Slide 1: Welcome to the Full-Year 2016 Conference
Welcome to the Full-Year 2016 Conference Zurich, 10 March 2017
Slide 2: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 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 Walter Börsch, CEO Questions and answers 3
Slide 5: Record-high order intake – order backlog for more than one year
Record-high order intake – order backlog for more than one year Order intake up 44% to CHF 480 million – in local currency up 43% Sales plus 2% to CHF 372 million – in local currency up 1% Order backlog of CHF 348 ensuring capacity utilisation for well over one year EBIT CHF 7.4 million (-50%) – Ope
Slide 6: Starrag Strategy 2020 to better exploit Group-wide potential
Starrag „Strategy 2020“ to better exploit Group-wide potential Strengthen existing business model Focus on profitable growth and most attractive market/product segments Differentiate through application competence, technology, service capabilities and premium market positioning Better scale existing
Slide 7: Market positioning
Market positioning Aerospace Energy Industrial Transportation Total Market segments • Aero Engines • Oil & Gas • Industrial • Heavy Duty • Aero Structures • Power Turbines Components Vehicles & • Avionics • Luxury Goods Engines • Med Tech • On-Road Vehicles Addressed market size 1’000 500 2’000 1’00
Slide 8: Geographic development of order intake
Geographic development of order intake Targeted growth rate Starrag Group: +5% CAGR 18% Americas: +10% 15% Asia: 37% 33% +8% Europe: 52% +2% 45% Avg 2014-2016 CAGR Avg 2018-2020 Note: 3 year order intake average at constant exchange rate used to eliminate potential impacts of individual large orders
Slide 9: Focus of strategic actions
Focus of strategic actions Innovation Geographical footprint Operational excellence Leading application USA Simplifying go to competence market Starrag Integrated China Sales effectiveness Production System (Industry 4.0) Dealer network in key Customer service markets readiness Next generation of ma
Slide 10: Dedicated solutions for our target industries
Dedicated solutions for our target industries Aerospace Energy Industrial Transportation ECOSPEED Serie LX Serie ECOFORCE Serie HEC Serie NB Serie G/GF Serie S191 Serie CONTUMAT Serie 9
Slide 11: Financial mid-term targets
Financial mid-term targets Growth Rate 5% per annum Profitability 8% EBIT margin Dividend ratio 35-50% of net profit Measured in local currency and as average over the business cycle.
Slide 12: Other key developments
Other key developments Cooperation with Klingelnberg Group Changes in Board of Directors and Executive Board Change to Swiss GAAP FER as from fiscal year 2017 11
Slide 13: Main focus of Starrag Group
Main focus of Starrag Group Focus on prioritized market segments and regions Clear strategic positioning Value proposition (solutions) International footprint (China, USA) Simplification Reliable operational Accountability performance Speed Innovation Creation of long-term value All stakeholders 12
Slide 14: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 13
Slide 15: Highest order intake ever
Highest order intake ever CHF m 500 +44% 400 300 480 425 407 200 348 364 328 341 333 100 206 188 188 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: 2011 acquisition of Dörries Scharmann Group, 2012 acquisition of Bumotec 14
Slide 16: Order intake benchmark: Starrag Group vs. sector
Order intake benchmark: Starrag Group vs. sector CHF m Starrag order intake year-on-year 43% (in local currencies) Sector Germany order intake year-on-year +7% (in local currencies) Note: four quarter moving 15
Slide 17: Order intake by industry: more than 80% from Aerospace and Industrial
Order intake by industry: more than 80% from Aerospace and Industrial CHF m 600 500 400 Aerospace 200 42% 175 166 300 109 116 Energy 20 14 50 16 10% 200 29 137 Industrial 167 154 194 40% 143 100 98 69 71 45 Transportation 36 0 8% 2012 2013 2014 2015 2016 16
Slide 18: Market trends by industry
Market trends by industry Global economic and political environment remains a challenge Aerospace Energy Transportation Industrial 39% 8% 15% 38% Solid market Power plant investments Agriculture slowly Stationary Machines still development globally concentrated in Asia, recovering growing wi
Slide 19: Order intake by region: more than one third from Asia
Order intake by region: more than one third from Asia CHF m 600 500 101 Americas 400 24 21% 42 77 50 300 32 Asia 133 174 36% 104 105 200 324 Europe 210 232 100 196 205 43% 0 2012 2013 2014 2015 2016 18
Slide 20: Participation in key trade fairs with great success
Participation in key trade fairs with great success Focus on efficiency enhancement Industry 4.0 intelligent machine peripherals IMTS Chicago Highly productive milling head Sprint Z3 as core part of flexible machining center ECOSPEED AMB Stuttgart HEC 500D U5 MT and HEC 800 machining centers 19
Slide 21: Technology Days: where the world's experts meet
Technology Days: where the world‘s experts meet Aero Structure Technology Days Mönchengladbach New ECOSPEE F1540 for high- precision manufacturing of aircraft structural components Industrial & Transportation Technology Days Chemnitz Premiere of new Focus machining centers Turbine Technology Days Ro
Slide 22: Large order in the USA
Large order in the USA Double digit million order from Orizon Aerostructure, a highly specialized top-tier supplier to aerospace industry Significant breakthrough in the strategically important US Aerospace segment. 6 connected Ecospeed F2060 with currently highest performance available in the marke
Slide 23: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 22
Slide 24: Highest order intake ever leads to strong order backlog
Highest order intake ever leads to strong order backlog CHF m +44% 500 480 425 407 400 364 333 249 219 300 224 171 192 200 348 275 288 239 238 231 100 193 206 184 141 0 2012 2 3 2013 4 5 2014 6 7 2015 8 9 2016 Order intake H1 Order intake H2 Order backlog Order intake year-on-year +43% (in local c
Slide 25: Income Statement: Declining EBIT margin
Income Statement: Declining EBIT margin CHF m Revenue Expenses 400 350 +2.2% 300 152 41.8% 167 44.8% 250 Sales revenue 200 Material / Inventory change 364 372 150 Personnel 132 36.2% 134 36.1% Other Operating Exp/Inc 100 Depreciation 50 53 14.6% 51 13.8% 3.4% 3.3% 15 EBIT 0 7 2015 0 2016 1 2998 2 29
Slide 26: EBIT under pressure by lower capacity utilization and lower gross margin
EBIT under pressure by lower capacity utilization and lower gross margin CHF m 18 16 14 12 -6.9 10 -2.4 3.7 8 -2.1 14.7 0.4 6 4 7.4 2 0 2015 Contribution Cost Salary One time FX 2016 savings, increases trans- net lation Lower contribution due to lower margins from changed product mix, lower percen
Slide 27: Net income impacted by lower EBIT
Net income impacted by lower EBIT CHF m 2016 2015 EBIT 7.4 14.7 Interest -0.6 -0.4 FX result 0.5 -1.5 Other finance expenses -1.3 -0.9 Earnings before tax EBT 5.9 11.9 Income tax -1.3 -2.4 Net income EAT 4.6 9.5 Tax rate 21.7% 19.9% Earnings per share 1.33 2.78 Net income and Earnings per share do
Slide 28: Balance sheet continuously strong
Balance sheet continuously strong CHF m Assets Liabilities 400 350 9 14 33 25 300 112 106 Cash 250 130 130 Receivables 200 85 87 Inventories 150 Fixed assets 100 186 187 Financial liabilities 136 143 50 Operating liabilities Shareholders' equity 0 31.12.15 31.12.16 1 31.12.152 31.12.162 Total assets
Slide 29: Strong cashflow from operations
Strong cashflow from operations CHF m 35 30 6.9 -4.6 25 -0.1 21.8 -19.4 19.6 20 15 10 5 2.4 -2.8 0 -4.1 -0.6 -0.5 -5 EBITDA Change Income Other Cash flow CapEx Free Dividend Interest FX Change in NWC taxes non-cash from Cash paid paid trans- in paid Operations flow lation net debt FY 2015: 27.1 -12.
Slide 30: FX impacts on financial statements 2016
FX impacts on financial statements 2016 Translation risk Limited translation impact as CHF-EUR was relatively stable within a certain fluctuation margin Transaction risk Foreign currency gain of 0.5m CHF primarily due to USD appreciation (compared with prior year loss of 1.4m CHF on unhedged Euro po
Slide 31: Simplification of internal and external financial reporting
Simplification of internal and external financial reporting Change of accounting standards from IFRS to Swiss GAAP FER from 2017 Reduction of the under IFRS ever increasing complexity and cost saving (next round of major IFRS changes effective from 1-Jan-2018) Swiss GAAP FER is a recognized accounti
Slide 32: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 31
Slide 33: Economic outlook
Economic outlook Ongoing economic and geopolitical uncertainty Energy sector, renewable and fossil, with ongoing moderate growth Expectations by regions: North America and Asia ahead of Europe VDW forecast 2017: “production growth of 3%” Impact of CHF below industry’s average 32
Slide 34: 2017 priorities
2017 priorities „Starrag 2020“: Further strategic focusing on defined market segments and regions Innovation: Consistent development of new and enhanced products Further investments in service – new products and global coverage Continuous process improvements to increase productivity, including proj
Slide 35: Positive outlook thanks to implemented strategic and operational actions
Positive outlook thanks to implemented strategic and operational actions Relatively stable economic and machine tool market development despite numerous economical and political uncertainties Starrag group well positioned Potential to achieve the medium-term growth and profit targets confirmed Order
Slide 36: Corporate calender / Contact
Corporate calender / Contact 28.04.2017 Annual general meeting in Rorschach 27.07.2017 Half-year report 2017 26.01.2018 Initial information on 2017 results 09.03.2018 Presentation of 2017 results for analysts and media in Zurich 28.04.2018 Annual general meeting in Rorschach Walter Börsch, CEO Phone
Slide 37: Agenda
Agenda Overview and strategy Daniel Frutig, Chairman Markets and technologies Walter Börsch, CEO Financial review Gerold Brütsch, CFO Outlook Walter Börsch, CEO Questions and answers 36
Slide 38: We are pleased to invite you to a buffet lunch
We are pleased to invite you to a buffet lunch. Thank you for your interest!
Slide 39: Additional information
Additional information Zurich, 10 March 2017
Slide 40: High-precision machine tools for greater productivity
High-precision machine tools for greater productivity Starrag Group is a global technology leader in manufacturing high-precision machine tools for milling, turning, boring and grinding workpieces of metallic, composite and ceramic materials. Principal customers are internationally active companies
Slide 41: World production machine tools 1986 - 2015
World production machine tools 1986 - 2015 EUR b +10% +6% 70 +29% +5% -12% 60 +29% 50 40 69 68 63 64 30 61 55 52 49 46 20 40 41 40 42 37 36 38 34 34 34 34 35 32 33 32 30 29 27 27 24 23 10 0 86 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 World production mac
Slide 42: World machine tool consumption 2014 to 2016: Top countries
World machine tool consumption 2014 to 2016: Top 20 countries USD billion CN US DE JP KR IT MX RU TW IN TK Total market volume 2016: USD 71 billion CA Rank 1 to 20 are 89% of global market TH CH VN FR U.K. ID BR AT 0.000 5.000 10.000 15.000 20.000 25.000 30.000 35.000 2014 2015 2016 forecast Sou
Slide 43: Our value proposition
Our value proposition "Engineering precisely what you value" Application-optimized, most economical, high-precision, machining solutions and service offering, tailored to the individual needs of our customers.
Slide 44: Vision – Mission – Values
Mission Starrag Group nce and con ier service We use our group-wide know- ledge base, our innovation and our market leadership position to develop sustainable future-oriented technologies and reliable long lasting manufacturing products. We offer complete solutions to our valued customers. Our uniqu
Slide 45: At your service
At your service Production site Logistic center Service center 44
Slide 46: 150 years tradition in innovation
150 years tradition in innovation enables the Starrag Group to be 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 45
Slide 47: Share details (as of 31 December 2016)
Share details (as of 31 December 2016) Market capitalization CHF 176.4 million Listed at SIX Swiss Exchange Main Standard Symbol STGN, Valor number 236‘106, ISIN CH00023610608 3‘360‘000 registered shares with a nominal value of CHF 8.50 each Stable shareholder structure others 28.9% 53.8% Walter Fus
Slide 48: Top Management
Top Managment Daniel Frutig (1962, Swiss) has been a member of the Board Walter Börsch (1959, German) has been CEO of Gerold Brütsch (1966, Swiss) has been of Directors of Starrag Group Holding AG since 2014 and its Starrag Group and Head of Regional Sales since Chief Financial Officer (CFO) of Star