Schouw & Co. Full Year 2017 Investor presentation MARCH 2018 - - PowerPoint PPT Presentation
Schouw & Co. Full Year 2017 Investor presentation MARCH 2018 CEO JENS BJERG SRENSEN | IR KASPER OKKELS 2017 Annual Report 09.03.2018 2 Schouw & Co. value proposition Diversified portfolio 1 25 25 7,0 ,000 2 Leading B2B
Investor presentation
MARCH 2018 CEO JENS BJERG SØRENSEN | IR KASPER OKKELS
countries with production
employees
major long-term shareholders
2
1 2 3 4 6 5
Diversified portfolio Leading B2B businesses Europe based, global outlook ROIC focused Financially strong Active/long-term ownership
09.03.2018 2017 Annual Report
09.03.2018 2017 Annual Report 3
Fish Feed Nonwovens Industrial solutions
>40%
~30%
<30%
~55%
~20%
~25%
09.03.2018 2017 Annual Report 4
2016 2017 14.4 14.4 15.8 17.0 +10.1% +18.5% 2016 2017 1.5 1.0 1.6 1.1 +6.5% +5.2% 1.2 2016 2017 1.6 1.3 0.8 +6.7%
Revenue Profit Cash Flow Return
Organic revenue Total revenue EBITDA EBIT CF Op. before NWC CF from Operations 2016 2017 20.2 16.6 17.6 13.8
ROIC excluding GW ROIC including GW 14.4
09.03.2018 2017 Annual Report 5
Acquisitions Capex Competition Innovation
Borg Automotive became 6th portfolio leg in April 2017
EV 100% DKK ~1.1bn
Alimentsa gives strategic foothold in shrimp for BioMar BHE part of Nordic EMS consolidation in GPV BioMar faces price pressure especially in Norway, offset by increasing market share FPC sees period of over capacity in Europe, hence focus on NPI and innovation FX and raw material prices remain volatile and affect competitiveness
EV 70% DKK ~800m EV 100% DKK ~40m
BioMar builds world’s biggest fish feed site in Karmøy
Capex DKK ~350m
FPC establishes new site in Malaysia and adds 20kt capacity
Capex DKK ~400m
GPV announces multi-year extension
Capex DKK +200m
In 2018, FIN acquires Brazilian peer to grow with auto customers
EV 100% DKK ~80m
BioMar introduces Omega3 rich feed based on sustainable algae products FPC patents a super-soft and cloth-like material called Fibertex Loft FIN develops filtration solutions based on nano technology
09.03.2018 2017 Annual Report 6
Revenue (DKK billion)
2016 17 Other 2017 BioMar 14,369 225 1,087 FPC 59 121 FIN HySp 709 17,032 Borg 480 GPV 18.5%
EBITDA (DKK million) Cash Flow Operations (DKK billion)
10 89 GPV 26 Other 2017 16 45 FPC BioMar 2016 3 HySp 1,472 1,568 22 FIN Borg 6.5% 139 HySp Borg 72 GPV 26 Other 2017 FIN 2016 588 BioMar 78 70 FPC 6 1,598 763
71
HySp
32
CF impact
52
2016 2017
21 223
Acquisitions
240
FPC
63 29
BioMar 2,043
97
GPV Borg Other
10
Non-cash NWC FIN
13
FX etc. 2,589
114
2,505 1,727 +18.3% +22.6%
09.03.2018 2017 Annual Report 7
96 62 52 546 1,227 2016 CF Op before NWC EBITDA 5 2017 CF from Operations 1,309 Net financials Tax Other 2017 CF Op before NWC NWC 763 +6.6%
Operational Cash Flow (DKK million)
Underlying Cash Flow from Operations increases, but significant negative impact from NWC
Net Working Capital (DKK million)
NWC increase follows higher activity. Significant less attractive to use Supply Chain Financing in BioMar.
Cash part of NWC change
09.03.2018 2017 Annual Report 8
756 286 809 744 20 Acquisitions NIBD 31 Dec 2016 1,913 42 Investments 1,115 Dividends CF
2017H1 CF
2017H2 58 1,275 Other NIBD 31 Dec 2017
BioMar expansion in Karmøy, Norway DKK ~350m Fibertex Personal Care in Sendayan, Malaysia DKK ~400m Fibertex Nonwovens expansions and line upgrades DKK ~125m GPV in Guadalajara, Mexico and new SMT capacity DKK ~50m
Notes: 1) Some of the investments lies outside 2017
Net Interest-Bearing Debt (DKK million) Selected investments1
NIBD increases mainly from acquisitions, high capex and low cash flow generation in H1
09.03.2018 2017 Annual Report 9 10 09 11.9 08 11 12 13 15 14 16 17 11.8 9.8 8.4 9.5 12.5 11.6 12.6 14.4 17.0 CAGR +6.3% 10 18% 14 08 15% 15 09 7% 11 12 13 16 17 4% 10% 14% 16% 17% 20% 18% +10.4pp 124 190 369 646 772 685 708 831 13 12 09 11 08 10 14 15 16 17 1,038 1,093 CAGR +27.4% 14 08 09 13 2,173 10 11 15 6,812 3,188 2,375 12 16 17 2,000 3,511 5,313 9,131 12,489 13,939 +24.1% 15 3.9 08 13
12 09 10 11 14 1.7 16 17 4.0 2.9 2.6 0.0 0.0
0.8
08 09 10 11 13 14 12 15 16 17 3,743 3,334 3,166 2,052 3,287 2,382 2,873 2,139 4,108 6,087 CAGR +5.6%
Revenue (DKK bn) ROIC ex goodwill FTEs (yearly average) EBIT (DKK m) NIBD/EBITDA Market Capitalisation (end of year)
09.03.2018 2017 Annual Report 10
GROWTH PROFIT RETURN GEARING DIVIDENDS PORTFOLIO
Considerable growth every year Benchmark level profitability ROIC > 15%
(dependent on risk)
Investment grade capital structure Constant or increasing dividends 5-7 strong businesses
14.4% ’17 1.2% ’14 ’15 ’16 6.6% 18.5% 13
Revenue growth EBIT benchmark
3,8% Peer Bio- Mar 5,6% FPC 14,8% Peer 12,4% FIN Peer 4,6% 6,2% HySp 4,9% Peer 4,7% Borg Peer 15,2% 2,0% GPV Peer 7,1% 6,1%
’16 ’13 ’14 18,3% ’15 ’17 16,1% 16,9% 20,2% 17,6%
ROIC
0,8 ’16 ’13 0,0 ’14 0,0 ’15 ’17
NIBD/EBITDA
6 8 10 12 13 ’17 ’13 ’14 ’15 ’16
Dividends DKK/share Portfolio
Revenue DKKm ROIC % Profit DKKm
2017
8,702
2014
8,451 8,974 8,867 9,955
2015 2013 2016
CAGR +3.4%
2014
394
2013 2015 2016 2017
538 574 434 447 593 581 722 559 712 CAGR +9.1%
2013 2016 2014 2015
22.7% 20.1% 14.7% 22.9% 16.6% 16.4% 35.8% 24.4%
2017
30.1% 19.5% +10.0pp
09.03.2018 2017 Annual Report 11
Financials
▪ Significant volume growth of 20% ▪ All divisions contribute to growth, but especially salmon region increases ▪ Very strong Q4 – better than expected ▪ EBIT at 2016 level which was significantly affected by one-off income ▪ ROIC declines but remains very attractive ▪ NWC negatively affected by changed use of Supply Chain Financing
Segments
▪ Increase in market share in salmon ▪ Price competition in Norway remains tough – no change since 2017 Q3 ▪ Very strong profitability in EMEA ▪ Ecuador significant contributor to EBIT ▪ Salmones Austral (23% non-core
EBITDA DKK 380m, NIBD DKK 500m) ▪ Non-consolidated 50% JVs (China/Turkey) revenue DKK ~700m, EBIT DKK ~40m
2018 outlook
▪ Volume growth driven by new capacity and full-year effect from Ecuador ▪ Increased market share in Norway will
▪ Innovation and NPI to drive future growth ▪ Growth in non-consolidated JVs ▪ 2018 sales expected at DKK 10-10.5bn ▪ 2018 EBITDA increase to DKK 720-770m
EBIT EBITDA
Revenue DKKm ROIC % Profit DKKm
2014 2013 2015 2016
1,554
2017
2,016 1,787 1,797 1,792 CAGR +6.7%
2014 2013
164 308
2015 2016 2017
288 171 253 246 395 362 251 365 CAGR +11.2%
2013 2014 2015 2016 2017
13.6% 12.8% 14.4% 13.5% 20.7% 19.2% 18.4% 17.1% 15.8% 14.9% +2.2pp
09.03.2018 2017 Annual Report 12
Financials
▪ Strong Q4 with sales 20% above 2016Q4 ▪ 2017 growth driven by volume increase in Malaysia and expansion of print business ▪ Attractive ROIC despite huge investments
Segments
▪ Strong sales of new volume in Malaysia ▪ Asian demand continues to grow double- digit ▪ Demand for print continues to grow both in Europe, Asia and Americas ▪ Value-added focus to compensate for price pressure in Europe
2018 outlook
▪ Focus on value-added products (softness, light material, print) ▪ Revenue expected to reach DKK 2.1bn ▪ EBITDA expected at DKK 350-370m with uncertainty from raw material prices and FX (especially USD/MYR)
EBIT EBITDA
Revenue DKKm ROIC % Profit DKKm
2016 2014
933
2015
1,422
2013 2017
1,048 1,222 1,301 CAGR +11.1%
2017 2015 2013 2016 2014
88 37 102 62 128 76 153 81 162 179 CAGR +23.9%
2017 2014 2013 2015 2016
5.1% 4.7% 8.4% 7.5%7.8%7.0%7.7%7.0% 7.8% 7.1% +2.7pp
09.03.2018 2017 Annual Report 13
Financials
▪ Continued progress in sales and EBIT, both Q/Q and Y/Y ▪ 9% increase in both 2017 sales and EBIT ▪ Negative result in South Africa offsetting solid progress in European business ▪ ROIC is lower than 15% target due to underperformance in South Africa and relatively large tied-up capital
Segments
▪ Good performance on all European sites ▪ Strong sales to automotive and other high- value segments ▪ Higher activity in US with strong EBIT improvement and good pipeline ▪ Continued challenging market in South Africa (EBIT DKK -13m) ▪ Foothold in Brazil following recent acquisition
2018 outlook
▪ Strong market position from investments in capacity expansion, value add and innovation ▪ Stable market activity expected ▪ Focus on new products and innovation ▪ Small positive effect from Brazil acquisition ▪ Revenue expected to reach DKK 1.6bn and EBITDA at DKK 195-215m
EBIT EBITDA
Revenue DKKm ROIC % Profit DKKm
480
2013 2016 2014 2015 2017
1,805 566 603 1,747 CAGR +39.3%
2014
78 46
2013 2015 2016 2017
111 64 148 60 78 93 170 88 CAGR +17.6% 28.9%
2013 2014 2016 2015 2017
22.6% 18.2% 18.2% 22.6% 28.9% 16.1% 13.6% 13.0% 11.1%
09.03.2018 2017 Annual Report 14
Financials
▪ Q4 sales above expectations but EBIT deviated negatively ▪ Profit adversely affected by lower demand in wind sector, restructuring in China and high costs following high Swedish activity ▪ ROIC declines as NWC increases from strategic decision on higher inventory ▪ Level of synergies from integration of Hydra and Specma continues as planned
Segments
▪ Strong market position after Specma acquisition in 2016 with solid platform of serving international customers ▪ Demand for more capacity requires investments in Nordic and Poland ▪ Unchanged pressure from global customers
▪ China the weak spot in 2017 – loss making
2018 outlook
▪ Continued integration and further utilisation of the combined platform ▪ Solid position to long-term growth ▪ Positive outlook in truck/bus and wind, but marine remains challenging ▪ Revenue expected to reach DKK 1.9bn ▪ EBITDA expected at DKK 155-175m
EBIT EBITDA
Revenue DKKm ROIC %
2013 2017
910
2014 2015 2016
946 CAGR +3.9%
2013 2016 2017 2014 2015
126 154 138 144 CAGR +13.9%
2015 2017 2014 2013 2016
12.7% 23.3%
09.03.2018 2017 Annual Report 15
Financials
▪ Borg Automotive acquired in April 2017 at EV/EBITDA17 of 7.4x ▪ Overall, the first 9 months in Schouw & Co. were as expected ▪ Adjusted for PPA and a special one-off cost relating to the acquisition EBIT increased 14% compared to 2016 ▪ Solid ROIC in first year of acquisition
Segments
▪ Increase in both IAM (independent aftermarket) and OE sale ▪ Optimising production footprint, UK/PL ▪ Growth strategy targeting new products ▪ Review of need for new production capacity
2018 outlook
▪ Consolidation in the automotive aftermarket changes industry dynamics ▪ Borg’s broad product range opens many doors and gives Borg a strong position ▪ Revenue expected to increase to DKK +1bn ▪ EBITDA expected at DKK 155-175m
EBIT EBITDA
2017 adjusted for PPA and a special
Revenue DKKm ROIC % Profit DKKm
855 877 1,148
2013 2014 2015 2017 2016
CAGR +15.9%
2014 2013 2017 2015 2016
53 79 61 84 81 107 CAGR +23.7%
2013 2014
16.5% 15.9%
2015 2017 2016
15.9% 17.1% +1.2pp
09.03.2018 2017 Annual Report 16
Financials
▪ A very strong year for GPV ▪ Revenue growth of 31% with similar increase in profit ▪ Best-in-class EBIT margin performance ▪ Synergies from BHE acquisition materialises as expected ▪ Strong execution of high order intake ▪ Mexico still in ramp-up phase (lossmaking) ▪ Solid ROIC performance above target
Segments
▪ Effect from long-term customer relations ▪ Solid demand in many segments and very strong order intake throughout 2017 ▪ Mexico commercially operational in 2017 but volume still being built up ▪ Major extension of Thailand sites planned 2018-2022 ▪ Added capacity in Denmark
2018 outlook
▪ Sales growth from increased outsourcing and customer’s focus on a.o. IIoT ▪ Positive outlook in Americas ▪ Pressure on component delivery times ▪ Revenue expected to reach DKK ~1,225m and EBITDA to increase to DKK 125-135m
EBIT EBITDA
Maintain position and build competitive strength by focus on operational streamlining and margin management and on sustaining strategic development from volume to value
09.03.2018 2017 Annual Report 17
Build strength
Allocate capital for growth and review future capacity expansion to ensure a strong platform for long-term value creation Invest to prepare for the future and put innovation and digitalisation on the agenda in all our businesses
Allocate capital Innovation
1 2 3
Drive ‘intelligent synergies’ in financing, accounting, strategy, acquisition and developing our organisations and talent across all businesses
Develop across all businesses
4
Ensure financial resources for future investments in both maintaining and expanding capacity and in large and small acquisitions
Investments
5
09.03.2018 2017 Annual Report 18
2018E 2017R 2016R 10-10.5b 9,955 8,867
2,016 1,792
1,422 1,301
1,805 1,747
709
1,148 668
17,032 14,369 2018E 2017R 2016R BioMar 720-770 712 722 Fibertex Personal Care 350-370 365 362 Fibertex Nonwovens 195-215 179 162 HydraSpecma 155-175 148 170 Borg Automotive 155-175 89
125-135 107 62 Other
Total EBITDA 1,665-1,805 1,568 1,472 PPA depreciation
Other depreciation
Total EBIT 1,110-1,250 1,093 1,038 Associates, etc.
42 566 Other financial items
Profit before tax 1,120-1,260 1,105 1,578 Profit Revenue
▪ Portfolio business guidance changed to EBITDA level but full disclosure on depreciations and PPA ▪ Increase in both revenue and profit guidance across all businesses ▪ FX incorporated at current levels – largest exposure to USD (BioMar Chile, BioMar Ecuador, FPC Malaysia, FIN USA), GPB (BioMar, Borg), NOK and SEK ▪ Total 2018 capex DKK ~750m with a few major items: BioMar Australia DKK ~300m FPC print US DKK ~80m GPV Thailand DKK ~150m
09.03.2018 2017 Annual Report 19
7.5% 6% 18% 15% 15% 9% 17.5% 12% 10% 7% 13% 10% EBITDA EBIT (pre PPA) 3-6% 7% 7-8% 5% 5-7% 5-7% Industry growth
09.03.2018 2017 Annual Report 20
▪ Best revenue/EBIT performance ever in Schouw & Co. ▪ Well-proved business model ▪ Delivering on strategic goals ▪ Financial versatile despite significant investments ▪ Well-balanced portfolio with active growth agenda ▪ All businesses contributing to the solid performance ▪ Taking markets shares in competitive markets ▪ Well-positioned for further expansion with attractive growth rates in all industries ▪ Strong focus on margin management, value-add and global production footprint ▪ Capitalising on capex and M&A Schouw &
Business level