WELCOME PRESENTATION DÜRR INVESTOR RELATIONS. August PDF

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WELCOME PRESENTATION DÜRR INVESTOR RELATIONS August DISCLAIMER This investor presentation has been prepared independently by Dürr AG ( Dürr ). The presentation contains statements which

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WELCOME PRESENTATION DÜRR INVESTOR RELATIONS August 2015 DISCLAIMER This investor presentation has been prepared independently by Dürr AG ( Dürr ). The presentation contains statements which address such key issues as Dürr s strategy, future financial results, market positions and product development. Such statements should be carefully considered, and it should be understood that many factors could cause forecast and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, physical and environmental risks, legal and legislative issues, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. Dürr AG, CCI, Investor Relations, August AGENDA 1. Dürr: global leader in strong competitive position 2. Markets 3. Dürr Strategy Financial overview, outlook and summary Dürr AG, CCI, Investor Relations, August DÜRR: GLOBAL LEADER IN STRONG COMPETITIVE POSITION Customers Fast facts Market share between approx % in the different machinery and engineering activities ~60% of revenue from automotive business; all OEMs worldwide as customers Strong emerging markets presence with 40-50% share of global incoming orders High entry barriers with limited competitive set Business drivers: market growth, growing replacement potential (automotive); increasing automation, flexibilization & globalization (industry); growing installed base & customer excellence (service) Dürr AG, CCI, Investor Relations, August GROUP STRUCTURE WITH 5 DIVISIONS Figures 2014 PAINT AND FINAL ASSEMBLY SYSTEMS APPLICATION TECHNOLOGY MEASURING AND PROCESS SYSTEMS CLEAN TECHNOLOGY SYSTEMS WOODWORKING MACHINERY AND SYSTEMS Paint Shops & Final Assembly Systems Paint Application Technology for Automotive and General Industry Balancing, Assembly & Testing, Filling, Cleaning Machines Air Purification Systems, Energy Efficiency Systems Machinery and Systems for Stationary Woodworking Sales: 1,078 m EBIT: 106 m EBIT margin: 9.9% ROCE 1 : 100% (¹ negative CE) Sales: 526 m EBIT: 55 m EBIT margin: 10.5% ROCE: 32.3% Sales: 582 m EBIT: 70 m EBIT margin: 12.1% ROCE: 28.0% Sales: 136 m EBIT: 8 m EBIT margin: 5.6% ROCE: 17.5% Sales 1 : 915 m EBIT 1 : 37 m EBIT margin 1 : 4.0% ROCE 1 : 8.6% ( 1 source: HOMAG annual report) Dürr AG, CCI, Investor Relations, August ORDER INTAKE: GLOBALLY BALANCED Rolling 12 months: H H Incoming orders rolling 12 months 2015 (2014) Incoming orders rolling 12 months 2015 (2014) Sales revenues rolling 12 months 2015 (2014) 30.8% 13.4% 26.1% 14.8% Mature markets 47% Emerging markets 1 53% 5.3% 27.7% 5.7% 27.6% 1 Asia (w/o Japan), Mexico, Brazil, Eastern Europe Emerging markets account for 53% of order intake Healthy demand in Europe & North America; acceleration in China in H1 Dürr AG, CCI, Investor Relations, August % 25.9% Germany Rest of Europe incl. Eastern Europe North and South America Asia (w/o China), Africa, Australia China 6 AGENDA 1. Dürr: global leader in strong competitive position 2. Markets 3. Dürr Strategy Financial overview, outlook and summary Dürr AG, CCI, Investor Relations, August MARKETS Worldwide automotive industry with steady growth (light vehicle production in m units) + 2% CAGR + 4% CAGR e* 2016e* 2017e* 2018e* 2019e* developed markets emerging markets 2011: Emerging markets overtaking developed markets * estimated Source: PwC Autofacts Last update: July 2015 Dürr AG, CCI, Investor Relations, August FURTHER GROWTH IN THE CAR MARKET Chinese market weakness expected to be temporary +5% in m units LV Ʃ % +11% % % % CAGR Ʃ % +6% +4% +4% Ʃ % % Americas Europe Asia (w/o China) China Others Source: own estimates, PwC Last update: July 2015 Dürr AG, CCI, Investor Relations, August FURNITURE MARKET Furniture industry: focus on China in USD bn 500 Furniture sales CAGR: 5% Percentage breakdown of furniture industry worldwide (2013) % 44% China USA Germany Italy % 2% 3% 4% 5% 10% India Poland Brazil Others China most important global market Source: Center of Industrial Studies, Csil Dürr AG, CCI, Investor Relations, August AGENDA 1. Dürr: global leader in strong competitive position 2. Markets 3. Dürr Strategy Financial overview, outlook and summary Dürr AG, CCI, Investor Relations, August DÜRR STRATEGY 2020 Innovation Globalization LEADING IN PRODUCTION EFFICIENCY Service Efficiency Dürr AG, CCI, Investor Relations, August INNOVATION LEADING IN PRODUCTION EFFICIENCY Cost per unit in a paint shop Reduction of resource consumption/emissions at paint shops of a German OEM 2,000 Energy 2.0 Water 3.5 VOC 6.0 Paint* Material 41% Service 3% Invest 20% Energy 8% Personnel 28% 1,800 1,600 1,400 1,200 1, % % % % Ø cost per unit in a current paint shop = 320 * 0 kwh/unit 0.0 m³/unit 0.0 kg/unit 0.0 l/unit * Compared to years ago *in spray booth only Dürr AG, CCI, Investor Relations, August GLOBALIZATION ADDRESSING NEW MARKETS Industrial products in Application Technology division Complete range of application products for the general industry (e.g. plastics, wood, furniture, construction) Sales channels: Distributors, integrators, Dürr web shop & Dürr regional centers Product range (extract): Pumps and fluid handling equipment, e.g. scoop piston and suction pumps for the high-pressure range Product systems for electrostatic application, e.g. electrostatic atomizers Conventional application systems, e.g. spray guns Roll out worldwide within the next 2 years, market size 3 bn Graco 23% Competition Iwata 7% Finishing Brands 8% Others 31% Nordson 31% Dürr AG, CCI, Investor Relations, August GLOBALIZATION FOCUS ON EMERGING MARKETS China CAGR in % Incoming orders (in m) Sales revenues (in m) Employees (12/31) 271 1, New Dürr site Shanghai/Baoshan Double-digit sales growth in Brazil, Mexico and India since 2005 Example China: - Doubling of capacities in space to 63,000m² up to now; new campus in China in Increasing use as manufacturing, purchasing and engineering center Test centers in Japan, China, India and US Expansion in South East Asia Dürr AG, CCI, Investor Relations, August DÜRR SERVICE GROWTH STRATEGY Service revenues (in m) In % of group revenues Service type in % of revenues Maintenance, assessments, seminars 18% Spare parts and repairs 42% Modifications and upgrades 40% Strengthening service business and capacities in emerging markets (e.g. China, India, Turkey) Service pricing, dedicated offerings, complaint management system, decentralized ware-housing, delivery speed H1 2015: Ongoing strong expansion; on a comparable basis: +19% Dürr service share H incl. HOMAG: 24% Long-term target: 27% sales share Dürr AG, CCI, Investor Relations, August DÜRR SERVICE GROWTH STRATEGY Number of paint robots sold (cumulative figure) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Dürr AG, CCI, Investor Relations, August DÜRR SERVICE GROWTH STRATEGY Module Customer Experience : Improvement interaction with customers Module Service Excellence : Improvement + extension service business Worldwide program Best in Class for all contact points with the customer Strengthening customer orientation, enhancing customer loyalty Developing instruments for regular measurement of customer satisfaction Consistent service orientation: sales, proposals, operations, aftersales Capacity increase in service business Profitable growth in service business Further improvement in customer relationships and push of service business Dürr AG, CCI, Investor Relations, August DÜRR SERVICE GROWTH STRATEGY Increasing potential due to ageing plant structure Expanding modernization business Age of paint shops (based on own calculations) 80% 70% 60% 50% 40% 30% 20% 10% 0% 75% 17% North America 8% 71% 25% South America 4% 67% 7% 26% 62% 19% 19% 39% 34% Russia EU Asia 20 years years 10 years ~250 paint shops in the world are older than 20 years 27% Dürr AG, CCI, Investor Relations, August EFFICIENCY Global processes as a basis for profitability Further globalization of Dürr processes Global processes / localization Global processes with full utilization of SAP/CAX/CRM/SharePoint Global IT platforms, integrated systems, one single database worldwide, continuous capex spending Expansion of sourcing offices in China, India, Mexico, Brazil Expansion of manufacturing in China, Mexico for international supply Rigorous localization of Dürr products in the emerging markets Supplemental product portfolio with low-cost/low-end solutions Reduction of specifications Local added value Dürr AG, CCI, Investor Relations, August TAKEOVER OF HOMAG GROUP Takeover details Dürr acquired 55.9% of HOMAG Group AG for m in cash Dürr joined a pool agreement and thus secured 77.9% of the voting rights, family/foundation remains shareholder with 22.1% HOMAG is expected to contribute positively to Dürr s EBIT from 2015; consolidation in Q New management team on board; Dürr management board members in HOMAG supervisory board Domination and profit & loss transfer agreement since March 17, 2015 HOMAG Group Financials in m H H Incoming orders Sales EBIT Net profit shareholders (without non-controlling interests) Operating cash flow after employee participation and extraordinary costs 2 including merchandising machines Dürr AG, CCI, Investor Relations, August HOMAG GROUP AT A GLANCE World market leader in woodworking machinery and systems Headquarters in Schopfloch, Germany, 90 km from Bietigheim Areas of application: Furniture industry, Wood-based panel-processing Construction supplies and timber home construction industries Key customers products: Home and office furniture, kitchens Parquet and laminate flooring, windows, doors, stairs 30% market share, biggest customer: IKEA (~ 5% of sales) International group with 37 locations worldwide; only 20% of sales in Germany 5,800 employees worldwide, thereof 3,900 in Germany Solid financials: Equity ratio 31%, net financial debt 50 m as of June 30, 2015 Operating result clearly improved in recent years, 4.0% EBIT margin in incl. extraordinary costs (e.g. PPA costs Stiles takeover) Dürr AG, CCI, Investor Relations, August LEADING THE HOMAG GROUP TO ITS FULL POTENTIAL FOCUS program started in June 2015 Lever Initiatives Targets 2020 Value creation program FOCUS Growth Optimization Expansion China Expansion US Service initiative Project business Innovation program Global organization ( ONE HOMAG ) Process improvement ERP rollouts Modular products Incentive systems Revenue: 1.25 bn EBIT margin: 8 10% Note: 2020 targets are indications for performance ambition only. Not supported by HOMAG s mid-term plans. Dürr AG, CCI, Investor Relations, August KEY ELEMENTS OF FOCUS PROGRAM (I) Growth Expansion China Expansion US Service initiative Project business Innovation program Increase and further localize production in China Establish localized R&D for mid-end products Leverage Stiles potential (project business) Further localize production and design Increase awareness Strengthen organization Improve cross-divisional collaboration Make use of Dürr project management know-how Increase/re-allocate R&D budget, esp. in area of automation and digitalization and CNC Dürr AG, CCI, Investor Relations, August KEY ELEMENTS OF FOCUS PROGRAM (II) Optimization Global organization Process improvement ERP rollouts Modular products Incentive systems Improve collaboration across HOMAG Group entities ( ONE HOMAG ) Establish global business units Efficiency improvement in order execution processes Process harmonization across HOMAG Group Increase use of modern ERP systems Productivity enhancement in order execution Modular product structure to increase part commonality Use of product configurator Alignment of incentives with global business objectives Dürr AG, CCI, Investor Relations, August AGENDA 1. Dürr: global leader in strong competitive position 2. Markets 3. Dürr Strategy Financial overview, outlook and summary Dürr AG, CCI, Investor Relations, August STRONG EARNINGS Huge extraordinary effects due to the HOMAG integration in H in m H H in % Incoming orders 2, , , , Sales revenues 2, , , , Orders on hand (end of period) 2, , , , Gross profit on sales Gross margin (%) percentage points EBIT EBIT margin (%) percentage points Net income Dürr AG, CCI, Investor Relations, August CASH FLOW Strong cash generation in the last years; expected increase in NWC in H in m H H EBT Depreciation and amortization Interest result Income taxes paid Changes Provisions Net working capital Other Cash flow from operating activities Interest paid (net) Capital expenditures Free cash flow Dürr AG, CCI, Investor Relations, August SOLID FINANCIAL RATIOS 12/31/ /31/ /31/ /30/2015 Equity in m Equity ratio in % Net financial status in m Net working capital in m DWC (days working capital) ROCE in % ROCE on a high level despite relatively low EBIT contribution from HOMAG Equity ratio at 21% due to changed entitlement of the HOMAG free shareholders Equity ratio should reach 25% at year end 2015 Pension risks limited; only 2% of balance sheet total 1 annualized Dürr AG, CCI, Investor Relations, August ROCE CLEARLY ABOVE COST OF CAPITAL EBIT in m Capital employed in m NWC in m DWC ROCE in % Dürr business model favors low capital employed ROCE in % CE turnover Strong focus on NWC management : CE of HOMAG fully included but only ¼ of results Dürr AG, CCI, Investor Relations, August OUTLOOK 2015 The upper end of ranges in focus in m 3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, ,400-3, ,200-3, in % Sales Incoming orders Gross margin (in %) EBIT margin (in %) Dürr AG, CCI, Investor Relations, August SUMMARY Stable market conditions, positioning for further growth Ongoing demand, full order pipeline, numerous new projects are coming to the market (e.g. China & North America) Positioning for further growth: focus on emerging markets, brownfield business, product innovation and new business segments (e.g. industrial painting components business/application technology) Service and modernization business becoming more important, group-wide project Customer with first success Cost containment, global processes, localization Solid financial structure, fully funded until 2021 HOMAG will contribute positively to Dürr s EBT in 2015; 2015 a year of transition, 2016 a year to harvest Dürr AG, CCI, Investor Relations, August FINANCIAL CALENDAR 09/09/2015 Commerzbank Sector Conference, Frankfurt 09/10/2015 Morgan Stanley Industrials and Natural Resources Summit, London 09/14/2015 UBS The Future of Auto Capex Conference, Frankfurt 09/15/2015 Deutsche Bank IAA Cars 2015 Conference, Frankfurt 09/17/2015 UBS Best of Germany Conference, New York 09/21/2015 Berenberg German Corporate Conference, Munich 09/22/2015 Baader Investment Conference, Munich 11/03/2015 Interim report for the first nine months of 2015 Contact Dürr Aktiengesellschaft Corporate Communications & Investor Relations Günter Dielmann / Stefan Tobias Burkhardt Carl-Benz-Str Bietigheim-Bissingen Germany Phone: /-3558 Telefax: Dürr AG, CCI, Investor Relations, August Appendix Dürr AG, CCI, Investor Relations, August 2015 AND 2016 FINANCIAL IMPACT FROM HOMAG TAKEOVER 1 in m H FY 2015e FY 2016e EBIT HOMAG Group , Optimization costs PPA EBIT at Dürr level Financial result impact Financial result HOMAG Refinancing syn loan EBT at Dürr level simplified overview 2 before termination of employee participation 3 consensus estimates 4 domination and profit & loss transfer agreement Dürr AG, CCI, Investor Relations, August SHAREHOLDER STRUCTURE / DIVIDEND POLICY Free float at 71.3%* Shareholder structure (as of July 2015) 25.2% Heinz Dürr GmbH, Berlin 3.5% Heinz und Heide Dürr Stiftung, Berlin 71.3% Institutional and private investors - Thereof Alecta Pensionsförsäkring: 3.15%** - Thereof Dürr Board of Management: 0.57%** Dividend policy: 30-40% payout ratio * Free float calculated according to Deutsche Börse AG ** According to the German Securities Trading Act (WpHG) Dürr AG, CCI, Investor Relations, August MARKET SHARE DÜRR/COMPETITORS* Paint and Final Assembly Systems Application Technology Dürr 50%, Eisenmann 10-15%, Taikisha/Geico 20% local competitors: Scivic, Giffin, Gallagher Kaiser, Trinity (Toyota) Dürr 50%, ABB 15-20%, Fanuc 15-20%, Yaskawa 10% Measuring and Process Systems Balancing Dürr 40%, Kokusai 15%, CEMB 10% Filling Dürr 25%, Fives Cinetic 22%, SAT Anlagentechnik 15% Testing Dürr 30%, BEP 20%, Fori 10%, Siemens 5% Cleaning Dürr 40%**, Valiant 20%, ABB 8%, Elwema 6%, Markert 4%, Sugino 4% Clean Technology Systems Woodworking Machinery and Systems Dürr 40-50%***, John Zink/KEU 20%, CTP 10% Dürr 30%, Biesse 10%, Scm group 7%, IMA 4% * own estimates, average of last 3 years ** market share relating to automotive business *** market share relating to business with exhaust-gas purification systems for automotive paint shops Dürr AG, CCI, Investor Relations, August SALES DEVELOPMENT PASSENGER CARS JANUARY-JUNE 2015/14 Change year-on-year in % Western Europe New EU countries China India Germany USA Japan Brazil Russia Source: The German Association of the Automotive Industry (VDA); July 2015 Dürr AG, CCI, Investor Relations, August
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