Investor Presentation Q2 2015 - PKC Group · Investor Presentation Q2 2015 Group EBITDA before...
Transcript of 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
PKC Investor Presentation Q2 2015
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%
Heavy Duty Trucks Medium Duty Trucks
Market Share 1-6/2015
Production units
Production units
+12%
-1%
EU27 + EFTA Market
PKC Investor Presentation Q2 2015
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
Heavy Duty Trucks Medium Duty TrucksSource: LMC Automotive forecasting Q4/2014
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
Heavy Duty Trucks Medium Duty Trucks
EURO 6
+6%
+2%
Source: LMC Automotive forecasting Q2/2015, PKC Group
43%
57%
20%
80%
Heavy Duty Trucks Medium Duty Trucks
Market Share 1-6/2015
Production units
+2%
-8%
Brazilian Market
PKC Investor Presentation Q2 2015
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
Heavy Duty Trucks Medium Duty TrucksSource: LMC Automotive forecasting Q4/2014
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
Heavy Duty Trucks Medium Duty Trucks
-21%
-21%
Source: LMC Automotive forecasting Q2/2015, PKC Group
32%
68%
2%
98%
Heavy Duty Trucks Medium Duty Trucks
Market Share 1-6/2015
Production units
+22%
+3%
PKC estimates production volume to be clearly lower than previous year
China Market
PKC Investor Presentation Q2 2015
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
Heavy Duty Trucks Medium Duty TrucksSource: LMC Automotive forecasting Q4/2014
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
Heavy Duty Trucks Medium Duty Trucks
-13%
-9%
Source: LMC Automotive forecasting Q2/2015, PKC Group
1%
99%
0%
100%
Heavy Duty Trucks Medium Duty Trucks
Market Share 1-6/2015
Production units
+22%
+17%
EURO 4 EURO 4
Revenue
PKC Investor Presentation Q2 2015
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
PKC Investor Presentation Q2 2015
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 Investor Presentation Q2 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
PKC Investor Presentation Q2 2015
Key Figures
PKC Investor Presentation Q2 2015
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
PKC Investor Presentation 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
PKC Investor Presentation 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
PKC Investor Presentation Q2 2015
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
PKC Investor Presentation Q2 2015
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
PKC Investor Presentation Q2 2015
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 Investor Presentation Q2 2015
PKC Investor Presentation Q2 2015
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
PKC Investor Presentation Q2 2015
• 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