Knorr-bremse Ag · XETR:KBX
Knorr-bremse — Q2 2020 Earnings Presentation
38 slides from Knorr-bremse's earnings presentation, Sep 10, 2020
Slide 1: Financial Results Q2/20
FINANCIAL RESULTS Q2/20 FRANK MARKUS WEBER I CFO SEPTEMBER 10, 2020
Slide 2: Frank Markus Weber – New CFO of Knorr-Bremse
FRANK MARKUS WEBER – NEW CFO OF KNORR-BREMSE Business experience ▪ Head of Corporate Development and Corporate Strategy (Daimler) ▪ Head of Transformation (Mercedes Benz) and MOVE Efficiency Program (Daimler) ▪ Head of M&A and Real Estate (Daimler) ▪ CFO Trucks Asia (Daimler) and CFO (Mitsubishi Fus
Slide 3: Strong performance in Q2/20 underpins resilience of KB
STRONG PERFORMANCE IN Q2/20 UNDERPINS RESILIENCE OF KB Q2/20: Strong performance in challenging times Countermeasures against COVID-19 payoff Good development of aftermarket business RVS: Strong profitability driven by very effective counter measures and positive sales mix CVS: Very effective COVID-
Slide 4: Markets impacted by COVID-19, but first encouraging signs of recovery
MARKETS IMPACTED BY COVID-19, BUT FIRST ENCOURAGING SIGNS OF RECOVERY Rail market current view Truck market current view Rail markets show great resilience in turbulent times as expected After very weak demand at the beginning of Q2/20 truck markets in Europe and in NA continue to recover Rail car O
Slide 5: KB activities recently
KB ACTIVITIES RECENTLY Heinz Hermann Thiele, Thomas Enders and Theodor Weimer join the Holistic countermeasures KB becomes a strategic Supervisory Board of Knorr-Bremse AG implemented to master partner for a new very COVID-19 pandemic high-speed train generation in Russia Retrofittable turning KB be
Slide 6: Q2/20 in a nutshell shows major aspects of our strong performance
Q2/20 - IN A NUTSHELL SHOWS MAJOR ASPECTS OF OUR STRONG PERFORMANCE REVENUES OF € 1.43bn 17.2% OP. EBITDA MARGIN 1 (-22.6% yoy) (PY: 19.1%) € 849m € 579m 24.0% 8.7% € 48m POSITIVE FREE CASH FLOW (-69.8% yoy) ORDER INTAKE € 1.14bn ORDER BOOK € 4.36bn (-32.5% yoy) (-3.9% yoy) 1) Operating level exclud
Slide 7: Q2/20: Firm order book, but COVID-19 impact on order intake
Q2/20: FIRM ORDER BOOK, BUT COVID-19 IMPACT ON ORDER INTAKE Order intake Order book €m €m 0.91 Book-to-bill 0.80 -3.9% -32.5% 4,542.3 1,688.0 4,363.3 -8.7 -42.1 1,139.1 M&A impact -498.1 R.H. Sheppard € +7m (Q2/20) -29.5% Powertech € -16m (Q2/19) Org. decrease Q2/19 Organic M&A net FX Q2/20 30.06.19
Slide 8: Strong impact by COVID-19, but fast recovery in China
STRONG IMPACT BY COVID-19, BUT FAST RECOVERY IN CHINA Revenue €m By region -22.6% 1,846.3 1,846 1,428.3 27 -60.0% -393.3 -9.9 -14.8 CVS M&A impact 536 1,428 48% CVS +4.2% 11 SA -21.3% 41% R.H. Sheppard € +7m (Q2/20) 558 Asia/ Org. Powertech € -17m (Q2/19) 435 Pacific -40.2% decrease 260 NA RVS RVS 8
Slide 9: Strong profitability despite COVID-19 impact underpins resilience of KB
STRONG PROFITABILITY DESPITE COVID-19 IMPACT UNDERPINS RESILIENCE OF KB OP.1 EBITDA/ E. Margin OP.1 EBIT/ E. Margin €m 19.1% Development in Q2/20 17.2% 15.5% ▪ Operating leverage burdened by lower revenue and mitigation costs 12.1% ▪ Early and fast measures taken to mitigate COVID-19 -30.3% impact o
Slide 10: KB continuously invests in good supply chain management and future growth
KB CONTINUOUSLY INVESTS IN GOOD SUPPLY CHAIN MANAGEMENT FOR ITS CUSTOMERS AND IN FUTURE GROWTH CapEx1 NWC Op. ROCE (annualized) €m % of sales €m Scope of days % 4.7% 70.5 31.3% 57.1 3.3% 1,196.8 22.2% 1,142.5 66.9 61.2 Q2/19 Q2/20 30.06.19 30.06.20 30.06.19 30.06.20 ▪ Mgt. program installed to adapt
Slide 11: Improvement of cash conversion rate is a high priority
IMPROVEMENT OF CASH CONVERSION RATE IS A HIGH PRIORITY Operating Cashflow Free Cashflow1 Cash Conversion Rate €m €m Development in Q2/20 -48.0% ▪ Cashflow strongly impacted by COVID-19 pandemic and lower profit 221.4 -69.8% ▪ Stringent measures ensured positive Free 157.6 92.1% Cashflow in Q/20, sig
Slide 12: COVID-19: Fast implementation of countermeasures
COVID-19: FAST IMPLEMENTATION OF COUNTERMEASURES MARKET ▪ Temporary Covid-19 impact, most operators and rail car OEMs ▪ Demand stabilizing further and truck OEMs on average at back to operation level, stimulus programs put in place 90%+ capacity after summer break ▪ China recovered in Q2/20, stimulu
Slide 13: RVS: Strong order book secures solid outlook
RVS: STRONG ORDER BOOK SECURES SOLID OUTLOOK Order intake Order book €m Order book increased by 7.2 %yoy 0.92 Book-to-bill 0.93 +7.2% ▪ Tough comparable financial figures: strong OI in Q4/19 due to timing of tender awards leads to balanced OI in -11.2% 3,496.5 Q1/20 3,261.1 889.7 ▪ Order book increa
Slide 14: RVS: Strong margin increase
RVS: STRONG MARGIN INCREASE Revenue Op. 1 EBITDA / Op.1 EBIT €m op. EBITDA op. EBIT Revenue decreased 12.0% yoy in Q/20 op. EBITDA margin op. EBIT margin ▪ AM: Good development despite COVID-19 impact in Q2/20 partly driven by pull-in effects from H2/20 24.0% -12.0% 22.5% ▪ EU: decrease driven by CO
Slide 15: RVS: Long-term growth despite short-term headwinds
RVS: LONG-TERM GROWTH DESPITE SHORT-TERM HEADWINDS ▪ The EU Commission intends to declare 2021 'the Year of Rail’ ▪ Green Deal: > € 750bn funding which have to comply with green focus ▪ Shift2Rail: +€ 1bn for COVID-19 response in 2020 ▪ Direct support of € 5bn & increased credit limit for Deutsch Ba
Slide 16: CVS: OI decrease driven by COVID-19, upsides from China
CVS: OI DECREASE DRIVEN BY COVID-19, UPSIDES FROM CHINA Order intake Order book €m Book to Bill rate clearly reflects COVID-19 impact 0.91 Book-to-bill 0.60 ▪ EU/ NA: After first impact in March, full impact on order intake due to customer shut-downs triggered by COVID- -56.7% 19 in Q2, recovery in
Slide 17: CVS: Solid results despite severe COVID-19 impact
CVS: SOLID RESULTS DESPITE SEVERE COVID-19 IMPACT Revenue Op. 1 EBITDA / Op.1 EBIT €m op. EBITDA op. EBIT Revenues hit by production shut-downs due to COVID-19, op. EBITDA margin however partly mitigated by global market presence op. EBIT margin ▪ EU & NA: Q2 yoy comparison not only affected by -34.
Slide 18: Some positive facts, despite TPR decrease due to COVID-19
SOME POSITIVE FACTS, DESPITE TPR DECREASE DUE TO COVID-19 Truck production rate1 In 1.000 trucks Outlook Expected market development 150 ▪ Very positive development in China will soften in 100 H2/20 EU2 50 ▪ EU and NA on the way to further recovery in H2/20 0 ▪ Freight volumes expected to further st
Slide 19: KB closed acquisition of R.H. Sheppard
KB CLOSED ACQUISITION OF R.H. SHEPPARD Strategic rationale ▪ Following the acquisition of Hitachi Steering business, KB reaches another important milestone with Sheppard R.H. as a global Steering supplier for commercial vehicles ▪ R.H. Sheppard is one of the two leading steering suppliers in the NA
Slide 20: As a result, convincing operative performance of KB Group
AS A RESULT, CONVINCING OPERATIVE PERFORMANCE OF KB GROUP - Clear market leadership in braking systems in different - Clear market leadership in ADB and strong market markets globally position in many subsystems in commercial vehicles Market - Only supplier worldwide to fulfill all global and local
Slide 21: Guidance 2020
GUIDANCE 2020 Assumptions Group Revenue1 Op.1,2 EBITDA margin €m 6,937 18.8% ▪ Stable economic environment 5,900 - 6,200 16.5 - 17.5% ▪ No large wave of infections due to COVID-19 with significant financial impact ▪ FX rates as of mid-July 2020 FY19 FY20e FY19 FY20e 1) Including Sheppard since June
Slide 22: Q&A / Backup
Q&A / BACKUP Knorr-Bremse AG 22
Slide 23: Financial Calendar
FINANCIAL CALENDAR Upcoming events Event Date Morgan Stanley conference 11.09.2020 Virtual roadshow (JP Morgan) 16.09.2020 UBS Quo Vadis Investor Trip 2020 18.09.2020 Berenberg/Goldman Sachs conference 21./22.09.2020 Baader Bank conference 23./24.09.2020 Release Nine Months/Third Quarter 2020 Report
Slide 24: Investor Relations Contact
INVESTOR RELATIONS CONTACT Andreas Spitzauer Phone: +49 89 3547 182310 Mobile: +49 175 5281320 Email: Andreas.Spitzauer@knorr-bremse.com Sophia Kursawe Phone: +49 89 3547 187311 Mobile: +49 151 62330709 Email: Sophia.Kursawe@knorr-bremse.com … Knorr-Bremse AG 24
Slide 25: Disclaimer
DISCLAIMER IMPORTANT NOTICE This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, an
Slide 26: Backup
BACKUP … Knorr-Bremse AG 26
Slide 27: H1/20 - Group
H1/20 - GROUP Order intake Order book €m €m 0.99 Book-to-bill 0.89 7.9 7.8 -3.9% -23.8% 4,542.3 3,581.2 4,363.3 2,727.1 -835.3 -7.7 -11.1 M&A net disposals -23.3% • R.H. Sheppard € +7m (H1/20) Org. • Hitachi € +20 (H1/20) decrease • Powertech € -36m (H1/19) H1/19 Organic M&A net FX H1/20 30.06.19 30
Slide 28: H1/20 - Group
H1/20 - GROUP Revenue €m By region -15.2% 3,601.5 3,601.5 55 -36.5% 3,055.8 3,055.8 1,013 35 SA -530.0 +2.2% -9.9 -5.8 M&A net disposals Asia/ • R.H. Sheppard 1,035 Pacific -14.7% € +7m (H1/20) 841 • Hitachi -27.2% Org. € +22m (H1/29) 613 NA decrease • Powertech € -39m (H1/19) -18.9% 1,692 1,373 EU
Slide 29: H1/20 - Group
H1/20 - GROUP Op.1 EBITDA/ EBITDA Margin Op.1 EBIT/ EBIT Margin €m 19.0% 17.5% 15.6% 685.4 13.0% 535.5 560.1 397.5 H1/19 H1/20 H1/19 H1/20 1) Operating level excludes restructuring costs Knorr-Bremse AG 29
Slide 30: H1/20 - Group
H1/20 - GROUP OCF & FCF CapEx1 NWC op. ROCE2 (annualized) €m OCF FCF €m % of sales €m Scope of days % 70.5 -107% 4.8% 57.1 31.3% -61.8% 1,197 1,143 310.5 3.4% 22.2% 147.9 123.4 189.7 118.6 -13.3 H1/19 H1/20 30.06.19 30.06.20 H1/19 H1/20 H1/19 H1/20 1) H1/19 adjusted for Sale & Lease back 2) H1/19 ad
Slide 31: H1/20 - RVS
H1/20 - RVS Order intake Order book €m 1.03 Book-to-bill 0.96 7.2% -13.5% 3,496.5 3,261.1 1,924.7 1,664.3 -212.5 -35.6 -12.3 -11.0% Org. decrease Powertech € -36m (H1/19) H1/19 Organic M&A net FX H1/20 30.06.19 30.06.20 disposals Knorr-Bremse AG 31
Slide 32: H1/20 - RVS
H1/20 - RVS Revenue Op. 1 EBITDA / EBITDA margin Op.1 EBIT / EBIT margin €m -7.2% 22.2% 22.4% 1,876.0 -87.5 19.2% 18.7% 1,740.8 -39.1 -8.6 -6.4% -4.7% -9.4% 417.0 390.2 Org. 359.4 325.6 decrease Powertech € -39m (H1/19) H1/19 Organic M&A net FX H1/20 H1/19 H1/20 H1/19 H1/20 disposals 1) Operating le
Slide 33: H1/20 - CVS
H1/20 - CVS Order intake Order book €m 0.96 Book-to-bill 0.81 -36.1% 1,658.5 -32.1% 1,295.6 +27.9 +1.3 1,060.6 -627.1 880.1 -37.8% Org. decrease R.H. Sheppard € +7m (H1/20) Hitachi € +20m (H1/20) H1/19 Organic M&A net FX H1/20 30.06.19 30.06.20 disposals Knorr-Bremse AG 33
Slide 34: H1/20 - CVS
H1/20 - CVS Revenue Op. 1 EBITDA / EBITDA margin Op.1 EBIT / EBIT margin €m -23.9% 16.3% 1,726.7 12.0% 12.8% 7.2% +29.2 +2.8 1,314.7 -43.6% -444.0 280.6 -57.5% -25.7% 221.5 Org. 158.2 decrease R.H. Sheppard € +7m (H1/20) 94.2 Hitachi € +22m (H1/20) H1/19 Organic M&A net FX H1/20 H1/19 H1/20 H1/19 H1
Slide 35: Q2/20 – Income Statement
Q2/20 – INCOME STATEMENT 2019 2020 2019 2020 EUR million Q2/19 Q3/19 Q4/19 2019 Q1/20 Q2/20 H1/19 H1/20 Revenues 1,846.2 1,711.1 1,623.9 6,936.5 1,627.5 1,428.3 3,601.5 3,055.8 Change in inventory of unfinished/finished products -22.6 18.1 -11.5 5.7 -0.8 15.1 -0.8 14.3 Own work capitalized 15.7 22.3
Slide 36: Q2/20 – Cashflow
Q2/20 – CASHFLOW 2019 2020 2019 2020 EUR million Q2/19 Q3/19 Q4/19 2019 Q1/20 Q2/20 H1/19 H1/20 Net cash flows from/used in operating activities 221.4 243.9 431.4 985.8 3.5 115.1 310.5 118.6 Net cash flows from/used in investing activities -88.4 -108.5 76.9 -353.8 -57.8 -195.5 -322.2 -253.3 Net cash
Slide 37: H1/20 – Balance Sheet / Assets
H1/20 – BALANCE SHEET / ASSETS 2019 2020 EUR million 31.03.2019 30.06.2019 30.09.2019 31.12.2019 31.03.2020 30.06.2020 Assets Intangible assets and goodwill 840.0 813.9 838.4 842.2 858.8 896.2 Property, plant and equipment 1,430.5 1,454.0 1,470.2 1,469.2 1,437.2 1,490.0 Investments accounted for usi
Slide 38: H1/20 – Balance Sheet / Liabilities
H1/20 – BALANCE SHEET / LIABILITIES 2019 2020 EUR million 31.03.2019 30.06.2019 30.09.2019 31.12.2019 31.03.2020 30.06.2020 Equity Subscribed capital 161.2 161.2 161.2 161.2 161.2 161.2 Capital reserves 13.9 13.9 13.9 13.9 13.9 13.9 Retained earnings 35.1 34.3 31.9 34.2 34.2 34.2 Other components of