NINE MONTHS REPORT, JAN SEP 2014mb.cision.com/Main/405/9667661/303328.pdfTO PARTICIPATE, PLEASE CALL...
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NINE MONTHS REPORT, JAN‐SEP 2014TELEPHONE CONFERENCE 23 OCT, 2014, AT 15:30 CETTOMMY ANDERSSON, PRESIDENT AND CEO | HELENA WENNERSTRÖM, EVP AND CFO
AGENDA1. Bulten in brief2. Market development3. Third quarter 20144. Going forward
BULTEN IS FOCUSED ON FASTENERS FOR THE AUTOMOTIVE INDUSTRY
In end of June 2014, division Finnveden Metal Structures was sold to Shiloh Industries Inc. to a final purchase price amounting to SEK 374 m
The continuing business is focused on the fast growing and international fastener business
The financial position for Bulten is strengthened after the divestment and creates better conditions to seize opportunities the coming years
Tommy Andersson is President and CEO of the Bulten Group
Company name changed from FinnvedenBultenAB to Bulten AB as from September 1, 2014
3NINE MONTHS REPORT, 2014
BULTEN‐ A STRONGER SOLUTION
BULTEN IS ONE OF THE LARGEST SUPPLIERS OF FASTENERS TO THE EUROPEAN AUTOMOTIVE MARKET
Development and production of a wide range of metallic fasteners and related services
Major player in critical fasteners for engines
Customer‐specific, special fasteners is a large part of the product range
Technical development, materials, production know‐how and logistics as well as full Full Service Provider (FSP) concepts
Leading FSP supplier in Europe
Number of employees approx. 1,100
Sales in 2013 approx. SEK 1,806 million
5
METALLIC BOLTS/SCREWS AND NUTS
CLIPS
PLASTIC SCREWS
RIVET
PINS
WASHERSSERVICE
ENGINEERING
LOGISTICSTVM
DESIGN
TESTING
PROJECT MANAGEMENT
Core products are metallic screws, bolts and nuts There are also other types of fasteners including rivets,
washers and clips Services linked to fasteners
LINE‐FEEDING
NINE MONTHS REPORT, 2014
STRATEGIC DIRECTION
Supporting the global automotive industry with state of the art fastener technology. Empower our people to be the best in the industry.
Be a leading business partner and supplier of fasteners to the international automotive industry ‐ continuously developing its full service concept.
Actively launch innovations and services in the product area of fasteners ‐ securing its position in Europe and increase presence on growth markets.
Be the preferred supplier when customers requires quality deliveries including design, project management, application engineering, testing, TVM (Total Value Management), manufacturing/trading and logistics.
To grow stronger than the industry in average Operating Profit (EBIT) > 7% Return on Capital Employed (ROCE) > 15%
VISION
BUSINESS IDEA
FINAN
CIAL
TA
RGETS
NINE MONTHS REPORT, 2014 6
BULTEN HAS ITS STRONGEST POSITION IN NORTHERN EUROPEBUT WILL GROW ON EMERGING MARKETS
7
The major part of sales go to production of vehicles in Europe, of which a significant portion is exported to other markets around the world.
SWEDEN 17%
GERMANY 17%
UK 30%
POLAND 1%ROEU 27%
CHINA 3%
US 4%
ROW 1%
RUSSIA 0% (start‐up)
Geographic sales distribution January – September 2014
NINE MONTHS REPORT, 2014
BULTEN IS EXPANDING ITS MANUFACTURING AND LOGISTIC FOOTPRINT
Production mainly in Western and Eastern Europe
New establishment in Russia and growth in Chinese plant will strengthen future production footprint and support local content
Bulten produces most products in‐house and has a significant trading operation to optimize efficiency
Strengthened logistic capacity in the US and the UK and planned in Poland
Head office
Production
Development
Sales/logistics
IN‐HOUSE VS. TRADING (SALES VALUE)
In‐house
55%
Trading
43%
Logistics
2%
LEAN AND WELL POSITIONED MANUFACTURING FACILITIES IN EUROPE AND ASIA
NINE MONTHS REPORT, 2014 8
9
STRONG CUSTOMER BASE AND RELATIONSHIPS WITH MAJOR LIGHT VEHICLE AND HEAVY COMMERCIAL VEHICLE OEMS AS WELL AS TIER 1 SUPPLIERS
OEMs –LIGHT VEHICLES
OEMs –HEAVY VEHICLES
72% 14% 14%
SELECTION OF CUSTOMERS
Share of Bulten’s sale YTD, 2014, . Share of Bulten’s sale YTD, 2014, Share of Bulten’s sale YTD, 2014,
TIERAUTOMOTIVE SUPPLIERS
NINE MONTHS REPORT, 2014
MARKET DEVELOPMENT
MARKET DEVELOPMENT
LMC Automotive reports for automotive production in Europe, 2014: Production of LV in 2014 expected up by 2.7% compared to 2013 Production of HCV (>15 t) in 2014 expected down by ‐5.7 % compared to 2013 For Bulten’s mix, up 1.5%
Bulten Q3, 2014: Strong market share and volume growth in Bulten
Bulten’s deliveries YTD: LV stands for ~86% of sales HCV stands ~14% of sales
11NINE MONTHS REPORT, 2014
12
LMC AUTOMOTIVE FORECAST FULL YEAR 2014
PRODUCTION GROWTH RATE (YEAR ON YEAR) LIGHT VEHICLES EUROPE
Adjusted Q3 LMC Automotive analysis show that production of LV in 2013 was 0.9% higher than 2012, growth rates are expected to pick up over the next three years
PRODUCTION GROWTH RATE (YEAR ON YEAR) HEAVY COMMERCIAL VEHICLES (>15t) EUROPE
Adjusted Q3 LMC Automotive analysis shows a production increase of appr. 4,9% between 2012 and 2013. In 2014 LMC expect a production drop of ‐5,7% within the HCV segment. Strong Recovery expected in 2015.
Source: LMC Automotive Q3, 2014NINE MONTHS REPORT, 2014
-5,3%
4,0%2,5%2,7%
0,9%
‐6%
‐4%
‐2%
0%
2%
4%
6%
2012E 2013E 2014E 2015E 2016E
Q2 2014 Q3 2014
-4,1%
4,9%
-5,7%
7,7%
10,6%
‐8%‐6%‐4%‐2%0%2%4%6%8%10%12%
2012E 2013E 2014E 2015E 2016E
Q2 2014 Q3 2014Analysis Q2, 2014 Analysis Q3, 2014
Analysis Q2, 2014 Analysis Q3, 2014
BULTEN HAS OUTPERFORMED THE GROWTH OF VEHICLE PRODUCTION IN WESTERN EUROPE ‐ NEW CONTRACTS STRENGTHEN THIS TREND
FSP contract for supply of fasteners to major automotive manufacturers
During 2013 Bulten was awarded contracts with annual value of approx. SEK 500 million
New deliveries have started early 2014, well executed and according to plan
Estimated full delivery capacity in 2015
Bulten has received supplementary volumes from an existing customer with an annual value of approximately SEK 150 million at full production in 2016
Bulten’s sales development vs. market development (adj. for currency), index year 2009
New contracts will give an additional boost.
>+40%
Solid underlying business and well positioned to gain market share with
new and existing FSP contracts
NINE MONTHS REPORT, 2014 13
BULTEN IS EUROPEAN MARKET LEADER IN FSP‐RELATED SOLUTIONS FOR THE INTERNATIONAL AUTOMOTIVE INDUSTRY ‐ CONDITIONS FOR CONTINUED GROWTH ARE GOOD
New FSP contracts will increase Bulten’s share in 2014.
Source: EIFI, Bulten
NINE MONTHS REPORT, 2014 14
15NINE MONTHS REPORT, 2014
KEY SUCCESS FACTORS FOR BULTEN’S STRONG GROWTH
FULL SERVICE PROVIDER
EXPERIENCED MANAGEMENT AND DEDICATED STAFF
QUALITY LEADER
TECHNOLOGY LEADER
LOW COST PRODUCTION
4. THIRD QUARTER 2014
CONTINUING OPERATIONS
As a result of the divestment of division Finnveden Metal Structures June 30, 2014, Finnveden Metal Structures is reported as ”Discontinued operations”separate from continuing operations in accordance with IFRS 5 ”Non‐current Assets Held for Sale and Discontinuing Operations”
Unless otherwise stated, information in this presentation relates to continuing operations
Continuing operations equal Bulten operations and HQ, such as overhead and IT operations
NINE MONTHS REPORT, 2014 17
FINANCIAL SUMMARY (MSEK)
Q3 JAN‐SEP 12 M ROLLING FULL YEAR
2014 2013 ∆ 2014 2013 ∆ OCT 2013‐SEP 2014 2013
Net sales 593.3 435.6 36.2% 1,793.2 1,334.0 34.4% 2,265.1 1,805.9
Gross profit 104.8 80.5 24.3 339.7 244.4 95.3 437.1 341.8
Earnings before depreciation(EBITDA) 35.7 30.0 5.7 128.4 110.9 17.5 169.7 152.2
Operating earnings (EBIT) 24.7 19.7 5.0 95.0 78.6 16.4 125.6 109.2
Operating margin, % 4.2 4.5 ‐0.3 5.3 5.9 ‐0.6 5.5 6.0
Adjusted operating earnings (EBIT) 13.5 19.7 ‐6.2 83.8 78.6 5.2 114.4 109.2
Adjusted operating margin, % 2.3 4.5 ‐2.2 4.7 5.9 ‐1.2 5.1 6.0
Earnings after tax 17.0 12.7 4.3 66.0 78.0 ‐12.0 88.4 100.4
Adjusted Earnings after tax 8.3 12.7 ‐4.4 57.3 50.9 6.4 79.7 73.3
Order bookings 570.5 445.9 27.9% 1,851.2 1,397.2 32.5 2,465.5 2,011.5
Return on capital employed, % ‐ ‐ ‐ ‐ ‐ ‐ 9.5 8.1
GROUP SUMMARYTHIRD QUARTER
Net sales up 36.2%
EBIT margin 4.2% (4.5)
Earnings after tax SEK 17 m (12.7)
EPS 0,89 SEK (0.60)
COMMENTS
Positive trend in sales and orders continued in the third quarter
- Supplementary order of appr. SEK 150 million at full production from 2016
EBIT affected by high priority of deliveries and fewer production days
Positive and negative events effected margin of net SEK ‐3 million Optimization of new contracts will gradually improve profitability
NINE MONTHS REPORT, 2014 18
SIGNIFICANT EFFECTS IN SALES AND ORDER INTAKE FROM NEW COMPREHENSIVE FSP CONTRACTS
The ramp‐up of the two FSP contracts has been successfully implemented in during Q1‐Q3
Supplementary volumes from an existing customer with an annual value of approximately SEK 150 million at full production in 2016 – with start of deliveries in Q4, 2014
Less production days in Q3
19NINE MONTHS REPORT, 2014
MSEK
20NINE MONTHS REPORT, 2014
STRONG GROWTH AFFECTS EBIT – OPTIMIZATION ON‐GOINGMSEK
4,5% 4,2%4,7%
0,0%1,0%2,0%3,0%4,0%5,0%6,0%7,0%8,0%9,0%10,0%
0
5
10
15
20
25
30
35
40
45
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14
EBIT
EBIT margin
EBIT margin simulated
Significant organic growth with many parallel activities. Start up costs for: New FSP contracts: SEK ‐14.9 million in 9M 2014, of which SEK ‐0.9 affected Q3 Establishment in Russia: SEK ‐11 m in 9M 2014, of which SEK ‐5 m affected Q3. Additional effects of
SEK ‐3 m expected in Q4
Negative effects by exchange rate fluctuation in translation of working capital at the closing rate Q3 of a net SEK ‐8.6 million (‐5.2). 9M of a net SEK ‐16.4 million (2.0).
Positive effect of 11,2 MSEK in Q3 as an insurance compensation for cost for machine repairment In Q3 start‐up volumes were prioritized on behalf of optimization. Optimization of new contracts will
continue, with good potential to gradually strengthen profitability
CASH FLOW
Strong growth and new volumes has tied up working capital in the first nine months. Guidance of approximately 20 percent of the increased estimated sales still valid
21NINE MONTHS REPORT, 2014
CASH FLOW STATEMENT, MSEK JAN ‐ SEP FULL YEAR
2014 2013 2013
Cash flow from operating activities before changes in working capital 112.5 73.3 126.0
Cash flow from operating activities ‐122.3 96.5 196.8
Cash flow from investing activities ‐116.7 ‐27.4 ‐66.2
Cash flow from financing activities ‐59.5 ‐39.1 ‐81.0
Cash flow for the period from continued operations ‐298.5 30.0 49.6
Cash flow for the period from discontinued operations 411.3 ‐1.3 ‐0.5
Cash flow for the period 112.8 28.7 49.1
Cash and cash equivalents at end of period 216.5 78.8 100.6
BALANCE SHEET
BALANCE SHEET, MSEK 30‐09‐2014 30‐09‐2013 31‐12‐2013ASSETS
Total fixed assets 641.1 731.5 807.8
Total current assets 1,208.7 1,241.7 1,285.8
Total assets 1,849.8 1,973.2 2,093.6
EQUITY AND LIABILITIES
Equity 1,256.7 1,042.9 1,103.5
Total non‐current liabilities 110.2 273.1 249.6
Total current liabilities 482.9 657.2 740.5
Total equity and liabilities 1,849.8 1,973.2 2,093.6
MSEK 2014‐09‐30 2013‐09‐30 2013‐12‐31
Net cash/Net debt, MSEK 79.1 ‐234.6 ‐188.7
The divestment of the Finnveden Metal Structures division has strengthened the Group’s financial position considerably
Net cash at SEK 79.1 million by the end of the quarter
NINE MONTHS REPORT, 2014 22
KEY INDICATORS – CAPITAL STRUCTURE AND RETURN INDICATORS
THE GROUP 30‐09‐2014 2013‐09‐30 2013‐12‐31
CAPITAL STRUCTURE
Net debt/equity ratio, times 0.1 ‐0.2 ‐0.2
Equity/assets ratio, % 67.9 52.9 52.7
12 M ROLLING FULL YEAR
THE GROUP, 12 MONTHS OCT 2013‐SEP 2014
OCT 2012‐SEP 2013 2013
RETURN INDICATORS
Return on capital employed, % 9.5 7.0 8.1
Return on equity % 16.1 4.3 8.3
Return on equity, adjusted % 14.4 6.1 8.6
CAPITAL STRUCTURE
Capital turnover, times 1.6 2.2 2.2
Net cash/Net debt/EBITDA 0.5 ‐1.7 ‐1.2
Balance sheet not recalculated
NINE MONTHS REPORT, 2014 23
24NINE MONTHS REPORT, 2014
FINANCIAL GUIDELINES
THE GROUP JAN – SEP 2014 GUIDELINES
Net Working Capital (% of sales) 24%* 20%
CAPEX as % of sales 6% 2‐3%
Depreciation as % of sales 2% 2‐3%
Tax rate 27,6% 27‐29%
Net Working capital slightly higher now due to the new business that has not been a part of the turnover for the whole period
Capex and depreciation mirrored by the high activity this year
Tax rate going forward is estimated to 27‐29%. The tax rate will fluctuate between quarters
* 12 M rolling, October – September 2014
3. GOING FORWARD
NEW LOGISTICS CENTER PLANNED IN POLAND
Volume increases mean higher loading in the factories. Bulten expects to handle them within the existing structure, but to prepare for future growth the company has decided to establish a new logistics centre in Poland
Premises for the new logistics centre will be rented and equipment will fall within the ordinary investment plan
Estimated operations start autumn 2015
26NINE MONTHS REPORT, 2014
START UP IN RUSSIA ACCORDING TO PLAN
The production in Russia has started with limited initial volumes in September but will increase gradually during the rest of the year
Establishment in Russia: SEK ‐11 m in 9M 2014, of which SEK ‐5 m affected Q3. Estimated additional costs of SEK ‐3 m in Q4
Continued strong interest from potential new customers
The Russian car market has been negatively affected as a result of the geopolitical uncertainty
Bulten’s operations in Russia account for a fraction of the Group total, but has a significant growth potential
27NINE MONTHS REPORT, 2014
FIRST NINE MONTHS OF 2014 IS CHARACTERIZED BY MANY ACTIVITIES AND HIGH PACE IN OPERATIONS
Production in Russia started in September
Decision on increased logistics facilities in Poland
Successful launches of both FSP contracts
Optimization ongoing
Bulten has received supplementary volumes from an existing customer with an annual value of approximately SEK 150 million at full production in 2016
Bulten has taken significant steps forward in the market and has created a high credibility in the automotive industry during the year
NINE MONTHS REPORT, 2014 28
A QUALITY GROWTH COMPANY WITH PROVEN TRACK RECORD
ORGANIC GROWTH POTENTIAL
Continued path of gaining market share in Western Europe
Significant opportunities in emerging markets
Potential to widen related business long‐term – expansion of product lines and processes
SOLID FINANCES
Strong financial position
Current cash positions opens up for further growth initiatives Prospects of growth with solid operating margins
29NINE MONTHS REPORT, 2014
BULTEN – A STRONGER SOLUTION
APPENDIX
FINANCIAL OBJECTIVES
TARGETS Q3 2014ACTUAL
Q3 2013ACTUAL
12 M ROLLINGOCT 2013‐SEP 2014
FULL YEAR2013
ACTUAL
Sales growth Target to achieve a profitable organic growth in excess of the market growth on the Company’s respective markets.
36% 13% ‐‐ 5.5%
Sales growthCurrency adjusted
Target to achieve a profitable organic growth in excess of the market growth on the Company’s respective markets.
29% 10% ‐‐ 6.4%
EBIT margin Target to achieve an EBIT margin of at least 7%.
4.2% 4.5% 5.5% 6.0%
Return on capital employed (ROCE)
Target to achieve a ROCE exceeding 15%.
9.4% 8.1%
Dividend policy Bulten has a target to pay dividends corresponding to approximately 1/3 of net income after tax. Bulten'sfinancial position, cash flow and future prospects should however be considered.
48%SEK 2.00 per
share
NINE MONTHS REPORT, 2014 31
32NINE MONTHS REPORT, 2014
FIVE LARGEST SHAREHOLDERS, 30 SEPTEMBER 2014
Owner No of shares Votes and capital (%)
Volito AB 4 300 000 20.4
ÖRESUND, INVESTMENT AB 1 457 359 6.9
Catella Fondförvaltning 1 390 537 6.6
JPM CHASE NA 736 487 3.5
SKANDINAVISKA ENSKILDA BANKEN S.A. 457 600 2.2
Source: Euroclear Sweden AB