annual report 2019 - schouw · 06-03-2020 · 2016 2017 2018 2.1 2015 2019 2020e 1.8 1.8 2.0 2.2...
TRANSCRIPT
Annual Report
2019
Enabling long-term and
responsible transformation
INVESTOR PRESENTATION
6 March 2020
Vis/skjul grid: ALT+F9
Our business model
INTRODUCTION
Active ownership
enabling long-term
and responsible
transformation
Long-term
and visionaryTaking risk and
investing
long-term
Results are
created by peopleCreating returns in a
proper and trust-
worthy manner
Patient,
but demandingOwnership through
and with the
management
teams
Making every
penny countIndustrial mindset
and operational
streamlining
A relevant
ownerContinually adapt
and safeguard
reputation and
values
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A portfolio of six strong businesses
3
INTRODUCTION
Quality feed for
fish and shrimps
Fabrics for diapers
and hygiene
Textiles for indus-
trial applications
Electronic Manu-
facturing Services
Hydraulic compo-
nents & solutions
Remanufactured
automotive parts
Aquaculture feed Nonwovens Industrial solutions
Revenue
DKK 11.2bn
Employees
~1,250
~50% of Group EBITDA
Revenue
DKK 2.2bn
Employees
~750
Revenue
DKK 1.7bn
Employees
~1,000
Revenue
DKK 2.9bn
Employees
~3,800
Revenue
DKK 2.1bn
Employees
~1,200
Revenue
DKK 0.9bn
Employees
~1,600
~25% of Group EBITDA ~25% of Group EBITDA
Revenue DKK billion EBITDA DKK million Cash Flow Op DKK million Dividend DKK million ROIC ex GW per cent
Record year for Schouw & Co. in 2019
4
2019 STATUS
2019
20.9
18.3
2018
+15%
20192018
1,951
1,579
+24%
837
20192018
1,410
+68%
14.5
20192018
12.3
-2.2pp
1314
2018 2019
+8%
High growth Increased profitability Very strong cash flow Sizeable dividend Decent return
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Significant impact from IFRS 16
5
2019 STATUS
EBITDA DKK million Cash Flow from Operations DKK million
Net Interest-Bearing Debt DKK million Return on Invested Capital excluding goodwill %
1,743
1,951
IFRS 1620192018
164
Change
208
2019
1,579
+10% +24%
IFRS 16
1,410
20192018
391
Change Pro forma
182
837
1,228
+47% +68%
2019
829
2018
44
Change Pro forma IFRS 16
3,298
2,425 2,469
+2% +36%
IFRS 16Pro forma2018 Change
0.9%
2019
12.3%
14.5%
13.2%1.3%
-1.3pp -2.2pp
2019: An active year
6
2019 STATUS
Q1 Q2 Q3 Q4
▪ FIN acquires US
spunlacing facility
▪ HydraSpecma
inaugurates new
factory in Poland
▪ Borg produces first
calipers on new Polish
site in Lublin
▪ BioMar expands
pelletised capacity in
Ecuador
▪ FPC opens greenfield
US print facility
▪ BioMar announces
acquisition of 50%
stake in Chilean JV
▪ HydraSpecma opens
new 3,200 m2 logistics
facility in Finland
▪ BioMar decides to
expand in Ecuador
with extruded feed
▪ Borg streamlines the
Belgian activities
▪ BioMar launches app
to fully enable raw
material traceability
▪ HydraSpecma
announces expansion
of facilities in Sweden
▪ BioMar finishes
expansion of Danish
site
▪ BioMar finishes
building new salmon
site in Australia
▪ GPV successfully fina-
lises CCS integration
▪ HydraSpecma
acquires small Finish
hydraulic activity
▪ GPV inaugurates new
2,300 m2 warehouse in
Thailand
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Net Interest-Bearing Debt DKK million
Slight increase in IFRS 16 adjusted NIBD following the finalisation of a major investment programme
NIBD development
7
2019 STATUS
Notes: 1) Adjustments to EBITDA relate to provisions and divestments
182 228
274
259
774
309
829
Divid.
2,468
NIBD
2018
Other NIBD
pro-
forma
IFRS 16 NIBD
2019
EBITDA
before
IFRS 16
1,743
3,297
NWC
62
Adj.1
74
IFRS 16
cash flow
effect
Financials
before
IFRS 16
2,425
Tax M&A Capex
112
+2%
BioMar Australia ~200m
BioMar Denmark ~80m
FIN Greenville ~50m
FIN Greenville 134m
BioMar 50% JV 107m
HySp Finland 18m
Cash Flow from Operations
DKK 1,410m
Investments
DKK 1,033m
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A global leader in quality feed for aquaculture focusing on
responsible use of sustainable raw materials, food safety and
traceability in the entire value chain
BioMar: Strong ’19 finish and positive outlook
8
PORTFOLIO COMPANIES
EBITDA DKK million
▪ Solid growth, especially in salmon
(Chile, Scotland) with new Chilean
capacity after full JV ownership
▪ Significant profitability uplift in
salmon, including Norway with effect
from changed market approach
▪ Innovative products/concepts and
close collaboration with customers
▪ NWC increases due to capacity ramp
up and geographic/customer mix
▪ ROIC of 18.8% (21.7% IFRS 16 adj.)
Revenue DKK billion
20172015 2016 2018 2019
9.0 8.910.0 10.3
11.2
2020E
12.0+5.6%
1,000-
1,060
201920172015
838
2016 2018
128
593722 712 713
966
2020E
+13.0%
CAGR
▪ Effect of 20% (~250k t) capacity
expansion in Denmark, Australia,
Chile, Ecuador (pelletised and
extruded) and China
▪ Growth and profit improvement
expected in all regions
▪ Consolidating position by implement-
ting new products and focus on
efficiency and margin management
▪ No news/impact from Chile FNE case
▪ Unchanged positive long-term outlook
on global aquaculture
Strong finish to 2019, better
than expected performance
Positive outlook continues
into 2020
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Market leader in spunbond fabrics used in hygiene
applications improving everyday health and well-being for
millions of people worldwide
FPC: Solid ’19 – influenced by FX and raw.mat
9
PORTFOLIO COMPANIES
EBITDA DKK million
▪ Revenue and volume at 2018 level;
up in Europe and decline in Asia
▪ DKK ~50m positive impact from FX,
raw materials, etc.
▪ Start-up of print activities in US are
progressing as planned
▪ Significant cash flow from operations
of DKK 426m, 242m higher than LY
and 371m higher than investments
▪ NWC lowered to 15% of revenue
▪ ROIC improved to 13.0%
Revenue DKK billion
2016 20182017
2.1
2015 2019 2020E
1.8 1.82.0
2.2 2.2
+5.0%
2015 2017
365
2016 2018 2019 2020E
395362
315352
280-310
-2.8%
CAGR
▪ Unchanged though competition in
Europe with new capacity coming on
stream in 2020
▪ Dynamic market conditions in Asia,
especially China is challenging
▪ Focus on innovation, speciality
products and post-treatment
applications
▪ Flat 2020 revenue with EBITDA
guidance DKK 280-310m, more or
less comparable with underlying
2018/2019 performance
Strong 2019 positively affected
by raw materials and FX
Competitive environment to
continue into 2020
Vis/skjul grid: ALT+F9
Leading manufacturer of lightweight non-woven fabrics used
e.g. to reduce CO2 emissions in cars, to improve global
infrastructure and in filtration to secure clean air
FIN: Profitability improvements in 2020
10
PORTFOLIO COMPANIES
EBITDA DKK million
▪ Weak Q4 following general economic
decline in Europe
▪ Revenue up 8% due to US acquisition
and North American growth
▪ Write-down in India/South Africa of
DKK 13m not included in guidance
▪ Improved cash flow generation
▪ Improved NWC management with
NWC/sales dropping 3.4%-points
▪ ROIC at highly unsatisfactory 3.1%
expected to increase significantly
Revenue DKK billion
2017 20192015 2016 2020E2018
1.2 1.31.4
1.61.7 1.75
+8.7%
20192015 2016 2017 2018 2020E
153 162179
160141
165-185
-2.1%
CAGR
▪ Market position confirmed and
development areas identified
▪ North America key in the current and
future profitability
▪ Relocating a production line from
South Africa to South Carolina
▪ Solid interest for nano products
▪ Optimising European factory footprint
▪ Expected 2020 progress in North
America but challenges in Europe
▪ Margins expected to increase over
the coming years
Weak 2019 profitability after
India/South Africa write-down
Earnings uplift expected in
2020 after strategic review
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European top 10 EMS company serving global industrial and
cleantech customers from Asian factories with significant
better-than average health & safety and working conditions
GPV: Transformed into the European Top 10
11
PORTFOLIO COMPANIES
EBITDA DKK million
▪ Revenue and profit increase
attributable to CCS acquisition
▪ DKK ~17m negative EBITDA effect
from surging THB during the year
▪ Phase 1 of integration successfully
finalised without negative surprises
▪ Inventory management lowers NWC
▪ ROIC declines to unsatisfactory level
Revenue DKK billion
2015 2016 2017 2018 2020E2019
0.9 0.91.21.1
2.9 2.8+35.2%
2015 20172016 2018 2019
162
34
2020E
79 84
196
107 115
210-240
+25.8%
CAGR
▪ Strong European market coverage in
both Scandinavia and DACH
▪ Solid pipeline, both new and existing
customers looking to grow with GPV
▪ Investment programme to step up on
automation and efficiency
▪ Expanding Thai facilities by 50%
▪ General uncertainty to affect
customer demand in 2020
▪ 2020 revenue guidance below ’19
▪ 2020 EBITDA increase due to
stronger and more profitable platform
Significant changed GPV after
acquisition of CCS
2020 profitability uplift despite
soft revenue outlook
Vis/skjul grid: ALT+F9
Leading Nordic hydraulic component and solutions specialist
servicing wind turbine and other cleantech customers globally
HydraSpecma: High activity in wind segment
12
PORTFOLIO COMPANIES
EBITDA DKK million
▪ FY revenue up 6% to DKK 2.1bn
▪ Strong sales to wind throughout 2019
▪ Setback in Q4 sales to vehicles
▪ EBITDA margin expanded to 10.1%,
however with effect from IFRS 16
▪ NWC reduced despite revenue
growth
▪ IFRS adj. ROIC increased to 15.0%
▪ New factory in Poland commissioned
and new setup in Finland
implemented
Revenue DKK billion
20162015 2017 2018 2019 2020E
0.6
1.7 1.82.0 2.1
2.0
+37.0%
20192015 2016
215
2017 2018 2020E
93
170148
175
200-220
30
185
+23.3%
CAGR
▪ Further optimisation of logistics and
production network and footprint
▪ Strong outlook in wind segment
▪ Ramping up in China
▪ Offerings within electrification to
complement hydraulic core business
▪ Lower activity expected in 2020,
mainly due to soft vehicle segment
▪ 2020 profitability around 2019 level
Significant margin expansion
in year with high activity
Soft outlook in vehicle segment
however stable profitability
Vis/skjul grid: ALT+F9
European leader in remanufacturing of automotive parts in a
business model fundamentally build on circular economy
Borg: Strong player in current soft market
13
PORTFOLIO COMPANIES
EBITDA DKK million
▪ Soft demand in Q4 and FY revenue
lower than expected
▪ EBITDA however, within guidance
range despite lower efficiency
▪ No loss of market share
▪ IFRS adj. ROIC remains attractive at
15.6%
▪ Streamlining Belgian activities
Revenue DKK million
958
2015 201920172016 2018 2020E
910 946 918975
+0.3%
2015 2016 2017 2018 2019 2020E
138
102110-120
131
11011
99
-7.3%
CAGR
▪ Strongest reman platform in Europe
▪ Preparations and investments to
handle greater complexity and
electrification of cars
▪ New site in Lublin, Poland has
capacity for further growth
▪ Ongoing IAM customer consolidation
▪ Volume expectations remain sub-
dued, however signs of improvement
▪ Slight increase in both revenue and
EBITDA expected
Volume and profitability under
pressure in 2019
Progress expected in 2020,
however still uncertainty
Vis/skjul grid: ALT+F9
NWC/sales Operating CF NWC/sales Operating CF NWC/sales Operating CF
NWC/sales Operating CF NWC/sales Operating CF NWC/sales Operating CF
2019 Cash Flow focus continues into 2020
14
OUTLOOK
149
75
2018
10
2019
85
-43%
2018 2019
14.717.0
+2.3pp
BioMar
GPV
Fibertex Personal Care
HydraSpecma
Fibertex Nonwovens
Borg Automotive
2019
27
2018
150
10
177
+1.625%
33.8
2018 2019
31.3
-2.5pp
40
2018
31
204
2019
235
+495%
20192018
66.4
26.8
-39.6pp
2018: Full CCS balance sheet but no P/L effect
2018 2019
112
60
+86%
2018 2019
33.329.9
-3.3pp
20192018
426
184
+131%
15.2
2018 2019
20.4
-5.2pp
20192018
110
366
218
328
-10%
8.2
2018
11.8
2019
+3.6pp
Vis/skjul grid: ALT+F9
Covid-19 impact not included in guidance
15
OUTLOOK
▪ Directly exposed in Chinese JV, and
start-up of Wuxi factory postponed
▪ Positive long-term effect from
increased focus on quality feed likely
▪ Potential risk in Ecuador shrimp
export to restricted areas
▪ Malaysian site both positively and
negatively affected
▪ Lower direct FPC sales to China
▪ Less export from China means (short-
term) additional volume to Malaysia
▪ Limited exposure to China/Asia
▪ Strong demand for fabrics for face
masks
▪ Site in China has been affected
▪ Long-term potential supply chain
effects as majority of electronic
components are produced in China
▪ Risk of lower activity with global
customers
▪ Two smaller sites in China are now
running after long Chinese new year
▪ Soft OEM demand
▪ Short-term positive effect as Europe’s
import of high-runners is limited
▪ Medium-term risk of component
shortage from China/Asia
▪ Potential long-term positive effect
supporting local circular economy
Vis/skjul grid: ALT+F9
Revenue DKK million
Depreciations DKK million
Profit DKK million
2020 guidance – growth of ~3%
16
OUTLOOK
2020E 2019R
BioMar 1,000-1,060 966
Fibertex Personal Care 280-310 352
Fibertex Nonwovens 165-185 141
GPV 210-240 196
HydraSpecma 200-220 215
Borg Automotive 110-120 110
Other -30 -29
Total EBITDA 1,935-2,105 1,951
PPA depreciations -100 -88
Other depreciations -745 -714
Total EBIT 1,095-1,260 1,149
Associates etc. 60 50
Divestments - 29
Other financial items -100 -79
Profit Before Tax 1,050-1,220 1,149
2020E 2019R
BioMar c. 12,000 11,180
Fibertex Personal Care c. 2,100 2,183
Fibertex Nonwovens c. 1,750 1,705
GPV c. 2,800 2,856
HydraSpecma c. 2,000 2,123
Borg Automotive c. 975 918
Other - -18
Total EBITDA c. 21,625 20,946
2020E 2019R
BioMar 340 311
Fibertex Personal Care 140 137
Fibertex Nonwovens 110 107
GPV 120 118
HydraSpecma 85 79
Borg Automotive 49 48
Other 1 1
Total EBITDA 845 802
Vis/skjul grid: ALT+F9
Globalise and
create platform
Utilise new
capacity
Utilise strong
platform
Continue long-
term growth
Regain volume
in Europe/Asia
Further
innovation
Transform and
improve Sweden
Optimise
footprint
Focus and
capture value
Leverage on
investments
Regain top line
momentum
Expand in new
products
Summing up: Priorities for 2020
17
OUTLOOK
▪ Maintain positions and keep volumes
▪ Streamline costs and margin mgmt.
▪ Fix underperformersProfit
improvement
▪ Capital allocation to ongoing
transformation
▪ Invest to secure long-term
competitiveness
Growth
investments
▪ Reduce NWC
▪ Generate cash flow
▪ Improve ROICCapital
optimisation
▪ Secure financial and management
resources
▪ Create value from ESGFuture-
proofing
Aktieselskabet Schouw & Co.
Chr. Filtenborgs Plads 1 8000 Aarhus C Denmark
+45 86 11 22 22
www.schouw.dk
www.linkedin.com/company/schouw
Nasdaq Copenhagen ticker SCHO
Enabling long-term and responsible transformation