Slide 1: Financial Year 2018: Media and Analyst Conference
Financial Year 2018: Media and Analyst Conference Zurich, 8 March 2019
Slide 2: Agenda
Agenda Highlights und business review Dr. Christian Walti, CEO Financial review Gerold Brütsch, CFO Strategy and outlook Dr. Christian Walti, CEO Q&A 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 Highlights and business review Dr. Christian Walti, CEO Financial review Gerold Brütsch, CFO Strategy and outlook Dr. Christian Walti, CEO Q&A 3
Slide 5: FY 2018: Higher order intake – record-high order backlog – lower sales and EBIT margin
FY 2018: Higher order intake – record-high order backlog – lower sales and EBIT margin Order intake up 32% to CHF 461 million Record order backlog of CHF 366 million, ensuring stable capacity utilization for over one year Sales down 4% to CHF 389 million, driven by delays in order processing trigger
Slide 6: Immediate measures taken to address the profitability issues at one site
Immediate measures taken to address the profitability issues at one site Interim management established for two sites In-depth review of risks in order backlog and appropriate risk mitigation Management focus on project execution Ensure higher order quality already in quotation and sales phase 5
Slide 7: Significantly higher order intake
Significantly higher order intake CHF m 600 500 400 300 200 100 0 2014 2015 2016 2017 2018 6
Slide 8: Order intake breakdown: Increase mainly driven by large orders won
Order intake breakdown: Increase mainly driven by large orders won CHF m 600 500 400 Large orders 143 98 233 (> 5m) 31% 41 300 82 Small/medium 200 237 orders 52% 244 239 190 180 100 Recurring 66 62 67 69 80 service 17% 0 2014 2015 2016 2017 2018 Continued increase of service business, stable amoun
Slide 9: Order intake by industry: 75% from Aerospace and Industrial
Order intake by industry: 75% from Aerospace and Industrial CHF m 600 500 400 200 171 Aerospace 37% 166 300 110 116 38 Energy 8% 50 16 38 200 29 176 Industrial 38% 154 194 157 143 100 71 45 44 76 Transport 17% 36 0 2014 2015 2016 2017 2018 8
Slide 10: Market trends by industry
Market trends by industry Key markets Aerospace and Industrial with positive perspective Aerospace Energy Transportation Industrial 37 % 10 % 12 % 41 % Solid growth, esp. in US Power plant investments Agriculture with positive Stationary Machines in concentrated on Asia outlook waiting posit
Slide 11: Order intake by region: Growth across all regions
Order intake by region: Growth across all regions CHF m 600 500 101 69 Americas 15% 400 42 24 120 Asia 26% 25 300 133 174 94 105 200 Europe 59% 272 232 205 231 100 196 0 2014 2015 2016 2017 2018 10
Slide 12: The leading experts for Aerospace applications
The leading experts for Aerospace applications ECOSPEED Starrag NB Bumotec s181 75% reduction of 5x faster around the Highest productivity in machining time for leading edge for market for avionic parts structural parts thanks to aerospace blisks due to production from bar parallel kinematic in one
Slide 13: The leading experts for Industrial applications
The leading experts for Industrial applications Berthiez RVU Droop+Rein FOGS NEO Heckert T45 Highest precision in Best in class in terms of 15% higher productivity market for machining contouring speed and for machining industrial bearings with < 1.5 μm accuracy for machining parts due to highest to
Slide 14: Great success in key trade fairs
Great success in key trade fairs Exhibitions CCMT and CIIE in China Starrag premiere at CCMT, one of the most important machine tool builder exhibitions in China with excellent customer feedback First edition of “China International Import Expo” (CIIE), Starrag had prime location and signed signific
Slide 15: Technology Days: The most important spot for the world's experts
Technology Days: The most important spot for the world‘s experts Aero Structure Technology Days Most innovative production for structural parts were demonstrated including flexible manufacturing systems Visit to Pilatus Aircraft as proof Turbine Technology Days More than 200 experts from around the
Slide 16: Agenda
Agenda Highlights and business review Dr. Christian Walti, CEO Financial review Gerold Brütsch, CFO Strategy and outlook Dr. Christian Walti, CEO Q&A 15
Slide 17: Ongoing high order backlog: H2 orders up 13% vs. H1 2018
Ongoing high order backlog: H2 orders up 13% vs. H1 2018 and up 32% y-o-y CHF m 500 480 461 407 400 349 333 249 245 300 224 192 208 200 348 366 288 302 238 231 216 100 184 141 142 0 2014 2015 2016 2017 2018 Order intake H1 Order intake H2 Order backlog Strong order intake +32% y-o-y (+29% in local
Slide 18: Decrease in sales revenue caused by underutilization at one specific plant
Decrease in sales revenue caused by underutilization at one specific plant Sales revenue -4.1%, fx adjusted -6.3% CHF m Organic decrease caused by 500 Delays in order processing triggering a shortfall in output at individual locations Lower material share due to timing effects 400 -25 9 in order pro
Slide 19: Income Statement: Head-wind through salary increases and restructuring
Income Statement: Head-wind through salary increases and restructuring CHF m Revenue Expenses 450 400 350 Sales revenue 300 166 42.8% 185 45.7% Material / Inventory change 250 200 405 389 Personnel 150 146 37.6% 139 34.3% Other Operating Expense/Income 100 Depreciation 50 54 13.9% 55 13.5% EBIT 2.8%
Slide 20: EBIT burdened by salary increases and restructuring cost
EBIT burdened by salary increases and restructuring cost CHF m Units Contribution 20 Shortfall in output due to delays in order Base Value 0.3 -2.7 processing at individual plants Change1 15.6 Change2 15 Compensated by contribution from Change3 0.3 -0.5 13.0 -1.9 upfront work for expected future Cha
Slide 21: Lower EBIT results in lower bottom-line
Lower EBIT results in lower bottom-line CHF m 2018 2017 Change Operating result EBIT 11.1 15.3 -27% Interest expenses, net -0.4 -0.5 FX result, net -0.3 0.5 Other financial result -1.5 -1.6 Total Financial result, net -2.2 -1.6 Income before taxes 8.9 13.7 -35% Income tax expenses -0.5 -1.6 Net inco
Slide 22: Balance sheet: Strong financial base
Balance sheet: Strong financial base CHF m Assets Liabilities 400 350 32 37 Cash 11 32 300 Receivables 128 250 128 156 126 Inventories 200 Fixed assets 105 150 85 Financial liabilities 100 177 177 Operating liabilities 111 50 105 Shareholders' equity 0 31.12.2017 31.12.2018 31.12.2017 2 Total assets
Slide 23: Strong Free Cash flow driven by reduced NWC
Strong Free Cash flow driven by reduced NWC CHF m Units 30 7.5 -0.1 26.9 -7.3 Base Value 25 Change1 20 11.1 0.2 19.7 Change2 Change3 Change4 15 Change5 Change6 Change7 Change8 Change9 10 8.4 Change10 Change11 Change12 Change13 5 Change14 Change15 Change16 Change17 0 Change18 Change19 Net Depre- Chan
Slide 24: Agenda
Agenda Highlights and business review Dr. Christian Walti, CEO Financial review Gerold Brütsch, CFO Strategy and outlook Dr. Christian Walti, CEO Q&A 23
Slide 25: Focus: Ongoing implementation of strategy
Focus: Ongoing implementation of strategy Focus on most attractive market/product segments and regions to better exploit group-wide growth and profit potential Pleasing increase in order intake from China and US in 2018 Differentiate through application competence, technology, service capabilities
Slide 26: Gaps in order fulfillment were identified and are addressed short-term
Gaps in order fulfillment were identified and are addressed short-term Future margin development has to reflect pleasing order intake Eliminate bottlenecks and delays in order fulfillment Stop negative profitability at specific site Create awareness and ownership within management of all levels Impr
Slide 27: Program «Starrag 2021» about to be established with mid-term runtime
Program «Starrag 2021» about to be established with mid-term runtime 2021 2020 Readiness for growth Reduced break-even New orders with Value added co-operation benchmark profitability 2019 in Group Renewed product port- folio Review and con- solidation Gain profitability Accelerate change Stable pro
Slide 28: Mid-term financial targets unchanged
Mid-term financial targets unchanged Growth Rate 5% p.a. – average throughout the cycle Profitability 8% EBIT margin – average throughout the cycle ROCE Above WACC – generate value Dividend ratio 35-50% of net profit Note: In local currencies and as average over the business cycle. 27
Slide 29: Economic outlook 2019
Economic outlook 2019 Target markets of Starrag Group expected to remain solid VDW forecast 2019: “production growth of 2%” Heterogeneous expectations for our relevant industries Aerospace positive Industrial positive Energy rather weak Transportation depending on market segment Expectations for our
Slide 30: Priorities 2019
Priorities 2019 Strategic priorities Intensified execution of strategy: Focusing on defined market segments and regions (US, China) Expansion of service capabilities as additional enabler of new machinery business (geographically and service product offering) Innovation: Consistent development of st
Slide 31: Guidance 2019 (organic, in local currencies)
Guidance 2019 (organic, in local currencies) Order intake Normalized and therefore below record 2018 Sales revenue Exceeding 2018 ROCE and EBIT margin In line with 2018 Positive volume effect offset by higher personnel and material expenses as well as restructuring charges 30
Slide 32: Summary
Summary 2018 highlights Significant increase in order intake – record order backlog – strong cash flow – strategy implementation ongoing – new and enhanced products 2018 setbacks Lower sales, disappointing profitability (EBIT, ROCE) and net income 2019 outlook Higher sales and lower order intake com
Slide 33: Starrag Group – Attractively positioned
Starrag Group – Attractively positioned Benefiting from sustainable megatrends Mobility, global infrastructure capex, agricultural productivity, energy efficiency, miniaturization Innovation leadership and technological expertise Leading innovation capability focused on customers’ needs using Indust
Slide 34: Corporate calendar and Contact details
Corporate calendar and Contact details 26.04.2019 Annual General Meeting in Rorschach 24.07.2019 Half-year report 2019 24.01.2020 Sales and orders 2019 06.03.2020 Presentation of 2019 results for analysts and media in Zurich 25.04.2020 Annual General Meeting in Rorschach Gerold Brütsch, CFO Phone +4
Slide 35: Agenda
Agenda Highlights and business review Dr. Christian Walti, CEO Financial review Gerold Brütsch, CFO Strategy and outlook Dr. Christian Walti, CEO Q&A 34
Slide 36: Backup information
starrag Backup information Engineering precisely what you value Solutions for Aerospace Energy Transportation Industrial
Slide 37: Share details (as of 31 December 2018)
Share details (as of 31 December 2018) Market capitalization CHF 144.5 million Listed at SIX Swiss Exchange Main Standard Ticker: STGN, Valor number 236‘106, ISIN CH00023610608 3‘360‘000 registered shares, nominal value of CHF 8.50 each Free float 28% Stable shareholder structure others 27.5% Walter
Slide 38: 150 years tradition in innovation
150 years tradition in innovation Key milestones for Starrag Group to become and remain 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 37
Slide 39: At your service
At your service Production site Logistic center Service center 38
Slide 40: Group Management
Group Management Dr. Christian Walti, CEO Gerold Brütsch, CFO (1967, Swiss) (1966, Swiss) Since 01.06.2018: CEO and Head of Regional Sales Since 2000 CFO, since 2005 Deputy CEO and Head of 2012 – 2018 Head of Bosch Packaging Systems, Beringen, Corporate Center Germany 1997 – 1999 CFO of Müll
Slide 41: World production machine tools 1988 - 2017
World production machine tools 1988 - 2017 EUR b 75 -+7% +10% +8% -2% +29% +5% -12% 60 +29% 45 69 69 67 72 63 64 30 61 55 52 49 46 40 41 40 42 37 36 38 34 34 34 34 35 33 32 15 27 27 29 24 23 0 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 16 17 Note: Without Par
Slide 42: World consumption machine tools 2015 - 2017: Top 20 countries
World consumption machine tools 2015 - 2017: Top 20 countries EUR b CN US DE JP IT KR MX IN TW RU FR TR CA VN CH TH ES AT PL 2015 2016 2017 GB 0 5 10 15 20 25 Top 20 countries are 91% of 72b EUR machine tool market. Note: Without Parts/accessories; Source: VDW World Machine Tool Statistics 2017, u