INVESTOR PRESENTATION Q3 2013 October 31, 2013 Matti Hyytiinen, - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION Q3 2013 October 31, 2013 Matti Hyytiinen, - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION Q3 2013 October 31, 2013 Matti Hyytiinen, President & CEO Q3/2013 Highlights Business Environment Truck production volumes improved from second quarter in Brazil and remained unchanged in Europe North

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SLIDE 1

INVESTOR PRESENTATION Q3 2013

October 31, 2013 Matti Hyytiäinen, President & CEO

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SLIDE 2

PKC’s Operations

  • Several production transfers and ramp-ups of

current and new customers’ programs on- going in Europe

  • Received major recognitions and awards on

quality and delivery performance from two main accounts in North America

2

Business Environment

Q3/2013 Highlights

  • Truck production volumes improved from

second quarter in Brazil and remained unchanged in Europe

  • North American truck demand was softer

than earlier forecasted

PKC’s Financial Performance

  • EBITDA% was burdened by product

transfers and ramp ups in Europe, and higher labour and material costs in Brazil

  • Cash flow improved from the first half of the

year

PKC Investor Presentation Q3 2013

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SLIDE 3

Maximizing current PKC set-up

3

Strategy 2018 Update

  • East/Midwest region office established in USA

to focus on growth opportunities with existing and new accounts

  • Decision to establish wiring systems factory in

Serbia to serve existing and potential new customers in Europe

PKC Investor Presentation Q3 2013

Penetrating into APAC

  • Framework Agreement for Strategic

Cooperation signed with SINOTRUK on the

  • pportunity to establish a joint venture to

manufacture wiring systems for SINOTRUK and possibly also for other customers in China and abroad

Funding

  • The issue of 2.14 million new shares (proceeds

EUR 44.9 million) and EUR 100 million fixed rate unsecured bond maturing in 2018

  • The proceeds are intended for refinancing,

general corporate purposes and to enable strategy execution incl. potential acquisitions

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SLIDE 4

4

Key Figures, 7-9/2013

EUR million 7-9/13 7-9/12 Change % 1-12/12 Revenue 211.6 227.4

  • 7.0

928.2 EBITDA 17.0 22.5

  • 24.5

83.0 Depreciation and amortisation1) 4.7 4.6 1.1 17.6 EBITA 12.3 17.9

  • 31.1

65.4 PPA depreciation and amortisation 2.7 3.5

  • 22.8

13.9 Operating profit 9.6 14.4

  • 33.1

51.5 Non-recurring items 1.7 1.9

  • 9.9

8.0 Operating profit after non-recurring items 7.9 12.5

  • 36.6

43.5 Financial items

  • 2.4
  • 2.7
  • 12.3
  • 8.5

Taxes

  • 2.6
  • 3.1
  • 18.9
  • 10.9

Net profit 3.0 6.7

  • 54.8

24.0 EPS (EUR) 0.14 0.31

  • 54.8

1.12

1) Excluding PPA depreciation and amortisation and non-recurring asset impairment and write-downs PKC Investor Presentation Q3 2013

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SLIDE 5

5

Key Figures, 1-9/2013

EUR million 1-9/13 1-9/12 Change % 1-12/12 Revenue 671.9 714.2

  • 5.9

928.2 EBITDA 56.4 65.8

  • 14.3

83.0 Depreciation and amortisation1) 13.8 12.6 9.5 17.6 EBITA 42.6 53.2

  • 19.9

65.4 PPA depreciation and amortisation 8.4 10.6

  • 20.7

13.9 Operating profit 34.2 42.6

  • 19.7

51.5 Non-recurring items 8.3 3.2 164.3 8.0 Operating profit after non-recurring items 25.9 39.4

  • 34.4

43.5 Financial items

  • 6.2
  • 5.2

20.5

  • 8.5

Taxes

  • 7.5
  • 11.0
  • 32.0
  • 10.9

Net profit 12.1 23.3

  • 47.8

24.0 EPS (EUR) 0.55 1.09

  • 49.5

1.12

1) Excluding PPA depreciation and amortisation and non-recurring asset impairment and write-downs PKC Investor Presentation Q3 2013

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SLIDE 6

Revenue

6

242.0 225.2 244.8 235.1 227.4 211.6 214.0 180 200 220 240 260 2012 2013

Q1 Q2 Q3 Q4

EUR million

PKC Investor Presentation Q3 2013

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SLIDE 7

Geographical Split

56.8 % 25.7 % 9.5 % 0.7 % 5.1 % 0.2 % 1.9 %

0% 10% 20% 30% 40% 50% 60% North America Europe South America APAC

Revenue 7-9/2013

Wiring Systems Electronics

120.3 65.3 20.5 5.5 EUR million

7

57.4 % 22.9 % 16.0 % 0.3 % 1.4 % 2.0 %

0% 10% 20% 30% 40% 50% 60% 70% North America Europe South America APAC

Average Number of Personnel 7-9/2013

Wiring Systems Electronics

11,051 4,670 3,076 439 Temporary employees included

PKC Investor Presentation Q3 2013

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SLIDE 8

Profitability

20.4 22.9 22.5 17.2 18.8 20.6 17.0 16.2 19.2 17.9 12.2 14.2 16.1 12.3 8.4 9.4 9.9 8.0 8.3 8.8 8.0 6.7 7.8 7.9 5.7 6.3 6.8 5.8 2 4 6 8 10 12 2 4 6 8 10 12 14 16 18 20 22 24 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 EBITDA (adjusted*) EBITA (adjusted**) EBITDA* % EBITA** %

8

EUR million

%

* excluding non-recurring items in EBITDA ** excluding non-recurring items and PPA depreciation and amortisation in operating profit

PKC Investor Presentation Q3 2013

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SLIDE 9

Earnings, Cash Flow and Dividend per Share

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1.16 1.12 1.09 0.55 1.46 2.97 2.43 0.29 0.60 0.70 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2011 2012 1-9/12 1-9/13 Earnings per share Free cash flow (excl. acquisitions) per share Dividend per share

EUR

PKC Investor Presentation Q3 2013

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SLIDE 10

Net Working Capital

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104.0 104.1 112.7 104.5 84.6 109.0 112.9 106.1 110.5 108.4 97.6 92.1 87.5 92.1 87.8 87.7

  • 90.8
  • 101.6
  • 91.3
  • 90.6
  • 75.5
  • 94.8
  • 90.8
  • 88.4
  • 23.0
  • 20.3
  • 22.1
  • 23.2
  • 23.8
  • 25.3
  • 26.6
  • 23.4
  • 15
  • 10
  • 5

5 10 15 20 25

  • 150
  • 100
  • 50

50 100 150 200 250 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Trade receivables Inventories Trade payables Other liabilities and receivables*** NWC* % of Revenue** 100.7 96.9 90.7 82.7 72.7 83.2 81.0 82.0

EUR million

%

* Average of previous four quarters ** Revenue of previous 12 months

PKC Investor Presentation Q3 2013

*** related to employee benefits, taxes and financial items

Inventories Trade receivables

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SLIDE 11

Cash Flow

40.0 76.0 60.8 16.8

  • 90.2
  • 12.3
  • 8.7
  • 10.3
  • 50.2

63.7 52.1 6.4

  • 100
  • 80
  • 60
  • 40
  • 20

20 40 60 80 100 2011 2012 1-9/12 1-9/13 Cash from operations Capital expenditure Free cash flow

11

EUR million

PKC Investor Presentation Q3 2013

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SLIDE 12

110.7 56.6 69.4 17.8 2.1 0.7 0.9 0.3 0.0 0.4 0.8 1.2 1.6 2.0 2.4 20 40 60 80 100 120 2011 2012 Q3/12 Q3/13 Net debt Net debt to EBITDA*

Balance Sheet and Returns

12

30.0 33.9 32.5 39.1 5 10 15 20 25 30 35 40 45 2011 2012 Q3/12 Q3/13 Equity ratio, % 72.6 34.4 42.0 9.0 10 20 30 40 50 60 70 80 2011 2012 Q3/12 Q3/13 Gearing, % 17.0 15.1 19.5 9.0 18.9 16.7 20.1 15.2 5 10 15 20 25 30 2011 2012 1-9/12 1-9/13 ROE, % ROI, %

% % EUR million %

PKC Investor Presentation Q3 2013

*EBITDA of previous 12 months

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13

Wiring Systems Segment, Q3/2013

  • Revenue decreased 10% from previous

quarter and 6% from previous year

  • Headcount was reduced in Brazil despite

growing volumes. Weaker real and continuing labour cost inflation had a negative impact on profitability

– target is to return to profitability in 2014 – actions to reduce headcount and fixed cost are continuing – in addition, supply chain is being streamlined

226.6 208.4 226.8 217.2 209.2 196.4 196.1 180 190 200 210 220 230 2012 2013 Q1 Q2 Q3 Q4 15.2 11.7 15.4 13.3 14.2 9.6 8.7 5 10 15 20 2012 2013 Q1 Q2 Q3 Q4

Revenue

EUR million

Adjusted Operating Profit

EUR million Illustrated net of non-recurring items

PKC Investor Presentation Q3 2013

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SLIDE 14

PKC Market Share 1-9/2013

  • Current business relationship with all key western OEMs in commercial

vehicle industry enable future growth

  • Global leader position as a target

59% 41% 34% 66% 33% 67% 2% 98% 37% 63% 17% 83% North America Brazil Europe Medium Commercial Vehicle Heavy Commercial Vehicle PKC Other

Source: PKC Group, ACT Build History October 2013, LMC Automotive forecasting Q3/2013. Note: Europe comprised of EU27 + Efta

1% 99% APAC 0% 100%

PKC Investor Presentation Q3 2013 14

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SLIDE 15

EU27+ EFTA Truck Production

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Q1-Q3 2012 Q1-Q3 2013 2012 2013 2014 2015 2016 2017 2018

Heavy Trucks Medium Trucks

  • Q3/13 heavy duty production volumes were flat compared to Q2/13 and up by

1% from Q3/12. Medium duty volumes decreased -4% from Q2/13

  • Full year 2013 heavy duty forecast has been increased, but is still down

slightly by about -1% from 2012 (previous forecast -6%) and medium truck production to remain unchanged compared to 2012 level

  • Due to upcoming Euro 6 standard volumes are expected to increase in Q4/13

units

Source: LMC Automotive forecasting Q3/2013

EURO 6

  • 6%
  • 8%
  • 1%

0%

PKC Investor Presentation Q3 2013 15

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SLIDE 16

North America Truck & LCV Production

50,000 100,000 150,000 200,000 250,000 300,000 350,000 Q1-Q3 2012 Q1-Q3 2013 2012 2013 2014 2015 2016 2017 2018

Heavy Trucks Medium Trucks

  • 15%
  • 10%

+7% +7%

  • Heavy duty truck production volume was

down -4% from previous quarter, but unchanged year-on-year

  • Full year heavy duty production estimate is

down by -10%, medium duty up by +7% (earlier -6% and +7% respectively)

  • LCV production volume estimate is

unchanged at +5%

units

Source: LMC Automotive forecasting Q3/2013

EPA 2014

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000

Q1- Q3 2012 Q1- Q3 2013 2012 2013 2014 2015 2016 2017 2018

+6% +5%

Light Commercial Vehicle (Pick-up and SUV)

PKC Investor Presentation Q3 2013 16

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SLIDE 17

Brazil Truck Production

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Q1-Q3 2012 Q1-Q3 2013 2012 2013 2014 2015 2016 2017 2018

Heavy Trucks Medium Trucks

+47% +66% +61% +48%

  • Heavy duty truck production volume was up 6% from previous quarter and

50% year-on-year

  • Full year estimates have been increased: heavy duty to +47% (earlier +21%)

and medium duty to +66% (earlier 54%)

  • The governmental incentive program to support truck sales is currently valid

until the end of year 2013

units

Source: LMC Automotive forecasting Q3/2013

EURO 5 (Brazil)

PKC Investor Presentation Q3 2013 17

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SLIDE 18

Market Outlook – Full Year 2013

  • European truck production is

estimated to remain roughly unchanged compared to 2012.

  • North American heavy duty truck

production is estimated to decrease by 10% and medium duty truck production to increase 7% from 2012 level.

  • Brazilian heavy duty truck production

is estimated to increase by 47% and medium duty truck production by 66% compared to 2012.

  • PKC’s market outlook is further

impacted by some light vehicle and component programs that are near end-of-life-cycle and will be ramped- down in 2013.

18 PKC Investor Presentation Q3 2013

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SLIDE 19

19

Electronics Segment, Q3/2013

  • Revenue decreased 20% year-on-year
  • Profitability improvement continued

due to on-going measures to improve cost competitiveness

  • Favourable product mix with stronger

ODM sales

15.3 16.7 18.0 17.9 18.3 15.3 17.8 13 14 15 16 17 18 19 2012 2013 Q1 Q2 Q3 Q4

  • 0.9

1.0 0.7 1.7 1.4 1.3 1.0

  • 1.5
  • 1
  • 0.5

0.5 1 1.5 2 2012 2013 Q1 Q2 Q3 Q4 EUR million EUR million Illustrated net of non-recurring items

Adjusted EBIT Revenue Market Outlook – Full Year 2013

  • The demand of industrial electronic

and telecommunications sector appliances is estimated to remain at the previous level

  • Volumes of renewable-energy and

energy saving products including smart grid solutions are expected to increase slightly

PKC Investor Presentation Q3 2013

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PKC Group’s Outlook

  • PKC Group estimates its full year 2013

revenue to be lower than in 2012 and estimates its comparable operating profit excluding non-recurring items not to reach 2012 level.

  • In 2012 PKC’s revenue was EUR 928.2

million and comparable operating profit excluding non-recurring items was EUR 51.5 million.

20 PKC Investor Presentation Q3 2013

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STRATEGIC INITIATIVES

PKC’s Strategy Captures Growth Opportunities

VISION 2020 PKC is the Preferred Supplier in Electrical Distribution Systems for Transportation Industry globally.

21

Managing the Complexity

Developing PKC Uniqueness further Maximizing current PKC set-up Penetrating into APAC Exploring

  • pportunities

to expand within Transportation Industry

Developing Electronics business as a stand alone within PKC Group

PKC Investor Presentation Q3 2013

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SLIDE 22

Long-Term Financial Targets

Annual Revenue EUR 1.4 Billion by 2018 EBITDA > 10% Gearing < 75% Dividends 30 – 60% of Free Cash Flow Annual Revenue EUR 1.4 Billion by 2018 EBITDA > 10% Gearing < 75% Dividends 30 – 60% of Free Cash Flow

Developing PKC Uniqueness further Developing PKC Uniqueness further Maximizing current PKC set-up Maximizing current PKC set-up Penetrating into APAC Penetrating into APAC Exploring

  • pportunities

to expand within Transportation Industry Exploring

  • pportunities

to expand within Transportation Industry

22 PKC Investor Presentation Q3 2013

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SLIDE 23

PKC Group Plc Unioninkatu 20-22 FI-00130 Helsinki, Finland www.pkcgroup.com