Annual General Meeting 2014 CEO statement May 2014 2 Sanitec Home - - PowerPoint PPT Presentation

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Annual General Meeting 2014 CEO statement May 2014 2 Sanitec Home of the Bathroom Selection of products Leading markets positions in the stronger economics of Europe Bathroom ceramics Ceramics complementary products Mature and

SLIDE 1

CEO statement May 2014

Annual General Meeting 2014

SLIDE 2

SLIDE 3

Leading markets positions in the stronger economics of Europe

Sanitec—Home of the Bathroom

Unique portfolio of leading and longstanding brands with a loyal customer base One Sanitec—fundamentally improved industrial platform Strategy founded on organic growth and incremental efficiency improvement Highly experienced management with proven track record Strong cash flows and solid financial position Industry with significant cyclical upside Mature and consolidated industry with high barriers to entry Selection of products

By product area

Central & North Europe 56% East Europe 16% Other 28%

By geography

Sales split 2013

Bathroom ceramics Ceramics complementary products

Key financials

(€m) 2010 2011 2012 2013

Net sales 777 771 753 702

Adj. EBITDA

77 106 108 103 % margin 9.9 13.7 14.3 14.6 Cash conversion (%) 53 78 88 82 Bathroo m ceramics 76% Ceramics complem entary products 24%

SLIDE 4

Leading positions in the stronger economies of Europe

Excellent geographical footprint

Source: BRG Consult ("BRG"), IMF WEO April 2014, Region East Europe figures from 2013

Market size: €2.7bn GDP growth: 1.5%

Central Europe (31%)

Market size: €0.7bn GDP growth: 1.9%

North Europe (25%)

Market size: €1.2bn GDP growth: 2.3%

East Europe (16%)

Market size: €2.3bn GDP growth: 1.2%

South Europe (17%)

Market size: €1.2bn GDP growth: 2.6%

UK & Ireland (7%) Sanitec market position within bathroom ceramics (by volume)

No. 1 or 2
No. 3 or 4

Clear no. 1

SLIDE 5

Unique portfolio of leading and longstanding brands

Strength of brands and customer relationships evidenced by sticky market shares

Sanitec bathroom ceramics market share in core markets by value

61 67 36 32 27 18 17 21 17 17 (%)

North (Sweden, Finland, Norway, Denmark) Central (Germany, the Netherlands, Belgium) South (France, Italy) East (Poland, Ukraine, Russia) UK and Ireland (UK) Source: Management estimates based on BRG market values

Sanitec‘s national jewels

SLIDE 6

Forecast

150 180 210 240 2000 2003 2006 2009 2012 2015E (€bn) New build RMI

Forecast

150 200 250 300 350 2000 2003 2006 2009 2012 2015E (€bn) New build RMI

Industry with significant cyclical upside

European bathroom fixtures market has a total market value of €8.1 billion with demand driven primarily by more resilient RMI activity

Comments Residential construction (€bn)3

Source: BRG, Euroconstruct June 2013 Notes: 1 Sanitec’s core markets by value,,Management estimate 3 Sweden, Finland, Norway, Denmark, Germany, the Netherlands, Belgium, UK, France, Italy, Poland

European bathroom fixtures Non-residential construction (€bn)3

Bathroom ceramics Pre-wall 5% Furniture 20% Taps & Mixers 31% Baths 7% Shower 17%

Bathroom fixtures market by product (2012)1 Sanitec‘s new build vs. RMI demand exposure2

New build ~30–40% RMI ~60–70%

 Sanitec’s main market, bathroom ceramics, represents c. 20% (€1.6 billion) of the total €8.1 billion bathroom fixtures market  Long-term driver via construction market with Renovation, Maintenance and Improvement (“RMI”) being more resilient and cyclicality coming from new build

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Organic growth and incremental efficiency improvement

Well articulated strategic priorities

 Drive value growth through innovation, renewal and streamlining of core product portfolio  Capture growth opportunities in the fragmented CCP market by using existing ceramics platform and locally proven bundling concepts  Continued expansion in higher-growth Eastern European markets, based on our existing Eastern European footprint and a select number of national jewel brands  Continue to execute One Sanitec efficiency improvement initiatives

Sanitec’s strategy Key highlights

Markets Western Europe Eastern Europe Rest of world CCP Bathroom ceramics Drive value through innovation and product leadership Product areas Grow Eastern Europe Grow ceramics complementary products

4 3 2

2 3 4

1 Exploit

pportunities

SLIDE 8 Notes: 1 Adjusted EBITDA margin 2 Reported EBITDA margin for the Bathroom and Wellness division only 3 Reported EBITDA margin, FIGURES FOR 2012 4 Adjusted EBITDA margin, pro forma adjusted for the Joyou acquisition

EBITDA margin full year 2013

3,1 9,9 7,4 11,4 14,6 19,7 25,9 5 10 15 20 25 30 EBITDA margin (%) Rovese3

Bathroom peers Ceramics peers

1 3 2 4 1

Best-in-class profitability among Ceramics peers

Source: Competitor reports

SLIDE 9

Key developments during Q1

On track to deliver on all long-term financial targets Q1 2014 EBIT-margin

10.6%

+2.9 p.p. y-o-y

Q1 Net sales in Germany

10%

y-o-y

Q1 2014 Net sales

5.4%

y-o-y

Q1 cash conversion

88%

Organic growth in 4 of 5 regions during Q1 One Sanitec delivers Exceeding financial cash conversion target Recovery in the European economy

1) Change calculated in constant currency and comparable legal structure i.e. organic change 1

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Quarterly sales and profitability development

Comments Quarterly sales1 and profitability

190 181 168 177 182 175 168 184 11.1 8.9 10.0 8.5 11.0 12.1 10.7 10.6 2 4 6 8 10 12 14 16 18 50 100 150 200 250 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (%) (EUR million) Organic sales

Adj. EBIT margin

Note: 1 Net sales with comparable legal structure after the divestment of Leda in October 2012, i.e. organic change

 Clear improvement in relative performance quarter over quarter since beginning of 2013  Continued successful “One Sanitec” implementation  Revenue synergies  Improved sourcing  Rightsizing benefits  Manufacturing efficiency

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Sales split by geography

Comments Net sales by regions¹

Note: 1 Reported net sales, not adjusted for sale of Leda in October 2012

Recovery driven by strong performance in Central Europe

 Strong performance in Central Europe driven by Germany  Strong performance in the Nordic Region  Stabilisation in South Europe  Political turmoil in East Europe  UK leading the recovery

54.8 49.4 55.9 54.2 57.2 50.6 59.4 42.2 45.1 44.9 50.4 39.8 43.3 47.6 34.2 26.7 32.3 32.2 27.8 25.4 32.1 36 29.5 26.5 28.1 31.3 27.9 26.1 13.5 12.1 12.8 11.9 13.2 13.8 13.6 5.9 5.1 4.4 5.4 6.1 6.5 4.9 25 50 75 100 125 150 175 200 225 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q1 2014 (€m)

Central North South East UK and Ireland RoW

6% Q1 Y-o-Y growth 9% (1)% 5% 4% 10%

SLIDE 12 Notes: Change calculated vs. prior period in constant currency and comparable legal structure after e.g. divestments, i.e. organic change

Dividend and distribution of funds policy

c. 50%

The Board of Directors proposes to the AGM that no dividend be distributed from the result for the year nor from retained earnings, and that EUR 22,000,000, i.e. EUR 0.22 per share, is paid as refund of capital from the reserve for invested unrestricted equity equals 52% of profit for the period.

Growth above market

+2 p.p.

(5,4) (3.9) 1.4 (10) Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (%)

 Relative growth improvement quarter by quarter

Operating margin

≥12%

8.5 11.0 12,1 10.7 10.6 10 20 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (%)

 Continued improved margins y-o-y

Cash conversion

>70%

53 78 88 82 88 40 60 80 100 2010 2011 2012 2013 Q1 14 (%)

 Continued strong cash conversion

Net debt/ EBITDA

<2.5x

2.1 1.8 1.5 1.6 2 3 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (x)

 Comfortable headroom to our maximum leverage target

Strong financial performance—on track to deliver on our long-term financial targets

Update on our long–term financial targets

(10,9) 5,4

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Annual General Meeting 2014

Q&A