Burckhardt Compression Holding Ag · SIX:BCHN

Burckhardt Compression — H1 FY2017 Earnings Presentation

58 slides from Burckhardt Compression's earnings presentation, Nov 7, 2017

  1. Slide 1: Results First-Half of FY17

    BURCKHARDT COMPRESSION HOLDING AG RESULTS FIRST-HALF OF FY17 Winterthur, November 7, 2017

  2. Slide 2: Content

    Content  About Burckhardt Compression  Corporate Overview  Review Systems Division  Review Services Division  Financials  Outlook, Guidance & Growth Areas  Shareholders Results first-half of FY17 November 7, 2017 Page 2

  3. Slide 3: About Burckhardt Compression

    ABOUT BURCKHARDT COMPRESSION Results first-half of FY17 November 7, 2017 Page 3

  4. Slide 4: About Burckhardt Compression

    About Burckhardt Compression  Burckhardt Compression is  the worldwide market leader in the field of reciprocating compressor systems  the only manufacturer and service provider that covers a full range of reciprocating compressor technologies and services  Main USP: lowest life cycle costs Resu

  5. Slide 5: About Burckhardt Compression

    About Burckhardt Compression  Founded 1844  Division of Sulzer corporation 1969 – 2002  Management buyout 2002  Shareholders Publicly listed company at SIX (BCHN) since IPO in 2006  Approx. 5’400 Shareholders  Market cap. CHF 1’029 mn (29.9.2017)  FTEs 1HY FY17 2’1921) (1HY FY16: 2’071)  Sal

  6. Slide 6: About Burckhardt Compression

    About Burckhardt Compression Burckhardt Compression Burckhardt Compression Manufacturing/Assembly Subsidiaries and Service Locations Centers Results first-half of FY17 November 7, 2017 Page 6

  7. Slide 7: Market Segments

    Market Segments Upstream Gas Transport Oil & Gas and Storage Petro- Refinery chemical/ Chemical Industry Industrial Gas Results first-half of FY17 November 7, 2017 Page 7

  8. Slide 8: Reciprocating Compressor (Crosshead Design)

    Reciprocating Compressor (Crosshead Design) Results first-half of FY17 November 7, 2017 Page 8

  9. Slide 9: Corporate Overview

    CORPORATE OVERVIEW Results first-half of FY17 November 7, 2017 Page 9

  10. Slide 10: Financial Summary

    Financial Summary All Financials FY16 / FY17 in accordance with Swiss GAAP FER Systems Division Services Division Others1) Total in CHF mn 1HY FY17 1HY FY16 1HY FY17 1HY FY16 1HY FY17 1HY FY16 1HY FY17 1HY FY16 Sales 192.8 186.2 94.2 83.4 287.0 269.6 Cost of -181.4 -168.8 -50.7 -39.2 -232.1 -208.0 g

  11. Slide 11: Highlights

    Highlights  Received one order for a Hyper Compressor project in China  Received first joint order for SYCC & BC compressors for a large Refinery project in China  Received some LPGM orders with delivery in 2018 – 2020  Further success in cost optimization efforts  Acquisition of service provid

  12. Slide 12: Set Backs

    Set Backs  Overall financial performance as expected but at low level  Slightly lower order intake in the Systems Division due to stronger focus on margin  Systems business is still a buyers market  Further reduced profitability in the Systems Division due to:  Different product mix  Unusually

  13. Slide 13: Review Systems Division

    REVIEW SYSTEMS DIVISION Results first-half of FY17 November 7, 2017 Page 13

  14. Slide 14: Systems Division Financials

    Systems Division Financials Change in CHF mn 1HY FY17 1HY FY16 1HY FY16 / FY17 Order intake 117.7 123.6 -4.8% Sales 192.8 186.2 +3.5% Gross profit 11.4 17.4 -34.5% In % of sales 5.9% 9.4% EBIT -7.4 -3.7 In % of sales -3.8% -2.0% Headcount (FTEs) 1’430 NA Results first-half of FY17 November 7, 2017 P

  15. Slide 15: Systems Division Key Figures

    Systems Division Key Figures in CHF mn Order intake Sales Gross profit EBIT 100 80 60 40 20 0 07 08 09 10 11 12 13 14 15 16 1HY 17 Results first-half of FY17 November 7, 2017 Page 15

  16. Slide 16: Systems Division Global Footprint and Capacity Load

    Systems Division Global Footprint and Capacity Load Burckhardt Switzerland: Low work load; some short-time work since March Compression 2017; Global support functions for all production sites and Manufacturing / Assembly Locations globalization projects (procurement, engineering, R&D) China SYCC: Go

  17. Slide 17: Systems Division Profitability Improvement Program 1/2

    Systems Division Profitability Improvement Program 1/2  Defend short-term results – More aggressive upselling adjusted to the competitive market environment – Adapt resource level to the business volume – Focus on project execution and stop non-urgent spending – Minimum margins increased for tender

  18. Slide 18: Systems Division Profitability Improvement Program 2/2

    Systems Division Profitability Improvement Program 2/2  Highlights in 1HY FY17:  Global support center in Pune, India, inaugurated – 40 FTEs to support engineering, contracting and IT worldwide  First frame for a BC process gas compressor cast at Shenyang Yuanda Compressor’s foundry  Substantial

  19. Slide 19: Systems Division Products and Market Strategy

    Systems Division Products and Market Strategyv Keep #1 market position Increase market share BC Products SYCC Process Gas Standard High Market Laby® Laby®-GI Hyper Compressors Pressure Compressors Compressors Compressor API 618 Compressors Upstream oil & gas     Gas transport and storage    

  20. Slide 20: Systems Division Upstream Oil & Gas

    Systems Division Upstream Oil & Gas Market drivers  Future crude oil and natural gas price development  Keep flexibility with offshore applications  Shale gas activities  Aging oil fields with declining production  Drilling of oil and gas is getting more demanding Highlights  SYCC received one

  21. Slide 21: Systems Division Gas Transport and Storage

    Systems Division Gas Transport and Storage Market drivers  Long-term increasing demand for gas as a substitute for oil and coal  Importance of natural gas as a clean and inexpensive source of energy  Gas is found in areas where it is not used  Move from stationary onshore to flexible offshore ac

  22. Slide 22: Laby-GI Fuel Gas Supply System (FGSS)

    Laby®-GI - Fuel Gas Supply System (FGSS) 5,200 4,400 13,000 11,200 7,000 6,400 Compressor 5LP250-5B_1 Compressor 6LP190-5C_1 Total weight 160 tons Total weight 112 tons Dimensions 13.0x7.0x5.2m Dimensions 11.2x6.4x4.4 m Results first-half of FY17 November 7, 2017 Page 22

  23. Slide 23: LNG Tanker Creole Spirit

    LNG Tanker «Creole Spirit» Results first-half of FY17 November 7, 2017 Page 23

  24. Slide 24: Systems Division Refinery

    Systems Division Refinery Market drivers  Growing demand for clean fuels due to environmental regulations  Flexibility to process different crude oil qualities  Modernization of old infrastructure  Strategic importance of refining capacity for independent supply  Oil producing countries capturi

  25. Slide 25: Systems Division Petrochemical / Chemical Industry

    Systems Division Petrochemical / Chemical Industry Market drivers  GDP growth for polyolefin products in emerging countries  Shift of production to countries with low feed stock price (oil and/or natural gas)  Shift from commodity to specialty products Highlights  Several orders for polypropylen

  26. Slide 26: Secondary Compressor Type K12

    Secondary Compressor Type K12 Worlds Largest Piston-Compressor  Worlds largest LDPE line  PE production 400'000 tons per year  Possibility, to produce 30 different products  High pressure design for tubular reactor >3'000 bar Results first-half of FY17 November 7, 2017 Page 26

  27. Slide 27: Systems Division Industrial Gases

    Systems Division Industrial Gases Market drivers  Growing population and industrialization in emerging countries  Sustainable demand for industrial gases in food, paper, chemical, agriculture, mining, construction and health care industry  De-carbonization initiatives replacing hydrocarbons by hy

  28. Slide 28: Review Services Division

    REVIEW SERVICES DIVISION Results first-half of FY17 November 7, 2017 Page 28

  29. Slide 29: Services Division Financials

    Services Division Financials Change in CHF mn 1HY FY17 1HY FY16 1HY FY16 / FY17 Order intake 94.9 99.2 -4.3% Sales 94.2 83.4 +13.0% Gross profit 43.5 44.2 -1.6% In % of sales 46.2% 53.0% EBIT 22.3 21.9 +1.8% In % of sales 23.7% 26.3% Headcount (FTEs) 750 NA Results first-half of FY17 November 7, 201

  30. Slide 30: Services Division Key Figures

    Services Division Key Figures in CHF mn Order intake Sales Gross profit EBIT Results first-half of FY17 November 7, 2017 Page 30

  31. Slide 31: Services Division Business Overview

    Services Division Business Overview Market drivers  High worldwide population of reciprocating compressors (~75’000 units)  Increasing BC & SYCC compressor population  Tendency to increasing mean time between overhaul (MTBO) and reduction of operating costs  Age of some production plants  safet

  32. Slide 32: Financials

    FINANCIALS Results first-half of FY17 November 7, 2017 Page 32

  33. Slide 33: Order Intake

    Order Intake  Decrease of order intake by 4.5% to in CHF mn CHF 212.6 mn  Systems Division  -4.8% to CHF 117.7 mn  Orders from Petrochemical, Refinery and Gas Transport and Storage  Services Division  -4.3% to CHF 94.9 mn  Spare parts orders below the very high prior year period  15% from OB

  34. Slide 34: Sales

    Sales  Total sales increase by 6.5% to in CHF mn CHF 287.0 mn  Systems Division  +3.5% to CHF 192.8 mn  Including the delivery of some projects moved from FY FY16 into FY 2017  Services Division  +13.0% to CHF 94.2 mn  Growth in all areas  High volume in engineering, revamp and repair Result

  35. Slide 35: Sales and Gross Margin by Division

    Sales and Gross Margin by Division In CHF mn FY15 FY16 1HY FY16 1 HY FY17 Systems GSP 332.4 367.2 186.2 192.8 Division GP 73.0 22.0% 36.5 9.9% 17.4 9.4% 11.4 5.9% Services GSP 154.8 190.5 83.4 94.2 Division GP 78.7 50.8% 94.0 49.4% 44.2 53.0% 43.5 46.2% GSP 487.2 557.7 269.6 287.0 Total GP 151.7 31.

  36. Slide 36: SGA and EBIT

    SGA and EBIT  SGA amounting to 14.2% of sales in CHF mn ROS (prior year period: 15.4%)  Total SGA CHF 40.8 mn (prior year period: CHF 41.5 mn)  Including new division structure (not in place in 1HY 16)  EBIT CHF 12.8 mn or 20.3% below prior year period  ROS of 4.5% (prior year period: 5.9%)  C

  37. Slide 37: EBIT Development 1HY FY16 to 1HY FY17

    EBIT Development 1HY FY16 to 1HY FY17 in CHF mn  Major impact from gross profit Systems Division  Further reduction of SGA in spite of new divisional structure  OIE largely reflects exchange-rate fluctuations Results first-half of FY17 November 7, 2017 Page 37

  38. Slide 38: Net Income

    Net Income  Net income CHF 8.7 mn or 12.7% in CHF mn below prior year period  CHF -0.4 mn share of results of Arkos Field Services (40% ownership)  Interest expense CHF -0.8 mn (prior year period CHF -1.5 mn)  Tax rate of 24.7% (prior year period 27.6%)  Last year included tax charges from prio

  39. Slide 39: Earnings and Dividend per Share

    Earnings and Dividend per Share in CHF Earnings per Share in CHF Dividend per Share 25.00 12.00 21.46 10.00 10.00 10.00 20.00 10.00 20.00 9.00 16.68 16.93 16.4215.87 16.34 8.00 15.22 15.00 7.00 7.00 13.56 6.00 6.00 6.00 9.12 5.00 5.00 10.00 4.00 5.00 2.61 2.37 2.00 tbd 0.00 07 08 09 10 11 12 13 14 1

  40. Slide 40: Balance Sheet Positions

    Balance Sheet Positions  Balance sheet total declined by CHF FY 1HY 1HY In CHF mn 61.5 mn or 7.6% compared to FY16 FY16 FY16 FY17  Lower WIP in line with lower order Property, Plant & 200.4 202.6 198.2 intake Equipment  Reduction accounts receivables Inventories 250.2 250.0 216.8 - Thereof WIP 17

  41. Slide 41: Cash Flow and Net Financial Position

    Cash Flow and Net Financial Position  Lower net financial position In CHF mn 2016 1HY 1HY FY16 FY17  Lower cash flow from operating activities Cash Initial Balance 125.3 125.3 74.9  Dividend payment of CHF 7.00/ Cash Flow from 46.0 29.3 26.0 Operating Activities share for FY16 (total CHF -23.6 mn

  42. Slide 42: Shenyang Yuanda Compressor Co. (SYCC) Results 1HY FY17

    Shenyang Yuanda Compressor Co. (SYCC) Results 1HY FY17  SYCC “Operation”: 1HY 1HY 1HY  Still solid sales performance In mn CHF FY17 FY17 FY17 despite challenging market SYCC „OPERATION“ SYCC „DEPRECIATION“ SYCC TOTAL environment in China  YTD EBIT and EBIT margin at Sales 49.4 49.4 expected level

  43. Slide 43: Arkos Field Service Results 1HY FY17

    Arkos Field Service Results 1HY FY17  Total net income 1HY FY17 CHF -1.1 mn. Thereof BC share in results of associates (40%): CHF -0.4 mn  Continuous challenging business environment in the US upstream market (Arkos’ original business)  Several initiatives are underway to increase downstream busi

  44. Slide 44: Capital Investments (Additions to fixed Assets)

    Capital Investments (Additions to fixed Assets) 90 47 4) 1) 3) 5) 5) 2) 1) Including purchase of real estate in the amount of CHF 77.0 mn 2) Including CHF 5.8 mn investments in real estate (construction of a new building of Prognost in Germany and several modifications to the factory in Winterthur)

  45. Slide 45: Accounting Standards Changed to Swiss GAAP FER

    ACCOUNTING STANDARDS CHANGED TO SWISS GAAP FER Results first-half of FY17 November 7, 2017 Page 45

  46. Slide 46: Reasons

    Reasons  Burckhardt Compression decided to switch the company‘s accounting standard from IFRS to Swiss GAAP FER effective April 1, 2017  The following reasons led to this decision:  Increasingly complex, time consuming and extensive detailed requirements imposed by IFRS  Increasing gap between o

  47. Slide 47: Restatement of Balance Sheet as of March 31, 2017

    Restatement of Balance Sheet as of March 31, 2017 in CHF mn IFRS Swiss GAAP FER Difference Comments Goodwill 85.2 - -85.2 Goodwill from acquisitions Capitalized development costs 2.1 - -2.1 Formerly capitalized development costs of Prognost Intangible assets 37.2 11.8 -25.4 Intangible assets from ac

  48. Slide 48: Restatement of P&L for FY16

    Restatement of P&L for FY16 in CHF mn IFRS Swiss GAAP FER Difference Comments Sales 557.7 557.7 - Cost of goods sold -427.2 -427.2 - Gross profit 130.5 13.0.5 - Selling and marketing expenses -44.8 -44.8 - General and administrative expenses -32.5 -32.5 - Research and development expenses -7.8 -8.8

  49. Slide 49: Outlook, Guidance & Growth Areas

    OUTLOOK, GUIDANCE & GROWTH AREAS Results first-half of FY17 November 7, 2017 Page 49

  50. Slide 50: Outlook: Main Developments in Market Segments 1/2

    Outlook Main Developments in Market Segments 1/2  Upstream Oil & Gas  Further development of the onshore business since production costs have been significantly reduced  Once production costs will be further reduced: – Development of not easy reachable oil and gas fields – Growing enhanced oil re

  51. Slide 51: Outlook: Main Developments in Market Segments 2/2

    Outlook Main Developments in Market Segments 2/2  Refinery  Continues to be the largest market segment overall and bears the highest potential to increase our market share (BC & SYCC compressors)  since every player builds API 618 Refinery compressors it is also the most competitive segment  Pet

  52. Slide 52: Guidance Financial Targets

    Guidance Financial Targets Guidance FY 2017 Order Intake • No upturn in the Systems Division order intake expected until FY18 at the earliest • Continued growth in the Services Division Sales • At prior year level Gross Margin • Systems Division 8 - 10% • Services Division 45 - 50% EBIT • EBIT margi

  53. Slide 53: Growth Areas

    Growth Areas  Systems Division  Capitalize on recent geographical expansions and acquisitions Organic Growth  Refinery business  Services Division  Grow in all business areas  Further selective geographical expansion Acquisitions  Services Division  Add-on acquisitions (focus OBC business) R

  54. Slide 54: Shareholders

    SHAREHOLDERS Results first-half of FY17 November 7, 2017 Page 54

  55. Slide 55: Burckhardt Compression Shareholder Structure

    Burckhardt Compression Shareholder Structure MBO Shareholder Pool 30 Institutional Shareholders 12.40% 0.3% - 2.9% 21.20% NN Group N.V. 6.93% 6.89% JO Hambro Capital Management Limited 4.99% Atlantic Value General Partner Ltd. (Mondrian) 3.49% 3.03% Ameriprise Financial Inc. 35.05% 3.01% 3.01% Credi

  56. Slide 56: Performance of BCHN Share Compared to the SPI Index

    Performance of BCHN Share Compared to the SPI Index BCHN 301.50 SPI 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (IPO) 26.6.06 30.3.07 31.3.08 31.3.09 31.3.10 31.3.11 30.3.12 30.3.13 30.9.14 30.9.15 30.9.16 29.9.17 85.00 199.50 317.00 106.00 208.00 244.20 247.50 355.30 442.50 315.00 2

  57. Slide 57: Disclaimer

    Disclaimer This document may contain forward-looking statements including, but not limited to, projections of financial developments, market activity, or future performance of products. These forward-looking statements are subject to change based on known or unknown risks and various other factors t

  58. Slide 58: CF Burckhardt

    CF Burckhardt y Compression Compressors for a Lifetime”

Burckhardt Compression Holding — H1 FY2017 Earnings Presentation on 6ix