TT Electronics plc · LSE:TTG
TT Electronics — Investor Day (April 2011)
84 slides from TT Electronics's investor day presentation, Apr 14, 2011
Slide 1: TT electronics plc Analyst and Investor Day
Business Group Strategy Review TT electronics plc 14th November 2008 Analyst and Investor Day 14 April 2011 1
Slide 2: Introduction: Our Programme
Introduction Our Programme Time Agenda 09.00 Group Strategy 09.30 Components Division 10.15 Werne Overview and Site Tour 12.15 Lunch 12.45 Sensors Division 13.30 IMS Division 14.00 Secure Power Division 14.30 Conclusion and Q&A April 2011: Analyst and Investor Day 2
Slide 3: Introduction
Introduction Bo Bo Bob Flenents Bo b b b F F F le le le t t t on on on e e e n n n ts ts ts Tim Roberts Geraint Anderson Shatish Dasani Group Business Development Director Group Chief Executive Group Finance Director Components Sensors Secure Power IMS Bob Bob Flenents Fl Bo Bo b b Bo et b F F One l
Slide 4: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 4
Slide 5: Group Strategy: Portfolio
Group Strategy Portfolio “STRATEGIC FOCUS” “DEVELOPMENT” “RUN FOR VALUE” Heartland to the brand / group Scalable Opportunities Value Businesses Components / Sensors IMS Secure Power General Industrial • Major driver of shareholder • Have potential to deliver • Now comprises AEI Compounds value mater
Slide 6: Key Performance Indicators – Group Measures
Group Strategy Key Performance Indicators – Group Measures Organic revenue growth Group operating profit margin Operating cash conversion (per cent)* (per cent) (per cent) Target: Mid to high single digits for Target: 8%-10% in medium term Target: 100% conversion of operating each year, 2010 to 2014
Slide 7: Key Performance Indicators – Divisional Operating Profit Margins
Group Strategy Key Performance Indicators – Divisional Operating Profit Margins Components Sensors IMS Secure Power Target: 10% medium term Target: 10% longer term Target: 6-8% medium term Target: 10% short term 8.1 7.3 4.6 4.7 3.1 3.2 2.7 (3.7) FY 2009 FY 2010 FY 2009 FY 2010 FY 2009 FY 2010 FY 200
Slide 8: Group Strategy Focus
Group Strategy Focus People • Develop management strength in depth • Employee engagement Building • Cultures and values a global platform for sustainable growth and Operational Excellence improved performance • Customer focus • Product innovation with technology • Manufacturing leadership April 2011
Slide 9: Implementing the Strategy
Group Strategy Implementing the Strategy Impact Action Revenue Margin Growth Improvement Align organisation with strategic objectives Invest in human resources and employee engagement Build deeper relationships with key customers Focus where we can create a differentiated position based
Slide 10: Group Margins
Group Strategy Group Margins 2009 2010 £m £m Sales 463.5 571.3 Cost of Sales (391.7) (471.2) Gross Profit 71.8 100.1 GP Margin% 15.5% 17.5% Distribution Costs (30.2) (35.0) Administration Expenses (35.2) (39.9) Operation Profit (before exceptionals) 6.4 25.2 EBIT Margin% 1.4% 4.4% April 2011: Analys
Slide 11: Margin Improvement
Group Strategy Margin Improvement Drive for an improvement in average gross margin: • Product mix through product innovation and targeting market segments • Growing sales and production in emerging markets • Portfolio churn – exit/renegotiate lower margin business • Operating efficiencies – manufact
Slide 12: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 12
Slide 13: Components Division Vision
Components Division Vision To become the world's fastest growing and most profitable provider of electronic components and microcircuits in our chosen focus areas. We will do so by anticipating our customers‟ needs to create the leading innovative product portfolio and every day set the benchmark fo
Slide 14: Components Division Business Profile
Components Division Business Profile +23% +81% 250 12 10 200 234.6 10.7 8 £m 150 190.8 2009 £m 2009 6 2010 5.9 2010 100 4 50 2 0 0 Revenue Operating Profit 4 2 Industrial 7 16 United Kingdom Passenger Car 19 27 11 Defence and Aerospace 1 Rest of Europe Telecom and Computer North America Other Transp
Slide 15: Components Division Our Value Proposition
Components Division Our Value Proposition • Leading position in broad range of core technologies – allowing us to deliver solutions that meet our customers‟ needs • Proven engineering skills and applications knowledge to support customers‟ development programmes with innovative solutions • Global sa
Slide 16: Components Division Our Portfolio
Components Division Our Portfolio Product/Technology Drivers of Innovation Applications Resistors • Power density • Power metering-in rush • Precision protection • Medical defibrillators Optoelectronics • High power • Opto-isolators on bullet train • Custom detection solutions braking systems • Liqu
Slide 17: Components Division Our Portfolio
Components Division Our Portfolio Product/Technology Drivers of Innovation Applications Magnetics • Power density • Surgical devices • Low power dissipation • Industrial DC/DC converters • Customised packages • Engine control Variable Components • Long service life • Electric power steering • Fuel e
Slide 18: Markets Served and Growth Trends
Components Division Markets Served and Growth Trends Industrial • Energy management – control circuit protection, power supplies • Oil & gas exploration – deeper wells, harsh environment • Alternative energy – wind, solar, other new sources of power • Continuing move from hydraulic to electric syste
Slide 19: Markets Served and Growth Trends
Components Division Markets Served and Growth Trends Aerospace and Defence • Growth in commercial aviation • Increasing electronic content on airframes, replacement of hydraulics • New satellites, replacement / upgrades of existing constellations • Electronic systems to protect armoured vehicles • E
Slide 20: Three Step Transformation Process
Components Division Three Step Transformation Process Revenue Margin Growth Improvement Delivering strong results while staying the course on transformation April 2011: Analyst and Investor Day 20
Slide 21: Sales Excellence
Components Division Sales Excellence • Global team - improved emphasis on key account management and distribution • Talent upgrade globally • Increasing share of customer wallet • Selling the entire portfolio • Best practices and disciplined / consistent operating system “Thank you…I appreciate your
Slide 22: Case Study – Customer Supply Chain Requirements
Components Division Case Study – Customer Supply Chain Requirements Challenge • Customer required a significant increase in components at short notice to support higher demand for their end product Response • The TT Key Account Manager ─ coordinated engineering and manufacturing efforts to optimise
Slide 23: Operational Excellence
Components Division Operational Excellence • Global team - improved emphasis and functional voice • Realignment of talent • Improved execution and accountability • Best practices and disciplined / consistent operating system ─ lean manufacturing ─ inventory optimisation ─ health and safety April 201
Slide 24: Lean Manufacturing
Components Division Lean Manufacturing Before After Before Performance metric After 30% Productivity 75% 28 FTE Direct labour 22 FTE 1,000 Work in progress (items) 300 April 2011: Analyst and Investor Day 24
Slide 25: Portfolio Leadership
Components Division Portfolio Leadership • Business unit structure around key technologies and markets • Portfolio decisions and product development driven by market needs • Talent upgrade and realignment • Best practices and disciplined / consistent operating system April 2011: Analyst and Investor
Slide 26: Portfolio Leadership – Fixed Resistors Business Unit
Components Division Portfolio Leadership – Fixed Resistors Business Unit Historical Structure New Structure Benefits Managing Director IRC AFD • Customer facing business unit Managing Director • Coherent portfolio strategy IRC WAFT • Dedicated product line managers Global VP/GM Resistors • Unified e
Slide 27: Components Division Conclusion
Components Division Conclusion 10% Continued investment for medium term Growth in Asia Portfolio leadership Build position in key end markets Manufacturing excellence 4.6% Alignment of organisation with strategic objectives 2010 Medium operating margin term target April 2011: Analyst and Investor
Slide 28: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 28
Slide 29: Welcome to Werne
Werne Overview Welcome to Werne Facts about Werne: • Werne: approx 32,500 inhabitants • Located in the Münsterland area of Germany • Community has strong links with Universities - Münster, Dortmund, Iserlohn, and for automotive – Aachen • Area has great connectivity and infrastructure – 3 airports,
Slide 30: Introduction to AB Elektronik
Werne Overview Introduction to AB Elektronik • AB Elektronik established in 1967 • 586 employees today (biggest employer in Werne) • Quality Supplier to automotive industry since 1978 – many awards and world class reputation with European OEMs • TT company since 1993 • Centre of Excellence within Se
Slide 31: Werne Location
Werne Overview Location Münster Dortmund 16 km Münster 60 km Düsseldorf 100 km Plant 12 Distance 4 km Plant 1 University Münster 50 km University Dortmund 20 km University Iserlohn 30 km April 2011: Analyst and Investor Day Universiy (RWTH) Aachen 190 km
Slide 32: Site Layout
Werne Overview Site Layout Business previously on 3 sites, recently consolidated onto 2 sites with many benefits including improved communication and productivity Plant 1 • Extensive quality laboratories – we have approvals from key OEMs to self certify – very few competitors have our capability and
Slide 33: What You Will See
Werne Overview What You Will See “Best in Class” automation capable of producing millions of sensors that work first time, every time, with zero defects, for the most demanding customers April 2011: Analyst and Investor Day 33
Slide 34: What You Will See
Werne Overview What You Will See We design and configure our own assembly lines - a key differentiator – creating “know how” we transfer to our other locations April 2011: Analyst and Investor Day 34
Slide 35: What You Will See
Werne Overview What You Will See Nothing matters more than people... we have some of the best people in the world April 2011: Analyst and Investor Day 35
Slide 36: We are in Plant 2
Werne Overview We are in Plant 2 Our Position April 2011: Analyst and Investor Day 36
Slide 37: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 37
Slide 38: Sensors Division Vision
Sensors Division Vision To be a global leader in the design, manufacture and supply of sensing solutions for the Transportation, Industrial, Medical, Aerospace and Defence industries April 2011: Analyst and Investor Day 38
Slide 39: Sensors Division Business Profile
Sensors Division Business Profile +36% 6 200 4 150 3.9 2 £m 143.5 2009 £m 2009 100 0 2010 2010 105.4 -2 -3.9 50 -4 0 -6 Revenue Operating Profit 1 1 5 4 3 Passenger Car 3 United Kingdom 10 Rest of Europe Other Transportation North America Industrial Central and South America 84 Defence and Aeropace
Slide 40: Sensors Division Our Value Proposition
Sensors Division Our Value Proposition • Excellence in the design and manufacture of key sensing technologies • Vast application knowledge, designing the right solutions for critical applications • Launched on time and on budget • Supplied anywhere in the world • Guaranteed performance – first time,
Slide 41: Our Portfolio: Strong Platform Based Portfolio
Sensors Division Our Portfolio: Strong Platform Based Portfolio Product/Technology Drivers of Innovation Applications Speed Sensors • Emissions reduction • Camshaft position • Performance improvement • Crankshaft position • Reliability improvement • Turbocharger turbine • Speeds up to 350,000 rpm •
Slide 42: Our Portfolio: Strong Platform Based Portfolio
Sensors Division Our Portfolio: Strong Platform Based Portfolio Product/Technology Drivers of Innovation Applications Pedal Sensors • Emissions reduction • “Smart” pedal • Performance improvement • Crash safe constructions • Improved safety/fatigue • Ergonomic designs • Integrated systems/ adaptive
Slide 43: Markets Served: Leverage Automotive Experience
Sensors Division Markets Served: Leverage Automotive Experience and Building Blocks Passenger Car Trucks Heavy Duty Vehicles Industrial Traction Diesel Engine On and Off Road Vehicles Forklift Trucks Locomotives Power Generation Agricultural Equipment Elevators Rail Cars Hoists Transit Cars Compress
Slide 44: Sensors Division Implementing the Strategy
Sensors Division Implementing the Strategy Impact Action Revenue Margin Growth Improvement Organisational Change - global management structure Growth in Broader Market Segments - truck and off road vehicles - industrial Growth in Emerging Markets - investment in capabilities and transfer
Slide 45: Sensors Division Organisational Change
Sensors Division Organisational Change Old Structure New Structure • 5 autonomous businesses • 1 global Sensors Division • Strong independent MDs – local focus • Strong functional leadership team • 4 sales team targeting same customers • 1 global sales organisation • Duplication of product developme
Slide 46: Total Business Excellence
Sensors Division Total Business Excellence Create new potential by Capitalise on existing systematic product and potential through process innovation customer-oriented market development, Set the base for growth pricing and business by lean consistent and planning excellence efficient processes, glo
Slide 47: Growth in Broader Market Segments
Sensors Division Growth in Broader Market Segments Case Study: Innovative win at Major Truck and Industrial Engine Manufacturer Technical/ Innovation Excellence Combi-Sensor Temperature & Pressure • Sensor building block – combined pressure and temperature sensing in one package • Temperature range:
Slide 48: Growth in Emerging Markets: be where our Customers need us
Sensors Division Growth in Emerging Markets: be where our Customers need us Germany -Technology provider to all locations - Knowledge transfer to local teams China - Growth at improved margins - Approval from BMW, Daimler, GM and Bitron/Fiat India - Growth at improved margins - Growth at Hero Honda,
Slide 49: Sensors Division Conclusion
Sensors Division Conclusion 10% Continued investment for medium term Growth and innovation from emerging markets Investment in strong regional teams Strengthen global partnerships with key existing and target customers “Centres of excellence” supplying building blocks 2.7% globally for localisatio
Slide 50: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 50
Slide 51: IMS Division Vision
IMS Division Vision To be a global provider specialising in lower volume, more specialised integrated assembly within the medical, aerospace and defence and industrial segments April 2011: Analyst and Investor Day 51
Slide 52: IMS Division Business Profile
IMS Division Business Profile +22% +79% £m £m Revenue Operating Profit Revenue by Market Revenue by Destination April 2011: Analyst and Investor Day 52
Slide 53: IMS Division Our Value Proposition
IMS Division Our Value Proposition Focused on High Mix/Low Volume segment offering: • End to end product lifecycle support from design to logistics • Global sales, manufacturing operations and support • Approvals and certifications across all sites • First class manufacturing and test capabilities P
Slide 54: IMS Division Market Segmentation
IMS Division Market Segmentation High Mix/Low Volume Low Mix/High Volume Markets – Medical, Aerospace/Defence, complex Markets – Consumer, PCs, Servers, Handsets Industrial and Telecoms More Mix & Complexity Less • Characterised by a high degree of customisation and • Characterised by little customi
Slide 55: TT Value Proposition: End-to-End Lifecycle Support
IMS Division TT Value Proposition: End-to-End Lifecycle Support Manufacturing scope PCB PCB Cable Box Systems Repair and layout assembly harnesses build integration upgrade Value added services Programme management Design engineering and rapid prototyping Test development Supply chain solutions Apri
Slide 56: Global Sales, Manufacturing and Support
IMS Division TT Value Proposition: Global Sales, Manufacturing and Support Global Brand and Sales Structure • Key customers managed on worldwide basis • Consistent approach in major markets Manufacturing facilities in USA, UK, Malaysia and China • Offers customers flexibility in terms of manufacturi
Slide 57: IMS Division Approvals and Certifications
IMS Division Approvals and Certifications • ISO 9001 • AS 9100 • ISO 14001 • ISO 13485 • TS 16949 • UL Cable Approval • IPC-A-610D • J-STD-001 • BABT PS 340 • SC21 Bronze Award • IRIS Rail Standard • NADCAP – In Process April 2011: Analyst and Investor Day 57
Slide 58: IMS Division Markets Served
IMS Division Markets Served Focus On Growth Trends • Industrial • Require complex electronic and electromechanical assembly skills • Medical • Increasing use of outsourced • Defence and Aerospace production • Telecom • Customers looking for global • Transportation support from strategic supply chain
Slide 59: IMS Division Implementing the Strategy
IMS Division Implementing the Strategy Impact Action Revenue Margin Growth Improvement Win new „high mix/low vol‟ business in target market segments - 10 new accounts won in 2010 Differentiated offering based on global footprint - partner with key customers across regions - transfer programm
Slide 60: Win New 'high mix/low volume' Business in Target Segments
IMS Division Win New „high mix/low volume‟ Business in Target Segments • Very good progress in defence and aerospace, medical and premium industrial sectors • 10 new wins in 2010, each with potential to grow to > £1m of revenue p/a • Medical - Two significant new medical customers secured in US for
Slide 61: Differentiated Offering Based on Global Footprint
IMS Division Differentiated Offering Based on Global Footprint Medical Case Study • Existing UK customer with multiple suppliers • Agreement secured to move existing TT volume to China • Opportunity to increase TT‟s share of business five times as other existing suppliers unable to provide support i
Slide 62: IMS Division End-to-End Lifecycle Support
IMS Division End-to-End Lifecycle Support Customer Case Study Products Prototypes Mass hubbed and Partnered in completed in production in distributed design phase high cost Asia across regions region using TT sites April 2011: Analyst and Investor Day 62
Slide 63: IMS Division Conclusion
IMS Division Conclusion 6-8% Continued investment in technology and global footprint Partnerships with key customers who value global footprint and support Focus growth in target segments Global standardisation of capabilities & quality systems 4.7% Transfer customer business to Asia to mutually imp
Slide 64: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 64
Slide 65: Secure Power Division Vision
Secure Power Division Vision To create a leading secure power systems business in our chosen focus areas, by providing our customers with tailored engineered solutions and first class customer service, ensuring that their critical power supplies are protected at all times and in all conditions April
Slide 66: Secure Power Division Business Profile
Secure Power Division Business Profile +44% +29% £m £m Revenue Operating Profit Revenue by Market Revenue by Destination April 2011: Analyst and Investor Day 66
Slide 67: Secure Power Division Our Value Proposition
Secure Power Division Our Value Proposition • A reputation for quality and service stretching over many decades • Deep technical expertise both in the UK and Mexico • Proven capability and track record of working with customers to design and supply bespoke engineered solutions • A comprehensive serv
Slide 68: Secure Power Division Our Portfolio
Secure Power Division Our Portfolio TOTAL POWER SOLUTION GENSET UPS SERVICE Diesel Gensets DC Systems Installation Diesel Genset AC UPS Systems Commissioning Projects/Upgrades Upgrades Maintenance Gas Turbine Upgrades Batteries Service Spares April 2011: Analyst and Investor Day 68
Slide 69: Generating Sets, UPS and Service
Secure Power Division Generating Sets Uninterruptible Power Service Supply (UPS) • Broad product range • Preventative maintenance (15-2000kVA) • High spec industrial and and emergency support commercial UPS product • >80 service engineers in range UK, Mexico and Brazil • ROW service covered by local
Slide 70: Secure Power Division Markets Served
Secure Power Division Markets Served Focus On Growth Trends • Lack of investment in electrical • Industrial and Retail generation and distribution networks • Petrochem • Growth in demand for power in emerging markets • Financial Services • Requirement for guaranteed continuous supply for critical •
Slide 71: Secure Power Division Implementing the Strategy
Secure Power Division Implementing the Strategy Impact Action Revenue Margin Growth Improvement Growth from Export Markets - further investment in Brazil - focus on Latin America Improve Breadth and Quality of Product Range - new products launched - improved quality from Mexican factory Grow
Slide 72: Growth from Export Markets – Central and South America
Secure Power Division Growth from Export Markets – Central and South America Attraction • Growing urban population • Economic growth • Strong existing presence and brand Actions completed • Brazil sales office transformation − sales engineers recruited in three states − local assembly commenced • Ex
Slide 73: Improve Breadth and Quality of Product Range
Secure Power Division Improve Breadth and Quality of Product Range Product Extension • Secure series containerised range • E Series Commercial UPS Process and Product Improvement • Enhanced canopies • CE availability • Investment in automation and application of lean manufacturing techniques April 2
Slide 74: Growth in Service Business
Secure Power Division Growth in Service Business Importance • Provides recurring revenue stream to underpin project business • Aids customer retention • Positions division to win new capital spend Actions completed • UK - strengthened sales team 20% growth - increased network of service engineers in
Slide 75: Secure Power Division Conclusion
Secure Power Division Conclusion 10% Continued investment for medium term Development of export markets Breadth and quality of product line 7.3% Growth of service business Manufacturing and product excellence Alignment of organisation with strategic objectives 2010 Short operating margin term targe
Slide 76: Agenda
Agenda 1. Group Strategy 2. Components Division 3. Werne Overview and Site Tour 4. Sensors Division 5. IMS Division 6. Secure Power Division 7. Conclusion and Q&A April 2011: Analyst and Investor Day 76
Slide 77: Conclusion: Significant progress made in 2010
Conclusion • Significant progress made in 2010 in the delivery of the Group‟s strategy • Improved financial performance with ongoing actions in all divisions • Strong balance sheet to support the development of the business • Continued focus on the delivery of sustainable growth and margin improveme
Slide 78: Conclusion Performance Drivers
Conclusion Performance Drivers 8%-10% Additional investment Growth from emerging markets Deeper relationships with key customers Growth from target market segments Investment in human resources 4.4% Alignment of organisation with strategic objectives 2010 Group Medium operating margin term target Ap
Slide 79: Q&A
Q&A April 2011: Analyst and Investor Day 79
Slide 80: Disclaimer
Disclaimer IMPORTANT INFORMATION • For the purposes of the following disclaimers, references to this “document” shall be deemed to include references to the presenters‟ speeches, the question and answer session and any other related verbal or written communications. • This document contains certain
Slide 81: Appendices
APPENDICES April 2011: Analyst and Investor Day 81
Slide 82: Appendices – Group Business Profile
Appendices – Group Business Profile 600 30 500 571.3 25 25.2 400 20 £m 463.5 2009 £m 2009 300 15 2010 2010 200 10 100 5 6.4 0 0 Revenue 2009/2010 Operating Profit 2009/2010 6 11 Defence and Aerospace 5 13 United Kingdom 2 17 8 Telecom and Computer Rest of Europe 15 Passenger Car 10 North America Ind
Slide 83: Appendices – Group Revenue by Destination
Appendices – Group Revenue by Destination Proportion of Region Change in revenue vs 2009 (%)* 2010 sales United Kingdom 23% 17% Rest of Europe 21% 40% North America 19% 18% Central & South America 17% 10% Rest of World 20% 2% Asia 49% 13% * At constant exchange rates April 2011: Analyst and Investor
Slide 84: Appendices – Group Revenue by Market
Appendices – Group Revenue by Market Proportion of Market Change in revenue vs 2009 (%)* 2010 sales Defence and aerospace (0.6%) 11% Telecom and computer 5% 8% Passenger car 19% 32% Industrial 33% 23% Power generation 29% 15% Medical 76% 5% Other transportation 83% 6% * At constant exchange rates Ap