Slide 1: Mersen: A Sustainable Growth Trajectory - 2017 Results and Outlook
MERSEN: A SUSTAINABLE GROWTH TRAJECTORY 2017 RESULTS AND OUTLOOK March 7, 2018
Slide 2: 2017 Results
MERSEN: A SUSTAINABLE GROWTH TRAJECTORY 1 2017 RESULTS 2 2017 results - March 7, 2018
Slide 3: 2017: A Year of Growth
2017: A YEAR OF GROWTH 1 2 3 4 Operating income Sales: before non- Net income: Net debt: €809m recurring items: €40m €178m €75m Like-for-like growth Operating margin before vs 2016: non-recurring items Year-on-year growth: Down 12% 8% up 170 basis points x12.5 High level of operating cash Growth in
Slide 4: Very strong growth in Asia, good performances in Europe and North America
A YEAR THAT SAW VERY STRONG GROWTH IN ASIA, AND GOOD PERFORMANCES IN EUROPE AND NORTH AMERICA NORTH AMERICA +5% EUROPE +5% Growth in electronics and process Strong performance from the industries aeronautics and space sectors Stable performance overall for electrical distribution, with sales 3
Slide 5: Sharp increase in profitability
SHARP INCREASE IN PROFITABILITY... +30% 9.2% +170 bps 7.5% Adjusted 2016 operating margin 7.5% before non-recurring items Volume/mix effects +2.4% 74.6 Price impact -0.2% Impact of competitiveness plans +2.0% 57.3 Inflation (costs, raw materials) -1.7% Other (including bonuses) -0.8% 2017 operating
Slide 6: Thanks to the AM segment's significant contribution
… THANKS TO THE AM SEGMENT’S SIGNIFICANT CONTRIBUTION… 49.6 Operating income 38.4 39.9 before non-recurring items (€m) 31.6 Operating margin 11.1% 11.0% before non-recurring items (%) 11.1% 7.7% 2016 adjusted 2017 2016 adjusted 2017 ELECTRICAL 2017 ADVANCED 2017 POWER EBITDA MARGIN MATERIALS EBITDA
Slide 7: ... and the competitiveness plan
… AND THE COMPETITIVENESS PLAN 2018 2016 2017 TOTAL Plan on schedule in terms of estimated cost savings and P&L impact Cost savings (€m) 16.5 16 [12-14] >45 Time lag for cash outflows P&L impact before tax (€m) (22) (9) (2) (33) in 2018 (particularly capex Cash flow impact (€m) (5) (11) (14) (35) an
Slide 8: Strong increase in net income
STRONG INCREASE IN NET INCOME In €m 2016 adjusted 2017 Operating income before non-recurring items 57.3 74.6 Strong 12.5x increase in net Non-recurring income and expenses (26.5) (10.3) income Net financial income/(costs) (11.0) (10.0) - Contained non-recurring expenses Income tax (11.5) (15.1) (com
Slide 9: Solid operating cash flow, with WCR/sales ratio stable at 20%
SOLID OPERATING CASH FLOW, WITH WCR/SALES RATIO STABLE AT 20% Cash flow before capital expenditure (€m) 94 83 High level of cash flow 74 73 following a record high in 2016 64 Includes - in 2017 - USD5 million of 48 exceptional contribution to US pension Increase in WCR in line with the high business
Slide 10: Net debt scaled back significantly
NET DEBT SCALED BACK SIGNIFICANTLY In €m 203 12 8 178 37 (18) (64) Including €7m related to the sale of Gorcy Dec. 2016 Operating cash flow Capex Interest payments Dividends Currency effect and Dec. 2017 other movements NET DEBT/EBITDA 2.1 1.6 NET DEBT/ 41% 37% EQUITY 10 2017 results - March 7, 2018
Slide 11: Recommended dividend of €0.75 per share
RECOMMENDED DIVIDEND OF €0.75 PER SHARE 0.75(1) +50% PAY-OUT RATIO EXCL. NON-RECURRING ITEMS(2) 0.5 38% TOTAL DIVIDEND PAYOUT 2016 2017 (1) Subject to shareholder approval at the Annual General Meeting €15m (2) Net income from continuing operations excluding the effect of the competitiveness plan an
Slide 12: Profitable Growth Drivers
MERSEN: A SUSTAINABLE GROWTH TRAJECTORY 2 PROFITABLE GROWTH DRIVERS 12 2017 results - March 7, 2018
Slide 13: Mersen: an efficient group and leader in its markets
MERSEN: AN EFFICIENT GROUP AND LEADER IN ITS MARKETS SHARED BUSINESS SHARED SHARED END-MARKETS MANUFACTURING R&D LEAN MODEL Operational excellence Small production batches, leveraging the Group’s SITES Cross fertilization, Business processes leader in niche markets, expertise and resources Central c
Slide 14: Markets with high growth potential
MARKETS WITH HIGH GROWTH POTENTIAL HIGH GROWTH POTENTIAL MARKETS ~ 40% OF TOTAL SALES 19% ENERGY RENEWABLE ENERGIES Solar power PROCESS 35% INDUSTRIES Industrial GDP €809m 18% ELECTRONICS SEMICONDUCTORS POWER ELECTRONICS Manufacture of semiconductors CHEMICALS 11% 17% TRANSPORTATION AERONAUTICS Elec
Slide 15: Driven by favorable underlying market trends
DRIVEN BY FAVORABLE UNDERLYING MARKET TRENDS PROCESS ENERGY ELECTRONICS TRANSPORTATION INDUSTRIES URBANIZATION ENERGY EFFICIENCY RENEWABLE MOBILITY INDUSTRIALIZATION ENERGIES DIGITIZATION ELECTRIFICATION Reducing energy consumption Electric vehicles Converting electrical power (including eBuses and
Slide 16: Mersen's profitable growth drivers
MERSEN’S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Enhancing by leveraging a growth high value-added the efficiency unique position in In Asia expertise of the whole organization growth markets Renewable energies, China, India, Innovation, R&
Slide 17: Mersen's profitable growth drivers
MERSEN’S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Strengthening by leveraging a growth high value-added the efficiency unique position in in Asia expertise of the whole organization growth markets Renewable energies, China, India, Innovation
Slide 18: Solar power: major potential for the long term
SOLAR POWER: MAJOR POTENTIAL FOR THE LONG TERM INSTALLATIONS PROGRESSING AT A VERY BRISK PACE THE LOWEST ENERGY PRODUCTION COST Annual (GW) Total (GW) 250 1200 Further acceleration probable 1000 200 with the arrival of energy storage 800 150 600 100 50 400 -20% vs natural gas 3x 200 than nuclear 0 2
Slide 19: Mersen's strengths in the solar power market
MERSEN’S STRENGTHS IN THE SOLAR POWER MARKET Polysilicon production Ingot production Electrical protection Energy conversion Graphite machining Graphite Graphite Bus bars crucible resistance Fuses for Furnace cladding semiconductors Insulation Graphite anticorrosion Graphite Cooling solutions Insula
Slide 20: Meeting market demand for graphite; capturing local solar panel protection markets
MERSEN’S STRENGTHS IN THE SOLAR POWER MARKET 1 MEETING MARKET DEMAND FOR GRAPHITE Production capacity/% usage rate 75% 85% 6,000 t FURNACES IN CHONGQING BROUGHT BACK ON STREAM Chongqing, China GREATER FINISHING CAPACITIES IN CHINA OPTIMIZATION OF THE UTILIZED CAPACITY RATE 6,000 t St Marys, US
Slide 21: The electronics market driven by 2 main factors
THE ELECTRONICS MARKET DRIVEN BY 2 MAIN FACTORS GLOBAL SEMICONDUCTORS MARKET Growing digitization Big data, mobility, Smartphone, IoT, Artificial intelligence $bn Forecast 500 2 GROWTH 250 DRIVERS 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: WSTS Energy savings and
Slide 22: Mersen's strengths in the electronics market
MERSEN’S STRENGTHS IN THE ELECTRONICS MARKET Ingot production Wafer manufacturing Epitaxy Energy conversion Graphite Bus bars machining Graphite Semiconductor crucible Graphite fuses resistance Graphite Electrostatic Wafer carriers in Cooling solutions Furnace cladding Insulation windows for chucks
Slide 23: Mersen's challenges in the electronics market
MERSEN’S CHALLENGES IN THE ELECTRONICS MARKET PREPARING TO CAPITALIZE ON THE CREATING NEW PRODUCTION MOVE TO CHINESE PRODUCTION CAPACITY IN ASIA Chinese government’s plan to Power electronics and electrical protection develop the semiconductor in India for Western OEMs industry Protection of fuses/b
Slide 24: Electric vehicles: a high-end market of the future
ELECTRIC VEHICLES: A HIGH-END MARKET OF THE FUTURE 600 000 BEV e-bus 500 000 BEV e-truck 400 000 300 000 200 000 100 000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 PASSENGER CARS BUSES, TRUCKS & OTHER INDUSTRIAL VEHICLES 3 000 000 BEV 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 2015 2016 2
Slide 25: Mersen's strengths in the electric vehicles market
MERSEN’S STRENGTHS IN THE ELECTRIC VEHICLES MARKET PASSENGER VEHICLES HEAVY GOODS VEHICLES Charging station protection Energy Electric motor conversion protection High-voltage (>600-1,000V) circuit Electric motor protection protection (>600V) (>600-1,000V) Auxiliary protection Illustration courtesy
Slide 26: Key dates in the electric vehicle market
KEY DATES IN THE ELECTRIC VEHICLE MARKET DC protection device for 400-1,000V Design of Patent Creation of a dedicated Certification of the the Xp filed EV team (40 people) production line system 2015/2016 2016 2017/2018 End-2018/2019 2020? First major Customized prototype deliveries? TESTED with aut
Slide 27: Mersen's profitable growth drivers
MERSEN’S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Enhancing the efficiency by leveraging a growth high value-added of the whole organization unique position in In Asia expertise growth markets Renewable energies, China, India, Innovation, R&
Slide 28: Asia: a major growth region, with an acceleration in 2017
ASIA: A MAJOR GROWTH REGION, WITH AN ACCELERATION IN 2017 28% OF TOTAL SALES €230m 2013-2017 2016-2017 CAGR growth 21% €157m JAPAN 2% >5% INDIA 15% >10% SOUTH KOREA 13% >20% CHINA 8% >20% 2013 2014 2015 2016 2017 ASIA-PACIFIC 8% 20% 28 2017 results - March 7, 2018
Slide 29: Asia: a fast growing region where most of our growth markets are located
ASIA: A FAST GROWING REGION WHERE MOST OF OUR GROWTH MARKETS ARE LOCATED CHINA Energy 26% +++ Electronics 21% ++ SOUTH KOREA Transportation 14% ++ INDIA Chemicals 12% + JAPAN Process industries 27% + 2017 SALES BY MARKET 29 2017 results - March 7, 2018
Slide 30: Ready to capture future growth
READY TO CAPTURE FUTURE GROWTH... India China South Korea PRODUCTION PRODUCTION PRODUCTION FACILITIES 1 FACILITIES 9 FACILITIES 1 WORKFORCE 250 WORKFORCE 1,300 WORKFORCE 100 2013-2017 CAGR +15% 2013-2017 CAGR +8% 2013-2017 CAGR +13% Future growth drivers: transportation, Future growth drivers: trans
Slide 31: Mersen's profitable growth drivers
MERSEN’S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Enhancing the efficiency by leveraging a growth high value-added of the whole organization unique position in In Asia expertise growth markets Renewable energies, China, India, Innovation, R&
Slide 32: Tightening the R&D focus in our growth markets
TIGHTENING THE R&D FOCUS IN OUR GROWTH MARKETS 15 R&D centers Graphite Graphite Graphite Fuses 160 people EV Bus bars Centralized Cooling solutions management Partnerships with Graphite customers Graphite Partnerships with universities/research Fuses centers Fuses, SPD SPD, EV Silicon carbide Bus ba
Slide 33: Mersen partners its customers' critical developments
MERSEN PARTNERS ITS CUSTOMERS’ CRITICAL DEVELOPMENTS CHALLENGES CUSTOMER CONTEXT GOALS FOR MERSEN Increasing the storage capacity of semiconductors Developing a very large carrier (>1m) that is geometrically Investments in SIC coating, perfect and SiC coated purification and shape control processes
Slide 34: Mersen partners its customers' critical developments
MERSEN PARTNERS ITS CUSTOMERS’ CRITICAL DEVELOPMENTS CHALLENGES CUSTOMER CONTEXT GOALS FOR MERSEN Electrical protection for buses 600-1,000V Adapting and optimizing an existing industrial product for the Serving the EV market in China Extreme electrical and EV market – particularly e-buses and mecha
Slide 35: Mersen partners its customers' critical developments
MERSEN PARTNERS ITS CUSTOMERS’ CRITICAL DEVELOPMENTS CHALLENGES CUSTOMER CONTEXT GOALS FOR MERSEN Design of a new style of Developing a specific Ensuring a product lifespan cell phone with a graphite grade adapted to adapted to the production rhythm curved glass screen shaping hot glass and related
Slide 36: Mersen's profitable growth drivers
MERSEN’S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Enhancing the efficiency by leveraging a growth high value-added of the whole organization unique position in In Asia expertise growth markets Renewable energies, China, India, Innovation, R&
Slide 37: Major improvements in recent years...
MAJOR IMPROVEMENTS IN RECENT YEARS... REORGANIZATION of the Group THE SIMPLIFICATION (5 BUs, CTO, Asia) of manufacturing organization MERSEN structures (mainly in Europe) EXCELLENCE GLOBAL JOURNEY COMPETITIVENESS PLAN Sales, R&D, HR, IT In € ‘000s 130 LIKE-FOR-LIKE 10% OPERATING MARGIN SALES/EMPLOYE
Slide 38: That will continue with Mersen Excellence Journey
THAT WILL CONTINUE WITH MERSEN EXCELLENCE JOURNEY Enhance commercial efficiency Improve the competitiveness in mature markets of certain product lines CUSTOMERS OPERATIONS, PERFORMANCE Improve the customer Effectively carry out service rate in future capex programs growth periods Keep the WCR ratio
Slide 39: 2018: Another Year of Growth
MERSEN: A SUSTAINABLE GROWTH TRAJECTORY 3 2018: ANOTHER YEAR OF GROWTH 39 2017 results - March 7, 2018
Slide 40: 2018: Another Year of Growth
2018: ANOTHER YEAR OF GROWTH FAVORABLE OUTLOOK ADDITIONAL CAPEX IN OUR GROWTH MARKETS TO PREPARE FOR 2019 Solar power Solar power, Asia +€10m Electronics Electric vehicles (R&D) +€5m Aeronautics US TAX REFORM PRICE INCREASE Effective income tax rate for IN ADVANCED MATERIALS SEGMENT the Group 28% vs
Slide 41: 2018: Another Year of Growth
2018: ANOTHER YEAR OF GROWTH LIKE-FOR-LIKE GROWTH* Between 3 and 6% 20 VS 2017 18 OPERATING MARGIN BEFORE NON-RECURRING ITEMS Between 9.6 and 10.1% of sales (vs 9.2 % in 2017) * Excluding the currency effect and impact of changes in scope of consolidation 41 2017 results - March 7, 2018
Slide 42: Mersen: A Sustainable Growth Trajectory - 2017 Results and Outlook
MERSEN: A SUSTAINABLE GROWTH TRAJECTORY 2017 RESULTS AND OUTLOOK March 7, 2018