Slide 1: Financial Year 2017: Media and Analyst Conference
Financial Year 2017: Media and Analyst Conference Zurich, 9 March 2018
Slide 2: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 1
Slide 3: Disclaimer
Disclaimer This presentation contains forward looking statements which reflect Starrag Group’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statemen
Slide 4: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 3
Slide 5: Starrag Group – Attractively positioned
Starrag Group – Attractively positioned Benefiting from sustainable megatrends Mobility, global infrastructure capex, agricultural productivity, energy efficiency, miniaturization Innovation leadership and technological expertise Leading innovation capability focused on customers’ needs using Indust
Slide 6: Highlights 2017: Higher sales – solid workload – improved profitability
Highlights 2017: Higher sales – solid workload – improved profitability Sales up 9% to CHF 405 million, organic growth +8% Order backlog of CHF 302, ensuring capacity utilization for well over one year Order intake of CHF 349 million EBIT up 63% to CHF 15.3 million – operating margin 3.8% - ROCE 5.7
Slide 7: Focus: Ongoing implementation of Strategy „Starrag 2020“
Focus: Ongoing implementation of Strategy „Starrag 2020“ Focus on most attractive market/product segments and regions to better exploit group-wide growth and profit potential Differentiate through application competence, technology, service capabilities and premium market positioning Better scale ex
Slide 8: Market positioning
Market positioning Aerospace Energy Industrial Transportation Total Market segments • Aero Engines • Oil & Gas • Industrial • Heavy Duty Components Vehicles & Engines • Aero Structures • Power Turbines • Luxury Goods • On-Road Vehicles • Avionics • Renewables • Med Tech Addressed market size 1’000 5
Slide 9: Dedicated solutions for our target industries
Dedicated solutions for our target industries Aerospace Energy Industrial Transportation ECOSPEED Serie LX Serie S191 Serie H Serie RVU Serie ECOFORCE Serie FOGS Serie CONTUMAT Serie Innovations 2017: RVU, FOGS HD, X40, H50. 8
Slide 10: Focus of strategic actions
Focus of strategic actions Innovation Geographical footprint Operational excellence Leading application USA Simplifying competence go to market China Starrag Integrated Sales effectiveness Production System Dealer network in key markets Customer service (Industry 4.0) readiness Next generation Proje
Slide 11: Financial mid-term targets
Financial mid-term targets Growth Rate 5% p.a. – average throughout the cycle Profitability 8% EBIT margin – average throughout the cycle ROCE Above WACC – generate value Dividend ratio 35-50% of net profit Targets: In local currencies and as average over the business cycle. 10
Slide 12: Other key developments
Other key developments Christian Walti appointed to new CEO as per June 1, 2018 CEO Walter Börsch to leave Starrag Group Michael Hauser proposed to AGM as member of the Board of Directors Frank Brinken to retire from Board as per AGM 2018 New factory in Vuadens/CH in full operations since end of 201
Slide 13: Christian Walti: New CEO, starting June 2018
Christian Walti (1967, Swiss): New CEO, starting 1 June 2018 Career 2012 - 2018: Head of Bosch Packaging Systems in Beringen/CH 2005 - 2011: Faes AG, CEO and Co-owner 2003 - 2004: Stratocon AG, Founding Partner 1999 - 2003: ABB Switzerland AG, Program Manager Professional Experience In-depth knowled
Slide 14: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 13
Slide 15: Order intake below previous year's record high
Order intake below previous year‘s record high CHF m 600 +44% -27% 500 400 300 480 200 425 407 333 349 100 0 2013 2014 2015 2016 2017 14
Slide 16: Order intake breakdown: Stable business increased
Order intake breakdown: Stable business increased CHF m (at 2017 fx rates) 600 2016: three extraordinary, 500 large orders 400 +203% -83% 239 Large orders 122 88 41 (> 5m) 12% 300 79 200 Small/medium 236 239 orders 69% 218 199 178 100 Recurring 60 62 63 68 69 service 20% 0 2013 2014 2015 2016 2017
Slide 17: Order intake by industry: more than 70% from Aerospace and Industrial
Order intake by industry: more than 70% from Aerospace and Industrial CHF m 600 2016: three extraordinary, 500 large orders 400 200 175 166 300 110 Aerospace 31% 116 14 50 16 29 38 Energy 11% 200 167 154 194 157 143 Industrial 45% 100 69 71 45 36 44 Transport 13% 0 2013 2014 2015 2016 2017 16
Slide 18: Market trends by industry
Market trends by industry Global economic environment is getting felt, larger orders remain lumpy Aerospace Energy Transportation Industrial 37% 10% 11% 42% Solid market Power plant investments Agriculture positive on Stationary Machines still development globally concentrated in Asia low le
Slide 19: Order intake by region: two thirds from Europe
Order intake by region: two thirds from Europe CHF m 600 2016: three extraordinary, 500 large orders 101 400 24 42 77 24 Americas 7% 25 300 133 174 94 Asia 27% 105 200 324 100 232 205 231 Europe 66% 196 0 2013 2014 2015 2016 2017 Asia share expected to reach 40% in the mid and long term 18
Slide 20: Participation in key trade fairs with great success
Participation in key trade fairs with great succes Focus further reinforced on: Integrated Production System IPS = Industry 4.0 Next generation of machine tools EMO Hannover ECOSPEED F 2060 New generation of horizontal machining centers HEC X40 and HEC H50 CIMT Beijing Many interesting contacts layi
Slide 21: Technology Days: where the world's experts meet
Technology Days: where the world‘s experts meet Technology Days Precision Engineering DE-Immendingen Bumotec high-precision machine tools for Med Tech industry Turbine Technology Days CH-Rorschach Latest developments in efficient manufacturing of turbines for aircrafts and power plants New service s
Slide 22: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 21
Slide 23: Swiss GAAP FER accounting as of FY 2017: Allows for important simplification
Swiss GAAP FER accounting as of FY 2017: Allows for important simplification Avoidance of ever increasing complexity related to IFRS, triggering substantial reduction of cost Swiss GAAP FER a recognized accounting standard - applying true and fair principle - accurate picture of Starrag Group’s fina
Slide 24: Ongoing high order backlog: H2 orders up 46% vs. H1 2017
Ongoing high order backlog: H2 orders up 46% vs. H1 2017 CHF m 500 480 425 407 400 349 333 249 219 300 224 192 208 200 348 288 302 275 238 231 100 206 184 141 142 0 2013 2014 2015 2016 2017 Order intake H1 Order intake H2 Order backlog Order intake -28% y-o-y (in local currencies), but: up 46% H2
Slide 25: Income Statement: Increase in revenue, Operating margin and ROCE
Income Statement: Increase in revenue, Operating margin and ROCE CHF m Revenue Expenses 450 +9.1% 400 350 Sales revenue 300 185 45.7% 167 44.8% Material / Inventory change 250 200 405 Personnel 372 150 139 34.3% 134 36.1% Other Operating Expense/Income 100 Depreciation 50 55 13.6% 51 13.8% EBIT 2.7%
Slide 26: EBIT increase through higher capacity utilization
EBIT increase through higher capacity utilization CHF m Units 25 Base Value Change1 20 Change2 7.9 -3.0 Change3 0.6 0.3 15.3 Change4 15 0.1 Change5 Change6 Change7 Change8 Change9 10 9.3 Change10 Change11 Change12 Change13 Change14 5 Change15 Change16 Change17 Change18 Change19 0 Change20 Grand Tota
Slide 27: Higher EBIT feeds through to bottom-line: EPS doubled in 2017
Higher EBIT feeds through to bottom-line: EPS doubled in 2017 CHF m 2017 2016 Change EBIT 15.3 9.3 63.2% Financial result -1.6 -1.4 8.7% Earnings before tax EBT 13.7 7.9 73.2% Income tax -1.6 -1.8 -14.6% Net income 12.1 6.1 99.7% Tax rate (implied) 11.5% 23.2% na. Earnings per share 3.58 1.77 102.3%
Slide 28: Balance sheet: Equity and equity ratio further strengthened
Balance sheet: Equity and equity ratio further strengthened CHF m Assets Liabilities 400 350 11 32 Cash 300 14 33 Receivables 133 250 96 128 Inventories 122 200 Fixed assets 96 150 85 Financial liabilities 100 180 161 Operating liabilities 110 111 50 Shareholders' equity 0 31.12.2016 31.12.2017 31.1
Slide 29: Free Cash flow increased despite NWC financing
Free Cash flow increased despite NWC financing CHF m Units 25 10.8 -9.5 Base Value 20 Change1 Change2 15 -0.4 Change3 13.1 -11.7 Change4 12.1 Change5 Change6 Change7 10 Change8 Change9 Change10 Change11 Change12 5 2.5 3.9 Change13 Change14 Change15 Change16 Change17 0 Change18 Change19 Net Depre- Ch
Slide 30: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 29
Slide 31: Main focus of Starrag Group
Main focus of Starrag Group Focus on prioritized market Clear segments and regions strategic positioning Value proposition (solutions) International footprint (China, USA) Simplification Reliable Accountability operational performance Speed Innovation Creation of ROCE > WACC long-term value All stak
Slide 32: Economic outlook 2018
Economic outlook 2018 Generally positive economic environment VDW forecast 2018: “production growth of 5%” Heterogeneous expectations for our relevant industries Aerospace positive Industrial positive Energy rather weak Transportation depending on market segment Expectations by regions Europe stable
Slide 33: Positive outlook thanks to implemented strategic and operational measures
Positive outlook thanks to implemented strategic and operational measures Relatively stable economic and machine tool market development despite numerous economical and political uncertainties Starrag group well positioned with sustainable 70% of stable base orders (<CHF 5 million) and service busin
Slide 34: Summary
Summary 2017 Highlights: Higher sales – solid order backlog – improved profitability 2018 Outlook: Orders clearly up, Sales at least on 2017 level, EBIT-% and ROCE up Mid-term ambitions confirmed: 5% revenue CAGR; 8% EBIT margin; ROCE > WACC Starrag – attractively positioned: Benefiting from sustain
Slide 35: Corporate calendar and Contact details
Corporate calendar and Contact details 28.04.2018 Annual general meeting in Rorschach 27.07.2018 Half-year report 2018 25.01.2019 Initial information on 2018 results 08.03.2019 Presentation of 2018 results for analysts and media in Zurich 26.04.2019 Annual general meeting in Rorschach Gerold Brütsch
Slide 36: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Daniel Frutig, Chairman Q&A 35
Slide 37: Backup information
starrag Backup information Engineering precisely what you value Solutions for Aerospace Energy Transportation Industrial
Slide 38: Share details (as of December 2017)
Share details (as of 31 December 2017) Market capitalization CHF 220 million Listed at SIX Swiss Exchange Main Standard Ticker: STGN, Valor number 236‘106, ISIN CH00023610608 3‘360‘000 registered shares, nominal value of CHF 8.50 each Free float 37% Stable shareholder structure others 28.8% 53.9% Wa
Slide 39: 150 years tradition in innovation
150 years tradition in innovation Key milestones for Starrag Group to become and remain a reliable long-term partner Scientific Machine Machine Machine Machine Textile Machine Machine Machine Software/ instruments tools tools tools tools machinery tools tools tools Technology company 38
Slide 40: At your service
At your service Production site Logistic center Service center 39
Slide 41: Group Management
Group Management Daniel Frutig, Chairman Walter Börsch, CEO Gerold Brütsch, CFO (1962, Swiss) (1959, German) (1966, Swiss) Since 2015 Chairman of the Board of Directors of 2014 – May 2018: CEO and Head of Regional Sales Since 2000 CFO, since 2005 Deputy CEO and Head Starrag Group (Member since
Slide 42: World production machine tools 1987 - 2016
World production machine tools 1987 - 2016 EUR b +10% +8% 70 -2% +29% +5% -12% 60 +29% 50 40 69 69 68 63 64 30 61 55 52 49 46 20 40 41 40 42 37 36 38 34 34 34 34 35 33 32 30 29 27 27 24 23 10 0 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Note: Without Pa
Slide 43: World consumption machine tools 2014 - 2016: Top 20 countries
World consumption machine tools 2014 - 2016: Top 20 countries EUR b CN US DE JP IT KR MX IN TW RU TR FR CA TH CH VN AT GB PL 2014 2015 2016 ES 0 5 10 15 20 25 Top 20 countries are 90% of 68b EUR machine tool market. Note: Without Parts/accessories; Source: VDW World Machine Tool Statistics 2016, u