Schouw & Co. Capital Markets Day Langelinie Pavillonen, 15 June 2017
Schouw & Co. CMD 15.06.2017 2 Agenda Speakers Jens Bjerg Sørensen President Schouw & Co. ▪ The strategic mindset in Schouw & Co. 09:00 ▪ Insights from the acquisition of Borg Automotive ▪ General status and update on recent developments Carlos Diaz CEO BioMar ▪ Highlights from BioMar’s strategy 09:45 ▪ Market insights and business update ▪ Entrance into shrimp feed with Alimentsa acquisition Bo Lybæk CEO GPV ▪ Status after the first year of Schouw & Co. ownership 11:15 ▪ Establishment in Mexico ▪ Growth agenda, including recent BHE acquisition 12:00 Lunch
Agenda Schouw & Co. strategic mindset Borg Automotive General update
Schouw & Co. CMD 15.06.2017 4 Our value proposition Diversified portfolio 1 25 25 6,5 ,500 2 Leading B2B businesses 2 countries with employees major long-term production shareholders Active/long-term ownership 3 Europe based, global outlook 4 ROIC focused 5 Financially strong 6
VISION We strive to be among the best in creating value in a proper and trustworthy manner
Schouw & Co. CMD 15.06.2017 6 Our modus operandi is active ownership DIVERSIFIED FUTURE- ACTIVE AND PORTFOLIO PROFITABLE PROOFING DEVELOPING GROWTH OWNERSHIP ACTIVE STRATEGY OWNERSHIP WHEEL MODEL FINANCIAL OPENNESS VERSATILITY EFFICIENT USE OF CAPITAL
Schouw & Co. CMD 15.06.2017 7 Active ownership: the transformation of Fibertex 2001 2002-2009 2010 2011- Fibertex, then Green-field Fibertex de- Continued expansion in Asia partly owned by expansion in Malaysia merged into two 5 lines in Malaysia – 8 lines in total EAC, was seeking a for hygiene products Technological upgrade in Denmark long-term owner Total investments DKK ~2bn willing to invest in Acquisition and Strict focus on innovation growth construction of a new Establish print business in Germany factory in the Czech Schouw & Co. Republic Investment plan ‘capturing the future’ acquired the shares Relocation of 200 jobs in the combined Acquisitions in France, US, South Africa Fibertex business at Turned around from loss to profit DKK 350m State-of-the-art equipment at all sites Leading position in most segments Revenue Total revenue (2017) DKK 600m DKK ~3.4bn CAGR 11%
Schouw & Co. CMD 15.06.2017 8 HydraSpecma update Hydra-Grene before acquiring Specma Specma acquired Strategic rationale early 2016 ▪ Small but highly profitable Strong in ▪ A leading Nordic ▪ Highly complementing ▪ Revenue of DKK ~550m and +10% EBIT hydraulics and fluid customer segments Denmark ▪ Two segments; Danish OEM and global conveyance application and in wind ▪ Broad geographical wind turbine manufacturers provider presence ▪ Revenue of DKK +1bn, ▪ Exposure to many ▪ Sub-supplier margins under pressure significantly bigger Wind industrial segments M&A than the ‘old’ Hydra industry ▪ Low visibility in wind turbine industry ▪ Strong platform for required ▪ Unique match between growing ▪ Wind industry volatile and project based future growth products, competences ▪ Economies of scale and knowhow ▪ Wish to reduce high exposure to wind ▪ Synergies primarily Strategic ▪ Acquired at 8.2x within sourcing and EBITDA before ambition ▪ Broadening geographical presence cross-selling synergies to grow ▪ Ambition of reaching DKK 1bn in revenue opportunities Status 17 months after the transaction ▪ Harvesting of sourcing synergies is encouraging ▪ In general, everything has developed as expected ▪ Cross sales and more ‘traditional’ integration up next ▪ Soft demands in some areas, especially marine and mining ▪ New (Danish) CEO in Specma from 2018 ▪ Solid progress in Specma’s transformation and relocation
Schouw & Co. CMD 15.06.2017 9 Strategic goals GROWTH PROFIT RETURN GEARING PAYOUT PORTFOLIO Considerable Benchmark ROIC > 15% Investment Constant or 5-7 big growth every level (dependent on risk) grade capital increasing and strong year profitability structure dividends businesses
Schouw & Co. CMD 15.06.2017 10 The strategic journey of Schouw & Co. Bigger and Bigger and Consolidating Diversification stronger stronger the Go Strong portfolio businesses conglomerate Revenue Revenue Revenue Revenue Revenue Target rev. 0.3bn 2.2bn 7.4bn 11.7bn 14.4bn +20bn 2001 2006 2013 2016 2020 1988 x65
Schouw & Co. CMD 15.06.2017 11 2020 Strategic ambition Scenario GO strong January 2017 revised 2020 ambition Revenue EBIT ROIC DKK +20bn DKK 1.xbn >15% Make required CAPEX investments (for organic growth) Investments DKK 2-3bn ( ✓ ) Complete x M&A bolt-on acquisitions DKK x bn ✓ Expand the portfolio with one new business DKK 1.0-1.5bn
Schouw & Co. CMD 15.06.2017 12 M&A Innovation Fit for future Operational excellence Digitalisation CAPEX SCHOUW’S CITY OF STRATEGY Enablers
Agenda Schouw & Co. strategic mindset Borg Automotive General update
Schouw & Co. CMD 15.06.2017 14 Ownership Ownership Ownership Ownership since Ownership Ownership since 2006 since 2001 since 2001 1988/2016 since 2016 since 2017 R E S U L T S A R E C R E A T E D B Y P E O P L E
Schouw & Co. CMD 15.06.2017 15 Borg Automotive, a leading remanufacturing company Borg Automotive at a glance Product split and life cycle 100% ▪ Borg Automotive is a remanufacturing company 3% 6% 7% founded in 1979 by Søren Toft-Jensen 34% ▪ The company specialises in the production and sales of remanufactured parts for the automotive 50% industry like alternators, starters, brake calipers ▪ Borg is Europe's leading independent auto All products remanufacturer with broadest product range and sales in almost all European countries EGR Starters & Brake Steering AC com- ▪ Customers (+100) are wholesalers, distributors valves alternators calipers pressors and OES/OEMs; largest ~10% of sales ▪ Headquarter in Silkeborg with production sites in sales Starters/ New products Air-conditioning Steering/brake Poland and UK, and a R&D facility in Belgium alternators Electrical parts, EGR, Growing segment as Used in all cars. Only in fuel-driven ▪ Production volume ~2m cores valves, turbo, kinetic most new cars have Remanufacturing engines. At least 15 ▪ FTE s: ~1,400 harvesters are small AC penetration increases years before market today but growing diminishes ▪ Annual sales : DKK ~1bn with EBIT DKK 150-160m ▪ CAGR 2012-2016 ~11% time
Schouw & Co. CMD 15.06.2017 16 Remanufacturing in Europe to grow ~8% European remanufacturing drivers European auto remanufacturing market EUR billion 1 Growing carpark 2.3% annual car park Forecast & new sales growth towards 2020 2 ~8% 11.6 Longer vehicle +1 year in average life- 10.8 lifetime time since 2010 10.1 9.4 ~7% 3 8.7 Declining num- 1% annual reduction in 8.0 7.4 ber of accidents accidents since 2010 7.0 6.5 4 Structural Growing aftermarket change liberalisation via regul. 5 Maturing reman. Drives industry promo- capabilities tion/knowledge sharing 6 Global green Supply concern ‘critical’ 2012 2013 2014 2015 2016 2017 2018 2019 2020 agenda to EU (focus on CO2) 1 Notes: 1) The remanufacturing of automotive components yields some 88% materials savings compared to using a new product, with an associated 53% decrease in CO2 emitted and 56% lower energy requirement (EU Commission, 2015)
Schouw & Co. CMD 15.06.2017 17 The remanufacturing process
Schouw & Co. CMD 15.06.2017 18 The remanufacturing process
Schouw & Co. CMD 15.06.2017 19 Acquisition makes good business sense Rationale, conglomerate level Rationale, business level ▪ Current capital structure provides room for significant ▪ Borg Automotive fulfils all investment criteria investment on top of current investment programs ▪ Leading position – leading position in Europe ▪ Span of control target of 5-7 businesses enables new value ▪ B2B – processing of remanufacturing auto parts servicing enhancing platform investments global wholesalers, buying groups and OES/OEMs ▪ Internationally focused – sales throughout Europe with ▪ Continue value-creation of the conglomerate by pursuing production in Poland and UK attractive buy-and-build opportunities ▪ Strong management – highly skilled management team ▪ A new platform investment is key in ‘the next step’ of willing to step-change the company Schouw & Co. ▪ Active ownership – significant opportunity for transformation through active ownership 2016 Revenue (DKKm) ▪ Borg Automotive is well-run and among the best-in-class 2016 EBIT (DKKm) to deliver growth and profitability 8.867 ▪ Well positioned with solid presence in attractive markets 1.792 1.747 and all major product categories 1.301 ~900 * 877 ▪ Industry growth of ~8% is unique 581 246 ▪ Significant opportunities to drive further growth in a ~125 * 111 81 61 fragmented industry, organically and through M&A Notes: *) Borg Automotive’ s accounting principles will be changed following the acquisition to adapt to IFRS. Pro-forma FY2016 revenue and EBIT before any effect of PPA
Agenda Schouw & Co. strategic mindset Borg Automotive General update
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