investor presentation – first half-year 2014
TRANSCRIPT
Investor presentation – First Half-Year 2014
Conference Call – July 22, 2014
The following documentation contains forward-looking statements that are subject to certain risks and uncertainties. Actual results may differ materially from those anticipated in this presentation.
2
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
Agenda
3
Micronas at a glance
4
About 900 employees worldwide
Leading supplier of hall sensors for the automotive industry
Core business Automotive Focus on sensors and sensor-based solutions
Full in-house production with own waferfab and backend operations including testing and packaging
zero ppm quality to ensure customer satisfaction
Commitment to environmental protection
Known and recognized in the automotive and industrial business as a reliable global partner for intelligent, sensor-based system solutions
Sales offices across Europe
Micronas Ltd. Glenrothes, Scotland
Test center, Production
Micronas New Technologies GmbH, Munich, Germany
Research & Development Sales
5
Group structure and locations
Micronas GmbH Freiburg, Germany
Research & Development Marketing & Sales Production
Micronas Japan K.K. Tokyo, Japan, Sales office
Micronas Semiconductor Holding AG, Zurich, Switzerland
Headquarters
Sales office Shanghai, China
Sales office Detroit, USA
Sales office Seoul, Korea
Micronas in first half-year 2014
Group sales better than guided in April and up by 7 percent compared to first half of 2013 thanks to: well performing automotive market
strong car sales in Japan in first quarter
restocking of inventories by our customers
Margins negatively affected by the weakness of the yen and temporary additional costs due to the production ramp-up of new products
Capacity utilization at the manufacturing facilities at around 85 percent 6
Micronas in first half-year 2014, cont.
Market’s first ISO 26262 compliant, low-power Hall switch family in SOT23 package
Advanced 3D HAL® technology powers Micronas’ new sensor generation leading to superior angular accuracy
Brushless DC motor control solutions migrating towards 0.18 micrometer high-voltage embedded flash CMOS process from X-FAB
Combined heat and power plant at the Freiburg location successfully in operation
7
Agenda
8
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
100%
120%
140%
160%
180%
200%
2014 2015 2016 2017 2018 2019
BLDC motors Automotive (Mil. USD)
Hall sensors Automotive (Mil. USD)
Elektronc systems Automotive (Mil. USD)
Vehicle production (Mil. units)
Market development
9 Source: Strategy Analytics / IHS / WSTS / Micronas, June 2014
Mar
ket f
igur
es n
orm
aliz
ed to
201
4
CAGR 2014 – 2019 = 5%
CAGR 2014 – 2019 = 7%
CAGR 2014 – 2019 = 8%
CAGR 2014 – 2019 = 11%
Hall sensors and BLDC motors will continue to outgrow vehicle production
and electronic systems in cars
6%
2% 4%
15%
11%
0%
5%
10%
15%
20%
0
2
4
6
8
10
WesternEurope
thereofGermany
USA China Japan
Registration in Mil./units
Growth (1st half 14/13)
New passenger car registration first six months 2014
10
Market development
Source: VDA – Verband der Automobilindustrie, July 2014
11 11
Customer and distributor base
Market and technology drivers
Comfort and lifestyle
High levels of functionality, low power and small form factor enable new applications and comfort features
Economy
Reduced overall system cost enabled by highly integrated sensors and embedded controllers, e.g. increasing magnet costs can be compensated by higher sensitivity
12
Increased safety demand drive growth for novel, intelligent and redundant products and system solutions
Increased demand for high energy efficiency and CO2 reduction needs optimized sensors and actuator solutions, e.g. for engines, BLDC motors and HVAC systems
Environmental protection
Safety
Agenda
13
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
Powertrain
Chassis and safety
Body and comfort
Micronas has a long history in Automotive with a very large customer base
Thanks to its full in-house manufacturing, Micronas maintains full control of production from wafer fab, assembly to final testing
This provides highest flexibility to meet automotive quality and to offer unique customization capability
Micronas offers the world’s largest Hall sensor portfolio covering all automotive applications in powertrain, chassis and safety as well as body and comfort
Segment Automotive
Automotive
14
Important electrification trend in the vehicle body compartment
Requirements are driving the trends towards higher safety integration
Increased demand for high energy efficiency and CO2 reduction
Automotive applications
15
Powertrain
Active pedal
Chassis and safety Body and comfort
Powertrain valves
Battery management
Gear position
Steering torque/angle
Steering motor position
Chassis height
Braking
Window/sunroof position
Wiper position
Grille shutter
Seat position
Agenda
16
Overview
Markets
Automotive
Industrial
Products
Financials
Summary
White goods and home appliances
Building and home automation
Intelligent sensor and actuator solutions for smart automation networks to enable increased comfort and lifestyle
Highly reliable and robust sensors to meet the demands for long lifetime within harsh environments
Wide range of cost-effective sensor solutions for eco-friendly home appliances with small form factor
Segment Industrial
Industrial
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Heavy machines and factory automation
Trend for higher comfort requires further electrifi-cation and replacement of today’s mechanical systems
Higher energy efficiency, reliability and comfort are driving the trend of optimized sensor and actuator solutions
Higher safety and environmental require-ments are driving the demand for more sensors with high performance
Industrial applications
18
Building and home automation
Roller shutter/blinds
Heavy machines and factory automation
White goods and home appliances
Door/window lock
Pressure measurement
Current measurement
Joystick/pedal
Throttle/valve
Cylinder position
Proximity switch
Door lock
Flow measurement
Motor commutation
Push button
Agenda
19
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
Micronas product portfolio
20
Embedded controllers Hall-effect sensors
Gas sensors
Up to 100 electric motors per vehicle Market growth dominated by BLDC and
stepper motors All-in-one solution
provides higher system efficiency to reduce motor size and weight
Major automotive trends for CO2 reduction and car electrification are asking for tighter controls, thus increasing the demand for magnetic sensors
More than 85% of magnetic sensors in cars are based on the Hall effect
Micronas offers the broadest portfolio of Hall sensors for automotive applications covered by switches, linear, direct angle and current sensors
Multi-parameter gas, temperature and relative humidity sensor
Single-chip sensor results in small and low power solution
Applications include fire detection, HVAC and leakage
Easy to implement contact-less switch Replacement of microswitches
Hall-effect sensors – product lines
Micronas offers the broadest portfolio of Hall sensors for automotive and industrial
Switches
21
power tools
Precise angle detection with a single sensor
Replacement of inductive or optical angle encoders
Angular steering angle
Highly accurate position detection
Replacement of conventional potentiometers
Linear
bending lights
pressure
Small form factor contact-less current transducer
Replacement of shunt-based solutions
Current
battery management
current monitor
control element
buckle switch
Hall-effect sensors – trends
Safety
New product development and documentation are meeting the requirements of ISO26262, the de-facto standard for automotive functional safety
Micronas has developed a concept for its devices to become insensitive against disturbing magnetic stray fields caused by the increased car electrification (HEV/EV)
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Capacitors are integrated into the sensor package in order to fulfill stringent EMC/ESD requirements and to reduce overall system costs
Two silicon dies are integrated into a single package to respond efficiently to redundancy requirements for most critical applications (pedal, throttle, steering)
Redundancy
Robustness
Integration
HVC 2480B All-in-one
Embedded controllers – trends
Micronas solutions are single-chip, high voltage controllers with flexible peripherals and direct motor driving capabilities.
23
Higher efficiency
32-bit ARM CortexTM-M3 core enables high end motor control strategies to further reduce noise and increase efficiency
Smaller footprint
Integration of digital logic as well as analog, HV and NVM capabilities in a dedicated CMOS process in co-operation with X-FAB
next
Agenda
24
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
-10123456
1st half 2013 1st half 2014
Industrial
Sales in CHF
EBIT in CHF
0
20
40
60
80
1st half 2013 1st half 2014
Automotive
Sales in CHF
EBIT in CHF
25
Micronas Group – segment information
Mil.
Automotive accounts for 93 and Industrial for 7 percent of total turnover
Mil.
Mil./CHF 1st half 2014 1st half 2013
AutomotiveNet sales 75.6 71.3Gross margin 22.5 21.2in % of sales 29.7% 29.8%Operating profit (EBIT) 3.2 2.9in % of sales 4.2% 4.0%
Mil./CHF 1st half 2014 1st half 2013
IndustrialNet sales 5.5 4.1Gross margin 2.2 1.6in % of sales 39.6% 38.4%Operating profit/loss (EBIT) 0.1 -0.3in % of sales 1.9% -6.6%
5%
95%
Sales by product lines
Controllers Hall-effect sensors
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Segment Automotive – product lines
Mil./CHF 1st half 2014 1st half 2013 Change in %
Hall-effect sensors 71.8 65.6 9%Controllers 3.8 5.7 -33%Total sales 75.6 71.3 6%
62%
12%
6% 5% 15%
Sales in Europe
Germany Hungary Czech Republic France Others
Mil./CHF 1st half 2014 1st half 2013 Change in %
Europe 26.8 27.1 -1%Asia 46.7 42.9 9%America 7.5 5.4 39%Others 0.1 0.1 0%
Total sales 81.1 75.5 7%
87%
9% 4%
Sales in Asia
Japan China Others
58%
33% 9% 0%
Sales total
Asia Europe America Others
27
Micronas Group – regional information
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Q3-13 Q4-13 Q1-14 Q2-14
Book-to-bill
28
Micronas Group – order book
Orders on hand of CHF 47 million – book-to-bill ratio of 1.00
ratio
Mil./CHF 1st half 2014 1st half 2013
Orders on hand, beginning of period 48.1 43.5Net sales 81.1 75.5Order intake 80.8 79.5Translation adjustments -0.4 0.9Orders on hand, end of period 47.4 48.4
Book-to-bill 1.00 1.05
Micronas Group – income statement
29
Mil./CHF in % of Mil./CHF in % ofnet sales net sales
Net sales 81.1 75.5Gross margin 24.7 30.4% 22.8 30.2%
Research and development expenses -13.4 16.5% -13.4 17.8%Marketing and sales expenses -5.1 6.3% -4.9 6.5%Administrative and general expenses -3.1 3.8% -3.0 4.0%Other operating income/expenses 0.2 0.2% 1.1 1.5%Operating profit (EBIT) 3.3 4.1% 2.6 3.4%
Financial income/expenses/FX net. -0.9 1.2Pretax profit 2.4 3.0% 3.8 5.0%
Income taxes -0.1 0.7Profit for the period 2.3 2.8% 4.5 6.0%
EBITDA 8.9 11.0% 8.4 11.1%
Earnings per share in CHF 0.08 0.15
1st half 2014 1st half 2013
Micronas Group – balance sheet
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Healthy net cash and equity position
Mil./CHF 27.6.2014 31.12.2013
Total non-current assets 91.0 86.2Cash, cash equivalents and short-term financial investments 157.8 173.7Other current assets 51.2 43.2
Total assets 300.0 303.1
Total shareholders' equity 117.8 129.8in % of total assets 39.3% 42.8%Total long-term liabilities 160.0 150.2Total current liabilities 22.2 23.1Total liabilities 182.2 173.3
Total shareholders' equity and liabilities 300.0 303.1
Micronas Group – cash flow statement
31
Investments in manufacturing including a combined heat and power unit result in a net cash position of CHF 157 million
Mil./CHF 1st half 2014 1st half 2013
Net cash at the beginning of the period 170.4 169.9
Cash flow from operating activities -2.2 0.1
Cash flow from investing activities -9.0 -3.5
Cash flow from financing activities -1.5 -1.30.7 0.7Exchange effect on cash -0.7 2.2Change in net cash -13.4 -2.5
Net cash at the end of the period 157.0 167.4(Cash, cash equivalents and short-term financial cash deposits)
Agenda
32
Overview
Markets and customers
Automotive
Industrial
Products
Financials
Summary
Strong car sales in Japan and a restocking of inventories by our customers had a positive effect on sales in the first six months
Against this background, and based on the current yen-euro exchange rate, the Board of Directors and Management expect to see sales of around CHF 158 million
The continuing weakness of the yen and the additional start-up costs for new products on the 8-inch line will continue to affect results in the second half of the year, so the EBIT margin is expected to remain in the lower single-digit percentage range
Outlook for full year 2014
33
Summary
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Our customers trust us. More than 3 billion sensors sold from the world market leader of linear Hall-effect sensors.
Quality without compromises. Our products are known for superior quality, functional safety and excellent reliability.
All under one roof. More flexibility and fast time-to-market.
Excellence by experience. Innovative solutions and excellent support, based on deep market and broad system know-how.