PKC Group Oyj Investor Presentation Q3/2010 November 2010 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 6,131 employees globally at the end of Q3/2010 • The Group’s net sales amounted to EUR 224.1 million in 1-9/2010 • PKC Group Oyj is listed in NASDAQ OMX Helsinki Ltd. 2 2
Outstanding Growth Track Record Through Focused Investments � PK Cables listed in � Acquisition of � Acquisition of � Acquisition of � Acquisition of the Helsinki Stock Estonian Russian North American Polish operations Exchange operations operations operations 1997 1998 2000 2002 2003 2004 2006 2007 2008 2009 � Brazilian factory was opened � Electronics business � Electronics � Wiring Harnesses � Acquisition of electronics established as separate operations started business established business subgroup in China as separate subgroup Adj. EBITDA (1) Development Over Time 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 ____________________ (1) Illustrated net of non-recurring items 3
PKC Group’s Locations Kempele (HQ) Kempele (HQ) Kostomuksha Raahe Kostomuksha Raahe Keila & Haapsalu Keila & Haapsalu Starachowice Starachowice Green Valley Green Valley Nogales Nogales Suzhou Suzhou Wiring Harnesses Curitiba Curitiba Electronics Office 4 4
Business Segments PKC Group operates in two core business segments: Wiring Harnesses, ~75% of the net sales The Wiring Harnesses business develops and manufactures wiring harnesses and cabling for automotive, telecommunications, and electronics industries Electronics, ~25% of the net sales The Electronics business provides design and contract manufacturing services for the telecommunications, electronics, and automotive industries 5 5
Proven and Tested Group Strategy Mission Vision Values � Commitment � Offer customers the best service � Provider of flexible and high quality solutions in close cooperation with � Generate economic value add for customers � Quality shareholders � Customer-oriented, � Profitability � Offer employees a rewarding job proactive contract manufacturer with ongoing development and R&D partner � Cooperation � Competitive pricing Strategic Objectives • Increase profitability by deepening existing customer relationships and acquiring new customers • Highest customer satisfaction by providing competitive, high quality products and global services • Ensuring competitiveness through multi-skilled, committed personnel and continuous development 6
PKC’s Financial Drivers and Targets for 2010-2013 � Volume rebound Annual Top � Potential acquisitions Line Growth of 10- 40% � New product initiatives and business wins � Reduced operative expenses by production relocations Gross Margin � Raw material and component cost reductions of 28-29% � Reduced SG&A expenses through reorganization and Operating Income Margin relocation of 9-13% � Effective capital usage ROIC of 30% 7 7
1-9/2010 Highlights Net Sales and Operating Profit Financial Items, Tax Items and EPS � Net sales amounted to EUR 224.1 million � Financial items amounted to EUR -1.5 million (146.4 million), up 53.1% compared to 1-9/09. negative (1.2 million). � Depreciation amounted to EUR 8.2 million � In addition to EUR 1.2 million interest expenses, a (8.4 million). translation loss of EUR 0.2 million related to the � Operating profit totalled EUR 19.9 million translation of subsidiaries’ financial statements as (-2.0 million), accounting for 8.9% (-1.3%) of net well as exchange rate losses caused mainly of sales. Group’s internal liabilities totalling EUR 0.2 million � The result is burdened by non-recurring expenses have been entered into the financial items. of EUR 1.6 million (5.0 million). � Profit for the report period totalled EUR 14.4 � Comparable operating profit without non-recurring million (-0.9 million). expenses totalled EUR 21.6 million (3.1 million), � Earnings per share were EUR 0.81 (-0.05). accounting for 9.6% (2.1%) of net sales. Cash Flows, Gearing, ROI and Net Debt � Cash flows after investments were EUR 13.9 million (31.1 million). � Gearing was 22.9% (41.3%) � ROI 27.3% (4.8%) � Net debt were EUR 20.9 million (30.8 million). 8
Key Figures, 1-9/10 1-9/10 1-9/09 Change % 1-12/09 Net sales (EUR 1,000) 224,140 146,424 53.1 201,814 EBIT (EUR 1,000) 19,913 -1,950 682 % of net sales 8.9 -1.3 0.3 Net result (EUR 1,000) 14,411 -896 2,349 EPS, (EUR) 0.81 -0.05 0.13 ROI, % 27.3 4.8 6.4 Net debt (EUR million) 20.9 30.8 -31.9 28.2 Gearing, % 22.9 41.3 35.9 No. of employees at closing 1) 5,467 4,205 30.0 4,077 1) Rented employees not included 9
Key Figures, 7-9/10 7-9/10 7-9/09 Change % 1-12/09 Net sales (EUR 1,000) 82,301 46,842 75.7 201,814 EBIT (EUR 1,000) 9,498 3,550 167.5 682 % of net sales 11.5 7.6 0.3 Net result (EUR 1,000) 9,973 6,470 54.1 2,349 EPS, (EUR) 0.56 0.36 55.6 0.13 Net debt (EUR million) 20.9 30.8 -31.9 28.2 Gearing, % 22.9 41.3 35.9 No. of employees at closing 1) 5,467 4,205 30.0 4,077 1) Rented employees not included 10
Cost Savings, 1-9/10 1-9/10 1-9/09 Change % Net sales 224,140 146,424 53.1 Staff expenses 47,232 39,855 18.5 Other operating expenses 20,347 16,620 22.4 Non-recurring expenses -1,646 -5,000 Operating expenses excluding one time expenses 65,933 51,475 28.1 11
Key Figures, 1-9/10 Net Sales by Geographical Areas 6,131 Employees in total incl. rented at the end of Q3 EUR, million 250.0 1,400 1,292 1,277 1,178 15.4 1,200 200.0 996 42.6 1,000 16.6 150.0 800 11.6 689 16.0 14.4 600 500 100.0 111.4 400 74.4 50.0 199 200 38.2 30.0 0.0 0 1-9/2009 1-9/2010 China Finland North Russia Estonia Poland Brazil America Finland Other Europe North America South America Other countires Personnel excluding rented employees R&D Personnel +34.1% 6,000 120 114 5,625 5,467 109 109 5,311 101 4,775 5,000 100 90 4,077 4,000 80 3,570 3,000 60 2,000 40 1,000 20 0 0 2005 2006 2007 2008 2009 Q3/10 2007 2008 2009 Q3/2009 Q3/2010 12
Key Figures, 1-9/10 Net Sales Adjusted Operating Profit EUR, million 100 Illustrated net of non-recurring items, EUR million MAN 88.6 90 12 85.1 acquisition 11.1 82.3 81.0 10.5 80 73.4 10 9.3 70 64.7 60.8 7.6 8 60 55.4 53.8 6 46.8 6 50 45.8 40 3.8 3.7 4 3.4 30 1.9 2 20 0.4 0 10 -1.1 0 -2 2008 2009 2010 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Earning per Share (EPS) Adjusted EBITDA % and EBIT % Illustrated net of non-recurring items, % EUR 18 0.8 16 0.56 0.6 14 0.41 0.39 0.4 12 0.30 0.25 0.26 0.24 0.24 0.19 0.19 0.17 10 0.2 0.01 8 0 6 -0.2 -0.20 4 -0.25 -0.4 2 0 -0.53 -0.6 2007 2008 2009 2010 97 98 99 00 01 02 03 04 05 06 07 08 09 Q3/10 EBITDA % Operating profit % Q1 Q2 Q3 Q4 13
Key Figures, 1-9/10 Investments Cash Flows after investments EUR, million EUR, million 35 40 37.6 35 30 31.1 30 25 25 21.6 20 20 13.9 15 15 10 10 5 5 9.9 0 4.8 4.1 -5 0 -6.2 2008 2009 1-9/2010 -10 2008 2009 Q3/2009 Q3/2010 Net Investments Acquisition Return on Investment ROI,% R&D Expenditures % EUR, million 30 7 27.3 5.8 25 6 5.5 5.5 20.8 5 20 4.1 4.1 4 15 3 10 2 6.4 5.9 5 1 0 0 2008 2009 Q3/2009 Q3/2010 2007 2008 2009 Q3/2009 Q3/2010 14
Outlook for the Future • In the third quarter our main customers received about 15% more orders in our main market areas than the number of vehicles delivered. This indicates that the production volumes will remain at least at the current level. Production volumes have grown steadily during the first part of the year and, therefore, we do not expect production volumes to grow significantly on the current level. • We estimate that demand for electronics design and manufacturing services in the market will remain at current level during the end of the year. 15
Outlook for the Future • We predict that the full-year net sales will increase and that the operating profit before non-recurring items will improve substantially on the previous year. We also estimate that net sales level and operating profit level before non-recurring items during the latter part of the year shall further improve from the average level of the first nine months of the year. • PKC’s balance sheet, liquidity and good customer relationships will enable improvement in PKC’s relative competitive position. 16
Wiring Harnesses Business Segment 17 17
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