investor presentation q2 2015 - pkc group · investor presentation q2 2015 group ebitda before...

Investor Presentation Q2 2015Group EBITDA before non-recurring items up 22%,

driven by continued improvement in Wiring Systems segment

PKC Investor Presentation Q2 2015 August 6, 2015 Matti Hyytiäinen, President & CEO

• Freight growth and new truck order activity slowed in North America

• Truck demand in Europe recovered while Brazilian market deteriorated further

Q2 2015 Highlights

PKC Investor Presentation Q2 2015

Business Environment

PKC’s Operations

PKC’s Financial Performance

• Overheated job market in Mexico resulted in unsatisfactory productivity

• Curitiba, Brazil factory to be closed due to poor market conditions

• Wiring Systems segment’s comparable EBITDA continued to improve sequentially

• Quarterly cash flow pattern similar to previous year

North American Market


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2011 2012 2013 2014 2015 2016 2017 2018

Heavy Duty Trucks Medium Duty TrucksSource: LMC Automotive forecasting Q4/2014

Production units

+21%

+12%

+14%

-3%

EPA 2014

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Heavy Duty Trucks Medium Duty Trucks

EPA 2014

+13%

-2%

Source: LMC Automotive forecasting Q2/2015, ACT Build History July 2015, PKC Group

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2011 2012 2013 2014 2015 2016 2017 2018

Light Vehicle (Pick-up and SUV)

+9% +5%

58%

42%34%

66%


Market Share 1-6/2015

Production units

Production units

+12%

-1%

EU27 + EFTA Market


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011 2012 2013 2014 2015 2016 2017 2018


Production units

-9%

-16%

+14%

-3%

EURO 6

0

20,000

40,000

60,000

80,000

100,000

120,000

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15


EURO 6

+6%

+2%

Source: LMC Automotive forecasting Q2/2015, PKC Group

43%

57%

20%

80%



Production units

+2%

-8%

Brazilian Market


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2011 2012 2013 2014 2015 2016 2017 2018


Production units

-27%

-22%

+14%

-3%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15


-21%

-21%


32%

68%

2%

98%



Production units

+22%

+3%

PKC estimates production volume to be clearly lower than previous year

China Market


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2011 2012 2013 2014 2015 2016 2017 2018


Production units

-2%

-13%

+14%

-3%

0

50,000

100,000

150,000

200,000

250,000

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15


-13%

-9%


1%

99%

0%

100%



Production units

+22%

+17%

EURO 4 EURO 4

Revenue


17.0 16.7 19.5 12.7 12.3 9.00

50

100

150

200

250

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

South America

188.6 191.3 195.4 196.7 205.7 209.2

15.4 14.7 14.8 12.520.8 14.7

0

50

100

150

200

250

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Total GroupEUR million EUR million

54.5 51.9 45.5 53.3 53.9 58.4

9.7 9.6 9.6 7.8 8.4 7.9

0

50

100

150

200

250

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

EuropeEUR million

114.5 120.5 129.4 129.4 138.2 141.5

0

50

100

150

200

250

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

North AmericaEUR million

Average Number of Personnel


11,081 11,507 12,265 12,212 12,306 12,713

0

5,000

10,000

15,000

20,000

25,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

North America

4,676 4,661 5,131 5,362 5,248 5,466236 242 233 233 252 253

0

5,000

10,000

15,000

20,000

25,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Europe

2,838 2,766 2,668 2,520 2,213 1,736

0

5,000

10,000

15,000

20,000

25,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

South America

18,659 19,004 20,136 20,164 19,835 19,979

616 652631 583 580 610

0

5,000

10,000

15,000

20,000

25,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Total Group

• European heavy-duty and medium-duty truck production is estimated to grow by 5% compared to previous year’s level.

• North American heavy-duty and medium-duty truck production is estimated to grow by 7% compared to previous year’s level.

• Brazilian heavy-duty and medium-duty truck production is estimated to be clearly lower than previous year.

• The market demand for Electronics segment’s products is expected to remain on the current level at the most.

Market Outlook – Full Year 2015


• PKC Group estimates that with prevailing exchange rates 2015 revenue will be higher than previous year level, and that comparable EBITDA will be higher than in 2014.

• Revenue and EBITDA estimates are based on current business structure.

• In 2014, PKC’s revenue was EUR 829.5million and comparable EBITDA before non-recurring items was EUR 48.6 million.PKC Group has reclassified certain financial items and operating expenses as of the beginning of 2015. The changes are minor and comparison periods have been adjusted accordingly.

PKC Group’s Outlook


Key Figures


EUR million 4-6/15 4-6/14 Change

%

1-6/15 1-6/14 Change

%

1-12/14

Revenue 223.9 206.0 +8.7 450.4 410.0 +9.8 829.5

EBITDA1)15.7 12.9 +21.5 32.4 24.7 +31.2 48.6

EBITDA%1)7.0 6.3 7.2 6.0 5.9

Non-recurring items -5.4 -1.5 -5.9 -4.2 -28.4

Operating profit (loss) 2.8 4.6 -40.5 11.3 7.2 +56.8 -7.0

EPS (EUR) -0.06 0.11 -153.4 0.12 0.15 -15.3 -1.21

Cash flow from operations 4.5 12.9 -25.2 0.1 41.0

Gross capital expenditure 3.0 5.0 -39.5 5.4 11.5 -53.1 19.9

Core working capital2) 96.5 98.7 -2.2 96.5 98.7 -2.2 70.2

ROCE, %3) 12.8 7.8 7.7

Gearing, % 21.1 14.0 -5.6

1) Excluding non-recurring items2) Inventories + trade receivables - trade payables3) ROCE, % = Adjusted operating profit (excl. NRIs) / ((Total equity + interest-bearing liabilities)(average))

• Revenue increased +9% including FX impact of +14%– Light-vehicle build-outs reduced

revenue in North America while truck revenue grew

– European revenue grew while revenue in Brazil decreased substantially due to poor market conditions

• Adjusted EBITDA continued to improve– Lower losses in Brazil and favorable

FX translation impact

– Development program in Europe and Brazil continuing

– Highest EBITDA-% since Q3 of 2013

Wiring Systems Segment, Q2 2015


188.6191.3

195.4 196.7

205.7209.3

170

180

190

200

210

220

230

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Revenue

EUR million

11.7 13.5 15.510.7

15.3 16.5

-2.1 -1.0 -7.4 -9.7

0.0

-5.0

6.27.1 7.9

5.5

7.4 7.9

-4

-2

0

2

4

6

8

-10

-5

0

5

10

15

20

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

EBITDA excl. NRIs

NRIs

EBITDA excl. NRIs, % of revenue

EUR million %

Electronics Segment, Q2 2015


15.4 14.7 14.8

12.5

20.8

14.7

0

5

10

15

20

25

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Revenue

EUR million

1.20.8 1.0

0.2

2.8

0.7

8.0

5.26.5

1.4

13.6

4.7

0

2

4

6

8

10

12

14

16

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

EBITDA excl. NRIs EBITDA excl. NRIs, % of revenue

EUR million %

• Revenue at same level as comparison quarter after seasonally strong Q1

• EBITDA close to comparison quarter level after strong Q1

• Own products have favorable impact into EBITDA

Net Working Capital


105.7 102.8 112.389.0

116.8 99.6

80.4 82.283.4

79.4

89.494.1

-87.0 -86.3 -95.9 -98.3 -102.7 -97.3

-17.6 -20.5-32.9 -44.0 -41.2 -36.7

0

2

4

6

8

10

12

14

16

18

-200

-150

-100

-50

0

50

100

150

200

250

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Trade payables Other liabilities and receivables***

NWC* % of Revenue** Core working capital* % of Revenue**

Inventories Trade receivables

* Average of previous four quarters ** Revenue of previous 12 months *** Related to employee benefits, taxes and financial

items. Since Q3/14 includes additional tax liability of EUR

8.3 million and non-recurring items booked, but not paid.

EUR million %

81.6 78.266.9

26.2

Core working capital = Inventories + trade receivables – trade payables

62.359.8

Cash Flow


41.0

0.1

-25.2

-20.3

-11.1

-5.1

20.7

-11.0

-30.2

-40

-30

-20

-10

0

10

20

30

40

50

2014 1-6/14 1-6/15Cash from operationsCapital expenditureFree cash flow

EUR million EUR million

-18.4

-31.8

7.4

1.60.9

30.7

-40

-30

-20

-10

0

10

20

30

40

50

2014 2015

Q1 Q2 Q3 Q4 Free cash flow

EUR million

Balance Sheet and Return


34.7

41.9

32.6

0

5

10

15

20

25

30

35

40

45

2014 Q2/14 Q2/15

Equity ratio, %

-5.6

14.021.1

-10

0

10

20

30

40

50

60

70

80

90

100

2014 Q2/14 Q2/15

Gearing, %

-8.9

26.232.2

48.643.9

56.3

-20

-10

0

10

20

30

40

50

60

2014 Q2/14 Q2/15

Net debt EBITDA*

7.7 7.8

12.8

0

2

4

6

8

10

12

14

2014 Q2/14 Q2/15

ROCE, %

%

EUR million %

%

*EBITDA of previous 12 months excl. NRIs ROCE % = Adjusted operating profit (excl. NRIs) /

((Total equity + interest-bearing liabilities)(average))

PKC’s Strategy Captures Growth

Opportunities



PKC’s existing addressable market amounts to about EUR 4 billion

• Trucks in North America, Europe and South America EUR 1.5 billion

• Construction equipment globally EUR 0.7 billion

• Agriculture equipment globally EUR 1.5 billion• Buses globally EUR 0.2 billion

New market opportunities equal to addressable market growth by about EUR 5 billion by 2018

• APAC truck wiring harnesses EUR 1 billion• Rolling stock control panels, power packs and

wiring harnesses globally EUR 2 billion• Aerospace wiring harnesses globally

EUR 2 billion

PKC Strategy 2018 – Doubling

the Addressable Market

1.5

1.5

0.7

0.2

Existing marketabout EUR 4 billion

Truck

Agriculture

Construction

Bus

1.0

2.0

2.0

New market opportunitiesabout EUR 5 billion

APAC Truck

Rolling stock

Aerospace


• Doubling the addressable market

• Strong market position in western truck markets and improving manufacturing footprint

• New business awards from global customers

• Expanding into rolling stock segment through recently closed acquisition

• First breakthrough into China EDS market through joint venture with Huakai which is expected to commence operations during Q3

Strategy Execution Proceeding

PKC Group Plc

Bulevardi 7

FI-00120 Helsinki, Finland

www.pkcgroup.comPKC Investor Presentation Q2 2015

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