Sfs Group Ag · SIX:SFSN
Sfs — H1 2016 Earnings Presentation
36 slides from Sfs's earnings presentation, Jul 22, 2016
Slide 1: Welcome to the presentation of 1HY 2016 results
Welcome to the presentation of 1HY 2016 results International development, manufacturing and distribution specialist Focused on technology – diversified in end markets 2016-07-22 Presentation 1HY 2016 results I page 1
Slide 2: Today's speakers
Today's speakers Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer 2016-07-22 Presentation 1HY 2016 results I page 2
Slide 3: Agenda
Agenda 1 Welcome and key takeaways Jens Breu 2 Development of key financials Rolf Frei 3 Development by segment Jens Breu 4 Review 1HY 2016 / guidance 2016 Jens Breu 5 Q&A Jens Breu / Rolf Frei 2016-07-22 Presentation 1HY 2016 results I page 3
Slide 4: Key takeaways 1HY 2016
Key takeaways 1HY 2016 Reported sales of CHF 689m in 1HY 2016 (+2.7% yoy). On a comparable basis, both the Fastening Systems (+10.0%) and Distribution & Logistics (+0.8%) segment delivered higher sales. At Engineered Components, reduced sales in Electronics offset good momentum in Automotive a
Slide 5: Financial overview
Financial overview CHF million 1HY16 1HY15 yoy Gross Sales 688.8 670.4 2.7% EBITDA 135.7 109.4 24.0% As a % of net sales 19.7 16.5 EBITA 93.3 70.4 32.6% As a % of net sales 13.6 10.6 Net Income 47.1 31.8 48.0% As a % of net sales 6.8 4.8 Cash net income1) 70.0 54.4 28.7% As a % of net sales 10.2 8.2
Slide 6: Agenda
Agenda 1 Welcome and key takeaways Jens Breu 2 Development of key financials Rolf Frei 3 Development by segment Jens Breu 4 Review 1HY 2016 / guidance 2016 Jens Breu 5 Q&A Jens Breu / Rolf Frei 2016-07-22 Presentation 1HY 2016 results I page 6
Slide 7: Sales bridge 1HY 2016
Sales bridge 1HY 2016 CHF million 750 670 -0 5 14 689 Reported growth 2.7% yoy Organic -0.1% 700 M&A 0.7% FX impact 2.1% 650 Like for like growth by segment 600 - 5.1% in EC 10.0% in FS 550 0.8% in D&L 500 Ramp-up of project wins on track in all segments 450 Div E down by -33% to
Slide 8: Sales breakdown by region
Sales breakdown by region 1HY 2015 1HY 2016 Gross sales: CHF 670.4m Gross sales: CHF 688.8m Asia Asia Switzerland 18.3 Switzerland 24.5 23.5 23.6 Rest of Rest of World World 0.4 0.3 % America % 13.8 America 11.7 Europe Europe 40.0 43.9 2016-07-22 Presentation 1HY 2016 results I page 8
Slide 9: Employee breakdown by region
Employee breakdown by region 1HY 2015 1HY 2016 Total FTE: 8,501 Total FTE: 8,046 Switzerland Switzerland Asia, RoW 2,265 Asia, RoW 2,245 3,971 27% 3,431 28% 47% 43% Europe Europe 1,739 1,775 20% 22% America America 526 595 6% 7% 2016-07-22 Presentation 1HY 2016 results I page 9
Slide 10: EBITA bridge 1HY 2016
EBITA bridge 1HY 2016 CHF million 120 70 38 -15 93 EBITA up CHF 22.9m or 32.6% 16.6m Seg EC 100 6.9m Seg FS 4.9m Seg D&L -5.5m "Others" 80 "Others" with special impacts 60 Acclerated depreciation CN Restructuring cost DK 40 Special employee bonus CH Higher contribution margin: 20
Slide 11: Operating profitability
Operating profitability in % of net sales in CHF million 25% 400 Regained strong profitability into the guidance of 13 – 14% 350 normalized EBITA margin 19.5% 19.7% 20% 19.0% with 13.6% almost back to 18.4% 17.4% 300 level of 1st HY 2014 (13.8%) 16.5% 250 normalized EBITDA margin with 15% 13.3
Slide 12: Capital expenditure
Capital expenditure Capex in % of net sales Capex in CHF million 8% 160 7.1% Capex spending at low 4.4% of net sales 7% 6.6% 140 projects are leveraging on existing assets 5.7% 5.8% 6% 120 purchase orders not yet fully cash flow effective 5.7% 5% 100 4.4% 97.6 90.4 Expect accelerated capex 4
Slide 13: Net working capital
Net working capital NWC in % of net sales NWC Days outstanding 35% 280 Seasonal peak in net working capital at 30 June 2016. Expect 30% 32.7% 33.0% 240 lower numbers at year end. 31.0% 30.1% 30.2% 28.7% Cash to cash cycle on average 25% 200 net working capital at 117 days slightly below measur
Slide 14: Free cash flow
Free cash flow Free cash flow in % of EBITDA CHF million 60% 300 Stable and strong free cash flow. Increase of CHF 27m 47.7% 15m higher cash in flow 50% 51.7% 45.2% 250 4m lower NWC increase 8m lower capex spending 40% 37.7% 200 Free cash flow used to 31.0% 35.1% acquire 100% Stamm AG 30
Slide 15: Return on net operating assets
Return on net operating assets EBITA in % of NOA NOA in CHF million 20.4% 20% 4'000 Operational NOA before 18.9% intangible assets (Swiss GAAP) 20.2% 19.1% RONOA I relatively stable at 17.8% CHF 986m influenced by NWC and 15% 3'000 change in scope 14.6% EBITA yield at 18.9% 10.6% 10.7% 10.5% 9
Slide 16: Net cash and equity ratio
Net cash and equity ratio Equity in % of assets CHF million 90% 1'200 82.6% 81.3% Equity ratio remains strong at around 80% 80% 1'000 80.4% 79.9% 70% 800 Net cash at CHF 104m. Lower as at year end. Main reason: 62.7% 60% 600 cash out of CHF 56.9m for 54.7% dividend 50% 400 Free cash flow gen
Slide 17: Agenda
Agenda 1 Welcome and key takeaways Jens Breu 2 Development of key financials Rolf Frei 3 Development by segment Jens Breu 4 Review 1HY 2016 / guidance 2016 Jens Breu 5 Q&A Jens Breu / Rolf Frei 2016-07-22 Presentation 1HY 2016 results I page 17
Slide 18: Headlines Engineered Components (EC)
Headlines Engineered Components (EC) Key figures Engineered Components At comparable level, sales declined by 5.1% Continued strong demand from Automotive, Aircraft and Medi- cal; project realization on track Expect difficult year in Electronics division due to dependency on product life cycle
Slide 19: EC: Significant improvements in Swiss operations
EC: Significant improvements in Swiss operations Comprehensive measures taken Customer wins for ABS and brake to offset surge in value of CHF systems All short-term measures rolled back by 1 July; CH sites focus on: precision components requiring highly automated processes and capital intensiv
Slide 20: EC: Further project wins fuel future growth
EC: Further project wins fuel future growth All project ramp-ups are on track and required productivity gains are achieved Efficiency, safety and autonomous driving remain stable trends for innovation and growth Strong competitive position underpinned by additional project wins Acquired addi
Slide 21: EC-E: Strategic key challenges and opportunities
EC-E: Strategic key challenges and opportunities HDD declines Chinese mobile companies taking up 600 market share Shipments in million units 500 Predicted 400 300 Actual 200 Chinese Mobile Companies 2013 2014 2015 2016* 2017* 2018* Year Integration of customers Lower level of innovation and intense
Slide 22: EC-E: Management vision on sales development
EC-E: Management vision on sales development 400 Phase-out of trading activity trading activity expected to be completed in 350 2017 300 Further reduction in HDD drive built to continue with 250 -5% to -7% on an annual basis core business 200 Development of new customers and programs in Mobile
Slide 23: EC-I: Continued strong growth in aircraft & medical
EC-I: Continued strong growth in aircraft & medical Applications in Aircraft and Customer wins for ABS and brake Medical continue to be growth systems engines in the Industrial division Opportunities for contract manufacturers in medical market created by general market growth and increased cost
Slide 24: Headlines Fastening Systems (FS)
Headlines Fastening Systems (FS) Key figures Fastening Systems Good momentum continued in 1HY 2016 resulting in sales growth of 10.0% yoy Growth dynamic broadly supported across the segment Substantial recovery of profitability by 320 bps to 8.6% EBITA yoy due to productivity gains focusin
Slide 25: FS: Strong development of key regions
FS: Strong development of key regions +7% +12% +13% +19% +15% +16% Sales growth compared to 1HY 15 Good momentum continued in 1HY 2016 Growth as a result of resulting in sales growth of 10.0% yoy market success of new products good condition of major markets Europe accounts for ~70% of sal
Slide 26: FS: Sharpening the production strategy
FS: Sharpening the production strategy Jirny, Jirny, CZ CZ Production strategy Construction division Schramberg, GER Campia Turzii, RO Valence, FR Izmir, TR Sharpening the production strategy will C: Moving fastener production out of result in additional productivity gains Switzerland to SFS sit
Slide 27: FS: Competence in facade fastening strengthened
FS: Competence in facade fastening strengthened SFS has acquired Ncase Ltd., a Customer wins for ABS and brake leading supplier of subframes for systems rainscreen cladding in the UK Beside the product, Ncase's leading position is built on a highly experienced team of building envelope special
Slide 28: Headlines Distribution & Logistics (D&L)
Headlines Distribution & Logistics (D&L) Key figures Distribution & Logistics Continued challenging market environment Stable sales development thanks to acquisition of new customers and projects Fast recovery of profitability to 8.0% EBITA (1HY 2015 5.0% EBITA) as result of new project wins
Slide 29: D&L: Continued market success of M2M solutions
D&L: Continued market success of M2M solutions Successful implementation of M2M projects Automated inventory management system M2M presented in 2015 Successful rollout of M2M solutions with pioneer customers proving the advantages After winning a contract from Swiss Federal Customer wins 1HY 2
Slide 30: Agenda
Agenda 1 Welcome and key takeaways Jens Breu 2 Development of key financials Rolf Frei 3 Development by segment Jens Breu 4 Review 1HY 2016 / guidance 2016 Jens Breu 5 Q&A Jens Breu / Rolf Frei 2016-07-22 Presentation 1HY 2016 results I page 30
Slide 31: Outlook 2016
Outlook 2016 Guidance March 2016 July 2016 FY 2016 1HY16 A 2HY16 E FY 2016 E Gross Sales reported 2 to 4% 2.7% 1.3% +2.0% • Organic growth 1 to 3% -0.1% -1.2% -0.6% • Change in scope 1 to 3% 0.7% 1.1% 0.9% • FX impact n/a 2.1% 1.4% 1.7% • Segment EC - 0.7% -2.7% -1.8% • Segment FS 11.9% 0.7% 6.4% •
Slide 32: How we reach the mid-term guidance
How we reach the mid-term guidance Sales growth reported: 5 – 7% EBITA margin adjusted: >15% Leverage existing platforms Above-average growth in business penetration of key accounts areas with attractive profitability global manufacturing platform, increased need for localization Introduct
Slide 33: Agenda
Agenda 1 Welcome and key takeaways Jens Breu 2 Development of key financials Rolf Frei 3 Development by segment Jens Breu 4 Review 1HY 2016 / guidance 2016 Jens Breu 5 Q&A Jens Breu / Rolf Frei 2016-07-22 Presentation 1HY 2016 results I page 33
Slide 34: Q&A
Q&A Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer 2016-07-22 Presentation 1HY 2016 results I page 34
Slide 35: More than 8'000 employees – one target
More than 8'000 employees – one target Creating value with In-depth technological competence International presence Application and industry expertise Long-term relationships 2016-07-22 Presentation 1HY 2016 results I page 35
Slide 36: Disclaimer
Disclaimer This presentation includes forward looking statements. These statements reflect the SFS Group's current assesment of market conditions and future events. The statements are therefore subject to risks, uncertainties and assumptions. Unforseen events may lead to deviations of the actual res