Presentation 1H2019 results Heerbrugg, 19 July 2019
Today’s speakers Welcome to the presentation on our 1H 2019 results Jens Breu Rolf Frei Chief Executive Officer Chief Financial Officer Presentation 1H 2019 results | 19 July 2019 2
Table of contents 1. Key takeaways Jens Breu 2. Development by segment Jens Breu 3. Development of key financials Rolf Frei 4. Updated guidance 2019 Rolf Frei 5. Q&A Jens Breu/Rolf Frei Presentation 1H 2019 results | 19 July 2019 3
Key takeaways Presentation 1H 2019 results | 19 July 2019 4
Key takeaways Modest growth in a challenging environment • Strong position with customers confirmed with ongoing successful acquisition of major new projects • Sales increased in 1H 2019 by 1.4% to CHF 867.8m • Market position in the US strengthened by acquisition of Triangle Fastener Corporation; overall positive consolidation effects of 4.6% • Organic development at –2.4% burdened by weaker economy and trade tensions • Earnings marked by mix effects and demand-driven fluctuations in capacity utilization • Adjusted EBIT margin at 12.6% (PY 13.6%), one-time effects of CHF –3.7m • Measures implemented to strengthen profitability • Successful commissioning of new manufacturing platform in Nantong (China) • Overall expect slightly better development in 2H 2019 Presentation 1H 2019 results | 19 July 2019 5
Development by segment Presentation 1H 2019 results | 19 July 2019 6
Headlines Engineered Components segment Challenging markets burden performance • Sales decreased to CHF 454.2m, –3.6% in Key figures Engineered Components local currencies to strong PY period 2019 +/– 2018 • Decline driven by challenging Automotive and in CHF million (unaudited) 1H PY 1H Electronics market conditions started Q4/2018 Third party sales 454.2 –4.0% 473.2 Sales growth comparable –3.6% • Continued dynamic growth of Medical division EBITDA 96.4 –14.3% 112.5 As a % of net sales 21.0 23.6 • Profitability burdened by mix effects and Operating profit (EBIT) adjusted 73.9 –11.9% 83.9 fluctuations in capacity utilization. Corrective As a % of net sales 16.1 17.6 actions to recover margins taken ø Capital Employed 680.6 8.9% 624.8 • Strong position with customers confirmed by Investments 44.3 –16.0% 52.8 attractive new project wins Full-time equivalents (FTE) 7,310 10.8% 6,600 • CAPEX –16.0% compared to PY (Nantong) ROCE in % 21.7 26.9 • Sales expected to increase in 2H Presentation 1H 2019 results | 19 July 2019 7
Key messages Automotive division Weak demand, but attractive new projects acquired • Global car sales down –8 to –6% in relevant segments and adjustments in the supply chain that took longer than expected impacting 1H performance • Ramp-up of innovative customer projects on track with limited impact due to weak demand • Sales of Automotive division in 1H at –4.3% to PY, +4.0% compared to 2H 2018 • Stable innovation trends and strong position as engineering partner fueled project pipeline • 1H 2019 EBIT increased vs. 2H 2018 by 4.9% • Business expected to remain flat during 2H Presentation 1H 2019 results | 19 July 2019 8
Key messages Electronics division Trade tensions impacting behavior • Demand stabilized below levels of the PY period (relevant smart phone shipments expected to land at –14% yoy, HDD drive builds at –15% yoy) • Impact expected to be offset with new product line introductions on full year basis • Successfully defended profitability thanks to capacity adjustments and productivity gains • Commissioning of new manufacturing platform in Nantong completed as planned • hosting all SFS core technologies • serving as strategic hub also for Automotive • providing ample capacity for future growth Presentation 1H 2019 results | 19 July 2019 9
Key messages Industrial division Growth returned to Aircraft business • Overall slightly negative trend, individual business areas developing unevenly • Aircraft business returned to growth track as expected due to ramp up of Airbus A350 • Strong capabilities in micro injection molding providing growth opportunities in • dental applications • drug delivery products • Site expansion project at Stamm (CH, plastic injection molding) to be completed until 2021 • Expect stable development in 2H Presentation 1H 2019 results | 19 July 2019 10
Key messages Medical division Continued dynamic sales momentum • Strong sales trend of 2018 confirmed and accelerated in 1H • Successful customer project launches in the application areas of sports medicine, urology, and vascular surgery Sports medicine • Improvements in productivity supporting margin development • Standardized production machine park at multiple sites confirmed to be a competitive advantage • Based on robust project pipeline expect Vascular surgery positive trend to continue in 2H Presentation 1H 2019 results | 19 July 2019 11
Headlines Fastening Systems segment Market position in the US strengthened • Strong sales growth of 16.6% to CHF 248.3m Key figures Fastening Systems driven by consolidation of HECO & TFC (20.4%) 2019 +/– 2018 • Organic development (–1.8%) and FX impact in CHF million (unaudited) 1H PY 1H (–2.0%) negative Third party sales 248.3 16.6% 213.0 Sales growth comparable –1.8% • Divergent trends among the divisions EBITDA 34.1 –15.6% 29.5 • Construction: Stable demand in construction As a % of net sales 13.4 13.3 industry and positive consolidation effects Operating profit (EBIT) 24.0 15.5% 20.7 As a % of net sales 9.4 9.4 • Riveting: Significant drop in demand from ø Capital Employed 294.8 18.8% 248.1 automotive- & industrial customers Investments 9.1 10.6% 8.2 • EBIT margin at 9.4% matching PY level Full-time equivalents (FTE) 2,459 22.2% 2,012 • Continued strong project pipeline ROCE in % 16.3 16.7 • Expect stable development of business in 2H Presentation 1H 2019 results | 19 July 2019 12
Key messages Construction division Ongoing positive development • Organic growth momentum continued at slower pace than 2018, supported by several business units including flat-roof applications • Division clearly benefiting from close collaboration with TFC and HECO by • significantly strengthened position in USA • expansion of product portfolio with inno- vative solutions like in timber construction • Trends to greater safety, energy efficiency and building automation continue to be key areas of innovation and further growth • Positive trend expected to continue in 2H Presentation 1H 2019 results | 19 July 2019 13
Triangle Fasteners Corporation (“TFC”) Acquisition completed and integration started Strategic rational of TFC acquisition • Add direct access to local installers and contractors (about 6000 active end customers) • Leverage direct customer access for cross- sales of Construction division’s portfolio • Significantly strengthens SFS’ competitive position in the US construction market Key Figures • Sales of > USD 70m in 2018 • 200 employees and 23 proprietary sales offices in 15 states Presentation 1H 2019 results | 19 July 2019 14
Key messages Riveting division Development burdened by weak demand • Significant exposure to automotive- and industrial markets and uncertainty due to Brexit strongly impacting business • Corresponding shifts in capacity utilization rate impacting earnings • Capacity adjustment measures taken to mitigate impact on earnings • Strong competitive positioning maintained • Urs Langenauer, former Head of Automotive in North America, replaced Thomas Bamberger • Due to unchanged challenging markets flat business trend expected in 2H Presentation 1H 2019 results | 19 July 2019 15
Headlines Distribution & Logistics segment Continuous growth of customer base • Slightly positive organic growth of +0.3% to Key figures Distribution & Logistics strong previous year period resulting in sales 2019 +/– 2018 of CHF 165.3m in CHF million (unaudited) 1H PY 1H • Development attributed particularly to tools Third party sales 165.3 –2.6% 169.7 Sales growth comparable 0.3% business, e-shop and retail stores EBITDA 21.2 38.1% 15.4 • Divestment of security system business and As a % of net sales 12.6 8.9 FX headwinds impacting sales (totally –2.9%) Operating profit (EBIT) adjusted 13.3 7.4% 12.4 As a % of net sales 7.9 7.2 • Positive 2018 earnings trend maintained with ø Capital Employed 138.5 –3.2% 143.2 adjusted EBIT margin of 7.9% (+70 bps yoy) Investments 1.6 –49.4% 3.2 • Reported earnings benefited from book gain Full-time equivalents (FTE) 618 0.0% 618 on sale of property ROCE in % 19.2 17.4 • Expected positive trend to continue in 2H Presentation 1H 2019 results | 19 July 2019 16
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