Half year presentation 2015 Rorschacherberg, 24 July 2015 berthiez - - PowerPoint PPT Presentation

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Half year presentation 2015 Rorschacherberg, 24 July 2015 berthiez - - PowerPoint PPT Presentation

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Half year presentation 2015 Rorschacherberg, 24 July 2015 berthiez bumotec drries droop+rein heckert scharmann sip starrag ttl wmw Legal note Starrag Group is making great efforts to include accurate and up-to-date information in

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berthiez bumotec dörries droop+rein heckert scharmann sip starrag ttl wmw

Half year presentation 2015

Rorschacherberg, 24 July 2015

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Legal note

Starrag Group is making great efforts to include accurate and up-to-date information in this presentation, however we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this presentation and we disclaim any liability whatsoever for the use of it. The information provided in this presentation is not intended nor may be construed as an offer or solicitation for the purchase or disposal, trading or any transaction in any Starrag Group securities. Investors must not rely on this information for investment decisions. All statements in this presentation which do not refer to historical facts are forecasts for the future which offer no guarantee whatsoever with respect to future performance; they embody risks and uncertainties which include - but are not confined to - future global economic conditions, exchange rates, legal provisions, market conditions, activities by competitors and other factors which are outside the company's control.

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Agenda

Market and Business Review Financial Review Outlook

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Agenda

Market and Business Review Financial Review Outlook

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Solid order backlog ensures good level of capacity utilization – order intake marked by volatility – positive sales growth before currency effects – slightly lower operating margin

Order backlog of CHF 220 million ensures a good level of utilization for the coming quarters Order intake minus 23 % versus the prior-year period (organic -16 %) Organic sales growth plus 3.5 %, in CHF minus 4.3 % EBIT margin of 3.9 % (4.7 % in the prior-year period) Net profit of CHF 3.1 million or CHF 0.92 per share, adversely affected by the revaluation

  • f euro positions

Full-year projections subject to additional uncertainty

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Order intake

80 160 240 320 400 480 560 20 40 60 80 100 120 140

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 CHF m

FX adjusted decrease last twelve months -5.7 % FX adjusted decrease H1 -16 %

4 quarter rolling quarterly

Jul 13 to Jun 14: 402 Jul 14 to Jun 15: 365

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25 50 75 100 125 150 175 200 225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Order intake machine tool industry Germany

Note: Index base sales 2010=100 Source: monthly index statistics VDMA, VDW.

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Index

German machine tool market July 2014-May 2015 +1.5 % to the same prior year period

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86 98 69 71 25 95 137 167 154 50 59 20 14 16 19 108 109 175 166 46 50 100 150 200 250 300 350 400 450 2011 2012 2013 2014 H1 15

Order intake by customer industry

CHF m

Aerospace 33 % Transport 18 % Energy 13 % Industrial 36 %

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211 210 324 232 93 102 104 77 133 38 35 50 24 42 10 50 100 150 200 250 300 350 400 450 2011 2012 2013 2014 H1 15

Order intake by region

CHF m

Americas 7 % Europe 66 % Asia 27 %

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Turbine Technology Days – where professionals meet

New process solutions for turbine parts

LX 051 - Your stand alone FMS – Automated handling of all setups - Let your machine work, while you take a rest Starrag Service – New Spindle Concept Small Blade «milling in one go»

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CIMT 2015, China International Machine Tool Show

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Successful machine tool exhibition CIMT in Beijing, China

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Reorganization based on strategic market segments on track

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Aims of reorganization reducing organizational complexity making greater use of synergy potential to raise growth rates and margins Extensive range of measures to strengthen marketing and sales power create an extensive and well-rounded product portfolio Numerous stand-alone measures implemented to enhance profitability and reach medium-term margin goals

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New Bumotec / SIP factory on track

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Investing in fast growing markets of Luxury Goods, Medtech and Micromechanics Manufacturing plant for ultra precision machine tools for the production of high-end components Start of construction September 2014, Move to new plant H2 2016 To manufacture with the latest production technology Ecological trendsetter (Geothermal probes, Large solar system on roof) Preparation for optimized production processes in the new plant

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Agenda

Market and Business Review Financial Review Outlook

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Sales revenue +3.5 % in local currencies

Organic growth of 3.5 % thanks to increased order backlog at the beginning of the year Lower Euro FX rate of 1.0761 compared to 1.2341 in H1 2014 reduces sales revenue by 14m CHF or 7.8 % 190

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CHF m

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Order backlog ensures utilization for several quarters

Lower Euro FX rate of 1.0484 compared to 1.2146 end of 2014 CHF m

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EBIT margin decrease to 3.9 % (H1 2014: 4.7 %)

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8.9

  • 0.9

4.0

  • 4.2
  • 0.9

7.0

2 4 6 8 10 12 H1 2014 FX Translation Volume Margin Cost H1 2015

CHF m Lower Euro FX rate of 1.0761 compared to 1.2341 in H1 2014 Normalized gross margin of 58.8 % as in full year 2014 (H1 14: 61.2 %) decrease to H1 14 primarily caused by lower percentage of completion of contracts in progress and thus higher material content Lower margins due to strong CHF with negative effect on backlog plus additional price concessions Negative cost impact mainly caused by industry-wide pay increases in Germany despite lower number of employees

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Net profit (EAT)

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Lowered Net profit due to negative FX result of 2.3m CHF after revaluation

  • f unhedged euro positions

Lower effective tax rate of 23 % compared to 25 % in H1 2014 due to different geographical distribution of profits

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CHF m H1 2015 H1 2014 Earnings before interest and taxes EBIT 7.0 8.9 Interest

  • 0.2
  • 0.1

FX result

  • 2.3

0.3 Other financial result

  • 0.4
  • 0.4

Earnings before tax EBT 4.1 8.8 Income tax

  • 1.0
  • 2.2

Net income 3.1 6.6 Earnings per share in CHF 0.92 1.93

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Free cash flow

CHF m

Free cash flow impacted by lower advance payments received for contracts in progress as well as increased capital expenditure for Bumotec/SIP plant

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+13.2

  • 3.1
  • 14.9
  • 4.8
  • 9.6
  • 14.4
  • 6.0

+19.5

  • 1.0
  • 1.9
  • 40
  • 30
  • 20
  • 10

10 20

EBITDA Other Net working capital Cash flow from

  • perations

CapEx Free cash flow Dividend Short term financing Other Change in cash

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Overview of key figures (I)

CHF m H1 2015 H1 2014 Change Order intake 141.1 183.6

  • 23.1 %

Sales revenue 181.8 189.7

  • 4.2 %

EBIT 7.0 8.9

  • 21.7 %

Net income 3.1 6.6

  • 52.2 %

Earnings per share (in CHF) 0.92 1.93

  • 52.4 %

EBIT as percentage of sales revenue 3.9 % 4.7 % n/a Net income as percentage of sales revenue 1.7 % 3.5 % n/a Return on equity 3.2 % 6.8 % n/a Cash flow from operations

  • 4.8
  • 8.2

n/a Capital expenditure 9.6 4.3 122.5 % Free cash flow

  • 14.4
  • 12.5

n/a

Strong CHF with negative impact on key figures Cash flows impacted by pre-financing of orders and capital expenditure into the new Bumotec and SIP plant

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Overview of key figures (II)

CHF m 30.06.2015 31.12.2014 Change Order backlog 220.2 287.6

  • 23.4 %

Total assets 326.2 356.3

  • 8.4 %

Net cash

  • 18.3

2.4 n/a % Shareholder's equity 174.7 195.9

  • 10.8 %

Equity ratio 53.5 % 55.0 % n/a % Employees at year end 1‘612 1'617

  • 0.3 %

Continued high levels of equity financing Starrag Group remains solid long-term partner for its customers

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Agenda

Market and Business Review Financial Review Outlook

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Market development scenario for H2 2015+

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Global economic and political environment is likely to become even more challenging in H2 2015 Aerospace capacity ramp up required based on existing order books deferral of individual orders to be expected Energy further slow recovery expected low energy prices continue to cause delays in required investments Industrial Swiss luxury goods exports positive in H1 2015 generating additional capacity requirements price pressure in large machine market Transportation positive development in railroad slow markets like construction and agriculture

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Financial outlook 2015

2014 H1 14 H1 15 Guidance 2015 (in local currencies) Order intake 407.3 183.6 141.4 H2 2015 > H1 2015 FY 2015 < FY 2014 Sales revenue 393.2 189.7 182.7 FY 2015 ≈ FY 2014 EBIT margin 4.9 % 4.7 % 3.9 % FY 2015 < FY 2014 Net profit margin 3.7 % 3.5 % 1.7 %

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Corporate calender / Contact

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03.11.2015 Key figures Q3 2015 29.01.2016 Initial information on 2015 results 04.03.2016 Presentation of 2015 results for analysts and media in Zurich 23.04.2016 Annual general meeting in Rorschacherberg 04.05.2016 Key figures Q1 2016 27.07.2016 Half-year report 2016

Walter Börsch, CEO Phone +41 71 858 81 11, Fax +41 71 858 82 09 Gerold Brütsch, CFO Phone +41 71 858 81 11, Fax +41 71 858 82 30 Further Information: http://www.starrag.com / investor@starrag.com

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berthiez bumotec dörries droop+rein heckert scharmann sip starrag ttl wmw

We are pleased to answer your questions.

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Back-up slides

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Vision

Starrag Group is the leading manufacturer

  • f highly productive, durable complete

solutions for precise cutting applications. Innovation, quality, a global presence and competence in customer service ensure

  • ur customers a consistent advantage in

productivity.

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Strong brands enhancing the overall potential for success

berthiez bumotec dörries droop+rein heckert scharmann starrag

Each brand with high level

  • f customer trust in its

specific application area Innovative technologies of each brand radiate across all group brands Collaboratively fulfilling our promise: long-time total customer satisfaction

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High-precision machine tools for greater productivity

Starrag Group is a global technology leader in manufacturing high-precision machine tools for milling turning, boring and grinding of workpieces made from metallic, composite and ceramic materials. Principle customers are internationally active companies in the Aerospace & Energy, Transportation & Industrial Components and Precision Engineering sectors. Our portfolio of tool machines is complemented by a range of technology and services and enables the customer to make substantial progress in productivity. The products are marketed under the following strategic brands: Berthiez, Bumotec, Dörries, Droop+Rein, Heckert, Scharmann, SIP, Starrag, TTL, WMW. Headquartered in Rorschach/Switzerland, the Starrag Group operates manufacturing plants in Switzerland, Germany, France, the UK and India and has established a network of sales and service subsidiaries in numerous other countries. Starrag Group is listed on the SIX Swiss Exchange (STGN).

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World machine tool production

Source: VDW, world machine tool statistics

World production machine tools 1985 – 2014

33 32 30 34 40 37 36 27 24 23 27 29 34 34 34 41 40 33 32 36 42 46 51 54 38 48 62 67 58 60

10 20 30 40 50 60 70 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

[Mrd. EUR]

  • 31%

+28% +29% +8%

  • 13%

+4%

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Multi-niche strategic positioning

100 240 320 400 500 630 800 1000 1250 1600 1800 2100 > 2500 100

Number of players

Vertical machining centers Horizontal machining centers Gantries and boring mills

Precisely productive

Machine / workpiece size Starrag Group High competition intensity Starrag

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Common strategy based on three pillars

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Leading metal cutting machine tools Leading global customer service Leading cutting technology support

Milling, turning, boring, grinding High-end products Precisely productive Center of Production Excellence Engineering services Software, programming Multi tasking machines Through life cycle support Preventive maintenance programs Global spare parts availability

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Global presence in sales, application and service support

Manufacturing plant, Sales and service organization Sales and service organization Service hubs

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Share details (as of 30 June 2015)

27.0% 53.7% Walter Fust 9.3% Eduard Stürm AG

  • thers

6.3% Max Rössler / Parmino Holding AG Market capitalization CHF 198 million Listed at SIX Swiss Exchange Main Standard Symbol STGN, Valor number 236'106, ISIN CH00023610608 3'360'000 registered shares with a nominal value of CHF 8.50 each Stable shareholder structure Swisscanto 3.7%

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Top management

Daniel Frutig (1962, Swiss) has been a member of the Board of Directors of Starrag Group Holding AG since 2014 and its Chairman since April 2015. He is CEO of the international medical group Medela Holding AG, based in Zug/Switzerland and member

  • f the Board of Directors of Eugster/Frismag AG,

Amriswil/Switzerland. From 2011 to February 2014 he was CEO of AFG Arbonia-Forster-Holding AG. From 2005 to 2011 he headed the global Support Services Division of the British Compass Group PLC, based in UK. From 2003 to 2005, he was CEO

  • f Swisscom Immobilien AG, from 1998 to 2003,

Daniel Frutig was Associate Partner at Accenture, a global consultancy firm, finishing as global head of the Services & Technology business. Before he worked at Sulzer AG, where he started his career in 1987. Daniel Frutig graduated in 1987 as engineer at the University of Lucerne. He earned an MBA from the University of St. Gall in 1994 and completed the Top Management Executive Program at INSEAD in Fontainebleau in 2004/2005. Gerold Brütsch (1966, Swiss) has been Chief Financial Officer (CFO) of Starrag Group since 2000 and since 2005 Deputy CEO and Head of Corporate Center. Gerold Brütsch previously served as Chief Financial Officer of an international machine manufacturing company (Müller Martini Buchbinde-System AG) and as an auditor with KPMG in Zurich and San Francisco. Gerold Brütsch is a graduate of the School

  • f Economics and Business Administration

in St. Gallen and earned his degree in business administration in 1990. He is a Swiss Certified Accountant and U.S. Certified Public Accountant. Walter Börsch (1959, German) has been CEO and Head of Regional Sales of Starrag Group since 2014. Before he has been Head of Business Unit 1 since January 2012 until end of 2013 with responsibility for the Starrag brand in Rorschacherberg (Switzerland) and as well as for the TTL subsidiary in Haddenham (UK). He previously held the position of Head of Operations at Starrag Group up to the year 2007. From 2005 to 2007 Mr. Walter Börsch was Head of Sales and Engineering at an internationally active machine tool manufacturer. From 2000 until 2004, he headed a business unit of Hüller Hille GmbH. Prior to that he held various management functions in that company’s development, sales, customer service and sales departments beginning in 1987. Walter Börsch holds a Master’s degree in mechanical engineering from Aachen University and also completed a marketing program at the University of St. Gall.

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Our pedigree, 150 years tradition for innovation

SIP Dörries Scharmann Heckert Droop+Rein Starrag Berthiez Bumotec TTL Geneva Mönchen- gladbach Chemnitz Bielefeld Rorschach

  • St. Etienne

Sâles Aylesbury 1862 1884 1885 1890 1897 1916 1973 1987 Scientific instruments Textile machine components Bicycle manu- facturing Machine tools Textile machinery Machine tools Machine tools Software/ technology company