Slide 1: Casting Future Solutions
Casting Future SOLUTIONS COMPONENTA
Slide 2: Ready for Future Growth
READY FOR FUTURE GROWTH CMD on 9 December 2014 Heikki Lehtonen, President and CEO Mika Hassinen, CFO 2
Slide 3: Componenta Today
COMPONENTA TODAY 3
Slide 4: One of the largest cast component suppliers in Europe
WE ARE ONE OF THE LARGEST cast component suppliers in Europe 511M€ Net sales (2013) 4,300 Personnel approx. 346,000 Iron foundry production capacity tons/year 726,000 Machining hours/year Listed in NASDAQ OMX Helsinki 4 9 December 2014
Slide 5: Our broad customer base supports stability and innovation
Our broad customer base supports stability and innovation 15% 31% 17% 19% 18% 18% 19% 17% 31% 15% Agricultural Machine Construction Automotive Machinery Building and Mining Heavy Trucks Construction Machine Agricultural Heavy Trucks and Mining Building Automotive Machinery 5 9 December 2014
Slide 6: Our diverse production network ensures quality at a competitive price
Our diverse production network ensures that quality is achieved at a competitive price Foundry Foundry division Aluminium Aluminium division Machineshop Machine shop division division division division Foundry division Aluminium division Machine shop division NET SALES 329 MEUR 73 MEUR 116 MEUR PERS
Slide 7: Global network with strong local presence
We serve our customers by combining a global network with strong local presence 7 9 December 2014
Slide 8: Performance Overview
PERFORMANCE OVERVIEW 8
Slide 9: Development of order book
Development of order book (including orders for next two months) 120 -5% 100 80 MEUR 60 40 20 0 Q3/13 Q3/14 2009 2010 2011 2012 2013 9 9 December 2014
Slide 10: Development of Net sales
Liikevaihto vuosineljänneksittäin, Me Quarterly net sales, MEUR 10 0 25 50 75 100 125 150 175 Q1/09 Q2/09 Q3/09 Q4/09 Net sales Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Net sales, rolling 12 months Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Development of Net sales Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 0 10
Slide 11: Operating profit and Result after financial items 2009 - Q3/2014
Operating profit and Result after financial items 2009 - Q3/2014 Operating profit* Result after financial items* 40 10 30 0 20 -10 10 -20 0 -30 -10 -20 -40 1-9/13 1-9/14 1-9/13 1-9/14 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 *) Excluding one-time items and exchange rate *) Excluding one-tim
Slide 12: Refinancing 2014
REFINANCING 2014 12
Slide 13: Componenta finalised refinancing arrangements of EUR 250 million
Componenta finalised refinancing arrangements of EUR 250 million Two share issues Term loan EUR 61.8 million Term loan EUR 70 million total EUR 98 million RCF EUR 7 million RCF EUR 20 million • 68 million shares in two • Agreement signed by • Agreement signed by phases Componenta Oyj with Componenta
Slide 14: Largest shareholders December 2013 vs. September 2014
10 Largest shareholders 31 December 2013 vs. 30 September 2014 Free float and especially liquidity increased significantly as a result of Q3/2014 share issues Largest shareholders on 31 December 2013 % Largest shareholders on 30 September 2014 % 1 Lehtonen Heikki 25,72 % 1 Lehtonen Heikki 11,85 % 2
Slide 15: Interest-bearing debt September 2014
Interest-bearing debt 30 September 2014 MEUR 220 Other IB debt Capital note 2010 Positions 30 Sept 2014 MEUR Maturity 200 Bonds (years) Pension loans Finance leasing Other IB debt 4.5 Rolling 180 160 Turkish bi-lateral loans Capital note 2010 2.0 1 140 Bonds 6.3 5 120 Nordic syndicate loan Pension l
Slide 16: Financial Objectives
FINANCIAL OBJECTIVES 16
Slide 17: Efficiency improvements and cost savings ensure better profitability and returns
Efficiency improvements and cost savings ensure to achieve better profitability and returns • New Force efficiency improvement program (waves 1 - 2) improves competitiveness by 35 MEUR by 2015 through: • Decreasing the number of units and fixed costs • Concentrating on big series production in Turke
Slide 18: Operating profit % excluding one-time items
Operating profit -% excluding one-time items % 10 Target 8% 8 6 4 2 0 -2 -4 -6 2009 2010 2011 2012 2013 Q3/13 Q3/14 18 9 December 2014
Slide 19: ROI % excluding one-time items
ROI -% excluding one-time items 18 Target 15% 15 12 9 6 3 0 -3 -6 2009 2010 2011 2012 2013 Q3/13 Q3/14 19 9 December 2014
Slide 20: Equity and Equity ratio
Equity and Equity ratio Target 40% 160 40,0 Equity, MEUR Equity ratio, % Liikevaihto vuosineljänneksittäin, Me 120 30,0 kk, Me MEUR Rullaava liikevaihto 12% 80 20,0 40 10,0 0 0,0 2009 2010 2011 2012 2013 Q3/13 Q3/14 20 9 December 2014
Slide 21: Net debt and Gearing
Liikevaihto vuosineljänneksittäin, Me MEUR 21 0 50 100 150 200 250 2009 300 2010 2011 2012 2013 Net debt, MEUR Net debt and Gearing Q3/13 Gearing, % Q3/14 0 100 200 300 400 500 600 9 December 2014 Rullaava liikevaihto 12% kk, Me
Slide 22: Economic Indicators
ECONOMIC INDICATORS 22
Slide 23: Pig Iron and Steel Scrap Indexes
9 December 2014 11/2014 10/2014 09/2014 08/2014 07/2014 06/2014 06/2014 05/2014 04/2014 Pig Iron and Steel Scrap Indexes 03/2014 02/2014 Steelscrap Colakoglu 01/2014 12/2013 China domestic 11/2013 10/2013 09/2013 08/2013 07/2013 07/2013 06/2013 05/2013 04/2013 Combi 2/3 steelscrap 1/3 pig iron 03/20
Slide 24: AlSi11MgSr price development
AlSi11MgSr (DA-177) price development Increase in aluminium raw material prices will impact Componenta’s results 2.4 MEUR on H2/2014 Componenta Premium Componenta LME (€) 2 200 € 2 200 € LME Cash S&S (€) 2 000 € 2 000 € 406 482 1 800 € 1 800 € 382 408 1 600 € 1 600 € 334 384 329 336 391 328 326 311
Slide 25: Development of Turkish Lira
Development of Turkish Lira Daily EURTRY= 4.12.2013 - 3.12.2014 (GMT) Price Line; EURTRY=; Ask(Last) 3.12.2014; 2,7610 TRY SMA; EURTRY=; Ask(Last); 90 3,15 3.12.2014; 2,8438 3,1 3,05 3 2,95 2,9 2,85 2,8 2,75 2,7 Auto 16 01 16 03 17 03 17 01 16 01 16 02 16 01 16 01 18 01 16 01 16 03 17 01 Q4 2013 Q1
Slide 26: Manufacturing Purchasing Manager Indices
9 December 2014 09-2014 06-2014 Manufacturing Purchasing Manager Indices 03-2014 12-2013 09-2013 06-2013 03-2013 India Markit 12-2012 09-2012 06-2012 03-2012 12-2011 China Markit 09-2011 06-2011 03-2011 12-2010 09-2010 UK Markit 06-2010 03-2010 12-2009 09-2009 EU 27 Markit 06-2009 03-2009 12-2008 09
Slide 27: IFO Expectations
IFO Expectations 125 120 115 110 105 100 95 90 85 80 75 Business Climate Business Situation Business Expectations Source: IFO 27 9 December 2014
Slide 28: CDS Index
CDS Index Source: Reuters 28 9 December 2014
Slide 29: Current Business Environment
CURRENT BUSINESS ENVIRONMENT 29
Slide 30: Heavy Trucks
Heavy Trucks • Registration numbers for Heavy trucks in September - October are encouraging. Cheap and improving availability of financing together with the ageing fleet will build a positive momentum but market is very sensitive for instability. • “The forecast of 230,000 trucks for the heavy-duty
Slide 31: Development of Supply Chain in Heavy Trucks Industry
Development of Supply Chain in Heavy Trucks Industry Compared to Previous Year Componenta’s Volvo Group’s Registrations of deliveries to heavy deliveries to new heavy trucks trucks industry in distributors in Europe in Europe 1-10/14 vs. 1-10/13 1-10/14 vs. 1-10/13 1-10/14 vs. 1-10/13 -1% -6% +4% So
Slide 32: Registrations of New Heavy Trucks in Europe
32 5 000 0 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 55 000 JAN 09-10 FEB 09-10 MAR 09-10 APR 09-10 MAY 09-10 JUN 09-10 2010 Source: ACEA JUL 09-10 AUG 09-10 SEP 09-10 OCT 09-10 NOV 09-10 DEC 09-10 2011 JAN 10-11 FEB 10-11 MAR 10-11 APR 10-11 MAY 10-11 JUN 10-11 JUL 10-11 2012 A
Slide 33: Construction & Mining
Construction & Mining Caterpillar’s global dealer deliveries “Caterpillar believe there is a reasonable likelihood that world economic growth could improve in 2015 and that there is potential for increased investment in infrastructure in countries such as the United States, India and Turkey. As a re
Slide 34: Machine Building
Machine Building • Development in Componenta’s Machine Building customer segment has been good due to strong global customer base and Componenta’s increased market share among the customers • “KONE’s net sales is estimated to grow by 6–8% at comparable exchange rates in 2014 compared to 2013.” Sourc
Slide 35: Machine Building
Machine Building • "I'm more positive on Europe than anyone else. What we see with the Euro/dollar, Swedish (krona)/dollar or Swedish (krona)/Euro, it helps the economy in the competitiveness… There's a lot of political talk going on about slow growth. I see positive (business) development in Europe
Slide 36: Agricultural Machinery
Agricultural Machinery • “Overall market conditions for agricultural machinery in Europe are expected to remain challenging throughout 2015. Manufacturers see the investment climate among customers adversely affected by the recent drop in agricultural commodity prices. In addition, the new rules for
Slide 37: Business expectations in Agriculture Industry
Business expectations in Agriculture Industry Source: CEMA 37 9 December 2014
Slide 38: Agricultural Machinery
Agricultural Machinery • “The priority for the remainder of 2014 continues to be lowering our dealer and company inventories in order to better align us with current market demand. Despite the softer market conditions we face today, the healthy, long-term fundamentals of our industry remain intact.
Slide 39: Automotive
Automotive • Automotive registrations development has remained healthy and grounds for reasonable development in 2015 remains. • “The automotive market in Europe is expected to recover by +5% in 2014 and 2015, but is still a long way from its pre-crisis level. The cannibalism among European auto mak
Slide 40: Registrations of New Passenger Cars in Europe
40 0 300 000 600 000 900 000 1 200 000 1 500 000 1 800 000 JAN 09-10 FEB 09-10 MAR 09-10 APR 09-10 MAY 09-10 JUN 09-10 2010 JUL 09-10 Source: ACEA AUG 09-10 SEP 09-10 OCT 09-10 NOV 09-10 DEC 09-10 JAN 10-11 2011 FEB 10-11 MAR 10-11 APR 10-11 MAY 10-11 JUN 10-11 JUL 10-11 AUG 10-11 SEP 10-11 2012 OCT
Slide 41: Strategy Implementation
STRATEGY IMPLEMENTATION 41
Slide 42: Strategic actions for implementing strategy and measuring performance
STRATEGIC ACTIONS - MWB’s - FOR IMPLEMENTING STRATEGY AND MEASURING PERFORMANCE 42 42 9 December 2014
Slide 43: Short-term focus on profitability pave the way for future growth
Short-term focus on profitability improvements pave the way for future growth with our customers “Growing together with our global accounts” 2017-2018 When balance sheet on “Build stronger platforms for growth” target levels, then 2015-2016 potentially expand together with our global accounts into n
Slide 44: Proforma EBITDA including New Force wave program
Proforma EBITDA including New Force wave 3 program 60 10.0 57.0 50 8.6 47.0 26.0 -2.3 40 38.4 MEUR 30 26.1 20 10 -11.4 0 FY/12 Volume loss Cost Cost Q3/14 LTM Proforma Q3/14 LTM New Force 3 2016 Adjusted margin savings inflation and EBITDA*) cost PF EBITDA*) EBITDA*) EBITDA impact realized FX diff.
Slide 45: New Force efficiency improvement program
New Force efficiency improvement program Wave 3 • Componenta has launched a third wave in New Force efficiency improvement program in the beginning of December 2014 to further improve competitiveness and reduce costs by minimum EUR 10 million • Fixed costs will be cut by EUR 4 million with full impa
Slide 46: Geographic footprint
Geographic footprint Phase I – 1980s Key Points • Broad service & logistics Phase II – 1990s network with just-in-time First Expansion capability • Continuous shift of production to Turkey to Phase III – 2004 take advantage of low cost Production in Netherlands and labour Access to • Larger size ser
Slide 47: Shifting production to low cost location
Shifting production to low cost location Continuous shift of production to Turkey significantly improves cost structure Revenue Breakdown – Europe vs Turkey Development of Iron Casting 100% Volumes in Turkey 60% 90% 56% 56% 54% 50% 80% 41% 47% 45% 43% 48% 55% 52% 52% 53% 52% 70% 64% 62% 40% 43% 42%
Slide 48: Competitor Analysis
COMPETITOR ANALYSIS 48
Slide 49: Iron casting - competitive landscape
Iron casting - competitive landscape Componenta is the European market leader non-automotive iron castings Iron Batch Size Sales Company (€m) Small Medium Mass Series Attractive Market Fritz Winter Position 712 Eisengießerei • Focus on non-automotive GeorgFischer 709 applications in iron Tek
Slide 50: Aluminium casting - market positioning
Aluminium casting - market positioning Componenta has a focused business strategy on complex, high margin automotive/truck products • Automotive aluminium casting industry highly fragmented with various product segments and different process requirements and margins • Componenta is focused on : (1)
Slide 51: Aluminium casting - market trends & drivers
Aluminium casting - market trends & drivers Strong underlying growth drivers: Aluminium is key for meeting stricter emission regulations Source: CO2 Emissions Report 2012, European Environment Agency, The aluminium Association Inc. “Automotive aluminium continued gain in fuel 51 economy” 2011, IHS A
Slide 52: Key Strengths
KEY STRENGTHS 52
Slide 53: Key Strengths
Key Strengths 1. Industry leading player in target markets 2. Specialized business model with barriers to entry 3. Long-term relationships with blue-chip customer base 4. Balanced and diversified business 5. Well positioned to capitalize on improved competitiveness 6. Flexible and improving cost str
Slide 54: Specialized business model with barriers to entry
Specialized business model with barriers to entry 1 • Focus on high end products requires substantial application, process, material know-how, and Technical know- experience how and expertise • Entrenched development partnerships with customers (high win rate when involved in R&D) 2 High • Significa
Slide 55: Sole supplier status with blue-chip customer base
Specialised business model with barriers to entry Sole supplier status with blue-chip customer base 100% 2% 7% 7% 8% 12% 18% 20% 75% 50% 98% 93% 93% 92% 88% 82% 80% 25% 0% Heavy Trucks MB Nordic MB Europe Agriculture Automotive Wheels Construction & Mining Single sourced Double sourced High proporti
Slide 56: Revenue streams characterised by long product lifecycles
Specialised Business Model with Barriers to Entry Revenue streams are characterised by long product lifecycles Sources: Management information and Thomson Reuters 56 9 December 2014
Slide 57: Balanced and diversified business
Balanced and diversified business High degree of diversification by customer segment and geography Net sales by customer segment Net sales by geography Q1 - Q3 2014 Q1 - Q3 2014 Heavy trucks 32% Germany 21% Sweden 18% Turkey 12% Construction and Mining 19% Machine building 19% UK 9% Finland 8% Benel
Slide 58: Well positioned to capitalize on improved competitiveness
Well positioned to capitalize on improved competitiveness 1 • European market is still uncertain due to Russian embargo Market situation • There are some signals of market recovery in certain customer segments, but especially Agriculture Machinery customer segment is impacted negatively by the Russi
Slide 59: Flexible and improving cost structure
Flexible and improving cost structure Increased flexibility in Componenta’s cost structure Breakdown of Variable Expenses (FY2013) Fixed costs 100% 14% Materials Other 43 % 90% variable costs 4% 80% Freights 3% 70% Maintenance 60% 80% and tools 84% 86% 86% 86% 87% 4% 50% Reduction in Energy 40% fixe
Slide 60: Flexible and improving cost structure
Flexible and improving cost structure 1 • 100% of sales have pass-through mechanisms for raw material costs • Covers raw materials such as Pig Iron, Scrap Steel and Aluminium Raw material cost • Represent 50% of variable and 44% of total costs • Time lag of 1-3 months depending on customer 2 • Nearl
Slide 61: Business strategy for 2014 and beyond
Business strategy for 2014 and beyond 1 Improving • Continued improvement in profitability is our number one priority in the short-term productivity and quality, and • New Force program is key in strategy implementation in 2015, in order to build on profitability of already realised savings which we
Slide 62: 100 MEUR Growth Program
100 MEUR GROWTH PROGRAM 62
Slide 63: New business secured since start of 100 MEUR growth program
Substantial amount of new business secured since the beginning of the 100 MEUR growth program Componenta closed deals and opportunities (cumulative, MEUR) Other Sales opportunities Hot Sales opportunities Recently closed deals Latest estimate 2014 Earlier closed deals minus erosion 250 200 150 100 6
Slide 64: Closed deals imply improvement of 87 MEUR
Closed deals imply an improvement of 87 MEUR excl. market development for existing business Development of product sales run rate, MEUR 78 170 -83 17 -21 8 -14 18 -4 7 -13 10 -4 4 -4 4 -12 92 10 -10 87 33 4 6 20 7 7 4 11 Ramp-up of earlier Recently New volumes Total erosion Run-rate closed deals clo
Slide 65: Summary
SUMMARY 65
Slide 66: Summary
Summary Componenta’s 2013 - 2016 strategic cornerstone actions are focusing on revenue growth and efficiency improvements and cost savings. 100 MEUR revenue growth program (2015 - 2016) 45 MEUR savings from New Force efficiency improvement program (waves 1 - 3) World-class product management One Com
Slide 67: Casting Future Solutions
Casting Future SOLUTIONS COMPONENTA