1. No category

10.03.2015
Excellence in Connectivity Solutions
Agenda
2014 – a very successful business year!
Overview of financial year 2014
Financial results
Outlook
Questions and discussion
Buffet lunch
Urs Kaufmann (CEO)
Ivo Wechsler (CFO)
Urs Kaufmann (CEO)
10 March 2015 | Media and Analysts Conference
1
10.03.2015
Overview of financial year 2014
Overview of the 2014 financial year
Operational, strategic and organisational progress
• Double-digit growth in order intake
• Solid organic growth in net sales
• EBIT margin above medium-term target range
• Sharp rise in net income
• All three divisions making progress
• Successful acquisition of Cube Optics in Mainz
• Global production network further optimised
• Global sales organisation set up in 7 regions
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10 March 2015 | Media and Analysts Conference
3
Overview of financial year 2014
Figures at a glance
CHF million
2014
2013
Δ%
Order intake
768.1
683.4
+12.4
Net sales
748.5
719.7
+4.0
69.0
51.6
+33.7
9.2
7.2
59.2
32.5
7.9
4.5
Operating profit (EBIT)
• in % of net sales
Net income
• in % of net sales
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+82.2
10 March 2015 | Media and Analysts Conference
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10.03.2015
Overview of financial year 2014
Net sales development in the last 5 years
Growth of +5.8% in 2014 without Solar base effect
CHF million
749
800
759
720
+4.0%
698
+5.8%
Solar net sales
Net sales
excluding Solar
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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Overview of financial year 2014
EBIT development 2010 - 2014:
Further increase of EBIT margin before and after one-off effects
CHF million
31.0
Operative EBIT
One-off effects EBIT
margin before oneoff effects
* IAS 19 adjusted
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10 March 2015 | Media and Analysts Conference
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10.03.2015
Overview of financial year 2014
The three dimensions of our business
Results by segment, markets and regions
APAC
Americas
EMEA
Technology/Segments
Communi- TransporIndustrial
tation
cation
RF
Radio Frequency
Fiber Optics
Low Frequency
FO
LF
Markets
10 March 2015 | Media and Analysts Conference
Excellence in Connectivity Solutions
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Overview of financial year 2014
Net sales development in divisions
Significant growth in RF and FO - decline in LF (base effect from solar)
CHF million
+10.5%
+7.8%
-4.3%
Without H+S Cube Optics
+7.8%
300
275.6
235.0
250
217.9
226.2
249.9
6.0
263.6
200
150
100
50
2013
2014
H+S Cube Optics
0
Radio Frequency
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Fiber Optics
Low Frequency
10 March 2015 | Media and Analysts Conference
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10.03.2015
Overview of financial year 2014
Radio Frequency division
Encouraging growth - strong EBIT margin - expanded customer base
Key facts
CHF million
2014
2013
Δ%
Order intake
238.7
211.4
+12.9
Net sales
235.0
217.9
+7.8
Operating profit (EBIT)
33.0
27.6
+19.4
• in % of net sales
14.0
12.7
• Significant increase in net sales
• Order intake shows even
stronger growth
• EBIT increased once again after
good development in previous
year
• Growth spurt in the
Communication market
• Decline in space and defence
due to budget cuts
• Established as a leading provider
for railway antennas
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10 March 2015 | Media and Analysts Conference
9
Overview of financial year 2014
Fiber Optics division
New net sales record - FTTA diversification - acquisition of Cube Optics
CHF million
Key facts
2014
2013
Δ%
Order intake
271.0
188.6
+43.7
Net sales
249.9
226.2
+10.5
Operating profit (EBIT)
26.6
28.0
-4.9
• in % of net sales
10.6
12.4
• Double-digit sales growth with a
new peak value
• Boost in order intake
• Slightly lower, but still double-digit
EBIT margin
• Successful geographic
diversification for Fiber to the
Antenna (FTTA)
• More orders from market segment
data centers
• Positive profit contribution from
Cube Optics right from the start;
smooth integration process
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10 March 2015 | Media and Analysts Conference
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5
10.03.2015
Overview of financial year 2014
Low Frequency division
Significantly improved profitability - Solar base effect reduces net sales
Key facts
CHF million
2014
2013
Δ%
Order intake
258.4
283.4
-8.8
Net sales
263.6
275.6
-4.3
12.2
0.5
n/a
4.6
0.2
Operating profit (EBIT)
• in % of net sales
• "Non-Solar net sales" maintain
previous year's strong level
• Order intake slightly weaker than
sales
• Significant increase in operating
profit
• Railways market still at the peak
of the cycle with strong growth in
China
• Automotive market continuing at a
good level
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10 March 2015 | Media and Analysts Conference
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Overview of financial year 2014
Net sales by markets
Communication and Transportation increasing - Industrial decreasing
CHF million
400
+12%
300
+4%
200
-8%
2014
100
0
Communication Transportation
2013
2014
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Industrial
Communication
Transportation
Industrial
10 March 2015 | Media and Analysts Conference
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10.03.2015
Overview of financial year 2014
Net sales by regions
Europe stable - growth spurt in Asia - decline in America
CHF million
400
-1%
300
+47%
200
2014
-24%
100
0
EMEA
Asia Pacific
(including
Switzerland)
Americas
EMEA (incl. Switzerland)
Asia-Pacific
Americas
2013
2014
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10 March 2015 | Media and Analysts Conference
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Overview of financial year 2014
Development average number of employees
Permanent employees
3950
4044
3808
3739
3789
Low-cost countries
High-cost countries
Switzerland
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10 March 2015 | Media and Analysts Conference
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7
10.03.2015
Overview of financial year 2014
Dividend
75% higher than previous year
• Strong group result
• Rock-solid balance sheet and liquidity reserves
• Profit-oriented dividend policy: 40 - 50% of net income
• Proposal to the Annual General Meeting:
– Dividend per share of CHF 1.40 (previous year: CHF 0.80)
– Distribution ratio of 46%
– Dividend yield of around 3.3% (share price CHF 43)
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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Overview of financial year 2014
Acquisition of Cube Optics
Radio Frequency
Low Frequency
Fiber Optics
Markets
Technologies
Perfect “strategic fit”!
Communication
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Transportation
Industrial
10 March 2015 | Media and Analysts Conference
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8
10.03.2015
Overview of financial year 2014
Cube Optics at a glance
2014 net sales by market
Quick facts
7%
Revenue 2014
26m Euro
Location
Mainz
Employees
140
Founded
2000
30%
63%
Telecom
Datacom
Industrial/OEM
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10 March 2015 | Media and Analysts Conference
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Overview of financial year 2014
WDM technology and products
WDM technology (Wavelength Division
Multiplexing) uses multiple wavelengths
of light on a single fiber.
This technique enables the multiplication of
network capacity.
40G / 100G Multiplexer
ROSA
Example: FTTH network with CWDM
CWDM
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10 March 2015 | Media and Analysts Conference
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10.03.2015
Overview of financial year 2014
Changes to the Board of Directors
As the successor to the Chairman of the Board
of Directors, Erich Walser, who passed away
unexpectedly at the end of 2014, the Board of
Directors proposes the election of Dr. Beat Kälin.
Personal details
• Swiss, born 1957
• Dr. sc. techn., dipl. Ing. ETH Zürich and MBA INSEAD, Fontainebleau
• Komax Group, Dierikon: 2006 COO, 2007-2015 CEO
– Stepping back as CEO of the Komax Group and will be proposed for
election as the new Chairman of the Board of Directors in May 2015.
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
19
Overview of financial year 2014
Setting the agenda for the Executive Group
Management
1 April 2015: Ulrich Schaumann
Chief Operations Officer + IT Officer
• Born 1957, Swiss
1 May 2015: Drew Nixon
Chief Operating Officer Global Sales
• Born 1965, American
1 July 2015: Patricia Stolz
Chief Human Resources Officer
• Born 1969, Swiss
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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10
10.03.2015
Overview of financial year 2014
Conclusion for 2014
A very successful business year!
•
Solid growth in net sales
•
Strong increase in earnings
•
EBIT margin above medium-term target range
of 6-9%
•
Important operational, strategic and organisational
progress achieved
•
Attractive dividend yield
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
21
Agenda
2014 – a very successful business year!
Overview of the 2014 financial year
Financial results
Outlook
Questions and discussion
Buffet lunch
Urs Kaufmann (CEO)
Ivo Wechsler (CFO)
Urs Kaufmann (CEO)
10 March 2015 | Media and Analysts Conference
11
10.03.2015
Financial results
Net sales
2013
Organic
Currency
+ copper
Portfolio
Excellence in Connectivity Solutions
+4.0%
+29 m
+0.8%
+6 m
-1.7%
-12 m
CHF million
+4.9%
+35 m
Factors impacting the “top line”
Net sales
2014
10 March 2015 | Media and Analysts Conference
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Financial results
Further significant improvement in gross margin
CHF million
400
40%
37.6%
35.8%
34.3%
300
31.4%
35%
30.7%
200
30%
301.0
238.4
100
214.6
246.6
267.7
25%
0
20%
2010
2011
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2012
2013
Gross profit
Gross margin
2014
10 March 2015 | Media and Analysts Conference
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12
10.03.2015
Financial results
Slight increase of operating expense
CHF million
300
27.6%
25.2%
201.6
200
30%
26.7%
26.7%
192.4
200.0
25.1%
190.6
192.4
100
20%
10%
Operating expense
As % of net sales
0
0%
2010
2011
2012
2013
Excellence in Connectivity Solutions
2014
10 March 2015 | Media and Analysts Conference
25
Financial results
+18%
+9 m
+34%
+17 m
EBIT
2013
-9%
-5 m
CHF million
+25%
+13 m
Factors impacting the EBIT
Organic incl.
portfolio
Currency
+ copper
One-off
effects
EBIT
2014
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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13
10.03.2015
Financial results
Positive net financial result
CHF million
4.8
2013
2014
Net currency
Other financial result
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
27
Financial results
Very low Group tax rate
35%
32.3%
30%
25.9%
25%
18.8%
20%
19.8%
15%
10%
5%
0%
2013
Expected tax rate
Excellence in Connectivity Solutions
2014
Effective tax rate
10 March 2015 | Media and Analysts Conference
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14
10.03.2015
Financial results
82%
+26 m
60
+1 m
CHF million
+8 m
+17 m
Influencing factors on the “bottom line”
Earnings per share (CHF)
1.67 ► 3.05
50
40
30
59
20
33
10
0
Net income
2013
Impact
on EBIT
Net
financial
result
Income
tax
Net income
2014
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
29
Financial results
Witzberg building purchase and capacity
expansion in China
CHF million
80
65
60
49
40
42
40
26
20
Investments
0
2010
2011
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2012
2013
2014
10 March 2015 | Media and Analysts Conference
30
15
10.03.2015
Financial results
Effects of the acquisition of Cube Optics
CHF million
Acquired net assets
10
Intangible assets from acquisition
16
Goodwill
27
Purchase price
53
2014 net cash flow
(49)
► Cube Optics contribution 2014:
CHF 6.0 million net sales / CHF 1.0 million EBIT
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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Financial results
Strong balance sheet
CHF million
Liquid assets
31/12/2014
143
31/12/2013
30/06/2014
170
-16%
152
336
Oth. current assets
323
272
19%
Non-current assets
371
309
20%
314
0
n/a
0
174
628
Financial debt
0
Other liabilities
163
128
28%
Shareholders' equity
674
623
8%
in %
80%
83%
Balance sheet total
837
751
11%
802
Net liquidity
143
170
-16%
152
Excellence in Connectivity Solutions
78%
10 March 2015 | Media and Analysts Conference
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10.03.2015
Financial results
Overview of free cash flow
CHF million
2010
2011
2012
2013
2014
Net cash from operating activities
58.4
29.2
39.2
115.9
78.0
(23.8)
(27.2)
(114.3)
(20.0)
(89.9)
34.6
2.0
(75.1)
95.9
(11.9)
Net cash from investing activities*
Free operating cash flow
Dividend paid
(15.2)
(29.2)
(18.5)
(9.7)
(15.6)
Change in treasury shares
13.5
1.1
0.0
(0.5)
(1.4)
Free cash flow
32.9
(26.0)
(93.6)
85.7
(28.9)
*excluding marketable securities
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
33
Financial results
2014 financial assessment




Strategic investments

Event after the balance sheet date (FX)
Profitable organic growth
Positive net financial result and low tax rate
High cash flow from operating activities
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10 March 2015 | Media and Analysts Conference
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10.03.2015
Financial results
FX development versus CHF since the end of 2009
Average rates
93% CNY
86% AUD
85% USD
84% GBP
70% EUR
67% INR
62% BRL
2010
2011
2012
2013
Excellence in Connectivity Solutions
2014
2015 (Feb YTD)
10 March 2015 | Media and Analysts Conference
35
Financial results
Influence of currency effect in 2015
2014 starting position
Income CHF
Expenses CHF
2015 scenario
CHF/EUR = 1.05
CHF/USD = 0.93
Effects on income statement 2015
before measures
94 m
• Net sales
-8%
• EBIT margin
-250 to 300 BP
• Net financial result
-17 CHFm
240 m
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10 March 2015 | Media and Analysts Conference
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10.03.2015
Financial results
Swiss franc expenses in 2014
22%
5%
9%
Personnel costs
Depreciation
Material costs
Other costs*
64%
* Maintenance, energy, transportation, marketing, consulting, travel expenses, etc.
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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Agenda
2014 – a very successful business year!
Overview of the 2014 financial year
Financial results
Outlook
Questions and discussion
Buffet lunch
Urs Kaufmann (CEO)
Ivo Wechsler (CFO)
Urs Kaufmann (CEO)
10 March 2015 | Media and Analysts Conference
19
10.03.2015
Outlook
Starting position for 2015
+ Strong 2014 financial year and very healthy balance sheet
+ Slightly higher order backlog than in previous year
+ Communication and Transportation markets in good shape
+ High-tech niches in Industrial vary, but future prospects intact
-
Lower order intake level in 4th quarter of 2014
-
SNB decision from 15 January 2015
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
39
Outlook
Increasing mobility and
environmental awareness
High-tech niches
Excellence in Connectivity Solutions
Constant technological change
and innovation
Transportation
Electric mobility
Industrial
Appetite for bandwidth
Connected Mobility
Broadband communication
Communication
Our growth drivers – the right strategy!
10 March 2015 | Media and Analysts Conference
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20
10.03.2015
Outlook
Mid-term growth potential
Communication
Data centers
Fiber to the Home
Transportation
Specialities for cars
+ heavy-duty vehicles
Connected Mobility
Industrial
Micro-niches:
medicinal, offshore, etc.
Growth of
market share
Excellence in Connectivity Solutions
Communication
in buildings
10 March 2015 | Media and Analysts Conference
41
Outlook
Net sales development at constant exchange rates
CHF million
Impact on net sales
936
749
• 2003 – 2015:
-27%
• 2014 – 2015:
- 8%
688
522
Net sales excluding
Solar
Net sales Solar
* Accounted
** At exchange rates
following National
Bank decision
EUR 1.05; USD 0.93
Currency basket -8%
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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10.03.2015
Outlook
“Currency crisis ll” measures
• “Low hanging fruits” already “harvested” in 2011
(e.g. in procurement)
•
Immediate measures initiated:
– Hiring freeze in Switzerland
– General saving measures
– Various projects reviewed - no compromise on innovation, market
development and promising strategy projects
– Increase in working hours from 40 to 43 hours, expected for 12 months
– Target salary reduction for Board of Directors (-10%), Executive Group
Management (-10%) and other management functions (-5%)
• Structural measures will be carefully evaluated in the coming
months
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
43
Outlook
Outlook for 2015
• Slow start due to a lower order intake in Q4 2014
• Impacts of the currency crisis are significant (chosen scenario)
– Minus 8% net sales (without potential losses of orders)
– Minus 2.5 to 3 percentage points at the level of EBIT margin
– In addition, CHF 17 million loss in net financial result
• Net sales increase thanks to Cube Optics CHF > 20 million
• Focus 2015: Acceptable result despite currency crisis
– Immediate measures initiated
– Structural steps are being considered
• Organic net sales about on previous year’s level
• Non-recurring costs and savings through structural measures due to the
currency crisis cannot be assessed at the present time
• For 2015, we expect an EBIT margin of 6 - 7.5% before possible
non-recurring costs, and therefore will remain within the medium-term
EBIT target range of 6 - 9 %.
Excellence in Connectivity Solutions
10 March 2015 | Media and Analysts Conference
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10.03.2015
Agenda
2014 – a very successful business year!
Overview of the 2014 financial year
Financial results
Outlook
Questions and discussion
Buffet lunch
Urs Kaufmann (CEO)
Ivo Wechsler (CFO)
Urs Kaufmann (CEO)
10 March 2015 | Media and Analysts Conference
Agenda
2014 – a very successful business year!
Overview of the 2014 financial year
Financial results
Outlook
Questions and discussion
Buffet lunch
Urs Kaufmann (CEO)
Ivo Wechsler (CFO)
Urs Kaufmann (CEO)
10 March 2015 | Media and Analysts Conference
23
10.03.2015
Excellence in Connectivity Solutions
24