Slide 1: Half-Year Results 2016
Half-Year Results 2016 . . . . presentation, Investor . . . . July . 21, . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dr. Norbert Klapper, Group CEO . . . . . . Joris Gröflin, Group CFO. . . . . . . . . . . . . . . . . . .
Slide 2: Agenda
Agenda 1. Introduction and summary HY1 2016 Dr. Norbert Klapper 2. Financial results HY1 2016 Joris Gröflin 3. Outlook Dr. Norbert Klapper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Half-Year Results 2016 2
Slide 3: HY1 2016: Key messages today
HY1 2016: Key messages today Positive development of order intake Order intake (in mCHF) 655 • Increase in order intake of 32% at +32% group level and 52% for machinery business 511 491 413 • Significant contribution to results by 388 After Sales and Components • STEP UP improvement program on track
Slide 4: Sales development by region
Sales development by region Lower sales, as expected mCHF • Significant sales to Asian countries achieved. -21% Order intake slighty above sales level 554 • China with strong growth against HY1 2015; more Africa 41 11 than half of sales were generated in the Xinjiang 483 province. Order intake below
Slide 5: Strategic focus
Strategic focus Rieter continues to work on achieving the mid-term targets Boosting innovative Expanding the after-sales Increasing profitability: capability: business: Increased R&D activities Target to achieve growth Streamlining of with 24.4 million CHF of 30% by 2018 (vs. production in Win
Slide 6: Agenda
Agenda 1. Introduction and summary of HY1 2016 Dr. Norbert Klapper 2. Financial results HY1 2016 Joris Gröflin 3. Outlook Dr. Norbert Klapper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Half-Year Results 2016 6
Slide 7: Rieter – Financial overview HY1 2016
Rieter – Financial overview HY1 2016 Orders received substantially over sales mCHF Orders Stronger demand at Machines & Systems and After 510.7 +32% received Sales, Components on healthy level Positive development of After Sales and Components Sales 436.9 -21% and lower Machines & Systems sales, as
Slide 8: Rieter – Financial key figures
Rieter – Financial key figures EBITDA profitability at 7.9% of sales and positive Free Cash Flow mCHF HY1 2016 HY2 2015 HY1 2015 FY 2015 Order Intake 510.7 413.3 388.3 801.6 Sales 436.9 482.9 553.9 1 036.8 EBITDA 34.4 49.9 66.0 115.9 EBITDA margin (of sales) 7.9% 10.3% 11.9% 11.2% EBIT 15.7 27.0 46.
Slide 9: Orders by business group
Orders by business group Orders received at 510.7 million CHF – strong Machines & Systems demand • Rebound: Business Group Machines & Systems mCHF with 343.4 million CHF orders received +32% (+ 52% vs. HY1 2015, +54% in local currencies) 550 511 • Positive: Business Group After Sales with 71.2 500 m
Slide 10: Sales by business group
Sales by business group Sales growth by After Sales and Components offset by Machines & Systems • 41% of sales from After Sales (16%) and mCHF Components (25%); 59% of sales from Machines & Systems 700 -21% • Very positive: Business Group Components with 600 554 109.3 million CHF sales (+ 19% vs. HY
Slide 11: Change in sales and currency impact
Change in sales and currency impact Main impact on sales from lower volume and price Machines & mCHF After Sales Components Rieter Group Systems Sales HY1 2015 392.7 69.6 91.6 553.9 Volume and price -116.7 0.3 15.4 -101.0 Currency translation -1.6 0.8 2.3 1.5 Divestments -17.5 0.0 0.0 -17.5 Sales HY
Slide 12: Operating result (EBIT)
Operating result (EBIT) EBIT margin at 3.6% of sales In % of 8.3% 5.6% 3.6% Profitability development stems from sales mCHF • Positive performance at After Sales with 18.7% of sales 70 • Good profitability of 13.0% of segment sales at Components 60 -66% • Volume driven profitability decrease at Mach
Slide 13: Net profit and RONA
Net profit and RONA Net profit margin at 2.5% In % of • Improvement of financial result to -1.8 million CHF sales 5.3% 4.3% 2.5% (HY1 2015: -4.7 million CHF) due to lower interest mCHF cost • Income tax at 2.9 million CHF (HY1 2015: 12.3 50 million CHF) 45 • Earnings per share at 2.42 CHF 40 (HY1 20
Slide 14: Changes in workforce
Changes in workforce Total workforce drops 6% year-on-year Temporaries • Fix employees decrease versus HY1 2015 due to in % 14.5% 11.3% 10.2% divestment of Schaltag group offset by increase FTE1) mainly in Czech Republic and China • Temporaries followed the volume and decreased 7.000 -6% mainly in S
Slide 15: Balance sheet
Balance sheet Net liquidity and equity ratio improved against HY1 2015 Total assets, equity and equity ratio Liquid funds and net liquidity (in mCHF / in %) (in mCHF) 334 43% 44% 44% 305 265 992 1001 987 212 194 568 557 554 139 424 444 433 HY1 HY2 HY1 HY1 HY2 HY1 2015 2015 2016 2015 2015 2016 Liabil
Slide 16: Net working capital
Net working capital Seasonal increase of net working capital to 20.8 million CHF • Seasonal increase in inventories 30.06. 31.12. 30.06. compared to prior year-end by 19.2 million mCHF 2016 2015 2015 CHF Inventories 210.7 191.5 207.8 • Overall increase in net working capital compared to year-end 201
Slide 17: Capital expenditures / D&A
Capital expenditures / D&A Capital expenditures below depreciation / amortization level mCHF Capital expenditures Depreciation & Amortization 35 35 30 +47% 30 -6% 25 24 25 23 20 19 20 9 20 11 15 1 15 8 7 11 1 1 1 10 3 10 5 5 7 12 5 1 3 5 0 5 5 4 7 7 6 0 1 2 2 0 HY1 2015 HY2 2015 HY1 2016 HY1 2015 HY
Slide 18: Free cash flow
Free cash flow Improved free cash flow compared to HY1 2015 due to modest NWC increase HY1 HY1 • Lower net profit with negative impact on mCHF free cash flow compared to prior-year 2016 2015 (-18.1 million CHF) Net profit 11.0 29.1 • Modest increase in net working capital at June 30, 2016, compared
Slide 19: Agenda
Agenda 1. Introduction and summary of HY1/16 Dr. Norbert Klapper 2. Financial results HY1/16 Joris Gröflin 3. Outlook Dr. Norbert Klapper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Half-Year Results 2016 19
Slide 20: Strategic focus
Strategic focus RIETER is the world's leading supplier of short staple spinning systems offering the full range of machines, parts and components Creating customer value through • system expertise • innovative solutions • after sales excellence • global presence Generating profitable growth and
Slide 21: Outlook
Outlook • The first six months of 2016 have been characterized by improved demand for spinning machinery and healthy demand at the Components and After Sales business groups. • Higher order intake for spinning machinery in the first half of 2016 has led to an increase in order backlog (as at June 30
Slide 22: Strategic focus – mid-term targets
Strategic focus – mid-term targets Sales Sales growth above market EBIT margin1) ~10% RONA2) ~14% Target pay-out ratio of at least Dividend policy 40% of net profits 1) At sales of ~1.3 CHF bn 2) RONA is calculated as net result before interest costs and write-off of financial assets divided by net
Slide 23: Disclaimer
Disclaimer Rieter is making great efforts to include accurate and up-to-date information in this document, however we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this document and we disclaim any liability whatsoever
Slide 24: Values and principles
Values and principles Half-Year Results 2016 24
Slide 25: Appendix
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Half-Year Results 2016 25
Slide 26: Key data per share
Key data per share Rieter registered shares of 5 CHF nominal value 30.06.2016 31.12.2015 30.06.2015 Bloomberg: RIEN SW; Thompson Reuters: RIEN.S Shares outstanding excl. own shares 4‘518‘063 4‘511‘075 4‘581‘585 (end of period) Average shares (of period) 4‘515‘519 4‘550‘650 4‘577‘017 Share price (end
Slide 27: Key investment highlights of Rieter
Key investment highlights of Rieter 1 Long-term growth industry Experienced Broadest global management 6 2 systems team and board supplier of directors Rieter Efficient cycle Leading market 5 management 3 positions with and value global footprint/ creation after sales Technology and 4 innovation lea
Slide 28: 1 – Long-term growth industry
1 – Long-term growth industry Rieter will profit from market drivers and shifts Textile mill consumption (in million tons) Performance shift (in %) 1.5% 99 30% 37% 87 42% 44% 47% 74 60% 65% 51 70% 63% 58% 56% 53% 40% 35% 2000 2010 2015 2020 2009 2010 2011 2012 2013 2014 2015 Cotton xx% CAGR short st
Slide 29: 2 – Rieter systems with superior customer value
2 – Rieter systems with superior customer value Higher total value of ownership for Rieter systems customers Exemplary spinning mill lay-out: Compact ring spinning system Draw Blowroom Card Comber Flyer Compact ring spin frame Rieter System Value Proposition One-stop-shop: providing customer speci
Slide 30: 2 – Rieter: Business Groups
2 – Rieter: Business Groups Strong business model serving a global market Machines & Systems After Sales Components Customer focus Spinning mills Rieter installed base 3rd party installed base and 3rd party OEM’s Products Machines & Systems Parts, Services & Parts & Components (Capital Goods) Instal
Slide 31: Components
2 – Rieter: Business Groups Preparation • Leading position in high-end segment for all fields Machines & of activity Systems • Recognized as an innovation leader with superior Ring Compact Rotor Air-Jet products Transport Automation Monitoring • Best support to leverage customers’ investment in Riet
Slide 32: 3 – Leading market positions with global footprint
3 – Leading market positions with global footprint Strong global production, sales and service footprint to serve key markets Half-Year Results 2016 32
Slide 33: 3 – Leading market positions with global footprint
3 – Leading market positions with global footprint Continuous increase of sales in Asia World-wide installed capacity Rieter sales in CHF million (spindle equivalents) in % 1.200 1153 Africa Europe Americas 1061 1035 1037 174 7% 4% 1.000 151 140 China 2% 870 889 223 131 Asian 800 103 175 142 India 1
Slide 34: 4 – Technology and innovation leadership
4 – Technology and innovation leadership Past break-through examples prove technology and innovation leadership Widest, self OMEGAlap Double-head New Compact Rotor sharpening (combing autolevel. Air-Jet spinning spinning Machines & card prep.) draw frame Machine machine K 46 machine R 66 Systems 200
Slide 35: 5 – Efficient cycle management and value creation
5 – Efficient cycle management and value creation Rieter’s market is characterized by cyclical fluctuations Spindle equivalents (shipments) - in million 20 Investment cycle triggers: 19.1 18.4 China 17.1 •17.5Positive 17.0 17.5 spinning mill 15.5 margins (conversion India 14.7 14.7 15 10.3 13.6 13.8
Slide 36: 5 – Efficient cycle management and value creation
5 – Efficient cycle management and value creation Focus on profitability Sales and profitability development Profitability improvement measures: (CHF million) Increase of share of high-margin 631 business 557 554 538 523 487 522 483 Value-based pricing 478 437 401 Improvement of product margin
Slide 37: 5 – Efficient cycle management and value creation
5 – Efficient cycle management and value creation Significant share of EBIT stems from After Sales and Components mCHF EBIT 70 56 60 50 46 30 40 17 29 27 16 30 11 12 14 13 13 20 9 10 18 16 18 18 14 0 -4 -4 -1 -2 -1 -12 -10 -4 -20 HY1 2014 HY2 2014 HY1 2015 HY2 2015 HY1 2016 Machines & Systems After
Slide 38: Profitability improvement mid-term: 10% EBIT margin
Profitability improvement mid-term: 10% EBIT margin Key initiatives lead to the profitability improvement HY1 HY2 HY1 HY2 HY1 Mid-term Key initiatives 2014 2014 2015 2015 2016 Target1) Machines & Systems 376.1 477.4 392.7 309.6 256.9 Innovation / CN,IN / Pricing Sales After Sales 59.6 67.9 69.6 70.2
Slide 39: Rieter’s Swiss franc exposure
Rieter’s Swiss franc exposure Additional measures initiated to reduce negative impact of strong CHF Sales in mCHF • Swiss franc cost exposure reduced since 2011 553.9 436.9 • Investments in China and India as well 50% as Czech Republic allow for greater flexibility • Rieter is streamlining productio
Slide 40: Profitability improvement mid-term: 14% RONA
Profitability improvement mid-term: 14% RONA Reduction of net assets with increased profitability in order to achieve target • Reduction of net working capital Net profit by half-year • Sale of non-core assets (before interest cost / mCHF) • Investments on or below D&A level 50 45 HY2 2014 13.7% 40
Slide 41: RONA
RONA Return on net assets (RONA) of 4.8% below cost of capital mCHF 30.06.2016 31.12.2015 HY1 2016 Non-current assets 360.4 370.1 Inventories and receivables 321.3 297.3 Liquid funds 305.4 334.0 Total assets 987.1 1 001.4 Non-current liabilities (excl. financial debt) -142.3 -143.9 Current liabiliti
Slide 42: 5 – Efficient cycle management and value creation
5 – Efficient cycle management and value creation Dividend of CHF 4.50 paid out for 2015 Dividend Pay-out ratio Reserves from capital (in CHF per share) (in % of net profit) contributions (in CHF million – year-end) 6.0 41 41 129.4 39 39 4.5 4.5 101.7 90.1 3.5 23 74.1 2.5 53.5 2011 2012 2013 2014 20
Slide 43: 6 – Experienced management team and BoD
6 – Experienced management team and BoD BoD and management team as of April 2016 Board of Directors Management team Erwin Stoller Dr. Norbert Klapper Chairman of the Board of Directors Chief Executive Officer since 2008 since 2014 This E. Schneider Thomas Anwander Lead Director General Counsel and C