gesco ag 20th oddo forum 2017
TRANSCRIPT
1. Business Model
2. Financial Year 2016/2017
3. M&A and Recent Acquisition
4. Capital Market
Overview
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GESCO Group – an association of industrial SMEs including market and technology leaders Currently 18 operating subsidiaries under the roof of GESCO AG
We think and act on a sustainable and entrepreneurial basis
We operate in established sectors with innovative technologies
We offer technology “made in Germany” for the world’s markets
GESCO is comprised of flexible, operationally independent and entrepreneurially-managed entities that benefit from being part of a strong group
GESCO AG – long-term investor and safe haven for succession solutions We acquire and develop industrial SMEs on a long-term basis without exit intentions
Majority acquisitions, generally 100 %
Usually as part of a succession arrangement
New management is offered opportunity to acquire stake of up to 20 % of the company it runs
1. The business model
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GESCO’s new portfolio strategy: What remains, what changes? Preserving the well-proven:
Long term oriented, sustainable business model Long term investments, no exit-focus Combination of internal and external growth Entrepreneurial approach, independently managed subsidiaries Active IR, open communication with the capital market
Providing new impetus: A new portfolio strategy
4 segments higher transparency, new framework for acquisitions Systematic benchmarking Optimisation projects for individual subsidiaries
A more active role of GESCO AG in terms of consulting for its subsidiaries The holding provides stronger support for its subsidiaries A stronger focus on free cash flow (working capital, investments) A more active approach towards M&A
Our goals: Living up to historic margins and growth rates Stimulating external growth Strengthening the GESCO model for a rougher, faster changing environment
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1. The business model
GESCO’s portfolio strategy
Spring 2016: development of a portfolio strategy of profitable growth based on tried-and-tested GESCO business model
Criteria: long-term positive megatrends, comparable end customer markets, similar economic fluctuation and growth rates
Definition of 4 relevant end customer market segments
Grouping of existing GESCO Group companies into the new segments, new segment reporting since Q1 2016/2017
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1. The business model
Production process technology
Resource technology
Health and infrastructure
technology
Mobility technology
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Production process technology
Dynamically growing markets, high degree of innovation, automation, „batch size 1“
Robotics and automation solutions in machine and plant construction, technology-intense manufacturing services
Resource technology
Consolidating markets, focus on niches and customer service Customised preparation of primary materials, e. g. materials supply, transport and loading technology
Health and infrastructure technology
Not very cyclical, relatively resilient to economic fluctuation
Components, modules and primary products for providers for mass markets close to end customers
Mobility technology
Cyclical automotive market, positive outlook driven by technological leaps, e. g. electromobility
Tools and moulds, components, parts etc. for vehicle industry
1. The business model
Objective of the GESCO portfolio strategy: enhance value of investment portfolio organically and through acquisitions
Respective managing directors continue to have exclusive
operating responsibility for GESCO Group companies
As the majority shareholder GESCO AG has “3 levers”
1. Appointment of best possible management
2. Prioritisation of investment projects within the individual companies which promise the highest return on capital employed in the long term
3. Active consulting and support role of shareholder: Monthly discussions, regular exchange, sparring, best practice Setting focal themes on strategy days: digitalisation and Industry 4.0 Support for technical optimisation projects for profitable growth and
cost efficiency, from the beginning of a project to its implementation
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1. The business model
Please note:
FY subsidiaries = calendar year
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2. Financial year 2016/2017
1 January 2016 31 December 2016
31 March 2017 1 April 2016
FY GESCO AG / GESCO Group = 1 April to 31 March
The environment
Forecast GDP growth: 1.7 % to 1.8 % Forecast VDMA: stagnation at best Agricultural machinery and oil industry: still no growth impetus „Dieselgate“ burdens automotive industry‘s propensity to invest Political risks (Brexit decision, Turkey) increase uncertainty Outcome of US elections unclear
Industrial customers still generally showing reluctance to invest New growth stimuli still lacking in capital goods industry
Our measures:
Short term: cost reduction, questioning investments Medium term: optimisation projects on cost and opportunities side
in the context of the new portfolio strategy
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2. Financial year 2016/2017
2. Financial year 2016/2017 – 1st HY
1st HY 2015/2016
1st HY
2016/2017
Change
Order intake €m 258.1 250.3 -3.0 %
Group sales €m 237.3 228.7 -3.6 %
EBITDA €m 26.1 21.0 -19.6 % EBIT €m 16.0 10.6 -33.9 % Group net income after minority interest €m 7.9 4.8 -39.2 %
Earnings per share acc. to IFRS € 2.39 1.46 -39.2 %
Cashflow from ongoing business activities €m -3.2 13.9 -
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The first half year
Q1: rather weak initial quarter Q2: burdened, since customers postponed deliveries
of major orders to Q3 1st HY: slightly declining order intake and sales,
earnings figures clearly burdened Cash flow significantly improved
2. Financial year 2016/2017 – Segment Development 1st HY
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1st HY 2015/ 2016
1st HY 2016/ 2017
Remarks
€ m € m
Production Process Technology
Sales 32.2 30.7 production of machinery and plants in progress; significant improvement expected for 2nd HY
EBIT 1.1 0.5
Resource Technology
Sales 107.7 100.7 customers from oil and chemical industry reluctant to invest, price pressure in steel industry, postponements to Q3
EBIT 9.8 6.4
Healthcare / Infrastructure Technology
Sales 58.7 59.9 very robust, less sensitive to economic climate, profitable growth EBIT 5.1 6.2
Mobility Technology
Sales 39.0 38.8 uncertainty in end-markets, challenging tooling environment EBIT 4.4 1.5
2. Financial year 2016/2017 – Q3 (operating months July to Sept. 2016)
Preliminary figures for the third quarter
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Q3: order intake +5% yoy
─ Order intake (€‘000) ─ Sales (€‘000)
In Q3 order intake (approx. € 126 m) and sales (approx. € 128 m) on satisfactory level
Q2: order intake +14% yoy
The second half year
In Q3 quite a number of machines and plants delivered strong quarter
In Q4 declining operating business and one-off expenses
Guidance for the full FY from August 2016 was narrowed
2015/2016 Actual
2016/2017
Guidance as at Aug. 2016
2016/2017
Guidance as at Nov. 2016
Group sales € m 494.0 480 at best 480 at best
Group net income after minority interest
€ m 16.1 13.5 at best 11.5 to 12.5
Guidance
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2. Financial year 2016/2017
More active approach towards M&A
Market still characterized by strong demand and a limited number of companies offered
Focus on 4 end customer segments
GESCO still generates high deal flow
GESCO has intensified its activities, aims to generate direct contact with entrepreneurs / business owners, which has already led to a number of personal meetings
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3. M&A
Recent acquisition: Pickhardt & Gerlach Group (PGW)
Leading supplier of refined cold rolled strip steel Products: nickel-, copper-, brass- or zinc-coated strip steel
and nickel-coated wire Customer sectors: electro-technic industry, automotive,
decorative articles, sporting equipment, office supply Product examples: electronic circuit breakers,
file folders, windscreen wipers… Highly automated production systems
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3. M&A
Recent acquisition: Pickhardt & Gerlach Group (PGW)
Family business, founded 1902, taken over by Hekhorn family in 1990 GESCO acquired 100% of the shares from Hekhorn family as part of a
succession planning process Signing Dec. 2016, approval of antitrust authorities expected
in the near future Managing Director of technology will continue to work for PGW Will be integrated in the Resource Technology segment Approx. € 30 million sales, 40 employees
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3. M&A
4. GESCO share vs. SDAX and DAX 1 Year in % (total shareholder return)
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80
85
90
95
100
105
110
Gesco AG
S-DAX Perf.
DAX Perf.
4. GESCO share vs. SDAX and DAX 10 Years in % (total shareholder return)
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25
50
75
100
125
150
175
200
225
250
275
300
Gesco AGS-DAX Perf.DAX Perf.
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4. The GESCO share – share split
Share split 1:3 was realized on 22 Dec. 2016
Implemented as a reaction upon shareholders’ requests One „old“ share was replaced by 3 „new“ shares Split was preceded by capital increase through own funds
in order to reach a nominal value per share of € 1.00 and a reasonable split ratio
Volume of equity remained unchanged, no inflow of new funds Before: 3,325,000 shares After: 9,975,000 shares Market cap not influenced by this measure, after the split distributed
on a higher number of shares, share price reduced correspondingly Targets:
“Lighten” the share Increase attractiveness of share,
especially for retail investors Support liquidity in the share
4. The GESCO share – shareholder structure
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Free float: 85.1%
14.9 % Stefan Heimöller (entrepreneur, member of supervisory board, private investor)
13.9 % Investmentaktiengesellschaft für langfristige Investoren TGV (institutional investor)
approx. 40.0 % other private investors
approx. 31.2 % other institutional investors
Directors‘ Dealings: In current FY purchases by members of supervisory and executive board.
Appendix – GESCO Group overview Company Sales 2015
€‘000 Staff as at 31/12/2015
GESCO AG shareholding *)
AstroPlast Kunststofftechnik GmbH & Co. KG 16,262 92 100%
Paul Beier GmbH Werkzeug- und Maschinenbau & Co. KG 12,117 117 100%
C.F.K. CNC-Fertigungstechnik Kriftel GmbH 9,708 66 80%
Dömer GmbH & Co. KG Stanz- und Umformtechnologie 15,661 104 100%
Dörrenberg Edelstahl GmbH 179,243 509 90%
Frank Group 27,629 258 90%
Franz Funke Zerspanungstechnik GmbH & Co. KG 15,383 80 80%
Haseke GmbH & Co. KG 12,969 64 80%
Hubl GmbH 12,775 106 80%
Georg Kesel GmbH und Co. KG 11,239 60 90%
MAE Group 44,359 222 100%
Modell Technik Formenbau GmbH 13,961 115 100%
Pickhardt & Gerlach GmbH & Co. KG (Acquired in Dec. 2016) 100%
Protomaster GmbH 17,688 123 82.17%
Setter Group 26,984 98 100%
SVT GmbH 33,464 186 90%
VWH GmbH 11,421 109 80%
Werkzeugbau Laichingen Group 26,594 177 100%
21 *) as at 21/12/2016
Founded: 1989 Share capital: € 9,975,000 Shares: 9,975,000 registered shares Free float: 85.1% Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market) Sec. identification number: A1K020 ISIN: DE000A1K0201 IPO: 24/03/1998 End of financial year: 31 March Designated sponsors: equinet Bank AG Oddo Seydler Bank AG
Appendix – Facts and figures for GESCO AG
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Appendix – Financial calendar and IR contact
Financial calendar
5/6 Jan. 2017 Oddo Conference, Lyon
14 Feb. 2017 Q3 figures
15/16 Feb. Oddo Conference, Frankfurt Main
29 June 2017 Annual Accounts Press Conference / Analysts‘ Meeting
Aug. 2017 Q1 figures
31 Aug. 2017 Annual General Meeting, Wuppertal
Nov. 2017 Q2 figures
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Investor Relations GESCO AG Telephone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49 Oliver Vollbrecht E-mail: [email protected] Johannisberg 7 Internet: www.gesco.de 42103 Wuppertal
Germany