elringklinger investor presentation - march 2018 beamer...4 fy 2017 financial highlights corporate...

Analysts’ conference

Frankfurt | March 27, 2018

2

ElringKlinger

In a nutshell

Corporate presentation | March 2018

Founded in

1879

+11% annual growth in

sales since 2005

Worldwide

45production sites

8.5%EBIT margin

pre PPA in 2017

Sales of EUR

1,664million in 2017

9,611employees as of

Dec 31, 2017

Family as a

strong anchor

shareholder

Headquartered in

Dettingen,

close to Stuttgart

3

Latest news

Dedicated board role for e-mobility, Reiner Drews new COO

• ElringKlinger will introduce dedicated management board role for e-mobility as ofApril 1, 2018, to be headed by today‘s COO Theo Becker

• Reiner Drews, currently responsible for Cylinder-head Gaskets and Specialty Gasket business divisions, will be appointed COO as of April 1, 2018

Dr. Stefan Wolf

CEO

Thomas Jessulat

CFO

Theo Becker

CTO

Reiner Drews, COO

• Born in 1969

• Toolmaker, graduate engineer in Production Technology; MBA

• With ElringKlinger since September 2006

• Before that, he held management positions at different companies of the metal industry

Management Board as from April 1, 2018


4

FY 2017

Financial highlights


• Strong organic growth of 8.1% across all global regions+8%

8.5%

EUR

0.50

�

• EBIT (pre PPA) slightly up to EUR 141.8 (140.4) million

• Optimization of Swiss site on track, headwinds by SAP implementation

• Capex ratio improved by disciplined approach to 9.3 (11.0)%, net working capital up due to inventories, operating free cash flow below prior year’s level at EUR -67 (-4) million

• Stable dividend proposal of EUR 0.50 to Annual General Meeting, resulting in a payout ratio of 45 (40)%

• Outlook for 2018: sales increase +2 to 4 pp above global market growth, EBIT margin (pre PPA) at ~9%

��

5

Global

megatrends

transform the

automotive

industry

Technological progress

Urbanization

Scarcity of resources

Globalization

Climate change

Safety systems

Autonomous driving

Efficient propulsion

Connectivity

Shared mobility

Markets

Megatrends trigger technological transformation process


Global combustion engines production

6

Markets

Automotive growth driven by new drive systems from 2021 on


Global EV production

Source: Morgan Stanley, ElringKlinger Research

CAGR-1%

CAGR+1%

20

30

20

29

20

28

20

27

20

26

20

25

20

24

20

23

20

22

20

21

20

20

20

19

20

18

20

17

20

16

CAGR+24%

20

30

20

29

20

28

20

27

20

26

20

25

20

24

20

23

20

22

20

21

20

20

20

19

20

18

20

17

20

16

7

Markets

Main driver: Stricter emissions legislation for vehicles

China 2020117g CO2/km average

fleet emissions

Japan 2020122g CO2/km average

fleet emissions

EU 202195g CO2/km average

fleet emissions

EU 2030**

30 % reduction of average fleet

emissions (base year: 2021)

USA 202599g CO2/km average

fleet emissions

* New European Driving Cycle

** Proposal submitted by the EU commission in November 2017

Source: ICCT, ElringKlinger research

India 2022113g CO2/km average

fleet emissions

Values adjusted to the European NEDC* test cycle


8

ElringKlinger

ElringKlinger’s sales structure of products will change

Sales split (actual and ambition) – in % of total sales


Non-Automotive

products

5%Aftermarket

9%Structural

lightweight and

e-mobility

products4%

Functional

components

82%

Actual 2017 Ambition 2030

Non-Automotive

products

~10%Aftermarket

~10%

Structural

lightweight and

e-mobility

products

>25%

Functional

components

<55%

9

ElringKlinger

Prepared to play an active role in the transformation

Sales split (ambition) – in % of total sales


Ambition 2030

Non-Automotive

products

~10%Aftermarket

~10%Structural

lightweight and

e-mobility

products

>25%

Functional

components

<55%

E-Mobility

• Battery, fuel cell, and drivetrain system

• Track record of successful R&D work and proven competence, e.g. as series producer of e-mobility components

Structural lightweighting

• Less weight and higher degree of functionality

• Unique production technology

Functional components

• Continuous high market share

• Benefitting from global footprint and sound process know-how

10

Three strategic areas of ElringKlinger: Lightweighting

Lightweight products help to meet CO2 regulations


Less weight helps to lower

fuel consumption and thus,

to reduce CO2 emissions

Advanced materials

enable new application

areas

Less weight means a

higher range of driving

for full EVs

+

Technology Markets ElringKlinger

• Technology independent of the

drive train

• Lightweighting trend enforced by

emission regulations, imposing

penalties on those OEMs which do

not meet the reference values

• Products like the cross-car beam

reduce the weight of a car up to

40%

• Focus: in-house tooling technology

enabling the production of

complex geometries

• Different products:

−Organo sheets

(e.g. door module carrier)

−Hydroform-hybrid

(e.g. cross-car beams, front-end

carrier, front-end adapter)

�CO2

�km

100 kg weight reduction

corresponds to 0.4l/100 km

less fuel consumption -100

kg

Improving driving

dynamics�

11

Three strategic areas of ElringKlinger: E-Mobility

Battery JV with CITC targets China and global markets


Batteries can be

recharged to a 80% level

within 30 minutes

Lower maintenance

costs than a combustion

engine car

Public recharging

stations in Germany

with upward trend4,000

+


• E-mobility as main contributor to

Automotive growth from 2021 on

• Emission reduction targets as key

driver of the industry

• National quota regulations for

electric vehicles in discussion

• State-funded incentive programs

support the forward movement

• Expanding recharging

infrastructure

• Cooperation with Chinese battery

manufacturer CITC/CALB

−Signed in 2017

−Targeting global markets

−CALB in charge of the cell,

ElringKlinger responsible for

design, cell contacts and housing

• Established e-mobility supplier as

series producer of cell contacting

systems since 2011

30min

Zero emission possible0 g CO2

Enhancing driving

comfort by lowest

acoustic emission�

Large range of

driving

Zero emission possible for

both power generation

and fuel cell in use

Multiple applications

(e.g. cars, LCVs, trucks,

buses, trains, forklifts)

Increasing number of

H2 fueling stations

Easy and fast to

refuel

12


Fuel cell market with substantial growth potential


2-5min

+

�


>500km

0 g CO2

• China as main market

opportunity – subsidizing each

bus driven by a fuel cell system

• Market entry in Europe

supported by economies of scale

in the mid-term perspective

• PEM fuel cell stack developed:

300 cells generate 63 kWeL

• Broad range of products:

−Full PEMFC stack

−Components: Metallic bipolar

plates, end and media modules,

casings

−R&D and testing

• Patents for several designs of

bipolar plates and media modules

Production-ready system

enables acceleration from

0 to 100 km/h in 4 seconds

Smart control of power

flow via intelligent

software technology

To be flexibly

integrated into PHEV,

BEV, and FCEV

Intelligent thermal

management improves

cooling performance

Combines power manage-

ment electronics, trans-

mission and electric engine

13


Stake in hofer complementing the e-mobility path


EDU

+


4seconds

@

• Strong growth of PHEV, BEV

and FCEV forecast, particularly

form 2021 onward

• Differentiated market: mass

market, premium market as

well as luxury segment

• Acquisition of stake in hofer

−28.9% of hofer AG

−53% of hofer powertrain

products

• Broad range of products

(e.g. system integration, control

soft-ware, power management

electronics, thermal management,

safety concepts)

• By offering sophisticated high-tech

solutions, addressing high-end

sports and luxury car segment

14

Three strategic areas of ElringKlinger: Functional Components

Continuous growth prospects in a transforming world


Cylinder-head Gaskets

• Fully dependent on combustion and hybrid world

• High global market share of 40-50%

• Strong remaining business in those regions and for those

applications which will not transform too fast

• Profound material and process know-how that is also used for

new products (e.g. for bipolar plates or cell contacting systems)

15

Three strategic areas of ElringKlinger: Functional Components

Continuous growth prospects in a transforming world


Specialty Gaskets, Shielding Technology & Plastic Modules

• Partly dependent on combustion and hybrid world

• Specialty Gaskets

− Special coating know-how and sealing competence from -40˚C to 1,100˚ C

− Products like gaskets for cooling systems still needed in full EV

• Shielding Technology

− Strong demand for thermal, acoustic and aerodynamic applications

− Substantial opportunities for EMC (electromagnetic compatibility) shielding

• Plastic Modules with a number of applications for e-mobility

world, e.g.:

− housing modules for battery systems

− Casings, end and media modules for PEMFC

− Cover (incl. sealing) for EDUs

16

ElringKlinger

Broader scope of ElringKlinger content by wide product range


Present Future

Content per car – in EUR

40 - 60 EUR(100-150 EUR incl. cross-car beam)

100 - 10,000 EURContent per car

Financials

18

FY 2017: Orders and sales

FX headwinds on orders and sales

Order intake – in EUR million

2016

1,557

+6.8%

2017

1,664

Organic

+126+8.1%

M&A

+9+0.6%

FX

-29-1.8%

+2.2%*

2017

1,732

2016

1,694

2016

+7.3%**

2017

1,001

933

*FX-adjusted: +6.6% **FX-adjusted: +12.4%


Order backlog – in EUR million Sales bridge – in EUR million/ in %

Differences due to rounding

19

FY 2017: Orders and sales

Ongoing internationalization and diversified customer structure

Sales 2007-2017 by region – in % of total sales Sales 2017 by customer group – in % of total sales


1,664

26%

31%

19%

19%

5%

2016

5%

608

35%

33%

17%10% 30%

18%

16%

6%

…2007

4%

…2012

1,127

30%

+6.9%

2017

1,557

27%

31%

19%

19%

South America/

Rest of World

GermanyRest of

Europe

NAFTAAsia-

Pacific

American

OEMs

19%

German

OEMs

16%

French

OEMs

4%Tier 1

14%

Aftermarket

9%

Other

38%

20

FY 2017: Income statement

Positive signs of recovery partly set off

EBITDA – in EUR million

+3.1%

2017

238

2016

231


EBIT bridge 2017 vs. 2016 – in EUR million

+1.0%

2017

141.8

High

demand

NAFTA

-12

Operating

leverage

+7

Optimization

Swiss site

+6

2016

140.4

21


Important factors on earnings level

• Main part of migration finalized

• Next step: migration of second part to new factory in Hungary – completion scheduled for end of 2018

• Continuing optimization of cost structure at Swiss site to be finished by end of 2019

• Annual optimization impact of EUR 10 million p.a. planned for 2018 and 2019

Sevelen (CH)Nantiat (F)

Reus (E)

��

2018Part 2

Part 1

�Kecskemét

(HU)

• Aluminum: cut of supply by China

• C-Steel: EU anti-dumping measures resulting in shortage of supply

• Polyamide: prices triggered by high global demand for lightweighting products

Polyamides

C-steel

High-grade

steel

Aluminum

201720162015

Optimization of Swiss site on track Commodity prices further increased


22


Strong impact on financial result by FX headwinds

EBT – in EUR million

20172016

7079

-11.1%

20172016


Net income (attr. to shareh.) – in EUR mn Earnings per share – in EUR

-11.3%

2017

1.10

2016

1.24

Financial

result -27

Financial

result -12

124

110

-11.3%

23

FY 2017

Stable dividend proposed

Dividend payment – in EUR

Payout ratio – in % of Group EPS

+0.4%

2017

890

2016

886


Equity – in EUR million

Equity ratio – in % of total assets Employees – headcount as of Dec. 31

47.2% 44.0%

+11.9%

Germany

Abroad

2017

9,611

40%

60%

2016

8,591

41%

59%40

2017

0.50*

45

2016

0.50

* Joint proposal of Supervisory Board and Management Board to the AGM

24

FY 2017: Balance sheet

Net working capital mainly driven by inventories

Net Working Capital (NWC) – in EUR million

NWC ratio – in % of total sales

-119

300 303

328 370

-103

+5.5%

Trade

payables

Trade

receivables

Inventories

2017

553

2016

525


33.7% 33.3%

Inventories bridge – in EUR million

25

21

1112

13

15

+12.5%

2017

370

OthersAfter-

market

Tools

(FX-

adj.)

Sales

growth

M&AFX2016

328thereof: tools25%23%

25

FY 2017: Balance sheet

Improved maturity structure by issued Schuldscheindarlehen


Net financial debt – in EUR million

321

479

257

+21.5%

Cash

and cash

equivalents

Non-current

financial

debt

Current

financial

debt

2017

655

-45

221

2016

539

-39

Maturity structure of financial debt –in EUR million

128

351

-45

Non-current (>5 years)

221

Cash and cash equivalent

2017

Non-current(between 1

and 5 years)

Current (up to 1 year)

Cash

26

FY 2017: Cash flow statement

Disciplined capex, increased inventories and SSD affected cash flow

Capex (in PPE) – in EUR million

Capex (in PPE) ratio – in % of total sales

193

4539

109

95

+15.5%

Cash

2017

FX/

Others

6

Invest-

ments

Financing

activities

Operating

cash

flow

Cash

2016


Cash flow bridge – in EUR million

-9.2%

2017

156

2016

171

11.0% 9.3%

SSD = Schuldscheindarlehen

156Capex

(in PPE)

27

FY 2017: Segments

Strong margin increase in Engineered Plastics

Original Equipment (OE) Aftermarket

Engineered Plastics Services & Industrial Parks

Sales – in EUR million

EBIT margin – in %

+6.8%

2017

1,382

6.2

2016

1,294

6.9

+6.4%

2017

156.7

20.3

2016

147.3

20.7

14.7 16.7

111.1

+9.2%

2016 2017

101.7

2016

13.8

9.2

2017

14.2

-2.8%

5.1


28

Financial agenda

Improving execution


Focus on improving operational excellence1

2

3

4

5

6

Improved approach to the management of inventories

Expansion of trade payables

Continuing disciplined capex approach

Focus on improved operating free cash flow

Balancing and managing the Group throughout the transformation process of the industry

Outlook

30

Expectations for 2018

Global markets expected to grow further

Light vehicle production growth – in % vs. 2017

Source: OICA, HSBC, JP Morgan, ElringKlinger research


• Stable situation in Germany

• Growth in Southern Europe

+3% Europe

• High demand for SUVs in China

• Modest growth in Japan

+3% Asia-Pacific

• Rising truck market

• Subdued demand for LVs

+1% NAFTA

• Low basis

• Turnaround achieved

+10% South America

• Solid growth prospects

• Supported by Europe and China

+2-3% Global

31

Expectations for 2018

Numerous factors intensify general environment of uncertainty


Geopolitical

tensions and

higher national

interests as risk

factors

Commodity price

development

Costs for shaping

production

facilities to

Group standard

Increasing salesContinuous

improvement of

production

processes on a

global basis

Optimized

purchasing and

logistic processes

within the GroupOptimized cost

structure esp. at

highly utilized

locations

2018Costs of the

transformation

process of the

industry

Ongoing discussion

on diesel subject

and court deci-

sions on city bans

of diesel cars

Mid-term

Benefitting from

early prepara-

tions for future

Automotive

technologies

32

Group

Outlook 2018


2 – 4 percentage

points above global market growth

~ 9%

Sales Sales

EBIT marginpre PPA

EBIT marginpre PPA

Successive

improvement

Above global

market growth

Mid-term2018

Group

Further indicators for FY 2018 and mid-term perspective

33

FY 2017

actual

FY 2018

expected

Mid-term

expected

ROCE in % 8.2% Slight improvement Increase based on

earnings and NWC

improvements

Capex (in PPE) in % of total sales 9.3% 9 - 10% Continuation at

comparable level

Net working capital

(NWC)

in % of total sales 33.3% Below prior-year level Slight step-by-step

improvement

Operating FCF in EUR million -66.6 Slight improvement Continuous

improvement

Equity ratio in % of total assets 44.0 40 - 50% Continuation at

comparable level


Analysts’ conference

Frankfurt | March 27, 2018

elringklinger investor presentation - march 2018 beamer...4 fy 2017 financial highlights corporate...

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