Tarkett Sa · SWB:1T9
Tarkett Sa — Investor Day (October 2016)
126 slides from Tarkett Sa's investor day presentation, Oct 27, 2016
Slide 1: Investor Day, October 27, 2016
INVESTOR DAY October 27, 2016
Slide 2: Disclaimer
Disclaimer This document may contain estimates and/or forward-looking statements. Such statements do not constitute forecasts regarding Tarkett’s results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and un
Slide 3: Today's Agenda
> Group strategy TODAY’S > Divisions AGENDA > Innovation > Finance > Conclusion & Q&A
Slide 4: Group Strategy
> Market overview GROUP and Tarkett positioning STRATEGY > Tarkett since the IPO > 2017-2020 strategy > 2017-2020 financial objectives
Slide 5: Group Strategy: Market overview and Tarkett positioning
GROUP STRATEGY Market overview and Tarkett positioning
Slide 6: Global flooring market
Global flooring market > Flooring market is growing World flooring market = 12.5bn sqm* more or less in line with GDP growth, with specificities by region and product Ceramics 62% > Flooring market (excluding Wood & Laminate ceramics) is ~80% exposed 11% to renovation Vinyl, Linoleum 25% & Rubber >
Slide 7: Flooring preferred categories vary greatly across the world
Flooring preferred categories vary greatly across the world North America: 1.6bn sqm Europe(1): 1.5bn sqm CIS: 0.5bn sqm 18% 30% 32% 51% 28% 9% 15% 18% 32% 15% 21% 27% 1% 3% 0% Ceramics Carpet 13% 12% 4% Vinyl, Linoleum & Rubber Wood & Laminate Other (non-resilient) 9% 11% 51% Latin America: 1.2bn s
Slide 8: Market growth assumptions
Market growth assumptions LEADING INDICATORS > No official statistics regarding market shares in the flooring market > Europe: Euroconstruct > North America: ABI, US Census housing starts > Russia: real wages, consumer confidence > National industry organizations TARKETT ASSUMPTIONS REGARDING MARKET
Slide 9: Tarkett is a global leader in flooring and sports surfaces
Tarkett is a global leader in flooring and sports surfaces with a regional manufacturing footprint Net sales: €2.7bn Adj. EBITDA: €285m 12,000 employees 1.3m sqm Plants Sales 34 of flooring sold Offices in more than Industrial each day Design teams Distribution centers / 100 countries sites Warehous
Slide 10: Balanced exposures providing resilience to industry cycles
Tarkett benefits from balanced exposures providing resilience to industry cycles BALANCED GEOGRAPHIC ONE OF THE BROADEST PRODUCT ATTRACTIVE END-MARKETS EXPOSURE PORTFOLIOS IN THE FLOORING INDUSTRY EXPOSURE Sales in more than 100 countries Education Sports NORTH AMERICA EMEA 17% Vinyl Health & Aged C
Slide 11: One of the broadest product offerings in the industry
Tarkett has acquired one of the broadest product offerings in the industry VINYL & WOOD & TURF & #PRODUCT RANKING BASED ON LATEST SALES DATA CERAMICS LINOLEUM CARPET LAMINATE RUBBER TRACKS CATEGORIES 5 5 5 2 1 1 4 2 3 2 Sources: Company information and Tarkett estimates. Note: List excludes pure Cer
Slide 12: Number 3 worldwide flooring player with leadership positions
Tarkett is number 3 worldwide flooring player with leadership positions in many categories and regions Vinyl Artificial Turf in sports fields #1 worldwide positions Flooring CIS Running Tracks North America Accessories North America #1 regional positions Tarkett Investor Day – October 27, 2016 12
Slide 13: A true Glo-cal competitive advantage
Tarkett has developed a true “Glo-cal” competitive advantage GLOBAL SCALE LEVERAGE LOCAL STRENGTHS > Purchasing negotiation power > Regional design centers > Research & innovation “Glo-cal” > Optimization of industrial > Best-in-class industrial competitive and logistics footprints processes benchma
Slide 14: Group Strategy: Tarkett since the IPO
GROUP STRATEGY Tarkett since the IPO
Slide 15: Strong performance despite CIS headwinds
Strong performance despite CIS headwinds NET SALES ADJUSTED EBITDA > Strong resilience during CIS in €m in €m 11.5% to downturn 2,700 to 12.2% 2,750 12.3% > Successful strategic acquisition 315 310 to 330 and integration of Desso 2,516 > North America back on track ~(115) > Dynamic organic growth an
Slide 16: Attractive geographical exposure in 2016
Tarkett in 2016: an attractive geographical exposure Sales breakdown 2013 2016 estimated EMEA EMEA NORTH AMERICA incl. Sports NORTH AMERICA incl. Sports incl. Sports incl. Sports 36% 29% 44% 36% 11% 17% Sports Sports 27% 33% EMEA EMEA €2,516m €2,700m to €2,750m 27% NA 30% NA CIS, APAC & LATAM CIS, A
Slide 17: Balanced profitability profile in 2016
Tarkett in 2016: a balanced profitability profile Adjusted EBITDA breakdown 2013 2016 estimated Sports EMEA 4% 21% Sports 13% EMEA North 37% America €315m 21% €310m to €330m North America 30% CIS, APAC CIS, APAC & LATAM & LATAM 20% 54% Tarkett Investor Day – October 27, 2016 17
Slide 18: Follow-up on IPO guidance (2013-2016)
Follow-up on IPO guidance (2013-2016) Net sales > 2012-2016 organic sales CAGR continues to outperform Achieved from organic growth aggregate GDP growth in the regions where we are present in 3 of 4 segments Additional sales > Objective of c. €300m additional sales by 2016 coming 80% completed from
Slide 19: Long term profitable growth
Long term profitable growth NET SALES ADJUSTED EBITDA in €m in €m 315 2,700 310 to 330 2,715 to 2,750 285 2,516 275 2,414 262 2,292 2,088 222 1,919 208 1,708 191 12.2% 11.6% 11.4% 12.3% 11.4% 10.5% 11.5% 9.1% to 12.2% 2009 2010 2011 2012 2013 2014 2015 2016E 2009 2010 2011 2012 2013 2014 2015 2016E
Slide 20: Group Strategy: 2017-2020 strategy
GROUP STRATEGY 2017-2020 strategy
Slide 21: Our Vision
OUR VISION Be the global leader in innovative solutions that generate value for customers in a sustainable way
Slide 22: Strategy for sustainable and profitable growth
Tarkett strategy for a sustainable and profitable growth > Deliver outstanding customer experience > Lead in design, innovation & sustainability STRATEGY > Excel in sales and operations > Create additional value with acquisitions OBJECTIVE > Grow faster and be more profitable than our competitors VI
Slide 23: Four strategic pillars
Tarkett four strategic pillars Deliver outstanding Lead in design, customer innovation & experience sustainability Excel Create additional in sales value with & operations acquisitions Tarkett Investor Day – October 27, 2016 23
Slide 24: Our customers are all stakeholders of the construction industry
Our customers are all stakeholders of the construction industry Deliver outstanding customer experience RESIDENTIAL COMMERCIAL Tarkett provides life-long Building/Project benefits to owners: Home owner sensorial, technical, owner ecological, financial Tarkett helps them grow their business: Contract
Slide 25: Tarkett ambition
Tarkett ambition Deliver outstanding customer experience From to flooring provider solutions partner Supplying parts of flooring > Owning entire floor space Create value > Segment specialist and customer-oriented pull for our Flooring generalist and (mono) product push customers (multi-products & se
Slide 26: Digitalization and the customer journey
Digitalization offers a seamless, value-adding and differentiated customer journey Deliver outstanding customer experience Example of two customer journeys Website Blogs Sales rep Catalogues Customer Sales rep Sales rep Sales rep Website Brochures service Store Website CRM Database Customer Tarkett
Slide 27: The preferred solutions partner
The preferred solutions partner Deliver outstanding customer experience CUSTOMERS NEEDS TARKETT STRATEGIC FOCUS RELIABLE “I want to work Supply chain Sales with a reliable & logistics & customer service and trustful partner” HELP and ADVICE “I want support Product selection Business partner in my da
Slide 28: The reliable partner
The reliable partner Deliver outstanding customer experience Supply chain & logistics Sales & customer service > Increase flexibility of manufacturing > Deploy advanced CRM integrating data and optimize product portfolio management from multi-touch-points, with easy access to improve customer servic
Slide 29: Help and advice
Help and advice Deliver outstanding customer experience Product selection & design Business partner > Make the on & off-line selection process easy > Provide support to architects & designers at each step of the customer project phase and installers (on-line design support during (technical advice,
Slide 30: Personalization
Personalization Deliver outstanding customer experience Personalized solutions Long-lasting relationships > Offer design and solutions that help the designer > Strengthen intimacy providing high-level to create innovative and unique spaces of consideration, including after-sales > Adapt process and
Slide 31: Four strategic pillars
Four strategic pillars Deliver outstanding Lead in design, customer sustainability experience & innovation Excel Create additional in sales value with & operations acquisitions Tarkett Investor Day – October 27, 2016 31
Slide 32: Create value for customers with innovative solutions
Create value for customers with innovative solutions Lead in design, sustainability & innovation CUSTOMERS TRENDS BE THE PREFERRED PARTNER Sustainability: circular designs “I want to live in a > Healthy indoor healthy environment and > Resources take care of the planet” > Environment Design: unique
Slide 33: Four strategic pillars
Four strategic pillars Deliver outstanding Lead in design, customer sustainability experience & innovation Excel Create additional in sales value with & operations acquisitions Tarkett Investor Day – October 27, 2016 33
Slide 34: Best-in-class in sales and operations
Best-in-class in sales and operations Excel in sales & operations Manufacturing excellence Supply chain excellence Sales force excellence > Continuous improvement in safety & > Best-in-class delivery service > Deploy new CRM environment, quality, customer service, and sales force excellence program
Slide 35: Four strategic pillars
Four strategic pillars Deliver outstanding Lead in design, customer sustainability experience & innovation Excel Create additional in sales value with & operations acquisitions Tarkett Investor Day – October 27, 2016 35
Slide 36: Successful track record: 20 acquisitions in 8 years
Successful track record: 20 acquisitions in 8 years Create additional value with acquisitions Portfolio extension Geographic expansion Industry consolidation > Leading commercial carpet > Strengthen our commercial network > Reinforce our presence manufacturer in Europe and extend our industrial pres
Slide 37: Tailor-made and smooth integration process
Tailor-made and smooth integration process Create additional value with acquisitions ~ 3 months ~ 6 months ~ 1 year ~ 2/3 years Safety Cost management World Class Manufacturing Marketing and > Quick savings on deployment sales integration purchasing and > Lean manufacturing some SG&A costs > Product
Slide 38: Ongoing priorities and criteria for acquisitions
Ongoing priorities and criteria Create additional value with acquisitions Portfolio extension Geographic expansion Industry consolidation > Increase leadership > Increase presence > Extract cost synergies as solution provider in emerging markets to increase profitability ~€500m with significant grow
Slide 39: Group Strategy: 2017-2020 financial objectives
GROUP STRATEGY 2017-2020 financial objectives
Slide 40: 2017-2020 financial objectives
2017-2020 financial objectives Unless transforming acquisition Revenue growth > 2020 net sales ~€3.5bn(1) > Adjusted EBITDA margin > 12% Profitability & return > ROIC > 9% Acquisitions strategy > Additional sales by 2020 of ~€500m Leverage > Net debt / adjusted EBITDA < 2.5x Dividend > At least €0.6
Slide 41: International and entrepreneurial teams
International and entrepreneurial teams Executive Management Committee Operational leaders Functional leaders Michel Giannuzzi Anne-Christine Ayed Remco Teulings Research, Innovation & Environment President EMEA CEO & Chairman of the Management Board Fabrice Barthélemy CFO Glen Morrison Member of th
Slide 42: EMEA
EMEA Remco TEULINGS President Tarkett EMEA
Slide 43: EMEA - Business snapshot
SWEDEN EMEA - Business snapshot Hanaskog Ronneby UK NETHERLANDS Orzechowo KEY BRANDS Goirle Waalwijk Lenham POLAND 13 Dendermonde BELGIUM Konz production sites Sedan GERMANY Jaslo Eiweiler Paris Clervaux ~4,400 FRANCE LUXEMBOURG employees ITALY Narni RECENT RESULTS 2015 Net sales €918m Adjusted EBIT
Slide 44: EMEA - Market overview
EMEA - Market overview MARKET HIGHLIGHTS > EMEA: 2.8bn sqm in 2015, of which 28% addressable by Tarkett > Europe only(1): 1.5bn sqm, of which 48% addressable by Tarkett > Stabilizing markets with higher growth in modular solutions (especially LVT and carpet tiles) > Significant variations in growth
Slide 45: EMEA - Key leadership positions in most countries
EMEA - Key leadership positions in most countries VINYL TARKETT POSITIONING > 60% commercial / 40% residential No.1 > Strong leadership positions across Nordics, Central Eastern and Southern Europe > Superior functionality, design and sustainability CARPET TILES COMMERCIAL COMMERCIAL CARPET TILES WO
Slide 46: EMEA - Continue to deliver profitable growth above market
EMEA – Continue to deliver profitable growth above market through cross-selling and innovation WHAT WHERE OUR WE’VE DONE WE’RE GOING GOALS > Accelerated growth in LVT > Develop strong value > Over-perform underlying category proposition for new target market growth segments > Profitability improveme
Slide 47: EMEA - Tailoring the integration of Desso
EMEA - Tailoring the integration of Desso and unlocking value Group-wide Case Study SALES & MARKETING FINANCE AND LEGAL > Sales activities transferred to Tarkett, > SAP “light” implementation except 5 main countries: NL, B, FR, UK, D > Corporate and legal entities optimization 2012- 2014- DESSO > Ta
Slide 48: EMEA - Unleash the full potential of Desso
EMEA - Unleash the full potential of Desso Next steps in Tarkett-Desso integration process 2017-2020 Full integration Full ERP Roll-out of sales integration of commercial organizations with one SAP excellence program Enhance Leverage Optimize combined offer eco-innovation manufacturing LVT/carpet fo
Slide 49: EMEA - Capture the fast-growing LVT category
EMEA - Capture the fast-growing LVT category by increasing cross-selling Integrated sales organization Launch of dedicated offers targeting key segments offering comprehensive product portfolio per segment Vinyl Rolls, Linoleum, Carpet Tiles, > Coordination of designs Non-PVC Rolls, LVT, Carpet Roll
Slide 50: EMEA - Solutions partner in attractive segments
EMEA - Solutions partner to expand in attractive segments KEY COMMERCIAL MARKET SEGMENT KEY SUCCESS DRIVERS High Key account One-stop shop Healthcare management cross-selling & Aged Care Stores & Shops Education Workplace Hospitality Attractiveness* & Leisure for Tarkett LVT position: Customized ins
Slide 51: EMEA - Stores & shops and hospitality & leisure
EMEA - Solutions provider in stores & shops and hospitality & leisure Key account management and cross-selling Design customization Multi-product offer Marks & Spencer, UK Melia Hotels, Spain > 93 stores already installed > 50 hotels renovated in 2015/2016, in 2016 and 21 under construction and 20 f
Slide 52: What's ahead for EMEA
What’s ahead for EMEA MARKET DYNAMICS EMEA PRIORITIES > Modest market growth Develop best-in-class customer experience > Further concentration of the market Develop value proposition > Modularity and build-up dedicated organization for new strategic segments > Attractiveness of “new-for-Tarkett” seg
Slide 53: North America
NORTH AMERICA Glen MORRISON President Tarkett North America
Slide 54: North America - Business snapshot
North America - Business snapshot CANADA KEY BRANDS Farnham, Québec Truro, 8 Waterloo, Ontario Nova Scotia production sites UNITED STATES Chagrin Falls, Ohio Middlefield, Ohio ~3,000 Solon Ohio employees Florence, Alabama Dalton, Georgia Calhoun, Georgia RECENT RESULTS 2015 Net sales €771m Adjusted
Slide 55: North America - Market overview
North America - Market overview MARKET HIGHLIGHTS > Market 2012-2015 CAGR of +3.5% > 1.5bn sqm demand in 2015, of which 38% addressable by Tarkett > Market weighted towards carpet (c. 51% of demand) US Residential - Housing Starts(1) US Architecture Billing Index (ABI) 1 211 1 207 1 213 1 218 55 56
Slide 56: North America - Tarkett is a strong challenger
North America – Tarkett is a strong challenger RUBBER & TARKETT POSITIONING ACCESSORIES > 80% commercial / 20% residential No.1 > Strong foothold in vinyl, rubber, commercial carpet and accessories > 2 routes to market: direct and through distributors (wholesalers) VINYL RUBBER & ACCESSORIES COMMERC
Slide 57: North America - Strong foundation of businesses, brands and talents
North America - Well positioned with strong foundation of businesses, products, brands and talents WHAT WHERE OUR WE’VE DONE WE’RE GOING GOALS > Consolidated our > Continue trend of > Drive growth above manufacturing footprint improved productivity and underlying market operational performance > Lev
Slide 58: North America - Consolidated manufacturing footprint
North America - Consolidated manufacturing footprint Major restructuring in VCT Case Study Pains of transition remedied Strategic over past 12 months consolidation of VCT production Seeing sustained from Houston, Texas improvement to Florence, Alabama in quality, delivery to realize cost, efficiency
Slide 59: North America - Improved productivity and operational performance
North America - Pursue improved productivity and operational performance trend WCM implementation in Chagrin Falls, OHIO Case Study WORLD CLASS MANUFACTURING (WCM) a sustainable source of competitive advantage KEY ACTIONS > Enhanced importance on WCM activities > Implemented WCM principles > Reenerg
Slide 60: North America - Leveraging our global strength
North America - We are leveraging our global strength Firmly positioning > Link “Tarkett” to experience, Tarkett as the brand innovation, sustainability > Leverage strategic brands: offering the “ultimate flooring experience” Our ultimate vision: the Tarkett brand name is synonymous with an outstand
Slide 61: North America - Culture of innovation: 11 NeoCon awards
North America - Building a culture of innovation: product launches won 11 awards at NeoCon EXPLORE THE COLLABORATIVE EFFORTS NEOCON UNARTICULATED ACROSS ORGANIZATION SUCCESSES NEEDS OF THE MARKET MESTO CONFIGURATIONS OPEN ARCHIVE COLLECTION: GEOKNIT OPEN ARCHIVE COLLECTION: CACHE TWEED JHANE BARNES
Slide 62: North America - Digital printing with Collections Infinies
North America - Exploring the unarticulated needs: digital printing with Collections Infinies™ > First Luxury Vinyl Tile (LVT) to use state-of-the-art digital printing technology along with a unique online co-creation tool Collections Infinies won More than a new product offering – Collections Infin
Slide 63: North America - Accelerating innovations in customer experience
North America - Accelerating innovations in customer experience Based on direct architects & designers customer feedback to address the pain point: “access to after hours customer support” Designer on Demand on-line service Technology enables live chat and desktop sharing to let our team of designer
Slide 64: What's ahead for North America
What’s ahead for North America MARKET DYNAMICS NORTH AMERICA PRIORITIES > Expected steady market growth Develop best-in-class from +2% to +4% per annum to 2020 customer experience > Continued market consolidation Continued growth above market through introduction > Significant growth of innovative s
Slide 65: CIS Countries
CIS COUNTRIES Slavoljub MARTINOVIC President Tarkett Eastern Europe
Slide 66: CIS countries - Business snapshot
CIS countries - Business snapshot RUSSIA KEY BRANDS Yekaterinburg Mytischi Novosibirsk 4 production sites Moscow in CIS & Balkans BELARUS Otradny Minsk Astana Kalush Kiev ~3,300 Bačka Palanka SERBIA UKRAINE Rostov KAZAKHSTAN Almaty Vladivostok employees VINYL CARPET RUGS WOOD LAMINATE 11 2 Division
Slide 67: CIS countries - Market overview
CIS countries - Market overview MARKET HIGHLIGHTS > More than 500m sqm demand in 2015(1), of which 60% addressable by Tarkett • Vinyl and linoleum flooring represents c. 32% of demand (vs c. 8% globally) • Vinyl is the most used flooring solution in the region, mainly in the residential market > Sig
Slide 68: Russia - Recovery expected to start in 2017
Russia - Recovery expected to start in 2017 GDP GROWTH % REAL MONTHLY WAGES 1.1% 1.2% 1.5% 1.5% 1.5% -0.8% -3.7% PRIVATE CONSUMPTION INDEX CONSUMER CONFIDENCE INDEX 0 -5 -10 -15 -20 -25 -30 -35 Sources: IMF GDP in constant prices as of October 2016, Datastream, Rosstat and Thomson Reuters. Tarkett I
Slide 69: Most recognized brand in the CIS countries
Tarkett is the most recognized brand in the CIS countries VINYL TARKETT POSITIONING > 80% residential (average bill for home owners 150 – 200 €) / 20% commercial No.1 > Unique service to clients from 11 distribution centers > Largest sales force organization in all countries > Presence in rugs and c
Slide 70: CIS: levers activated to cope with the recession
CIS countries: Tarkett activated all levers to cope with the economic recession Case Study RUSSIA GDP GROWTH % RUB DEVALUATION (inverted scale) 60% 8.2 8.5 50% 6.4 5.2 4.5 40% 4.0 3.5 2.6 1.3 30% 0.7 20% 2011 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 10% -0.8 -3.7 0% 31-Dec-13 30-
Slide 71: Strong presence in all distribution channels
Tarkett has a strong presence in all distribution channels thanks to a multi-brand and differentiated offer strategy ROUTE TO MARKET FOR VINYL CATEGORY(1) EVOLUTION OF DIY STORES Number of DIY stores 8% 16% 2015 2020E 2015 2020E Multi-brands International DIY International DIY strategy 9% Domestic D
Slide 72: Strong presence in independent retail
Maintain strong presence in independent retail thanks to specific program Tarkett Points HOW DO WE BENEFIT BENEFIT DO THIS? FOR RETAILERS FOR TARKETT > Program is voluntary: independent retail > Additional earnings which > Maintain Tarkett volume, decide whether they participate or not help them be
Slide 73: Russia: New parquet production line in Mytischy
Russia: Investment in a new parquet production line in Mytischy (near Moscow) GOAL > Increase volume and profitability in Wood business in Russia STRATEGY > Produce Wood in our existing laminate plant of Mytischy • Improve customer service • Direct contract with all International DIY’s • Focus on Ru
Slide 74: What's ahead for CIS countries
What’s ahead for CIS countries MARKET DYNAMICS CIS COUNTRIES PRIORITIES > Huge flooring refurbishment needs Further protect our relationship of 2bn sqm for Russia only, with with independent retail points high proportion of home-owners Direct contract with > Growth of laminate growing international
Slide 75: Break
BREAK
Slide 76: APAC & Latin America
APAC & LATIN AMERICA Michel GIANNUZZI CEO
Slide 77: Tarkett Asia Pacific - New opportunities
Tarkett Asia Pacific - New opportunities Beijing CHINA Suzhou KEY BRANDS 2 New Delhi Chongqing Shanghai production sites in China INDIA Mumbai Bangalore Headquarters in Shanghai ~370 Division Singapore employees Headquarters KEY HIGHLIGHTS VINYL CARPET CHINA > Positioned on value-added niche markets
Slide 78: Tarkett Latin America - Niche leader
MEXICO Tarkett Latin America - Niche leader DOMINICAN REPUBLIC GUATEMALA NICARAGUA TRINIDAD & TOBAGO KEY BRANDS COSTA RICA 1 PANAMA COLOMBIA production site in Brazil ECUADOR Headquarters near BRAZIL PERU São Paulo (Jacarei) BOLIVIA ~270 PARAGUAY Jacarei employees KEY HIGHLIGHTS CHILE URUGUAY > Lead
Slide 79: Sports
SPORTS Eric DALIERE President Tarkett Sports
Slide 80: Tarkett Sports - Business snapshot
Tarkett Sports - CANADA Business snapshot Montréal Tulatin UNITED STATES NETHERLANDS 12 Hunt Valley Oss operational hubs Denver GERMANY Fresno Auchel Absteinach >15,000 Georgetown Calhoun 80% of sales Sedan sourced from fields installed 20% Tarkett flooring worldwide of sales FRANCE Bačka Palanka so
Slide 81: Tarkett Sports - Sports surface market
Tarkett Sports - Sports surface market Artificial Turf - Sports > Market estimated to be over 100M sqm globally > Customers range from professional sports clubs to primary schools and small municipalities > North America and Europe represent ~45% of global demand > Between 2009 and 2015, European vo
Slide 82: Tarkett Sports - A market leader with a differentiated offer
Tarkett Sports - A market leader with a differentiated offer TARKETT POSITIONING > Artificial turf represents the majority of the division’s revenue, but tracks is an important contributor of sales and profit > Tarkett Sports’ positioning is at the mid and higher-end of the market ARTIFICIAL TURF HY
Slide 83: Tarkett Sports' turnaround completed
Tarkett Sports’ turnaround completed 5 stages of turnaround Case Study KEY DRIVERS ~4–5 years > Upgraded talent and systems Stage 5 • Senior leadership Sustain the gains • ERP / CRM Stage 3 Stage 1 2015/2016 Gradual Stage 4 > Reduced fixed costs / improved operating leverage Restructuring improvemen
Slide 84: Tarkett Sports - Innovation pipeline: CoolPlay
Tarkett Sports - A strong innovation pipeline Artificial turf designed to keep athletes cool Customer Need > Temperatures on artificial turf sports fields are much higher than natural grass fields > Common solution is to water fields before play: drawbacks are that it is a temporary fix, requires ir
Slide 85: Tarkett Sports - Innovation pipeline: Banked Hydraulic Track
Tarkett Sports - A strong innovation pipeline Banked Hydraulic Track Customer Need > Indoor banked hydraulic track to allow athletes of all levels to compete safely > Upgrade on the existing technology Beynon Solution - Rise n’ Run Track > Sought to understand customers wants > Delivered superior fe
Slide 86: What's ahead for Tarkett Sports
What’s ahead for Tarkett Sports MARKET DYNAMICS TARKETT SPORTS PRIORITIES > Growth in core sports turf markets Successfully commercialize driven by replacement wave innovation pipeline in turf & tracks > Continued expansion of landscape Benefit from growth of alternative artificial turf market infil
Slide 87: Innovation
INNOVATION Anne-Christine AYED EVP Research, Innovation and Environment
Slide 88: Innovation strategy: driver for organic growth
Innovation strategy: driver for organic growth CUSTOMERS NEEDS FROM PRODUCT-DRIVEN INNOVATION… …TO INNOVATIVE SOLUTIONS & SERVICES “I want to live in a healthy Eco Circular environment and take care innovation designs of the planet” “I want to create unique Modularity Unique spaces that enhance & de
Slide 89: Sustainability strategy and eco-innovation
Our sustainability strategy targets healthy environment and circular economy, and drives eco-innovation Sustainability: circular designs Tarkett sustainability commitment Initiatives 2020 objectives Choose good materials in terms > 100% of materials used in our products of potential risk towards p
Slide 90: Designing solutions with healthy materials
Designing solutions with healthy materials that contribute to well-being and quality of life Sustainability: circular designs WHAT WE’VE DONE Set the standards > Indoor Air quality: 10 to 100 times and lead the industry below the strictest standards since 2010 > Healthy materials: phthalate-free pla
Slide 91: Circular economy services based on recycled materials
Develop circular economy services based on healthy recycled materials Sustainability: circular designs RECYCLED RESOURCES Reduce consumption of virgin raw materials > Vinyl recycled resources cheaper than virgin raw materials Anticipate virgin > Up to 50% of recycled content (Europe) in LVT backing
Slide 92: Unique experience thanks to digital printing technology
Deliver unique experience thanks to digital printing technology Design: unique spaces INDUSTRIAL & SUPPLY CHAIN Leverage state-of-the-art Patented breakthrough process to digitally print specific designs (vs. traditional offset cylinder process) technology First to industrialize on various floorings
Slide 93: Healthcare and aged care services with connected living spaces
Offer healthcare and aged care services thanks to connected living spaces Connected and interactive spaces CONNECTED FLOORING SOLUTIONS Extend to senior Real-time alarm and information services for care givers and nursing homes First flooring manufacturer to offer combined Accelerate + connected flo
Slide 94: Finance
FINANCE Fabrice BARTHÉLEMY Chief Financial Officer
Slide 95: Q3 2016 and 2016 FY estimate
Q3 2016 and 2016 FY estimate Strong profitability improvement in a soft demand environment > Q3 2016 • Net sales: €794m, -2.1% on an organic basis vs. Q3 2015(1), -0.2% including price increases in the CIS − Flat organic sales in EMEA, North America and Sports segments − CIS still on a negative volu
Slide 96: 2017-2020 financial objectives
2017-2020 financial objectives Unless transforming acquisition Revenue growth > 2020 net sales ~€3.5bn(1) > Adjusted EBITDA margin > 12% Profitability & return > ROIC > 9% Acquisitions strategy > Additional sales by 2020 of ~€500m Leverage > Net debt / adjusted EBITDA < 2.5x Dividend > At least €0.6
Slide 97: >12% adjusted EBITDA margin objective
All segments to contribute to 2020 financial objectives Based on relatively stable raw material prices ADJ. EBITDA MARGIN SEGMENT CAGR(1) OBJECTIVE MAIN FOCUS EMEA +0% / +2% Remain above 15% Organic growth North America +2% / +4% Reach 15% Cost efficiency CIS, APAC & LATAM +0% / +3% Back to 15% Prog
Slide 98: Productivity: structural and ongoing savings
Productivity: structural and ongoing savings thanks to World Class Manufacturing PRODUCTIVITY GAINS Productivity as a % of COGS 2.6% 2.6% 2.4% 2.3% 2.3% 2.3% Target > 2% 2011 2012 2013 2014 2015 2016E Objective: €40m / year minimum Tarkett Investor Day – October 27, 2016 98
Slide 99: Well-invested and managed industrial assets
Well-invested and managed industrial assets INVESTMENTS Ongoing capex (€m) 84 88 90 77 78 79 3.7% 3.6% 3.5% 3.2% 3.3% 2.9% Ongoing capex as % of net sales 2011 2012 2013 2014 2015 2016E Objective: ~ 3.5% of sales Tarkett Investor Day – October 27, 2016 99
Slide 100: Focus on Return On Invested Capital
Focus on Return On Invested Capital (ROIC) ROIC 9.0% Adjusted EBIT NEW x (1 - Normative tax rate(1)) 10.8% 10.0% 8.4% 8.8% 7.0% NOPAT 6.0% ROIC = Capital Employed 2011 2012 2013 2014 2015 2016E Goodwill + Tangible & intangible Assets + Working Capital Objective: ROIC > 9.0%, higher that the WACC (1)
Slide 101: Solid balance sheet and extended debt maturity
Solid balance sheet and extended debt maturity NET FINANCIAL DEBT AND LEVERAGE RATIO MATURITY OF AVAILABLE CREDIT LINES Net debt in €m in €m 671 RCF 595 568 651 482 400-440 €300m 2.3x Schuldschein 2.0x 1.8x 1.2- 1.7x 1.4x Net debt/ Adjusted EBITDA(1) 174 151 153 126 4 1 0 End of End of End of End of
Slide 102: M&A: financial discipline and significant firepower
M&A: financial discipline and significant firepower AQUISITION CRITERIA SIGNIFICANT FINANCIAL HEADROOM > After 2 years: For illustration purposes only, adjusted EBITDA margin based on EV multiples of 7.0x to 9.0x EBITDA > 12.0% > A €500m acquisition (Enterprise Value) would > After 3 years: increase
Slide 103: Dividend policy
Dividend policy Unless transforming acquisition Year of payment 2014 2015 2016 2017 2018 - 2020 Dividend €0.62 €0.38 €0.52 €0.60 >€0.60 per share % of Net 40% 40% 40% 30-50% 30-50% profit Tarkett Investor Day – October 27, 2016 103
Slide 104: Conclusion
CONCLUSION Michel GIANNUZZI CEO
Slide 105: Tarkett strategy and financial objectives
Tarkett strategy and financial objectives STRATEGY 2017-2020 FINANCIAL OBJECTIVES unless transforming acquisition > Deliver outstanding Revenue growth > 2020 net sales ~€3.5bn(1) customer experience > Adjusted EBITDA margin > 12% > Lead in design, Profitability & return > ROIC > 9% innovation & sust
Slide 106: A global leader and solutions provider of flooring and sports surfaces
A GLOBAL LEADER AND SOLUTIONS PROVIDER OF FLOORING AND SPORTS SURFACES Tarkett offers one of the broadest product ranges to all end-markets and the most diversified RESILIENCE AND OPPORTUNITIES geographic exposure with 80% in renovation Tarkett has maintained its leadership position READY TO BENEFIT
Slide 107: Investor Day, October 27, 2016
INVESTOR DAY October 27, 2016
Slide 108: Q&A
Q&A
Slide 109: Appendices
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Slide 110: EMEA Q3 2016
EMEA Q3 2016 NET SALES EVOLUTION in €m -3.5% reported > Sound growth in the Nordics, 230.9 Q3 2016 222.9 Net sales organic growth(1) +1.1% Germany and the Netherlands > The UK suffered from the recent Brexit uncertainties 9M 2016 > Spain continued to be affected Net sales organic growth(1) +4.0% by
Slide 111: North America Q3 2016
North America Q3 2016 NET SALES EVOLUTION in €m +1.1% reported Q3 2016 216.6 214.1 Net sales organic growth(1) -0.6% > Continues to benefit 9M 2016 from LVT growth Net sales organic growth(1) +4.8% Q3 2015 Q3 2016 > Faced a softer demand in commercial carpet mostly (1) Organic growth: At same perime
Slide 112: CIS, APAC & LATAM Q3 2016
CIS, APAC & LATAM Q3 2016 NET SALES EVOLUTION in €m -4.2% 164.6 reported Q3 2016 CIS countries 157.7 Net sales organic growth(1) -10.1% > Decline in volume at similar rate to H1’s > Economic conditions remained difficult in Russia with consumer disposable income still at a low level 9M 2016 > Kept r
Slide 113: Sports Q3 2016
Sports Q3 2016 NET SALES EVOLUTION in €m -1.0% reported Q3 2016 199.2 197.2 Net sales organic growth(1) -0.9% > Lower proportion of turn-key projects that include revenues 9M 2016 from civil engineering Net sales organic growth(1) +5.1% Q3 2015 Q3 2016 > Turf product sales kept growing (1) Organic g
Slide 114: Net sales evolution in Q3 2016
Net sales evolution in Q3 2016 NET SALES in €m 2.6 808.8 (1.5) 5.0 794.3 791.8 (16.6) (1.6) (2.6) (1) Q3 2015 EMEA North America CIS, APAC & Sports Sales LfL Currencies Selling price lag Q3 2016 LATAM effect in CIS (1) Organic growth: At same perimeter and exchange rates (NB: In the CIS, price incre
Slide 115: Adjusted EBITDA in Q3 2016
Adjusted EBITDA in Q3 2016 ADJUSTED EBITDA(1) in €m 8.9 119.2 6.6 3.5 (7.5) (0.2) > Improvement in EBITDA 113.2 in Q3 thanks to positive lag (3.9) effect and productivity (1.3) Q3 2015 Currencies Selling price lag Volume/Mix Sales pricing Purchase Productivity SG&A, Wage Q3 2016 effect in CIS pricin
Slide 116: EBITDA 9M 2016
EBITDA 9M 2016 ADJUSTED EBITDA(1) in €m 33.9 270.6 (20.6) 16.2 > Robust EBITDA 19.3 241.2 over the first nine (7.1) months of the year (6.4) (6.0) YTD Sep-15 Currencies Selling price Volume/Mix Sales pricing Purchase Productivity SG&A, Wage YTD Sep-16 lag effect in pricing increase & CIS Other (1) A
Slide 117: Ruble and Russia vinyl prices evolution
Ruble and Russia vinyl prices evolution 60% 50% Rate and price change, % 40% 30% 20% 10% 0% RUB devaluation (inverted scale) 2/3 of Devaluation Price change estimate Sources: Reuters and Tarkett data. Tarkett Investor Day – October 27, 2016 117
Slide 118: Material consumption in 2015
Material consumption in 2015 COGS breakdown as of December 31, 2015 Material consumption detail Traded goods Others Raw materials 22% 16% 58% Transport Oil derivatives Total COGS and logistics €2,045m 53% 10% Payroll Other raw materials 16% 25% Tarkett Investor Day – October 27, 2016 118
Slide 119: Shareholder composition
Shareholder composition As of July 31, 2016 Shareholder composition Société d’Investissement Deconinck 50.2% Treasury shares 0.3% KKR International Flooring 10.2% Free float 39.3% > Shareholder agreement between KKR and the Deconinck family to remain in place post-IPO for a term of 4 years (or until
Slide 120: Tarkett Supervisory Board
Tarkett Supervisory Board Supervisory Board Supervisory Board Special Committees > 9 Board members > Audit Committee Chaired by Guylaine Saucier 4 representatives of the Deconinck family 3 independent members Françoise Leroy Didier Deconinck Bernard-André Deconinck Gérard Buffière Josselin de Roquem
Slide 121: Detailed overview of Tarkett's product offering
Detailed overview of Tarkett’s product offering Heterogeneous Vinyl Homogenous Vinyl Linoleum Vinyl 48% & Linoleum Broadloom Modular Carpet 21% Multilayer wood floor Laminate Wood & Laminate 7% Rubber Tiles/Sheets Stair nosing Drain Rubber & 7% Accessories Track Artificial Turf Reinforced natural gr
Slide 122: Vinyl and Linoleum (1/2)
Vinyl and Linoleum (1/2) HETEROGENEOUS VINYL Heterogeneous commercial Vinyl Heterogeneous residential Vinyl LVT (modular heterogeneous Vinyl) PUR reinforcement Compact PVC Printed design Design (printed PVC film or print) Transparent PVC wear-layer Fibreglass for easy maintenance non woven reinforce
Slide 123: Vinyl and Linoleum (2/2)
Vinyl and Linoleum (2/2) LINOLEUM HOMOGENEOUS VINYL Urethane polymer based Homogeneous Vinyl VCT (modular homogeneous Vinyl) surface treatment Surface treatment Solid Pur: Polyurethane Surface treatment Linoleum Colour pigments Pur: Polyurethane Colour pigments Product Jute backing Plain and decor
Slide 124: Wood and Laminate
Wood and Laminate WOOD LAMINATE Core board Lacquer or hardwax oil made of high Overlay surface treatment density floor board Middle layer made of pine or spruce or HDF Decor layer = Product Wear layer impregnated paper of hard wood Balancing layer Bottom layer of spruce veneer Engineered wood comb
Slide 125: Rubber, Accessories and Carpet
Rubber, Accessories and Carpet RUBBER SHEETS, TILES AND ACCESSORIES CARPET Rubber Sheets/Tiles Stair nosing Drain Modular Broadloom Tufted Fibre (nylon) PP woven backing with latex coating Product Primary backing with latex pre-coat Structured backing Loop pile top cloth Rubber sheets and tiles ca
Slide 126: Sports
Sports TURF REINFORCED NATURAL GRASS TRACKS Coating of the Polyethylene fibres backing in rows tufted into backing Finished Carpet ready Natural grass to be installed on the pitch Patented infilling: 40 cm long Product washed silica sand artificial turf fibers Patented infilling: Final layers of cry