Kongsberg Automotive Asa · OSL:KOA
Kongsberg Automotive Asa — Investor Day (November 2018)
57 slides from Kongsberg Automotive Asa's investor day presentation, Nov 7, 2018
Slide 1: 2018 Capital Markets Day
2018 Capital Markets Day Kongsberg Automotive Henning E. Jensen – President & CEO November 7, 2018
Slide 2: Forward-Looking Statements and Non-IFRS Measures
Kongsberg Automotive Forward-Looking Statements and Non-IFRS Measures Forward-Looking Statements This presentation contains certain “forward-looking statements”. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which
Slide 3: Executive Summary
Executive Summary Executive Summary ▸ We are confirming the 2017 CMD and 2018 AGM Selected KPIs outlook for 2018 continuing to deliver substantial Revenue Adj. EBIT improvements after the second year of our (2016A / 2017A / 2018 FCST) (2016A / 2017A / 2018 FCST) improvement plan in spite of turbulen
Slide 4: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 4
Slide 5: Kongsberg Automotive at a glance (1/2)
Overview Kongsberg Automotive at a glance (1/2) Overview Selected KPIs ▸ Headquartered in Zurich, Switzerland and listed on the Oslo stock exchange Revenue Adj. EBIT ▸ Top 100 global automotive supplier by sales of original equipment (2016A / 2017A / 2018 FCST) (2016A / 2017A / 2018 FCST) ▸ 3 segmen
Slide 6: Kongsberg Automotive at a glance (2/2)
Overview Kongsberg Automotive at a glance (2/2) Interior Powertrain & Chassis Products Specialty Products Twin Turbo Seat Hood/Bonnet ATrAct™ Gear Cabin Raufoss ABC™ Pedal Feed system Release Cable Control Unit Anti-roll Bar Couplings System Box Interior Comfort Transmission Light Duty Cables Vehicl
Slide 7: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 7
Slide 8: General Update (1 of 4): Where are we compared to our Improvement Plan
What has taken place since the last CMD (2017) General Update (1 of 4) Where are we compared to our Improvement Plan Two years ago, we announced a plan for the company that will improve our net results significantly. The plan was ambitious with many components. We are ahead on some of our initia
Slide 9: General Update (2 of 4): Where are we compared to our Improvement Plan
What has taken place since the last CMD (2017) General Update (2 of 4) Where are we compared to our Improvement Plan ± We presented a plan to close manufacturing facilities through a restructuring program in order to reduce fixed costs and lower our variable cost basis. We have closed five plants
Slide 10: General Update (3 of 4): Changes to our Capital Structure
What has taken place since the last CMD (2017) General Update (3 of 4) Changes to our Capital Structure – In 2018, we strengthened our capital structure and overall solidity of our balance sheet – We completed a capital increase of 10% after being offered a share price premium by large shareholders.
Slide 11: General Update (4 of 4): Increased Raw Material/Tariff Costs
What has taken place since the last CMD (2017) General Update (4 of 4) Increased Raw Material/Tariff Costs – In 2018 we saw significant increases in the cost of raw materials, particularly in the second half. • In 2018, the major commodity contributors to these were steel, resin, PTFE, and alloys. B
Slide 12: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 12
Slide 13: Real GDP Forecast
Market Drivers Real GDP Forecast 8 6.9 6.6 6.2 6.2 6.0 Annual GDP growth rate (in %) 6 China 4 3.7 3.7 3.7 3.7 3.6 World 2.9 2.5 2.2 2 2.4 1.8 1.7 US 2.0 1.9 1.7 1.6 Euro area 0 2017 2018 2019 2020 2021 • Growth of all major economies are forecasted to slow down, • However, the overall world economy
Slide 14: Interest rate outlook of major economies
Market Drivers Interest rate outlook of major economies 6 5.50 China 5 4.35 4.35 4.50 4 3.50 Interest rate in % US 3.00 3 2.50 2 1.50 1 0.75 Euro Area 0.25 0.00 0.00 0 -1 Dec-17 Dec-18 Dec-19 Dec-20 • It is expected that the Euro Area and China will follow the US by increasing interest rates startin
Slide 15: Light vehicle production forecast
Market Light vehicle production forecast has been slightly revised, but still forecasted to reach 100 million units by 2021 CAGR 120 CAGR: 18-21 1.9% 99.5 102.1 100 96.4 98.3 Rest of World 5.8% 95.2 3.9 4.2 3.6 3.8 2.8 2.9 South America 3.3 2.7 2.6 2.6 16.8 17.3 North America 2.6% 17.1 17.1 80 17.1
Slide 16: Commercial Vehicle production forecast
Market Commercial Vehicle production forecast remains robust despite uncertainties CAGR 4 18-21 CAGR: +0.7% 3.2 3.2 3.2 3.3 3.2 Rest of World 12.9% 0.0 0.1 0.0 0.1 0.0 0.1 0.0 0.1 3 0.0 0.1 South America 0.5 0.6 0.5 0.5 0.6 North America 1.5% Units in millions -3.0% 0.6 0.6 0.6 0.7 Europe 0.6 3.4% 2
Slide 17: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 17
Slide 18: New Business Wins
New Business Wins ▸ Due to very focused efforts on New business wins per quarter (per annum value) winning new business, we have achieved very high 140 122 121 levels of new business wins in 120 99 2018. 100 80 71 66 65 €m 62 60 ▸ As a result of the high wins in 36 40 the previous three quarters, 20
Slide 19: New Business Wins: reporting methodology
New Business Wins ▸ Kongsberg Automotive has generated New Business Wins at very high levels over the past 2½ years. As a result of this we are projecting a stronger than market growth over the next 2-3 years which to a large extent is based on already awarded programs. ▸ Historically, KA has report
Slide 20: Change in NBW reporting from annualized to lifetime revenues
New Business Wins Change in NBW reporting from annualized to lifetime revenues ▸ The table below gives an overview over KA’s NBWs since 2016 on the basis of both annualized and lifetime revenues. Although the 2016 NBWs were characterized by some longer than average lead time program awards, the mess
Slide 21: Kongsberg Automotive benefits from a well diversified customer base
Customer Base Kongsberg Automotive benefits from a well diversified customer base Contribution of top 10 customers 15% 14% Top 10 customers 13% ~60% 12% Top customer 11% Revenue 2017A: €1,057mm Share of KA’s Total Revenue (2017) <10% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1 OEM customers Tier1 customers2
Slide 22: Status of revenue outlook
Growth Rationale Status of revenue outlook Group | Product Sales by status, 2017-2023 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 Existing business Booked business Estimated Business Wins Almost all of our 2019 business has been awarded 22
Slide 23: Positioned to benefit from current market trends and grow above market
Growth Rationale Kongsberg Automotive is positioned to benefit from current market trends and grow above market ~2% Adoption of Underlying Premiumization premium features OEM outsourcing Market share gain market growth in mass market ▸ Continuous growth ▸ Continuous increase ▸ Increased adoption ▸ O
Slide 24: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 24
Slide 25: How well positioned are we for the big automotive trends? (1 of 2)
The road forward How well positioned are we for the big automotive trends? (1 of 2) ▸ Generally speaking, Kongsberg Automotive is not very exposed to the current trends in the automotive market, neither from an upside nor from a downside perspective. ▸ Comfort & Convenience – Although more of a gene
Slide 26: How well positioned are we for the big automotive trends? (2 of 2)
The road forward How well positioned are we for the big automotive trends? (2 of 2) ▸ Autonomous Vehicles – Overall, KA is not directly active in the autonomous vehicle field. We are not active in the advanced control electronics or advanced sensor required for autonomous vehicles.Two of our busines
Slide 27: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 27
Slide 28: Specialty Products | Couplings | 2018
KONGSBERG AUTOMOTIVE Specialty Products | Couplings | 2018
Slide 29: Raufoss Couplings
Raufoss COUPLINGS AK KONGSBERG AUTOMOTIVE 29
Slide 30: Our Product Lines
Our Product Lines KA growth Sales Product lines expectations ▪ High performing coupling system with unlimited flexibility (Lego philosophy) 10% Above market ▪ Integrated safety features and high flexibility. 18% 2018 8% 64% ▪ High efficiency solutions reducing customer assembly time. Above market ▪
Slide 31: Key Features & Benefits
Key Features & Benefits Customer System Cost Reduction ▪ Market leading CV solution for low leakage and superior fuel economy ▪ Design Flexibility ▪ Assembly time reduction ▪ Full Release of Tube & Coupling ▪ Integrated Safety ▪ Flexible assembly sequence ▪ Customized solutions ▪ Increased efficienc
Slide 32: A great customer base
Selected customers Selected customers Selected customers Selected customers Tier 1 Construction/Agricultur Trailer Truck & Bus al A great customer base 32
Slide 33: Couplings at a glance
Couplings at a glance Business World class supplier of couplings for compressed air systems for commercial vehicles, which provide Europe competitive advantage and profitable growth 86% opportunities above market rates Asia 8% North & South America 6% Segments & Products Truck & Bus, trailer, constr
Slide 34: Further Growth
Further Growth APAC w/o South North China Rest of America ▪ Customer oriented with flexible off-the-shelf America 3% 3% World solutions that can be tailored to their specific 1% 0% China requirements 11% Revenue by Revenue by ▪ By clearly understanding our customer’s Region Region environment, chall
Slide 35: Global Market Share
Global Market Share 2018 Global Market share 2023 Global Market share Addressable market 2018 Addressable market 2023 Truck & Bus € 532.542 € 76.165 14% Truck & Bus € 579.433,00 € 112.083 19% Trailer € 80.990 € 23.793 29% Trailer € 87.773,00 € 28.857 33% Distribution & IAM ? Distribution & IAM ? 15%
Slide 36: Global Foot Print
Global Foot Print - Transforming from one manufacturing location to a global foot print “Servicing our worldwide customers locally through our global footprint” NORWAY Raufoss Germany FRANCE Munich Molsheim USA Willis CHINA Wuxi INDIA Prithla BRAZIL Sales & Programs Jundiai Sales & Distribution Prod
Slide 37: Couplings Summary
Couplings Summary ✓ A technology leader providing state of the art products to the market ✓ Provide flexible solutions that can be tailored to the customers specific requirements ✓ Multi market approach covering Truck & Bus, trailer, construction & agriculture ✓ Our strong growth is a result of prim
Slide 38: Interior Comfort Systems and Light Duty Cables / Actuators
Capital Markets Day 2018 Interior Comfort Systems and Light Duty Cables / Actuators
Slide 39: Interior Comfort Systems & Light Duty Cables/Actuators – Introduction
Our Customers Interior Comfort Systems & Light Duty Cables/Actuators – Introduction Business World class supplier of Interior Comfort Systems and Light Duty Cables/Actuators mainly for passenger car market, which provide competitive advantage and profitable growth opportunities above market Light Du
Slide 40: Interior: a great customer base
Interior: a great customer base 40
Slide 41: Product Overview: Light Duty Cables / Actuators
Product Overview Light Duty Cables / Actuators LIGHT DUTY CABLES / ACTUATORS Main product categories: • Mechanical and electromechanically driven actuation and cabling systems for all aspects of the vehicle where movement or release is a Electromechanical Systems Cabling Systems function of the syst
Slide 42: Light Duty Cables / Actuators: market trends
Light Duty Cables / Actuators: market trends [LDC] | Market trends ▸ Vehicles being equipped with features that allow push button or ‘waving’ Convenience sensors to operate and function in and out of the vehicle ▸ Smaller packaging, lightweight, more quite, smaller more powerful EM ‘Downsizing’ actu
Slide 43: Summary of Light Duty Cables
Summary of Light Duty Cables KA growth 2018 Sales FC by Product Line Comments/Outlook expectations • Remote Electro-mechanical solutions provide efficient performance Above • Compact and lightweight package • Customizable to fit demanding market automotive applications • Unique seat cable solutions
Slide 44: Product Overview: Interior Comfort Systems
Product Overview Interior Comfort Systems Main product categories: Seat support systems Seat climate systems Seat 1970‘s „A seat“ Seat today „A seat system“ 44
Slide 45: Interior Comfort Systems: Market trends
Interior Comfort Systems: Market trends ICS | Market trends ▸ Shift from central HVAC to heated surfaces and passenger microclimates EV Downsizing ▸ Small size - low weight - low energy consumption ▸ Bundled seat heat and vent package. For some OEMs, steering wheel heating Bundling SH & is also bund
Slide 46: Summary of Interior Comfort Systems
Summary of Interior Comfort Systems KA growth 2018 Sales FC by Product Line Product Line expectations • High performing systems with low weight • Large range of products fitting Above all customer needs market • Competitive pricing thanks to high vertical integration PV CV • Globally identical produ
Slide 47: 2018 Interior Highlights
2018 Interior Highlights ▸ Systematic operational improvement Program – initiated at our biggest Interior plants in Poland (Pruszkow, started Q2) and Mexico (Reynosa, started Q4) – Measures: process design improvements, scrap reduction, headcount and overtime reduction, output improvement, increase
Slide 48: Interior - Summary
Interior - Summary ✓ A technology leader providing high-end products with excellent quality to the market ✓ Only supplier who offers complete range of Seat Support, Seat Heat and Seat Cooling and can offer fully integrated solutions with clear customer advantages ✓ Enter Commercial Vehicle business
Slide 49: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 49
Slide 50: Assumptions for the financials
Financials Assumptions for the financials ▸ 2018 and beyond assumptions: – Raw Material prices, tariffs, and FX rates will remain at the levels forecasted as of July 2018 throughout the plan period – No “hard Brexit” will take place – The overall automotive markets will perform at the levels current
Slide 51: Financial overview – 2018 Progress
Financial overview – 2018 Progress Quarterly Revenues Adjusted EBIT MEUR MEUR and percent 294 288 288 7.0% 7.2% 7.1% 280 5.4% 5.2% 5.1% 4.8% 268 267 3.6% 3.2% 3.0% 257 259 4.9% 251 250 21 21 20 -0.3% 241 15 14 228 13 13 13 9 8 7 Q1 Q2 Q3 Q4 Q1 Q2 -1 Q3 Q4 2016 2017 2018 ▸ Consistent improvement in p
Slide 52: Financial overview – 2018 Progress (Annually)
Financials Financial overview – 2018 Progress Annually 2018 CMD In Mill. Euro 2016 2017 2018 2019 2020 ACT ACT ACT/FCST Plan Plan Sales 986 1.057 1.128 1.271 1.357 adj. EBIT 28 50 75 97 114 % of sales 2,9% 4,7% 6,6% 7,6% 8,4% Restructuring & One Off cost -10 -26 -20 -7 -1 EBIT 18 24 55 90 113 % of s
Slide 53: Financials – 2017 CMD plan vs. 2018 Update
Financials Financials – 2017 CMD plan vs. 2018 Update (excluding further plant closures) 2017 CMD 2018 CMD 2016 Actual , 2017-2019 Outlook 2016-2017 Actual , 2018-2019 Outlook In Mill. Euro 2016 2017 2018 2019 In Mill. Euro 2016 2017* 2018 2019 ACT ACT/FCST Plan Plan ACT ACT ACT/FCST Plan Sales 350
Slide 54: Financial overview: 2018 CMD vs 2017 CMD
Financials Financial overview How does 2018 CMD look compared to 2017 CMD? 2017 CMD 2018 CMD In Mill. Euro 2017 2018 2019 2020 In Mill. Euro 2017 2018 2019 2020 Sales 1.049 1.132 1.237 1.316 Sales 1.057 1.128 1.271 1.357 EBIT adj. 48 82 108 122 EBIT adj. 50 75 97 114 % of sales 4,6% 7,3% 8,7% 9,3% %
Slide 55: IFRS 16 Estimated impact for Kongsberg Automotive
Financials IFRS 16 Estimated impact for Kongsberg Automotive First time adoption of IFRS 16 is mandatory by January 1 st, 2019 ▸ IFRS 16 requires lease contracts to be recognized as lease liabilities with corresponding right of use assets. Therefore, KA has calculated the present value of its lease
Slide 56: Agenda
Agenda ▸ Executive Summary ▸ An overview of our businesses ▸ General Update ▸ Markets ▸ New Business Wins ▸ How well positioned are we for the big automotive trends? ▸ Presentation of Couplings and Interior Comfort Systems business units ▸ Financials ▸ Summary and Conclusion 56
Slide 57: Summary & Conclusion
Conclusion & Wrap-up Summary & Conclusion ▸ We are confirming the 2017 CMD and 2018 AGM outlook for 2018 continuing to deliver substantial improvements after the second year of our improvement plan in spite of turbulent markets, 2018 CMD world economies and delays in restructuring savings. In Mill.