PKC Group Oyj Investor Presentation Q1/2011 May 2011 Harri Suutari President & CEO 1 1
PKC Group • PKC Group provides design and manufacturing services for wiring harnesses and electronics • The Group’s products and services are delivered mainly to the automotive, telecommunications and electronics industries • PKC Group employs 7,213 employees*) globally at the end of Q1/2011 • The Group’s net sales amounted to EUR 96.9 million in 1-3/2011 • PKC Group Oyj is listed in NASDAQ OMX Helsinki Ltd. *) rented employees included 2 2
Outstanding Growth Track Record Through Focused Investments � PK Cables listed in � Acquisition of � Acquisition of � Acquisition of North � Acquisition of Polish � Acquisition of SEGU the Helsinki Stock Estonian operations Russian operations American operations operations Exchange operations in Starachowice in Germany, Poland, Ukraine 1997 1998 2000 2002 2003 2004 2006 2007 2008 2009 2010 2011 � Brazilian factory � Electronics business � Electronics � Wiring Harnesses was opened established as operations started in business � Acquisition of separate subgroup China established as electronics business separate subgroup Adj. EBITDA (1) EUR million Development Over Time 42.2 38.3 35.8 32.3 30.6 25.7 24.3 16.0 15.0 15.3 13.5 12.0 9.6 8.9 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (1) Illustrated net of non-recurring items 3
PKC Group’s Locations Kempele (HQ), Finland Kempele (HQ), Finland Kostomuksha, Russia Raahe, Finland Kostomuksha, Russia Raahe, Finland Keila & Haapsalu, Estonia Keila & Haapsalu, Estonia Barchfeld, Germany Barchfeld, Germany Starachowice, Poland Starachowice, Poland Green Valley, USA Green Valley, USA Sosnowiec, Poland Sosnowiec, Poland Nogales, Mexico Nogales, Mexico Mukachewo, Ukraine Suzhou, China Mukachewo, Ukraine Suzhou, China Curitiba, Brazil Curitiba, Brazil Wiring Harnesses São Bento do Sul, Brazil Electronics São Bento do Sul, Brazil Office 4 4
Acquisition of Segu Companies • PKC Group announced on 28 February 2011 that it had signed an agreement for the purchase of shares in the Segu companies. The requirements of closing have been fulfilled and the closing became effective on April 30, 2011. • The Segu companies in Germany, Poland and Ukraine manufacture and develop wiring harnesses for the automotive and construction equipment sectors. • In 2010, the Segu companies generated consolidated net sales of EUR 37.9 million (EUR 26.5 million in 2009), EBITDA was EUR 3.8 million (EUR 3.0 million in 2009) and had 1,078 employees at the end of the year (876 at the end of 2009). 5
1-3/2011 Highlights Net Sales and Operating Profit Financial Items, Tax Items and EPS � Net sales amounted to EUR 96.9 million � Financial items amounted to EUR -0.3 million (60.8 million), up 59.3% compared to 1-3/10. (-2.5 million). � Depreciation amounted to EUR 2.8 million � Financial items consist of EUR 0.5 million interest (2.8 million). expenses, as well as exchange rate profit caused � Consolidated comparable EBITDA before non- mainly by Group’s internal liabilities totalling EUR recurring items was 12.5 EUR million (6.2 million). 0.2 million net. � Operating profit totalled EUR 9.7 million � Profit for the report period totalled EUR 7.6 million (2.8 million), accounting for 10.0% (4.6%) of net (0.2 million). sales. The result is burdened by non-recurring � Earnings per share were EUR 0.38 (0.01). expenses of EUR 0.6 million on the comparison period. � Comparable operating profit without non-recurring expenses totalled EUR 9.7 million (3.5 million), accounting for 10.0% (5.7%) of net sales. Cash Flows, Gearing, ROI and Net Debt � Cash flows after investments were EUR 0.1 million (-2.8 million). � Gearing was -3.8% (40.4%) � ROI 28.3% (17.4%) � Net debt were EUR -4.6 million (32.1 million). 6
Key Figures, 1-3/11 1-3/11 1-3/10 Change % 1-12/10 Net sales (EUR 1,000) 96,886 60,835 59.3 316,081 EBIT (EUR 1,000) 9,670 2,827 242.1 29,689 % of net sales 10.0 4.6 9.4 Net result (EUR 1,000) 7,592 246 2,986.2 19,683 EPS, (EUR) 0.38 0.01 3,700.0 1.09 ROI, % 28.3 17.4 25.8 Net debt (EUR million) -4.6 32.1 -2.1 Gearing, % -3.8 40.4 -1.7 No. of employees at closing 1) 6,197 4,492 38.0 5,765 1) Rented employees not included 7
Cost Savings, 1-3/11 1-3/11 1-3/10 Change % Net sales 96,886 60,835 59.3 Staff expenses 18,725 14,468 29.4 Other operating expenses 7,780 6,125 27.0 Non-recurring expenses -600 Operating expenses excluding one time expenses 26,505 19,993 32.6 8
Key Figures, 1-3/11 Net Sales by Geographical Areas 7,213 Employees in total incl. rented at the end of Q1 EUR, million 120.0 1,800 1,686 1,616 1,600 100.0 4.3 1,400 1,251 15.8 1,143 80.0 1,200 6.4 1,000 817 60.0 3.9 800 11.9 4.9 54.8 40.0 600 416 400 29.3 284 20.0 200 15.6 10.8 0.0 0 1-3/2010 1-3/2011 China Finland North Russia Estonia Poland Brazil America Finland Other Europe North America South America Other countires Personnel excl. rented employees R&D Personnel +7.5% at the end of report period 120 114 7,000 110 110 6,197 101 5,765 6,000 5,625 100 5,311 90 5,000 80 4,077 4,000 60 3,000 40 2,000 20 1,000 0 0 2007 2008 2009 2010 Q1/11 2007 2008 2009 2010 Q1/11 9
Key Figures, 1-3/11 Net Sales Adjusted Operating Profit EUR, million Illustrated net of non-recurring items, EUR million 120 Segu MAN 12 acquisition acquisition 10.5 96.9 9.9 100 9.7 91.9 10 82.3 81.0 7.6 8 80 60.8 6 55.4 60 53.8 46.8 3.8 45.8 3.4 4 40 1.9 2 0.4 20 0 -1.1 -2 0 2009 2010 2011 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Earnings per Share (EPS) Adjusted EBITDA % and EBIT % Illustrated net of non-recurring items, % EUR 18 0.70 0.56 16 0.60 14 0.50 0.39 0.38 0.40 12 0.29 0.30 0.24 10 0.19 0.20 8 0.10 0.01 6 0.00 4 -0.10 -0.20 2 -0.20 -0.30 -0.25 0 2009 2010 2011 97 99 01 03 05 07 09 Q1/11 Q1 Q2 Q3 Q4 EBITDA % Operating profit % 10
Key Figures, 1-3/11 Investments Cash Flows after investments EUR, million EUR, million 40 37.6 9 35 8 30 7 6 25 5 20 14.9 4 8.1 15 3 10 4.8 2 5 0.1 2.3 1 0 1.3 0 -5 -2.8 2009 2010 Q1/2010 Q1/2011 2009 2010 Q1/2010 Q1/2011 Return on Investment ROI,% R&D Expenditures % EUR, million 30 28.3 5.7 6 5.5 25.8 25 5 20 17.4 4 15 3 10 2 1.6 1.4 6.4 5 1 0 0 2009 2010 Q1/2010 Q1/2011 2009 2010 Q1/2010 Q1/2011 11
Wiring Harnesses Business Segment 12 12
Key Customer Segments Business Description Customer Segments • The wiring harnesses business segment develops • WH for Trucks & and manufactures wiring harnesses for the Buses commercial vehicle, telecommunication and • Engine Harnesses electronics industries • WH for Recreational • Service concept comprises cost-effective contract Products manufacturing and expert product development and design services. Provision of full supply chain • WH for Agricultural, management for customers with sourcing, Forestry and procurement, manufacturing and sequence Construction deliveries on global basis Equipment • Wiring of Electronics 13
Market Development of Wiring Harnesses Segment 1-3/2011 • Truck markets in Europe strengthened during the report period. The registrations of heavy-duty trucks increased in Europe (the EU countries, Switzerland and Norway) by 65% over the comparison period. • Vehicle orders received by our customers exceeded the deliveries made during the report period by about 9%. • In the first quarter, a total of almost 58,000 new heavy-duty trucks were registered, and sales for the whole year are forecast to increase to between 220,000 and 240,000 vehicles. 14
Market Development of Wiring Harnesses Segment 1-3/2011 • The Brazilian commercial vehicles market profited from the strong economic growth and the increased overall demand for capital goods. • Vehicle orders received by our customers exceeded the deliveries made during the report period by about 20%. • In addition, the Brazilian government continued its investment subsidy program, which also applies to trucks. • In Brazil, the registrations of heavy-duty trucks increased by about a fifth over the previous year’s first quarter. • The changes in emissions regulations scheduled to enter into force at the end of this year are expected to increase production towards the end of the year. • In 2010, about 110,000 heavy-duty trucks were registered in Brazil. Industry expects registrations for the whole year to increase by about 10% over the previous year. 15
Market Development of Wiring Harnesses Segment 1-3/2011 • Orders for heavy-duty trucks continued to be very strong in North America during the first quarter. • The order book of manufacturers increased to 108,000 vehicles, which is 150% more than the same time a year ago, and it is estimated that whole-year sales will reach between 230,000 and 250,000 vehicles. • PKC’s deliveries of wiring harnesses for recreational vehicles increased in the first quarter in North America by 38% over the corresponding period the previous year. 16
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