elringklinger investor presentation - march 2018 beamer · corporate presentation | march 2018...
TRANSCRIPT
Analysts’ conference
Frankfurt | March 27, 2018
2
ElringKlinger
In a nutshell
Corporate presentation | March 2018
Founded in
1879
+11% annual growth in
sales since 2005
Worldwide
45production sites
8.5%EBIT margin
pre PPA in 2017
Sales of EUR
1,664million in 2017
9,611employees as of
Dec 31, 2017
Family as a
strong anchor
shareholder
Headquartered in
Dettingen,
close to Stuttgart
3
Latest news
Dedicated board role for e-mobility, Reiner Drews new COO
• ElringKlinger will introduce dedicated management board role for e-mobility as ofApril 1, 2018, to be headed by today‘s COO Theo Becker
• Reiner Drews, currently responsible for Cylinder-head Gaskets and Specialty Gasket business divisions, will be appointed COO as of April 1, 2018
Dr. Stefan Wolf
CEO
Thomas Jessulat
CFO
Theo Becker
CTO
Reiner Drews, COO
• Born in 1969
• Toolmaker, graduate engineer in Production Technology; MBA
• With ElringKlinger since September 2006
• Before that, he held management positions at different companies of the metal industry
Management Board as from April 1, 2018
Corporate presentation | March 2018
4
FY 2017
Financial highlights
Corporate presentation | March 2018
• Strong organic growth of 8.1% across all global regions+8%
8.5%
EUR
0.50
�
• EBIT (pre PPA) slightly up to EUR 141.8 (140.4) million
• Optimization of Swiss site on track, headwinds by SAP implementation
• Capex ratio improved by disciplined approach to 9.3 (11.0)%, net working capital up due to inventories, operating free cash flow below prior year’s level at EUR -67 (-4) million
• Stable dividend proposal of EUR 0.50 to Annual General Meeting, resulting in a payout ratio of 45 (40)%
• Outlook for 2018: sales increase +2 to 4 pp above global market growth, EBIT margin (pre PPA) at ~9%
��
5
Global
megatrends
transform the
automotive
industry
Technological progress
Urbanization
Scarcity of resources
Globalization
Climate change
Safety systems
Autonomous driving
Efficient propulsion
Connectivity
Shared mobility
Markets
Megatrends trigger technological transformation process
Corporate presentation | March 2018
Global combustion engines production
6
Markets
Automotive growth driven by new drive systems from 2021 on
Corporate presentation | March 2018
Global EV production
Source: Morgan Stanley, ElringKlinger Research
CAGR-1%
CAGR+1%
20
30
20
29
20
28
20
27
20
26
20
25
20
24
20
23
20
22
20
21
20
20
20
19
20
18
20
17
20
16
CAGR+24%
20
30
20
29
20
28
20
27
20
26
20
25
20
24
20
23
20
22
20
21
20
20
20
19
20
18
20
17
20
16
7
Markets
Main driver: Stricter emissions legislation for vehicles
China 2020117g CO2/km average
fleet emissions
Japan 2020122g CO2/km average
fleet emissions
EU 202195g CO2/km average
fleet emissions
EU 2030**
30 % reduction of average fleet
emissions (base year: 2021)
USA 202599g CO2/km average
fleet emissions
* New European Driving Cycle
** Proposal submitted by the EU commission in November 2017
Source: ICCT, ElringKlinger research
India 2022113g CO2/km average
fleet emissions
Values adjusted to the European NEDC* test cycle
Corporate presentation | March 2018
8
ElringKlinger
ElringKlinger’s sales structure of products will change
Sales split (actual and ambition) – in % of total sales
Corporate presentation | March 2018
Non-Automotive
products
5%Aftermarket
9%Structural
lightweight and
e-mobility
products4%
Functional
components
82%
Actual 2017 Ambition 2030
Non-Automotive
products
~10%Aftermarket
~10%
Structural
lightweight and
e-mobility
products
>25%
Functional
components
<55%
9
ElringKlinger
Prepared to play an active role in the transformation
Sales split (ambition) – in % of total sales
Corporate presentation | March 2018
Ambition 2030
Non-Automotive
products
~10%Aftermarket
~10%Structural
lightweight and
e-mobility
products
>25%
Functional
components
<55%
E-Mobility
• Battery, fuel cell, and drivetrain system
• Track record of successful R&D work and proven competence, e.g. as series producer of e-mobility components
Structural lightweighting
• Less weight and higher degree of functionality
• Unique production technology
Functional components
• Continuous high market share
• Benefitting from global footprint and sound process know-how
10
Three strategic areas of ElringKlinger: Lightweighting
Lightweight products help to meet CO2 regulations
Corporate presentation | March 2018
Less weight helps to lower
fuel consumption and thus,
to reduce CO2 emissions
Advanced materials
enable new application
areas
Less weight means a
higher range of driving
for full EVs
+
Technology Markets ElringKlinger
• Technology independent of the
drive train
• Lightweighting trend enforced by
emission regulations, imposing
penalties on those OEMs which do
not meet the reference values
• Products like the cross-car beam
reduce the weight of a car up to
40%
• Focus: in-house tooling technology
enabling the production of
complex geometries
• Different products:
−Organo sheets
(e.g. door module carrier)
−Hydroform-hybrid
(e.g. cross-car beams, front-end
carrier, front-end adapter)
�CO2
�km
100 kg weight reduction
corresponds to 0.4l/100 km
less fuel consumption -100
kg
Improving driving
dynamics�
11
Three strategic areas of ElringKlinger: E-Mobility
Battery JV with CITC targets China and global markets
Corporate presentation | March 2018
Batteries can be
recharged to a 80% level
within 30 minutes
Lower maintenance
costs than a combustion
engine car
Public recharging
stations in Germany
with upward trend4,000
+
Technology Markets ElringKlinger
• E-mobility as main contributor to
Automotive growth from 2021 on
• Emission reduction targets as key
driver of the industry
• National quota regulations for
electric vehicles in discussion
• State-funded incentive programs
support the forward movement
• Expanding recharging
infrastructure
• Cooperation with Chinese battery
manufacturer CITC/CALB
−Signed in 2017
−Targeting global markets
−CALB in charge of the cell,
ElringKlinger responsible for
design, cell contacts and housing
• Established e-mobility supplier as
series producer of cell contacting
systems since 2011
30min
Zero emission possible0 g CO2
Enhancing driving
comfort by lowest
acoustic emission�
Large range of
driving
Zero emission possible for
both power generation
and fuel cell in use
Multiple applications
(e.g. cars, LCVs, trucks,
buses, trains, forklifts)
Increasing number of
H2 fueling stations
Easy and fast to
refuel
12
Three strategic areas of ElringKlinger: E-Mobility
Fuel cell market with substantial growth potential
Corporate presentation | March 2018
2-5min
+
�
Technology Markets ElringKlinger
>500km
0 g CO2
• China as main market
opportunity – subsidizing each
bus driven by a fuel cell system
• Market entry in Europe
supported by economies of scale
in the mid-term perspective
• PEM fuel cell stack developed:
300 cells generate 63 kWeL
• Broad range of products:
−Full PEMFC stack
−Components: Metallic bipolar
plates, end and media modules,
casings
−R&D and testing
• Patents for several designs of
bipolar plates and media modules
Production-ready system
enables acceleration from
0 to 100 km/h in 4 seconds
Smart control of power
flow via intelligent
software technology
To be flexibly
integrated into PHEV,
BEV, and FCEV
Intelligent thermal
management improves
cooling performance
Combines power manage-
ment electronics, trans-
mission and electric engine
13
Three strategic areas of ElringKlinger: E-Mobility
Stake in hofer complementing the e-mobility path
Corporate presentation | March 2018
EDU
+
Technology Markets ElringKlinger
4seconds
@
• Strong growth of PHEV, BEV
and FCEV forecast, particularly
form 2021 onward
• Differentiated market: mass
market, premium market as
well as luxury segment
• Acquisition of stake in hofer
−28.9% of hofer AG
−53% of hofer powertrain
products
• Broad range of products
(e.g. system integration, control
soft-ware, power management
electronics, thermal management,
safety concepts)
• By offering sophisticated high-tech
solutions, addressing high-end
sports and luxury car segment
14
Three strategic areas of ElringKlinger: Functional Components
Continuous growth prospects in a transforming world
Corporate presentation | March 2018
Cylinder-head Gaskets
• Fully dependent on combustion and hybrid world
• High global market share of 40-50%
• Strong remaining business in those regions and for those
applications which will not transform too fast
• Profound material and process know-how that is also used for
new products (e.g. for bipolar plates or cell contacting systems)
15
Three strategic areas of ElringKlinger: Functional Components
Continuous growth prospects in a transforming world
Corporate presentation | March 2018
Specialty Gaskets, Shielding Technology & Plastic Modules
• Partly dependent on combustion and hybrid world
• Specialty Gaskets
− Special coating know-how and sealing competence from -40˚C to 1,100˚ C
− Products like gaskets for cooling systems still needed in full EV
• Shielding Technology
− Strong demand for thermal, acoustic and aerodynamic applications
− Substantial opportunities for EMC (electromagnetic compatibility) shielding
• Plastic Modules with a number of applications for e-mobility
world, e.g.:
− housing modules for battery systems
− Casings, end and media modules for PEMFC
− Cover (incl. sealing) for EDUs
16
ElringKlinger
Broader scope of ElringKlinger content by wide product range
Corporate presentation | March 2018
Present Future
Content per car – in EUR
40 - 60 EUR(100-150 EUR incl. cross-car beam)
100 - 10,000 EURContent per car
Financials
18
FY 2017: Orders and sales
FX headwinds on orders and sales
Order intake – in EUR million
2016
1,557
+6.8%
2017
1,664
Organic
+126+8.1%
M&A
+9+0.6%
FX
-29-1.8%
+2.2%*
2017
1,732
2016
1,694
2016
+7.3%**
2017
1,001
933
*FX-adjusted: +6.6% **FX-adjusted: +12.4%
Corporate presentation | March 2018
Order backlog – in EUR million Sales bridge – in EUR million/ in %
Differences due to rounding
19
FY 2017: Orders and sales
Ongoing internationalization and diversified customer structure
Sales 2007-2017 by region – in % of total sales Sales 2017 by customer group – in % of total sales
Corporate presentation | March 2018
1,664
26%
31%
19%
19%
5%
2016
5%
608
35%
33%
17%10% 30%
18%
16%
6%
…2007
4%
…2012
1,127
30%
+6.9%
2017
1,557
27%
31%
19%
19%
South America/
Rest of World
GermanyRest of
Europe
NAFTAAsia-
Pacific
American
OEMs
19%
German
OEMs
16%
French
OEMs
4%Tier 1
14%
Aftermarket
9%
Other
38%
20
FY 2017: Income statement
Positive signs of recovery partly set off
EBITDA – in EUR million
+3.1%
2017
238
2016
231
Corporate presentation | March 2018
EBIT bridge 2017 vs. 2016 – in EUR million
+1.0%
2017
141.8
High
demand
NAFTA
-12
Operating
leverage
+7
Optimization
Swiss site
+6
2016
140.4
21
FY 2017: Income statement
Important factors on earnings level
• Main part of migration finalized
• Next step: migration of second part to new factory in Hungary – completion scheduled for end of 2018
• Continuing optimization of cost structure at Swiss site to be finished by end of 2019
• Annual optimization impact of EUR 10 million p.a. planned for 2018 and 2019
Sevelen (CH)Nantiat (F)
Reus (E)
��
2018Part 2
Part 1
�Kecskemét
(HU)
• Aluminum: cut of supply by China
• C-Steel: EU anti-dumping measures resulting in shortage of supply
• Polyamide: prices triggered by high global demand for lightweighting products
Polyamides
C-steel
High-grade
steel
Aluminum
201720162015
Optimization of Swiss site on track Commodity prices further increased
Corporate presentation | March 2018
22
FY 2017: Income statement
Strong impact on financial result by FX headwinds
EBT – in EUR million
20172016
7079
-11.1%
20172016
Corporate presentation | March 2018
Net income (attr. to shareh.) – in EUR mn Earnings per share – in EUR
-11.3%
2017
1.10
2016
1.24
Financial
result -27
Financial
result -12
124
110
-11.3%
23
FY 2017
Stable dividend proposed
Dividend payment – in EUR
Payout ratio – in % of Group EPS
+0.4%
2017
890
2016
886
Corporate presentation | March 2018
Equity – in EUR million
Equity ratio – in % of total assets Employees – headcount as of Dec. 31
47.2% 44.0%
+11.9%
Germany
Abroad
2017
9,611
40%
60%
2016
8,591
41%
59%40
2017
0.50*
45
2016
0.50
* Joint proposal of Supervisory Board and Management Board to the AGM
24
FY 2017: Balance sheet
Net working capital mainly driven by inventories
Net Working Capital (NWC) – in EUR million
NWC ratio – in % of total sales
-119
300 303
328 370
-103
+5.5%
Trade
payables
Trade
receivables
Inventories
2017
553
2016
525
Corporate presentation | March 2018
33.7% 33.3%
Inventories bridge – in EUR million
25
21
1112
13
15
+12.5%
2017
370
OthersAfter-
market
Tools
(FX-
adj.)
Sales
growth
M&AFX2016
328thereof: tools25%23%
25
FY 2017: Balance sheet
Improved maturity structure by issued Schuldscheindarlehen
Corporate presentation | March 2018
Net financial debt – in EUR million
321
479
257
+21.5%
Cash
and cash
equivalents
Non-current
financial
debt
Current
financial
debt
2017
655
-45
221
2016
539
-39
Maturity structure of financial debt –in EUR million
128
351
-45
Non-current (>5 years)
221
Cash and cash equivalent
2017
Non-current(between 1
and 5 years)
Current (up to 1 year)
Cash
26
FY 2017: Cash flow statement
Disciplined capex, increased inventories and SSD affected cash flow
Capex (in PPE) – in EUR million
Capex (in PPE) ratio – in % of total sales
193
4539
109
95
+15.5%
Cash
2017
FX/
Others
6
Invest-
ments
Financing
activities
Operating
cash
flow
Cash
2016
Corporate presentation | March 2018
Cash flow bridge – in EUR million
-9.2%
2017
156
2016
171
11.0% 9.3%
SSD = Schuldscheindarlehen
156Capex
(in PPE)
27
FY 2017: Segments
Strong margin increase in Engineered Plastics
Original Equipment (OE) Aftermarket
Engineered Plastics Services & Industrial Parks
Sales – in EUR million
EBIT margin – in %
+6.8%
2017
1,382
6.2
2016
1,294
6.9
+6.4%
2017
156.7
20.3
2016
147.3
20.7
14.7 16.7
111.1
+9.2%
2016 2017
101.7
2016
13.8
9.2
2017
14.2
-2.8%
5.1
Corporate presentation | March 2018
28
Financial agenda
Improving execution
Corporate presentation | March 2018
Focus on improving operational excellence1
2
3
4
5
6
Improved approach to the management of inventories
Expansion of trade payables
Continuing disciplined capex approach
Focus on improved operating free cash flow
Balancing and managing the Group throughout the transformation process of the industry
Outlook
30
Expectations for 2018
Global markets expected to grow further
Light vehicle production growth – in % vs. 2017
Source: OICA, HSBC, JP Morgan, ElringKlinger research
Corporate presentation | March 2018
• Stable situation in Germany
• Growth in Southern Europe
+3% Europe
• High demand for SUVs in China
• Modest growth in Japan
+3% Asia-Pacific
• Rising truck market
• Subdued demand for LVs
+1% NAFTA
• Low basis
• Turnaround achieved
+10% South America
• Solid growth prospects
• Supported by Europe and China
+2-3% Global
31
Expectations for 2018
Numerous factors intensify general environment of uncertainty
Corporate presentation | March 2018
Geopolitical
tensions and
higher national
interests as risk
factors
Commodity price
development
Costs for shaping
production
facilities to
Group standard
Increasing salesContinuous
improvement of
production
processes on a
global basis
Optimized
purchasing and
logistic processes
within the GroupOptimized cost
structure esp. at
highly utilized
locations
2018Costs of the
transformation
process of the
industry
Ongoing discussion
on diesel subject
and court deci-
sions on city bans
of diesel cars
Mid-term
Benefitting from
early prepara-
tions for future
Automotive
technologies
32
Group
Outlook 2018
Corporate presentation | March 2018
2 – 4 percentage
points above global market growth
~ 9%
Sales Sales
EBIT marginpre PPA
EBIT marginpre PPA
Successive
improvement
Above global
market growth
Mid-term2018
Group
Further indicators for FY 2018 and mid-term perspective
33
FY 2017
actual
FY 2018
expected
Mid-term
expected
ROCE in % 8.2% Slight improvement Increase based on
earnings and NWC
improvements
Capex (in PPE) in % of total sales 9.3% 9 - 10% Continuation at
comparable level
Net working capital
(NWC)
in % of total sales 33.3% Below prior-year level Slight step-by-step
improvement
Operating FCF in EUR million -66.6 Slight improvement Continuous
improvement
Equity ratio in % of total assets 44.0 40 - 50% Continuation at
comparable level
Corporate presentation | March 2018
Analysts’ conference
Frankfurt | March 27, 2018