Download - 2006 Full-year Results & 2007 Outlook Frank Gad, Chief Executive Officer March-April 2007
2006 Full-year Results & 2007 Outlook
Frank Gad, Chief Executive Officer
March-April 2007
22006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
AGENDA
1. SP Group – an overview
2. 2006 highlights
3. Group financial highlights 2006
4. Business areas – results & outlook
5. Group strategy
6. Financial objectives
7. 2007 outlook Frank Gad (born 1960, M. Sc.)
Career:
Nov. 2004: CEO, SP Group A/S
1999-2004: CEO, FLSmidth A/S
1996-99: President, Mærsk
Container Industri A/S
1985-99: Odense Steel Shipyard A/S,
latest as EVP
32006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
SP Group A/S
Injection moulding Polyurethane Vacuum Coating
SP Moulding A/S Tinby A/S
Ergomat A/S
Gibo Plast A/S Accoat A/S
TPI Polytechniek BV
SP Medical A/S
SP GROUP – AN OVERVIEW
• Manufacturer of moulded plastic components and coatings
• Supplier of customer specified solutions for manufacturing industries
• Increasing exports and increasing production in Poland and China
• Strong international niche positions – also within own brands
42006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
• Revenue in all 4 business areas exceeded expectations
• 20.1% growth outside Denmark • Higher efficiency and capacity utilisation
throughout the Group
• EBITDA margin at 8.9% (+2.2pp)
• 2 new manufacturing units in Poland; capacity expansion in China
• Sale/close-down of non-strategic assets
• Holstebro and Jyderup closed
• 3 properties sold during H2
• Acquisitions strengthen focus areas• 2006: Mattega AB (60%), Danfoss
Plastics, Ergomat LLC (22.6%) • 2007: 10% of TPI Polytechniek
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2006 HIGHLIGHTS
Results before tax & minorities DKKm
Operating profit (EBITDA) DKKm
+48,4%
-60
-50
-40
-30
-20
-10
0
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20
30
40
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+99%
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-15
-10
-5
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5
10
15
2003 2004 2005 2006
GROWTH DRIVERS
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180
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Sales and marketing focus
Organic growth in %
25
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35
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45
2003 2004 2005 2006
International sales focus
Exports in % of total revenue
Medico focus Focus on own brands
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120
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Ventilation concepts Ergonomic solutions
Revenue in DKKm Revenue in DKKm
62006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
121,2
462101
148,7
Polyurethane Vacuum formingCoatings Injection moulding
2006 RESULTS EXCEEDED EXPECTATIONS
DKKm 2006 2005 Change %
Revenue 825.4 742.5 +11
EBITDA 73.4 49.5 +48.4
Operating profit (EBIT) 36.0 19.1 +88.5
Profit before tax & minorities
20.7 10.4 +99
Assets in total 670.6 606.6 +10.6
Equity incl. minorities 167.1 134.2 +24.5
Net interest-bearing debt 337.3 327.9 +2.9
Cash flows, operations 37.5 36.6 +2.5
Cash flows, investments -67.5 -16.8 +301.8
Cash flows, financing 38.6 -31.7 n.a.
Revenue split 2006, DKKm
Initial guidance:
4-8% growth; DKK 10-15m profit before tax and minorities
72006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
SP Moulding manufactures injection moulded advanced plastic components for a wide range of industries.
SP Medical produces for customers in the medical appliance industry, including finished articles such as medical guide-wires. The production takes place in bacteria- and particle-free clean-rooms.
SP Moulding is the leading Danish manufacturer and among the largest in Scandinavia. SP Medical ranks 3-4 in Scandinavia.
Locations: Juelsminde, Stoholm, Karise, Sønderborg (Denmark), Suzhou (China) and Sieradz (Poland).
INJECTION MOULDING (1)
Technical plastics
Mass Production Medico Medico 2K and 3K moulding
82006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
INJECTION MOULDING (2)
2006:
• 15.9% growth; 10.8% organic growth
• Margin improvement due to higher efficiency and capacity utilisation
• Strong performance by SP Medical; integration of Accoat Medical early 2007
• Acquisition of Danfoss Plastics; 35 machines to Denmark and Poland
• Production set-up in Poland established for both SP Medical and SP Moulding
• Earnings affected by expansion outside Denmark and integration efforts
Outlook for 2007:
• Continuing growth; improved earnings
• Declining negative impact from Polish start-ups and integration efforts
DKK mio. 2006 2005
Revenue 462.0 398.6
EBITDA 27.2 18.9
Operating profit (EBIT) 9.0 1.6
Result 0.6 -2.5
Employees (average) 494 463
92006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
3 activities: Tinby A/S, Ergomat A/S and TPI Polytechniek BV
Locations: Søndersø (DK), Zdunska Wola (POL), Vught and MK Teuge (NL), Cleveland (US), Montreal (CAN), Zeil am Main (DE), Helsingborg (SE)
Tinby is one of the leading supplier in Northern Europe of moulded products in solid foamed and flexible polyurethane (PUR). Global market leader within hard rollers. Rollers Solid foamed
PUR
TPI Polytechniek produces and sells light-foamed ventilation equipment for industrial buildings and poultry and pig houses. Market leader in the EU.
POLYURETHANE (1)
Ergomat produces and sells ergonomic solutions under own brands: Primarily mats (Ergomat), chairs (ErgoPerfect), tables, and DuraStripe striping tape. Market leader in the EU. Mats DuraStripe
102006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
POLYURETHANE (2)
2006: • Overall: 1.5% organic growth • TPI: 17% growth, driven by Eastern
Europe and the Middle East
• Ergomat: Modest growth at 10%
• Tinby: Declining revenue; progresses made in the wind mill industry
• Overall EBIT margin up to 15.7% due to better product mix and elimination of loss-making activity in Poland
• Acquisitions of 60% in Mattega AB and 22.6% in Ergomat LLC
Outlook for 2007:
• Higher revenue overall
• Higher earnings overall
DKK mio. 2006 2005
Revenue 148.7 156.6
EBITDA 30.4 24.7
Operating profit (EBIT) 23.3 17.8
Result 14.0 10.9
Employees (average) 193 201
112006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
Gibo Plast develops and manufactures thermo-formed plastic products in different materials and colours. The products are mainly used in refrigerators and freezers, caravans as well as within transportation, medical equipment, lighting industries, wind turbines etc.
Market leader in Denmark and Scandinavia, among the 10 biggest suppliers in the EU as regards traditional vacuum forming. Strong position within the new High-pressure and Twinsheet technologies.
Location: Skjern (DK).
Vacuum forming CNC milling High pressure Twinsheet
VACUUM FORMING (1)
122006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
VACUUM FORMING (2)
2006:
• Revenue slightly better than expected
• 14% drop in sales to the refrigerator and freezer sector; 2 major customers closed production in Denmark in Q4
• 10% growth in sales to other segments: transportation equipment, the medico industry, big parts for wind turbines
• Stable earnings due to centralization of production in Skjern during 2005
• Sales efforts strengthened significantly; objective of doubling export sales
Outlook for 2007:
• Revenue down due to shortfall of revenue to refrigerator/freezer sector
• Positive earnings, but at a lower level than in 2006
DKK mio. 2006 2005
Revenue 101.0 104.2
EBITDA 8.4 8.7
Operating profit (EBIT) 5.3 6.3
Result 2.5 3.4
Employees (average) 76 76
132006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
Accoat develops and manufactures high-build corrosion protection, non-stick and low-friction coatings in Teflon, PTFE and other refined materials for a wide range of industries. Accoat engages in coating of both industrial products and production equipment.
Within industrial teflon coating Accoat is among the 5 biggest suppliers in the EU. Manufacturing of medical guidewires and other finished articles has been transferred to SP Medical early 2007.
Location: Kvistgaard (DK).
COATINGS (1)
Coating Coating Medico
142006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
COATINGS (2)
2006:
• 55% organic growth with growth accelerating during H2
• Strong revenue growth within chemical and pharmaceutical industries
• Transfer of wage-incentive activities from Denmark to Poland in 2006-07
• Investments in Kvistgaard factory
• Earnings significantly ahead of expectations following stronger focus on core competencies
Outlook for 2007: • Accoat Medical divested to SP Medical • Continuing growth in both revenue and
earnings in the coating activities
DKK mio. 2006 2005
Revenue 121.2 92.0
EBITDA 17.8 7.2
Operating profit (EBIT) 11.5 2.3
Result 6.5 -0.2
Employees (average) 121 114
152006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
• Win market shares in Northern and Central Europe through increasing exports from Denmark and Poland
• Acquisitions, e.g. consolidation of main markets in Northern Europe
• Intensified marketing and stronger differentiation within processes, design and raw materials
• Intensified innovation and contribution to the customer’s product development; global sourcing of forms and tools
• Stronger engagement in growth industries and new customers
GROUP STRATEGY (1)
162006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
• Leverage the potential in the existing niche products
• Ergonomic workplaces and striping equipment
• Ventilation equipment • Guide-wires • Rollers
• Globalize products under own brands, i.e. Ergomat, DuraStripe, TPI etc.
• New niche products with control of trademarks and distribution
• Focus on medico through strengthening of competencies
STRATEGY (2)
Increasing investments in DKKm
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Investments in property, plant and equipment
172006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
STRATEGY (3)
• Continuing adjustments and improved efficiency of production
• Automation of processes, LEAN roll out • ”Better, cheaper and faster”
• Expansion in Poland and China • Doubling of capacity in China
• Expansion of new Polish moulding factory and clean room production
• Ongoing transfer of work-intensive activities from Denmark to Poland
• Maximum utilisation of economies of scale, e.g. global sourcing
• Optimisation of supply chain and IT and control systems
• Increased flexibility and better education of the employees
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667
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99
6
687 Denmark
Germany
Sweden
Poland
Netherlands
China
North America
Distribution of employees by geography in 2006 (average)
182006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
OUTLOOK FOR 2007
• Growth in 3 business areas; Gibo Plast to offset shortfall of revenue
• Group revenue growth of 4-8% = revenue of DKK 860-890m
• Declining negative impact from Polish start-ups and integration costs related to Danfoss Plastics
• Group profit before tax and minorities is estimated at DKK 25-30m vs. DKK 20.6m in 2006
• Outlook is based on current raw material prices and exchange rates
• No changes in the Group’s activities are anticipated
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Equity incl. minority interests DKKm
• Two share issues in 2006 = net proceeds of DKK 23.7m
• Equity ratio incl. minorities up 2.8pp to 24.9%
• Share capital DKK 200m
Stronger financial platform
+24,5%
192006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
LONG-TERM FINANCIAL OBJECTIVES
• Profit before tax and minorities = 5% of revenue within 3 years
• Group revenue in the range of DKK 1bn in 2009
• EBITDA margin to exceed 10%
• Lower net interest-bearing debt
• Increased cash flow from operations
• NIBD/EBITDA ratio at 3-4 in 2009 • 11.5 in 2004; 4.5 in 2006
• Equity ratio in the range of 20-35% is considered appropriate
• Competitive return to shareholders from rising share price
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42.9% return in 2006
Share price development
Share price (DKK) Total index
Heading for the 5%
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-6
-4
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Profit before tax and minorities in % of revenue
202006 Full-Year & 2007 Outlook – March-April 2007 / SP Group
FORWARD-LOOKING STATEMENTS
This presentation reflects management’s expectations of future events and financial results.
The statements as regards 2007 and the years to come are subject to certain uncertainties and actual results may therefore deviate
materially from the outlook and the financial objectives. Circumstances that could cause changes are among others - but
not exclusively – price changes in raw material and energies, changes in exchange rates, changes in the macro economic and
political conditions, changes in the customer’s demands and production ways and other circumstances on which we do not have
any influence.
This presentation is not a request for buying or selling shares in SP Group A/S.
Additional information:
CEO Frank Gad Phone: (+45) 7023 2379 E-mail: [email protected]
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