Knorr-bremse Ag · XETR:KBX
Knorr-bremse — Q2 2022 Earnings Presentation
38 slides from Knorr-bremse's earnings presentation, Aug 12, 2022
Slide 1: Financial Results Q2/22
FINANCIAL RESULTS Q2/22 FRANK WEBER I CFO AND EXECUTIVE BOARD SPOKESMAN DR. JÜRGEN WILDER I HEAD OF RVS AUGUST 12, 2022
Slide 2: Key take-aways for today
Key take-aways for today Strong underlying demand in Truck (EU/ NA) and Rail (EU) continues, but Russia and weak development in China are weighing on both divisions Pricing and cost measures to mitigate inflation on track Challenging global economic environment should continue, but KB is prepared Bo
Slide 3: Good demand ex China in a challenging global environment
Good demand ex China in a challenging global environment Current situation Throughout 2022 No cancellations of vehicle contracts by rail Good OI development expected operators, but postponements of deliveries ongoing AM: Increase in train traffic after Covid Despite increasing supply challenges good
Slide 4: KPIs Q2/22: Strong demand and revenues, but pressure on profitability
KPIs Q2/22: Strong demand and revenues, but pressure on profitability REVENUES OF € 1.74bn 10.5% op. EBIT MARGIN (+0.5% yoy) (PY: 14.1%) € 823m € 914m 14.3% 8.1% € -35m FREE CASHFLOW (PY: € 131m) -32% Cash Conversion Rate ORDER INTAKE € 1.93bn ORDER BOOK € 6.69bn 1 1 (+6.9% yoy) (+29.7% yoy) 1) Spec
Slide 5: Higher NWC to secure ability to deliver, while stringent measures implemented
Higher NWC to secure ability to deliver (“Customer First”), while stringent measures implemented to lower NWC towards YE22 Capex NWC ROCE (annualized) €m % of sales €m Scope of days % 73.0 67.4 4.4% 59.3 3.9% 26.7% 1.381 47.0 1.250 1.126 77 876 68 16.4% Q2/21 Q2/22 30.06.21 31.12.21 31.03.22 30.06.2
Slide 6: RVS: Strong order book and high B-t-B provide good visibility
RVS: Strong order book and high B-t-B provide good visibility Order intake Order book €m +35.6% Strong Order book provides good visibility 0.87 Book-to-bill 1.27 ▪ Order book well supported by resilient and stable 1 4,769 rail industry despite Covid; order book adjusted in +42.2% view of sanctions o
Slide 7: RVS: Solid revenues, but profitability burdened by Russia and China
RVS: Solid revenues, but profitability burdened by Russia and China Revenue op. EBIT €m Solid revenue development in Q2/22 18.4% ▪ AM: rail traffic is not back to normal, but AM increased in Q2/22 yoy -3.1% ▪ EU: OE lower; positive development in freight & 849 14.3% 36 823 locos, AM slightly lower i
Slide 8: CVS: Order book remains very strong
CVS: Order book remains very strong Order intake Order book €m Lower OI due to supply shortages for OEMs, managed order book at OEM level and weak market 1.22 Book-to-bill 0.96 +16.3% in China 1,927 1 ▪ EU/ NA: Demand still on high level with no major -17.5% 1,657 cancellations, but postponements in
Slide 9: CVS: Revenues increased slightly, profitability still under inflationary pressure
CVS: Revenues increased slightly, profitability still under inflationary pressure Revenue op. EBIT €m Good revenues ex China ▪ EU & NA: Successful negotiations on price 11.2% increases with OEMs +4.0% ▪ APAC: No recovery in China yet, India business 61 914 continues to be strong, Japan slightly down
Slide 10: Guidance FY22: Impact by sanctions on Russia versus original guidance
Guidance FY22: Impact by sanctions on Russia versus original guidance Q2/22 FY22e Revenues ~ € -40m ~ € -130m Impact on EBIT EBIT ~ € -25m ~ € -70m margin at KB group level approx. -70 bps in FY22 One-time € 18m € 18m effects / (additional ~€ 32m possible1) Write off assets/ Write off assets/ Non op
Slide 11: Guidance FY22: Chinese market reduction significantly burden KB's revenues
Guidance FY22: Chinese market reduction significantly burden KB’s revenues H1/21 H1/22 Rail market China Metro cars ~2,010 ~1,530 High-speed trains 50 27 vs. RVS total revenues China € ~387m € ~314m Truck market China (TPR) Heavy Duty ~942,000 ~340,000 vs. CVS total revenues China € ~310m € ~142m 11
Slide 12: Inflationary pressure increased but KB well positioned to mitigate headwinds
Inflationary pressure increased but KB well positioned with the unchanged goal to mitigate headwinds with pricing actions and revenue/ cost measures Countermeasures to fight inflation Status quo (incl. raw material, salary, transport etc. ) ▪ RVS: successful AM pricing actions, OE more difficult due
Slide 13: Guidance FY22: Good operational performance not able to overcompensate China and Russia
Guidance FY22: Good operational performance not able to overcompensate the impact of China and Russia Inflation can be fully compensated by price 13.5% ~0bps increases and sustainable & one-off cost measures 10.5-12.0% ~ -70bps ~ -120bps ~ -30bps Price Headwinds increases (Inflation etc.) and revenu
Slide 14: Revised Group Guidance from July 27, 2022, confirmed
Revised Group Guidance from July 27, 2022, confirmed Revenues Operating EBIT margin Free Cashflow Assumptions €m ▪ No significant further deterioration in geopolitical and economic conditions 6,900-7,200 compared with current situation 6,706 600 ▪ No significant deterioration in gas and 13.5% 300-50
Slide 15: Knorr-Bremse strategy set to develop new growth segments within rail and truck
Knorr-Bremse strategy set to develop new growth segments within rail and truck on top of strong existing businesses New growth markets Digitalization • Further growth perspectives • Inorganic moves on top Connectivity / Automated E-Mobility/ • Investments needed Digital Truck Driving Emission Reduct
Slide 16: Base business: China to reach bottom, but remains important
Ad (I) BASE BUSINESS: China to reach bottom, BUT remains important, well supported by RVS AM business Total RVS revenues in China (€m) ~950 KB group EBIT ~800 margin impact approx. ~700 -100 bps ~650 ~600 Expected Bottom Some AM recovery Invest. in Green mobility/ RVS global partner of CRRC Low inve
Slide 17: New business M&A CVS: Cojali will strengthen accretive digitalization business
Ad (II) NEW BUSINESS M&A CVS: Cojali will strengthen accretive digitalization business CVS will become an important system supplier in global growth market of digital solutions and data-driven services Connectivity / Digital Truck Financial impact ▪ Purchase price of ~ € 200m for 55% stake ▪ Revenue
Slide 18: New business M&A RVS: Cooperation & investment agreement with Nexxiot
Ad (III) NEW BUSINESS M&A RVS: Cooperation & investment agreement with Nexxiot fuels new data driven business opportunities for RVS RVS will become a leading player for condition-based Lifecycle Availability maintenance & automation operations in rail industry Management Cooperation agreement ▪ RVS
Slide 19: Q&A / Backup
Q&A / Backup
Slide 20: Financial calendar: Upcoming events
Financial calendar: Upcoming events Date Event August 12, 2022 Q2/22 financial results September 7, 2022 Commerzbank and ODDO BHF Corporate Conference, Frankfurt September 8, 2022 Morgan Stanley CEO Conference, London September 13, 2022 UBS Quo Vadis (virtually) September 19, 2022 Baader Bank Invest
Slide 21: Q2/22 – Group (order intake and order book)
Q2/22 – Group Order intake Order book €m €m 1.04 Book-to-bill 1.11 +29.7% +22.5% +6.9% 6,695 w/o adjustment 115 1,928 6,320 1,804 19 5,161 -10 RVS RVS RVS RVS -0.5% 737 1,047 3,517 4,769 CVS EVAC CVS 1,068 € 19m (Q2/22) 881 CVS CVS 1,657 1,927 Q2/21 Organic M&A FX Q2/22 30.06.21 30.06.22 Book-to-bil
Slide 22: Q2/22 – Group (revenue)
Q2/22 – Group Revenue €m By business By region +0.5% 1,727 97 1,737 1,727 1,737 8 30 26.6% 38 SA -96 Asia/ 426 528 -19.2% Pacific RVS -5.5% RVS 849 823 451 359 25.5% NA EVAC CVS € 8m (Q2/22) CVS 879 914 810 822 EU 1.4% Q2/21 Organic M&A FX Q2/22 Q2/21 Q2/22 y-o-y growth 22
Slide 23: Q2/22 – Group (op. EBIT, EPS)
Q2/22 – Group op. EBIT/ ROS EPS1 € m 14.1% € -36.3% 1.02 10.5% -25.1% 244 0.65 8 183 -68 -2 27.8% EVAC € -2m2 (Q2/22) Q2/21 Org. M&A FX Q2/22 Q2/21 Q2/21 1) After minorities 2) Before PPA 23
Slide 24: H1/22 – Group (order intake and order book)
H1/22 – Group Order intake Order book €m €m 1.05 Book-to-bill 1.19 +29.7% +12.1% +22.5% 6,695 w/o adjustment 179 4,038 6,320 228 29 3,603 5,161 RVS 6.3% RVS RVS 1,451 2,128 RVS 4,769 3,496 CVS EVAC CVS 2,153 € 29m (H1/22) 1,911 CVS CVS 880 1,927 H1/21 Organic M&A FX H1/22 H1/21 H1/22 1) Specific rev
Slide 25: H1/22 – Group (revenue)
H1/22 – Group Revenue €m By business €m By region y-o-y growth -0.4% 3,419 153 3,406 3,419 3,406 20 32.5% SA 54 72 -186 1,049 826 Asia/ RVS RVS -21.2% Pacific -5.4% 1,655 1,598 18.7% 839 706 NA EVAC € 20m (H1/22) CVS CVS 1,765 1,809 1,609 1,669 3.7% EU H1/21 Organic M&A FX H1/22 H1/21 H1/22 25
Slide 26: H1/22 – Group (op. EBITDA, op. EBIT)
H1/22 – Group op. EBITDA/ EBITDA Margin op. EBIT/ EBIT Margin (ROS) €m 18.5% 14.5% 15.0% -19.3% 10.7% 632 -26.4% 12 510 495 RVS -134 -1 RVS 361 RVS 8 365 361 RVS 305 RVS 390 -21.1% RVS RVS RVS -124 -2 301 301 240 EVAC 326 -25.1% € -1m1 (H1/22) CVS CVS CVS EVAC CVS 280 221 214 € -2m1 (H1/22) 151 H1/2
Slide 27: H1/22 – Group (cash flow, capex, NWC, ROCE)
H1/22 – Group OCF & FCF CapEx NWC ROCE (annualized) €m OCF FCF €m % of sales €m Scope of days % 73.0 4.1% 3.8% nm 59.3 26.7% nm 1,381 224 1,126 108 141 16.4% 130 -153 -267 H1/21 H1/22 30.06.21 30.06.22 H1/21 H1/22 H1/21 H1/22 27
Slide 28: H1/22 – RVS order intake and order book
H1/22 – RVS Order intake Order book €m +35.6% 0.88 Book-to-bill 1.33 4,769 +27.5% +46.7% w/o adjustment 4,486 29 81 2,128 568 3,517 1,451 39.2% EVAC € 29m (H1/22) H1/21 Organic M&A FX H1/22 H1/21 H1/22 1) Specific revenue-generating existing orders (e.g. prototypes, other revenues and FX impacts etc
Slide 29: H1/22 – RVS revenue and earnings
H1/22 – RVS Revenue op. EBITDA / EBITDA margin op. EBIT / EBIT margin (ROS) €m 21.8% -3.4% 19.1% 18.2% 1,655 58 1,598 15.0% 20 -15.3% -134 361 -20.2% -8.1% 6 305 301 -60 -1 4 240 -16.7% -63 -2 EVAC € 20m (H1/22) -21.0% EVAC EVAC € -1m1 (H1/22) € -2m1 (H1/22) H1/21 Organic M&A FX H1/22 H1/21 Organic
Slide 30: H1/22 – CVS order intake and order book
H1/22 – CVS Order intake Order book €m 1.22 Book-to-bill 1.06 -11.3% +16.3% 2,153 +11.6% 98 1,911 1,927 w/o adjustment 0 1,657 1,849 -340 15.8% H1/21 Organic M&A FX H1/22 30.06.21 30.06.22 1) Specific revenue-generating existing orders (e.g. prototypes, other revenues and FX impacts etc.) are now in
Slide 31: H1/22 – CVS revenue and earnings
H1/22 – CVS Revenue op. EBITDA / EBITDA margin op. EBIT / EBIT margin (ROS) €m 15.9% +2.5% 12.2% 12.1% 8.3% 95 1,809 1,765 -21.2% 280 -29.3% 0 214 0 7 221 -51 -67 0 5 151 -2.9% -68 -23.8% -31.7% H1/21 Organic M&A FX H1/22 H1/21 Organic M&A FX H1/22 H1/21 Organic M&A FX H1/22 31
Slide 32: Lower FCF due to higher NWC and lower EBIT
Lower FCF due to higher NWC and lower EBIT Free Cashflow1 Cash Conversion Rate €m In % 131 77% -35 -32% Q2/21 Q2/22 Q2/21 Q2/22 1) FCF before M&A 32
Slide 33: H1/22: income statement
H1/22: income statement INCOME STATEMENT 2021 2022 2021 2022 €m Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/21 H1/22 Revenues 1,691.5 1,727.4 1,589.2 1,697.5 6,705.6 1,669.4 1,736.7 3,418.9 3,406.0 Change in inventory of unfinished/finished products 30.0 22.2 17.9 -31.1 39.1 54.0 8.3 52.2 62.3 Own w
Slide 34: H1/22: cashflow
H1/22: cashflow CASHFLOW STATEMENT (shortened) 2021 2022 2021 2022 €m Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/21 H1/22 Net cash flows from/used in operating activities 27.6 196.1 265.1 486.8 975.5 -189.6 36.7 118.6 -152.9 Net cash flows from/used in investing activities -78.8 -186.9 -71.0 -197.6
Slide 35: H1/22: balance sheet / assets
H1/22: balance sheet / assets 2021 2022 €m 31.03.2021 30.06.2021 30.09.2021 31.12.2021 31.03.2022 30.06.2022 Assets Intangible assets and goodwill 899.2 967.5 986.9 1,005.8 1,016.5 1,017.4 Property, plant and equipment 1,589.1 1,611.6 1,618.1 1,790.4 1,798.8 1,786.0 Investments accounted for using t
Slide 36: H1/22: balance sheet / liabilities
H1/22: balance sheet / liabilities 2021 2022 €m 31.03.2021 30.06.2021 30.09.2021 31.12.2021 31.03.2022 30.06.2022 Equity Subscribed capital 161.2 161.2 161.2 161.2 161.2 161.2 Capital reserves 13.9 13.9 13.9 13.9 13.9 13.9 Retained earnings 13.3 13.3 13.3 13.3 10.3 10.0 Other components of equity -2
Slide 37: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, an
Slide 38: Investor relations contact
Investor relations contact Andreas Sophia Spitzauer Kursawe +49 89 3547 182310 +49 89 3547 187311 +49 175 5281320 +49 151 62330709 Andreas.Spitzauer@knorr-bremse.com Sophia.Kursawe@knorr-bremse.com 38