17 March 2020 / results 2019 and mid-term targets / 1
RESULTS 2019 AND MID-TERM TARGETS
17 March 2020
17 March 2020 / results 2019 and mid-term targets / 2
2019 in brief
Phase of weakness for automotive industryOrder intake, revenues, and EBIT all down sharply
Investment in R&D maintained at a high level 9.9% of revenues directed toward expansion of technological and market leadership Additional unique selling propositions thanks to the launch of numerous new products
Enhanced global customer proximity Acquisition of Artos Engineering and Exmore and founding of Komax Thailand
Move to new production and development facilitiesGermany: Kabatec in Burghaun and Komax SLE in GrafenauHungary: Komax Thonauer, e-mobility competence center in Budakeszi Switzerland: New building at Komax headquarters in Dierikon soon to be completed
Challenges in project businessHigh additional expenses for individual customer-specific pioneer projects
17 March 2020 / results 2019 and mid-term targets / 3
Order intake down by 17.7% 2nd half slightly weaker than the first six
months H1 2019: CHF 206.7 million H2 2019: CHF 202.0 million
General uncertainty due to various geopolitical factors (including the trade conflict between the US and China)
Customers reluctant to invest and postponing projects throughout the year
Sharp decrease in orders
449.7496.7
408.7
0
100
200
300
400
500
600
2017 2018 2019
in CHF million
Order intake
Phase of weakness for automotive industry
17 March 2020 / results 2019 and mid-term targets / 4
Revenues decrease by 12.9% Factors behind development of revenues Organic decline: –13.7% Acquisition-related growth: +2.7% Foreign currency impact: –1.9%
Acquisitions (Artos Engineering and Exmore) contributing to a slight increase in revenues in the 2nd half H1 2019: CHF 203.3 million H2 2019: CHF 214.5 million
Book-to-bill ratio: 0.98 (2018: 1.04)
Revenues well below the record prior-year figure
408.5
479.7
417.8
0
100
200
300
400
500
600
2017 2018 2019
in CHF million
Revenues
17 March 2020 / results 2019 and mid-term targets / 5
EBIT down by 64.3% EBIT higher in first six months H1 2019: CHF 16.4 million H2 2019: CHF 7.6 million
Reasons for disproportionate decrease in EBIT Far smaller number of machines sold in
volume business (crimp-to-crimp machines) Additional expenses in the high single-digit
millions for individual customer-specific pioneer projects
Marked fall in profitability
55.1
67.3
24.0
13.5%
14.0%
5.8%
0%
5%
10%
15%
20%
0
20
40
60
80
2017 2018 2019
in CHF million
EBITEBIT in % of revenues
5.5 million fewer vehicles produced than in 2018
17 March 2020 / results 2019 and mid-term targets / 6
AGENDA
1 2019 financial year: financial performance2 Unchanged strategy – new mid-term targets 3 Priority areas and outlook 20204 Questions
17 March 2020 / results 2019 and mid-term targets / 7
Resources situation in Eastern Europe still tight; build-up of production capacity in North Africa continuing
One factor contributing to revenue growth in North/South America was the acquisition of ArtosEngineering as of 1 April 2019
Growth in North/South America
Revenues by region in 2019
0.3%
-17.5%
-22.5%
5.7%
-13.2%
-12.9%
-30% -20% -10% 0% 10% 20%
Change from previous year
Total
Revenues by region in 2018 Switzerland 2% Europe 43% Asia/Pacific 21% North/South America 21% Africa 13%
2%
41%
19%
25%
13%
SwitzerlandEuropeAsia/PacificNorth/South AmericaAfrica
Switzerland
Africa
Asia/Pacific
North/South America
Europe
17 March 2020 / results 2019 and mid-term targets / 8
R&D expenditure consist of Internal development services of
CHF 34.0 million (2018: CHF 32.3 million) Development services of third parties of
CHF 7.5 million (2018: CHF 8.8 million) Technological shift in automotive industry
(e-mobility, autonomous driving, etc.) creating opportunities for further unique selling propositions
240 R&D staff; plus 200 engineering staff for customer-specific solutions
Securing the future with innovation
36.741.1 41.5
9.0%8.6%
9.9%
0%
2%
4%
6%
8%
10%
0
10
20
30
40
50
2017 2018 2019
in CHF million
R&DR&D in % of revenues
17 March 2020 / results 2019 and mid-term targets / 9
Sharp decline in EBIT
246.2
–39.0–3.6 –1.5
0.8
EBIT 2018 Gross profit Personnel expenses Depreciation Operating expenses EBIT 2019
24.0Gross profit margin2019: 62.0%(product mix)
Gross profit margin2018: 62.1%
Personnel expensesin % of revenues2019: 38.5%
Personnel expensesin % of revenues2018: 32.8%
- Lower volume- Lower variable
costs
in CHF million
67.3
17 March 2020 / results 2019 and mid-term targets / 10
Foreign currency impact 2019revenues: –1.9 ppts, gross profit margin: –1.2 ppts, EBIT margin: –0.8 ppts
Foreign currency impact 2018revenues: +1.8 ppts, gross profit margin: +0.7 ppts, EBIT margin: +0.2 ppts
Substantial currency fluctuations
85
90
95
100
105
110
115
12.1
6
02.1
7
04.1
7
06.1
7
08.1
7
10.1
7
12.1
7
02.1
8
04.1
8
06.1
8
08.1
8
10.1
8
12.1
8
02.1
9
04.1
9
06.1
9
08.1
9
10.1
9
12.1
9
EUR (Basis: 1.09) USD (Basis: 1.03) CNY (Basis: 0.1484)
46%
21%
10%
11%
12%
EURUSDCNYCHFOthers
Revenues by currency
17 March 2020 / results 2019 and mid-term targets / 11
Group earnings after tax decreases by 74.5% Two factors impacting on Group profit after taxes Negative financial result of CHF –4.9 million
(2018: CHF –5.2 million) High tax rate of 31.1% (2018: 17.0%) due
mainly to non-capitalized tax-loss carryforwards
Tax rate expected over medium term: around 20%
Group earnings after tax (EAT) fall sharply
42.1
51.8
13.2
0
10
20
30
40
50
60
2017 2018 2019
in CHF million
EAT
17 March 2020 / results 2019 and mid-term targets / 12
Free cash flow impacted by high level of investment and acquisition activity
246.2
51.0
13.2
12.8
15.3
–53.5
–24.7
33.4
Cash and cashequivalents01.01.2019
Group profit aftertaxes
Depreciation Change inNWC/other
Investments Acquisitions &others
Financing,currency
differences
Cash and cashequivalents31.12.2019
Free cash flow CHF –36.9 million (2018: CHF –4.3 million)
47.5
DividendsCHF –26.9 millionIncrease in financial liabilitiesCHF 61.9 million
in CHF million
Operating activities
Increase in cash flow from operating activitiesfrom CHF 29.6 million (2018) to CHF 41.3 million (2019)
17 March 2020 / results 2019 and mid-term targets / 13
Very high investment volume
Net investment(excl. acquisition and sale of companies
Net investment (excl. acquisition and sale of companies): CHF 55.7 million (2018: CHF 31.7 million) Tangible assets (CHF 48.3 million) Intangible assets (CHF 5.2 million) Increase in granted loans (CHF 2.2 million)
Investment in Group companies (CHF 22.4 million)
75%
12%
13%
Land, buildings
IT (software,hardware)Tangible assets
17 March 2020 / results 2019 and mid-term targets / 14
CAPEX 2019: CHF 54 million 2020: CHF 22–28 million from 2021: 2%–3% of revenues annually
Conclusion of the largest investment program in Komax’s history
Burghaun
Kabatec
Grafenau
Komax SLE
Budakeszi
Komax Thonauer
To be commissioned in phases (started at the end of 2019)
Dierikon
Headquarters
17 March 2020 / results 2019 and mid-term targets / 15
Loan in the amount of CHF 160 million through a bank syndicate (2018: CHF 160 million)
Increase of the syndicated loan to CHF 190 million in the first quarter of 2020
Term until January 2022(plus option for extension until January 2023)
Further local credit lines for subsidiaries in the amount of CHF 30 million (31.12.2018: CHF 20 million)
Future financing assured by credit limit
160
180190
74
98
156
0
50
100
150
200
31.12.2017 31.12.2018 31.12.2019
in CHF million
Utilized credit linesTotal credit lines
17 March 2020 / results 2019 and mid-term targets / 16
Equity ratio over 50% Net debt of CHF 106.2 million
(2018: CHF 39.4 million) Retained earnings of CHF 223.8 million
(2018: CHF 259.0 million)
Continued robust financial base
414
463 481
258282
245
62.3% 60.8%
50.8%
0%
15%
30%
45%
60%
75%
0
100
200
300
400
500
31.12.2017 31.12.2018 30.12.2019
in CHF million
Shareholders’ equityEquity ratio in % of total assets
Total assets
17 March 2020 / results 2019 and mid-term targets / 17
RONCE: 8.4% (2018: 25.2%) Robust management of net working capital
(NWC) Ongoing improvement and acceleration of
internal processes Stringent accounts receivable management
Net working capital: receivables + inventory less current liabilities
RONCE declining sharply
248
283 295
168
204189
0
50
100
150
200
250
300
350
31.12.2017 31.12.2018 31.12.2019
in CHF million
Net Working Capital (NWC)Net Capital Employed (NCE)
17 March 2020 / results 2019 and mid-term targets / 18
Payout ratio of 52.3%
2015 2016 2017 2018 2019
Distribution pershare in CHF 6.00 6.50 6.50 7.00 1.80Dividend yieldin % as at 31 Dec. 3.1 2.6 2.0 3.0 0.8
Share price in 2019: +2.8% (2018: –28.0%) Steady expansion of shareholder base 31.12.2019: 7120 shareholders 31.12.2018: 6027 shareholders 31.12.2017: 5048 shareholders
Payout of CHF 1.80 per share proposed Of which CHF 1.60 as dividend and CHF 0.20
as distribution from capital contribution reserves Payout ratio within strategic bandwidth (50%–60%)
in CHF
0
50
100
150
200
250
300
350
2015 2016 2017 2018 2019 2020Komax-Aktie SPI Extra TR
1 Proposal to the Annual General Meeting
1
17 March 2020 / results 2019 and mid-term targets / 19
AGENDA
1 2019 financial year: financial performance2 Unchanged strategy – new mid-term targets 3 Priority areas and outlook 20204 Questions
17 March 2020 / results 2019 and mid-term targets / 20
Focused strategy
17 March 2020 / results 2019 and mid-term targets / 21
Komax offers solutions for every stage of customers’ value chain
20%
25%
28%
9%
9%
9%
Cutting, crimping,block loading, etc.
Pre-assembly, taping
Routing
Attaching clips, etc.
Testing
Packaging
Proportion of time spent per wire harness
17 March 2020 / results 2019 and mid-term targets / 22
Focused strategy
17 March 2020 / results 2019 and mid-term targets / 23
Significant investment in R&DPrepared to meet changing market needs
Strategic target for R&D8%–9% of revenues
17 March 2020 / results 2019 and mid-term targets / 24
Customer-specific projectsKey element in expanding technology leadership
Shared projects with customers focused on the automation of wire processing
Aim: as many repeat orders as possible and integration of developments into serial production machines
In recent years: several pioneering projects due to radical change in the automotive industry
Future: projects with low risk profile
Important: good balance between serial production machines and customer-specific projects, though the project business is much smaller and will remain so
17 March 2020 / results 2019 and mid-term targets / 25
Founded in 1993 Own product portfolio and wealth of experience in
developing innovative applications related to the processing of sensor cables
Headquarters in Beerse, Belgium 60 employees Consolidated as at 1 October 2019
Well positioned in autonomous drivingAcquisition of Exmore
17 March 2020 / results 2019 and mid-term targets / 26
Source: McKinsey / Komax
20000000
40000000
60000000
80000000
100000000
120000000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Number of produced carsin million120
100
80
60
40
20
Full hybrid (HEV)
Battery electric vehicle (BEV)
Plug-in hybrid (PHEV)
Internal combustion engine (ICE)
Development of e-mobilityCompetence center at Komax Thonauer in Budakeszi (Hungary)
17 March 2020 / results 2019 and mid-term targets / 27
Komax ConnectSigma 688 ST
Q1250
TSK Connect
SMART FACTORY by KOMAXSimpler, more convenient, and safer
17 March 2020 / results 2019 and mid-term targets / 28
Focused strategy
17 March 2020 / results 2019 and mid-term targets / 29
Global localUnique sales, engineering, and service network
Bangkok
Founding ofKomax Thailand
Production / development site
Production / engineering site
Sales / service site
Sales representative
17 March 2020 / results 2019 and mid-term targets / 30
Founded in 1911 Own product portfolio and wealth of experience in
developing innovative applications Headquarters in Brookfield, Wisconsin, USA 50 employees Consolidated as at 1 April 2019
Strengthening of position in North AmericaAcquisition of Artos Engineering
17 March 2020 / results 2019 and mid-term targets / 31
Largest installed base in the worldKomax machines on all continents
~ 20 Crimp to crimp machines~ 20 Other machines
Diversified customer portfolio (including key accounts, small regional companies, all OEMs)
17 March 2020 / results 2019 and mid-term targets / 32
Focused strategy
17 March 2020 / results 2019 and mid-term targets / 33
Rigorous development of non-automotive markets
Data/TelecomAerospace Industrial
Non-automotive markets make a substantial contribution to revenues, accounting for less than 20% Selective and complementary build-up of competencies in non-automotive areas supports success of core business
17 March 2020 / results 2019 and mid-term targets / 34
MID-TERM TARGETS
17 March 2020 / results 2019 and mid-term targets / 35
Global megatrends in the automotive industry
17 March 2020 / results 2019 and mid-term targets / 36
Vehicle production set to increase again from 2021 (CAGR: 1%–2%)
93 95 9489 89 92 94 97 99 102
2025
Production of passenger cars and light commercial vehicles in million vehicles
20242016 2017 2018 2019 2020 2021 2022 2023Source: IHS Markit, November 2019
17 March 2020 / results 2019 and mid-term targets / 37
Increasing in electrical functions
17 March 2020 / results 2019 and mid-term targets / 38
Steady rise in level of automation(CAGR: 2%–3%)
rising wage costs
staff availability miniaturization
traceability
autonomous driving e-mobility
rising number of wires
Numerous reasons
17 March 2020 / results 2019 and mid-term targets / 39
Mid-term targets up to 2023
REVENUES• Primarily organic growth• Increase in number of vehicles produced from 2021 (CAGR: 1%–2%) • Increase in level of automation (CAGR: 2%–3%)
CHF
450–550million
EBIT• EBIT dependent on product mix • EBIT strongly influenced by volume business (crimp-to-crimp)• Low revenues (CHF 450 million) resulting in low EBIT (CHF 50 million)
CHF
50–80million
PAYOUT• Shareholders benefiting from sustained generation of value• Attractive dividend policy• Dividend dependent on business performance; no minimum dividend
50–60%of EAT
17 March 2020 / results 2019 and mid-term targets / 40
AGENDA
1 2019 financial year: financial performance2 Unchanged strategy – new mid-term targets 3 Priority areas and outlook 20204 Questions
17 March 2020 / results 2019 and mid-term targets / 41
Current situation
Coronavirus – too early to predict impact January/February 2020: revenues in China around 40% lower than in 2019 Travel reduced to a minimum Customers cannot perform factory acceptance testing (FAT) at Komax’ sites Service technicians cannot provide support in customers’ plants Salesforce cannot visit customers Constantly changing restrictions
Impact and measures vary from company to company
Coronavirus
17 March 2020 / results 2019 and mid-term targets / 42
Current situation
Review of the structures of the entire Komax GroupReview within the first six months of 2020 First staffing and organizational measures already implemented
Measures for reducing costs Short-time working at several locations Individual redundanciesGeneral reduction of OPEX Investment stop – excluding buildings and urgent replacement investments
Review of the structures / reducing costs
17 March 2020 / results 2019 and mid-term targets / 43
Priority areas 2020
Successfully navigating the challenges presented by the coronavirus
Review of the structures of the Komax Group implementation of organizational and staffing measures
Completion of customer-specific pioneer projects
Integration of Artos Engineering and Exmore
Bringing new production and development building at headquarters on-stream
17 March 2020 / results 2019 and mid-term targets / 44
Outlook
The Komax Group’s medium- and long-term growth outlook remains positive as customers continue to target a significant increase in the level of automation in wire processing going forward. What is more, trends such as autonomous driving and e-mobility will power growth at Komax.
That said, the company will suffer over the short term as the entire automotive industry comes under enormous pressure to adapt its value chain.
Komax expects 2020 to be another challenging year. For this reason, it has already initiated measures to reduce costs over the long term. In addition, Komax is adapting its structures to be even better aligned with momentum in the markets.
Since business development visibility is very low and the implications of the coronavirus outbreak are presently impossible to gauge, a forecast can currently not be made for the 2020 financial year.
17 March 2020 / results 2019 and mid-term targets / 45
Contact / Financial calendar
ContactRoger MüllerIndustriestrasse 66036 DierikonSwitzerlandPhone +41 41 455 06 [email protected]
komaxgroup.com
Financial calendar
Annual General Meeting 21 April 2020
Dividend payment 27 April 2020
Half-year results 2020 18 August 2020
Investor Day 23 October 2020
Preliminary information on 2020 financial year 26 January 2021Annual media and analyst conference on the 2020 financial results 16 March 2021
17 March 2020 / results 2019 and mid-term targets / 46
Disclaimer
This presentation contains forward-looking statements in relation to Komax which are based on current assumptions and expectations. Unforeseeable events and developments could cause actual results to differ materially from those anticipated. Examples include: changes in the economic and legal environment, the outcome of legal disputes, exchange rate fluctuations, unexpected market behavior on the part of our competitors, negative publicity and the departure of members of management. The forward-looking statements are pure assumptions, made on the basis of information that is currently available.
17 March 2020 / results 2019 and mid-term targets / 47
QUESTIONS?