Slide 1: Media & Analyst Conference
Media & Analyst Conference Tornos Holding Ltd Zurich, March 17, 2014 1
Slide 2: Speakers
Speakers François Frôté – Chairman of the Board Luc Widmer – Chief Financial Officer Michael Hauser – Chief Executive Officer 2
Slide 3: Agenda
Agenda Welcome Overall Review François Frôté, Chairman Financial Results 2013 Luc Widmer, CFO Review 2013 – Market development Strategy 2017 – On course for the future Michael Hauser, CEO Questions and Answers 3
Slide 4: Overall Review
Overall Review François Frôté – Chairman of the Board 4
Slide 5: Key Financials 2013
Key Financials 2013 Key Financials Actual Underlying 2013 MCHF Gross sales 155.3 155.3 EBIT -35.9 -16.3 Net income/(loss) -45.6 -19.0 Free cash flow 1.5 1.5 5
Slide 6: Main Actions 2013
Main Actions 2013 Main Actions Impact Headcount -39% in Reduction of footprint of Swiss organization 15 months New products well accepted, i.e. SwissNano, EvoDECO 20/32, Swiss >30% order intake ST 26 CE, BA 1008, VA 1008 increase vs. 2012 Reduction of Board of Directors From 6 to 5 members 1st machi
Slide 7: Financial Results 2013
Financial Results 2013 Luc Widmer – Chief Financial Officer 7
Slide 8: Financial Results 2013: Summary of key figures
Financial Results 2013 Summary of key figures • Order intake MCHF 151.9 – down by -14.0% • Gross sales MCHF 155.3 – down by -16.0% • EBIT MCHF -35.9, underlying MCHF -16.3 • Net result MCHF -45.6, underlying MCHF –19.0 • Free cash flow positive at MCHF 1.5 • Net working capital MCHF 63.7 – improved
Slide 9: Net sales
Financial Results 2013 Net sales 181.6 150.8 MCHF 2012 2013 • Main negative impacts in Asia and Europe THINK PARTS THINK TORNOS 9
Slide 10: Net sales
Financial Results 2013 Net sales 2012 2012 2013 2013 22% 27% 78% 73% Machines CS & SP Machines CS & SP • Customer Service stable contributor THINK PARTS THINK TORNOS 10
Slide 11: Consolidated income statement
Financial Results 2013 Consolidated income statement % of 2012 % of MCHF 2013 sales restated sales Gross sales 155.3 100.0% 184.8 100.0% Rebates and discounts -4.4 -2.9% -3.3 -1.8% Net sales 150.8 97.1% 181.6 98.2% Cost of sales -127.0 -81.8% -134.9 -73.0% Gross profit 23.8 15.3% 46.7 25.3% Operatin
Slide 12: Operating Expenses
Financial Results 2013 Operating Expenses % of 2012 % of MCHF 2013 sales restated sales Marketing and sales 27.4 18.2% 31.4 17.0% General and administrative expenses 20.3 13.5% 20.6 11.1% Research and development 12.3 8.2% 17.8 9.6% Other income / (expenses) - net -0.3 -0.2% -0.7 -0.4% Operating Exp
Slide 13: Consolidated statement of cash flows
Financial Results 2013 Consolidated statement of cash flows MCHF 2013 2012 Net result -45.6 -22.6 Other non cash items 32.5 9.6 Cash earnings -13.1 -13.0 Change in net working capital 8.9 4.7 Interest net 1.3 1.6 Income tax paid -0.6 -0.4 Net cash from operating activities -3.5 -7.1 Net cash from in
Slide 14: Consolidated balance sheet
Financial Results 2013 Consolidated balance sheet Assets Liabilities/Equity MCHF 2013 2012 MCHF 2013 2012 Cash 11.1 10.9 Current liabilities 47.9 37.9 7.8% 5.8% 33.6% 26.6% Current 97.9 127.2 Non cur. liabilities 21.8 68.4 68.7% 67.6% 15.3% 48.0% Non current 33.5 50.1 Equity 72.8 81.9 23.5% 26.6% 51
Slide 15: Adjustments to build the future
Financial Results 2013 Adjustments to build the future 2012 2013 2014 Adjust Build Adjust Build Build • Product • MultiSwiss • Phase out • MultiSwiss • Mid-segment development • Swiss ST 26 products • Swiss ST 26 CE product lines Products projects • EvoDECO 10 • Cyklos licensed • SwissNano • Goodwil
Slide 16: Transformation and non recurrent costs
Financial Results 2013 Transformation and non recurrent costs MCHF 2013 2012 Products Product/development portfolio streamlining -12.9 -7.1 Discontinuation Cyklos / Goodwill Almac -5.2 -2.9 Total -18.1 -10.0 Structure adjustement of distribution network -0.8 - Structure Restructuring of the company
Slide 17: Underlying profit & loss statement
Financial Results 2013 Underlying profit & loss statement Underlying MCHF One-time Actual 2013 2013 Gross sales 155.3 155.3 Rebates and discounts -4.4 -4.4 Net sales 150.8 150.8 Cost of sales -112.3 14.7 -127.0 Gross profit 38.5 14.7 23.8 Marketing and sales -27.4 -27.4 General and administrative ex
Slide 18: Consolidated income statement – Underlying
Financial Results 2013 Consolidated income statement – Underlying Underlying Underlying % of % of MCHF & restated 2013 sales sales 2012 Gross sales 155.3 100.0% 184.8 100.0% Rebates and discounts -4.4 -2.9% -3.3 -1.8% Net sales 150.8 97.1% 181.6 98.2% Cost of sales -112.3 -72.3% -128.6 -69.6% Gross
Slide 19: Operating Expenses – Underlying
Financial Results 2013 Operating Expenses – Underlying Underlying Underlying % of net of net MCHF & restated 2013 sales sales 2012 Marketing and sales 27.4 17.6% 30.9 16.7% General and administrative expenses 19.0 12.2% 20.3 11.0% Research and development 8.7 5.6% 10.5 5.7% Other income / (expenses)
Slide 20: Financing
Financial Results 2013 Financing 2012 2013 2014 Financing MCHF 10 MCHF 10 • Solid Banks Banks financial Financing MCHF MCHF MCHF 8 25 25 basis MCHF 10 • Competitive Private MCHF 10 MCHF 10 conditions Private Private MCHF 40 MCHF MCHF 30 30 • MCHF 40 shareholder loan • MCHF 30 share capital • MCHF 30
Slide 21: Calendar of events 2014
Calendar of events 2014 April 16 Annual General Meeting, 3 p.m. at the Foyer Moutier May 6 First quarter results 2014 August 12 First half-year results 2014 November 11 Third quarter results 2014 21
Slide 22: Review 2013 Market development / Strategic reorientation 2017
Review 2013 Market development Strategic reorientation 2017 On course for the future Michael Hauser – Chief Executive Officer 22
Slide 23: Order intake 2013
Order intake 2013 Decline has bottomed out 176,6 MCHF 151,9 2012 2013 • Order intake –14.1% • Mainly driven by drop of one market segment • 2013 influenced by cancellations of orders recognized in 2012 23
Slide 24: Order intake 2013: Significant contrast by region
Order intake 2013 Significant contrast by region 2012 2012 2013 2013 10% 11% 13.6 12.6 10% MCHF MCHF 11.3 27% 35.4 63% 84.9 79% 86.9 Europa Europe Asia Asia Americas Americas Europa Europe Asia Asia Americas Americas • Europe +2%, driven by robust demand in Germany • Europe South demand slightly imp
Slide 25: Order intake 2013: Technology shift challenges electronics sector
Order intake 2013 Technology shift challenges electronics sector 2012 2012 2013 2013 17% 18% 20% 22% Automotive Medical 13% Electronics 16% Watch/Precision 17% Job Shop 20% Others 15% 19% 5% 18% • Stable demand in watchmaking industry • Promising automotive investments in Asia • Increased activity i
Slide 26: Order intake 2013: Portfolio transition in full swing
Order intake 2013 Portfolio transition in full swing 2012 2012 2013 2013 11% 35% 65% 89% New products New products • Encouraging order intake for latest products (five novelties introduced in 2013) • Launch of new products in 2014 26
Slide 27: Strategy 2012 – 2017: Six strategic thrusts
Strategy 2012 – 2017 Six strategic thrusts 1 Internationalization of business 2 Strengthen flexibility 3 Growth through innovation 4 Make service a business 5 Enhance operational excellence 6 Offer unique solutions for targeted market segments 27
Slide 28: Internationalization: Future production footprint
1. Internationalization of business Future production footprint 2008 Chaux‐de‐Fonds (CH) 2013 Xi’an (CN) 2012 Taichung (TW) 1880 Moutier (CH) • Key components from Switzerland Production sites • High-end products from Switzerland • Mid-range / standard products from Taiwan and China Sales and servic
Slide 29: Internationalization: Access to largest machine tool market
1. Internationalization of business Access to largest machine tool market Xi’an area • Well skilled engineers from local technology universities Tornos Xi‘an Shaanxi province • Strong automotive and aerospace industry • Wages substantially lower than in coastal cities • Modest employee turnover amon
Slide 30: Internationalization: Local production for global markets
1. Internationalization of business Local production for global markets Tornos Taiwan Taichung area Taichung • Industry cluster • Highly skilled people • High-tech and high quality environment with proven supplier network Tornos Taiwan • Mid-range products • Key components from Switzerland • Swiss m
Slide 31: Strengthen flexibility: Sharper product portfolio profile
2. Strengthen flexibility Sharper product portfolio profile • Accelerated phase-out of outdated and/or complex products • Focus on new generation products Source: Strategy 2017 presentation 16.10.2012 based on platform concept • Own products replace Tsugami products Æ One-off cost charged on 2013 re
Slide 32: Strengthen flexibility: Sustainable footprint adaptation
2. Strengthen flexibility Sustainable footprint adaptation 815 FTE Tornos Group 2013 vs 2012 -12% 650 2013 vs 9/2012 -30% 570 Switzerland 2013 vs 2012 -17% other 2013 vs 9/2012 -39% countries • Sales, Application, and Service remained unchanged Switzerland • General Management reduction Æ One-off co
Slide 33: Strengthen flexibility: Exit non-core business
2. Strengthen flexibility Exit non-core business Cyklos • Existing customers are successfully Surface processing system running the system • Automotive sector shows strong interest, but is hesitant to integrate the technology • Development of this venture requires more time and further investments Æ
Slide 34: Growth through innovation: Bridging the gap
3. Growth through innovation Bridging the gap • Presented at EMO Hanover 2011 • Outperforms competition in terms of precision and application variety • Repeat orders • Growing number of projects in three target market segments • Soon reaching machine # 100 • Growth rate +66% in 2013 MultiSwiss 34
Slide 35: Growth through innovation: High-end for high precision
3. Growth through innovation High-end for high precision • Introduced at EMO Hanover 2013 • High precision for medical and dental industries • New design with improved performance • Developed and manufactured 100% in Switzerland EvoDECO 32 35
Slide 36: Growth through innovation: Mid-range for high-precision
3. Growth through innovation Mid-range for high-precision • World premiere at IF Design 5th Tornos Watchdays 2013 • Innovative Swiss-type mid-range product • Tailored to high-precision applications (focus on micromechanics) • Time-to-market 14 months • Several prospects for batch orders • Developed
Slide 37: Growth through innovation: Mid-range micro milling
3. Growth through innovation Mid-range micro milling • Introduced at EMO 2013 • Based on SwissNano platform • Unique manufacturing cell for small and/or volume parts production • Several prospects for batch orders • Further evolutions planned for 2014 • Developed and manufactured 100% in Switzerland
Slide 38: Growth through innovation: Mid-range for world market
3. Growth through innovation Mid-range for world market • Introduced in the USA and in Asia at the end of 2012 • Joint-development CH - TW • Key components from Switzerland • Manufactured at Tornos Taiwan • Product line extension scheduled for 2014 Swiss ST 26 38
Slide 39: Growth through innovation: Entry-level for emerging markets
3. Growth through innovation Entry-level for emerging markets • Introduced in China at the end of 2013 • First product from JV Tornos Xi’an • Well perceived by customers • First orders recorded • Promising prospects for 2014 • Worldwide roll-out scheduled for 2014 CT 20 39
Slide 40: Make service a business: Reliable revenue contribution
4. Make service a business Reliable revenue contribution 2012 2012 2013 2013 22% 27% 78% 73% Machines CS & SP Machines CS & SP • Start of revision/overhauling business in Moutier • New pricing concept implemented • Great potential due to large installed base 40
Slide 41: Enhance operational excellence: SwissNano & Spindle Center
5. Enhance operational excellence SwissNano & Spindle Center • Spindle Center operating since spring 2013 • SwissNano Center operating since summer 2013 • Time-to-market acceleration • Continuous process optimization in Swiss plants with «lean» concept ongoing Lean production Swiss ST 26 spindles 41
Slide 42: Unique solutions for targeted market segments
6. Unique solutions for targeted market segments Watchmaking industry Y- Axis on MultiSwiss Y • Finish the part in one machine Medtech applications B-Axis on EvoDECO 16 • Shorter, easier set-up • Enhanced precision, repeatability and feasibility B 42
Slide 43: Priorities and outlook for 2014
Priorities and outlook for 2014 On course for the future ! Pursue strategic reorientation according to medium- term plan • Ramp up Asian operations • Further process and structure optimization • Capitalize on latest products • Introduction of new products • Achieve a result close to break-even 43
Slide 44: Inquiries
Inquiries Investors relations: Luc Widmer +41 32 494 42 33 investors@tornos.com Media relations: Patrick G. Köppe +41 32 494 45 46 communications@tornos.com For more details on Tornos Group, please refer to www.tornos.com 44
Slide 45: Disclaimer
Disclaimer Tornos Holding Ltd is confirming its best efforts to present accurate and up-to-date information in this document. Tornos Holding Ltd gives no representation or warranty, expressed or implied, as to the accuracy or completeness of the information provided herein and disclaims any liabilit