Arbonia Ag · SIX:ARBN
Arbonia — FY2018 Earnings Presentation
52 slides from Arbonia's earnings presentation, Feb 26, 2019
Slide 1: 2018 Results | 26 February 2019
2018 Results | 26 February 2019 Alexander von Witzleben, CEO Felix Bodmer, CFO
Slide 2: Recap transformation: Overview key metrics 2015-2018
Recap transformation Overview key metrics 2015-2018 Net revenues 1 EBITDA2 +25% +10% +75% +8% +6% 1'245.6 1'374.0 +158% 120.3 130.5 941.4 995.3 68.7 26.6 2015 2016 20171 20181 2015 2016 20171 20181 Shareholders’ equity Investments Net debt 863.1 887.7 136.0 225.1 728.8 105.1 62.1 116.8 351.83 21.9 2
Slide 3: 2018 summary: Performance by Division
2018 summary Performance by Division All figures in CHF M Sanitary HVAC1 Equipment Windows Doors +24% +4% +5% 505.5 408.3 -1% 351.0 366.3 357.5 340.0 Net 146.7 144.8 revenues 2017 2018 2017 2018 2017 2018 2017 2018 +20% +10% 54.8 -26% +20% 45.6 36.4 40.2 50 16.9 12.5 13.3 16.0 EBITDA2 0 2017 2018 20
Slide 4: Agenda
Agenda 1. 1. Transformation Transformation highlights 2018 2018 highlights 2. Financial results 2018 3. Divisional strategies 4. Corporate Guidance Questions | Results 2018 | 26 February 2019 4
Slide 5: Transformation Highlights 2018
Transformation Highlights 2018 Update on key achievements Launch of Arbonia Digital Successful acquisitions of Vasco initiative to seize new growth Group (Benelux) and Tecna (Spain) opportunities in the future provide new business opportunities 6 1 Concluded CAPEX projects New established brands ena
Slide 6: Transformation highlights 2018: Successful acquisitions
1 Transformation highlights 2018 Successful acquisitions Vasco Group (May 2018) Tecna (September 2018) Take an active role in market consolidation by Enter into growing Iberian HVAC market by acquisition of leading Benelux company and acquisition of long-time Sabiana distributor with further grow pr
Slide 7: Transformation highlights 2018: Brand portfolio extensions
2 Transformation highlights 2018 Brand portfolio extensions HVAC Sanitary Equipment Windows Doors Acquisitions 2018 2016 2015 New established brands enable access to new markets and drive cross-selling | Results 2018 | 26 February 2019 7
Slide 8: Transformation highlights 2018: Leading market positions
2 Transformation highlights 2018 Leading market positions Market leadership Market leadership (new market segments) Market presence | Results 2018 | 26 February 2019 8
Slide 9: Transformation highlights 2018: Focus on product innovation
3 Transformation highlights 2018 Focus on product innovation HVAC – Lowest sound level, highest cooling Windows – Complete rehaul of product range in all capacity, low energy consumption key markets and frame materials F130 Central RVU Skystar Cassette Elveo Infrared- P-Line Optim EgoAllstar for sma
Slide 10: Production relocation projects
4 Transformation highlights 2015-2018 Production relocation projects Our ambitious relocation projects advanced well in 2018 and will be completed in 2019 From To Vlotho Villeneuve Pravenec Tubbergen A (CH) (SK) (NL) (D) Langenwetzen- dorf (D) Windows Altstätten Pravenec B (CH) (SK) F G C Stríbro E
Slide 11: Transformation highlights 2018: Europeanisation of HR
4 Transformation highlights 2018 Europeanisation of HR Average FTE 20151: 6’186 Average FTE 20181: 8’198 12% 23% Regional distribution 48% 53% 31% (Ø FTE) 25% 4% 4% Personnel 37.4% 33.1% expense ratio2 Switzerland South (IT, ES, others) West (West D, FR, BE, NL) Central / East (East D, CZ, SK, PL, R
Slide 12: Transformation highlights 2018: CAPEX projects
5 Transformation highlights 2018 CAPEX projects HVAC Sanitary Equipment Windows Doors • Plant construction in • Ongoing automation of • Ramp up of production at • New edge-processing Stupino (RUS) shower enclosure wood/alu competence machines at Prüm and addresses growing production process center i
Slide 13: Corporate Priorities 2019: Arbonia Digital
6 Corporate Priorities 2019 ARBONIA DIGITAL − TOMORROW'S GROWTH 2. Innovation 4. Further development and conception and scaling of digital solutions for the mass market 1. Identification of 3. Realization of Digital customer needs prototypes experiences Internal and external for validation with cust
Slide 14: Agenda
Agenda 1. Transformation highlights 2018 2. Financial results 2. Financial 2018 results 2018 3. Divisional strategies 4. Corporate Guidance Questions | Results 2018 | 26 February 2019 14
Slide 15: Income Statement
Income Statement Including one-time effects In CHF M 2018 in % 2017 in % Net revenues 1’374.0 100.0 1’245.6 100.0 Cost of material and goods -633.7 -46.1 -570.7 -45.8 Personnel expenses -454.7 -33.1 -411.6 -33.0 Other operating expenses -201.5 -14.7 -182.6 -14.7 EBITDA 130.5 9.5 120.3 9.7 Depreciati
Slide 16: Reconciliation to adjusted numbers
Reconciliation to adjusted numbers 2018 without Actual Sanitary one-time In CHF M 2018 HVAC Equip. Windows Doors CS effects Net revenues 1’374.0 1’374.0 EBITDA 130.5 7.9 0.8 -3.7 0.6 -21.0 115.1 EBIT 61.0 2.4 0.2 -0.4 47.8 Group result from continuing operations 38.7 -2.9 -0.2 0.7 -0.1 0.8 23.8 | Re
Slide 17: Adjusted Income Statement
Adjusted Income Statement Without one-time effects In CHF M 2018 in % 20171 in % Net revenues 1’374.0 100.0 1’245.6 100.0 Cost of material and goods -633.7 -46.1 -571.1 -45.9 Personnel expenses -447.6 -32.6 -415.0 -33.3 Other operating expenses -197.8 -14.4 -176.3 -14.2 EBITDA 115.1 8.4 101.3 8.1 De
Slide 18: Net Revenues by Division and Region
Net Revenues by Division and Region Acquisitions have contributed to Division HVAC and RoW Net revenues by Division1 Net revenues by Region1 26% (27%) 26% (28%) 37% (33%) 34% (31%) 27% (28%) 10% (12%) 40% (41%) HVAC Switzerland Sanitary Equipment Germany Windows RoW Doors 1 Net revenues 2018 in CHF
Slide 19: Most FTE's in CEEC
Ø-Employees by Division / Region Most FTE’s in CEEC Ø-FTEs by Division1 Ø-FTEs by Region1 8% 12% (5%) (13%) 23% (23%) 32% (29%) 41% (42%) 39% (40%) 10% 35% (37%) (11%) HVAC Switzerland Sanitary Equipment Germany Windows CEEC Doors RoW Net revenues 2018 in CHF Mio. The figures in brackets show the va
Slide 20: EBITDA- / EBIT-margins per Division
EBITDA- / EBIT-margins per Division1 Material price increases and stronger EUR impact margins 15% 11.2% 10.8% 11.5% 10.7% 11.3% 10% 8.6% EBITDA margin, 5% 3.8% 4.4% adjusted 20172 0% 20183 HVAC Sanitary Windows Doors Equipment 15% 10% 8.7% 7.2% 6.5% 5.6% EBIT 5% 4.3% 5.4% margin, 20172 adjusted 0% 2
Slide 21: IFRS 16 – Leasing
IFRS 16 – Leasing Impact on Arbonia for 2019 Income Statement EBITDA / Depreciation Arbonia CHF 10 – 12 Mio. HVAC CHF ~ 2 Mio. Sanitary Equipment CHF ~ 1 Mio. Windows CHF ~ 4 Mio. Doors CHF ~ 4 Mio. Balance Sheet Financial Debt Arbonia CHF 50 – 55 Mio. | Results 2018 | 26 February 2019 21
Slide 22: Development of Net Revenues by Division
Development of Net Revenues by Division Strong Organic Growth in HVAC Division Net revenues Δ Currency Acqui- Organic as reported 20181 20172 sition Year Total Effects Growth3 in CHF M Effects Arbonia 1’374.0 1’245.6 +10.3% +2.7% +5.1% +2.5% HVAC 505.5 408.3 +23.8% +3.2% +15.6% +5.0% Sanitary 144.8
Slide 23: Organic Growth by Division
Organic Growth by Division Driven by price increases Organic Price Volume IFRS 15 Growth1 Effect Effect Effect2 Arbonia +2.5% +2.5% -0.5% +0.5% HVAC +5.0% +2.0% +3.0% Sanitary -4.1% +1.0% -5.1% Equipment Windows +2.7% +4.6% -1.9% 0.0% Doors +2.1% +1.6% -1.3% +1.7% 1 Adjusted for currency and acquisi
Slide 24: Organic Growth by Division (H1 vs H2)
Organic Growth by Division Driven by price increases 1-6/2018 7-12/2018 Organic Price Volume IFRS 15 Organic Price Volume IFRS 15 Growth1 Effect Effect Effect2 Growth1 Effect Effect Effect2 Arbonia +7.5% +3.4% +0.4% +3.7% -1.6% +1.8% -1.2% -2.2% In % 8 6 4 7.51 2 3.4 3.72 1.8 0 0.4 -1.6 -1.2 -2.2 -2
Slide 25: Balance Sheet
Balance Sheet Extension due to acquisition of Vasco and capex In CHF M 1'600 1'400 Current Current Current liabilities assets assets 20.7% Current 1'200 32.6% 30.2% liabilities 27.3% Non-current 1'000 liabilities 20.6% Non-current liabilities 11.8% 800 600 400 Shareholders' Non-current Non-current e
Slide 26: Net Debt / Leverage Ratio
Net Debt / Leverage Ratio1 Higher due to capex and acquisitions In CHF M 0 0.0x -22 -50 0.5x -43 -100 1.0x -117 -150 1.5x -200 2.0x -222 -225 -250 2.5x -300 3.0x 2014 2015 2016 2017 2018 Leverage Ratio Net Debt 1 Leverage ratio = Net debt / EBITDA | Results 2018 | 26 February 2019 26
Slide 27: Free Cash Flow
Free Cash Flow Driven by capex and acquisitions In CHF M 200 180 160 140 120 100 190 80 60 40 20 16 0 -20 -54 -40 -36 -60 -52 -80 -67 -65 2014 2015 2016 2017 2018 Free cash flow (Cash flow from operating and investing activities) Free cash flow (Cash flow from operating and investing activities, wit
Slide 28: Development of Investments
Development of Investments On high level as planned In CHF M 250 200 661 150 3 100 110 3 62 132 50 102 22 57 46 2 20 0 20142 2015 2016 2017 2018 Acquisition of subsidiaries Property, plant, equipment Intangible assets 1 Net cash outflow without financial debt 2 Continuing Operations | Results 2018 |
Slide 29: Operating Net Working Capital
Operating Net Working Capital Same level as previous year In CHF M 200 20% 150 15% 100 10% 167 173 138 113 122 50 5% 0 0% 2014 2015 2016 20171 20182 % Net revenues Operating net working capital Note: Operating NWC = Accounts receivable + inventories – accounts payable – advances from customers From
Slide 30: Lean industrial holding
Lean industrial holding Less than 1% of revenues – Mission accomplished -24% -35% 5 20 15 14 13 11 2014 adj. 2015 adj. 2016 2017 2018 2.0% 1.6% 1.1%1 ~1.1% <1% Add. costs from Looser Holding (2016: 5 Mio.) Holding costs of former Arbonia Holding costs in % of sales | Results 2018 | 26 February 2019
Slide 31: Agenda
Agenda 1. Transformation highlights 2018 2. Financial results 2018 3. Divisional strategies 3. Divisional strategies 4. Corporate Guidance Questions | Results 2018 | 26 February 2019 31
Slide 32: Corporate Development Strategy
Corporate Development Strategy I Plant Productivity Best-cost country footprint | Vertical integration | Operational flexibility | Industrie 4.0 II Market Leadership Regional expansion | Multiple sales channels | Brand positioning | Acquisitions III Customer Value Digitization | Full range offering
Slide 33: HVAC Division: Operational performance and highlights 2018
HVAC Division Operational performance and highlights 2018 All figures in CHF M Operational performance 2018 Highlights 2018 I Plant Productivity 11.2% 10.5% • Finalized installation of automated packaging line in 505.5 Plattling (D) 408.3 Revenue • New plant in Russia for Russian radiator market EBI
Slide 34: HVAC Division: Objectives and priorities in 2019
HVAC Division Objectives and priorities in 2019 Objectives 2019 Priorities 2019 I Plant Productivity Continue productivity • Launch new production plant in Russia and accomplish consolidation of steel improvement in panel radiator production production centers • Further optimize production of growth
Slide 35: Sanitary Equipment Division: Operational performance and highlights 2018
Sanitary Equipment Division Operational performance and highlights 2018 All figures in CHF M Operational performance 2018 Highlights 2018 I Plant Productivity 11.5% 8.6% • Established steady state mode at production site in 146.7 144.8 Plattling (D) (Koralle relocation completion) 16.9 Revenue • Rev
Slide 36: Sanitary Equipment Division: Objectives and priorities in 2019
Sanitary Equipment Division Objectives and priorities in 2019 Objectives 2019 Priorities 2019 I Plant Productivity Further improve • Implement cost reduction plan by increasing automation level and material cost productivity and savings leverage synergies • Further reorganization of production proce
Slide 37: Windows Division: Operational performance and highlights 2018
Windows Division Operational performance and highlights 2018 All figures in CHF M Operational performance 2018 Highlights 2018 I Plant Productivity 3.8% 4.4% • Further personnel reduction in Altstätten (CH) 366.3 • New insulating glass production (Pravenec) fully 351.0 Revenue ramped up 13.3 16.0 EB
Slide 38: Windows Division: Objectives and priorities in 2019
Windows Division Objectives and priorities in 2019 Objectives 2019 Priorities 2019 I Plant Productivity Productivity improvements in • Productivity: Further drive productivity in divisional production competence production centers (Langenwetzendorf, Pravenec, Zambrow) competence centers • Personnel
Slide 39: Doors Division: Operational performance and highlights 2018
Doors Division Operational performance and highlights 2018 All figures in CHF M Operational performance 2018 Highlights 2018 I Plant Productivity 10.7% 11.3% • Installed new equipment needed for premium 357.5 products at both German plants 340.0 36.4 40.2 Revenue • Advanced with construction of new
Slide 40: Doors Division: Objectives and priorities in 2019
Doors Division Objectives and priorities in 2019 Objectives 2019 Priorities 2019 I Plant Productivity Increase capacity at German and Polish • Remove capacity bottlenecks at German and Polish plants and implement plants, increase additional investments to increase output volume up to 2024 by 15% ver
Slide 41: Agenda
Agenda 1. Transformation highlights 2018 2. Financial results 2018 3. Divisional strategies 4. Corporate 4. Guidance Corporate Guidance Questions | Results 2018 | 26 February 2019 41
Slide 42: Arbonia: A leading European building components supplier
Arbonia A leading European building components supplier “Condi®line” fan coil − The traditional and versatile solution for air-conditioning in your rooms “Casteo” design radiator − Clear Sales of over 2.3 million lines, pure aesthetics. Recipient of Insulating glass manufactured in-house interior do
Slide 43: Guidance of Arbonia Group
Guidance of Arbonia Group1 Transformation completed, guidance updated Guidance 2018 Guidance 2019 Sales Sales + 3% organic growth ~ 3% organic growth EBITDA2 EBITDA3 CHF >110 M ~ CHF 128-136 M 1 Assuming a stable to positive market environment, organic growth = adjusted for currency and acquisitio
Slide 44: German construction output
German construction output Our view on market dynamics Completion 79% 74% 82% 86% 90% ~94% rate (%)1 87% 93% 102% • We are confident that the German construction Actual Forecast environment stays positive in 375 2019 supported by: 348 ~350 Low mortgage interest rates Building 313 permits2 Reduce
Slide 45: Construction volume of our key markets
Construction volume of our key markets Stable to positive outlook for 2019 Change of market volume in real terms (EUR M) Germany Market growth Poland Market growth These 4 markets 2019 vs. 2018 2019 vs. 2018 represent ~80% Residential Residential Non- Residential Residential Non- of total sales of N
Slide 46: Why Arbonia?
Why Arbonia? Investment case 2019 Reduced dependence on Innovative products for Reduced dependence on Innovative products for of Low production & personal Swiss and German economic growth markets as a result Low production & personal Swiss costs due to favourable cycleand German through economic geo
Slide 47: Disclaimer
Disclaimer Arbonia AG 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 whatsoe
Slide 48: Appendix
Appendix | Results 2018 | 26 February 2019 48
Slide 49: Strategy: HVAC business transformation
Strategy HVAC business transformation Net Revenue Growth (CHF Mio.) ~750 Steel panel radiators ~25% (traditional markets) 505 Steel panel radiators <40% (growth markets) 341 Growth products ~75% >50% (ventilation, air conditioning, >60% underfloor heating, heat pumps, <50% convectors, design radiato
Slide 50: Transformation highlights 2018: Europeanisation of HR
Transformation highlights 2018 Europeanisation of HR Average FTE 20151: 6’186 Average FTE 20181: 8’198 IT Others BE Others SK IT 1% DE SK 2% 7% CZ 26% 8% 3% 4% DE 13% CZ 10% 39% 12% 23% CH 26% CH 22% PL PL Personnel 37.4% 33.1% expense ratio2 Comparison: Development of nominal gross wages in key mar
Slide 51: Arbonia analysts Consensus
Arbonia analysts Consensus Results 2017 Results 2018 EBITDA incl. one-time effects: CHF 120.3 million EBITDA incl. one-time effects: CHF 130.5 Mio. EBITDA excl. one-time effects: CHF 101.3 million EBITDA excl. one-time effects: CHF 115.1 Mio. Guidance 2018 EBITDA excl. one-time effects: CHF 110 mill
Slide 52: Thank you
Thank you Arbonia Investor Relations ir@arbonia.com +41 71 447 45 54 +41 79 457 01 38 | Results 2018 | 26 February 2019