gesco bpk-2014 en
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1.Business model
2. Portfolio development and M&A
3. Financial year 2013/2014
4. Financial year 2014/2015
5. The GESCO share
Overview
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GESCO – an industrial group shaped by SMEs with market and technology leaders
Tool manufacturing/mechanical engineering and plastics technology segments
Currently 17 operating subsidiaries under the GESCO AG umbrella
We think and act sustainably and in an entrepreneurial manner.
We are active in established industries with innovative technologies.
We provide technology “Made in Germany” to the world’s markets.
GESCO consists of flexible, independently operating and managed units that benefit from belonging to a strong group.
1. The business model
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1. The business model
The GESCO AG investment philosophy Acquisition and development of industrial SMEs Long-term orientation, no intent to exit Majority takeover, usually 100 % Usually as part of succession planning New managers hold a share of up to 20 % in their companies
(“entrepreneurial companies”)
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2. Portfolio development
MAE strengthens position in US by acquiring local competitor
MAE: international market leader for automatic straightening machines and wheel presses
Eitel is the US market leader for straightening machines Founded in 1973 Sales: around € 10 million Around 50 employees Export ratio: around 20 %
(Canada, Mexico, South America) Transition of expertise in both
directions Eitel expands range of products
and services, addresses new target groups
Positive synergy effects in the medium term
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2. Portfolio development
Setter takes over smaller competitor Papersticks UK
Papersticks produces paper sticks for
sweets and hygiene articles, focus on UK and South Africa
Sales volume: around € 1 million p.a.
Acquisition of key assets in April 2014
Production to take place in future in Germany using more modern Setter machines
Niche shakeout
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Current M&A situation Fewer offers, possibly because …many industrial companies recorded declines in
incoming orders, sales and earnings in 2013 not an ideal basis for approaching investors
…business owners wonder what to do with the money in a zero-interest environment
Increasing competition, e.g. from family offices
Two projects currently about to enter into due diligence A direct acquisition by GESCO AG A strategic enhancement of a subsidiary abroad
2. M&A
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3. Financial year 2013/2014
Financial year 2013/2014:
Not an easy year
Massive strategic investments US acquisition at MAE
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3. Financial year 2013/2014
German GDP in 2013: +0.4 %
VDMA reports drop (-1.7 %), GKV growth (+3 %)
GESCO Group: Sales unchanged organically, growing inorganically Order intake fell organically, compensated for by inorganic development
Why did margins fall?
Earnings quality generally poorer Processes less efficient due to customers placing orders at short
notice and hesitantly Some pronounced weaknesses in countries/sectors (China weak;
massive reluctance to invest, esp. at major automotive suppliers; semiconductors and photovoltaics weak)
On top: technical problems with two large orders, due diligence costs higher than expected
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3. Financial year 2013/2014
Massive strategic investments A total of € 28 million in property, plant and equipment
as well as intangible assets (planned: € 30 million)
Focus: companies with concrete growth potential Dörrenberg Edelstahl GmbH (including new plant in Dieringhausen for the
expansion of capacities and the product spectrum) MAE Maschinen- und Apparatebau Götzen GmbH (new assembly hall) AstroPlast Kunststofftechnik GmbH & Co. KG
(property in Meschede, logistics and production building)
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3. Financial year 2013/2014
Keep in mind:
GESCO AG and GESCO Group financial year = 1 April to 31 March
Subsidiaries’ financial year = calendar year
Financial statement 2013/2014 encompasses calendar year 2013 in operating terms
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3. 2013/2014: GESCO Group key figures
2012/2013
2013/2014
Change
Incoming orders €‘million 439.4 435.6 -0.9 %
Group sales €‘million 440.4 453.3 2.9 %
Group EBITDA €‘million 51.8 48.7 -5.9 %
Group EBIT €‘million 37.3 32.0 -14.3 % Earnings before tax €‘million 33.8 29.0 -14.2 % Income taxes €‘million -11.1 -9.3 -16.5 % Earnings after tax €‘million 22.7 19.8 -13.1 % Group net income for the year (after minority interest)
€‘million 20.9 18.1 -13.4 %
Earnings per share acc. to IFRS
€ 6.30 5.45 -13.4 %
Cash flow €‘million 36.2 36.6 1.2 % Employees No. 2,292 2.360 3.0 %
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50
100
150
200
250
300
350
400
31.03.2013 31.03.2014 31.03.2014 31.03.2013
Current liabilities
Non-current liabilities
Equity capital
Liquid assets
Receivables and other assets
Inventories
Non-current assets
Assets Equity and liabilities
In € million
3. 2013/2014 Group balance sheet structure
126
67
37
128
119
81
39
177
89
114
167
83
108
380 380
141
358 358
Equity ratio: 46.5 %
€ 28 million in investments Goodwill: € 12.4 million = 7 % of equity capital
Adequate liquid assets Net liabilities to banks to EBIDTA: 1.2 13
4. Financial year 2014/2015
Financial year 2014/2015:
The economic climate is better. Sales should rise, but earnings will not increase yet because of impact from two key factors
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4. Financial year 2014/2015
Starting position and expectations
Economic forecasts point to recovery (GDP: +1.9 %, VDMA: production + 3 %, GKV: sales +4 % to 5 %)
Positive signals at GESCO Group since the start of the year Demand from China has recovered
Stop on investments at major automotive suppliers no longer as strict
Situation at the companies particularly affected in 2013/2014 is improving.
Special steel business at Dörrenberg Edelstahl GmbH at an appealing level good sign for the German capital goods industry
Sales at GESCO Group set to rise
Two issues weighing down earnings performance
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4. Financial year 2014/2015
Issue 1: Protomaster GmbH
Manufactures metal forming tools Produces body parts and assemblies for small and medium-scale
series using these tools Niche position, few comparable suppliers Dramatic rise in call-off orders for several ongoing (major) orders;
labour shortage and organisational deficits Concrete support by GESCO Group, investments in future development
Issue 2: MAE Maschinen- und Apparatebau Götzen GmbH
International market leader for automatic straightening machines and wheel presses
Growth driven strongly by innovation; sales more than doubled between 2006 and 2013; extensive construction and expansion projects with new administration and production building
Burdens on several fronts due to strong operating growth, construction activities, technical challenges, Eitel acquisition and organisational development, labour bottlenecks
Active support by GESCO AG
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4. Financial year 2014/2015
Impact of the Ukraine/Russia crisis
Currency devaluation in Russia, Ukraine, Kazakhstan leading to slump in business by German agricultural machinery manufacturers Frank Walz- und Schmiedetechnik GmbH in OEM business, directly impacted
An escalation of the situation would have a significant impact on German industry – which would also have an impact on GESCO Group
This crisis is not yet reflected in the VDMA and GKV forecasts
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4. Financial year 2014/2015
Q1: incoming orders high and satisfactory, operations still rather weak
Includes operations at subsidiaries between January and March 2014
Incoming orders at around € 126 million (Q1 previous year: € 110.4 million): +14 %
Sales at around € 109 million (Q1 previous year: € 108.9 million)
Resulting in a book-to-bill ratio of > 1
Earnings weighed down significantly by the two “issues” in particular
Order backlog at the end of Q1: around € 205 million
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4. Financial year 2014/2015
Sales and incoming orders by quarter (in €'000)
─ Incoming orders ─ Sales 19
20.000
40.000
60.000
80.000
100.000
120.000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2009 2010 2011 2012 2013 2014
4. Financial year 2014/2015
Additional strategic investments A total of €30 million in property, plant and equipment planned
Major growth investments:
Frank Walz- und Schmiedetechnik GmbH: new hall and forged-parts production line for new product group
Werkzeugbau Laichingen-Gruppe: construction of new hall, new press Protomaster GmbH: capacity expansion, expansion of manufacturing
technology
Most of these growth investments won’t be completed before the end of 2014.
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4. Financial year 2014/2015
2013/2014 Actual figures
2014/2015e
Target
Change
Group sales € million 453.3 470 to 480 +3.7 % to +5.9 %
Group net income for the year after minority interest
€ million 18.1 17.5 to 18.5 -3.3 % to +2.2 %
Earnings per share acc. to IFRS
€ 5.45 5.26 to 5.56 -3.3 % to +2.2 %
Target figures
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Conclusion: 2014/2015 to bring a certain recovery to business
The two “issues” are weighing down earnings
Appropriate countermeasures have been taken
Keep in mind: the political risks are substantial
(Ukraine/Russia, eurozone, Iraq…)
4. Financial year 2014/2015
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5. The GESCO share
The GESCO share: an underperformer after two years of outperformance
Price performance in financial year 2013/2014:
+0.8 % (SDAX +25.8 %)
Price development in calendar year 2013: +0.4 % (SDAX +27.2 %)
Dividend proposal: € 2.20 per share (previous year: € 2.50) – equivalent to long-term distribution ratio of around 40 % of EPS
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5. The GESCO share
Freefloat: 86.4 %
Stefan Heimöller, entrepreneur, private investor: 13.6 %
Stefan Heimöller 13.6 %
Private investors ~ 46.4 %
Institutional investors ~ 40 %
Mr Heimöller was elected by the Annual General Meeting on 25 July 2013 to the Supervisory Board as Mr Back’s successor
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5. Share price development (in %) – 1 and 5 years
GESCO vs. SDAX, 1 year GESCO vs. SDAX, 5 years
90
100
110
120
130
140
GESCO
SDAX
80 100 120 140 160 180 200 220 240 260 280
GESCO
SDAX
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5. Share price development (in %) – 10 years
GESCO vs. SDAX, 10 years
0
100
200
300
400
500
GESCO
SDAX
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Founded: 1989 Share capital: € 8,645,000 Shares: 3,325,000 registered shares Free float: 86.4 % Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market) Sec. identification number: A1K020 ISIN: DE000A1K0201 IPO: 24 March 1998 Index: SDAX End of financial year: 31 March Designated sponsors: equinet Bank AG Close Brothers Seydler Bank AG
Facts and figures on GESCO AG
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Financial calendar and investor relations contact
Financial calendar
26 June 2014 Annual Accounts Press Conference and Analysts’ Meeting
15 August 2014 Q1 figures (01.04 to 30.06.2014)
28 August 2014 Annual General Meeting
November 2014 Q2 figures (01.04 to 30.09.2014)
February 2015 Q3 figures (01.04 to 31.12.2014)
25 June 2015 Annual Accounts Press Conference and Analysts’ Meeting
Investor Relations
GESCO AG Phone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49 Oliver Vollbrecht E-mail: info@gesco.de Johannisberg 7 Internet: www.gesco.de 42103 Wuppertal
Germany
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