S HAREHOLDERS ' A NNUAL G ENERAL M EETING May 17, 2018
A GENDA I NTRODUCTION 2017 R ESULTS T HE DRIVERS OF PROFITABLE GROWTH R EPORT BY THE B OARD AND THE C OMMITTEE R EPORT BY THE STATUTORY A UDITORS S UMMARY PRESENTATION OF RESOLUTIONS D IALOG WITH SHAREHOLDERS V OTE OF RESOLUTIONS 2 2 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN : A SUSTAINABLE GROWTH TRAJECTORY 1 2017 RESULTS 3 Shareholders’ Annual General Meeting – May 17, 2018
2017: A YEAR OF GROWTH 1 2 3 4 Operating income Sales: before non- Net income: Net debt: €809m recurring items: €40m €178m €75m Like-for-like growth Operating margin before vs 2016: non-recurring items Year-on-year growth: Down 12% up 170 basis points x12.5 8% High level of operating cash Operating income before Dividend at €0.75 flow Growth in Asia: non-recurring items up 50% 20% up 30% Net debt/EBITDA: 1.6 Faster pace of growth ROCE up 150 basis as the year progressed points at 9.8% 4 Shareholders’ Annual General Meeting – May 17, 2018
A YEAR THAT SAW VERY STRONG GROWTH IN A SIA , AND GOOD PERFORMANCES IN E UROPE AND N ORTH A MERICA +5% +5% NORTH AMERICA EUROPE Growth in electronics and process Strong performance from the industries aeronautics and space sectors Stable performance overall for 33% electrical distribution, with sales 35% picking up in the course of the year €809m +20% -9% ASIA SOUTH AMERICA & AFRICA 4% Adversely affected by Brazil’s economic Growth in renewable energies, situation electronics and process industries 28% Unfavorable effects linked to large contracts booked in 2016 2017 sales in €m - Like-for-like growth vs. 2016 5 Shareholders’ Annual General Meeting – May 17, 2018
S HARP INCREASE IN PROFITABILITY ... +30% 9.2% +170 bps Adjusted 2016 operating margin 7.5% 7.5% before non-recurring items Volume/mix effects +2.4% 74.6 Price impact -0.2% Impact of competitiveness plans +2.0% 57.3 Inflation (costs, raw materials) -1.7% Other (including bonuses) -0.8% 2017 operating margin before non-recurring 9.2% items 2016 adjusted 2017 6 Shareholders’ Annual General Meeting – May 17, 2018
… THANKS TO THE AM SEGMENT ’ S SIGNIFICANT CONTRIBUTION … 49.6 Operating income 39.9 38.4 before non-recurring items (€m) 31.6 Operating margin 11.1% 11.0% 11.1% before non-recurring items (%) 7.7% 2016 adjusted 2017 2016 adjusted 2017 2017 2017 ELECTRICAL ADVANCED EBITDA MARGIN EBITDA MARGIN POWER MATERIALS 13.5% 17.8% Productivity gains Productivity gains Negative mix effects Price increase during the year Neutral price effects Volume effect (organic growth: +9.6%) 7 Shareholders’ Annual General Meeting – May 17, 2018
… AND THE COMPETITIVENESS PLAN 2018 Plan on schedule in terms of 2016 2017 TOTAL estimated cost savings and P&L impact Cost savings (€m) 16.5 16 >45 [12-14] Time lag for cash outflows P&L impact before tax (€m) (22) (9) (2) (33) in 2018 (particularly capex Cash flow impact (€m) (5) (11) (14) (35) and restructuring costs) Including Capex (1) (7) (8) 8 Shareholders’ Annual General Meeting – May 17, 2018
S TRONG INCREASE IN NET INCOME In €m 2016 adjusted 2017 57.3 74.6 Operating income before non-recurring items Strong 12.5x increase in net income Non-recurring income and expenses (26.5) (10.3) Net financial income/(costs) (11.0) (10.0) - Contained non-recurring expenses Income tax (11.5) (15.1) (competitiveness plan) x5 8.3 39.2 Net income from continuing operations - Lower financial expenses Net income/(loss) on assets held for sale and (5.1) 0.8 discontinued operations - Effective income tax rate: 32% x12.5 (excluding more than €2 million of 3.2 40.0 Net income impact of non-recurring items) Attributable to owners of the parent 1.8 37.6 9 Shareholders’ Annual General Meeting – May 17, 2018
N ET DEBT SCALED BACK SIGNIFICANTLY In €m 203 12 178 8 37 (18) (64) Including €7m related to the sale of Gorcy Dec. 2016 Operating cash flow Capex Interest payments Dividends Currency effect and Dec. 2017 other movements 2.1 1.6 NET DEBT/EBITDA NET DEBT/ 41% 37% EQUITY 10 Shareholders’ Annual General Meeting – May 17, 2018
R ECOMMENDED DIVIDEND OF €0.75 PER SHARE 0.75 (1) +50% PAY-OUT RATIO EXCL. NON-RECURRING ITEMS (2) 0.5 38% TOTAL DIVIDEND PAYOUT €15m 2016 2017 (1) Subject to shareholder approval at the Annual General Meeting (2) Net income from continuing operations excluding the effect of the competitiveness plan and tax impact of non-recurring items 11 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN : A SUSTAINABLE GROWTH TRAJECTORY 2 PROFITABLE GROWTH DRIVERS 12 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN : AN EFFICIENT GROUP AND LEADER IN ITS MARKETS SHARED SHARED BUSINESS LEAN MANUFACTURING SHARED END-MARKETS R&D MODEL Operational excellence SITES leveraging the Group’s Cross fertilization, Small production batches, Business processes expertise and resources Central coordination leader in niche markets, AND SALES NETWORK Project-based organization high cash generation Resource allocation ELECTRICAL POWER ADVANCED MATERIALS ELECTRICAL SOLUTIONS FOR ANTICORROSION GRAPHITE POWER TRANSFER PROTECTION & CONTROL POWER MANAGEMENT EQUIPMENT SPECIALTIES TECHNOLOGIES World’s no. 2 in World’s no. 1-2 in World’s no. 1-2 in World’s no. 2 in World’s no. 1-2 in passive components for power high-temperature brushes for industrial industrial fuses graphite equipment electronics applications motors 13 Shareholders’ Annual General Meeting – May 17, 2018
M ARKETS WITH HIGH GROWTH POTENTIAL HIGH GROWTH POTENTIAL MARKETS ~ 40% OF TOTAL SALES 19% ENERGY Solar power RENEWABLE ENERGIES PROCESS 35% INDUSTRIES Industrial GDP €809m 18% ELECTRONICS SEMICONDUCTORS POWER ELECTRONICS Manufacture of semiconductors CHEMICALS 11% 17% TRANSPORTATION Electric AERONAUTICS vehicles ELECTRIC VEHICLES 14 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN ’ S PROFITABLE GROWTH DRIVERS IN THE MEDIUM TERM 1 2 3 4 Accelerating growth Speeding up Developing our Strengthening by leveraging a growth high value-added the efficiency unique position in in Asia expertise of the whole organization growth markets Renewable energies, Renewable energies, China, India, Innovation, R&D, acquisitions Operational excellence electronics, electronics, South Korea Mersen Excellence Journey electric vehicles electric vehicles 15 Shareholders’ Annual General Meeting – May 17, 2018
S OLAR POWER : M AJOR POTENTIAL FOR THE LONG TERM A VERY BRISK PACE INSTALLATIONS PROGRESSING AT THE LOWEST ENERGY PRODUCTION COST Annual (GW) Total (GW) 250 1200 Further acceleration probable 1000 200 with the arrival of energy storage 800 150 -20% 600 vs natural gas 100 400 3x cheaper 50 200 than nuclear 0 0 energy 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 est. est. est. est. est. Source: IHS Markit Source: Lazard’s 2017 Levelized Cost of Energy Analysis 16 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN ’ S STRENGTHS IN THE SOLAR POWER MARKET Polysilicon production Ingot production Electrical protection Energy conversion Graphite machining Graphite Bus bars Graphite crucible resistance Fuses for Furnace cladding semiconductors Insulation Cooling solutions Graphite anticorrosion Graphite Insulation Fuses and Surge Smart systems for HCI electrodes fuse holders protection switches synthesis G LOBAL PRESENCE (local market of panel builders) P RESENCE IN A SIA (70% of customer base) R ELATIONS with energy conversion OEMs F ORMULATION of graphite applications C OMPREHENSIVE PROTECTION OFFERING for solar power E XPERTISE in increasingly large parts I NNOVATIVE PRODUCTS for a market of the future: battery-based energy storage P RODUCTION CAPACITY (no. 1 worldwide) 17 Shareholders’ Annual General Meeting – May 17, 2018
T HE ELECTRONICS MARKET DRIVEN BY 2 MAIN FACTORS GLOBAL SEMICONDUCTORS MARKET Growing digitization Big data, mobility, Smartphone, IoT, Artificial intelligence Forecast $bn 500 250 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 GROWTH DRIVERS Source: WSTS +20% Energy savings and power conversion +8% in 2017 in 2018 (estimate) 18 Shareholders’ Annual General Meeting – May 17, 2018
M ERSEN ’ S STRENGTHS IN THE ELECTRONICS MARKET Ingot production Wafer manufacturing Epitaxy Energy conversion Graphite Bus bars machining Graphite Semiconductor Graphite crucible fuses resistance Graphite Electrostatic Wafer carriers in Cooling solutions Furnace cladding Insulation windows for chucks for ultra-pure graphite ion implant photo-lithography for plasma etching High-purity SiC coated graphite carriers Power semiconductors Photo: Semikron PRESENCE IN THE UNITED STATES for the OEM market (semiconductors) UNIQUE OFFERING of passive components PRESENCE IN ASIA for the replacement parts market (emicon fab. in Taïwan and South Korea) for OEMs UNIQUE CAPACITY to partner the technological breakthroughs made by semiconductor machine DESIGN CAPACITY manufacturers for OEMs 19 Shareholders’ Annual General Meeting – May 17, 2018
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