflow [€m] Additional achievements Record order book of € >7bn 7,500-7,800 7,926 10.5-12% 350-550 552 provides solid foundation for 11.3% 2024 Inflationary burden of nearly € 300m fully compensated WC SOD reduced by 3 days* Net Debt
Slide 7: Solid demand in rail and truck on good level
Solid demand in rail and truck on good level CURRENT SITUATION OUTLOOK FY24 EU/ NA: solid growth CN: good momentum of ridership supporting AM EU: solid growth continues, shift to rail High order books at OEMs continue (green deal) and replacement of obsolete fleets Pricing of new OE contra
Slide 8: Rock-solid balance sheet is excellent basis for 2024 and beyond
Rock-solid balance sheet is excellent basis for 2024 and beyond Equity/ Equity Ratio Liquidity2 Net Debt/ Gross Debt1 Rating [€m] [€m] +11% 2,904 A- 2,628 -1% A3 1.445 1.432 -14% 35% 727 Leverage 32% Debt Repayment of ~ € 120m 627 Net Debt/ EBITDA included 0.51x 2,172 2,060 Gross Debt Gross Debt Gro
Slide 9: Improved EBIT and NWC efficiency boosted ROCE to 20%
Improved EBIT and NWC efficiency boosted ROCE to 20% CapEx NWC1 ROCE [€m] % of sales [€m] Scope of days [%] 55.9 4.9% 51.4 4.6% 19.5% 1,109 1,131 16.5% 352 368 FY22 FY23* 31.12.22* 31.12.23 31.12.22* 31.12.23* 1) Short term notes payables and liabilities are included in Q4/23. Considering them in Q4
Slide 10: FCF strongly improved and CCR above target range
FCF strongly improved and CCR above target range Free Cashflow1 Cash Conversion Rate (CCR) [€m] [%] 552 96 "Collect“ program boosted NWC and FCF & 219 43 PCPP boosted EBIT margin FY22 FY23* FY22 FY23* 1 FCF before M&A. 10 * Updated with Annual Report (March 21, 2024) vs. preliminary figures (Februar
Slide 11: Q4/23: Strong top and bottom line
Q4/23: Strong top and bottom line OPERATIVE REVENUES OF EBIT MARGIN ORDER INTAKE € 2.07bn 12.3% FREE CASHFLOW (+6% yoy) € 2.04bn (PY: 11.6%) € 487m* (-7% yoy) (PY: € 448m) ORDER BOOK1 € 1.00bn 14.8% € 7.08bn 246%* CASH (+3% yoy) CONVERSION € 1.07bn 11.0% RATE 1) Incl.~€ 570m from Kiepe. * Updated wi
Slide 12: RVS: Record order book and Book-to-bill >1, nine quarters in a row
RVS: Record order book and Book-to-bill >1, nine quarters in a row Order intake [€m] Order book1 [€m] 1.22 Book-to-bill 1.00 OI lower on tough +4.3% Order book at record -13.7% comps yoy level 5,132 1,156 EU: OE lower yoy due 4,919 ▪ Strong Order book 1 to comparably high OI provides good 998 in Q
Slide 13: RVS: Sound revenue growth and margin solidly improved
RVS: Sound revenue growth and margin solidly improved Revenue [€m] Op. EBIT [€m]/ Margin1 14.1% 14.8% Organic revenues up by 9% 14.1% 14.8% EBIT margin increase +5.6% driven by volume Revenue growth supported 83 1 by volume & prices Weaker FX (CN and +11.0% India) and loss of Russia 1,002 EU:
Slide 14: CVS: Global truck demand still solid and on a good level
CVS: Global truck demand still solid and on a good level Order intake [€m] Order book [€m] 1.04 Book-to-bill 0.97 OI solid on high level, -1.9% Order book remains on high -0.2% after record demand level and close to € 2bn 1,990 1,952 20 EU: OI up High demand in EU and NA, 1,041 14 1,039 APAC:
Slide 15: CVS: Strong revenues fueled by pricing successes lead to solid margin increases
CVS: Strong revenues fueled by pricing successes lead to solid margin increases Revenue [€m] Op. EBIT [€m]/ Margin1 10.1% 11.0% Revenue drivers: solid Profitability improved as +6.4% TPR and price increases guided 20 EU: OE and AM higher, Positive impact by new 83 TPR stable, better pricing 1,0
Slide 16: Guidance FY24
Guidance FY241 Revenue [€m] Op. EBIT Margin Free Cashflow [€m] General Assumptions: ▪ Stable FX yoy 7,926 7,700-8,000 11.5-12.5% 550-650 ▪ Essentially stable geopolitical and 11.3% macroeconomic conditions 552 Divisional Assumptions: ex. Kiepe ex. Kiepe ex. Kiepe RVS: 7,777 11.5% low impact ▪ Solid
Slide 17: BOOST program – Brownfield measures fully on track
BOOST program – BROWNFIELD measures fully on track € 7.1bn € 1.4bn Revenue volume Project status “Fix” Fix ➜ Update with Q2/24 results Keep or further 5.7 Revenue volume Project status “Sell” improve Carve out Investor approach Closing Four entities € 300-400m Assess. advanced & update with Q2/24 re
Slide 18: BOOST program – Greenfield will take KB to the next level
BOOST program – GREENFIELD will take KB to the next level Profit BOOST Brownfield + ▪ More of the same but better ▪ Improvement of profit margins 1 ▪ Long-term competitive differentiation 1 ▪ Strengthen Leadership Position Greenfield Technology New Growth ▪ Enhance technology innovation ▪ Diversify
Slide 19: BOOST program – Value addition via accretive transformation already ongoing
BOOST program – Value addition via accretive transformation already ongoing 1 Transformation Transformation KB best investor/ best owner ▪ NEXXIOT‘s products will enhance RVS‘ ▪ Cojali expands today‘s AM business of CVS product portfolio ▪ Cojali’s entrepreneurial business approach ▪ KB active in tr
Slide 20: Aftermarket/ Service is the growth and resilience backbone of Knorr-Bremse
Aftermarket/ Service is the growth and resilience backbone of Knorr-Bremse CVS AM/ Service Revenue RVS AM/ Service Revenue [€bn] [€bn] CAGR 6% 1.9 CAGR 1.6 11% 1.5 1.5 1.5 1.2 1.1 0.8 0.9 52% 0.8 45% 46% 48% 28% 29% 42% 26% 27% 27% AM-share AM-share 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
Slide 21: India is one of the most attractive railway markets of the future
India is one of the most attractive railway markets of the future RVS India Revenue Market Development India Growth drivers of rail market [€m] [€bn] OEM AM 100% electrification planned CAGR for 2030, production of ~750 13% 221 CAGR 1.1 E-Locos per year 12% 195 ▪ >1,500 employees in India 0.8 ▪ Indi
Slide 22: BOOST – Value creation
BOOST – Value creation CURRENT SITUATION 2026 TARGETS Margin improvement is key priority € 8-9bn Highly resilient business with growth potential in AM REVENUES Long-term above market growth fueled by mega trends > 14% OP. EBIT MARGIN Maintain high level of cash conversion rate Solid balance sheet 80
Slide 23: Q&A / Backup
Q&A / Backup
Slide 24: Financial calendar 2024: Upcoming events and FY24 release dates
Financial calendar 2024: Upcoming events and FY24 release dates DATE EVENT LOCATION Feb 22 Preliminary FY23 results Online Feb 27 Roadshow Switzerland Mar 5 Morgan Stanley Industrial Conference Paris Mar 5-6 Roadshow Toronto/ Chicago Mar 15 Stifel Conference Stuttgart Mar 21 BofA Global Industrials
Slide 25: Q4/23 – Group: op. EBIT growth vs. prior year
Q4/23 – Group: op. EBIT growth vs. prior year op. EBIT [€m]/Margin1 11.6% 12.3% +12.1% Reported: 31 5 Reported: 178 255 248 (9.1%) (12.0%) 227 -9 +13.7% Q4/22 Organic M&A FX Q4/23 1) M&A: before PPA 25
Slide 26: Group FY23 – Order intake and order book
Group FY23 – Order intake and order book Order intake [€m] Order book1 [€m] 1.13 Book-to-bill 1.04 +2.5% 6,907 7,082 +1.7% 216 162 8,252 8,114 -241 +2.7% RVS 4,919 5,132 RVS 4,162 4,043 CVS 3,954 4,212 CVS 1,990 1,952 FY22 Organic M&A FX FY23 31.12.22 31.12.23 1) Incl.~€ 570m from Kiepe. 26
Slide 27: Group FY23 – Revenue
Group FY23 – Revenue Revenue [€m] Revenue [€m] By business By region +10.9% 850 160 7,926 7,926 7,150 7,150 -234 1,898 Asia/ 5.7% +11.9% Pacific 1,795 3,748 149 RVS 3,402 SA 152 -1.8% 1,993 1,814 9.9% NA CVS 3,750 4,180 3,886 3,389 EU 14.7% FY22 Organic M&A FX FY23 FY22 FY23 y-o-y growth 27
Slide 28: Group FY23 - Operating EBIT growth vs. prior year
Group FY23 - Operating EBIT growth vs. prior year op. EBIT [€m]/Margin1 11.1% 11.3% +12.4% Reported: Reported: 870 721 95 28 893 (11.0%) (10.1%) 795 -25 +12.0% 536 507 (14.3%) RVS (14.9%) 417 CVS 339 (10.0%) (9.0%) FY22 Organic M&A FX FY23 1) M&A: before PPA 28
Slide 29: Group FY23 – FCF, CapEx, NWC and ROCE
Group FY23 – FCF, CapEx, NWC and ROCE OCF & FCF [€m] CapEx [€m] NWC1 [€m] ROCE [%] % of Sales Scope of days 4.9% 55.9 19.5% 4.6% 51.4 16.5% 915 352 369 1,109 1,131 542 552 219 FY22 FY23* FY22 FY23* 31.12.22* 31.12.23 31.12.22* 31.12.23* OCF FCF 1) Short term notes payables and liabilities are includ
Slide 30: RVS FY23 – Order intake and order book
RVS FY23 – Order intake and order book Order intake [€m] Order book1 [€m] 1.22 Book-to-bill 1.08 +4.3% 5,132 -2.9% 4,919 4,162 60 4,043 -50 -129 -1.2% FY22 Organic M&A FX FY23 31.12.22 31.12.23 1) Incl.~€ 570m from Kiepe. 30
Slide 31: RVS FY23 – Revenue and profitability
RVS FY23 – Revenue and profitability Revenue [€m] op. EBIT [€m]/Margin1 +10.2% 14.9% 14.3% 407 59 3,748 3,402 -120 +12.0% +5.7% 52 536 507 -6 -18 +10.3% FY22 Organic M&A FX FY23 FY22 Organic M&A FX FY23 1) M&A: before PPA. 31
Slide 32: CVS FY23 – Order intake and order book
CVS FY23 – Order intake and order book Order intake [€m] Order book [€m] 1.05 Book-to-bill 1.01 -1.9% 1,990 1,952 +6.5% 267 102 4,212 3,954 -112 +6.8% FY22 Organic M&A FX FY23 31.12.22 31.12.23 32
Slide 33: CVS FY23 – Revenue and profitability
CVS FY23 – Revenue and profitability Revenue [€m] op. EBIT [€m]/Margin1 +11.5% 10.0% 101 9.0% 443 4,180 3,750 -114 +23.3% +11.8% 34 417 53 339 -8 +15.5% FY22 Organic M&A FX FY23 FY22 Organic M&A FX FY23 1) M&A: before PPA. 33
Slide 34: Group FY23 Bridge – Reported EBIT to operating EBIT
Group FY23 Bridge – Reported EBIT to operating EBIT op. EBIT/ EBIT Margin (ROS) €m 11.0% 11.3% 870 4 2 14 6 2 893 11.1% 10.1% -4 795 721 532 536 (14.2%) (14.3%) 507 RVS 454 (14.9%) (13.3%) 398 417 CVS 318 (9.5%) (10.0%) 339 (8.5%) (9.0%) FY22 rep. FY23 rep. Exit Russia Sale Foundry Restructuring Rai
Slide 35: Net Financial Debt / (Cash) Balance
Net Financial Debt / (Cash) Balance € million 31.12.2023 31.12.2022 Cash and cash equivalents (1,291.4) (1,342.6) Short-term liabilities to banks 66.2 172.4 Short-term bonds and obligations 11.0 11.0 Short-term leasing liabilities 63.4 63.1 Securities (incl. other debt investments) (141.1) (102.5) L
Slide 36: Investor relations contact
Investor relations contact Andreas Sophia Stephanie Spitzauer Kursawe Jaschiniok +49 89 3547 182310 +49 89 3547 187311 +49 89 3547 183466 +49 175 5281320 +49 151 62330709 +49 171 8451732 Andreas.Spitzauer@knorr-bremse.com Sophia.Kursawe@knorr-bremse.com Stephanie.Jaschiniok@knorr-bremse.com 36
Slide 37: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, an