Sfs Group Ag · SIX:SFSN
Sfs — FY2019 Earnings Presentation
43 slides from Sfs's earnings presentation, Mar 6, 2020
Slide 1: Presentation FY2019 results
Presentation FY2019 results Zurich, 6 March 2020
Slide 2: Today's speakers
Today’s speakers Welcome to the presentation on our FY 2019 results Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer Presentation FY 2019 results | 6 March 2020 2
Slide 3: Agenda
Agenda 1. Key takeaways Jens Breu 2. Development by segment Jens Breu 3. Development of key financials Rolf Frei 4. Guidance Rolf Frei 5. Group priorities Jens Breu 6. Q&A Jens Breu / Rolf Frei Presentation FY 2019 results | 6 March 2020 3
Slide 4: Key takeaways
Key takeaways Presentation FY 2019 results | 6 March 2020 4
Slide 5: Key takeaways: Important progress achieved
Key takeaways Important progress achieved • Robust innovation trends & our strong operational capabilities continue to be the source of SFS’ progress – in particular evident in 2H with solid top & bottom line improvements • overall sales growth of 2.5% vs FY2018 • weakened demand in key markets miti
Slide 6: Development by segment
Development by segment Presentation FY 2019 results | 6 March 2020 6
Slide 7: Headlines Engineered Components
Headlines Engineered Components Solid performance in the face of challenging markets • Weakened demand in important markets burdened results • Position defended or selectively strengthened • Slight organic growth in sales to CHF 957.1m • EBIT margin adj. at 17.0% (PY 18.2%) due to lower capacity uti
Slide 8: Key messages Automotive division
Key messages Automotive division Continued outperformance of the market • Weakened regional demand resulting in global car sales down by –5% to –6% in relevant market segments • Ongoing ramp-up of customer projects limited sales decline vs. 2018 to –1.1% like-for-like (2H + 2.4% vs. 2H 2018) • Conti
Slide 9: Growth drivers Automotive division
Growth drivers Automotive division Growth largely independent from specific drive concept Combustion engine Combustion engine markets (90%) & markets EV (10%) by 2025 ~15% India ~50% Europe ~30% Americas ~5% China/RoW mid-term not at risk mid-term at limited risk ~45% ~55% Electric 2019 Interior
Slide 10: Key messages Electronics division
Key messages Electronics division Transfer to new Nantong site completed • Growth in Consumer/Lifestyle Electronics largely offsets decline in HDD • Project pipeline well filled with relevant opportunities for key customer groups • Bild update • New Nantong site fully operational 4 months ahead of t
Slide 11: Key messages Industrial division
Key messages Industrial division Varying development of individual business units • Overall slightly negative sales development • Maintained sound level of profitability • Business driven by • aircraft showing continued growth backed by ramp up of Airbus A350 • strong growth with plastic injection m
Slide 12: Key messages Medical division
Key messages Medical division Continued positive development • Conversion of solid project pipeline into sales continued in 2H, resulting in double- digit organic sales growth • Strong project pipeline driven by top ten customers to reach well into 2020 • Top-line gains and productivity improvements
Slide 13: Headlines Fastening Systems
Headlines Fastening Systems Market position strengthened • Strong sales growth of 14.0% to CHF 498.3m driven by consolidation of HECO & TFC • Expanded market position with acquisition of TFC and mbe • Divergent trends among the divisions • Construction: Stable demand, organic growth and positive con
Slide 14: Key messages Construction division
Key messages Construction division Growth story continued • Positive customer sentiment resulting in stable market development • Organic growth and significant consolidation effects drove sales • Integration of TFC running smoothly and yielding expected results • Acquisition of mbe, further strength
Slide 15: Moderne Befestigungselemente GmbH (mbe)
Moderne Befestigungselemente GmbH (“mbe”) Strengthening façades business in Germany • Part of SFS since 01.01.2020 • Strategic rationale of acquisition: • strong, long-standing relationships with specialty retailers for premium façade solutions • vast expertise in painting technology, differentiates
Slide 16: Key messages Riveting division
Key messages Riveting division Development burdened by weak demand • Significant exposure to automotive and industrial markets and uncertainty due to Brexit strongly impacted business • Continued product innovations expected to positively impact future results • Shifts in capacity utilization addres
Slide 17: Headlines Distribution & Logistics
Headlines Distribution & Logistics Profitability improved • Sales of CHF 326.0m representing a slight decline of –2.5% y-o-y due to weaker demand • Customer wins prove strong competitive position and comprehensive offering • Positive contribution from tools business and intensified multi-channel act
Slide 18: Development of key financials
Development of key financials Presentation FY 2019 results | 6 March 2020 19
Slide 19: Sales bridge
Sales bridge Back to organic growth in 2H2019 with 1.1% CHF million • Reported growth of 2.5% (PY 6.5) 1,900 • organic -0.6% (PY 4.3) 1,739 -11 76 -23 1,781 • scope 4.4% (PY 0.8) 1,800 • FX impact -1.3% (PY 1.4) 1,700 • Organic growth SFS Group 1,600 • 1H2019 -2.4% • 2H2019 1.1% 1,500 1,400 • Like-f
Slide 20: Sales growth organic
Sales growth organic Growth impacted by global issues in % yoy 10% weakening global economy 7.5% automotive 8% 6.7% electronics 6% other Industries 4.1% 4% COVID-19 3.0% 2% 1.4% 0.7% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb Mar Q2 Q3 Q4 -2% 2018 -1.0% 2019 2020 -1.7% -3.1% -3.0% -4% Presentation FY 2019 r
Slide 21: Sales breakdown
Sales breakdown Strong growth in construction, medical and America 2019 data 2019 data 2018 data 2018 data by end markets by regions 18.8% 19.4% 20.0% 19.7% 20.4% 29.6% 20.8% 26.5% 7.5% 6.4% 21.6% 17.7% 39.0% 24.4% 19.7% 41.1% 26.3% 21.0% Construction Others Automotive Medical Electronics Switzerlan
Slide 22: Operating profitability
Operating profitability Profitability burdened by soft economy and mix effects in % of net sales in CHF million • EBIT margin adjusted 13.4% 25% 500 21.3% • CHF 239.1m -1.7% yoy 19.8% 19.2% • 2H margin 14.2% vs. 12.6% in 1H 20% 18.5% 18.6% 400 • EBITDA margin adjusted 18.6% 14.6% 15% 14.3% 14.0% 300
Slide 23: Operating profitability: track record throughout all crises
Operating profitability Strong track record throughout all crises Sales in CHF million EBITDA margin adjusted 20.7% 19.1% 19.7% 2'000 18.9% 19.5% 19.2% 18.6% 20% 18.5% 17.3% 17.1% 1781 15.5% 1739 1'600 16% 1633 1437 11.7% 1383 1376 1331 1327 1'200 12% 1193 1122 1093 1068 800 8% 400 4% 0 0% 2008 2009
Slide 24: Swiss franc exposure: Opex
Swiss franc exposure Opex reached mid-point of target range % share • Operating expenses in Swiss francs 50% • 37.4% share of group OPEX 45% Opex in Swiss francs 46.1% • within target range of 35 - 40% 40% 44.3% 39.8% 40.2% 35% 37.4% • Drivers for strategically targeted reduction • international M&A
Slide 25: Swiss franc exposure: limited impact on EBIT
Swiss franc exposure Appreciation of CHF with limited impact on EBIT € / CHF | $ / CHF spot rate • P&L translation in foreign currency 1.18 • conversion into CHF expected to have low Ø 1.15 impact on Group EBIT Ø 1.11 • Swiss transaction exposure • export activities suffer from appreciation • offset
Slide 26: Net working capital
Net working capital Stable development in past five years in % of net sales in days • NWC slightly lower at 29.8% of net sales 35% 175 31.0% 31.2% 31.1% 30.3% • equals 109 working days 29.8% 30% 150 • supported by low FX rates at year end 2019 • like for like on same level as in 2018 25% 125 114 113
Slide 27: Capital expenditure
Capital expenditure Capex back in target range of 6 – 7% in % of net sales in CHF million • CAPEX spending 6.6% 10% 250 • to increase capacity, efficiency, productivity • to support future growth 8% 8.6% 200 8.1% • in 2018 CN-Nantong completed 5.9% • CAPEX spending by region 6% 6.6% 6.6% 150 149.1 •
Slide 28: Free cash flow
Free cash flow Strong cash generation and conversion rate in % of EBITDA CHF million • Strong cash flow from operations 60% 300 • CHF 278m +14m 51.2% 48.5% 50% 250 • Lower CAPEX 47.6% • CHF 117m - 33m 40% 200 34.4% • Strong operating free cash flow 30% 150 161 157 • CHF 161m +47m 29.0% 121 114 20% 1
Slide 29: Balance sheet ratios
Balance sheet ratios Solid equity and strong financial flexibility Equity ratio in % CHF million net cash • Equity ratio remains strong and healthy 90% 180 at 75.5% 80% 74.4% 75.5% 160 • target range >60% 71.6% 70% 78.4% 140 67.2% • Financial flexibility for growth secured by 60% 120 128 • net cash
Slide 30: Return on capital
Return on capital Attractive return on Ø capital employed Return in % • Return on capital employed at 21.1% 30% • EBIT adjusted in % of Ø CE CHF 1.1bn 24.8% • slightly lower yoy but within target range 25% 24.6% 22.7% 21.0% 21.1% • Return on invested capital at 9.2% 20% • EBIT after tax (flat rate o
Slide 31: Effective tax rate (ETR)
Effective tax rate (ETR) ETR expected to fluctuate around 17.5% Effective tax rate in % • Adjusted ETR in 2019 17.6% 25% • exceptional one-off lowering effects - 2.6% lower Swiss tax rates (STAF) 19.8% 20.1% 20.0% 20% - 4.9% capitalized temporary differences in amortizable goodwill 17.5% 17.6% 10.1%
Slide 32: Payout ratio
Payout ratio Stable dividend at ~38% of net income Payout ratio in % Payout per share in CHF • BoD will propose a payout per share 70% 4.20 of CHF 2.10 out of retained earnings at reported net income • increase by 5.0% 60% 3.60 • total cash out CHF 78.8m Amortization intangible assets 50% 3.00 • Div
Slide 33: KPI summary
KPI summary Good growth, healthy profitability and funding In CHF million 2019 % 2018 % yoy Sales 1,781.4 1,738.6 2.5% EBITDA margin 331.7 18.6% 332.8 19.2% -0.3% EBIT adjusted margin 239.0 13.4% 243.1 14.0% -1.7% Net income margin 206.5 11.6% 193.9 11.2% 6.5% Equity ratio 1,237.2 75.5% 1,204.6 74.4
Slide 34: Guidance 2020
Guidance 2020 Presentation FY 2019 results | 6 March 2020 35
Slide 35: Guidance FY2020 & Mid-Term
Guidance FY2020 & Mid-Term Subdued demand in FY2020 expected 2019A 2020G Mid-Term G Gross sales 3.8% 0 – 2% 3 – 6% (in local currencies, incl. M&A) EBIT margin adjusted 13.4% 12 – 14% 13 – 16% A = Actual G = Guidance Assumptions: • No significant deterioration in the economic conditions • Outbreak o
Slide 36: Historical growth 2015 – 2019 at CAGR 5.7%
Growth factors on top line Historical growth 2015 – 2019 at CAGR 5.7% Growth in % yoy 2015A 2016A 2017A 2018A 2019A 2020G Mid-T G Gross sales 4.6% 3.5% 13.2% 5.1% 3.8% 0% – 2% 3% – 6% organic growth 2.5% 2.0% 7.4% 4.3% -0.6% -1.5% – 0.5% change in scope 2.1% 1.5% 5.8% 0.8% 4.4% 1.5% Currency impact
Slide 37: Group priorities
Group priorities Presentation FY 2019 results | 6 March 2020 38
Slide 38: SFS Group priorities
SFS Group priorities Focus on specific priorities Presentation FY 2019 results | 6 March 2020 39
Slide 39: Q&A
Q&A Presentation FY 2019 results | 6 March 2020 40
Slide 40: Q&A: Any questions?
Q&A Any questions? Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer Presentation FY 2019 results | 6 March 2020 41
Slide 41: Coming up: Our IR agenda for FY2020
Coming up Our IR agenda for FY2020 1H 2020 results: 21 July 2020 web conference Investor Day: 3 September 2020 Heerbrugg (CH) IR Contact: investor.relations@sfs.biz Presentation FY 2019 results | 6 March 2020 42
Slide 42: Thank you for your attention
Thank you for your attention Presentation FY 2019 results | 6 March 2020 43
Slide 43: Presentation FY 2019 results | 6 March 2020
Presentation FY 2019 results | 6 March 2020 44