Kongsberg Automotive Asa · OSL:KOA
Kongsberg Automotive Asa — Investor Day (November 2012)
76 slides from Kongsberg Automotive Asa's investor day presentation, Nov 6, 2012
Slide 1: Table of contents - Capital Markets Day Presentations
Table of contents - Capital Markets Day Presentations ▸ KA strategic direction (slides 2 - 23) – Hans Peter Havdal, CEO ▸ Power Products & A&C (24 - 42) – EVP Jim Ryan ▸ Fluid Transfer business (43 - 53) – EVP Jonathan Day ▸ Finances and financial strategy (54 - 70) – CFO Trond Stabekk ▸ Summary & c
Slide 2: Kongsberg Automotive – today and tomorrow
Hans Peter Havdal Kongsberg Automotive – today and tomorrow 2
Slide 3: Global footprint, portfolio and capabilities
Global footprint, portfolio and capabilities ▸ Supplier of components and systems for passenger cars, trucks, buses and off-highway vehicles ▸ Product portfolio includes products and Automotive 56 % Sales Commercial 44 % by segment systems within vehicle driveline, interior, suspension and fluid han
Slide 4: Current Business Area structure
Current Business Area structure DRIVELINE INTERIOR FLUID TRANSFER ACTUATION & CHASSIS POWER PRODUCTS AT Gearshift Seat Climate Engine fluid Clutch Actuation Pedals MT Gearshift Seat Support handling Systems Electronic displays Shift Towers Head Rests Air suspension Gearshift Systems Heavy Duty Light
Slide 5: Acquisitive growth, financial crisis, organic recovery
Acquisitive growth, financial crisis, organic recovery Entering the Establishing top three positions in attractive segments Consolidation and recovery automotive market GMS (Global) 1.100 1.000 900 Raufoss United 800 (NO) 700 600 EUR Million Milan Jung-An (Korea) 500 (US) Ctex (UK) 400 EuroAutotech
Slide 6: The KA journey - From a small Scandinavian supplier to a global player
The KA journey - From a small Scandinavian supplier to a global player ▸ In the early 90’s KA’s footprint and portfolio offered limited growth opportunities ▸ Through acquisitions and organic growth KA expanded product portfolio and global reach ▸ The GMS acquisition moved us into a true global play
Slide 7: Current strategic position assessment
Current strategic position assessment STRATEGIC TARGET CURRENT STATUS Close to 50/50 split Balanced end-market between Automotive and Target achieved Commercial Last 10 years: above vehicle production growth Company growth above industry Target achieved 36% US, 52% EU and 12% Asia – a future growth
Slide 8: Current strategic position assessment - Where do we go from here?
Current strategic position assessment ▸ Where do we go from here? 8
Slide 9: Our positions in a changing competitive environment
Our positions in a changing competitive environment AUTOMOTIVE COMMERCIAL VEHICLES Supplier Just bordering on the global top 100 supplier list Among the top 10-30 suppliers to the key ranking Consolidation trend – the big get bigger customers 9
Slide 10: Our positions in a changing competitive environment
Our positions in a changing competitive environment Company Revenue 2010 Revenue 2009 ▸ Consolidation of big OEM Robert Bosh GmbH $34.6B $25.6B groups triggers consolidation Denso Corp. $32.8B $28.7B on the supplier side Continental AG Aisin Seiki Co. $24.8B $24.6B $18.8B $20.5B Magna International
Slide 11: Our positions in a changing competitive environment
Our positions in a changing competitive environment AUTOMOTIVE COMMERCIAL VEHICLES Supplier Just bordering on the global top 100 supplier list Among the top 10-30 suppliers to the key ranking Consolidation trend – the big get bigger customers Volume versus High volume market but small sales per unit
Slide 12: Our positions in a changing competitive environment
Our positions in a changing competitive environment AUTOMOTIVE COMMERCIAL VEHICLES Allocate resources to continue strong Priorities Profitability before growth profitable growth pattern Further develop niche leadership Optimize organizational structure to Direction positions based on technology and
Slide 13: The way forward
The way forward ▸ Build on our strengths ▸ Continue to grow with our key customers ▸ Selective business within the Automotive segment 13
Slide 14: Shifting the balance towards higher-value businesses
Current situation Shifting the balance towards higher-value businesses AUTOMOTIVE COMMERCIAL VEHICLES Share of Revenues EUR EUR 442 8.5% 356 13.5% CAGR 2010-2012 CAGR 2010-2012 Million Million Share of Capital Employed EUR EUR 255 4.1% 256 19% ROCE ROCE Million Million Year to date 2012: Financials
Slide 15: Focus on high technology businesses
Focus on high technology businesses AUTOMOTIVE High-end shifters Seat comfort Key Global Brands 15
Slide 16: Profit before growth
AUTOMOTIVE Profit before growth Global production forecast Million units ▸ Build on leading positions in 120,0 Seat Comfort segments ▸ Continue to develop shifter 100,0 business for Automatic transmissions 80,0 ▸ Continue cost optimization and 60,0 operational efficiency programs ▸ Seeking the right
Slide 17: Focus on global leading Commercial Vehicle OEMs
Focus on global leading Commercial Vehicle OEMs COMMERCIAL Driver interface products Key Global Brands 17
Slide 18: Supporting profitable growth trend
COMMERCIAL Supporting profitable growth trend Global production forecast ▸ Prepare for geographic Thousand units expansion from strong 4000,0 European base 3500,0 ▸ Further strengthen innovation 3000,0 to sustain technology 2500,0 leadership 2000,0 ▸ Evaluate strategic alternatives 1500,0 for acquis
Slide 19: Creating a new business structure
Creating a new business structure DRIVELINE INTERIOR FLUID TRANSFER ACTUATION & CHASSIS POWER PRODUCTS LIGHT DUTY CABLES Revenue Light Duty Cables Tier 1 OPE 50% 40% EUR 100 million Automotive 10% 19
Slide 20: Creating a new business structure
Creating a new business structure DRIVELINE INTERIOR FLUID TRANSFER ACTUATION & CHASSIS POWER PRODUCTS LIGHT DUTY CABLES DRIVER CONTROL SYSTEMS On-highway / off-highway 20
Slide 21: Leveraging combined resources
Leveraging combined resources NORWAY Kongsberg (R&D) Hvittingfoss Rollag SWEDEN Ljungsarp UK Mullsö Basildon CANADA Grand Mere. QU GERMANY KOREA Heiligenhaus Yangsan CHINA USA Shanghai Williis. TX INDIA Wuxi (Driveline) Pune BRAZIL Jundiai Power Products Actuation & Chassis 21
Slide 22: Creating a new business structure: 4 Business Areas
Creating a new business structure DRIVELINE INTERIOR FLUID TRANSFER ACTUATION & CHASSIS POWER PRODUCTS LIGHT DUTY CABLES DRIVER CONTROL SYSTEMS New structure: 4 Business Areas DRIVELINE INTERIOR FLUID TRANSFER DRIVER CONTROL SYSTEMS End-market: AUTOMOTIVE End-market: COMMERCIAL VEHICLES 22
Slide 23: Summary – Changes to the current strategy
Summary – Changes to the current strategy ▸ Shifting efforts towards higher value business ▸ Combining A&C and Power Products to form a strong growth platform ▸ Expand Driver Control Systems portfolio on a global basis ▸ Profitability before growth in Automotive 23
Slide 24: Building a platform for growth
Building a platform for growth Combining Actuation & Chassis and PPS business areas 24
Slide 25: Strengthening Commercial Vehicles Focus
Strengthening Commercial Vehicles Focus ▸ Accelerate growth within commercial vehicles (CV), to create a more balanced and profitable business ▸ Merge A&C and PPS to strengthen growth platform within Commercial Vehicles ▸ Create a unique and comprehensive offering for commercial vehicle Man to Machi
Slide 26: Integration to Driver Control Systems
Integration to Driver Control Systems 2011 Trade Sales: €999 million KONGSBERG AUTOMOTIVE 2011 EBITDA: €82 million 10.932 Employees INTERIOR* DRIVELINE* DRIVER CONTROL SYSTEMS FLUID TRANSFER ACTUATION & POWER PRODUCTS* CHASSIS REV EUR 298 million EUR 317 million EUR 260 million EUR 171 million EMPL
Slide 27: Organizational structure – A geographical focus to enhance growth
Organizational structure – A geographical focus to enhance growth DRIVER CONTROL SYSTEMS James G. Ryan GEOGRAPHICAL FOCUS REGION EUROPE & SOUTH AMERICA REGION NORTH AMERICA REGION ASIA Trond Fiskum James G. Ryan Bent Wessel-Aas ▸ Regional heads to have full P&L and business responsibility ▸ Support
Slide 28: Products and key customers: Actuation & Chassis
ACTUATION & CHASSIS Products and key customers Driveline control systems and Main product categories chassis related products to CV Gearshift Systems Vehicle dynamics Clutch Actuation Steering columns 28
Slide 29: Products and key customers: Power Products
POWER PRODUCTS Products and key customers Products for off-highway Main product categories vehicles and recreational products Controls / Shifters Controls & Cables Pedals Electroncis & Displays 29
Slide 30: Combined value proposition: Taking the driver’s position
Combined value proposition: Taking the driver’s position 30
Slide 31: Combined value proposition: Taking the driver’s position
Combined value Proposition: Taking the driver’s position A portfolio of “Man To Machine Interface products” 31
Slide 32: Leveraging a combined Sales and Marketing network
Leveraging a combined Sales and Marketing network… NORWAY Kongsberg Hvittingfoss Rollag SWEDEN Ljungsarp UK Mullsö Basildon CANADA Grand Mere, QU GERMANY KOREA Nbr. of employees Heiligenhaus Yangsan CHINA USA Shanghai Williis, TX INDIA Wuxi Pune BRAZIL Jundiai Power Products Actuation & Chassis 32
Slide 33: …and a global R&D network
…and a global R&D network NORWAY Kongsberg Hvittingfoss Rollag SWEDEN Ljungsarp UK Mullsö Basildon CANADA Grand Mere, QU GERMANY KOREA Nbr. of employees Heiligenhaus Yangsan CHINA USA Shanghai Williis, TX INDIA Wuxi Pune BRAZIL Jundiai Power Products Actuation & Chassis 33
Slide 34: Strong A&C position with the leading CV OEMs
Strong A&C position with the leading CV OEMs Global truck sales >6t (2005-2011 average) Units (thousand) Daimler AG A&C Revenue €10M Dongfeng A&C Revenue: €5M FAW Volvo Global Trucks A&C Revenue: €36M N/K VW Group A&C Revenue: €40M Tata Paccar A&C Revenue: €10M CNHTC Navistar A&C Revenue: €0,2M Ford
Slide 35: Strong PPS position with the leading Off-highway OEMs
Strong PPS position with the leading Off-highway OEMs Off-highway end-markets Polaris Recreational Products Yamaha PPS Revenue: €0,7M BRP PPS Revenue: €32,2M Honda PPS Revenue: €3,2M Suzuki Komatsu PPS Revenue: €0,11M Construction Caterpillar PPS Revenue: €3,3M Volvo Group PPS Revenue: €4,9M Doosan
Slide 36: Collaboration successes, and future potential
Collaboration successes, and future potential ▸ PPS and A&C share similar markets, have untapped synergies that will bring shareholder value ▸ Significant cross-over and benefits realized from collaboration – Steering Column Sales – A&C entering the North American market with Paccar – Chinese Pedal
Slide 37: Growth potential examples
Growth potential examples On Highway Pedal BRIC ▸ New composite pedal design for On-Hwy ▸ Leverage the existing local resources with aligned applications objectives ▸ Localized sensor in LCC ▸ Growth using the existing portfolio for both PPS ▸ Leverage existing technology and A&C ▸ Start targeting t
Slide 38: Strong customer positioning
Strong customer positioning ▸ KA has an excellent position with the leading CV brands LEADING BRANDS REVENUE PER AVERAGE VEHICLE €320 €380 €250 €120 €120 Shift fork Cabin ARB Cabin ARB HGS HGS PRODUCTS EXAMPLES V-stay Servo Clutch servo CGS CGS Clutch servo Master Master Clutch Servo Clutch Servo I-
Slide 39: Examples of combined growth potential
Examples of combined growth potential ▸ Average ▸ Average revenue per revenue per truck: vehicle: €140 €50 ▸ Addressable ▸ Addressable on-highway off-highway market: market: 1.9 million 1.7 million trucks vehicles Potential combined average revenue per vehicle: 210€ 39
Slide 40: Leverage core competences
Leverage core competences ACTUATION & CHASSIS POWER PRODUCTS ▸ Clutch and gear technology ▸ Mechatronic systems ▸ Material technology ▸ Electronics Hardware & Software ▸ Lean product development ▸ System integration 40
Slide 41: Combined Value Proposition: Taking the driver’s position
Combined Value Proposition: Taking the driver’s position Innovations to the “Man To Machine Interface” 41
Slide 42: Summary
Summary ▸ Opportunities to gain growth through closer collaboration ▸ Leveraging existing resources for better utilization of current infrastructure will yield greater profit potential ▸ Closer collaboration will increase the probability of winning new businesses ▸ Technology synergies enhance the p
Slide 43: Fluid Transfer Systems, Jonathan Day
Capital Markets Day, November 6 Fluid Transfer Systems, Jonathan Day 43
Slide 44: Fluid Transfer – Supporting KA’s direction ahead
Fluid Transfer – Supporting KA’s direction ahead ▸ Commercial Vehicles focus – Well balanced product and customer portfolio – 75 % of BA revenues ▸ Delivering growth and margins – 28.5% revenue growth in 2011 vs. 2010 – 14% EBITDA (Q312) ▸ Well aligned with KA’s direction 44
Slide 45: Products and key customers: Fluid Transfer
FLUID TRANSFER Products and key customers Fluid handling systems for light Main product categories duty and commercial vehicles Fluid Handling Systems Air Couplings 45
Slide 46: Global footprint Fluid Transfer Systems
Global footprint Fluid Transfer Systems NORWAY Raufoss UK Normanton SLOVAKIA USA Connecticut Vrable Sales (EUR Million) USA HOLLAND 180,0 Ohio Enchede 2009 2010 2011 YTD 2012 SPAIN 160,0 Epila CHINA USA Wuxi 140,0 MEXICO South Carolina INDIA Nuevo Laredo Pune 120,0 100,0 80,0 60,0 40,0 20,0 Producti
Slide 47: Markets and Products
NS KONGSBERG AUTOMOTIVE MARKETS AND PRODUCTS #
Slide 48: Fluid Transfer sales YTD-2012
Fluid Transfer sales YTD-2012 Sales by market segment Sales by region EUR Million EUR Million Asia and South America 2+3% North America Automotive 33% 25% EUR EUR 133 133 Million YTD Million YTD Commercial Europe 75% 62% 48
Slide 49: FTS – The Fluid Handling Specialist
FTS – The Fluid Handling Specialist Commercial Vehicle Fluid Components Automotive Fluid Components Powertrain: Diesel Chassis & Particulate Filter / Low Pressure Fuel Pipes Powertrain Fuel SCR lines Alternative Fuel Systems Lines Chassis: CNG Fuel ABC Air Assemblies Couplings Chassis: Crankcase Ven
Slide 50: Technology
TECHNOLOGY 50
Slide 51: Technology trends providing opportunities for FTS
Technology trends providing opportunities for FTS Tighter emission requirements driving new technologies in engine designs Increased Gasoline Direct Cooled EGR system, after Bio fuels – different blends & Downsizing engine Injection (GDI) technology treatment sources Extra equipment to reduce emissi
Slide 52: Customers, products and innovations
Customers, products and innovations Commercial Vehicle Fluid Components Automotive Fluid Components BRANDS PRODUCTS Air, Oil & Coolant lines Oil & Coolant lines ABC Couplings Air Suspension Air Brake Couplings Fuel Lines KArtridge Fuel Lines Air Brake Systems Manifolds Selective Power Train Tube Con
Slide 53: Summary: Supporting KAs future direction
Summary: Supporting KAs future direction ▸ CV focused business, high-end Automotive niche – DAF Paccar fastest growing customer in Fluids – Volvo significant in Commercial Vehicle sector – Premium brand Jaguar Land Rover is growth area in Automotive ▸ Established global footprint ▸ Technology trends
Slide 54: Financials & Financial Strategy
Trond Stabekk FINANCIALS & FINANCIAL STRATEGY 54
Slide 55: Status revenue and EBITDA per segment (LTM)
Status revenue and EBITDA per segment (LTM) Revenues EBITDA and EBITDA Margin EUR Million EUR Million and percent LTM = Last 12 months 55
Slide 56: Revenue and EBITDA composition in new structure
Revenue and EBITDA composition in new structure Based on last 12 month figures AUTOMOTIVE COMMERCIAL VEHICLES DRIVELINE INTERIOR FLUID TRANSFER DRIVER CONTROL SYSTEMS REVENUE EBITDA REVENUE EBITDA REVENUE EBITDA REVENUE EBITDA 56
Slide 57: Ambitions & Targets
y\S KONGSBERG AUTOMOTIVE
Slide 58: Our 3-year ambitions
Our 3-year ambitions Automotive Commercial Vehicle Revenue Profit before growth CAGR> 8% Margin Improve Sustain Group Revenue Selective growth focus Margin Gradually improving margin ROCE > 15% by 2015 NIBD/EBITDA < 2x by 2015 ▸ Our ambition is to grow earnings, sharply improve our return on capital
Slide 59: Selective growth focus
Selective growth focus ▸ Market expected to grow 6% - 8% annually from 2012 to 2015 ▸ Focusing on selected segments playing to KOA’s strengths ▸ Commercial Vehicles – Targeting average revenue growth above 8% ▸ Automotive – Focus on profit before growth – Selective approach to products lines and cus
Slide 60: Improving operational margins
Improving operational margins EBITDA ▸ Structural improvement EUR Million – Margin support from change in revenue mix; higher growth in high-margin segments ▸ Commercial Vehicles – Continuous improvement focus – Utilizing footprint by combining PPS and A&C EBITDA margin – TARGET: SUSTAIN MARGINS Per
Slide 61: Revenues and EBITDA margin targets
Revenues and EBITDA margin targets Revenues, LTM EBITDA margin, LTM EUR Million Percent Profit first CAGR >8% IMPROVE SUSTAIN 61
Slide 62: Targeting >15% ROCE by 2015
Targeting >15% ROCE by 2015 ▸ Multiple levers Return on Capital Employed (ROCE) Percent – Revenue growth in high-margin Target: segments 15% 15% – Improved margins in currently low-yielding segments 10% – Higher capital efficiency, i.e. maintaining capital expenditure 05% below D&A 00% Implies signi
Slide 63: Seeking to reduce financial leverage
Seeking to reduce financial leverage NIBD/EBITDA ▸ Targeting Net Debt/EBITDA Times ratio below 2x by 2015 ▸ Consistent with our targets for ROCE and capital intensity 63
Slide 64: Enterprise Value dynamics
Enterprise Value dynamics Current Enterprise Value EUR Million ▸ Current Enterprise value based on LTM EBITDA implies a multiple of 5x ▸ Seeking to unlock shareholder value potential both through 1. Improving EBITDA growth 2. Reduced Net Debt ▸ Net debt currently accounts for 84 % of EV, offering si
Slide 65: Funding considerations
FUNDING CONSIDERATIONS 65
Slide 66: Funding objectives
Funding objectives ▸ Sound balance sheet structure – Strengthen the equity ratio – Reduce the debt ▸ Sufficient liquidity – Increase cash flow ▸ Optimized capital structure – Increase financial flexibility 66
Slide 67: Strengthening the balance sheet
Strengthening the balance sheet Balance Sheets ▸ Equity to increase with EUR Million improving results Equity ratio currently 5%-points below the 30% target ▸ Stable asset base ▸ Retaining solid coverage for long-term assets ▸ Net Debt/EBITDA target <2x implies increased headroom 67
Slide 68: Liquidity and financial flexibility
Liquidity and financial flexibility Credit utilization ▸ Current Free Cash Flow is EUR Million insufficient – Debt amortization and interest payments of ~EUR 60 million annually ▸ Free Cash Flow expected to improve – Revenue growth and margin improvement – Continued cautious investment spending – Wo
Slide 69: Further optimizing the capital structure
Further optimizing the capital structure Maturity profile for EUR 385 million loans ▸ Secured 5-year bank loan at EUR Million favourable terms earlier in 2012 ▸ Seeking to further optimize the capital structure ▸ May consider opportunities in the corporate bond market – Focus on enhancing flexibilit
Slide 70: Summary
Summary ▸ Setting new 3-year targets ▸ Selective growth approach – Focus on margin improvement ▸ Enhancing financial flexibility – Seeking sharp reduction in debt to earnings ratios ▸ Targeting gradual improvement to 15% ROCE by 2015 ▸ Delivering on targets to unlock shareholder values 70
Slide 71: Summary and Conclusion
Hans Peter Havdal SUMMARY AND CONCLUSION 71
Slide 72: Summary: Our vision “Enhancing the driving experience”
Summary Our vision “Enhancing the driving experience” ▸ focusing on - driver control systems - comfort systems - optimized fluid handling 72
Slide 73: Summary
Summary ▸ Shifting efforts towards higher value business ▸ Profit before Growth in the Automotive segment ▸ Growth above market average in the Commercial segment Our 3-years Group ambition Revenue Selective growth focus Margin Gradually improving margin ROCE > 15% by 2015 NIBD/EBITDA < 2x by 2015 73
Slide 74: Summary: Our values
Summary Our values Passionate Accountable Prepared 74
Slide 75: Questions & Answers
y\S KONGSBERG AUTOMOTIVE
Slide 76: Thank you for your attention
THANK YOU FOR YOUR ATTENTION 76