Zumtobel Group Ag · VIE:ZAG
Zumtobel — Investor Day (October 2021)
62 slides from Zumtobel's investor day presentation, Oct 12, 2021
Slide 1: Virtual Capital Markets Day Zumtobel Group
Virtual Capital Markets Day Zumtobel Group October 12, 2021
Slide 2: Disclaimer
Disclaimer The facts and information contained herein constitute forward -looking statements as of the date they were made and based upon assumptions as to future events or circumstances that may not prove to be complete or accurate. By their nature, these statem ents involve risk and uncertainty be
Slide 3: Focused on Sustainable Growth and Value Creation 2025
C a p i t a l M a r ke t s D a y FOCUSED ON SUSTAINABLE GROWTH AND VALUE CREATION 2025 A l f r e d Fe l d e r, C E O October 12, 2021 Johannes Keppler Universität Linz, Austria (Zumtobel) Capital Markets Day, October 12, 2021 © Faruk Pinjo 3
Slide 4: Agenda
1 The Zumtobel Group at a glance 2 Successful transfor mation and restructuring 3 Mar ket outlook and g r owth oppor tunities 4 Components segment 5 Lighting segment 6 Sustainability and digitalisation 4
Slide 5: The Zumtobel Group at a glance
The Zumtobel Group at a glance Innovative lighting solutions, lighting components and extensive service offers Q1 2021/22 FY 2020/21 10 90 in EUR mn in EUR mn Revenues 289.3 1,044.5 Plants on three Sales offices and (PY 250.8) (PY 1,131.3) continents partners in 90 countries EBIT 20.1 43.4 5,813 70
Slide 6: The global lighting market – structure and size
T he global lighting mar ket – str uctur e and size Worldwide lighting market size in USD bn General lighting market Lighting segment 4 (3%) 112 21 (19%) Our targeted segments 43 (39%) Systems services Components segment Luminaires 19 (17%) Systems Luminaires 8 (7%) 17 (15%) Lamps Electronics Consum
Slide 7: Two strong segments within the Zumtobel Group
Two strong segments within the Zumtobel Group Components segment Lighting segment • Global multi-brand sales strategy Global Sales Global Sales • Group-wide management and service functions for all Brand and Portfolio Management Brand and Portfolio Management – Services brands • Firewall between Tri
Slide 8: Where do we come from?
W here do we come from? Financial data in EUR mn Key facts 1,313 1,357 1,304 • Growth between 2013/14 and 2015/16 1,280 1,244 1,247 1,197 driven by LED transformation in Lighting and higher value per light point (both segments) • Start of commoditisation after 2016/17 69 due to LED technology satura
Slide 9: The company is back on track
The company is back on track Financial data in EUR mn Turning financials from negative to positive >90 100 Free cash flow >50 from minus 24 mn EUR to 100 mn EUR >120 53 43 46 EBIT Manage restructuring 35 from minus 7 mn EUR to 43mn EUR Handle COVID-19 crisis 15 3 3 Net profit -7 from minus 47
Slide 10: Successful transformation 2017/18 – 2020/21
Successful transfor mation 2017/18 – 2020/21 We streamlined our operational footprint We reduced our cost position • Production network rebalanced • Simplified management layer structure for − Closure of Usingen (2017), an increased focus on customers in Sales, Guangzhou (2019), Jennersdorf (2019) P
Slide 11: How does the market develop – indoor and outdoor market outlook
How does the mar ket develop – indoor and outdoor mar ket outlook Indoor: Non-residential construction output Outdoor: Civil engineering construction 410 550 390 540 370 530 350 520 3 330 6 510 0 310 500 3 -3 0 -6 -3 -9 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023 % change i
Slide 12: The Zumtobel Group is well positioned to benefit from megatrends
The Zumtobel Group is well positioned to benefit from megatrends Energy efficiency Sustainability Connectivity Miniaturisation Customisation Capital Markets Day, October 12, 2021 12
Slide 13: The EU Green Deal offers further growth opportunities in four sectors
T he EU GREEN DEAL offer s fur ther growth oppor tunities in four sector s Buildings Industry • Funding for building sector • Fostering Circular Economy • Renovating 3% of area of public buildings p.a. • New alliances (e.g., Battery Alliance) to push EU industry • Examples: Building renovation/effic
Slide 14: Operational excellence, unique brands, environment and engaged employees
OPERATIONAL UNIQUE BRANDS ENVIRONMENT AND EXCELLENCE UNDER ONE ROOF ENGAGED EMPLOYEES Efficient organisation for quality Brands that cover most of the lighting value Goal: climate-neutral by 2025 and excellence and competitive cost chain: from components to overall solutions pacemaker for circular e
Slide 15: Set for sustainable profitable growth
Set for sustainable profitable growth Generate sustainable growth while being a leader in the industry 2025 2021-22 2018-2020 Proactive and anticipative Begin fixing the problems changes to address the Restructure and start challenges of the future 2017-18 building a solid foundation Uncertainty & l
Slide 16: Our growth path to 2025
Set for sustainable and profitable growth – our growth path to 2025 Revenues development until 2025 in EUR mn Annual CAGR 4-5 % 1,220 – 1,270 M&A activity Getting market share Growth in back & growth core markets opportunities 1,044 Covid catch up FY 20/21 FC FY 24/25 FC FY 24/25 Capital Markets Day
Slide 17: Components segment
Components segment 17
Slide 18: Tridonic at a glance
Trid o n ic at a g la n c e Tridonic is the technology branch of the Zumtobel Group The LED modules The LED driver converts mains carry the real light sources: power supply into low voltage semiconductors. Available DC supply required by the LED in various forms and light source colours Ambient ligh
Slide 19: Tridonic develops and produces lighting technology
Trid o n ic d eve lo p s a n d p r o d u c e s lig h tin g te ch n o lo g y R&D centres Dornbirn (A) Niš (SRB) Shenzhen (CN) Spennymoor (UK) Porto (P) ~300 highly qualified R&D engineers Advanced LED drivers LED drivers and light LED drivers for LED Light Advanced software to sources Asian market em
Slide 20: The technology of Tridonic is well regarded in the market
T h e te ch n o lo g y o f Trid o n ic is we ll r e g a r d e d in th e ma r ke t More than 80% of the revenues are generated with competitors of the Zumtobel Lighting segment Revenues by region in 2020/21 Revenues by customer group in 2020/21 17% 28% 42% Total 303 mn EUR Total 303 mn EUR 65% 18% wi
Slide 21: Tridonic customers value and positioning
Trid o n ic c u s to me r s v a lu e Trid o n ic ’s p o s itio n in g Partnering with Tridonic ensures lighting companies worry-free technology use Close to customers High quality System know-how • Local network of light experts and well • Proven for long lasting operation • An understanding for end
Slide 22: Growth paths in the Components segment
Growth paths in the Components se gment Synergies within current Regional growth Growth with offerings meeting portfolio the time spirit • Outdoor with award winning • Underrepresented regions • Cradle-2-Cradle LED drivers solution SIDEREA e.g. Asia • LUMDATA – Data for better lighting • Single batt
Slide 23: Growth drivers and opportunities in the Components segment
Growth driver s and oppor tunities in the Components se gment Revenues development until 2025 in EUR mn Growth with offerings meeting Regional the time spirit 350 – 370 Synergies within growth current portfolio 303 • Outdoor solutions • Underrepresented • Cradle-2-Cradle • Emergency lighting regions
Slide 24: Lighting segment
Lighting segment 24
Slide 25: The Lighting segment is based on two strong brands
The Lighting segment is based on two strong brands which are driving our growth & Indoor Outdoor Industry Office & Education Architecture Sports & Arena Retail and Arts & Culture Health & Care Urban areas Roads, Transportation & Tunnel Our two brands are active in several channels while offering our
Slide 26: The Lighting segment is a strong European player with a focus on indoor
T he Lighting segment is a strong European player with a focus on indoor applications & ser vices Revenues by region in 2020/21 Revenues split indoor and outdoor in 2020/2021 5% 9% 9% 15% 37% Total 794 mn EUR ~85% Total 794 mn EUR ~76% 24% 53% of revenues of revenues are generated are generated in E
Slide 27: Brand positioning indoor luminaires & service market
Br and positioning indoor luminair es & ser vice mar ket Premium tier Hard Spec Performance tier Soft Spec Value tier Eco OTC Trade (wholesale) Enduser channel Spec channel Capital Markets Day, October 12, 2021 27
Slide 28: Brand positioning outdoor luminaires market
Br and positioning outdoor luminair es mar ket Premium tier Hard Spec Urban Space Performance tier OUTDOOR Soft Spec Functional Value tier OTC Trade (wholesale) Enduser channel Spec channel Capital Markets Day, October 12, 2021 28
Slide 29: Growth drivers and opportunities in the Lighting segment
Growth driver s and oppor tunities in the Lighting se gment Revenues development until 2025 in EUR mn Thorn Eco 930 – 965 Thorn Outdoor Thorn Indoor Zumtobel 794 • Industry, Health & • Industry, Education • Functional street • Extend offering Care Health & Care and lighting in value segment • Lighti
Slide 30: Accelerating our sustainability efforts
We are wor king intensively on fur ther accelerating our sustainability effor ts Optimise sustainability of core business D i sc ove r c i r c u l a r e c o n o m y o p p o r t u n i t ie s Reduction of operational carbon footprint • A roadmap has been developed to achieve Carbon Neutrality by 2025
Slide 31: We help our customers become more sustainable
We help our customer s become mor e sustainable Circular economy • Existing installed Zumtobel tracks were 8 Sustainable sourcing used to carry the new LED luminaires 1 • Suppliers rated on work, ethics, health, safety and environmental issues Business Operations • New LED luminaires require less fr
Slide 32: For us, sustainability has a 3-fold lever
For us, sustainability has a 3-fold lever 1. For Zumtobel – on costs (lower energy, water, material consumption, less CO2 emissions) 2. For Zumtobel – on sales and margins (through sustainable products and solutions) 3. For our customers – on their sustainability (less energy consumption, less mater
Slide 33: Status quo of digitalisation in different industries
Status quo of digitalisation in different industries Assets Usage Labour Overall Digital Digital Transactions Interactions Business Market Digital spending Digital capital Digitisation Sector digitalisation spending asset stock processes making on workers deepening of work Relatively high Media ⚫ ⚫
Slide 34: Digitalisation of construction business via BIM
Digitalisation of constr uction business via Building Infor mation Modeling (BIM) Ke y f a c t s • Client: Hitachi Zosen • Lighting Design: Lichtvision • Lighting Solution: Multi brand lighting solution / outdoor / higher protection rate • Project volume: approx. 700.000 EUR • BIM-data of our produc
Slide 35: For us, digitalisation has a 3-fold lever
For us, digitalisation has a 3-fold lever 1. For Zumtobel – on costs (through digitisation of end to end processes from the customer to the customer) 2. For Zumtobel – on sales and margins (through digital products and solutions) 3. For our customers – on their costs, their time (planning, installat
Slide 36: We did our homework and we earned the right to growth
We did our homewor k and we ear ned the right to g rowth Financial development in EUR mn The homework we have done >90 100 We streamlined our operational footprint >50 >120 We reduced our cost position 53 43 46 Manage restructuring 35 Handle COVID-19 crisis 15 We repositioned our brands 3 3 -7
Slide 37: Why invest in Zumtobel Group
W hy invest in Zumtobel Group € Flexible & efficient Highly innovative development and Producing European lighting production close carbon neutral company to the customer by 2025 Set for Solid liquidity sustainable position profitable growth Capital Markets Day, October 12, 2021 37
Slide 38: Focused on Operational Excellence Beneficial for Our Customers
Capital Markets Day FOCUSED ON OPERATIONAL EXCELLENCE BENEFICIAL FOR OUR CUSTOMERS Ber nard Motzko, COO October 12, 2021
Slide 39: Agenda
Agenda 1 OUR CURRENT FOOTPRINT 2 PA T H T O E X C E L L E N C E 3 O U R L I C E N S E TO O P E R AT E 4 SUM M A RY Capital Markets Day, October 12, 2021 39
Slide 40: Efficient global production network
Efficient global production networ k Spennymoor, UK Lemgo, Germany Components Competence for outdoor and center spot and emergency down lights applications Thorn Niš, Serbia production site for Components mainly UK for volume Highland, USA business in Europe Local site for US demand High volume Dorn
Slide 41: Our operational footprint
Our operational footprint Transformation of product value Key facts In-house production network: • Rebalance site utilisation in production network Rest of the world − Slightly adapt Western Europe sites Niš plant − Closure of Usingen (2017), Guangzhou (2019), Jennersdorf (2019) and Barrowford (2021
Slide 42: Niš as best fit site for European business
Niš as best fit site for European Business (Components & Lighting) Product value in EUR mn Capability increase for the Group ~190 • Research & Development − Production Engineering − Local Customer Product Design (CPD) Components − Development of new products started − Already 42 engineers (productio
Slide 43: Digitalisation along the value chain supports cost efficiency
High flexibility creates customer value and additional business – Digitalisation along the value chain suppor ts cost efficiency Agility benefits by processes Digital transformation along the value chain • Market growth potentials based on high flexibility and lead • Digital Transformation Program a
Slide 44: Health & safety is one of our top priorities
Health & safety is one of our top priorities Engaged and empowered employees are key to LTI rate Zumtobel plants (1.000.000) our success • Health and Safety certification (DIN ISO 45001) of the 8 -23 % Components production area in Niš as the first operation site achieved in 2021 6 -32 % ► Planned f
Slide 45: Our way to become net zero in our operations
Our way to become net zero in our operations (Scope 1 & 2) Main objectives till FY 20/21 and optimization CO2 emissions in tonnes1 potentials in upcoming years • Although we ramped up Niš we could reduce CO2 emissions by 20% till last FY 20/21 21,383 − Optimisation of power consumption of machines,
Slide 46: Our supplier network as part of Scope 3
Our supplier networ k as par t of Scope 3 Ongoing enlargement of regional sourcing Achievements and outlook Asia sourcing ratio in % • Till FY 20/21 achieved: 68.3 58.9 51.4 − Extensive supplier sustainability audits − Conflict materials and Reach/Rohs confirmations − Supplier code of conduct update
Slide 47: Our optimized operational footprint in 2025
Our optimized operational footprint in 2025 Production value per region in EUR mn Rest of the world Western Europe Eastern Europe China 66 531 189 54 23 23 373 2 2017/18 2024/25 2017/18 2024/25 2017/18 2024/25 2017/18 2024/25 Streamline production sites Streamline supplier network 13 714 674 10 10 5
Slide 48: 3 key takeaways
Operational priorities in a nutshell 3 key takeaways Producing carbon neutral by 2025 High flexibility for € additional customer value Cost efficient production close to the customer Capital Markets Day, October 12, 2021 48
Slide 49: Focus on Value Creation
Capital Mar kets Day FOCUS ON VALUE CREATION Thomas Erath, CFO October 12, 2021
Slide 50: Agenda
Agenda 01 SETTING THE SCENE 02 F O C U S O N VA L U E C R E AT I O N 03 SUM M A RY Capital Markets Day, October 12, 2021 50
Slide 51: Successful transformation 2017/18 – 2020/21
Successful transfor mation 2017/18 – 2020/21 Spennymoor, United Kingdom Lemgo, Germany Guangzhou, China • Restructuring production plant • Restructuring sales organisation • Downsizing of plant and • Downsizing to Brexit needs and production plant R&D • Reduction of sales offices • Switch to 3rd par
Slide 52: Substantially improved financial performance
Substantiall y impr oved financial perfor mance Financial data in EUR mn Key facts 100 • New Board executed necessary restructurings and focuses on the transformation of the company into 53 a performance organisation 43 46 35 15 • 2018/19 was a year of transition 3 3 -7 -15 • 2019/20 focused on tran
Slide 53: Solid balance sheet
Solid balance sheet Equity ratio in % Solid liquidity position backed by 32 • Consortium credit agreement with a term ending Nov. 2022 27 29 28 Covenants and a max. volume of EUR 200 million, whereof EUR 20 mn >23.5 (Sept 30, 2021) drawn • Negotiations for refinancing started • Two long-term credit
Slide 54: Focus on value creation
FOCUS ON VALUE CREATION Smart Enable Increase cash Reward capital allocation growth generation shareholder Capital Markets Day, October 12, 2021 54
Slide 55: Smart capital allocation – disciplined investing while growing
Smar t capital allocation – disciplined investing while g rowing Estimate CAPEX spending between 2021/22 until 2024/25 Plant, machinery & other 25% R&D 45% • Renewal main product line (Tecton) • Tecton platform, controls and • Automatization, flexible testing, Odd connectivity – Lighting segment for
Slide 56: The drivers for our organic growth
T he driver s for our or ganic g rowth Components segment Lighting segment Synergies within current portfolio • Education and Health & Care benefit from • Intelligent Outdoor systems (Siderea) investments of governments • Emergency systems • Industry benefits from megatrends into • Wireless solution
Slide 57: Our M&A criteria for inorganic profitable growth
Our M&A criteria for inor ganic profitable growth Acquisition ► Geographical white spots ► Data collection & analysis capacity € 200 – 300mn ► New technologies & ► New business models applications HOWEVER: Growth not at any cost. We are looking for profitable growth. Capital Markets Day, October 12,
Slide 58: Cost discipline remains an imperative to increase EBIT margin
Cost discipline remains an imperative to increase EBIT mar gin by 2024/25 Operational efficiency in SG&A 1 3 Lower manufacturing costs due to load through digitalisation increase in factories in low cost countries PROFITABILITY EXPANSION TARGET € 30–40 mn Capture economies of scale and strict Price
Slide 59: EBIT margin development until 2024/25
EBIT mar gin development until 2024/25 EBIT margin in % Investments into the future 6-8 like • Digitalisation (e.g., SAP 4-5 S4, digital customers guidance journey) 4.2 • Innovation and product 3.1 portfolio • Further streamlining of the organisation will restrict the profitability 0.2 in the near f
Slide 60: Sustainable cash generation to fund further growth
Sustainable cash generation to fund fur ther growth Development of Free Cash Flow in EUR mn 100.0 Sustainable Cash Flow generation backed by • Profitable growth • Continuous cost optimization 53.3 • Maintain working capital discipline • Smart CAPEX spending 3.4 M&A and resulting Capex -23.9 Continuo
Slide 61: Dividend policy will be maintained
Dividend policy will be maintained Dividend in EUR Dividend policy • We are committed to delivering a continuous and reliable dividend • We aim to distribute approximately 30% to 50% of the consolidated net profit after the deduction of any special 0.20 effects 0.10 • Dividend amount will depend on
Slide 62: 3 key takeaways
Financial priorities in a nutshell 3 key takeaways Reward shareholders Drive performance Enable growth Capital Markets Day, October 12, 2021 62