Techtronic Industries Co., Ltd. · HKEX:669
Techtronic Industries — H1 2008 Earnings Presentation
74 slides from Techtronic Industries's earnings presentation, Aug 22, 2008
Slide 1: 2008 Interim Results
2008 Interim Results 22 August 2008 2006 annual results announcement
Slide 2: Introduction – Horst Pudwill, Chairman
Introduction Horst Pudwill Chairman 2
Slide 3: Joe Galli, CEO
Tri Joe Galli CEO
Slide 4: Outperforming the Market
is Outperforming the Market 4
Slide 5: 2008 Interim Highlights
2008 Interim Highlights Sales +10.1% EBIT before one-time benefit +79.9% Hoover Turnaround +US$28M Improvement 5
Slide 6: 2008 Interim Financial Results (US$)
2008 Interim Financial Results 2008 2007 Changes US$m US$m Sales 1,688 1,533 +10.1% Gross Profit Margin% 31.5% 31.8% EBIT 99 55 +79.9% (Before one time benefit, restructuring and transition costs) One Time Benefit 5 42 (88.0%) EBIT 104 97 +7.1% (After one time benefit before restructuring and transi
Slide 7: 2008 Interim Financial Results (HK$)
2008 Interim Financial Results 2008 2007 Changes HK$m HK$m Sales 13,135 11,928 +10.1% Gross Profit Margin% 31.5% 31.8% EBIT 770 428 +79.9% (Before one time benefit, restructuring and transition costs) One Time Benefit 39 327 (88.0%) EBIT 809 755 +7.1% (After one time benefit before restructuring and
Slide 8: Restructuring Overview
Restructuring Overview Actual Plan (US$m) 2007 2008 2009 2010 Total Cash 53.5 41.8 - - 95.3 Non cash 32.4 22.5 - - 54.9 Subtotal 85.9 64.3 - - 150.2 Transition Cost 9.6 8.1 4.3 - 22.0 Total 95.5 72.4 4.3 - 172.2 Savings - 25.0 45.0 70.0 8
Slide 9: Restructuring Plan Actual
Restructuring Plan Actual (US$m) 2008 Full Year 2008 1st Half Cash 41.8 15.2 Non cash 22.5 1.5 Subtotal 64.3 16.7 Transition Cost 8.1 4.7 Total 72.4 21.4 Savings 25.0 31.5 9
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Slide 11: Financial Review
Financial Review Frank Chan Chief Financial Officer 11
Slide 12: 2008 Interim Financial Performance
2008 Interim Financial Performance For the 6 months period ended June 30, 2008 2008 % of 2007 % of % HK$m sales HK$m sales Change Sales 13,135 11,928 10.1 Gross Profit 4,131 31.5% 3,790 31.8% 9.0 Operating Expenses (Before restructuring and transition costs) 3,355 25.5% 3,357 28.1% (0.1) EBIT (Befor
Slide 13: Financial Position
Financial Position (HK$m) 2008 2007 Factors June Dec Non-current Assets 10,220 10,015 Current Assets 13,999 14,954 More efficient cash and working capital Current Liabilities 11,196 11,983 management Net Current Assets 2,803 2,971 Long-term Liabilities 5,630 5,975 Reclassified to current liabilities
Slide 14: Debt Profile
Debt Profile As of June 30, 2008 and December 31, 2007 (HK$m) 2008 1st Half 2,678 Cash 2007 Year End 3,293 (5,368) Short Term Debt (6,021) (2,657) Long Term Debt - Fixed (2,653) (1,348) Long Term Debt - Floating (1,588) (100) Long Term Debt - CB (98) 2008 1st Half 2007 Year End Long Term Debt / Tota
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Slide 16: Financial Targets
Financial Targets 2007 1H 2007 YE 2008 1H 2011 GM % 31.8% 31.5% 31.5% 34%+ SG&A % 28.2% 27.9% 25.5% EBIT% 3.6% 3.6% 5.9% 10%+ 16
Slide 17: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 17
Slide 18: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 18
Slide 19: Gross Margin Challenges
Gross Margin Challenges ¾ PRC Inflation • Labor • Labor Law • RMB • VAT ¾ Commodity Inflation Impacting All Competitors 19
Slide 20: Plan: Offset Inflation, Improve Gross Margin
Plan Offset Inflation + Improve Gross Margin 20
Slide 21: Challenges offset by Plan
Challenges offset by Plan 1. High Margin New Products 2. Hoover Restructuring 3. Milwaukee Restructuring 4. New PRC Facility 5. Comprehensive TTI Productivity Initiative 6. “Global” Operations Plan 21
Slide 22: Key New Product
Gross Margin Improvement Key New Product 22
Slide 23: Hoover Turnaround: +US$28M
Hoover Restructuring Hoover Turnaround : +US$28M 23
Slide 24: Milwaukee Restructuring
Milwaukee Restructuring ¾ 1st US Facility closed ahead of schedule – 6/08 ¾ 2nd US Facility on-schedule for closure – 9/08 ¾ New PRC Facility operational Savings of US$7.3M in 2008 1H 24
Slide 25: Campus Innovation Center
Campus Innovation Center 25
Slide 26: Campus
Campus Innovation Center Assembly Factories Warehouse Staff Dormitories 26
Slide 27: Global Manufacturing Platform
Global Manufacturing Platform 27
Slide 28: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 28
Slide 29: Driving Sales Growth
Challenging economic environment but… is Driving Sales Growth 29
Slide 30: 2008 1H Sales +10.1%
2008 1H Sales +10.1% Down OEM Single digit (As planned) US Consumer Tools Low single digit US Professional Tools Floor Care Mid single digit is Up outperforming US Outdoor the market Europe and capturing Double digit market share Canada Australia 30
Slide 31: A New Product Machine
Tri A New Product Machine
Slide 32: Cordless
Cordless 2006 annual results announcement
Slide 33: Cordless Lithium 12V
Lithium 12V Cordless 2006 annual results announcement
Slide 34: Cordless Lithium 18V
Lithium 18V Cordless 2006 annual results announcement
Slide 35: Cordless
Cordless 2006 annual results announcement
Slide 36: Cordless
Cordless 2006 annual results announcement
Slide 37: Cordless
Cordless 2006 annual results announcement
Slide 38: Cordless
Cordless 2006 annual results announcement
Slide 39: Cordless 12V/18V
Lithium 12V/ 18V Cordless 12V/18V 2006 annual results announcement
Slide 40: Cordless Lithium Batteries
Cordless Lithium Batteries 2006 annual results announcement
Slide 41: Cordless Sales up 40% in 1st Half
Cordless Sales up 40% in 1 Half st 41
Slide 42: Corded Power Tools
Corded Power Tools 2006 annual results announcement
Slide 43: Accessories
Accessories 2006 annual results announcement
Slide 44: Accessories
Accessories 2006 annual results announcement
Slide 45: Accessories
Accessories 2006 annual results announcement
Slide 46: Outdoor Products
Outdoor Products 46
Slide 47: Outdoor Corded
Outdoor Corded 47
Slide 48: Gas Chain Saw
Gas Chain Saw 48
Slide 49: 2006 annual results announcement
2006 annual results announcement
Slide 50: Gas Pressure Washer
Gas Pressure Washer 2006 annual results announcement
Slide 51: Outdoor Accessories
Outdoor Accessories 51
Slide 52: Floor Care
Floor Care 2006 annual results announcement
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Slide 54: Floor Care
Floor Care 2006 annual results announcement
Slide 55: Floor Care
Floor Care 2006 annual results announcement
Slide 56: Floor Care
Floor Care 2006 annual results announcement
Slide 57: Products Launched in the last 12 months
Products Launched in the last 12 months Power Tools 133 Outdoor Products 108 Floor Care 82 Total 323 57
Slide 58: Geographic Expansion
Geographic Expansion ¾ Canada ¾ Europe • Middle East • Russia • Eastern Europe ¾ Australia ¾ Latin America 58
Slide 59: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 59
Slide 60: Free Cash Flow
Free Cash Flow 2007/2008 Impacted by: Restructuring Inventory build up for Restructuring New PRC Facility Hoover losses 60
Slide 61: Long Term Target: Convert ~100% of Net Profit into Free Cash Flow
Free Cash Flow Long Term Target: TTI will convert ~ 100% of Net Profit into Free Cash Flow and… Net Profit will grow 61
Slide 62: Free Cash Flow
Free Cash Flow Target (US$) 2007 1H 2007 YE 2008 1H 2009-2011 Free Cash Flow $13m ($58m) $71m 100% of Net Profit % of Net Profit 19% (360%) 155% 62
Slide 63: Free Cash Flow Plan
Free Cash Flow Plan Improve through: 1. Completing Restructuring 2. Increase EBIT 3. Reducing Working Capital as a % of Sales 4. Completing PRC New Facility 5. Reduce Fixed Capital as a % of Sales 6. Turnaround Hoover 63
Slide 64: Inventory days
Inventory 2007 1H 2007 YE 2008 1H Target $669m $765m $770m 64 days 83 88 84 days days days 64
Slide 65: Working Capital
Working Capital Target 2007 1H 2007 YE 2008 1H 2009-2011 Inventory Days 83 88 84 64 Receivables DSO 68 62 57 57 Payables DPO 69 66 63 59 Working Capital 22.5% 21.4% 17.0% 22.9% As a % of Sales 65
Slide 66: Fixed Capital
Fixed Capital Target (US$) 2007 1H 2007 2H 2008 1H 2009-2011 CAPEX $40m $71m $53m _< 2.5% % of sales 2.6% 4.3% 3.1% Depreciation $36m $37m $34m % of sales 2.3% 2.2% 2.0% Capex <_ Dep 66
Slide 67: Free Cash Flow a Focus
Free Cash Flow a 7TTi Focus
Slide 68: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 68
Slide 69: Strengthen / Upgrade Organization
Strengthen / Upgrade Organization 69
Slide 70: Management Team
Management Team Strong TTI Veterans + + Outstanding New Hires TTI = Exceptional People 70
Slide 71: Strategic Roadmap
Strategic Roadmap 1. Gross Margin 2. Sales Growth 3. Free Cash Flow 4. Organization Development 5. Operating Cycle 71
Slide 72: Operating Cycle
Operating Cycle Strategic Planning Organization Review Annually Budget Global Product Summits Semi-Annually Operations Reviews Quarterly 72
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Slide 74: Disclaimer
Disclaimer This presentation includes forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Changes in the following important factors, among others, could cause Techtronic Industries Co. Ltd.’s actual results to diff
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