Kongsberg Automotive Asa · OSL:KOA
Kongsberg Automotive Asa — Investor Day (2013)
145 slides from Kongsberg Automotive Asa's investor day presentation, 2013
Slide 1: Capital Markets Day 2013
CAPITAL MARKETS DAY 2013 1
Slide 2: Agenda
Agenda ▸ 8:30 Kongsberg Automotive today and next steps CEO Hans Peter Havdal ▸ 9:00 Financials CFO Trond Stabekk ▸ 9:20 Automotive market outlook VP IR & M&A Philippe Toth ▸ 9:35 Driveline – Focus areas & trends in the passenger car segment EVP Joachim Magnusson VP Sales & Marketing Ian van Duijven
Slide 3: Who We Are
WHO WE ARE Enhancing the driving experience Hans Peter Havdal President & CEO 3
Slide 4: Our mission
Our mission Kongsberg Automotive provides world class products to the global vehicle industry. Our products are enhancing the driving experience, making it safer, more comfortable and sustainable ▸ Safety is embedded in our driveline control systems, our interior products, chassis components and saf
Slide 5: Our Business Concept
Our Business Concept Three levers to create stakeholder value KA Lean framework Drive innovations Strategic suppliers Offer end user value Global reach Competence partner STAKEHOLDER VALUE Hold a leading position in our segments Work with the most demanding global customers 5
Slide 6: Our Values
OUR VALUES Passionate Accountable Prepared 6
Slide 7: Key operational initiatives in 2013
KEY OPERATIONAL INITIATIVES IN 2013 ▸ Strong focus on increased efficiency in all plants Internal ▸ Trimmed fixed cost base to competitive level in the Automotive segment efficiency ▸ Continued to strenghten our supplier base by developing preferred suppliers ▸ Improved commercial terms with key cus
Slide 8: Next Moves
\ AN KONGSBERG
Slide 9: The global automotive environment
The global automotive environment Risks and opportunities A growing global market, but... ▸ Continued weak South European demand ▸ Emerging markets, particularly China, have gained critical importance ▸ BRIC share of LV sales expected to grow from 35% share in 2012 to 45% share in 2019 Global vehicl
Slide 10: The global automotive environment - cont'd
The global automotive environment - cont’d Risks and opportunities Technology trends ▸ OEMs increasing technology/feature requirements – Higher component value per car – Higher barriers to entry ▸ Increased focus on safety, comfort, emission reduction and connected vehicles – OEMs more willing to pa
Slide 11: The global automotive environment - cont'd
THE The GLOBAL global automotive AUTOMOTIVE environment - cont’d ENVIRONMENT Risks and opportunities Alliances between OEMs to create efficiencies ▸ Daimler and Renault-Nissan strategic and technologic cooperation ▸ PSA and Dong Feng potential alliance ▸ Volvo group and Dong Feng CV joint venture in
Slide 12: Next moves
Next moves Our strategic focus ▸ Drive innovations to support trend from mechanical to electric actuation ▸ Grow electronics capability across BAs ▸ Secure growth in BRIC regions; double BRIC revenues in 5 years ▸ Secure competence in critical areas through talent management 12
Slide 13: Strategic focus across Business Areas
Strategic focus across Business Areas - building a common platform DRIVER FLUID INTERIOR DRIVELINE CONTROL TRANSFER SUPPORT TREND FROM MECHANICAL TO ELECTRIC ACTUATION GROW ELECTRONICS CAPABILITY SECURE GROWTH IN BRIC REGIONS BUILD A GLOBAL COMPETENCE BASE 13
Slide 14: Matching external drivers
Matching external drivers DRIVER FLUID INTERIOR DRIVELINE CONTROL TRANSFER External drivers SUPPORT TREND FROM MECHANICAL TO ELECTRIC ACTUATION ENVIRONMENT GROW ELECTRONICS CAPABILITY TECHNOLOGY SECURE GROWTH IN BRIC REGIONS GLOBALIZATION GLOBAL BUILD A GLOBAL COMPETENCE BASE LEADERSHIP 14
Slide 15: Matching external drivers
Matching external drivers DRIVER FLUID INTERIOR DRIVELINE CONTROL TRANSFER External drivers SUPPORT TREND FROM MECHANICAL TO ELECTRIC ACTUATION DOWNSIZING ENVIRONMENT INCREASED GROW ELECTRONICS CAPABILITY TEMPERATURES TECHNOLOGY SECURE GROWTH IN BRIC REGIONS GLOBALIZATION GLOBAL BUILD A GLOBAL COMPE
Slide 16: Financials
FINANCIALS Trond Stabekk EVP& CFO 16
Slide 17: Recap on targets CMD 2012
Recap on targets CMD 2012 ▸ Strengthen operating margins ▸ Reduce the gearing ▸ Improve return on capital employed ▸ Selective growth (profit before growth in automotive) 17
Slide 18: Group revenue and EBITDA (LTM)
Group revenue and EBITDA (LTM=last twelve months) Revenues EBITDA and EBITDA Margin EUR Million EUR Million and percent 1.015 1.001 985 986 982 97 88 82 68 71 9.9% 8.9% 8.3% 6.9% 7.2% Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 18
Slide 19: Operational Margins
AK KONGSBERG AUTOMOTIVE
Slide 20: Revenues and EBITDA per segment (LTM)
Revenues and EBITDA per segment (LTM) Revenues EBITDA Margin 16,8% EUR Million percent 15,8% 14,0% 13,6% 12,0% 328 9,6% 302 296 282 259 247 173 183 4,7% Driveline Interior Fluid Transfer DCS -1,5% Driveline Interior Fluid Transfer DCS Revenues LTM 2012 Revenues LTM 2013 EBITDA (margin) 2012 EBITDA m
Slide 21: Gearing
AK KONGSBERG AUTOMOTIVE GEARING
Slide 22: Focus on reducing debt and gearing level
Focus on reducing debt and gearing level NIBD/EBITDA Times 6,0x ▸ Targeting Net Debt/EBITDA ratio 5,0x below 2x by 2015 5,2x 4,0x 4,3x ▸ From Q3 2012 gearing reduced 3,9x from 4.3 to 2.7 3,0x 2,7x 2,0x ▸ Focus still to continue towards the 2,0x 2.0 target in 2015 1,0x 0,0x 2010 2011 2012 Q3 2013 201
Slide 23: Improved Financial ratios
Improved Financial ratios NIBD Equity EUR million EUR million 311 193.5 193.4 297 289 189.0 189.4 275 265 184.7 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 NIBD/EBITDA Equity ratio Times Percent 27.4% 4.3 3.8 3.8 24.8% 24.8% 24.8% 25.2% 3.1 2.7 Q3 2012 Q4 2012 Q1
Slide 24: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED 24
Slide 25: Targeting >15% ROCE by 2015
Targeting >15% ROCE by 2015 ▸ Multiple levers for improvement Return on Capital Employed (ROCE) Percent – Revenue growth in high-margin Target: segments 15% 15% – Improved margins in currently low-yielding segments 10% – Higher capital efficiency, i.e. maintaining capital expenditure 5% below D&A 0%
Slide 26: Improved ROCE (LTM)
Improved ROCE (LTM = last twelve months) Revenues (LTM) ROCE EUR Million Percent 10.3% 1,015 8.1% 1,001 985 986 982 5.8% 5.9% 4.6% Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 EBIT and EBIT margin (Ltm) Avg. Capital Employed and turnover (Ltm) 75.3 EUR Million and
Slide 27: Funding Considerations
AK KONGSBERG AUTOMOTIVE FUNDING CONSIDERATIONS
Slide 28: Liquidity and funding
Liquidity and funding Liquidity reserve Facility utilization 120 405 361 100 400 80 31 64 300 60 200 40 328 274 64 100 20 42 0 0 Q3 12 Q3 13 Q3 12 Q3 13 Cash Facility Drawn Facility ▸ Liquidity reserve slightly improved ▸ Drawn amount reduced more than facility reduction 28
Slide 29: Funding
Funding ▸ Have increased the flexibility through reduced gearing ▸ Key focus will still be to reduce debt ▸ Long term financing in place up to 2017 ▸ Optimize capital structure to match strategy direction 29
Slide 30: Summary
Summary ▸ Have delivered on the path towards the targets – Operational margins improved – Balance sheet deleveraged – Return on capital employed improved ▸ Financial targets for 2015 remain 30
Slide 31: Market Outlook
MARKET OUTLOOK Philippe Toth VP Investor Relations and M&A 31
Slide 32: Agenda
Agenda ▸ Global light vehicle production ▸ Market structure in BRIC for light vehicles ▸ Global commercial vehicle production ▸ Market structure in BRIC for commercial vehicles ▸ New estimated business wins in BRIC ▸ Market summary 32
Slide 33: Market Outlook Passenger Vehicle
Market Outlook Passenger Vehicle 33
Slide 34: Global passenger car production per region
Global passenger car - production per region Near-term volatility, Long-term growth trajectory CAGR 2013-18 120 BRIC 7.3 % Millions TRIAD 1.5 % 100 80 60 40 20 0 China India Russia Brazil Rest Europe North America Japan/Korea Source: IHS ‣ Weak growth in TRIAD markets (Europe, North America and Japa
Slide 35: Triad markets LDV production
Triad markets LDV production Market driven by replacement demand; average fleet age increasing CAGR 2015-18 47.8 48.8 45.3 46.6 47.2 45.2 45.3 3.5% 1.9% 4.2% 18 19 17 Millions 16 16 16 17 2.0% 3.9% 3.6% 15 16 17 17 18 18 18 -1.9% -6% -1.3% 14 13 13 12 12 12 12 2012 2013 2014 2015 2016 2017 2018 Sour
Slide 36: BRIC countries LDV production
BRIC countries LDV production China ”cooling down” at 29 million cars by 2018 CAGR 2015-18 41.5 39.6 37.3 Growth 34.7 5.7% Growth 31.5 29.1 27.3 29 27 10% 26 Millions 24 9,4% 22 9,9% 18 20 5.7% 5 6 6 4 4 6.8% 4 4 15% 2 2 2 2 3 2 2 6.2% 5.8% 4.4% 3 3 4% 4 9.4% 4 4 4 4 2012 2013 2014 2015 2016 2017 20
Slide 37: Different BRIC market structures
Different BRIC market structures China India 2013 2018 2013 2018 28% 24 % 40 % 37 % 63 % 60 % 72% 76 % Russia Brazil 2013 2018 2013 2018 51 % 49 % 44 % 100 % 100 % 56 % Foreign OEM Local OEM Source: LMC; Roland Berger ; Company data 37
Slide 38: Growing addressable market for KA products
Growing addressable market for KA products 100% 90% 80% 70% 60% 50% 40% 30% 2010 2011 2012 2013 2014 2015 2016 2017 2018 China South Asia Source: Company data ▸ Drivers for increase of addressable markets – Improving road infrastructure – Stricter emission regulations – Owners focus on total cost of
Slide 39: Market Outlook Commercial Vehicles
Market Outlook Commercial Vehicles 39
Slide 40: Global Commercial Vehicle production per region
Global Commercial Vehicle production per region Growth industry in spite of temporary market fluctuations Trucks with GVW above 6t CAGR 2013-18 Millions BRIC 7.7 % 4,0 TRIAD 5.0 % 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 2012 2013 2014 2015 2016 2017 2018 China India Russia Brasil Brazil Rest Europe Japan/ K
Slide 41: TRIAD countries CV production
TRIAD countries CV production Recovery toward long term growth 1.509 CAGR 2015-18 1.357 1.435 1.321 1.236 527 1.179 1.179 493 8.5% 11% 412 455 -2.9% 371 384 381 Thousands 4.7% 516 534 1.3% 8.3% 490 513 501 466 453 8.7% 5.4% 426 448 329 345 375 396 401 4.2% 2012 2013 2014 2015 2016 2017 2018 Source:
Slide 42: BRIC countries CV production
BRIC countries CV production China the biggest market CAGR 15-18 2.101 1.956 7.3% 1.809 Growth 1.683 1.561 1.390 1.447 Growth 1.313 12.1% Thousands 1.230 1.152 1.062 8.5% 998 6,4% 880 920 5.9% 373 410 11,3% 257 13,2% 291 336 288 231 6,9% 11,1% 121 130 86 92 98 109 109 4.0% 136 204 1,8% 208 6,3% 221
Slide 43: Different BRIC market structure
Different BRIC market structure China India 2013 2018 2013 2018 3% 13 % 5% 6% 97% 95% 94 % 87 % Russia Brazil 2013 2018 2013 2018 11 % 19 % 100 % 100 % 89 % 81 % Foreign OEM Local OEM Source: LMC; Roland Berger ; Company data 43
Slide 44: Example change in Indian vehicle market
Example change in Indian vehicle market ~EUR 90 000,- Fully addressable 1% 2% 28% 48% ~EUR 40 000,- Gradually more EUR100-200k depending on addressable motorization equipment 71% 50% ~EUR 20 000,- Total KA revenue in the Volvo FH 1000 EUR Not addressable yet 2012 2020 >280HP 200-280HP <200Hp Custome
Slide 45: Growing addressable market for KA products
Growing addressable market for KA products 50 % 45 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Company data China South Asia ▸ Drivers for increase of addressable markets – Improving road infrastructure – Stricter emission regulations – Better enfo
Slide 46: Estimated business wins 2013
Estimated business wins 2013 46
Slide 47: Significant booked business in BRIC in 2013
Significant booked business in BRIC in 2013 43 % 25 % 28 % 177 MEUR* LTM 4% Global * Per annum value ‣ KA new business wins exceed 15 % of LTM revenue; confirms good trend on order intake ‣ 32 % of total new business in last 12 months booked in BRIC countries vs. current BRIC revenue of 9 % 47
Slide 48: Market summary
Market summary 48
Slide 49: Market summary and outlook
Market summary and outlook Global industry growth Country/region Expected 2014 Outlook growth rate 2.3% • Rebound expected in Europe in 2014 or 2015 0.9% • Recovery in infancy, EURO VI to boost Q4-2013 with a negative impact on Q1-2014 3.4% • Production growth rate moderate, yet recovery progresses
Slide 50: Driveline - focus areas & trends in Passenger Car segments
Driveline - focus areas & trends in Passenger Car segments – EVP Joachim Magnusson, VP Sales & Marketing Ian van Duijvenboode 50
Slide 51: Agenda
Agenda ▸ Business environment ▸ 2013 New Business Wins in BRIC ▸ Technology trend: Shift by Wire – AT/Shift by Wire trends globally – Kongsberg Driveline market positioning ▸ A winner in the market 51
Slide 52: Driveline systems - market positioning
Driveline systems - market positioning ▸ True global Tier1 supplier for gear shifter systems ▸ Targeting standardization and modularization in design ▸ Close to our strategic customers ▸ Bring innovations to the market ▸ Enhancing the driving experience ▸ Shift feel ▸ Superior human machine interfac
Slide 53: Strategic customer environment
Strategic customer environment - Efficiency through standardization and modularization OEM Current platforms 2020 Target platforms 22 16 12 8 10 9 3 2 11 7 ▸ Global OEMs consolidate platforms to achieve efficiencies ▸ Platforms going from regional to global ▸ JV between OEMs, (e.g. PSA & GM in Europ
Slide 54: KA Driveline Global Footprint
KA Driveline Global Footprint Mullsjö & Göteborg Sweden Hallbergmoos Germany Detroit Vrable United States Slovakia Tokyo Japan Nuevo Laredo Cluses Mexico France Wuxi China Shanghai China Customer Focus Team Gurgaon • Sales India • Program • Application Engineering Production Location Jundiai Enginee
Slide 55: KA and Nissan – a perfect match
KA and Nissan – a perfect match Example of Nissan platform Vrable Slovakia Nissan China Mullsjö Sweden Renault France (Flins) Wuxi China Nuevo Laredo Cluses Mexico France Nissan Mexico Nissan IDN Nissan India Nissan THI Nissan Brazil Gurgaon Jundiai India Brazil Kongsberg Plant Nissan Plant 55
Slide 56: Examples of multi-region supply
Examples of multi-region supply - Supporting our strategic customers locally Product Europe North Asia South America America Shift tower AT SBW* AT Shifter* *AT SBW: Automatic Shift by wire, AT Shifter: Automatic Shifter 56
Slide 57: Fragmented market; global system suppliers
Fragmented market; 2 global system suppliers Automatic Automatic Supplier Mechanical Shift by Manual wire Kongsberg Dura Tokai Rika /Tram Lemförder GHSP SL Kostal ▸ 2 global suppliers making all complete gear shifter systems ▸ BRIC is key to unlocking market growth 57
Slide 58: Technology change in the market
Technology change in the market Shift by wire volumes 14 Millions 12 ▸ External market drivers towards 10 8 Automatic transmissions 6 – Comfort 4 2 – Fuel efficiency and legislation 0 Source: IHS and company estimate ▸ AT installed in B-segment cars ▸ Shift by wire technology leading the market with
Slide 59: Business environment summary
Business environment summary Innovation & technology OEMs demand global Increase competitive key to growth in SBW supplier footprint pressure • BRIC presence more • OEMs are consolidating • 17% CAGR expected important then ever supplier base • More revenue for winners 59
Slide 60: Driveline Agenda
Driveline Agenda ▸ Business environment ▸ 2013 New Business Wins in BRIC ▸ Technology trend: Shift by Wire – AT/Shift by Wire trends globally – Kongsberg Driveline market positioning ▸ A winner in the market 60
Slide 61: 2013 New Business wins for Driveline in BRIC
2013 New Business wins for Driveline in BRIC 48% of New business win in BRIC EUR 116 M (Lifetime estimate) EUR 28 M Annually EUR 15 M (Lifetime estimate) EUR 4 M Annually EUR 63 M (Lifetime estimate) EUR 14,5 M Annually Region Sales % NBW NBW % ROW 88% 209 52% BRIC 12% 192 48% 61
Slide 62: Securing BRIC growth ahead
Securing BRIC growth ahead Growth strategy aligned with strategic customers Strategy centered around footprint match EUR 192 M lifetime wins 2013 62
Slide 63: Driveline Agenda
Driveline Agenda ▸ Business environment ▸ 2013 New Business Wins in BRIC ▸ Technology trend: Shift by Wire (SBW) – AT/Shift by Wire trends globally – KA Driveline market positioning ▸ A winner in the market 63
Slide 64: What is Shift by wire?
What is Shift by wire? From: Mechanical Actuation “From mechanical to electronic actuation” ▸ Removes mechanical link between gear lever and gearbox – Gear changes through actuator or electronic gearbox ▸ The gear shifter communicates with the transmission electronically To: Shift By Wire 64
Slide 65: Market drivers for Shift by wire
Market drivers for Shift by wire ▸ Design freedom – Design options: Joystick, Buttons, Steering column – Freedom for gearshifter location – Space saving – Shift feel ▸ Safety – Self parking – Block incorrect gear shifting from driver ▸ CO2 emissions – Focus on vehicles with low weight – Self driving
Slide 66: Shift by wire technology
Shift by wire technology Steering Technology Joystick Rotary Buttons column Audi Volvo Daimler JLR Aston Martin Manufacturer Chrysler RR Chrysler Ford JLR KIA ▸ 4 key technologies for shift by wire ▸ Joystick stands out as market leader 66
Slide 67: Key technology trends in SBW
Key technology trends in SBW 8 ▸ Joystick leads growth Millions 7 ▸ Increased interest in rotary 6 Buttons 5 Joystick/In-knob ▸ Slow growth for buttons 4 Rotary and steering column shifter 3 Steering column 2 shifter 1 0 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS and company estimate 67
Slide 68: Shift by wire customer trends
Shift by wire customer trends 2 Millions BMW 1,8 DAIMLER JLR 1,6 Aston Martin 1,4 Audi Chrysler 1,2 GM Volvo 1 Ford PSA 0,8 VW 0,6 RSA Toyota 0,4 Fiat KIA 0,2 Subaru 0 China 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS and company estimate 68
Slide 69: Regional Shift by wire markets
Regional Shift by wire markets SBW volumes ▸ EU leading SBW adoption 6 Millions – Premiums have SBW – Mid-segment starting SBW 5 ▸ Slower start in NA 4 – Aggressive growth projected EU 3 NA ▸ Asia starting SBW adoption Asia – China will drive growth 2 1 0 2013 2014 2015 2016 2017 2018 2019 2020 Sour
Slide 70: Shift By Wire segmentation
Shift By Wire segmentation SBW segmentation (Volume) 14 Millions 12 10 8 Mid segment 6 Premium 4 2 0 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS and company estimate ▸ Premium segment mature ▸ Growth from mid segment 70
Slide 71: KA Shift by wire expertise - Volvo 'Concept Coupe'
KA Shift by wire expertise - Volvo ‘Concept Coupe’ ▸ KA SBW shifter in Volvo Cars ‘Concept Coupe’ unveiled at IAA ▸ SBW with crystal knob – provides a unique feeling – Shifter contains best in class packaging and safety features ▸ Volvo concept was awarded best concept from autoblog 71
Slide 72: Voice of the customer
Voice of the customer ”Volvo Concept Coupe” 72
Slide 73: KA's shift by wire strategy
KA’s shift by wire strategy ▸ Innovation – Focus on 2 technologies • Joystick • Rotary – World class packaging and weight (560 156 g) – Safety features • “Make before break” ▸ Enhancing the driving experience – World class shift feel – World class human machine interface ▸ Systems capabilities – F
Slide 74: Investment in marketing
Investment in marketing ONE CTi SBW concept Auto Shanghai IAA Frankfurt Transmission car customer Show VCC Concept Symposium global tour April 2013 car Berlin 2013 Sep 2013 Dec 2013 74
Slide 75: Driveline Agenda
Driveline Agenda ▸ Business environment ▸ 2013 New Business Wins in BRIC ▸ Technology trend: Shift by Wire – AT/Shift by Wire trends globally – Kongsberg Driveline market positioning ▸ A winner in the market 75
Slide 76: A winner in the market
A winner in the market Global & follow OEMs footprint More revenue per platform Secure business growth in BRIC EUR 192M business wins 2013 Innovation in key technology Shift by wire 17% CAGR 76
Slide 77: Driver Control – Trends & focus in commercial vehicles
Driver Control – Trends & focus in commercial vehicles – EVP Jim Ryan, VP Sales & Marketing Håkon Amundsen 77
Slide 78: Agenda
Agenda ▸ Main trends in the truck industry ▸ A global business – Driver Control a global supplier – BRIC countries ▸ Technology trends – Electronics strategy – Automated Manual Transmissions – Hybrid vehicles 78
Slide 79: Opportunities & challenges in the truck industry
Opportunities & challenges in the truck industry Total cost of Environmental OEM growth pressure Comfort & safety ownership • TRIAD OEMs to • Reducing fuel • Emission legislation • Stricter safety turn attention to consumption is key in all markets regulations in TRIAD emerging market to requires OE
Slide 80: A global player in driver interface
DRIVER CONTROL A GLOBAL PLAYER IN DRIVER INTERFACE 80
Slide 81: Product Portfolio
Product Portfolio An integrated portfolio focused on ‘Man to Machine Interface’ Pedals Clutch control systems Sensors Displays Steering columns Electronic Hand Cable Gear shifters controls & Shifters 81
Slide 82: Integrated systems between Driver and Powertrain
Integrated systems between Driver and Powertain CAN Interface Modules Digital Keypads Custom Clusters KAntrak LCD Display Digital and Analog Inputs ES-3000 Electronic Shifter CANbus Digital Outputs MH-2000 Throttle Control Multiplexing Control Unit KA Global Pedals 82
Slide 83: Global win strategy
Global win strategy Strategic customer focus Focus on leading OEMs in each vehicle segment Leverage European position to emerging markets Customer intimacy Through global reach with production & engineering support in customer proximity Bringing new innovations to the market Preferred supplier statu
Slide 84: A global footprint, matching customer needs
A global footprint, matching customer needs Volvo Volvo Sweden USA Grand Mere,QC Volvo Sweden Russia Canada Norway Germany Volvo Willis, TX Japan Volvo United States Italy Vrable Wuxi France Czech Republic China Yangsan Volvo Korea Spain Shanghai Easley, SC China United States Volvo Volvo Pune Volvo
Slide 85: BRIC Countries
A GLOBAL BUSINESS BRIC COUNTRIES 85
Slide 86: BRIC business - building on our strengths
BRIC business - building on our strengths 32% of all new business wins YTD 2013 from BRIC countries EUR 2.5 M (Lifetime est.) EUR 1.5 M per year EUR 14.4 M (Lifetime est.) EUR 3 M per year EUR 2.5 M (Lifetime est.) EUR 0.5 M per year EUR 27 M (Lifetime est.) EUR 5.4 M per year Region Sales Sales % N
Slide 87: Established BRIC footprint
Established BRIC footprint Serving both domestic & foreign OEMs Production facility Sales & Tech support Global capabilities enhanced by local customer focused teams 87 87
Slide 88: On-highway growth: PACCAR example
On-highway growth: PACCAR example Supplied today: ▸ KA serves PACCAR in Europe, North America & South America – Supplies products across business areas – Integrated teams coordinate and support global PACCAR activity & offering ▸ Trends open for more content per vehicle in all regions – Globalizatio
Slide 89: On-highway segment: Leveraging a strong European platform
On-highway segment: Leveraging a strong European platform – PACCAR example NORWAY Kongsberg Hvittingfoss SWEDEN Rollag Ljungsarp Raufoss Mullsjö CANADA ENGLAND Grand Mère Basildon Normanton RUSSIA Burton GERMANY Moscow Heiligenhaus USA FRANCE Hallbergmoos Willis, TX Cluses SLOVAKIA CHINA JAPAN Easle
Slide 90: Off-highway growth: Example
Off-highway growth: Example ▸ A global tractor maker launched largest project ever - to produce the first Global tractor on 3 continents and in 5 locations ▸ KA offers a wide range of generic and modular steering columns – To meet requirements of the world’s top maker of off- highway vehicles ▸ KA h
Slide 91: Off-highway segment: Global footprint with local Customer Focus Teams
Off-highway segment: Global footprint with strong local ‘Customer Focus Teams’ NORWAY Kongsberg SWEDEN Hvittingfoss Ljungsarp Rollag Mullsjö Steering column Raufoss CoC CANADA Grand Mère ENGLAND Ljungsarp (S) Basildon Normanton RUSSIA GERMANY Burton Moscow Heiligenhaus USA FRANCE Hallbergmoos Willis
Slide 92: DCS – A global partner in the CV market
DCS – A global partner in the CV market Growth strategy aligned with strategic TRIAD customers and emerging leaders Strategy centered around footprint match and product technology spread Localize TRIAD product technology in BRIC markets 92
Slide 93: Electronics Strategy
TECHNOLOGY TRENDS ELECTRONICS STRATEGY 93
Slide 94: Electronic content is found in 30% of all KA products
Electronic content is found in 30% of all KA products ▸ Content will increase in coming years Trend Market Solutions Consequence for KA Strategic topics Hybridization Vehicle driveline: More Increased demand for demand for Control-By- Fuel efficiency systems combining Wire products electronics and E
Slide 95: Electronics centers of Excellence in Europe & North America
Electronics centers of Excellence in Europe & North America Leveraging technologies and resources to: Maximize profits Build expertise Create mass Developing products and people to: Maintain growth and market position Build competence Partnering with suppliers to: Create a competitive ad
Slide 96: KA controls the value chain
KA controls the value chain Electronic design Electronic Schematic Mechanical function Mechanical design Electronic assembly Hardware Embedded Software Software Control System Integrated mechatronic 96
Slide 97: Automated Manual Transmissions
TECHNOLOGY TRENDS AUTOMATED MANUAL TRANSMISSIONS 97
Slide 98: Drivers behind shift to AMT
Drivers behind shift to AMT Actual Forecast Ongoing shift to AMT technology in Europe to continue Other regions lag, but are expected to grow rapidly over 10-15 years AMT volume development 2000-2025 (KA forecast) 98
Slide 99: Automated Manual Transmissions - AMT
Automated Manual Transmissions - AMT Shifter Leverage shift by wire with Driveline Actuator Leverage electronics CoEs Leverage system integration for unique offering Growth focus via 3 integrated system elements = Increased content value 99
Slide 100: Hybrid Vehicles
TECHNOLOGY TRENDS HYBRID VEHICLES 100
Slide 101: KA awarded first business on hybrid vehicles
KA awarded first business on hybrid vehicles ▸ KA’s e-Power Nordic AB unit nominated for first serial development program – Onboard charger for a hybrid city bus – Customer is a global OEM, among the market leaders 101
Slide 102: Focusing on Power Electronics
Focusing on Power Electronics High voltage Electric Vehicle Control Module (480-840V) Auxiliary DC/DC On Board Inverter Converter Charger M Battery 3~ 24 VDC system El. Motor Core business: development of power electronic units connected between the battery, the electric motors and the grid 102
Slide 103: Current product range overview
Current product range overview Product Function Customer feedback DC/DC converter Among the smallest on market Convert 220-650V from energy storage to all Reliable impression of layout, auxiliaries on 12/24V details and components used On board charger Attractive small package and high Charge 220-65
Slide 104: Technology trends summary
Technology trends summary Market trends KA focus areas • Leverage of cross BA activities with Increased use of Driveline particularly within Shift-by- Electric actuation Wire • Leverage Electronics CoE’s Control-By-Wire • Leverage system integration for unique offering Hybridization • Leverage power
Slide 105: Purchasing Strategies
PURCHASING STRATEGIES Anders Nyström Executive Vice President,Purchasing 105
Slide 106: Agenda
Agenda ▸ Overview of KA’s external spend – Direct material – Indirect material and services ▸ Direct material strategy & efficiencies ▸ Indirect material strategy & efficiencies ▸ CSR in the supply base 106
Slide 107: Direct materials spend profile
Direct materials spend profile Total spend external suppliers EUR 500m Number of active suppliers 2 500 Spend by commodity Electronics 17 % Metal raw materials 15 % Plastic raw materials 11 % Machined metal parts 10 % Leather & textiles 8% Castings 8% Plastic injection moldings 7% Metal stampings 6%
Slide 108: Indirect materials and services - spend profile
Indirect materials and services - spend profile Investment EUR million Machines 10 Tools 5 Returnable packing material 5 Other 12 Expense Freight 23 External services 12 Leasing & rental 10 Energy 10 Machine spares & 7 consumables Other 16 Total spend 110 108
Slide 109: Main challenges
Main challenges ▸ Drive cost savings in line with industry efficiency expectations ▸ Build right geographical supplier footprint ▸ Right-size supply base & raise standards ▸ Extract right technology from supply base at the right time 109
Slide 110: Global Purchasing Organization
Global Purchasing Organization 32% of direct 56%* of spend direct spend No. of employees EU NA Asia Other 12% of direct spend 4% 18% 21% 57% *Including ROW which is 1% Direct Materials spend 500 MEUR 110
Slide 111: Strategic elements
Strategic elements Control of indirect spend Org. efficiency CSR Profitability Predictability Buyer Launch Quality Flawless execution compentence Supplier Supply base relationships management 111
Slide 112: Strategic elements
Strategic elements Control of indirect spend Org. efficiency CSR Profitability Predictability Buyer Launch Quality Flawless execution compentence Supplier Supply base relationships management 112
Slide 113: Direct Material Strategies & Efficiencies
Purchasing DIRECT MATERIAL STRATEGIES & EFFICIENCIES 113
Slide 114: Supply Base Management
Supply Base Management ▸ Define the future state supply base and document in Commodity Strategies. ▸ Qualify and continously develop preferred suppliers ▸ Map supplier performance ▸ Execute strategy through sourcing of new business to preferred suppliers ▸ Actively and passively exit non-preferred s
Slide 115: Sourcing in KA
Business area driven Sourcing in KA customer product projects Cross-functionally aligned commodity strategies Project Teams Competitive supply base in every region Commodity Purchasing Team SOURCING = Execution of commodity strategies Purchasing Team China Operations 115
Slide 116: Supply base metrics
Supply base metrics No. of active production suppliers 3500 3000 2500 2000 1500 1000 500 0 Mid-2011 Mid-2012 Mid-2013 End State Spend allocation 35% 65% Preferred Suppliers Others 95% of new business awards to Preferred suppliers 116
Slide 117: Benefits
Benefits ▸ Economies of scale – with preferred suppliers, volume efficiencies and negotiating power. ▸ Supplier ’familiarity’ – With KA specifications, processes, systems and people reduces complexity and leadtime ▸ Resource efficiency ▸ Risk reduction 117
Slide 118: Example: Co-ordinated sourcing of Electronic Control Units
Example Co-ordinated sourcing of Electronic Control Units cross BA’s in 2013 ▸ Volume of multiple projects across BA’s was bundled in one business award to an existing preferred supplier ▸ Negotiation resulted in reduced new product price and 12% reduction in price on existing business 118
Slide 119: Indirect Material Strategy & Efficiencies
Purchasing INDIRECT MATERIAL STRATEGY & EFFICIENCIES 119
Slide 120: Strategy – Gradually consolidating indirect buy
Strategy – Gradually consolidating indirect buy ▸ Starting with the high-impact categories – with a regional or global supply base ▸ Capture opportunities from long term capex plans and spend across the enterprise ▸ Focused categories: – Major machine investments EUR 10m – Injection molding tools EU
Slide 121: Measures & benefits
Measures & benefits ▸ Freight contract consolidation in Europe & North America – EUR 3m (13%) savings on FY basis ▸ Early involvement of professional buyer in major investment projects – delivered EUR 1.2m (21% on orders placed) vs historical levels ▸ Transfer to new tool-maker base in China – EUR1.
Slide 122: CSR in the Supply Base
Purchasing CSR IN THE SUPPLY BASE 122
Slide 123: Risk Exposure
Risk Exposure ▸ KA – a global company with suppliers in all major regions ▸ China and India considered high risk regions ▸ 229 suppliers in China, 32 in India, actively supplying KA – All have accepted the Supplier Declaration, outlining KA’s requirements in terms of Corporate Social Responsibility
Slide 124: KA Strategy
KA Strategy Training & self Information Monitoring Assessment 2013 -14 2015 •Supplier CSR declaration •Suppliers in China & India •Supplier sites regularly o A condition for doing trained in: monitored for adherence buisness o Business ethics o Working conditions o Environmental responsibility 124
Slide 125: Status: All preferred suppliers in China trained
Status: All preferred suppliers in China trained & undergoing self assesment Training curriculum ▸ Business ethics • Working practice (respect and honesty) • Training & development • Integrity ▸ Working conditions • Harassment & discrimination • Health & safety • Wages & benefits • Working hours • C
Slide 126: Summary
Summary Strategic plan set in 2012 has momentum Supply base reduction effort will leave only the best suppliers in the base Cross-BA management of sourcing and supplier relations has delivered results Savings on current business at historical high 126
Slide 127: Attracting and retaining talent in a global industry
Attracting and retaining talent in a global industry Jarle Nymoen, EVP Human Resources 127
Slide 128: Ambition
Ambition “To be a preferred employer with a reputation for having the best People development systems.” 128
Slide 129: World class global leadership programs
World class global leadership programs Passage 6 Individual program Individual Passage 5 program Passage 4 KAscent Passage 3 Interdal Passage 2 KAliber Passage 1 Trainee KAspire 129 129
Slide 130: KAspire
YOUNG PROFESSIONALS KAspire 130
Slide 131: KAspire - prepare & develop young professionals
KAspire - prepare & develop young professionals for more responsibility in KA Preparation to Preparation to Preparation to Self Business Case Managerial Role Managerial Role Managerial Role Development/ Presentation Business Case ExCom Induction 3 day Workshop 3 day Workshop 3 day Workshop 4 day Wor
Slide 132: Interdal
GLOBAL MANAGERIAL DEVELOPMENT INTERDAL 132
Slide 133: Interdal – preparing for a managerial role in KA
Interdal – preparing for a (new) managerial role in KA Strategy, team Finance, Sales, Production/ Int. operations, and history acquisition and purchase and The KA Way cross-culture environment negotiations and ethics 7 day Workshop 7 day Workshop 8 day Workshop 6 day Workshop 6 day Workshop CEO CFO
Slide 134: Trainee Program
YOUNG GRADUATES TRAINEE PROGRAM 134
Slide 135: Trainee program - attracting ambitious graduates
Trainee program - attracting ambitious graduates by presenting a career path in KA 2nd year Cross-functional Cross-functional Cross-functional Cross-functional Cross-functional training training training training training Project at a Production R&D Market Purchasing Finance plant abroad 1st year Tr
Slide 136: KAPS Trainee Program
HUMAN RESOURCES KAPS TRAINEE PROGRAM 136
Slide 137: Common Trainee program KA / Petter Solberg
Common Trainee program KA / Petter Solberg Kongsberg Petter Solberg Automotive -Structure - Adventure - Leadership - Energy development - Excitement - R&D - Winner instinct - Purchase - Ultimate gearhead - Industial experience 137
Slide 138: Teamwork & Accountability, KAPS, Passion
• TEAMWORK & ACCOUNTABILITY There’s no ”I” in Team • KAPS • PASSION Innovative collaboration between PSRX and Kongsberg Automotive Always give 110% • Goal The first ever professional World Champion in 2 different motor sports 138
Slide 139: RallycrossRX
•RALLYCROSSRX The world’s fasted growing motor sport 139
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Slide 141: Summary: KA - 2015 and beyond
Summary: KA - 2015 and beyond CEO Hans Peter Havdal 141
Slide 142: Short term… Confirm our 2015 targets
Short term… Confirm our 2015 targets Group Revenue Selective growth focus Margin Gradually improving margin ROCE > 15% by 2015 NIBD/EBITDA < 2x by 2015 142
Slide 143: Support globalization of OEMs
Support globalization of OEMs ▸ The industry is shaped by – the rise of developing markets – globalization of vehicle platforms ▸ KA has the global capabilities to supply the passenger- and commercial vehicle industries from its worldwide locations 143
Slide 144: KA an innovative technology partner for global OEMs
KA an innovative technology partner for global OEMs ▸ KA providing SBW solutions to both the Automotive and Truck OEMs ▸ Building critical mass within electronics, established CoEs and investing in R&D ▸ Providing leading safety and comfort features within our segments ▸ Developing strong global tea
Slide 145: Thank you for your attention
THANK YOU FOR YOUR ATTENTION QUESTIONS & ANSWERS 145