Burckhardt Compression Holding Ag · SIX:BCHN

Burckhardt Compression — FY2017 Earnings Presentation

56 slides from Burckhardt Compression's earnings presentation, May 29, 2018

  1. Slide 1: Burckhardt Compression Holding AG Results FY 2017

    BURCKHARDT COMPRESSION HOLDING AG RESULTS FY 2017 Winterthur, May 29, 2018

  2. Slide 2: Content

    Content  About Burckhardt Compression M. Pawlicek  Corporate Overview M. Pawlicek  Review Systems Division M. Pawlicek  Review Services Division M. Pawlicek  Financials R. Braendli  Outlook, Guidance & Growth Areas M. Pawlicek  Shareholders R. Braendli  Questions & Answers All FY 2017 May 29

  3. Slide 3: About Burckhardt Compression

    ABOUT BURCKHARDT COMPRESSION FY 2017 May 29, 2018 Page 3

  4. Slide 4: About Burckhardt Compression

    About Burckhardt Compression Burckhardt Compression is the worldwide market leader for reciprocating compressor systems and the only manufacturer and service provider that covers a full range of reciprocating compressor technologies and services. Its customized compressor systems are used in the ups

  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  > 4’000 Shareholders  Market cap CHF 1.0 bn (31.3.2018)  Headcount (FTEs worldwide) 2’214 (FY 2016: 2’107)  Sales F

  6. Slide 6: About Burckhardt Compression

    About Burckhardt Compression FY 2017 May 29, 2018 Page 6

  7. Slide 7: Market Segments

    Market Segments Upstream Gas Transport Oil & Gas and Storage Petro- Refinery chemical/ Chemical Industry Industrial Gas FY 2017 May 29, 2018 Page 7

  8. Slide 8: Reciprocating Compressor (Crosshead Design)

    Reciprocating Compressor (Crosshead Design) FY 2017 May 29, 2018 Page 8

  9. Slide 9: Corporate Overview

    CORPORATE OVERVIEW FY 2017 May 29, 2018 Page 9

  10. Slide 10: Financial Summary

    Financial Summary All Financials FY16/FY17 in accordance with Swiss GAAP FER Systems Division Services Division Other1) Total in CHF mn 2017 2016 2017 2016 2017 2016 2017 2016 Sales 384.4 367.2 210.2 190.5 594.6 557.7 Cost of goods -357.2 -330.8 -112.3 -96.5 -469.5 -427.2 sold Gross profit 27.2 36.5

  11. Slide 11: Highlights

    Highlights  Launch of the new Mid-Range Plan for FY 2018-2022  Opening of the Global Support Center in Pune, India  Acquisition of service provider CSM in Edmonton, Canada  New service sales office in Argentina  Collaboration agreement signed with Kompressorteknik ML AB, Sweden  First orders f

  12. Slide 12: Set Backs

    Set Backs  Further reduction of profitability in the Systems Division due to:  Additional cost for improvements in dual- fuel applications  Sharp rise in material prices, especially in China  Under-utilized production capacity  Systems business is still a buyers’ market  Slower than expected r

  13. Slide 13: Review Systems Division

    REVIEW SYSTEMS DIVISION FY 2017 May 29, 2018 Page 13

  14. Slide 14: Systems Division Financials

    Systems Division Financials Change in CHF mn 2017 2016 2016/2017 Order intake 319.8 280.6 +14.0% Sales 384.4 367.2 +4.7% Gross profit 27.2 36.5 -25.5% In % of sales 7.1% 9.9% EBIT -9.0 -1.5 In % of sales -2.3% -0.4% Headcount (FTEs) 1’425 1’446 -1.6% FY 2017 May 29, 2018 Page 14

  15. Slide 15: Systems Division Key Figures

    Systems Division Key Figures in CHF mn Order intake Sales 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17 Gross profit EBIT 100 40 80 30 20 60 10 40 0 20 -10 0 -20 08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 1

  16. Slide 16: Systems Division Global Footprint and Capacity Load

    Systems Division Global Footprint and Capacity Load Burckhardt Switzerland: Low work load; short-time work in some areas since Compression March 2017; Global support functions for all production sites and Manufacturing / Assembly Locations globalization projects (procurement, engineering, R&D) China

  17. Slide 17: Systems Division Profitability Improvement Program

    Systems Division Profitability Improvement Program  Defend Short-Term Results (30 separate initiatives) – More aggressive upselling, adjusted to the competitive market environment – Adapt resource level to the business volume – Focus on project execution and stop non-urgent spending – Minimum margi

  18. Slide 18: Our Products and Markets

    Our Products and Markets B-Line Products M-Line Laby® Laby®-GI Process Gas Hyper Standard High Components Compressors Compressors Compressors Compressors Pressure and Service Markets API 618 Compressors Upstream      oil & gas Gas transport &      storage Refinery   Petrochemical / Chemi

  19. Slide 19: 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  Oil price development  Growth of middle-class in emerging countri

  20. Slide 20: 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

  21. Slide 21: Laby-GI – Fuel Gas Supply System (FGSS)

    Laby®-GI – Fuel Gas Supply System (FGSS) 5,200 4,400 13,000 11,200 7,000 6,400 Compressor 5LP250-5B_1 Compressor 6LP190-5C_1 Total weight 160 tons Total weight 112 tons Dimensions 13.0x7.0x5.2m Dimensions 11.2x6.4x4.4 m FY 2017 May 29, 2018 Page 21

  22. Slide 22: LNG Tanker Creole Spirit

    LNG Tanker «Creole Spirit» FY 2017 May 29, 2018 Page 22

  23. Slide 23: 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

  24. Slide 24: 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

  25. Slide 25: 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

  26. Slide 26: Secondary Compressor Type K12

    Secondary Compressor Type K12 Worlds Largest Piston-Compressor FY 2017 May 29, 2018 Page 26

  27. Slide 27: Secondary Compressor Type K12

    Secondary Compressor Type K12 Worlds Largest Piston-Compressor  Worlds largest LDPE line  PE production 400'000 tons per year  Possibility to produce 30 different products  High pressure design for tubular reactor >3'000 bar FY 2017 May 29, 2018 Page 27

  28. Slide 28: Review Services Division

    REVIEW SERVICES DIVISION FY 2017 May 29, 2018 Page 28

  29. Slide 29: Services Division Financials

    Services Division Financials Change in CHF mn 2017 2016 2016/2017 Order intake 205.4 194.3 +5.7% Sales 210.2 190.5 +10.3% Gross profit 97.9 94.0 +4.1% In % of sales 46.6% 49.4% EBIT 54.4 53.0 +2.5% In % of sales 25.9% 27.8% Headcount (FTEs) 778 649 +19.9% FY 2017 May 29, 2018 Page 29

  30. Slide 30: Services Division Key Figures

    Services Division Key Figures in CHF mn Order intake Sales 200 200 150 150 100 100 50 50 0 0 08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17 Gross profit EBIT 120 60 100 50 80 40 60 30 40 20 20 10 0 0 08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17 FY 2017 May 29, 2018 Page 3

  31. Slide 31: 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

  32. Slide 32: Financials

    FINANCIALS FY 2017 May 29, 2018 Page 32

  33. Slide 33: Order Intake

    Order Intake in CHF mn  Increase of order intake by 10.6% to 600 CHF 525.2 mn  +10.3% excluding currency 500 translation effects  Systems Division: +14.0% to CHF 400 319.8 mn  Orders from Petrochemical, Gas 300 Transport & Storage and Refinery  Services Division: +5.7% to CHF 200 205.4 mn  Sig

  34. Slide 34: Sales

    Sales  Sales increase overall by 6.6% to in CHF mn 700 CHF 594.6 mn  +6.4% excluding currency 600 translation effects  Systems Division: +4.7% to CHF 500 384.4 mn  Including some projects originally 400 scheduled for invoicing in FY 2016 (including the largest Hyper project 300 in the world)  S

  35. Slide 35: Sales and Gross Margin by Division

    Sales and Gross Margin by Division In CHF mn FY 2014 FY 2015 FY2016 FY2017 Systems GSP 327.1 332.4 367.2 384.4 Division GP 78.2 23.9% 73.0 22.0% 36.5 9.9% 27.2 7.1% Services GSP 146.5 154.8 190.5 210.2 Division GP 74.6 50.9% 78.7 50.8% 94.0 49.4% 97.9 46.6% GSP 473.6 487.2 557.7 594.8 Total GP 152.8

  36. Slide 36: SGA and EBIT

    SGA and EBIT  SGA amounting to 13.5% of sales in CHF mn EBIT ROS (prior year: 13.9%) 100 25%  Total SGA CHF 80.5 mn, prior year: 90 22% 22% CHF 77.3 mn 20% 20% 80 20% – Including first full year of SYCC (prior year 11 months only) and 6 months of CSM Compressor 70 17% 16% Inc. 15% 60 16% 15% – Inc

  37. Slide 37: EBIT Development FY 2016 to FY 2017

    EBIT Development FY 2016 to FY 2017 in CHF mn FY 2017 May 29, 2018 Page 37

  38. Slide 38: Net Income

    Net Income  Net income CHF 3.5 mn or 10.8% in CHF mn below prior year 80 25%  CHF -1.9 mn share of results Arkos Field Services (40% 70 ownership) 20% 60  Financial expense CHF -1.9 mn 17% 16% (prior year CHF -1.8 mn) 50 15% 15% 15%  Tax rate of 23.5% (prior year 40 25.1%) 13% 12% 12% 11% 10% 

  39. Slide 39: Earnings and Dividend per Share

    Earnings and Dividend per Share in CHF Earnings per Share in CHF Dividend per Share 25.00 12.00 20.00 10.00 10.00 10.00 10.00 20.00 9.00 16.68 16.93 16.42 16.34 8.00 15.22 15.87 7.00 7.00 15.00 13.56 6.00 6.00 6.00 5.00 5.00 10.00 9.12 8.51 4.00 5.00 2.00 0.00 0.00 08 09 10 11 12 13 14 15 16 17 08 0

  40. Slide 40: Balance Sheet Positions

    Balance Sheet Positions  Decrease of balance sheet total by FY FY FY 2015 2016 2017 1.7% In CHF mn Property, Plant & 164.5 200.4 193.2  Equity ratio increased by 2.9 Equipment percentage points to 42.0% Inventories 199.6 250.2 210.7 - Thereof WIP 137.3 171.4 133.8  Balance between advance payment

  41. Slide 41: Cash Flow and Net Financial Position

    Cash Flow and Net Financial Position  Slightly higher net financial position In CHF mn 2015 2016 2017  Cash outflow from investing Cash Initial Balance 178.5 125.3 74.9 activities includes the acquisition of Cash Flow from 40.7 46.0 44.4 CSM (last year included the Operating Activities acquisition

  42. Slide 42: Shenyang Yuanda Compressor Co. (SYCC) Results FY 2017

    Shenyang Yuanda Compressor Co. (SYCC) Results FY 2017  SYCC “Operation”: FY FY FY  Sales within expectations despite in mn CHF 2017 2017 2017 challenging market environment SYCC „OPERATION“ SYCC „DEPRECIATION“ SYCC TOTAL in China  EBIT significantly below Sales 110.8 110.8 expectation due to fast

  43. Slide 43: Arkos Field Service Results FY 2017

    Arkos Field Service Results FY 2017  Total net income CHF -4.7 mn (including CHF 3.8 mn depreciation and amortization) thereof BC share of results of associates (40%): CHF -1.9 mn  Slightly improving business environment in the US upstream market (Arkos’ original business) – Slow business in the f

  44. Slide 44: Capital Investments (Additions to fixed Assets)

    Capital Investments (Additions to fixed Assets) 90 47 35 30 25 20 1) 3) 15 2) 10 5 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 E2018 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 Prognost in

  45. Slide 45: Outlook, Guidance & Growth Areas

    OUTLOOK, GUIDANCE & GROWTH AREAS FY 2017 May 29, 2018 Page 45

  46. Slide 46: Outlook Main Developments in Market Segments 1/2

    Outlook Main Developments in Market Segments 1/2  Upstream Oil & Gas  Further development of the onshore business since production costs have been significantly reduced  Once production costs will be further reduced: – Development of not easy reachable oil and gas fields – Growing enhanced oil re

  47. Slide 47: Outlook Main Developments in Market Segments 2/2

    Outlook Main Developments in Market Segments 2/2  Refinery  Continues to be the largest market segment overall and bears the highest potential to increase our market share (BC & SYCC compressors)  since every player builds API 618 Refinery compressors it is also the most competitive segment  Pet

  48. Slide 48: Guidance Financial Targets

    Guidance Financial Targets Guidance FY 2018 Systems Division: FY 2018 = FY 2017 Order Intake Services Division: continues to grow Sales At prior year level Systems Division: FY 2018 ≥ FY 2017 Gross Margin Services Division: FY 2018 = FY 2017 FY 2018 slightly above FY 2017 EBIT Margin 2nd semester FY

  49. Slide 49: Mid-Range Plan 2018-2022 Targets 2022

    Mid-Range Plan 2018-2022  Targets 2022 Presented on January 9, 2018 Systems Division • Sales CHF 340 mn BC Group • Keep leading market position in all segments • Sales CHF 700 mn • Use strong global presence and • Keep leading market position in Shenyang Yuanda Compressor Systems Division • Focus o

  50. Slide 50: Growth Areas

    Growth Areas  Systems Division  Capitalize on geographical expansions and acquisitions Organic Growth  Refinery business  Services Division  Grow in all business areas  Further selective geographical expansion Acquisitions  Services Division  Add-on acquisitions (focus OBC business) FY 2017

  51. Slide 51: Shareholders

    SHAREHOLDERS FY 2017 May 29, 2018 Page 51

  52. Slide 52: Burckhardt Compression Shareholder Structure

    Burckhardt Compression Shareholder Structure MBO Shareholder Group 19 Institutional Shareholders 13.24% 12.40% NN Group N.V. 0.3% - 2.9% 6.93% JO Hambro Capital Management Limited 6.89% 4.99% Atlantic Value General Partner Ltd. (Mondrian) 3.49% 43.01% 3.03% Ameriprise Financial Inc. 3.01% 3.01% Cred

  53. Slide 53: Performance of BCHN Share Compared to the SPI Index

    Performance of BCHN Share Compared to the SPI Index BCHN 304.80 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 26.6.06 30.3.07 31.3.08 31.3.09 31.3.10 31.3.11 30.3.12 31.3.13 31.3.14 31.3.15 31.3.16 31.3.17 31.3.18 85.00 199.50 317.00 106.00 208.00 244.20 247.50 355.30 455.00 366.7

  54. Slide 54: Seven Good Reasons to Invest

    Seven Good Reasons to Invest 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 experience in any gas compression

  55. Slide 55: 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

  56. Slide 56: Burckhardt Compression

    CF Burckhardt y Compression Compressors for a Lifetime”

Burckhardt Compression Holding — FY2017 Earnings Presentation on 6ix