Burckhardt Compression Holding Ag · SIX:BCHN

Burckhardt Compression — FY2018 Earnings Presentation

47 slides from Burckhardt Compression's earnings presentation, May 28, 2019

  1. Slide 1: Burckhardt Compression Holding AG Results FY 2018

    BURCKHARDT COMPRESSION HOLDING AG RESULTS FY 2018 Winterthur, May 28, 2019

  2. Slide 2: Content

    Content  About Burckhardt Compression  Corporate Overview  Review Systems Division  Review Services Division  Financials  Guidance & Growth Areas  Shareholders  Questions & Answers FY 2018 May 28 2019 Page 2

  3. Slide 3: About Burckhardt Compression

    ABOUT BURCKHARDT COMPRESSION FY 2018 May 28 2019 Page 3

  4. Slide 4: About Burckhardt Compression

    About Burckhardt Compression  Burckhardt Compression is • the worldwide market leader in the field of reciprocating compressor systems • the only manufacturer and service provider that covers a full range of reciprocating compressor technologies and services  Optimized solutions for our customers

  5. Slide 5: About Burckhardt Compression

    About Burckhardt Compression  Founded 1844  Division of Sulzer Corporation 1969 – 2002  Management buyout 2002  Shareholders Public listed company SIX (BCHN) since IPO in 2006 • Approx. 4’000 shareholders • Market cap CHF 0.9 bn (31.3.2019)  Headcount (FTEs worldwide) 2’346 (FY 2017: 2’214)  S

  6. Slide 6: About Burckhardt Compression

    About Burckhardt Compression FY 2018 May 28 2019 Page 6

  7. Slide 7: Market Segments

    Market Segments Upstream Gas Transport Oil & Gas and Storage Petro- Refinery chemical/ Chemical Industry Industrial Gas FY 2018 May 28 2019 Page 7

  8. Slide 8: Reciprocating Compressor (Crosshead Design)

    Reciprocating Compressor (Crosshead Design) FY 2018 May 28 2019 Page 8

  9. Slide 9: Corporate Overview

    CORPORATE OVERVIEW FY 2018 May 28 2019 Page 9

  10. Slide 10: Financial Summary

    Financial Summary Systems Division Services Division Other1) Total in CHF mn 2018 2017 2018 2017 2018 2017 2018 2017 Sales 375.4 384.4 223.9 210.2 599.3 594.6 Cost of goods -344.9 -357.2 -118.7 -112.3 -463.6 -469.5 sold Gross profit 30.5 27.2 105.2 97.9 135.7 125.1 Gross profit as 8.1% 7.1% 47.0% 46

  11. Slide 11: Highlights

    Highlights  High order intake in both divisions  Maintained leading market position in the petrochemical business in China  Positive market development in the US  Further success in all cost reduction projects in the Systems Division  Overall performance Services Division • Further success in O

  12. Slide 12: Set Backs

    Set Backs  Profitability in the Systems Division still under pressure due to: • Substantial additional costs in the LNGM business • Underutilized production capacity mainly in Switzerland (first quarter 2018) and to a smaller extent also in the US  LPGM business at historic low  Arkos recovery sl

  13. Slide 13: Review Systems Division

    REVIEW SYSTEMS DIVISION FY 2018 May 28 2019 Page 13

  14. Slide 14: Systems Division Financials

    Systems Division Financials Change in CHF mn 2018 2017 2017/2018 Order intake 428.0 319.8 +33.8% Sales 375.4 384.4 -2.3% Gross profit 30.5 27.2 +12.1% In % of sales 8.1% 7.1% EBIT -8.7 -9.0 In % of sales -2.3% -2.3% Headcount (FTEs) 1’506 1’425 +5.7% FY 2018 May 28 2019 Page 14

  15. Slide 15: Systems Division Key Figures

    Systems Division Key Figures in CHF mn Order intake Sales 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 09 10 11 12 13 14 15 16 17 18 09 10 11 12 13 14 15 16 17 18 Gross profit EBIT 90 40 80 30 70 60 20 50 10 40 30 0 20 -10 10 0 -20 09 10 11 12 13 14 15 16 17 18 09 10 11 12 1

  16. Slide 16: Systems Division Products and Market Strategy

    Systems Division Products and Market Strategy Keep #1 market position Increase market share Products B-Line M-Line Laby® Laby®-GI Hyper Process Gas Standard High Market Compressors Compressors Compressors Compressors Pressure API 618 Compressors Upstream Oil & Gas (UO&G)     Gas Transport and St

  17. Slide 17: Systems Division Upstream Oil & Gas

    Systems Division Upstream Oil & Gas Market drivers  US political support for domestic gas production & trends  Productivity improvements in Enhanced Oil Recovery  Changing energy mix leads to a globally increasing demand for gas  Only segment that is directly affected by the oil price  Growth o

  18. Slide 18: Systems Division Gas Transport and Storage

    Systems Division Gas Transport and Storage Market drivers  Changing global energy mix towards gas & trends  Importance of natural gas as a clean and inexpensive source of energy  Feedstock for the Petrochemical industry changing to low-cost LPG/LEG (e.g. in the US)  Gas is found in areas where i

  19. Slide 19: Systems Division Refinery

    Systems Division Refinery Market drivers  Older/less efficient technologies trigger new equipment & trends or replacement of existing  Growing demand for clean fuels due to environmental regulations (Euro V & VI)  Flexibility to process different crude oil qualities  Strategic importance of refi

  20. Slide 20: Systems Division Petrochemical / Chemical Industry

    Systems Division Petrochemical / Chemical Industry Market drivers  Annual ~2% demand growth for plastics based on & trends increased world population & middle class growth in India and China  Shift of production to countries with low feed stock price (e.g. US)  Older technologies/less efficient p

  21. Slide 21: Systems Division Industrial Gases

    Systems Division Industrial Gases Market drivers  World population growth leads to increasing demand & trends for industrial gases (e.g. medical, food & beverage, fertilizers (CO2), inert gas)  Hydrogen to be used as fuel (busses, cars, trains, fuel cell power plants)  Pressure to reduce CO2 lead

  22. Slide 22: Hydrogen for Fuel Cells requires Oil-Free High-Pressure Solutions

    Hydrogen for Fuel Cells requires Oil-Free High-Pressure Solutions  Oil-free, high-pressure compression to meet highest hydrogen purity for fuel cell operation • Process gas compressors – Compressors for pressures up to 450 bar – Low operating cost due to extensive experience with dry running materi

  23. Slide 23: Review Services Division

    REVIEW SERVICES DIVISION FY 2018 May 28 2019 Page 23

  24. Slide 24: Services Division Financials

    Services Division Financials Change in CHF mn 2018 2017 2017/2018 Order intake 230.7 205.4 +12.3% Sales 223.9 210.2 +6.5% Gross profit 105.2 97.9 +7.5% In % of sales 47.0% 46.6% EBIT 58.2 54.4 +7.0% In % of sales 26.0% 25.9% Headcount (FTEs) 830 778 +6.7% FY 2018 May 28 2019 Page 24

  25. Slide 25: Services Division Key Figures

    Services Division Key Figures in CHF mn Order intake Sales 250 250 200 200 150 150 100 100 50 50 0 0 09 10 11 12 13 14 15 16 17 18 09 10 11 12 13 14 15 16 17 18 Gross profit EBIT 120 70 100 60 80 50 40 60 30 40 20 20 10 0 0 09 10 11 12 13 14 15 16 17 18 09 10 11 12 13 14 15 16 17 18 FY 2018 May 28 2

  26. Slide 26: Services Division Business Overview

    Services Division Business Overview Market drivers  High worldwide population of reciprocating & trends compressors (~72’000 units with a market size of about CHF 2.7 bn)  Increasing BC & SYCC compressor population  Increasing mean time between overhaul (MTBO) and reduction of operating costs  A

  27. Slide 27: Financials

    FINANCIALS FY 2018 May 28 2019 Page 27

  28. Slide 28: Order Intake

    Order Intake in CHF mn  Increase of order intake by 25.4% to 700 CHF 658.7 mn • +25.6% excluding currency 600 translation effects  Systems Division: +33.8% to CHF 500 428.0 mn • Orders mainly from Petrochemical, 400 Gas Transport & Storage and Refinery 300  Services Division: +12.3% to CHF 200 23

  29. Slide 29: Sales

    Sales  Sales increase overall by 0.8% to in CHF mn 700 CHF 599.3 mn • +0.9% excluding currency 600 translation effects  Systems Division: -2.3% to CHF 500 375.4 mn • High wave of invoicing towards the 400 end of the fiscal year  Services Division: +6.5% to CHF 300 223.9 mn • Growth in all areas i

  30. Slide 30: Sales and Gross Margin by Division

    Sales and Gross Margin by Division In CHF mn FY 2016 FY2017 FY2018 Systems GSP 367.2 384.4 375.4 Division GP 36.5 9.9% 27.2 7.1% 30.5 8.1% Services GSP 190.5 210.2 223.9 Division GP 94.0 49.4% 97.9 46.6% 105.2 47.0% GSP 557.7 594.6 599.3 Total GP 130.5 23.4% 125.1 21.0% 135.7 22.6%  Gross margin in

  31. Slide 31: SGA and EBIT

    SGA and EBIT  SGA amounting to 14.4% of sales in CHF mn EBIT ROS (prior year: 13.5%) 80 25% • Total SGA CHF 86.5 mn, prior year: 21.6% 70 20.0% CHF 80.5 mn 19.7% 20% – Additional costs to support growth of Services 60 business 15.8% – One off consulting fees 50 17.3% 15.8% 15.0% 15%  R&D expenses

  32. Slide 32: EBIT Development FY 2017 to FY 2018

    EBIT Development FY 2017 to FY 2018 in CHF mn FY 2018 May 28 2019 Page 32

  33. Slide 33: Net Income

    Net Income  Net income CHF 3.2 mn or 10.9% in CHF mn above prior year 70 25% • CHF -1.2 mn share of results Arkos Field Services (40% 60 ownership) 20% • Financial expense CHF -2.2 mn 50 16.3% (prior year CHF -1.9 mn) 15.4% 15.0% 15% 40  Tax rate of 21.6% (prior year 12.7% 15% 11.4% 23.5%) 30 12.0

  34. Slide 34: Earnings and Dividend per Share

    Earnings and Dividend per Share in CHF Earnings per Share in CHF Dividend per Share 18.00 12.00 16.68 16.93 16.42 16.34 15.87 16.00 15.22 10.0010.00 10.00 10.00 13.56 9.00 14.00 12.00 8.00 7.00 7.00 10.00 6.00 6.00 9.12 6.00 8.51 8.15 5.00 5.00 8.00 6.00 4.00 4.00 2.00 2.00 0.00 0.00 09 10 11 12 13

  35. Slide 35: Balance Sheet Positions

    Balance Sheet Positions  Increase of balance sheet total by FY FY FY In CHF mn 2016 2017 2018 6.4% Property, Plant & 200.4 193.2 191.2  Solid equity ratio of 40.7%, slightly Equipment below to prior year (42.0%) Inventories 250.2 210.7 222.0 - Thereof WIP 171.4 133.8 139.6  Balance between advanc

  36. Slide 36: Cash Flow and Net Financial Position

    Cash Flow and Net Financial Position  Improved net financial position FY FY FY In CHF mn 2016 2017 2018 CHF +12.7 mn 125.3 74.9 75.1 • Slightly lower cash flow from Cash Initial Balance operating activities Cash Flow from 46.0 44.4 41.8 Operating Activities • Dividend payment of CHF Cash Flow from

  37. Slide 37: Shenyang Yuanda Compressor Co. (SYCC) Results FY 2018

    Shenyang Yuanda Compressor Co. (SYCC) Results FY 2018  Sales above expectations despite FY FY continuous challenging market in mn CHF 2017 2018 environment in China Sales 110.8 127.2  Strong recovery in EBIT Gross Profit 7.9 1) 21.6 2) • Fast reaction in FY 2018 to the sharp material price increas

  38. Slide 38: Arkos Field Service Results FY 2018

    Arkos Field Service Results FY 2018  Total net income CHF -3.0 mn (including CHF 3.4 mn depreciation and amortization) thereof BC share of results of associates (40%): CHF -1.2 mn (previous year: CHF -1.9 mn)  Slow recovery of US upstream market (Arkos’ original business) FY 2018 May 28 2019 Page

  39. Slide 39: Capital Investments (Additions to fixed Assets)

    Capital Investments (Additions to fixed Assets) 90 47 35 30 25 20 1) 3) 15 2) 10 4) 4) 5 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 E19 1) Including purchase of real estate in the amount of CHF 77.0 mn 2) Including CHF 5.8 mn investments in real estate (construction of a new building of Pro

  40. Slide 40: Guidance & Growth Areas

    GUIDANCE & GROWTH AREAS FY 2018 May 28 2019 Page 40

  41. Slide 41: Guidance Financial Targets

    Guidance Financial Targets Guidance FY 2019 Order Intake FY 2019 ≥ FY 2018 Sales CHF 600 mn – CHF 640 mn FY 2019 slightly above FY 2018 EBIT Margin 2nd semester FY 2019 higher than 1st semester FY 2019 Dividend Policy Payout ratio between 50 – 70% of net profit FY 2018 May 28 2019 Page 41

  42. Slide 42: Growth Areas

    Growth Areas Organic growth Systems Division:  Capitalize on recent geographical expansions and acquisitions  Refinery business Services Division:  Grow in all business areas  Further selective geographical expansion Acquisitions Services Division:  Add-on acquisitions (focus OBC business) FY 2

  43. Slide 43: Shareholders

    SHAREHOLDERS FY 2018 May 28 2019 Page 43

  44. Slide 44: Burckhardt Compression Shareholder Structure

    Burckhardt Compression Shareholder Structure 20 Institutional MBO Shareholder Group Shareholders 0.3% - 2.9% 15.30% 12.40% NN Group N.V. 6.93% JO Hambro Capital Management Limited 6.13% 5.03% Atlantic Value General Partner Ltd. (Mondrian) 3.49% 41.67% 3.03% Ameriprise Financial Inc. 3.01% 3.01% Cred

  45. Slide 45: Performance of BCHN Share Compared to the SPI Index

    Performance of BCHN Share Compared to the SPI Index BCHN 271.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 26.6.06 31.3.07 31.3.08 31.3.09 31.3.10 31.3.11 31.3.12 31.3.13 31.3.14 31.3.15 31.3.16 31.3.17 31.3.18 31.3.19 85.00 199.50 317.00 106.00 208.00 244.20 247.50 355.30

  46. Slide 46: Seven Good Reasons to Invest in Burckhardt Compression

    Seven Good Reasons to Invest in Burckhardt Compression Global presence and Divisional setup: closeness to the customer • Economic stability in cyclical market conditions • Agility on the respective markets Attractive markets with predictable long-term growth potential One strong brand Broad experien

  47. Slide 47: Disclaimer

    Disclaimer This document may contain forward-looking statements including, but not limited to, projections of financial developments, market activity, or future performance of products. These forward-looking statements are subject to change based on known or unknown risks and various other factors t

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