Traton Se · XETR:8TRA
Traton — Investor Presentation (March 2019)
44 slides from Traton's investor presentation, March 2019
Slide 1: TRATON GROUP – Creating a Global Champion
TRATON GROUP – CREATING A GLOBAL CHAMPION COMPANY PRESENTATION MARCH 2019
Slide 2: Disclaimer
DISCLAIMER The following presentation contains forward-looking statements and information on the business development of TRATON GROUP. These statements and information may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “
Slide 3: TRATON GROUP has continuously delivered on its strategic goal
TRATON GROUP HAS CONTINUOUSLY DELIVERED ON ITS STRATEGIC GOAL SINCE THE INCEPTION OF VOLKSWAGEN TRUCK & BUS Successful creation and implementation of New corporate identity Collaboration among strategic alliance partnerships brands in Volkswagen T&B fully on track 6.4% Significant 5.4% 6.0% performa
Slide 4: Snapshot TRATON GROUP 2018
SNAPSHOT TRATON GROUP 2018 UNIT SALES1 BY GEOGRAPHY SALES REVENUE BY BRAND ADJ. OPERATING PROFIT5 BY BRAND % of total € bn / % of total € bn VWCO VWCO Germany Other 1.4 MAN T&B6 15% 0.0 23% (5%) 0.5 EU28+22 10.8 4% Scania 13.4 Scania 56% (42%) MAN T&B 1.3 S. America Group4 (52%) Group4 (ex. Brazil)
Slide 5: Key Company Highlights
KEY COMPANY HIGHLIGHTS 1 • Scale and global reach through leading brands and GLOBAL strategic alliance partners CHAMPION • Unique platform enabling growth and positioning us for best-in-class profitability 2 • Customer value focused product and service offering GROWTH • New product generations • Fur
Slide 6: TRATON GROUP with #1 truck market position in Europe and South America
TRATON GROUP WITH #1 TRUCK MARKET POSITION IN EUROPE AND SOUTH AMERICA Core markets of TRATON GROUP brands TRATON GROUP truck market share in 2017 (>15t) Europe1 32% Market leader with 32% market share Market leader in Germany with 37% market share TRATON GROUP South America2 30% Market leader with
Slide 7: Expanding global reach through alliance partners
EXPANDING GLOBAL REACH THROUGH ALLIANCE PARTNERS TO ADDRESS ALL MAJOR PROFIT POOLS Core markets of TRATON GROUP brands Truck market share in 2017 (>15t) Alliance partners North America – Partnership since 2016 12%1 • Technology cooperation: first SoPs by 2020/21 • Synergies in procurement JV achieve
Slide 8: TRATON GROUP with multiple strategic levers for growth
TRATON GROUP WITH MULTIPLE STRATEGIC LEVERS FOR GROWTH TRATON GROUP SALES REVENUE • Market leadership in Europe and South America SUSTAIN CORE • Aftermarket and service growth on existing rolling fleet • Mutually beneficial / smart partnerships globally GO GLOBAL • Expanding premium segments in Chin
Slide 9: Sustain Core – sales volumes still far from historical peaks
SUSTAIN CORE – SALES VOLUMES IN TRATON GROUP'S CORE MARKETS AND THE US ARE STILL FAR FROM HISTORICAL PEAKS x% Current-to-peak variation Truck sales volumes (>6t)1, in k units 600 545 521 500 449 24% 400 US 348 16% 300 200 Western Europe2 238 194 56% 100 South America3 0 1980 82 84 86 88 90 92 94 96
Slide 10: Go Global – addressable market for technology leaders expected to increase
GO GLOBAL – ADDRESSABLE MARKET FOR TECHNOLOGY LEADERS EXPECTED TO INCREASE ON THE BACK OF REGULATION & CUSTOMER REQUIREMENTS INCREASING LEVEL OF REGULATION & CUSTOMER REQUIREMENTS TRUCK MARKET VOLUME IN SELECTED MARKETS2, in k units TRIAD markets1 Emerging markets Euro VI-comparable emission standar
Slide 11: Grow Share – benefit from highly attractive product pipeline
GROW SHARE – BENEFIT FROM HIGHLY ATTRACTIVE PRODUCT PIPELINE % of truck units of respective brand affected post full production ramp-up NTG NEW TRUCK GENERATION NEW DELIVERY TRUCK Current / upcoming launch 100% 100% ~60% New generation for all trucks (R, G and P trucks New state of the art truck Mod
Slide 12: Drive Innovation – TRATON GROUP is transforming transportation
DRIVE INNOVATION – TRATON GROUP IS TRANSFORMING TRANSPORTATION Hybrid Broadest range of Natural Gas Autonomous transport system in customer operation1 Large connected fleet 450k+3 alternative fuel HVO BEV technologies 2 Ethanol Biogas Autonomous Mining System Connected vehicles on the road Here and
Slide 13: Multiple solutions for autonomous driving
ALREADY TODAY TRATON GROUP HAS MULTIPLE SOLUTIONS FOR AUTONOMOUS DRIVING ON THE WAY… Scania project in mining system MAN project with German • Autonomous vehicle operates Federal Ministry for Economic in real life conditions at Rio Affairs and Energy Tinto's mining operations in • Automatic driverle
Slide 14: Expansion of service offering through smart and connected services
EXPANSION OF SERVICE OFFERING THROUGH SMART AND CONNECTED SERVICES SCANIA HAS A LARGE AND CONTINUOUSLY GROWING DATA BASE ... ... AND KNOWS HOW TO CAPITALIZE ON IT – EXAMPLE: FLEXIBLE MAINTENANCE Selected examples of collected vehicle data Who is using flexible maintenance? Who benefits from flexible
Slide 15: E-mobility portfolio with full pipeline until 2025 and beyond
TRATON GROUP E-MOBILITY PORTFOLIO CONTINUOUSLY BEING DEVELOPED WITH FULL PIPELINE UNTIL 2025 AND BEYOND e-Delivery e-Delivery Pilot Series readiness e-Truck e-Truck CitE e-Truck e-Truck TRUCKS e-Highway truck Full pipeline Plug-in hybrid truck until Long-haul hybrid truck 2025 Hybrid truck and beyon
Slide 16: Common base engine (13L) compatible with conventional and alternative fuels
COMMON BASE ENGINE (13L) COMPATIBLE WITH CONVENTIONAL AND ALTERNATIVE FUELS COMMON BASE 13L ENGINE (CBE) – PART OF OUR IN THE SHIFT TO ALTERNATIVE FUELS TRATON GROUP EXPECTS TO JOINTLY DEVELOPED HD POWERTRAIN PLATFORM BENEFIT FROM ITS BROAD RANGE OF ALTERNATIVE FUEL SOLUTIONS Scania vehicles display
Slide 17: Increasing volumes and sales growth beyond core markets
INCREASING VOLUMES AND SALES GROWTH BEYOND CORE MARKETS TRATON INDUSTRIAL BUSINESS TRATON INDUSTRIAL BUSINESS Volume delivered1 (k units / % growth) Sales revenue (€bn)3 Book-to-bill2 Aftersales sales revenue4 share as % of total industrial sales revenue 1.04 1.12 1.05 20.1% 19.3% 19.0% 11.6% 13.7%
Slide 18: Adj. operating profit expanding
ADJ. OPERATING PROFIT EXPANDING TRATON INDUSTRIAL BUSINESS Adj. Operating Profit1 (€m) Commentary Adj. Return on Sales (%)5 + Fixed cost degression on the back of market growth (e.g. 5.0%2 5.6%3 5.9%4 volume growth in EU and Brazil) and market share expansion (e.g. MAN) 24.8% 12.6% + Operational Per
Slide 19: New truck generations – well positioned to fund new technologies
WITH THE INTRODUCTION OF THE NEW TRUCK GENERATIONS, TRATON GROUP VERY WELL POSITIONED TO FUND NEW TECHNOLOGIES TRATON GROUP Research and development costs and capex (€bn) Commentary on Free Cash Flow % of TRATON GROUP sales revenue 10.9% 10.4% 9.1% Significant funding of new truck generations across
Slide 20: Scania Group – capitalizing on excellence
SCANIA GROUP – CAPITALIZING ON EXCELLENCE Track-Record Current Focus Target Increased average price per vehicle Phase-out of double Industry leading and strong volumes in Europe production line profitability Substantially more high-margin Focus and Ambition program to Increased share of high service
Slide 21: MAN T&B – focused path to operational excellence
MAN T&B – FOCUSED PATH TO OPERATIONAL EXCELLENCE Track-Record Current Focus Target PACE performance program Ramp-up/“dual costs” for new Leverage investment in new truck (mainly production, material truck generation generation across Europe costs and aftersales) Market shares in Europe Profit from t
Slide 22: VWCO – market driven return to profitability strength
VWCO – MARKET DRIVEN RETURN TO PROFITABILITY STRENGTH Track-Record Current Focus Target Increased average price Leverage recovering Brazilian market Brazilian market recovery per vehicle New delivery truck generation New product portfolio with higher Headcount reduction average price per vehicle Str
Slide 23: Synergies ramping up on five individual categories
TRATON GROUP SYNERGIES RAMPING UP ON THE BACK OF FIVE INDIVIDUAL CATEGORIES Production footprint 5th Category and logistics ~€0.7bn 4th Category New technologies 3rd Category Joint Powertrain 2nd Category Modularisation in trucks and components 1st Category Purchasing • Synergies executed on the bac
Slide 24: TRATON GROUP – KPI and outlook on group level
TRATON GROUP – KPI AND OUTLOOK ON GROUP LEVEL TRATON Group 2016A 2017A 2018A 2019E Over-the-cycle RoS target Volume 204.9k 233.0k 183.6k (Units; Growth in %) 11.6% 13.7% Sales revenue €24.4bn €25.9bn slightly above (in €bn; €21.9bn 11.2% 6.4% previous year Growth in %) Adj. return on Sales 5.4% 6.0%
Slide 25: TRATON GROUP – unique profitable growth profile
TRATON GROUP – UNIQUE PROFITABLE GROWTH PROFILE • Scania: Enters harvesting period on New Truck Generation, profits from short- Three strong brands… term improvement of cost base and attractive aftermarket and service growth • MAN: Achieved profit stabilization, enters new era of profitability post
Slide 26: Appendix
TRATON APPENDIX
Slide 27: Two-tier board structure with independence secured by supervisory board composition
TWO-TIER BOARD STRUCTURE WITH INDEPENDENCE SECURED BY SUPERVISORY BOARD COMPOSITION EXECUTIVE BOARD SUPERVISORY BOARD Executive Board composition Supervisory Board composition Andreas Christian Henrik • Supervisory Board composition reflects targeted Renschler Schulz Henriksson shareholder structure
Slide 28: TRATON GROUP corporate sustainability – overview
TRATON GROUP CORPORATE SUSTAINABILITY – OVERVIEW • Ability to contribute to leading the transport sector towards sustainability is a prerequisite for TRATON GROUP’s long-term TRATON GROUP success Corporate Sustainability • Transparent sustainability reporting according to GRI standards1 • Corporate
Slide 29: Corporate sustainability at Scania
CORPORATE SUSTAINABILITY AT SCANIA DRIVING THE SHIFT TOWARDS A SUSTAINABLE TRANSPORT SYSTEM Sustainable transport: Doing the right things Responsible business: Doing things right Sustainable transport KPIs Business area Selected targets Energy • Ecolution by Scania • Driver training and coaching 1 E
Slide 30: Corporate sustainability at MAN T&B/VWCO
CORPORATE SUSTAINABILITY AT MAN T&B/VWCO STRUCTURED APPROACH APPLIED TO DERIVE MAN/VWCO SUSTAINABILITY ACTION FIELDS SUSTAINABILITY ACTION FIELDS • Reduce • Reduce greenhouse gas, • Allocation relevance greenhouse gas pollutant emission of CS standards • Focus on global challenges emission in Identi
Slide 31: Limited amount of adjustments to historical operating profit
LIMITED AMOUNT OF ADJUSTMENTS TO HISTORICAL OPERATING PROFIT FOR TRATON GROUP Operating Profit to Adj. Operating Profit table (€m) Commentary in €m 2016A 2017A 2018A • Scania provisioned €403m in relation to the European Commission’s antitrust fine in 2016A Operating Profit 727 1,512 1,513 • Lower t
Slide 32: Industrial business: income statement overview
INDUSTRIAL BUSINESS: INCOME STATEMENT OVERVIEW in €m 2016A 2017A 2018A Commentary Sales revenue1 21,023 23,403 24,963 Cost of sales (17,026) (18,985) (20,298) Financial result in 2018A of €98m mainly includes: Gross Profit 3,997 4,418 4,665 • €209m resulting from share of earnings from minority SG&A
Slide 33: Industrial business: trade net working capital development
INDUSTRIAL BUSINESS: TRADE NET WORKING CAPITAL DEVELOPMENT ILLUSTRATION LEASE ASSET ACCOUNTING Trade working capital (TWC)1 development (€m) Vehicle Sales with Buy-Back Obligation – IFRS 15 As % of sales revenue Vehicle sale to customer with buy-back obligation 17.3% 16.9% 16.9% - TRATON receives a
Slide 34: Industrial business – net cash flow evolution
INDUSTRIAL BUSINESS – NET CASH FLOW EVOLUTION in €m 2016A 2017A 2018A 440 1,172 1,444 Commentary Earnings before tax Income taxes paid (81) (217) (403) D&A of, and impairm. losses on, int. assets, PP&E, and inv. property4 552 585 634 a. IFRS 15 relevant lease assets incl. in the Amortization of and
Slide 35: Financial services – income statement overview
FINANCIAL SERVICES – INCOME STATEMENT OVERVIEW in €m 2016A 2017A 2018A Financing income (Lease income and interest income)1 709 721 760 Cost of sales (482) (469) (489) Gross Profit 228 252 271 SG&A2 (102) (106) (110) Other operating income/expenses3 (21) (36) (22) Operating Profit 105 111 138 Financ
Slide 36: Financial services – net cash flow evolution
FINANCIAL SERVICES – NET CASH FLOW EVOLUTION in €m 2016A 2017A 2018A Earnings before tax 106 112 148 Income taxes paid (57) (52) (41) D&A of, and impairm. losses on, int. assets, PP&E, and inv. property 2 3 4 Change in pensions 1 0 0 Gain/loss on disposal of noncurrent assets and equity investments
Slide 37: TRATON GROUP: detailed income statement 2016A-2018A
TRATON GROUP: DETAILED INCOME STATEMENT 2016A, 2017A & 2018A in €m 2016A 2017A 2018A Sales revenue 21,915 24,366 25,927 Cost of sales (17,649) (19,653) (20,946) Gross Profit 4,266 4,713 4,981 Distribution expenses (2,316) (2,354) (2,391) Administrative expenses (789) (872) (1,011) Net impairment los
Slide 38: Detailed balance sheet 2016A-2018A (1/2)
TRATON GROUP: DETAILED BALANCE SHEET 2016A, 2017A & 2018A (1/2) in €m 2016A 2017A 2018A Assets Noncurrent assets 24,344 25,337 25,851 Intangible assets 7,055 7,019 6,597 Property, plant and equipment 5,940 6,003 5,469 Lease assets 5,840 6,103 6,599 Equity-accounted investments 491 836 1,223 Other eq
Slide 39: Detailed balance sheet 2016A-2018A (2/2)
TRATON GROUP: DETAILED BALANCE SHEET 2016A, 2017A & 2018A (2/2) in €m 2016A 2017A 2018A Equity and Liabilities Equity 10,931 11,810 16,801 Subscribed capital 10 10 10 Capital reserves 24,271 24,581 21,331 Retained earnings (11,817) (10,760) (2,064) Other comprehensive income (1,635) (2,130) (2,478)
Slide 40: Detailed cash flow statement (1/3)
TRATON GROUP: DETAILED CASH FLOW STATEMENT 2016A, 2017A & 2018A (1/3) in €m 2016A 2017A 2018A Cash and cash equivalents at beginning of period 6,575 4,907 4,594 Earnings before tax 493 1,379 1,566 Income taxes paid (199) (303) (420) Depreciation and amortization of, and impairment losses on, intangi
Slide 41: Detailed cash flow statement (2/3)
TRATON GROUP: DETAILED CASH FLOW STATEMENT 2016A, 2017A & 2018A (2/3) in €m 2016A 2017A 2018A Investments in intangible assets (excluding development costs), property, plant and equipment, and investment property (1,057) (849) (935) Additions to capitalized development costs (400) (416) (449) Acquis
Slide 42: Detailed cash flow statement (3/3)
TRATON GROUP: DETAILED CASH FLOW STATEMENT 2016A, 2017A & 2018A (3/3) in €m 2016A 2017A 2018A Capital contributions 0 311 (0) Profit transfer to/loss absorption by Volkswagen AG (2,365) 32 28 Dividends paid to minorities (0) - - Other changes (0) 0 - Proceeds from issuance of bonds 751 2,264 2,162 R
Slide 43: Truck industry characterized by a limited number of OEMs competing globally
TRUCK INDUSTRY CHARACTERIZED BY A LIMITED NUMBER OF OEMS COMPETING GLOBALLY LIMITED NUMBER OF GLOBAL PLAYERS • Trucks are highly customized products given HDT market share 2017 held by top 3 in each region Customization & heterogeneous customer requirements regulation • Products need to meet strict
Slide 44: Outlook for core markets positive
OUTLOOK FOR TRATON GROUP'S CORE MARKETS POSITIVE – EUROPE PROFITABLE AND INNOVATION DRIVEN, SOUTH AMERICA RECOVERING MARKET VOLUME TRUCK SALES >6t PROFIT POOL OUTLOOK (UNITS) 2017, k units Share 2017 CAGR 2018-25e CONSIDERATIONS • Robust volumes TRATON GROUP Europe ~30-35%6 +0.5%1 • Services/afterma