PKC Group Oyj Investor Presentation Q4/2011 February 2012 Harri - - PowerPoint PPT Presentation

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PKC Group Oyj

Investor Presentation Q4/2011

February 2012 Harri Suutari President & CEO

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PKC Group Briefly

• PKC Group operates in two core business

segments: Wiring Systems and Electronics

• PKC designs and manufactures electrical

distribution systems, wire & cables, wiring components and electronics

• The Group’s products and services are

delivered mainly to the commercial vehicle, automotive and electronics industries

• Global footprint and headquartered in

Kempele, Finland

• The Group’s net sales amounted to EUR

550.2 million in 2011

• 21,895 employees globally at the end of

Q4/2011, rented employees included

• PKC Group Oyj is listed in NASDAQ OMX

Helsinki Ltd.

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Growth Through Focused Investments

• Adj. EBITDA(1) EUR million Development Over Time

(1) Illustrated net of non-recurring items 3

1997 1998 2000 2002 2003 2005 2006 2007 2008 2009

Brazilian factory was

• pened

Acquisition of

electronics business

Acquisition of

Estonian production

Operations started in

China

PK Cables listed in

the Helsinki Stock Exchange

Acquisition of

Russian production

Acquisition of

Electro Canada in Canada, the USA and Mexico

Acquisition of MAN

WH production in Poland

2010 2011

Acquisition of SEGU

in Germany, Poland and Ukraine

Acquisition of AEES

in North America, Brazil and Ireland

PKC locations today

4 Barchfeld, Germany (M) Dundalk, Ireland (M) Haapsalu, Estonia (M) Keila, Estonia (M) Kempele, Finland (HQ) Kostomuksha, Russia (M) Mukachewo, Ukraine (M) Raahe, Finland (M) Sosnowiec, Poland (M) Starachowice, Poland (M) Suzhou, China (M) Campo Alegre, Santa Catarina, Brazil (M) Curitiba, Brazil (M) Itajuba, Brazil (M) São Bento do Sul, Brazil (M) São Paulo, Brazil

Wiring systems business Electronics business Manufacturing

Acuna, Mexico (M) Dallas, Texas Green Valley, Arizona Farmington Hills, Michigan Jeffersontown, Kentucky Juarez, Mexico (M) Kirkland, Washington Monterey, Mexico Nogales, Mexico (M) Piedras Negras, Mexico (M) Portland, Oregon San Antonio, Texas Torreon, Mexico (M) Traverse City, Michigan (M)

North America

South America

Europe

Asia

(M)

Geographical split

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Key Figures, 1-12/2011

EUR million 1-12/11 1-12/10 Change % Net sales 550.2 316.1 74.1 EBITDA before non-recurring items 59.5 42.2 41.0 Depreciation 17.5 10.7 63.6 EBIT before non-recurring items 42.0 31.5 33.3 % of net sales 7.6 10.0 Non-recurring items 7.5 1.8 316.7 EBIT 34.5 29.7 16.2 Financial items

• 5.1
• 4.7

Taxes

• 6.0
• 5.3

Net profit 23.4 19.7 18.8 EPS, (EUR) 1.16 1.09 6.4 Cash flows before investments 40.0 22.9 74.7 Net investments 101.5 8.6 1080.2 Cash flows after investments

• 50.2

14.9

• 436.9

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Key Figures, 1-12/2011

1-12/11 1-12/10 Change % Net debt (EUR million) 110.7

• 2.1

ROI, % 18.9 25.8 Gearing, % 72.6

• 1.7
• No. of employees at closing. (Rented

employees not included) 21,528 5,977 260.2

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Key Figures, 10-12/2011

EUR million 10-12/11 10-12/10 Change % 1-12/11 Net sales 242.0 91.9 163.3 550.2 EBITDA before non-recurring items 20.6 12.4 66.1 59.5 Depreciation 8.2 2.5 228.0 17.5 EBIT before non-recurring items 12.4 9.8 26.5 42.0 % of net sales 5.1 10.6 7.6 Non-recurring items 3.6 0.2 1700.0 7.5 EBIT 8.8 9.8

• 10.2

34.5 Financial items

• 1.1
• 3.1
• 5.1

Taxes

• 1.9
• 1.4
• 6.0

Net profit 5.8 5.3 9.4 23.4 EPS, (EUR) 0.29 0.29 1.16 Cash flows before investments 35.6 5.0 612.0 40.0 Net investments 80.1 3.8 2007.9 101.5 Cash flows after investments

• 33.5

1.0

• 50.2

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Non-recurring Items, 1-12/2011

(EUR 1,000)

Wiring Systems Electronics Group total

Donations to the universities 150 150 Advisor fees 7,100 7,100 Cancellation of the write-down of inventories

• 317

317 Restructuring labour expenses 218 310 528 Total non-recurring items 7,001 460 7,461

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Employees in total incl. rented R&D Personnel Personnel excl. rented employees Net Sales by Geographical Areas

Key Figures, 1-12/2011

5,311 5,652 4,423 5,977 21,528 5,000 10,000 15,000 20,000 25,000 2007 2008 2009 2010 2011

+260%

53,7 62,5 154,6 236,0 20,7 157,5 60,0 73,5 30,1 20,7 100 200 300 400 500 600 1-12/2010 1-12/2011 Finland Other Europe North America South America APAC 90 101 114 120 143 20 40 60 80 100 120 140 160 2007 2008 2009 2010 2011

EUR, million at the end of report period at the end of report period

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Adjusted Operating Profit Adjusted EBITDA % and EBIT % Net Sales Earnings per Share (EPS)

Key Figures, 1-12/2011

0.4 3.4 10.0

• 1.1

7.6 8.9 3.8 10.5 10.7 1.9 9.9 12.4

• 2

2 4 6 8 10 12 14 2009 2010 2011 Q1 Q2 Q3 Q4

• 0.20

0.01 0.38

• 0.25

0.24 0.31 0.39 0.56 0.19 0.19 0.29 0.29

• 0.30
• 0.20
• 0.10

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 2009 2010 2011 Q1 Q2 Q3 Q4

Illustrated net of non-recurring items, EUR million Illustrated net of non-recurring items, % EUR, million EUR

2 4 6 8 10 12 14 16 18 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 EBITDA % Operating profit %

Segu acquisition AEES acquisition

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Cash Flows after investments R&D Expenditures Net Investments Return on Investment ROI,%

Key Figures, 1-12/2011

4.8 8.1 90.2 10 20 30 40 50 60 70 80 90 100 2009 2010 2011 Other Investments Acquisition 37.6 14.9

• 50.2
• 60
• 50
• 40
• 30
• 20
• 10

10 20 30 40 50 2009 2010 2011 6.4 25.8 18.9 5 10 15 20 25 30 2009 2010 2011 5.5 5.7 6.9 1 2 3 4 5 6 7 8 2009 2010 2011

EUR, million EUR, million % EUR, million

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Wiring Systems Business Segment

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Key Financials, Wiring Systems 2011

EUR million 10-12/11 10-12/10 1-12/11 1-12/10 Net sales 224.5 70.8 477.2 242.4 EBIT before non-recurring items 13.7 8.9 42.5 26.3 % of net sales 6.0 12.5 8.9 10.8 Non-recurring items 5.0 0.2 7.0 1.8 EBIT 8.7 8.7 35.5 24.5

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AEES, Key Financials, 10-12/2011

10-12/11 Net sales 124.0 EUR million Net profit 6.7 EUR million

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Net Sales, Wiring Systems

41.7 45.7 78.2 33.1 64.1 90.2 34.2 61.8 84.3 40.3 70.8 224.5 50 100 150 200 250 2009 2010 2011 Q1 Q2 Q3 Q4 EUR million

Adjusted Operating Profit, Wiring Systems

• 0.6

2.6 10.1

• 1.8

7.0 9.7 2.2 7.8 6.0 1.7 8.9 13.7

• 4
• 2

2 4 6 8 10 12 14 16 2009 2010 2011 Q1 Q2 Q3 Q4

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Illustrated net of non-recurring items EUR million

18 Source: Truck Statistics: J.D. Power Automotive Forecasting, Q4 2011 , ACT Forecasting January 2012, Note: Europe comprised of EU27 + Efta,

North America South America Europe Medium Trucks Heavy Trucks

PKC Group Truck Market Share Globally

PKC Other

Key Customer Segments

• Trucks & Buses
• Light vehicles
• Engines
• Recreational Products
• Agricultural, Forestry and

Construction Equipment

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Vehicles Europe, 2011

• The registration of heavy-duty trucks increased in Europe (the EU

countries, Switzerland and Norway) by 36% in 2011 over the previous

• year. All in all, about 236,500 heavy-duty trucks were registered during
• 2011. In Europe, the order books of our customers are forecast to be on

a level equivalent to 2–3 months’ production. Forecasts on the production volumes in Europe for 2012 would seem to indicate a fall of about 10% over 2011.

• Registrations of new medium and heavy commercial vehicles over 3.5

tonnes in the EU-27 rose by 29.0% in 2011. A total 315,447 new trucks were registered during the year.

• New car sales in the European Union (EU27) year 2011 was 13,111,209

– a 1.7% decline from the 2010 total of 13,343,302 and the fourth consecutive yearly fall.

• The number of orders received by truck manufacturers in Europe during

the fourth quarter fell about a fourth short of the level of deliveries made.

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Truck Deliveries and Order Intakes, Q4/2011 Heavy Trucks Registration EU27+EFTA (incl. Bulgaria & Romania)

Truck Market

34,175 18,740 21,862 25,749 14,210 21,234 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Volvo Europe + Latin America Scania Global MAN (excluding Brazil) Deliveries Order intake

5,000 10,000 15,000 20,000 25,000 30,000 35,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2011

• 24.7%
• 24.2%

Total -22.2%

Source: MAN, Volvo, Scania Source: ACEA

Heavy Trucks Production, EU27+ EFTA

Trucks > 16t, units Trucks, units Trucks >16t, units Source: J.D. Power Automotive forecasting Q4/2011

Heavy Trucks Production by Marque, EU27+ EFTA

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 MAN Volvo Scania

Trucks 16t, units Source: J.D. Power Automotive forecasting Q4/2011

• 2.9%

20,000 40,000 60,000 80,000 100,000 120,000 140,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 MAN Group Volvo Group VW/Scania

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Vehicles, North America, 2011 1/2

• The freight volume in the NAFTA region has returned to pre-crisis level,

and vehicle fleets are being replaced. Demand has been particularly strong for heavy-duty long-haulage trucks. Some truck models now have backorders stretching for six months.

• The North America heavy-duty truck market strengthened during the

report period. All in all, about 249,800 heavy-duty trucks were produced in 2011 which represents an increase of 62% when compared to 2010. During the fourth quarter, a total of 69,100 new heavy-duty trucks were

• produced. Production volumes for 2012 are projected to increase 20 %

to over 300,000 units.

• Forecasts for North American class 8 truck retail sales are around

232,000 units in 2012. This implies overall market growth of around 26 - 27% versus 2011 total of around 183,000.

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Vehicles, North America, 2011 2/2

• The North America medium-duty truck market continued to gain

momentum during the report period. 2011 production of medium-duty trucks increased in North America by 42.3% over the comparison period to 160,731 units. During the fourth quarter, a total of 41,147 new medium-duty trucks were produced. Production volumes for 2012 are projected to increase 6% to 170,000 units. Forecasts for North American class 6-7 truck retail sales are around 108,000 units in 2012.

• North America light-duty truck assembly in 2011 rose to 6,912,666 units

from 6,299,976 units in 2010.

• North America Light Vehicle 2011 sales were up 9.4% to 15.28 million

units over the comparison period. The momentum gained in 2011 in the automotive industry is expected to continue throughout 2012 and sales growth is projected at 6.4% for 2012.

• In North America, the orders received by truck manufacturers during the

fourth quarter were almost on level with the volume of deliveries made in the corresponding period.

N.A. Class 8 Production

376 212 206 118 154 252 296 323 269 221 259 50 100 150 200 250 300 350 400 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year

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Source: ACT N.A. Commercial Vehicle Outlook January 2012

Units, Thousands

N.A. Class 8 Retail Sales

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Units, Thousands

Source: ACT N.A. Commercial Vehicle Outlook January 2012

N.A. Class 5-7 Production

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Source: ACT N.A. Commercial Vehicle Outlook January 2012

Units, Thousands

North America Truck Market

Source: Automotive World

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The US LV market, 1970-2015

Source: Automotive World

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PKC Customers – N.A. Recreational

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Vehicles, South America, 2011 1/2

• The South America heavy-duty 2011 production was at 140,114 which

represents an increase of 8.2% when compared to 2010. Fourth quarter production levels decreased 18% from the previous quarter to 33,764

• units. The fourth quarter production decline was anticipated as

production levels are historically lower in the fourth quarter. Production volumes for 2012 are projected to decrease 12% to 123,000 units.

• The South America medium-duty 2011 production was at 63,696 units

which represents an increase of 5.8% when compared to 2010. Fourth quarter production levels decreased 14% from the previous quarter to 15,805 units. The fourth quarter production decline was anticipated as production levels are historically lower in the fourth quarter. Production volumes for 2012 are projected to decrease 7% to 59,000 units.

• The number of orders received by truck manufacturers in Brazil during

the fourth quarter fell about a fifth short of the level of deliveries made.

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Vehicles, South America, 2011 2/2

• The 2011 South America light vehicle market sales reached 5.53 million

units which is an all-new high. Overall sales were up 8.1% compared with 2010 which reflects the promising outlook of the South American automobile industry.

• A major development in the region in 2011 was the closing of boarders

to imported vehicles which was expanded from Venezuela to include Argentina, Brazil and Ecuador as the country continues to drive localized production.

• The explosive growth that the region experienced in recent history is

expected to slow down and 2012 projected sales in the region is expected to reach 5.7 million units which represents little growth over the record 2011 sales rate.

• New vehicle sales in Brazil set a fifth consecutive annual record in 2011.

Sales of new vehicles increased 3.4% to 3.63 million units last year. Production levels also reached a new record last year at 3.41 million units, up 0.7% from the 3.38 million vehicles build in 2010. This year production is expected to reach 3.49 million units.

Forecast Heavy-duty Trucks, Brazil

Source: Anfavea & Automotive Reports

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Forecast Light Vehicle, Brazil

Source: Anfavea & Automotive Reports

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Agricultural Equipment Industry , 2011

• Agricultural Equipment Industry and Market Worldwide

agricultural industry unit sales increased 12% compared to 2010.

• Global tractor sales grew 12% while global combine sales grew

16%.

• North American tractor sales, both over and under 40

horsepower segments, were up 2%, and combine sales were down 5%.

• Latin America sales of tractors decreased 2% and combine sales

increased 21%.

• EAME & CIS markets continued to improve in 2011, with tractor

sales up 25% and combine sales up 39%.

• Production volumes for 2012 are projected to equal 2011

volumes in North America and to decrease 5-10% in South America.

Construction Equipment Industry, 2011

• Construction Equipment Industry and Market Global construction

equipment industry unit sales rose 27% in 2011 compared to the prior year, with positive trends in every region.

• Light equipment was up 30% and heavy equipment up 23%.
• North American demand was up 38% and EAME & CIS markets rose

35% as the industry continued to rebuild from the prior year's low levels.

• In Latin America, the market was up 25%, driven by strong demand

from projects in both the public and private sectors.

• In APAC markets, industry sales were up 19% for the year, although

significantly weaker in the second half of the year.

• Production volumes for 2012 are projected to increase 10-20% from

2011 volumes in North America and to increase 5 - 10 % in South

• America. Production volumes in AEME & CIS markets are projected to

stay flat or grow up to 5 %.

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Electrical Distribution Systems, EDS

• Leading, global electrical distribution

systems supplier for heavy trucks

• Manufactures electrical distribution

systems also for light vehicles, buses, recreational vehicles as well as construction, forestry and agricultural equipment

• Full service capabilities from design

to final functional testing

• Strong experience on high volumes

JIT deliveries with customized product variations

• Manufacturing of water tight and heat

resistant engine and other wiring systems and injection moulding of connectors and grommets

• Factories in Brazil, China, Estonia,

Germany, Mexico, Poland, Russia and Ukraine

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Batch harnesses Engine harnesses Chassis harnesses Instrument harnesses ABS cable

Components

• Manufacturing of plastic components

& connectors, junction boxes and various power distribution centres

• Primary Products

– Connection Systems Components – Power Distribution Center Components – Modular Blocks – High speed precision stamping of automotive electrical terminals – Large lead frame / fret stampings for power distribution boxes – High current heavy gage power terminals – Battery terminals – Steel brackets for wire harness routing and retention

• Factories in USA, Mexico and Ireland

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Wire & Cable

• Manufactures and distributes

selected wire products, PVC and cross link coated wire in both metric and English wire sizes

• Primary Products

– PVC coated wire – Cross linked polyethylene coated wire – Metric and English wire sizes – Battery cable

• Factory in Mexico

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Electronics Business Segment

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Key Financials, Electronics 2011

EUR million 10-12/11 10-12/10 1-12/11 1-12/10 Net sales 17.5 21.1 73.0 73.7 EBIT before non-recurring items 0.1 2.0 2.8 7.7 % of net sales 0.6 9.6 3.9 10.4 Non-recurring items 0.3 0.5 EBIT

• 0.2

2.0 2.4 7.7

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Net Sales, Electronics

12.1 15.1 18.7 12.7 16.9 12.7 20.5 17.7 15.1 21.1 17.5 19.1 5 10 15 20 25 2009 2010 2011 Q1 Q2 Q3 Q4 EUR million

Adjusted Operating Profit, Electronics

0.7 1.3 0.4 0.7 1.1 0.6 1.5 3.3 1.7 1.7 2.0 0.1 0.5 1 1.5 2 2.5 3 3.5 2009 2010 2011 Q1 Q2 Q3 Q4

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Illustrated net of non-recurring items EUR million

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Electronics Segment, 2011

• Demand for the products of PKC Group’s key industrial

electronics customers increased during the first half of 2011 but turned down during the second half of the year. The weakening was a result of growing economic uncertainty in Europe and a reduction in wind power investments globally.

• Due to a change in the product strategy of a telecommunications

customer, the demand for PKC Group’s Electronics business design and manufacturing services was significantly smaller than the previous year.

Electronics Business

• ODM services - Total solution including

design, sourcing, prototyping, manufacturing, testing, logistics and after sales services

• R&D partner and contract manufacturer in

industrial, commercial vehicle and “Green Business” electronics

• High-quality, experienced and flexible

partner with excellent customer service and short lead times

• Innovative and proactive design and

product development services in Finland and China

• Factories in Finland, China and Russia
• Factories are certified in accordance with

requirements of the ISO 9001 and ISO/TS16949 quality and ISO 14001 environmental standards

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Products and Industrial Segments

Products

• Power supply units
• Electronics control units
• Vehicle electronics
• Testing equipment
• Electronics service devices
• Vehicle computers
• Security products

Industrial Segments

• Industrial electronics
• Telecommunication
• Commercial vehicles
• Energy
• Security

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Outlook 2012

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Outlook for the Future

• PKC expects that its net sales and comparable operating profit

will increase in 2012 from the previous year’s level. Net sales in 2011 amounted to EUR 550.2 million and operating profit without non-recurring items was EUR 42.6 million. Major part of net sales and profit is generated by the Wiring Systems business.

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Thank You!

www.pkcgroup.com