half-year results presentation 2012 - ascom€¦ · tems investigation . tems pocket . 29 . with...
TRANSCRIPT
[ ]
FRITZ MUMENTHALER, CEO
MARTIN ZWYSSIG, CFO
2012 HALF-YEAR RESULTS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 2
H1/2012 Ascom Group: Stable revenue Profit of CHF 2.6m (in line with communication in June)
Wireless Solutions (about 70% of Ascom’s Business): Outstanding first two quarters
Network Testing (about 30% of Ascom’s Business): On-going slow market demand reflected in the numbers Turn-around well under way, measures to reduce cost base by CHF 15m taken Moderate market recovery expected for second half-year 2012
Divestment of Security Communication Division completed
EBITDA-margin of 14-15% for 2013 confirmed
CORNERSTONES 1ST HALF-YEAR 2012
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 3
[ ]
2012 HALF-YEAR RESULTS AT A GLANCE BUSINESS DEVELOPMENT 2012 HALF-YEAR FINANCIAL RESULTS SUMMARY AND OUTLOOK
AGENDA
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 4
[ ]
2012 HALF-YEAR RESULTS AT A GLANCE
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 5
Stable revenue development for continuing operations
Wireless Solutions: Revenue growth in local currencies 9.7%. Market position in Health Care further improved.
Network Testing: Decrease of revenue by 12.7% in local currencies reflects continuing slow market demand. Market share in most important business unit “Test & Measurement” defended.
Ascom Group: Revenue at CHF 213.4m; stable compared to H1/2011
STABLE REVENUES
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 6
Group profit impacted by restructuring charges and NT performance
Net profit: CHF 2.6m (H1/2011: CHF 9.0m) includes restructuring expenses of CHF 8.8m
EBITDA for continuing operations CHF 10.7m (H1/2011: CHF 27.8m)
Wireless Solutions Gross margin improved by another 2.1 percentage points to 53.0% EBITDA increased by 18.5% to CHF 21.1m EBITDA margin improved to 14.9% (H1/2011: 13.4%)
Network Testing EBITDA negative at CHF -11.8m EBITDA excl. restructuring expenses at CHF -3.0m (H1/2011: CHF 5.4m)
PROFIT AS COMMUNICATED IN JUNE
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 7
Ascom Czech Republic MBO (closed on 10 October 2011)
Defense Ruag (closed on 1 March 2012)
Ascom Austria MBO (closed on 1 April 2012)
Infrastructure Operators Trans Data Management (closed on 1 April 2012)
Civil Security Sitasys (closed on 31 July 2012)
Divestments completed on 31 July 2012 within less than one year Interests of customers and employees served preferentially
DIVESTMENT SECURITY COMMUNICATION COMPLETED
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 8
[ ]
BUSINESS DEVELOPMENT
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
WIRELESS SOLUTIONS NETWORK TESTING
9
[ ]
www.ascom.com/ws
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
WIRELESS SOLUTIONS
10
Wireless Solutions grows its business
Revenue growth of 9.7% in local currencies Strong performance in the US – Ascom gaining market share in Health Care Very good development in the UK – substantial progress in Retail Strong performance in DACH region (DE, AT and CH) Book-to-bill ratio > 1
WIRELESS SOLUTIONS – EXCELLENT RESULTS IN H1/12
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Wireless Solutions improves its operational efficiency
Gross margin increased by 2.1 percentage points to 53.0% EBITDA margin up by 1.5 percentage points to 14.9% (H1/2011: 13.4%)
11
Continued investments in innovation and in the sales organization
Launch of Multi Medical Alarm module (MMA), next generation of medical alarms for efficient management of medical devices
R&D investments of CHF 11.5 million; focus on the next generation handsets Build-up of sales force in the US
WIRELESS SOLUTIONS – ACHIEVEMENTS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Acquisition of GE Healthcare Nurse Call business
GE Healthcare is one of the three leading vendors of nurse call solutions used throughout North America
GE Healthcare Nurse Call business with a large installed base and overall presence in North America will enhance Ascom’s existing nurse call business
Acquisition will reinforce existing partnership between GE Healthcare and Ascom Acquisition of GE Healthcare Nurse Call business is another step towards global
market leadership in healthcare communication
12
Integrations Unite Device interfaces
Patient monitoring Nurse call Laboratory Radiology Building management
Integration middleware System management Device licensing Duty assignment Event handling Escalation Reporting
Wireless phones Smartphones LED boards Pagers Tablets
2-way interactive messaging/alerts
ASCOM‘S USP
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Inputs Outputs
13
A UNIQUE SOLUTION
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
COMPLETE SYSTEM
OUT OF ONE HAND
14
SMART DEVICES IN OUR PLAYING FIELD
WE BUILD THE BEST HANDSETS IN THE WORLD
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
NEXT GENERATION HANDSETS
NEED FOR MORE INTEGRATION
15
CLOSELY INTEGRATED WITH UNITE
AN INTERNATIONAL NURSE CALL PROVIDER
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
COMPLETE SYSTEM
TRULY GLOBAL
USE THE MOMENTUM OF IP
16
Network Testing consolidated its market leadership
Market leader with global sales presence and an innovative, integrated product portfolio ready to capitalize from coming up-turn
Market leadership in the most important Test & Measurement market was maintained Reporting & Analysis with strong growth in H1/2012 R&D spending of CHF 13.5m (22.2% of revenue excl. restructuring expenses)
NETWORK TESTING – ADAPTED TO MARKET REALITIES
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Network Testing will reduce its cost base by CHF 20m
Implementation of cost reduction program All measures towards CHF 15m cost reduction completed by June 2012. First cost
benefits in H2/2012, full run-rate savings as of 2013 Management is committed to start 2013 with a substantially reduced overall cost
base by CHF 20m
18
Achievements in H1/2012
New product releases Reporting & Analysis: TEMS Discovery Enterprise introduced to the market Benchmarking & Monitoring:
Support for LTE extended to TEMS Automatic product line Test & Measurement: Several new TEMS Pocket models were introduced
NETWORK TESTING – ACHIEVEMENTS AND TRENDS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Market trends in H2/2012
Second half of 2012 is expected to improve Americas:
First signs of market stabilization, growth is expected from service providers EMEA: Middle East & Africa show growing market trend APAC: Moderate market recovery is expected due to first LTE roll-outs
19
[ ]
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
NETWORK TESTING: THE MARKET
www.ascom.com/nt
20
Harsh market environment Mobile network operators continued to focus on cost-saving programs for
investments and operational expenses Investment in LTE networks continues being pushed out Further decline in the demand for mobile network infrastructure in North
America > failed merger of AT&T/T-Mobile brought infrastructure purchase to a standstill
Customer demand in Europe softened Markets in Middle East & Africa showed a growing trend Asia Pacific: Increasing competition and weaker than expected demand
Overall mobile network operators CapEx and OpEx reluctant
NETWORK TESTING – DEMANDING ENVIRONMENT IN H1/2012
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 21
Decline in wireless infrastructure with network equipment manufacturers
Revenue Networks Division -17%.
Overall revenue -8%. Growth in services offset by decline in equipment.
Revenue Wireless
Networks Division -24%.
All numbers represent year-over-year comparisons H1/12 vs. H1/11. Source: Company reporting and press statements.
Weak demand confirmed by network equipment manufacturers
MARKET – NETWORK EQUIPMENT MANUFACTURERS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 22
Operator challenges Operator needs – Market drivers Increasing: Capacity demand Build capacity
Exponential mobile data growth LTE has superior spectrum efficiency and operator ROI and will be rolled out
Spectrum scarcity Capacity augmented with Wifi, HSDPA+, Hetnets and small cell technologies
Increasing: Complexity Increase efficiency
Multi technology and multi vendor networks Roll-out and operation of complex networks, services and applications require cost effective automated solutions that work across vendors and technologies. Services, apps and devices
Not increasing: ARPU Manage quality of experience
Average revenue per user (ARPU) is trending down Cut through complexity, focus on the actual experience of the consumer.
“Over the top” (OTT) players and device manufacturers encroach on operators
Solutions need to consider the network, the service, the application and the device and requires expertise in all these dimensions.
Network Testing is the industry leader with the largest installed base and has positioned to meet the new demand with the industry’s most integrated, broad portfolio targeting the network,
service, application and device dimension of the wireless industry
THE ASCOM ADVANTAGE
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 23
Expected mobile broadband traffic load Revenue trends do not correspond with traffic growth
Operator’s revenue/MB going down by 50% p.a. Operator’s cost/MB going down by 32% p.a.
With margins in decline, operators struggle to meet increasing capacity demand
EXPONENTIAL DATA GROWTH LEADING TO PRESSURE ON CAPACITY
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Source: Nokia Siemens Networks whitepaper
24
LTE POPULATION COVERAGE STILL INSIGNIFICANT
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Percentages represent portion of population that are within the deployed coverage area, not actual subscriber penetration.
25
LTE PENETRATION OFFERS ATTRACTIVE POTENTIAL
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 26
Asia Pacific
Europe Middle East
Americas
PLANNED LTE NETWORK LAUNCHES
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Q3/12 Q4/12 Q1/13 Q2/13 Q3/13
Oman
Mexico
Italy Russia Switzerland
USA
Australia Malaysia China
Switzerland
27
Opp
ortu
nity
for
Net
wor
k Te
stin
g
Network roll-out
WHEN DOES LTE BUSINESS KICK IN?
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Need for NT fully materializes once a network gained critical mass in its subscriber base and the network is considered to be at a maintenance stage
When it comes to new standards such as LTE, there is volume lag until those networks are rolled out across the world
Source: Jefferies, 2012
Trials Roll-out Maintenance
28
TRIAL ROLL-OUT OPTIMIZATION OPERATION
Network Testing supports all phases of the network life cycle
OPPORTUNITY CYCLE NETWORK TESTING
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Benchmarking & Monitoring
TEMS Automatic TEMS Symphony TEMS Monitor Master
Reporting & Analysis TEMS Visualization
TEMS Discovery
Test & Measurement
TEMS Investigation TEMS Pocket
29
With LTE starting to be rolled out: focus of testing is shifting from voice quality to data and application performance (Yesterday: “Did my call get through?” Today: “Can I access my Facebook account? Does Skype work?”)
Traditional outdoor drive testing will become relatively less important, as large-scale geographic network roll-outs will be increasingly replaced by capacity upgrades in typically more challenging environments (e.g., indoors). Indoor deployments are expected to grow at a 15% CAGR rate over the next 5 years (ABI Research).
Labor intensive activities will be increasingly outsourced to engineering service providers, or preferably eliminated through use of smarter technology for reporting and analysis
Demand continues to grow for competitive benchmarking and to monitor and understand the end-customer experience
THE MARKET SPACE OF NETWORK TESTING IS EVOLVING
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 30
[ ]
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
NETWORK TESTING COST REDUCTION PROGRAM AND RE-ORGANIZATION
www.ascom.com/nt
31
A substantial restructuring and reorganization program was initiated in April
with a CHF 15m target run-rate cost reduction – this target has been achieved
Sites in Kista, Sweden and in Eningen, Germany have been closed
The vast majority of affected employees left the company during May and June
First positive impact of these changes are seen in the first half of 2012
Commitment to customers and to technology leadership has not changed
Customer support levels have been maintained
Reductions in R&D have been achieved primarily through portfolio streamlining
and increases in productivity, driven by ongoing platform synergy program
SUBSTANTIAL COST SAVINGS ACHIEVED IN Q2
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 32
ENHANCED CUSTOMER FOCUS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Asia & Pacific Europe, Middle East & Africa Americas
Test & Measurement
Benchmarking & Monitoring
Director Finance & Controlling
Strategic Functional Leaders
GENERAL MANAGER
PRODUCT UNITS Product Management Product Development
Product Support Product Partnering
Regional Sales Regional Finance
Regional Service Delivery Regional HR
Order Desk
Reporting & Analysis
REGIONAL UNITS
33
The new structure has created immediate tangible benefits:
Reductions in backlog as regional sales, finance and supply chain now formally own both expenses and revenue recognition
Faster resolution of customer issues and increased visibility of opportunities for tactical marketing campaigns have resulted from improved interaction between product units and regions, as well as better communication of longer-term product issues that have driven high customer support costs in the past
Substantial further R&D productivity improvements are expected from the sharpened focus within the product units in 2013 and beyond
REORGANIZATION HAS RESULTED IN IMMEDIATE BENEFITS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 34
[ ]
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
NETWORK TESTING: OUTLOOK
www.ascom.com/nt
35
Americas
Large U.S. operators AT&T, T-mobile and Verizon are expected to resume spending
Opportunities in Central and South America driven by LTE Sales to 3rd party service providers are expected to further
increase
Europe, Middle East
& Africa
Continued growth trends in the Middle East and Africa Strong pipeline with limited reliance on large deals for success New hires and targeted products in place to support market
share growth
Asia Pacific
Strong sales outlook in select markets including China
New Reporting & Analysis customized offering launched for Asia Pacific customers
Continued progress in anti-piracy campaign
WE EXPECT A STRONGER TOP LINE IN THE SECOND HALF
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 36
In the course of implementing the cost reduction and restructuring program in Network Testing in the second quarter, additional selective cost reduction measures have been identified and are being implemented in the second half to further drive profitability and capitalize on operational improvements.
Ascom Management is committed to start 2013 with a – by CHF 20m – substantially reduced cost base.
ADDITIONAL PROFITABILITY MEASURES WILL CAPITALIZE ON PRODUCTIVITY IMPROVEMENTS ACHIEVED
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 37
CHFm 1st half 2011 1st half 2012 Revenue 213.4 213.4 Gross profit 110.3 101.2 Gross margin (%) 51.7% 47.4%
Total functional costs (89.3) (95.9) Amortization of intangible assets from acquisition (5.0) (5.3)
Other income/(expenses), net 2.0 0.4
EBIT 18.0 0.4 Net financial result (8.3) (1.3)
Income tax (1.7) (2.6)
Profit/(loss) from continuing operations 8.0 (3.5) Profit/(loss) from discontinued operations 1.0 6.1
Group profit for the period 9.0 2.6 EBITDA 27.8 10.7 EBITDA margin (%) 13.0% 5.0%
CONSOLIDATED INCOME STATEMENT
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 39
GROWTH ANALYSIS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Actual 2011.06 (in CHFm)
Organic growth (in %)
FOREX translation (in %)
Acquisition (in CHFm)
Actual 2012.06 (in CHFm)
Δ 2012/2011 (in %)
Wireless Solutions 132.4 6.2% -2.8% 4.7 141.5 6.9%
Network Testing 70.3 -12.7% -0.8% n/a 60.8 -13.5%
Real Estate 10.9 2.1% -0.2% n/a 11.1 1.9%
Total Ascom 213.4 -0.2% -2.0% 4.7 213.4 0.0%
40
NETWORK TESTING PRO-FORMA*
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
CHFm NT 1st half 2012
Restruct. expenses
NT excl. restruct. expenses
Savings included in H1
Run-rate savings
NT pro-forma
Revenue 60.8 60.8 60.8
Gross profit 24.9 4.9 29.8 (0.7) 3.7 32.8
Gross margin (%) 41.0% 49.0% 53.9%
Total functional costs (35.6) 3.9 (31.7) (1.1) 3.7 (29.1)
Amortization of intangible assets from acquisition (5.2) (5.2) (5.2)
Other income/(expenses), net (2.4) (2.4) (2.4)
EBIT (18.3) 8.8 (9.5) (1.8) 7.4 (3.9)
Amortization/depreciation 6.5 6.5 6.5
EBITDA (11.8) 8.8 (3.0) (1.8) 7.4 2.6
EBITDA margin (%) (19.4%) (4.9%) 4.3%
* without restructuring expenses but with savings
41
31.12.2011 30.6.2012
CHFm % CHFm %
Intangible assets 215.0 42.4 240.8 47.9
Other non-current assets 40.8 8.1 41.5 8.3
Non-current assets 255.8 50.5 282.3 56.2
Cash and cash equivalents 73.3 14.4 55.3 11.0
Other current assets 164.5 32.5 165.0 32.8
Assets of disposal group (held for sale) 13.2 2.6 - -
Total assets 506.8 100.0 502.6 100.0
Shareholders’ equity 203.8 40.2 200.1 39.8
Non-current liabilities 60.4 11.9 154.0 30.6
Current liabilities 152.8 30.2 145.2 28.9
Liabilities of disposal group (held for sale) 89.8 17.7 3.3 0.7
Total liabilities and shareholders’ equity 506.8 100.0 502.6 100.0
CONSOLIDATED BALANCE SHEET
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 42
DEVELOPMENT OF THE SHAREHOLDERS‘ EQUITY (in CHFm)
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
203.8
200.1
2.6
2.8
-8.7
-0.4
192
194
196
198
200
202
204
206
208
Balance at 31.12.2011
Group profit for the period
Distribution of share premium
(dividend)
Currency translation
adjustments
Other items Balance at 30.6.2012
43
DCF < NOA?
CONCLUSION: Annual impairment testing due in Q4/2012 but no indication for an impairment as of today. The terminal value of the CGU Network Testing is about 90%.
SYSTEMATIC OF IMPAIRMENT TESTING
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Calculation of the discounted future cash flows of the goodwill carrying CGU (Network Testing)
DCF
Calculation of the net operating assets of the respective CGU
NOA
No impairment
No Impairment of the
DIFFERENCE between the DCF and the NOA
Yes
No impairment
No
44
2012 2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Reporting according to old accounting principles Effective date of IAS19R (1.1.2013) First time reporting according to IAS19R
IMPACT OF IAS19 „EMPLOYEE BENEFITS“ (REVISED)
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 45
CHFm 1st half 2011 1st half 2012
Net cash flow from operating activities 1.3 (9.7)
Net cash flow from investing activities (3.5) (87.1)
Net cash flow from financing activities (43.4) 78.9
Net decrease in cash and cash equivalents (48.6) (18.0)
Cash and cash equivalents at the end of the period 80.4 55.3
Net cash/(net debt) 42.8 (50.8)
CONSOLIDATED STATEMENT OF CASH FLOWS
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 46
55.8
-50.8
-61.5
-23.3
-12.0 -8.7 -1.1
-60
-40
-20
0
20
40
60
80
Net cash at 1.1.2012
Cash flow due to divestments
Cash flow due to acquisitions
Cash flow from operations and
other investments
Distribution of share premium
(dividend)
Other cash flow Net debt at 30.6.2012
NET CASH TO NET DEBT
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
Net debt 30.6.2012
Net cash 1.1.2012
Cash flow divestments
Cash flow acquisitions
Cash flow operations &
other investments
Distribution of share premium
(dividend) Other cash flow
47
ASCOM IS COMMITTED TO PROFITABLE GROWTH
Ascom is well positioned in two global businesses with market leadership and with a clear focus on innovative software and hardware products, systems, solutions and services
Wireless Solutions to continue to generate profitable growth, especially in the healthcare communication market
Network Testing has the largest installed base, an innovative product portfolio, and as of 2013 a substantially reduced cost base (CHF 20m) – all this combined with global sales reach offers attractive opportunities
EBITDA target for 2013 confirmed: Ascom Group 14-15% EBITDA margin*
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
* Outlook assumes a steady economical environment and at least stable currency relations
49
Financial targets for FY 2012* Certain market growth on Group level expected Lower net result year-on-year due to the additional cost measures and the difficult market environment for Network Testing: H1/2012: Group profit of CHF 2.6m achieved Additional restructuring expenses to reduce NT cost base by totally CHF 20m Network Testing expects better results in H2/2012 due to the measures initiated and the expected market recovery Wireless Solutions expected to end full-year 2012 both with top-line growth and higher EBITDA compared to 2011
OUTLOOK
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
* Outlook assumes a steady economical environment and at least stable currency relations
50
Financial targets for FY 2013* EBITDA margin of 14-15% on Group level as target for 2013 confirmed: Wireless Solutions achieved a 15% EBITDA margin already in 2011 and has started the first two quarters stronger than last year Network Testing will benefit from a reduced divisional cost structure of CHF 20m in 2013 Moderate market recovery for Network Testing already expected for the second half of 2012
OUTLOOK
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
* Outlook assumes a steady economical environment and at least stable currency relations
51
[ ]
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group
GROUP CONTACT
Ascom Holding AG Investor Relations Stettbachstrasse 6 CH-8600 Dübendorf
T +41 31 999 11 11 F +41 44 823 13 21 [email protected]
www.ascom.com
52
LEGAL DISCLAIMER
This document contains specific forward-looking statements, e.g. statements including terms like “believe”, “expect” or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of Ascom and those explicitly presumed in these statements.
Against the background of these uncertainties readers should not rely on forward-looking statements. Ascom assumes no responsibility to update forward-looking statements or adapt them to future events or developments.
2012 Half-Year Results Conference, 22/08/2012 © Ascom Group 53