Slide 1: Investor and Analyst Briefing 2014
Investor and Analyst Briefing 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 2: Agenda
Agenda 1. Welcome and program 2. Market trends and growth 3. Rieter position 4. Strategic focus . . . . . 5. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 2
Slide 3: Schedule
Schedule 09.15 – 10.15 Presentation and discussion 10.30 Departure by bus to Bräcker, Pfäffikon 11.00 – 11.40 Introduction and factory tour 11.45 Departure by bus to Winterthur 12.15 Flying lunch 13.30 Planned end Investor and Analyst Briefing 2014 3
Slide 4: Key messages
Key messages Rieter sets priorities in the implementation of it’s strategy Strengthening innovation Expanding parts and components business Increase profitability Adjusted medium-term targets Outlook for 2014 confirmed Investor and Analyst Briefing 2014 4
Slide 5: Agenda
Agenda 1. Welcome and program 2. Market trends and growth 3. Rieter position 4. Strategic focus . . . . . 5. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 5
Slide 6: Market trends and growth
Market trends and growth Rieter will profit from market drivers and shifts Textile Mill Consumption (in million tons) Performance shift (in %) 2.5% 108 30% 37% 90 42% 44% 47% 76 53 70% 63% 58% 56% 53% 2000 2010 2014 2020 2009 2010 2011 2012 2013 Cotton Manmade staple fibres xx% CAGR short staple fib
Slide 7: Market trends and growth
Market trends and growth Market for short staple spinning equipment is assumed to grow in value Value (in million CHF) Spindle equivalents (in million) +1.9% +0.4% 4'330 14.7 15.0 3'950 2013 Mid-term 2013 Mid-term Actual estimate Actual estimate w/o Winder Endspinning machines only Market growth i
Slide 8: Agenda
Agenda 1. Welcome and program 2. Market trends and growth 3. Rieter position 4. Strategic focus . . . . . 5. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 8
Slide 9: Rieter position
Rieter position Strong market position, upside potential by realized capacity increase Value (in million CHF) Spindle equivalents (in million) 4’220 18.4 3’990 3’950 17.1 3’610 14.7 13.6 22% 25% 25% 26% 7% 9% 10% 12% 2010 2011 2012 2013 2010 2011 2012 2013 Market value Rieter market share Market Rie
Slide 10: Rieter position
Rieter position Consistent profitability improvement since HY2 2012 Sales and profitability development Profitability drivers: (in million CHF) Price and currency development 557 538 523 522 Development of product and regional mix 487 478 401 Improved product cost 13.1% Less profitable busin
Slide 11: Agenda
Agenda 1. Welcome and program 2. Market trends and growth 3. Rieter position 4. Strategic focus . . . . . 5. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 11
Slide 12: 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 13: Strategic focus – innovative solutions
Strategic focus – innovative solutions Creating customer value through innovative solutions Spinning mill profitability impact Rieter innovation focus areas (in basis points) Improvement of yarn property Yarn price +5% ~500 (higher prices) Reduction of raw material cost Material cost -5% ~345 (Flexi
Slide 14: Strategic focus – after sales excellence
Strategic focus – after sales excellence Creating customer value through after sales excellence Distribution of sales (in million CHF) After sales growth potentials 1’061 1’035 Excellent after sales is a key differentiator in the market 865 889 SYS Parts and PTC business is more stable through t
Slide 15: Strategic focus – profitable growth
Strategic focus – profitable growth Improvement measures started to increase profitability Sales and EBIT (in million CHF) Improvement measures Focus area Content ~1’300 Delight your Improve customer customer satisfaction 1’035 +265 Enhance strategic Price pricing Margin Utilize capacities in Mix Ch
Slide 16: Strategic focus – mid-term targets
Strategic focus – mid-term targets Sales Sales growth above market EBIT margin ~10% at sales of ~1.3 bn1) RONA2) ~14% Target pay-out ratio of about Dividend policy 30% of net profits 1) Targets assume growth in consumption of short-staple fibers of 2 – 3 % p.a., current (average 2014) exchange rates
Slide 17: Agenda
Agenda 1. Welcome and program 2. Market trends and growth 3. Rieter position 4. Strategic focus . . . . . 5. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 17
Slide 18: Market environment
Market environment • Spinning mills’ narrowing margins due to declining raw material and yarn prices in the third quarter have resulted in a slowdown in market momentum, especially in Turkey, the Asian countries (without China and India) and Latin America. The slightly positive momentum in India was
Slide 19: Outlook
Outlook • Rieter expects for the second half of 2014 a market demand on lower levels than in the strong first semester. Demand depends among other factors on the development of yarn and raw materials prices, currency exchange rates, financing costs, and global consumer sentiment. • Based on the curr
Slide 20: 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 21: Appendix
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor and Analyst Briefing 2014 21
Slide 22: 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 Technology and 4 innovation leadership Inves
Slide 23: Rieter's market: Short staple spinning machines and components
1 – Rieter’s market: Short staple spinning machines and components Rieter’s customers spin any fiber with a length from 25 to 45 mm to yarn • Length: 25 – 45 mm Fibers • Types: Man-made (synthetic and cellulosics) and natural (cotton) • Consumption: 40.2 million tons (2012) • Consumption growth: ~2.
Slide 24: Rieter's market: Long-term growth industry
1 – Rieter’s market: Long–term growth industry Cyclical market will be driven by continued growth in fiber demand Spindle equivalents (shipments) - in million Investment cycle triggers: 20 19.1 18.4 • Positive spinning mill China 17.1 margins (conversion 15.5 15 India 14.7 14.7 between raw material
Slide 25: Rieter's market: Impact of macro trends on growth
1 – Rieter’s market: Impact of macro trends on growth Macro trends will have a positive impact on Rieter’s position Future growth drivers Growing fiber demand calls Trend to increasing quality, Replacement of installed for additional capacity fineness and automation capacity beyond productivity gain
Slide 26: Rieter's market: Fiber and yarn price
1 – Rieter’s market: Fiber and yarn price Different yarn products exist – Rieter machines spin all short staple yarns Selection of short staple yarn prices, cost and margins in USD/kg (estimated 2013 indexed) 1,00 Margin 0,87 Waste costs Labour costs 0,62 0,58 Energy costs 0,50 Running costs 0,44 0,
Slide 27: Broadest global systems supplier
2 – Broadest global systems supplier Global supplier… …of spinning machinery and components Europe Asia Americas [Pic] [Pic] Legend Sales Service R&D Production …covering preparation and Full-liner for all fibre types… all four spinning technologies From raw material… …to yarn Ring conventional (1)
Slide 28: Full-liner: Spinning technology for all fiber types
2 – Full-liner: Spinning technology for all fiber types Rieter’s products can be adapted to spin all fiber types Example Rotor R 60 – component options for all fiber types Cotton Synthetic / blends Cellulosics (Viscose) Investor and Analyst Briefing 2014 28
Slide 29: Full-liner: Rieter offers full systems
2 – Full-liner: Rieter offers full systems Spinning mills are a system of pre and end spinning machines Exemplary spinning mill lay-out: Compact ring spinning system Blowroom Comber Card Drawframe Flyer Compact ring spin Investor and Analyst Briefing 2014 29
Slide 30: Service and installation offering
2 – Service and installation offering Rieter – service and engineering solutions as key value proposition Feasibility studies Mill planning Project management - Simulation - Layout (3D) - Engineering - Spinning schedule - Automation - Coordination - Production costs - Infrastructure - Hand-over Inve
Slide 31: Leading market positions with global footprint
3 – Leading market positions with global footprint Continuous increase of sales in largest market China 2012, world-wide installed capacity (spindle equivalents) in % 2010 – 2013, Rieter sales in Mio CHF Africa Europe 1.200 Americas 1061 5% 1035 7% 1.000 2% 151 870 889 223 China Rest of Asia 800 103
Slide 32: Technology and innovation leadership
4 – Technology and innovation leadership SYS and PTC are focused on improving customer’s competitive position Cost structure of a spinning mill In % of total cost, excluding overhead and interest costs Improvement of yarn property (higher prices) Raw 45-73% material 68-85% Reduction of raw material
Slide 33: Efficient cycle management and value creation
5 – Efficient cycle management and value creation Improved sales and profitability in HY1 CHF million HY1 2014 HY2 2013 HY1 2013 FY 2013 FY 2012 Order Intake 655.5 548.0 711.4 1‘259.4 839.7 Sales 522.1 557.2 478.1 1‘035.3 888.5 EBITDA (1) 48.4 60.9 34.3 95.2 65.9 EBIT (1) 28.8 43.1 17.1 60.2 32.7 EB
Slide 34: Efficient cycle management and value creation
5 – Efficient cycle management and value creation Return on net asset base and free cash flow generation of high significance Sales Return on net assets Capex and FCF (in million CHF) (in %)1) (in million CHF)2) 79.5 1061 1035 13.1 61.1 199 889 178 161 8.5 6.7 862 858 728 -32.3 -57.3 -55.0 -81.6 201
Slide 35: RONA calculation
5 – Efficient cycle management and value creation RONA calculation CHF million 31.12.2013 31.12.2012 2013 Non-current assets 371.1 356.3 Inventories and receivables 373.2 361.9 Liquid funds 369.7 351.9 Total assets 1‘114.0 1‘070.1 Non-current liabilities (excl. debt) -137.4 -138.0 Current liabilitie
Slide 36: Strong net liquidity and stable equity ratio
5 – Efficient cycle management and value creation Strong net liquidity of 118.6 million CHF and equity ratio stable at 35% • Net liquidity of 118.6 million 30.06. 31.12. 30.06. 31.12. CHF impacted by CHF million 2014 2013 2013 2012 • low free cash flow due to Total assets 1100.2 1114.0 1092.7 1070.1
Slide 37: Experienced BoD and Management team
6 – Experienced BoD and Management team Board of Directors Michael Pieper Peter Spuhler Erwin Stoller This E. Schneider Dr. Jakob Baer Hans-Peter Schwald Dr. Dieter Spälti Member of the Board Member of the Board President Vice President Member of the Board Member of the Board Member of the Board Man
Slide 38: Rieter – At a glance
Rieter – At a glance Rieter is a leading supplier of short staple textile machinery and components • Rieter – an industrial group based in Winterthur, CH, operating on a global scale • Formed in 1795, and a leading supplier of short-staple spinning machinery and technology components • Widest produc
Slide 39: Spun Yarn Systems 2013
Spun Yarn Systems 2013 Leading systems supplier in the spinning process Brand: • Customers / regions: Spinning mills in Turkey, India, China, South East Asia, North and Latin America, Africa • Market size: ~2,800 million CHF (2010) • Product offering: Short staple spinning systems and machinery for
Slide 40: Premium Textile Components 2013
Premium Textile Components 2013 Leading supplier of premium textile components Brands: • Customers / regions: Spinning mills and OEMS (Rieter and third) in India, China, Turkey, Europe, South East Asia, North and Latin America, Africa • Market size: ~1,100 million CHF (2010) • Product offering: Dura
Slide 41: Strategy implementation external growth
Rieter – Strategy implementation external growth Clear criteria for target selection • Selected acquisitions in the Criteria: components business • Strong brand in the respective segment • Closing product gaps in the • Improving market access or machinery business enhancing product portfolio • Allow
Slide 42: Values and principles
Values and principles Investor and Analyst Briefing 2014 42