Dksh Holding Ltd · SIX:DKSH
Dksh — Investor Day (November 2015)
87 slides from Dksh's investor day presentation, Nov 27, 2015
Slide 1: DKSH Capital Market Day 2015: 150 years of DKSH
DKSH Capital Market Day 2015 150 years of DKSH – Key value drivers and operating insights Zurich, November 27, 2015 © DKSH
Slide 2: Welcome to our first Capital Market Day
Welcome to our first Capital Market Day Page 2 © DKSH
Slide 3: Introduction of today's speakers
Introduction of today’s speakers Dr. Joerg Wolle Bernhard Schmitt Martina Ludescher Bruno Sidler Andrew Frye President & CEO CFO Head Corporate COO Head Business Unit Development Healthcare Industry Industry Industry Industry Industry experience experience experience experience experience since 1991
Slide 4: Agenda
Agenda Time Presentation/Event Speaker 09:00‒09:30 Arrival and registration 09:30‒10:00 Welcome and introduction Dr. Joerg Wolle President & CEO 10:00‒10:30 Market and industry trends Martina Ludescher Head Corporate Development 10:30‒11:00 Coffee break 11:00–11:30 Strategy update Dr. Joerg Wolle Pr
Slide 5: Introduction – Dr. Joerg Wolle, President & CEO
Introduction Dr. Joerg Wolle – President & CEO
Slide 6: Another Asian crisis ahead?
Another Asian crisis ahead? World Bank cuts 2015–2016 East Asia growth forecasts Reuters, October 5, 2015 The worst ever golden week, retailers moan South China Morning Post, October 2, 2015 A slowdown among Asian economies The Economist, October 3, 2015 Page 6 © DKSH
Slide 7: 150 years of experience in Asia
150 years of experience in Asia Specialized services Market Expansion Trading companies provider Services provider 1865 1887 2002 2015 Page 7 © DKSH
Slide 8: No. 1 Market Expansion Services provider in Asia
No. 1 Market Expansion Services provider in Asia1 No. 1 750 Market Expansion business Services provider locations with focus on Asia 35 28,000 specialists countries 9.8 billion 14,000 CHF net sales jobs created since (2014) 2002 worldwide 1 Roland Berger Strategy Consultants, February 2015, based on
Slide 9: Market and industry trends – Martina Ludescher
Market and industry trends Martina Ludescher – Head Corporate Development
Slide 10: How to capture growth in Asia
How to capture growth in Asia • Small and medium size companies lack financial and personnel resources in Asia • Larger multinational companies focus on core competencies • MES providers help clients to enter Asian markets with high entry barriers • Expand access to knowledge and sourcing Drive reve
Slide 11: Market Expansion Services (MES) – at every stage
Market Expansion Services (MES) – at every stage Entering Asia Expanding in Asia Growing within Asia Enable market expansion Capture ‘new’ Asian Grow business within into Asia markets existing Asian markets Page 11 © DKSH
Slide 12: Asian MES market…
Asian MES market… Greater China Northeast Asia Total market size: Total market size: USD 1.516 billion USD 995 billion MES penetration MES penetration rate 20% or rate 19% or USD 201 billion USD 285 billion Southeast Asia Total market size: USD 469 billion MES penetration rate 23% or USD 109 billion
Slide 13: Competitive landscape in Asia…
Competitive landscape in Asia… Healthcare Specialty Engineered FMCG Prescription Medical chemicals products drugs & OTC devices Zuellig #1 #1 #1 Brenntag #1 Pharma Zuellig #2 LF Asia #2 #2 #2 Rieckermann Pharma #3 PT Arta Boga Cemerlang #3 Geoyoung LF Asia #3 Connell Brothers #3 Illies DKSH in Top 3
Slide 14: Three major growth drivers of MES business…
Three major growth drivers of MES business… 1 Growing middle class in Asia Overall consumption 2 Increasing inner-Asian trade MES penetration rate 3 Trend towards outsourcing …will increase consumption and penetration rate Page 14 © DKSH
Slide 15: Rising middle class boosts local consumption
Rising middle class boosts local consumption Asia Pacific middle class 2010 Asia Pacific middle class 2030 572 million 3.2 billion people people 28% of global middle class 66% of global middle class 4.8 trillion 32.6 trillion USD spending USD spending Sources: UnctadSTAT Roland Berger Strategy Consu
Slide 16: Beiersdorf targeting growing middle class in Myanmar
Beiersdorf targeting growing middle class in Myanmar Background and results Sales growth Beiersdorf through DKSH • Collaboration started in 1988 in Thailand • Partnership in Myanmar since 1997 • Middle class in Myanmar extremely underrepresented • Distribution network of 28,000 points of sale 2012 2
Slide 17: Strong inner-Asian trade
Strong inner-Asian trade Trend of fast Asian trade to continue Origin of DKSH’s key clients • Asia is the second largest trading area after Europe, having overtaken America¹ Asia Americas 30% • Inner-Asian trade expected to grow fast: 30% - Trade barriers fall - Local consumer markets develop fast •
Slide 18: Taiho Pharma's expansion into South East Asia
Taiho Pharma’s expansion into South East Asia Background and results Geographic reach in Asia • Taiho Pharma approached DKSH to expand its Asian footprint • DKSH registered products in Hong Kong, Malaysia, Thailand and Vietnam • Marketing, sales, distribution and logistic services • Taiho enjoys dou
Slide 19: Suntory heading to further Asian countries
Suntory heading to further Asian countries Background and results Geographic reach in Asia • Partnership with Suntory started in the 1970s in Thailand • Expansion to Hong Kong, Malaysia, Myanmar, Singapore and Vietnam • DKSH showed strong track record to build brands in Asia • Since 2015, DKSH as we
Slide 20: Increasing trend towards outsourcing
Increasing trend towards outsourcing • MES is one of the most promising sectors in the outsourcing industry • Focus on core competencies and slower growth rates lead to increasing demand • DKSH a reliable partner for a rapid and low-risk expansion to and within Asia • The role of outsourcing has cha
Slide 21: BMS outsourced commercial business
BMS outsourced commercial business BMS core competencies: Background and results Manu- Global • Bristol Myers-Squibb (BMS) reallocated R&D facturing Marketing resources BMS outsourced to DKSH: • DKSH took over commercial business of new hepatitis B product in Malaysia Local Capillary Marketing Distr
Slide 22: Omni channel approach of DKSH
Omni channel approach of DKSH Channels Modern Trade Traditional Trade Specialty Stores Brand owners Pharmacies and Manufacturers Medical channel Consumers Clients Food Service E-Retailers E-Stores and market places Page 22 © DKSH
Slide 23: Digitization enables MES players to offer new services
Digitization enables MES players to offer new services Online channel management Digital (full) services • Manage online retailers and market • Creation of web shops, places digital marketing, e-fulfillment and after-sales services Extend reach of products Extend reach to consumers DKSH Digital
Slide 24: DKSH Connect digital platform
DKSH Connect digital platform Accessible across all digital devices Desktop/laptop Tablet Smartphone Page 24 © DKSH
Slide 25: Coffee break
Q@ DksH Coffee break Think Asia. Think DKSH.
Slide 26: Strategy update – Dr. Joerg Wolle
Strategy update Dr. Joerg Wolle – President & CEO
Slide 27: Value creation
DKSH has undertaken four stages of transformation Structural reinforcement Value creation Preparing and implementing IPO $ Repositioning Merger and restructuring 2002 Time Page 27 © DKSH
Slide 28: Clear strategy for future profitable growth
Clear strategy for future profitable growth Focus on existing markets Increase operational Strengthen service offering and Business Units efficiency • Focus on existing markets • Enhance service and • Strengthen market position to • Grow Business Units organically solution competence use economies o
Slide 29: DKSH value creation track record
DKSH value creation track record EBIT (in CHF million) 2002–2008: 2008–2009: 2010–2012: 2013–2014: Booming markets Financial crisis Natural desasters Slowing markets Double digit Decline of ~10% Double digit Slow growth growth growth 400 350 300 250 200 150 100 50 0 2002 2003 2004 2005 2006
Slide 30: Current impacts on Business Unit Consumer Goods
Current impacts on Business Unit Consumer Goods Consumer Confidence Index1 1 FMCG 130 120 110 100 2 Luxury goods business 90 80 70 60 3 Translational FX effects 50 40 1/1/04 1/1/06 1/1/08 1/1/10 1/1/12 1/1/14 1/1/16 Thailand Malaysia 1 University of the Thai chamber of commerce; Malaysian institute
Slide 31: Chinese business of DKSH
Chinese business of DKSH Limited impact on DKSH business DKSH presence in mainland China • DKSH successfully follows a niche strategy approach since many years • Accordingly less than 10% of group net sales are derived from mainland China • Present with all four Business Units with focus on Healthca
Slide 32: Business Unit Consumer Goods – Bruno Sidler
Business Unit Consumer Goods Bruno Sidler – COO
Slide 33: Leading consumer goods MES provider in Asia
Leading consumer goods MES provider in Asia CHF 4.1 billion net sales 14,560 specialists 640 business locations Note: Financial figures (FY 2014) Page 33 © DKSH
Slide 34: Long-lasting client relationships in various categories
Long-lasting client relationships in various categories Consumer Goods clients and categories Personal care: Confectionery and snacks: Infant nutrition:¹ Beverages: Dairy and dry grocery: ¹ Partly consolidated in Business Unit Healthcare DKSH is further active in the categories of consumer health, h
Slide 35: DKSH omni channel approach
DKSH omni channel approach Modern Trade Traditional Trade DKSH omni channel approach Specialized channels E-commerce Page 35 © DKSH
Slide 36: The theory of capillary distribution
The theory of capillary distribution Capillary distribution Non-capillary distribution D D N Standard N DKSH wholesaler D D D D D D W D D D D ID ID N D Direct access W Wholesaler ID Indirect access N No access Page 36 © DKSH
Slide 37: Regional growth for Mars
Regional growth for Mars Background and results • Partnership since 1987 in Malaysia • Further partnership in Myanmar, Singapore, Hanoi Taiwan, Thailand and Vietnam • Through DKSH’s capillary network, Mars products have broader reach Hoi An • Enhanced impact at point-of-sale through field marketing
Slide 38: Reasons for Mars to work with DKSH
Reasons for Mars to work with DKSH Terry Seremetis General Manager – Mars Chocolate South East Asia & Thailand Page 38 © DKSH
Slide 39: DKSH value chain
DKSH value chain Comprehensive portfolio of services along the value chain Market Marketing Distribution After-Sales Sourcing Analysis and and Services and Research Sales Logistics Customers Clients Field Marketing …by providing blanket market coverage across Asia Page 39 © DKSH
Slide 40: Why is Field Marketing of increasing importance?
Why is Field Marketing of increasing importance? Sales growth drivers Desire Decision Experience Availability Visibility Implementation • On-shelf availability • Planogram implementation • Promotions • Stock availability • Product shelf display • New innovation • Channel ranging • On-shelf display s
Slide 41: DKSH Smollan Field Marketing (DSFM)
DKSH Smollan Field Marketing (DSFM) DSFM team Singapore • Founded in 2009 as joint venture of DKSH (51%) and Smollan (49%) • More than 3,500 specialists in Asia servicing around 60,000 retail stores in seven countries • Clients such as Mars, Nestlé, Friesland Campina or P&G DSFM is the largest Field
Slide 42: Field Marketing service offerings
Field Marketing service offerings Category management science Brand activation • Range assortment • Promotional and event campaigns • Shelf space management • Point-of-sale management and • Store layout optimization design • Demand forecasting • Shopper engagement • Mystery shopping Turning shoppers
Slide 43: Field Marketing insight reporting
Field Marketing insight reporting Page 43 © DKSH
Slide 44: Showcase Field Marketing (during lunch break)
Showcase Field Marketing (during lunch break) What awaits you later • Category management explanation – Why and how we plan • In-field management: order entry and measurement demo • Reporting explanation • Activation Page 44 © DKSH
Slide 45: Consumer Goods outlook
Consumer Goods outlook • Structural long-term growth drivers intact • Focus on adding new clients and expanding existing client relationships • Focus on demand creation through Field Marketing • Focus on omni-channel access – providing access to the growing online channel • Focus on scale efficienci
Slide 46: Lunch break
Q@ DksH Lunch break Think Asia. Think DKSH.
Slide 47: Business Unit Healthcare – Andrew Frye
Business Unit Healthcare Andrew Frye – Head Business Unit Healthcare
Slide 48: Proven integrated MES leader in Asia in healthcare
Proven integrated MES leader in Asia in healthcare 4,200 Marketing and sales specialists 150 business locations 4.5 billion CHF net sales (2014) Page 48 © DKSH
Slide 49: Three specialized Business Lines
Three specialized Business Lines Selected Healthcare clients and Business Lines Pharmaceuticals: Over-the-counter (OTC) & Consumer Health: Medical Devices: Page 49 © DKSH
Slide 50: Covering all relevant channels
Covering all relevant channels Medical channel Traditional Trade DKSH omni channel approach Modern Trade E-commerce Page 50 © DKSH
Slide 51: Value chain integrity – product arrival
Value chain integrity ‒ product arrival 1 2 3 4 5 6 7 8 9 10 11 12 Page 51 © DKSH
Slide 52: Product control
Product control 1 2 3 4 5 6 7 8 9 10 11 12 Page 52 © DKSH
Slide 53: Relabeling
Relabeling 1 2 3 4 5 6 7 8 9 10 11 12 Page 53 © DKSH
Slide 54: Storage
Storage 1 2 3 4 5 6 7 8 9 10 11 12 Page 54 © DKSH
Slide 55: Cold chain handling
Cold chain handling 1 2 3 4 5 6 7 8 9 10 11 12 Page 55 © DKSH
Slide 56: Picking in the cold chain area
Picking in the cold chain area 1 2 3 4 5 6 7 8 9 10 11 12 Page 56 © DKSH
Slide 57: Picking in the ambient area
Picking in the ambient area 1 2 3 4 5 6 7 8 9 10 11 12 Page 57 © DKSH
Slide 58: Dispatching
Dispatching 1 2 3 4 5 6 7 8 9 10 11 12 Page 58 © DKSH
Slide 59: Transport
Transport 1 2 3 4 5 6 7 8 9 10 11 12 Page 59 © DKSH
Slide 60: Traffic control center
Traffic control center 1 2 3 4 5 6 7 8 9 10 11 12 Page 60 © DKSH
Slide 61: Delivery
Delivery 1 2 3 4 5 6 7 8 9 10 11 12 Page 61 © DKSH
Slide 62: Consignment inventory management
Consignment inventory management 1 2 3 4 5 6 7 8 9 10 11 12 Page 62 © DKSH
Slide 63: Two pillars of medical sales
Two pillars of medical sales Demand creation Order facilitation and customer mgt. • Educating healthcare professionals on the • Ensuring products are in stock and properly technical benefits of a therapy visible • Recommending prescription and/or correct • Actively engage consumers or manage the usa
Slide 64: Marketing and sales teams grow business
Marketing and sales teams grow business Facts and figures • More than 4,200 dedicated healthcare marketing and sales specialists • Strong relationships with clients, customers and healthcare professionals • EchoPlus, DKSH’s proprietary mobile sales management and CRM tool • More than 3,500 healthcar
Slide 65: From market entry to managing tail brands
From market entry to managing tail brands Sales volume New products and indications Mature and non-core Pre launch Launch Existing products products support Regulatory Expand geographic, Full outsourcing Support channel or (entire business account coverage or portfolio) Development Launch Growth Mat
Slide 66: Bringing Dr. Wolff into the South East Asian markets
Bringing Dr. Wolff into the South East Asian markets Background and results • Dr. Wolff outsourced the entire range of services to DKSH in 2013 • Markets covered: Hong Kong, Malaysia, Singapore, Taiwan and Thailand • DKSH expanded revenue by leveraging relationships with chain pharmacies • Continuou
Slide 67: Cooperation with Dr. Wolff
Cooperation with Dr. Wolff Eduard R. Dörrenberg Managing Partner Page 67 © DKSH
Slide 68: Healthcare outlook
Healthcare outlook • Markets continue to grow faster than in Europe and the Americas • Market changes let clients outsource parts of their value chain • More competition for lower margin, but high volume clients emerging • Recent distribution center openings enable to serve more clients and customer
Slide 69: Finance – Bernhard Schmitt, CFO
Finance Bernhard Schmitt – CFO
Slide 70: Our finance team's mission…
Our finance team’s mission… CFO Accounting Business Country and Controlling Process Tax Treasury Finance Reporting Outsourcing Systems/MIS Business/ Overhead Controlling Singapore Zurich Kuala Lumpur In-country …is to enable growth and safeguard assets Page 70 © DKSH
Slide 71: State-of-the art IT platform is the backbone for finance
State-of-the art IT platform is the backbone for finance Clients DKSH IT platform Customers • Single instance worldwide • >15,000 IT and >8,000 SAP users • >15 million transactions per year • Mirroring every 30 minutes • IT costs below 0.5% of net sales Page 71 © DKSH
Slide 72: Risk management ensures safeguarding of assets
Risk management ensures safeguarding of assets Working capital risks Risk Management FX risks Liquidity risks Page 72 © DKSH
Slide 73: Receivables management in Thailand
Receivables management in Thailand Net sales Rural collections CHF 3.4 billion annually a challenge Bangkok 400,000 customer 40% of collections invoices a month in cash or cheque (20,000 a day) (90,000 cheques a month) Page 73 © DKSH
Slide 74: Process of receivables management in Thailand
Process of receivables management in Thailand Customized bar-coded Same or next-day 1 Credit assessment and 3 Sort bills and re-distribute 5 bank-in slips 7 funding credit limits Delivery of goods and Customers pay Bank staff at over 400 Release or lower credit 2 customers sign bills 4 collectors 6
Slide 75: Successful receivables management
Successful receivables management Write downs of trade receivables (%) Write downs of inventories (%) 1.0 1.0 0.9 0.9 0.8 0.8 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0.0 0.0 2012 2013 2014 2012 2013 2014 Page 75 © DKSH
Slide 76: Conservative currency risk management
Conservative currency risk management • Conservative way to manage currency risks THB / CHF • In Consumer Goods and Healthcare 40 − Purchase and sell in local currency − Hardly any transactional currency risk 35 • In Performance Materials and Technology − Purchase in foreign currency 30 − Weaker loc
Slide 77: Strong cash generation
Strong cash generation • Tight working capital management Net cash development (in CHF million) contributes to strong cash generation • More than CHF 335 million net cash position at the end of June 2015 336 293 • A committed syndicated facility of CHF 200 million (5+2) is available 214 • Capital st
Slide 78: Strong balance sheet
Strong balance sheet Balance sheet as of June 30, 2015 Extract from Mead Johnson 10K report Assets Liabilities and equity “Our products are sold principally to distributors Net Operating Capital (NOC) CHF 1,086.7m and retail customers, both nationally and Cash CHF 432.2m internationally. Sales to tw
Slide 79: Capillary distribution – Finance view
Capillary distribution ‒ Finance view Client sells directly Client sells with DKSH Market Reduced intelligence risk 35% Margin 35% 41% Margin Margin 50% 48% Less 2% 20% 2% complexity 15% 17% Client DKSH …with Market Expansion Services sells direct cost only +5% +10% +20% Sales 100 100 105 110 120 Va
Slide 80: Finance – a look ahead
Finance ‒ a look ahead Manage age-old, entrenched market practices Further drive benefits of modern technologies FX translational impact of 2–3% on net sales¹ Capex of around CHF 40 million Tax rate in the range of 28–30% ¹ Assuming that FX rates stay the same as of October 31, 2015 Page 80 © DKSH
Slide 81: Coffee break
Q@ DksH Coffee break Think Asia. Think DKSH.
Slide 82: Q&A session
Q&A session
Slide 83: Closing remarks – Dr. Joerg Wolle
Closing remarks Dr. Joerg Wolle – President & CEO
Slide 84: Key takeaways
Key takeaways • Structural growth drivers are intact – expand leading MES position in Asia • Balance sheet strength enables DKSH to drive industry consolidation • DKSH weathers current market challenges • Net sales and profit for 2015 expected to be similar to last year’s levels • Confident to achie
Slide 85: Apero
Q@ DksH Think Asia. Think DKSH.
Slide 86: DKSH Holding Ltd. contact details
DKSH Holding Ltd. Wiesenstrasse 8, P.O. Box 888, 8034 Zurich, Switzerland Phone +41 44 386 7272, Fax +41 44 386 7282 www.dksh.com © DKSH
Slide 87: Disclaimer
Disclaimer Due care has been used in preparation of this presentation and DKSH makes every effort to provide accurate and up-to-date information. Nevertheless, this presentation may be subject to technical inaccuracies, information that is not up-to-date or typographical errors DKSH does not assume