Slide 1: Welcome to the Media and Analysts Conference
Welcome to the Media and Analysts Conference Zurich, 4 March 2016 berthiez bumotec dörries droop+rein heckert scharmann sip starrag ttl wmw
Slide 2: Agenda
Agenda Overview Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 1
Slide 3: Legal note
Legal note The economic projections and predictions contained in this presentation relate to future facts. Such projections and predictions are subject to risks, uncertainties and changes which cannot be foreseen and which are beyond the control of the publisher. Starrag Group is therefore not in a
Slide 4: Agenda
Agenda Overview Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 3
Slide 5: Sales steady at constant exchange rates and solid order backlog
Sales steady at constant exchange rates and solid order backlog Sales CHF 364 million – in local currency -0.1% Order intake CHF 333 million – in local currency -11% (-18% nominal) Order backlog of CHF 238 ensuring capacity utilisation over 3 quarters EBIT CHF 15 million (-23%) – Operating margin 4.
Slide 6: Order intake benchmark: Starrag Group vs. sector
Order intake benchmark: Starrag Group vs. sector Starrag order intake year-on-year -11% (in local currencies) Sector Germany order intake year-on-year +1.8% 5 Note: Four quarter moving.
Slide 7: Share information
Share information 2015 2014 Earnings per share (CHF) 2.78 4.26 Profit distribution per share (CHF) 1) 1.20 1.80 Share price at year end (CHF) 46.00 64.50 Market capitalization (CHF million) 155 217 - as% of shareholders‘ equity 83% 111% Total shareholder return -25.9% -12.5% 1) Withholding tax free
Slide 8: Main developments in 2015 (I)
Main developments in 2015 (I) Caution and volatility on order Strengthen sales and product portfolio Reorganization targeting market segments „Engineering precisely what you value“ 7
Slide 9: Main developments in 2015 (II)
Main developments in 2015 (II) Innovations Changes in Board Abandoning quarterly reporting 8
Slide 10: Main focus of Starrag Group
Main focus of Starrag Group Focus on market segments Clear strategic positioning Value proposition (solutions) International footprint Simplification Reliable operational Accountability performance Speed Innovation Creation of long-term value All stakeholders 9
Slide 11: Confidence towards a successful future
Confidence towards a successful future Attractive markets Aerospace Transportation & Precision & Energy Industrial Components Engineering Top people Great customer references 10
Slide 12: Agenda
Agenda Overview Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 11
Slide 13: Order intake reflects slack business investment
Order intake reflects slack business investment CHF m 450 425 -18% 407 400 364 348 350 333 300 288 275 250 238 239 238 200 150 100 50 0 2011 2012 2013 2014 2015 Order intake Order backlog Order intake year-on-year -11% (in local currencies) 12
Slide 14: Order intake by region: one third from Asia
Order intake by region: one third from Asia CHF m 450 24 400 42 77 350 America 35 50 32 10% 300 133 102 104 Asia 250 105 31% 200 324 150 100 211 210 232 Europe 196 59% 50 0 2011 2012 2013 2014 2015 13
Slide 15: Order intake by industry: 80% from Aerospace and Industrial
Order intake by industry: 80% from Aerospace and Industrial CHF m 450 400 350 174 166 300 109 Aerospace 108 116 35% 250 20 16 19 59 Energy 200 29 9% 137 150 164 154 95 Industrial 143 100 43% 50 86 98 68 71 45 Transport 0 13% 2011 2012 2013 2014 2015 14
Slide 16: Trends by industry
Trends by industry Aerospace Energy Transportation Industrial 36 % 7% 20 % 37 % Continuous miniaturization Solid civil aircraft market Power plant investments Rising demand in Asian trend drives micromechanics Asian market developing concentrated in Asia Railway Market Luxury goods marke
Slide 17: EBIT margin peer group
EBIT margin peer group Starrag GF MS Hardinge DMG Mori Makino Okuma Hermle Mikron Tornos (CH) (CH) (US) (JP/DE) (JP) (JP) (DE) (CH) (CH) 30% 25% 20% 17.3% 15% 12.2% 1) 10% 8.6% 7.9% 6.8% 4.0% 5% 1.6% 0% -1.1% -5% -2.5% -10% -15% -20% -25% 2013 2014 2015 (2015: DMG = Jan-Sep; Makino, Okuma = Apr-Dec;
Slide 18: Measures taken to mitigate impact of strong CHF
Measures taken to mitigate impact of strong CHF Targets Ensure the competitiveness of the Swiss plants Offset the effects of the Swiss franc flotation with further productivity gains Comprehensive range of measures implemented Procurement contracts renegotiated Recruitment freezed Extended working h
Slide 19: Benefits provided by Starrag Group
Engineering precisely what you value Profitability Safety Growth Cost reduction Reliability Competitiveness Unit costs Maschine reliability Competitive advantage Benefits provided by Starrag Group Energy costs Maschine availability Future extensions Material expenses No downtime Upgrading Servicing
Slide 20: Optimisation of marketing tools on all levels
Optimisation of marketing tools on all levels Goal: communicate value added of Starrag Group’s competence to solve clients’ problems New website as global information platform New client magazine “Starrag Star” Latest trends, professional information, users’ reports 19
Slide 21: Successful participation in key trade fairs
Successful participation in key trade fairs CIMT Beijing (Chinese International Machine Tool Show): Rising demand for high quality production facilities EMO Milan: World premiere with Bumotec modular machining center S181 for medical technology industry World premiere with new ECOFORCE Ti series for
Slide 22: Successful Turbine Technology Days
Successful Turbine Technology Days: where the worldwide experts meet Most important gathering of turbine experts from power generation, aviation and aerospace technology sectors as well as key trade magazines 250 attendees from whole Europe, China, India and Russia – the key growth markets in this f
Slide 23: Event Essentials for Excellence in Aerospace Manufacturing
Event „Essentials for Excellence in Aerospace Manufacturing“ Organised by Starrag Group company TTL, Coventry/UK More than 50 production experts from leading turbine manufacturers Mark Heyman, Chief of Manufacturing Engineering CAM & SFS at Rolls Royce as guest speaker 22
Slide 24: Win of benchmarking process for Pilatus' new PC-24 business jet
Win of benchmarking process for Pilatus‘ new PC-24 business jet Challenge by Pilatus: exceptionally productive and versatile manufacturing system for production Answer of Starrag Group: flexible machining center with two interconnected Ecospeed machining centers Starrag Group’s technology as enabler
Slide 25: Agenda
Agenda Overview Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers Quelle/Legende 24
Slide 26: Order intake
Order intake CHF m 140 560 120 480 425 407 348 4 quarter rolling 100 400 364 quarterly 80 333 320 60 188 240 40 160 20 80 0 0 2010 2011 2012 2013 2014 2015 Currency adjusted 11% below 2014 Order intake Q4 2015 > 100m CHF 25
Slide 27: Income statement to EBIT
Income statement to EBIT CHF m Income Expense 450 4.9% 4.0% 400 19 EBIT 350 15 Sales revenue 1) 300 165 -3.0% 148 Material expense 250 Personnel expense 1) 200 393 Operating expense -0.1% 364 1) Depreciation 150 143 -1.3% 132 100 Other EBIT 50 57 1) 54 +2.9% 0 6 -3 14 12 1) In local currencies. 2014
Slide 28: Main drivers of EBIT development
Main drivers of EBIT development CHF m 25 20 -5.0 15 -1.0 3.6 -2.0 10 19.1 14.7 5 0 2014 Contribution Salary Cost FX 2015 increases savings, Trans- net lation Lower contribution from orders due to lower rate of capacity utilization and strong CHF FX translation impact on EBIT margin limited to -
Slide 29: Net income impacted by lower EBIT and FX adjustment
Net income impacted by lower EBIT and FX adjustment CHF m 2015 2014 EBIT 14.7 19.1 Interest -0.4 -0.3 FX result -1.5 0.5 Other -0.9 -1.1 Earnings before tax EBT 11.9 18.2 Income tax -2.4 -3.8 Net income EAT 9.5 14.4 Tax rate 19.9% 20.7% Earnings per share 2.78 4.26 Net income down by 33.9% – Earni
Slide 30: Balance sheet remains strong
Balance sheet remains strong CHF m Assets Liabilities 400 Cash and cash equivalents 350 11 9 9 25 Receivables 300 120 112 151 250 130 Inventories 200 Fixed assets 91 85 150 Financial liabilities 100 196 186 Operating liabilities 134 136 50 Shareholders' equity 0 2014 2015 2014 2015 Solid financing
Slide 31: Solid shareholders' equity base
Solid shareholders’ equity base CHF m 220 210 200 10 -12 190 -2 -6 1 180 196 170 186 160 150 31.12.2014 Net FX Pension Dividend Other 31.12.2015 income translation benefit paid obligation Solid equity ratio of 55% unchanged Strong CHF leads to FX translation impact of CHF -12 million 30
Slide 32: Cashflow 2015 impacted by financing of orders
Cashflow 2015 impacted by financing of orders CHF m 40 30 27.1 -7.6 20 -5.2 -3.4 11.0 -22.3 10 -11.3 16.9 -1.4 -1.9 0 -6.2 -10 -20 -30 EBITDA Orders in Recei- Other Cash flow CapEx Free Dividend Short- Other Change progress vables from Cash term in cash Operations flow Financing Reduction in net cas
Slide 33: De-pegging of Swiss franc
De-pegging of Swiss franc Translation impact resulting in reduction of Sales revenue by 29m CHF EBIT by 1.0m CHF Net equity by 12m CHF (Equity ratio of 55% unchanged) Transaktion risk Foreign currency loss of 1.4m CHF on unhedged Euro positions recognized in financial result Economical currency risk
Slide 34: Agenda
Agenda Overview Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers Quelle/Legende 33
Slide 35: Economic outlook
Economic outlook Ongoing economic and geopolitical uncertainty Weak stock markets in 2016 to date Low oil prices with negative impact on investment levels Global purchasing managers index: slightly positive driven by Europe Business climate Germany: overall slightly positive VDW forecast 2016: “Mode
Slide 36: Machine tool industry Germany (cutting)
Machine tool industry Germany (cutting) Index, nominal – trend values (seasonally adjusted and rolling) 240 200 160 120 80 40 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 [Jan-Dez 15/14: Sales +4%, Order intake +3% (+1.8% in local currencies)]
Slide 37: Cecimo MTIX confirms outlook
Cecimo MTIX confirms outlook 300 250 200 150 100 50 CECIMO MTIX 0 12mths MTIX moving average 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: MTIX is an index based on the capitalization of 23 leading, publicly listed machine tool producing companies. There is a 73% correlation betw
Slide 38: Measures to strengthen marketing/sales and reduce costs
Measures to strengthen marketing/sales and reduce costs Accelerated implementation of 1st half 2015 action plan to strengthen sales and marketing activities in newly defined market segments Rounding up integrated product portfolio Additional investments in technology for networking manufacturing sys
Slide 39: Financial targets
Financial targets Guidance 2016 1) Mid-term target Order intake growth FY 2016 > FY 2015 > 5% p.a. Sales growth FY 2016 ≈ FY 2015 > 5% p.a. 8% p.a. over EBIT margin FY 2016 ≥ FY 2015 the cycle 35 - 50% of 35 - 50% of Dividend policy net income net income 1) organic, in local currencies. 38
Slide 40: Corporate calendar / Contact
Corporate calender / Contact 23.04.2016 Annual general meeting in Rorschach 27.07.2016 Letter to shareholders on H1 2016 results 26.01.2017 Initial information on 2016 results 10.03.2017 Presentation of 2016 results for analysts and media in Zurich 28.04.2017 Annual general meeting in Rorschach Walt
Slide 41: Agenda
Agenda Overview Walter Fust, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers Quelle/Legende 40
Slide 42: We look forward to your questions!
We look forward to your questions! 41
Slide 43: Thank you for your interest!
We would be pleased to invite you to a buffet lunch. Thank you for your interest! berthiez bumotec dörries droop+rein heckert scharmann sip starrag ttl wmw
Slide 44: High-precision machine tools for greater productivity
High-precision machine tools for greater productivity Starrag Group is a global technology leader in manufacturing high-precision machine tools for milling, turning, boring and grinding workpieces of metallic, composite and ceramic materials. Principal customers are internationally active companies
Slide 45: World production machine tools 1985 - 2014
World production machine tools 1985 - 2014 EUR b 70 +9% +28% +4% -13% 60 +28% 50 40 -31% 67 30 62 61 59 54 51 46 48 20 40 41 40 42 37 36 35 38 33 32 34 34 34 34 33 32 30 29 27 27 24 23 10 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 World production mac
Slide 46: World machine tool consumption 2013 to 2015
World machine tool consumption 2013 to 2015 (as of April 2015) USD billion CN US DE JP KR IT MX TW RU Total market volume 2015: USD 75 billion IN Rank 1 to 16 are 97% of global market UK CA TR CH FR BR 0 5 10 15 20 25 30 35 2013 rev. 2014 est. 2015 forecasted Source: Gardner Research World Machi
Slide 47: Organization focussed on target markets and market segments
Organization focussed on target markets and market segments Transportation & Business Unit Aerospace & Energy Precision Engineering Industrial Components Heavy Duty Vehicles Large Components On-Road Vehicles Micro Mechanics Market Segment Power Turbines Aero Structures Oil/Gas/Fluids Luxury Goods Ae
Slide 48: Strong brands enhancing the overall potential for success
Strong brands enhancing the overall potential for success berthiez bumotec Each brand with high level dörries of customer trust in its specific application area droop+rein Innovative technologies of heckert each brand radiate across all group brands scharmann Starrag Group Collaboratively fulf
Slide 49: Common strategy based on three pillars
Common strategy based on three pillars Leading metal cutting Leading cutting Leading global machine tools technology support customer service Milling, turning, boring, Center of Production Through life cycle support grinding Excellence Preventive maintenance High-end products Engineering
Slide 50: Multi-niche strategic positioning
Multi-niche strategic positioning Starrag Starrag Group Number of players High competition intensity Gantries and boring mills Horizontal machining centers Precisely productive Vertical machining centers 100 240 320 400 500 630 800 1000 1250 1600 1800 2100 > 2500 Machine / workpiece size 49
Slide 51: Global presence in sales, application and service support
Global presence in sales, application and service support Manufacturing plant, Sales and service organization Sales and service organization Service hubs 50
Slide 52: Our pedigree, 150 years tradition for innovation
Our pedigree, 150 years tradition for innovation Dörries SIP Scharmann Heckert Droop+Rein Starrag Berthiez Bumotec TTL Mönchen- Geneva Chemnitz Bielefeld Rorschach St. Etienne Sâles Aylesbury gladbach 1862 1884 1885 1890 1897 1916 1973 1987 Scientific Textile Bicycle Machine Textile Machine Machine
Slide 53: Share details
Share details 34.7% Market capitalisation year-end 2015: CHF 155 million Listed at SIX Swiss Exchange Main Standard Symbol STGN, Valor number 236‘106, ISIN CH00023610608 3‘360‘000 registered shares with a nominal value of CHF 8.50 each Stable shareholder structure Free Float 29.1% 53.8% 7.8% Walter
Slide 54: Top Management
Top Management Daniel Frutig (1962, Swiss) has been a member of the Board Walter Börsch (1959, German) has been CEO of Gerold Brütsch (1966, Swiss) has been of Directors of Starrag Group Holding AG since 2014 and its Starrag Group and Head of Regional Sales since Chief Financial Officer (CFO) of Sta
Slide 55: Starrag Group
Starrag Group