Arbonia Ag · SIX:ARBN

Arbonia — AFG Arbonia-Forster-Holding — FY2014 Earnings Presentation

47 slides from Arbonia's earnings presentation, Mar 3, 2015

  1. Slide 1: AFG – FY 2014 Results – 03 March 2015

    AFG – FY 2014 Results – 03 March 2015 William J. Christensen, CEO Felix Bodmer, CFO

  2. Slide 2: Agenda

    Agenda 1. Review 2014 William J. Christensen 2. Financial results Felix Bodmer 3. “100 days” & actions William J. Christensen 4. Outlook William J. Christensen 5. Summary William J. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 2

  3. Slide 3: Review 2014 – Financial key figures

    Review 2014 – Financial key figures AFG Group CHF 1'017M  Negative organic development Net revenues +1.3% vs. 2013  Sabiana H2 addition with positive effect CHF 78.3M EBITDA -23.9% vs. 2013  Margin compression in all divisions 7.7% margin CHF 33.4M EBIT -45.7% vs. 2013  Reflects weak Division En

  4. Slide 4: Review 2014 – Key events

    Review 2014 – Key events Summary  Sale of AFG Kitchens business to Alno Q1 – 2014  New CEO (a.i.): Rudolf Graf, Chairman of the Board  Retirement of Edgar Oehler from Board Q2 – 2014  Divestment of STI Precision Machining (Changshu) Co., Ltd.  Acquisition of Sabiana S.p.A (closing on 4 July) Q3

  5. Slide 5: Review 2014 – Employees

    Review 2014 – Employees Nominal increase Average employees 2014  6’057 employees on average (continued operations) 6% 2% • 25% based in Switzerland • Down from 26% in 2013 43%  Overall increase of 53 employees 49% in core business  Net acquisitions/divestments reduction of 863 employees Div. Tech

  6. Slide 6: Review 2014 – Capex

    Review 2014 – Capex Significant increase Investments by division 2014  Capital expenditures of roughly 6% CHF 48M; 21% above the previous year 16% 37%  Investments correspond to 4.7% of sales 42%  All projects implemented as planned Building Technology Building Security Building Envelope Other AF

  7. Slide 7: Review 2014 – Capex

    Review 2014 – Capex Key projects Slovaktual  New PVC production hall in Pravenec  CHF ~15M  Start up Q2, 2015 RWD  Automatic door panel sizing/edge Schlatter banding lines and production hall extension  CHF ~25M  Start up Q3, 2014 AFG – Annual Results 2014 – 03 March 2015 7

  8. Slide 8: Review 2014 – Net revenues

    Review 2014 – Net revenues Development In CHF M -2.4% -1.4% +5.1% +1.3% 51 1’017 13 1’004 -24 -14 2013 Variance in Currency M&A 2014 Total local currency1 effect Variance 1. Variance in volume and price in local currency AFG – Annual Results 2014 – 03 March 2015 8

  9. Slide 9: Review 2014 Division Summary

    Review 2014 Division Summary Technology Envelope Security  Growth across all BU’s  Volume decline CH  Sales growth Performance  H2 Russia headwind  Margin deterioration  Margin compression  German design award  Sabina acquisition  Footprint expansion  RWD Schlatter invest SK  Opened Kermi

  10. Slide 10: Agenda

    Agenda 1. Review 2014 William J. Christensen 2. Financial results Felix Bodmer 3. “100 days” & actions William J. Christensen 4. Outlook William J. Christensen 5. Summary William J. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 10

  11. Slide 11: Income Statement – Continued Operations

    Income Statement – Continued Operations First net profit since 2010, but disappointing In CHF M 2014 in % 2013 in % Net revenues 1'017.4 100.0 1'004.0 100.0 Cost of material and goods -450.7 -44.3 -429.6 -42.8 Personnel expenses -344.7 -33.9 -338.7 -33.7 Other operating expenses -152.6 -15.0 -145.1

  12. Slide 12: Reconciliation to adjusted numbers

    Reconciliation to adjusted numbers Minor negative one-time effects 2014 without Actual Building Building Building one-time In CHF M 2014 Techn. Envelope Security Others effects Net revenues 1'017.4 1'017.4 EBITDA 78.3 -0.2 +1.0 +0.6 79.7 EBIT 33.4 +1.2 +0.9 36.9 Group result 11.3 -0.3 -0.2 -0.2 +3.5

  13. Slide 13: Adjusted Income Statement

    Adjusted Income Statement Slightly better, but still below expectations In CHF M 2014 in % 2013 in % Net revenues 1'017.4 100.0 1'004.0 100.0 Cost of material and goods -450.7 -44.3 -429.6 -42.8 Personnel expenses -343.1 -33.7 -338.5 -33.7 Other operating expenses -150.2 -14.8 -142.7 -14.2 EBITDA 79

  14. Slide 14: AFG Group - Continued Operations

    AFG Group - Continued Operations Deterioration of all key figures In CHF M 2014 2013 Net revenues 1'017.4 1'004.0 Adjusted organic growth -2.4% +0.3% EBITDA margin, adjusted 7.8% 10.2% EBIT margin, adjusted 3.6% 6.3% Free Cash Flow, adjusted 8.5 31.0 ROCE, adjusted 5.0% 7.8% AFG – Annual Results 201

  15. Slide 15: AFG Group – Discontinued Operations

    AFG Group Positive contribution to group result Discontinued Operations Result from discontinued operations In CHF M Result from discontinued +2.4 1 January operations after taxes AFG Küchen AG, CH-Arbon (without sales costs and 2014 currency translation effects) Gain on disposals +6.2 STI Precision

  16. Slide 16: Net revenues by Division / Country

    Net revenues by Division / Country Decline of Envelope reflected in breakdown Net revenues by Division Net revenues by Country 15% (15%) 31% (27%) 40% (44%) 48% (44%) 37% (41%) 29% (29%) Building Technology Building Security Switzerland Germany RoW Building Envelope Note: Figures in brackets represe

  17. Slide 17: Net revenues / EBITDA adjusted / EBIT adjusted

    Net revenues / EBITDA adjusted / EBIT adjusted Adjustment of business portfolio finalised In CHF M 1′800 18% 16% 1′414 1 1′347 1 14% 1′200 12% 919 1′004 1′017 10% 8% 600 6% 4% 2% 0 0% 2010 2011 2012 2013 2014 EBIT adj. EBITDA adj. Net revenues 1) Including discontinued operations AFG – Annual Result

  18. Slide 18: EBITDA- / EBIT-margins per Division

    EBITDA- / EBIT-margins per Division Margin pressure, esp. in Building Envelope 20% 15% 12.3% 11.3% 11.5% 11.4% EBITDA 10% 8.9% margin, 6.4% adjusted 5% 2013 2014 0% Building Technology Building Envelope Building Security 20% 15% EBIT 8.8% 9.4% 10% 8.0% 7.5% 6.8% margin, adjusted 5% 1.6% 2013 2014 0%

  19. Slide 19: Acquisition Sabiana

    Acquisition Sabiana Strategic move into ventilation, air-conditioning Multiple range (EV / Key Financial) 15.7x EV 14.7x  Equity value: CHF 113M EQV 12.0x  Enterprise value: CHF 138M 7.0x EBITDA Transaction multiples AFG – Annual Results 2014 – 03 March 2015 19

  20. Slide 20: Balance Sheet

    Balance Sheet Equity ratio slightly higher In CHF M 1′200 1′000 Current Current Current liabilities Current liabilities 800 assets assets 28.3% 35.9% 36.3% 51.7% 600 Non-current Non-current liabilities liabilities 34.2% 28.0% 400 Non-current Non-current assets assets 63.7% Shareholders' Shareholders

  21. Slide 21: Free Cash Flow

    Free Cash Flow 1 Disappointing funds from operations In CHF M 75 60 38 31 2 13 92 0 -20 -52 -75 2010 2011 2012 2013 2014 1) Cash flow from operating and investing activities 2) Free cash flow without acquisition / disposal of subsidiaries, adjusted AFG – Annual Results 2014 – 03 March 2015 21

  22. Slide 22: Development of Investments

    Development of Investments Capex in line with previous years’ average In CHF M 175 150 125 100 75 50 67 58 25 39 39 48 0 2010 2011 2012 2013 1 2014 1 Acquisition of subsidiaries Intangible assets Property, plant, equipment 1) Continued Operations AFG – Annual Results 2014 – 03 March 2015 22

  23. Slide 23: Changes in Operating Net Working Capital

    Changes in Operating Net Working Capital In CHF M 200 20% 180 18% 160 16% 140 14% 120 12% 100 10% 80 8% 60 6% 40 4% 20 2% 0 0% 2010 2011 2012 2013 2014 % Net revenues Operating net working capital Note: Operating NWC = Accounts receivable + inventories – accounts payable – advances from customers AF

  24. Slide 24: Net Indebtedness and Leverage Ratio

    Net Indebtedness and Leverage Ratio Higher debt, leverage ratio beyond target In CHF M 0 0.0x -50 0.5x -100 1.0x -150 -131 1.5x -151 -169 -167 -200 2.0x -222 -250 2.5x Leverage Ratio Net indebtedness -300 3.0x 2010 2011 2012 2013 2014 AFG – Annual Results 2014 – 03 March 2015 24

  25. Slide 25: Maturities of Financial Debt

    Maturities of Financial Debt Syndicated loan provides financial flexibility In CHF M 300 275 250 250 225 200 200 175 150 125 100 75 50 25 0 2015 2016 2017 2018 2019- Syndicated loan 2013 – 2018, CHF 250M Bond 2010 – 2016, CHF 200M Others AFG – Annual Results 2014 – 03 March 2015 25

  26. Slide 26: AFG Group – Outlook

    AFG Group – Outlook Effects from repeal minimum rate CHF / EUR Translation & transaction effects Selected Indications for 2015 (assuming 1 CHF = 1 EUR) (assuming 1 CHF = 1 EUR) Translation effects Interest rates CHF 3.0%  Net revenues approx. -12% EUR 2.0%  EBIT margin in % approx. stable  Financ

  27. Slide 27: Agenda

    Agenda 1. Review 2014 William J. Christensen 2. Financial results Felix Bodmer 3. “100 days” & actions William J. Christensen 4. Outlook William J. Christensen 5. Summary William J. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 27

  28. Slide 28: 100 days at AFG Overview

    100 days at AFG Overview Summary 1 Reality at AFG  Significant changes in 2014  Various key challenges remain • Complexity 2 Priorities & • Credibility Actions • Culture  SNB decision generates additional headwind AFG – Annual Results 2014 – 03 March 2015 28

  29. Slide 29: Priorities and actions – short-term focus 2015

    100 days at AFG Priorities and actions ̶ short-term focus 2015 Summary 1 Reality at AFG 1 1. Contain & counter-act new FX reality 2 2. Turn-around Division Envelope 2 Priorities & 3 3. Simplification Actions 4 4. Rebuild credibility AFG – Annual Results 2014 – 03 March 2015 29

  30. Slide 30: FX – CHF exposure analysis

    1 Contain & counter-act new FX reality FX – CHF exposure analysis Key considerations  Swiss sales share at 40% down from 44% in Others 2013 31% 40% Sales  Poland and Russia main other markets 2014 29%  International sales share growth driven by Sabiana acquisition Others  HQ, EgoKiefer and Divis

  31. Slide 31: Contain & counter-act new FX reality

    1 Contain & counter-act new FX reality Scope and implications 3 aspects Implications Translation  1 CHF /1 EUR  New budget  Low share of Swiss made exports  Sales Transaction  Selective pricing adjustments  Purchasing  Purchasing savings initiative Cost  Accelerated cost improvements competi

  32. Slide 32: Improve Division Envelope: Two key areas

    2 Improve Division Envelope: Two key areas  Align EgoKiefer structure to market reality Structure  Accelerate PVC relocation Altstätten (CH)  SK  Refocus Swiss market organization Strategy  Review options based on “new” FX rates AFG – Annual Results 2014 – 03 March 2015 32

  33. Slide 33: Improve Division Envelope: Broad program defined

    2 Improve Division Envelope: Broad program defined 1. Operating profit improvement  Planned reduction of 150-200 FTEs  ~80 due to announced PVC relocation  Additional 70-120 based on volume & process adaptations  Targeted supply chain savings program 2. Market organisation  Strengthen & expand

  34. Slide 34: Simplification

    3 Simplification Focus on the essential tasks  Currency reality  Division Building Envelope  Address brand portfolio  Reduce complexity  Rebuild credibility AFG – Annual Results 2014 – 03 March 2015 34

  35. Slide 35: Agenda

    Agenda 1. Review 2014 William J. Christensen 2. Financial results Felix Bodmer 3. "100 days" & actions William J. Christensen 4. Outlook William J. Christensen 5. Summary William J. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 35

  36. Slide 36: 2015 – Mixed market performance anticipated

    2015 ̶ Mixed market performance anticipated Markets outlook Regions Comments  Mixed picture Western  Germany positive and main driver Europe  Market cooling in CH anticipated  Continued weak Italian market  Political uncertainty Challenging Eastern  Solid growth in Poland expected Europe overa

  37. Slide 37: 2015 – Outlook: Division Building Technology

    2015 ̶ Outlook Division Building Technology In CHF M 2012 2013 2014 Net revenues 456.2 445.4 490.2 Adjusted organic growth -0.3% -2.1% 2.4% EBITDA margin, adjusted 12.9% 12.3% 11.3% EBIT margin, adjusted 9.6% 8.8% 8.0% Market outlook … … and AFG focus topics  Core markets stable  Sabiana integrati

  38. Slide 38: 2015 – Outlook: Division Building Envelope

    2015 ̶ Outlook Division Building Envelope In CHF M 2012 2013 2014 Net revenues 320.1 410.8 376.0 Adjusted organic growth -3.8% +2.1% -9.2% EBITDA margin, adjusted 11.0% 11.5% 6.4% EBIT margin, adjusted 7.3% 7.5% 1.6% Market outlook … … and AFG focus topics  CH: further price pressure due to imports

  39. Slide 39: 2015 – Outlook: Division Security

    2015 ̶ Outlook Division Security In CHF M 2012 2013 2014 Net revenues 141.6 146.2 149.9 Adjusted organic growth +1.1% +3.2% +2.7% EBITDA margin, adjusted 9.4% 11.4% 8.9% EBIT margin, adjusted 7.3% 9.4% 6.8% Market outlook … … and AFG focus topics  Mixed international project landscape  Division st

  40. Slide 40: 2015 – Outlook: AFG Group

    2015 ̶ Outlook AFG Group short term Mid term targets BMK 2014 Outlook 2015  Growth 3-5% p.a.  Mid-term targets not valid given current reality  EBIT-margin >8% EBIT-margin >8%  ROCE >10% • Significant FX headwinds  FCF CHF >50M • Various operating challenges • Anticipated anchor shareholder ali

  41. Slide 41: Agenda

    Agenda 1. Review 2014 William J. Christensen 2. Financial results Felix Bodmer 3. "100 days" & actions William J. Christensen 4. Outlook William J. Christensen 5. Summary William J. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 41

  42. Slide 42: Summary: Priorities and actions defined

    Summary Priorities and actions defined Short-term actions (2015) Priorities  Cross-selling Sabiana Building  Sabiana integration Technology  Streamline brand portfolio  Sanitary quality of growth  Contain & counter-act FX impact  EgoKiefer structural adjustments  PVC ramp-up Slovaktual  Turn

  43. Slide 43: Important dates

    Important dates Summary 2015 April 17, 2015  General Meeting August 6, 2015  Interim report on the First Half 2015  Investor Day 2015 November 11, 2015  Sabiana, IT January 21, 2016  Sales 2015 March 1, 2016  FY 2015 results AFG – Annual Results 2014 – 03 March 2015 43

  44. Slide 44: Agenda

    Agenda 1. Review 2014 W. Christensen 2. Financial results F. Bodmer 3. "100 days" & actions W. Christensen 4. Outlook W. Christensen 5. Summary W. Christensen Questions AFG – Annual Results 2014 – 03 March 2015 44

  45. Slide 45: Questions?

    Questions? AFG – Annual Results 2014 – 03 March 2015 45

  46. Slide 46: Disclaimer

    Disclaimer AFG Arbonia-Forster-Holding 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 a

  47. Slide 47: Thank you

    Aare Building the Difference Thank you 47

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