Media- & Financial Analyst-Conference 2014 Zehnder Group Review - PDF document

Media- & Financial Analyst-Conference 2014 Zehnder Group Review 2013 Hans-Peter Zehnder, Chairman & CEO Josef Brügger, CFO 7 March 2014 We strive to find the right balance between improving results in the short term and optimising earnings in the long term. 2

Agenda 1. Business Review 2013 2. Financial Results 2013 3. Outlook 2014 4. Q&A 3 Flat sales and higher costs squeezed our results.  Weaker market resulted in unchanged sales and missing our profit targets.  Prices were under pressure (mainly RAD).  Costs were on level as planned.  Sales of EUR 522.4 million (PY: 523.8) and EBIT of EUR 32.3 million (PY: 38.5) were achieved. 4

Financial situation is solid.  Investments in fixed assets of EUR 35.1 million (PY: 37.3)  Cash flow from operating activities EUR 37.9 million (PY: 44.0)  Net cash position of EUR 32.2 million (PY: 26.3)  Net income EUR 18.2 million (PY: 26.8)  Equity ratio 62% (PY: 61%) 5 New residential buildings in Europe declined in most countries and grew only in RU, DE, CH and BE. Source: Total housing completions, EUROCONSTRUCT, November 2013; BRG Consult, October 2013 6

Refurbishment of residential buildings in Europe overall declined. Source: Total housing completions, EUROCONSTRUCT, November 2013 7 New commercial and industrial buildings in Europe declined in nearly all countries. Source: Total housing completions, EUROCONSTRUCT, November 2013 8

Europe net sales 2013: ongoing growth in ventilation, small decline in radiators. EUR million 2011 2012 2013 FX-adj/organic Radiators Europe 307.7 304.6 295.7 Change from prior year 4% -1% -3% -2% Ventilation Europe 153.4 164.7 168.1 Change from prior year 16% 7% 2% 3% Total Europe 461.1 469.3 463.8 Change from prior year 8% 2% -1% 0% 9 Sales of radiators in Europe varied.  Growth in France, UK and Russia  Decline in Germany, Italy and Switzerland  Cold winter affected 1 st quarter sales.  Product group ceiling panels for heating and cooling grew again. 10

There was no medal ceremony at the Winter Olympic Games in Sochi without Zehnder. Zehnder ZIP radiant ceiling panels are attached to the ceiling of the open ceremonial hall at Medal Plaza to provide warmth to the happy athletes. 11 Despite sales decrease in the key markets NL and CH, ventilation sales in Europe increased by 2%.  NL suffered from the continuous drop in residential new built.  CH sales were affected by cold winter and delayed product introduction.  Growth in IT, FR, UK and DE  Strong growth of product group Clean Air Solutions 12

Highlights FR: We increased sales in France despite difficult economic situation.  Market share radiators kept  Significant growth of towel radiators  Strong growth in ventilation  Merger of 3 companies into 1 sales company  New regulations HPE (haute performance énergétique) and THPE (très haute performance énergétique) as of 2014 will favour demand for energy efficient solutions. 13 Highlights FR: Kuehne + Nagel, Paris, goes for our Clean Air Solutions. Massive dust reduction after installation of air cleaning units 14

Highlights DE: In the flattish German market our sales slightly decreased.  Ventilation sales increased whereas radiator sales decreased  Successful new product launch in ventilation business (ComfoAir 180)  New partnership with leading supplier of HVAC integration software 15 Highlights CH: The construction market was stable on high level.  Cold temperatures in 1 st quarter resulted in temporary stop at many construction sites.  Successful, but delayed introduction of a new slim heat recovery ventilation unit.  Service offer strengthened  Merger of 2 sales companies into 1 company and successful introduction of SAP 16

Highlights UK: We achieved over performance in a recovering market.  UK residential building market grew in new build as well as in refurbishment.  Decorative and towel radiators grew.  Very strong growth in radiant heating and cooling.  Successful launch of renewed heat recovery ventilation product range. 17 Highlights IT: The construction market declined again.  Decline in radiators sales but market share increased.  Strong growth of ventilation leads to strengthened leader position.  Successful launch of various new radiators and ventilation units.  Merger of all 3 sales companies into 1 company and successful introduction of SAP. 18

Highlights NL: The market suffered from severe recession in new build residential.  Collapse 2012 of residential market continued – no recovery in 2013  Radiators sales declined  Ventilator sales declined but market leader position was kept.  Strong growth of the product group Clean Air Solutions 19 Highlights NL: The ComfoSchool solution provides a perfect indoor climate. Benefits:  Ensures healthy air quality  Avoids a too high CO ₂ concentration  Avoids temperature overshoot in the classroom  Provides fast response time to changing occupation 20

We developed new markets: Example Turkey - Spine Tower, Istanbul developed new markets e developed new markets 21 Highlights North America: We outperformed in the ongoing recovery of the residential construction market. 2012 [1] 2011 2013 FX-adj/organic EUR million Radiators North America 20.8 27.1 30.6 Change from prior year -4% 31% 13% 16% Ventilation North America 7.0 2.2 2.1 Change from prior year 34% -69% -9% -6% Total North America 27.8 29.4 32.6 Change from prior year 3% 6% 11% 15% [1] movement between the radiator and ventilation segments mainly due to product reclassification  Strong growth in new private residential homes (+18%), whereas private non residential and public construction on previous year’s level. (Source: U.S. Census Bureau)  Heat recovery ventilation grew significantly, whereas fan coils suffered from a very competitive environment. 22

Highlights USA: The Mansions at Aqualina & Oceana in Miami Dual Tunnel Vertical Hi-Stack Fan Coil for high rise luxury condominium buildings Order size: 600 units 23 Highlights USA: Lake Hotel Yellowstone National Park, Wyoming Runtal RF and RV panels 120 pieces for the 1 st phase; total order 450 pieces 24

Highlights China: We progressed in many respects. 2011 2012 2013 FX-adj/organic EUR million Radiators CN 19.7 17.7 19.5 Change from prior year 10% -10% 10% 12% Ventilation CN 6.7 7.4 6.5 Change from prior year 127% 10% -12% -11% Total CN 26.5 25.1 26.0 Change from prior year 26% -5% 4% 5%  Government took measures to calm down overheated residential building market.  Despite this, radiators sales grew significantly.  Ventilation sales decreased due to postponed big construction projects.  Successful relocation of Beijing factory with minimal impact on operations.  Sale of office building results in additional EBIT. 25 Highlights China: Qujiang Wudong Garden in Xian is one of many residential buildings we equipped with our products. Extract ventilation unit G-VENT-3S 26

We increased expenses for process improvements. We strongly believe that our investments in the future will pay-off  Pro memoria: SAP is a comprehensive process and organisational project to improve  Efficiency by a uniform IT platform  Transparency of transactions  In 2013 introduction of SAP in several sites  January: Sales organisation Germany  April: Logistics HUB Germany  October: Sales organisations Italy and Turkey  January 14: Sales organisation Switzerland, Production Lahr (DE)  Preparation of further roll-outs 2014 in NL, BE and UK initiated 27 After a difficult start the logistics hub Lahr achieved its performance goals. We strongly believe that our investments in the future will pay-off  Difficult start delayed shipments during May and June and impacted 1 st half year sales.  Since July the processes in the hub were stable. Further optimisation is in progress.  Hub Lahr plays a very important role in our organisation:  streamlines entire European logistics chain;  reduces logistic costs;  shortens delivery time. 28

We achieved further process improvements resulting from the Kaizen (Zmile) program.  Zmile initiative based on Kaizen philosophy  Gain of momentum with strong involvement of employees in all manufacturing sites  Considerable savings in production achieved 29 New products were successfully launched.  Zehnder Vitalo  Runtal Cosmopolitan (iF product design award)  ComfoAir 180  Comofo Air 330 Slimline  ComfoAir XL  ComfoSchool  ComfoBox A/W  Vireo  …. 30

New products were successfully launched: Example ComfoAir 330 Slimline 31 New products were successfully launched: Example ComfoAir 180 32

New products were successfully launched: Example ComfoBox Air-Water 33 Hand-over of CEO position will take place as of 1 November 2014. Hand-over of CEO position will take place as of November 1, 2014 Hans-Peter Zehnder  Will step back as CEO of the Zehnder Group as of 31 October 2014.  Will continue to be involved in the company as full-time chairman of the Board of Directors. Dominik Berchtold  Was appointed deputy chairman of the Group Executive Committee as of 1 January 2013.  Will take over as CEO of the Zehnder Group as of 1 November 2014. 34