Victrex Plc · LSE:VCT
Victrex — Investor Day (April 2015)
35 slides from Victrex's investor day presentation, Apr 21, 2015
Slide 1: A journey in Product Leadership
‘A journey in Product Leadership’ Victrex plc Capital Markets Day 21st April 2015
Slide 2: Selling a solution, not just materials
Selling a solution, not just materials Global presence Technical centres in the UK, 700+ Employees in Our key product one of the highest performing polymers in the world China and Japan plus offices 16 countries in the US, Germany & Korea Global sales team Financial performance World Leader 7,150t i
Slide 3: Welcome to Victrex
Welcome to Victrex Executive Leadership Team (left to right): Tim Cooper, Managing Director VPS; Louisa Burdett, Group Finance Director; Martin Court, Managing Director Invibio; David Hummel, Chief Executive 3
Slide 4: A journey in Product Leadership: key themes
A journey in Product Leadership Key themes - Focused strategy - Further differentiation - Accelerating our growth 4
Slide 5: Today's agenda
Today’s agenda 10.45 Focused strategy David Hummel Further differentiation 11.05 Accelerating our growth Tim Cooper / Martin Court / Martin Jones (CEO Magma Global) 11.45 Questions 12.10 Lunch 13.00 Product Leadership in action: Tours of PPP3, Aptiv 2, Invibio manufacturing 14.45 Today’s highlights
Slide 6: Focused strategy
Focused strategy: Vision World leader in value creation through high performance PEEK solutions Product Leadership “Selling a solution – not just materials” Differentiation - Market-led innovation - Technical excellence - Superior products 6
Slide 7: Good strategic progress
Good strategic progress Element Measure / Action Status 1/ “Solve the market’s unmet needs” – solutions provider 2/ Market-led innovation, technical excellence, superior products 3/ Proven capacity & downstream focus: materials to components Differentiation 4/ More IP; protectable IP Move further do
Slide 8: How we differentiate
How we differentiate 1. VICTREX HISTORIC Barriers to entry Barriers to entry Materials Materials manufacturer knowledge and know-how Closer to customers Proven capacity 2. 3. Focused R&D and Downstream manufacturing* VICTREX TODAY prototyping excellence* capability and know- Solutions provider how**
Slide 9: Further differentiation: moving downstream
Further differentiation: moving downstream Semi-finished Finished Product product product Proven form or capacity grade Component Medical device Moving downstream requires greater focus, capability, IP and investment: More intensive R&D, more innovation, more IP, commercial scale with OEMs 9
Slide 10: PEEK: the polymer of first opportunity
PEEK: the polymer of first opportunity POLYMER PERFORMANCE Focused innovation, R&D, prototyping and IP High Performance Product grade Polymers + Semi-finished Downstream manufacturing capability and IP product Engineering Polymers Focused commercial scale with OEMs Commodity Polymers Market supplier
Slide 11: Significant market opportunities
Significant market opportunities *Dark Shade - Metal Metal replacement focus industries: Light Shade - Polymer Auto, Aero, Oil & Gas, Medical Material trends Metal & Polymer • Metal replacement accelerating replacement • Biocompatible polymers: clinical benefit • Demanding environments: light and du
Slide 12: Portfolio quality
Portfolio quality • Focus on fewer, larger targets • Reduction in targets but 90% increase in target size since 2011 • Increase commercialisations Focus on pipeline quality and deliverability rather than quantity 12 12
Slide 13: Strong and focused pipeline
Strong and focused pipeline • Seven “mega- 100% programmes” >£50m annual revenue potential in peak year • Supported by several “major programmes” Probability of Success 0% Time to meaningful revenue KEY: Annual revenue potential in peak year: <£20m £20-50m (major) >£50m (mega) Time to meaningful rev
Slide 14: Proven history of successful adoption
Proven history of successful adoption Crossing the Chasm 30 25 Revenue £m Revenue £m 20 15 Adoption 10 5 - Invest 1 2 3 4 5 6 7 8 9 10 Yr OPTIMA - Spine Year APTIV® Mega-programmes often involve ‘disruptive’ technology: - Invibio & Aptiv ® film both took ~6 years to deliver double-digit revenues - V
Slide 15: Accelerating our growth journey
Accelerating our growth journey Tim Cooper Martin Court Managing Director Managing Director VPS Invibio Martin Jones CEO Magma Global 15
Slide 16: Focused market priorities
Focused market priorities Aerospace megatrends: Light-weighting and resource efficiency - Innovative solutions provider: brackets, film and tape Automotive megatrends: Fuel efficiency, durability and safety - Increase penetration: double PEEK volume in cars Energy megatrends: Easy oil is over, growt
Slide 17: Accelerating our pipeline: VPS
Accelerating our pipeline: VPS 100% VPS mega-programmes Probability of Success offer >£50m annual revenue potential in peak year VPS major programmes 0% Time to meaningful revenue (£1m-£2m sales) offer £20-£50m revenue potential in peak year Mobile devices Gears (Auto) Brackets (Aero) Mega programme
Slide 18: Mobile devices
Electronics Mobile devices CHALLENGES BENEFITS Thinner, smaller, smarter Design flexibility Power / heat Miniaturisation Processing environment Durability Sound quality High yield Rapid innovation HD sound $2 trillion industry with 7% CAGR to 2020 (source: IHS) Leverage stron
Slide 19: Automotive
Automotive CO2 legislation driving change Global car production increasing (25% forecast increase by 2021: source HIS Light Vehicle Production Forecast) • Fuel efficiency, CO2 legislation, cost, safety, comfort, reliability • Build on Victrex’s strong heritage in Automotive: - Over 200m drivers rely
Slide 20: Automotive: Gears
Automotive: Gears Selling a solution, not just materials…… Material Part Tool Moulding Processing Mass Selection Design Cutting Trials Optimisation Production Gear components with VICTREX® PEEK • Reduced noise, better durability, weight saving & lower part cost • 50% lower noise vs metal, 85% lighte
Slide 21: Aerospace: Brackets
Aerospace Aerospace: Brackets CHALLENGES BENEFITS Order backlogs Faster production Cost Reduced weight Fuel efficiency Lower fuel cost CO2 emissions CO2 reduction • Doubling of global fleet by 2033 (36,000 new planes) • PEEK offers 70% less weight, 40% lower system cost and cycle tim
Slide 22: Magma: a potential oil & gas game changer
Magma: a potential oil & gas game changer “Our mission is to produce the world’s most reliable risers, jumpers and flow- lines for subsea exploration and production.” Magma Global Victrex & Magma in partnership with m-pipe® • High strength carbon/polymer pipe • 90% lighter than steel in water • 20x
Slide 23: Magma: significant benefits
Magma: significant benefits “M-pipe® can reduce cost and risk for Operators as a result of its exceptional performance.” Magma Global M-pipe® benefits • Reduced project cost, risk, operational cost • Reduced vessel size and reduced load • Faster deployment and standardisation • Differentiated by: -
Slide 24: Magma: good progress
Magma: good progress $ 100m Fully Optimised Field Utilising Risk Reduction m-pipe Cost Saving Components Within Existing Field Architectures $-0 Early Installations M-pipe® progressing well • Further test orders (£revenue) sold during 2014/15 • In-field testing • Diverse range of majors and global o
Slide 25: Accelerating our pipeline: Invibio
Accelerating our pipeline: Invibio 100% Invibio mega-programmes Probability of Success offer >£50m annual revenue potential in peak year 0% Focus on high incidence Time to meaningful revenue (£1m-£2m sales) procedures delivering clinical benefit PEEK-OPTIMA® HA- Enhanced Knee Dental Trauma Mega prog
Slide 26: Spine: PEEK-OPTIMA HA Enhanced
Spine: PEEK-OPTIMA® HA Enhanced Bone on-growth the key benefit for implantable PEEK-OPTIMA® HA Some direct High degree of Enhanced bone contact direct bone contact PEEK-OPTIMA® Natural PEEK-OPTIMA® HA Enhanced PEEK-OPTIMA® HA Enhanced building momentum: - Premium product delivering bone-on growth fo
Slide 27: Trauma: demand for change
Trauma: demand for change CHALLENGES BENEFITS Metal deficient Enhanced bone formation Low fatigue resistance 50x fatigue resistance (vs metal) US healthcare cost Improved bone alignment Poor healing (10% of cases) X ray imaging capability PEEK OPTIMA® Ultra Reinforced “I'm disappoint
Slide 28: Dental: lifestyle demand
Dental: lifestyle demand CHALLENGES BENEFITS Growing edentulous Comfort and fit population (300 million) Metal free Lifestyle demand Aesthetics Reluctance to metal Speed / CAD CAM benefit Lack of thermal shock Market potential Dental remains an attractive and sizeable opportunity - F
Slide 29: Dental milestones
Dental milestones 1st Customer EU Concept Investigation 1st Customer US & Brazil 100 Customers EU Target Double-digit meaningful revenue revenue potential 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Today 1. Extend geographic reach 2. Increase level of indicators 3. OEM partnerships & distribu
Slide 30: Knee: a solution to metal limitations?
Knee: a solution to metal limitations? CHALLENGES BENEFITS High patient dissatisfaction Comfort Discomfort / durability Low stress shielding Weight of implant Light, durable, metal free Emerging geography demand Radiolucency: surgeon visibility Simplicity of manufacture Knee: a sol
Slide 31: Underpinning our future: proven capacity today
Underpinning our future: proven capacity today CHALLENGES Monomer Polymer (2 plants & external supply) (3 plants) Speciality Speciality Medical components (APTIV film: 2 plants) (Victrex pipe: 1 plant) (In-house: 1 plant) (Victrex tape: 1 plant) “Selling a solution – not just materials” - Proven man
Slide 32: Underpinning our future: technical excellence
Underpinning our future: technical excellence UK China Japan Partnering New Polymer with Innovation Centre academia (UK) “Selling a solution – not just materials” - Proven global technical excellence - Capability to deliver total solutions for OEMs China - Prototype development through new Polymer I
Slide 33: Today's headlines
Today’s headlines Significant and growing market - Market opportunity >80,000 tonnes Strong and focused pipeline - Portfolio quality: larger targets - Two new £50m+ future mega-programmes Differentiation by moving downstream - Project investment, partnerships and M&A to accelerate growth 33
Slide 34: Summary
Summary 1. Barriers to entry Barriers to entry Materials knowledge and know-how Proven capacity 2. 3. Focused R&D Downstream and prototyping manufacturing excellence capability and know-how VICTREX MOVING DOWNSTREAM OEM Materials manufacturer to solutions provider - Selling a solution, not just mate
Slide 35: Disclaimer
Disclaimer Victrex's business and share price may be affected by a number of risks, trends, factors and uncertainties, not all of which are in our control. Accordingly, actual performance may differ materially from anticipated performance because of a variety of risk factors, including: changes in e