The Schaffner Group Corporate presentation Fiscal year 2009/10 Caution regarding forward-looking statements This communication contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our Business structure and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SIX Swiss Exchange. More detailed information about those factors is set forth elsewhere in this document and in documents furnished by Schaffner Group, including Schaffner Holding's Annual Report for the year ended September 30, 2010 Report. Schaffner Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.
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The Schaffner Group Corporate presentation Fiscal year 2009/10...The Schaffner Group Corporate presentation Agenda Strategic growth markets and Asia drive Schaffner in FY 2009/10 Financial
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The Schaffner GroupCorporate presentationFiscal year 2009/10
Caution regarding forward-looking statementsThis communication contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance.While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our Business structure and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SIX Swiss Exchange. More detailed information about those factors is set forth elsewhere in this document and in documents furnished by Schaffner Group, including Schaffner Holding's Annual Report for the year ended September 30, 2010 Report. Schaffner Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.
The Schaffner GroupCorporate presentationFiscal year 2009/10
Chairman of the Board of Directors
Chief Executive Officer
Chief Financial Officer
Daniel Hirschi
Alexander Hagemann
Kurt Ledermann
Highlights 2009/10
Sales CHF 188.9 m (CHF 133.4 m)Book-to-bill 1.10 (0.99)EBIT margin on 7.9 % (-6.9%)Net profit CHF 12.0 m (CHF -11.9 m)EPS CHF 18.9 (CHF -18.0)Proposal to the AGM to pay-out CHF 4.50 per share
The Schaffner GroupCorporate presentation
Agenda
Strategic growth markets and Asiadrive Schaffner in FY 2009/10
Financial highlights FY 2009/10
Outlook
Q&A
Coffee break
Alexander Hagemann, CEO
Kurt Ledermann, CFO
Alexander Hagemann, CEO
Highlights 2009/10
Above pre-crisis results, not just a turnaroundStrategy implementation delivers results
Generate value for shareholders- EPS of CHF 18.68 (diluted)- Propose a payout of CHF 4.50 per share
Positive outlook in a more normal environment- High single digit percentage growth of net sales (in local currencies)- Continued improvement of operating margins
The Schaffner GroupSolutions for efficient and reliable power
Making power electronics work
Power electronic devices convert electrical energy- Direct current (DC) to alternate current (AC), e.g. UPS, PV- AC to AC with different frequency, e.g. motor drives, wind turbines
Components from Schaffner guarantee the safe and reliable operation of power electronic systems
- Filtering of harmful electrical noise- Increasing the stability of electric power grids- Ensuring compliance with standards and regulations- Increasing lifetime of electrical machines
Schaffner Schaffner SchaffnerPower Electronics
Focus on greentech applications for sustained growth
Motor drives: Saving 30% to 70% of electrical energy consumption
Photovoltaics:Getting ready for prime time after productivity gains, economies of scale
Wind power:Most competitive renewable energy
Trains: The most sustainable answer to increased mobility demands for people and goods
Electromobility: Carmakers start mass production of plug-in hybrid and electric cars in 2011
The Schaffner GroupLeadership in growing markets
Strategic markets drive growth
Leadership in mature markets provides diversified risk profileElectromobility is the next growth driver from FY 2011/12 onwards
Motor drivesRenewable energyTraction
Electronic devices & power suppliesMachine tools & roboticsTelecom equipment
Automotive electronics Other
Strategic markets: 54% (44%)
Historic growth markets: 34% (50%)
Other markets: 12% (6%)
Share of FY 2009/10 net sales (in brackets: PY)
18%
19%
17%
15%
13%
6%
9%3%
71% sales growth in Asia-Pacific
Accelerated growth strategy in APAC delivers resultsEuropean markets started to recover in Q2 (29% sales growth)Market share gains in North America (53% sales growth)
Share of Asia sales (in %)Sales by regions (in %)
Asia Americas Europe
33%
7%60%
0%
10%
20%
30%
FY05/06
FY06/07
FY07/08
FY08/09
FY09/10
20%
17% 18%
27%
33%
2010: Completion of realignment and accelerated growth
Consolidation of European EMC manufacturing in Hungary completed in 01/2010Up-front investments into Power Quality growth strategy started to deliver financial returnsNew product line of harmonic filters contributed 5% to Group sales (FY 2007/08: 0)Mastered multiple challenges related to growth:
- Increased manufacturing output by 81%- Secured material supply during worldwide shortage- Added PQ capacity in Shanghai (China)
2011-2015: Growth strategy
The Schaffner business model allows for sustained double-digit sales growth and operating margins exceeding 10%
Expanded resources in ChinaPole position in electro-mobilityDevelop Schaffner’s talent pool
More output, protected IPR&D collaborationElectromobility
Lean conversionProcess redesign and SAPPQ manufacturing efficiency
The Schaffner GroupA close-up look at business segments
Net Sales FY 2008/09 in %Net Sales FY 2009/10 (in%)
59%32%
9%
62%
32%
6%
Electromagnetic Compatibility EMC
EMC: Market share gains confirm leadership position
Expanded world market share by 2% pointsLeadership in growth markets, e.g. photovoltaics and wind turbinesStrong technology base, operating leverage, distribution
1.
Addressed market: ca. CHF 480m (2009: CHF 400m)
Market Share EMC
EMC in FY 2009/10: Partialrecovery and satisfying margins
Cyclical markets (e.g. machine tools) are recoveringHigh demand for photovoltaics (Germany, Italy, China)Restructuring and productivity drive operating margin to 16%
Net Sales Segment Result1
FY08/09
FY 09/10
FY 08/09
FY 09/10
82.3
111.5
0 18.3
CHFm
1) Segment result is based on operating profit before costs for Group functions, other income, restructuring costs and amortization of customer relationships.
Power Quality
Addressed market: ca. CHF 1.4bn (2009: CHF 1.2bn)
6.
Market share Power Quality
Power Quality: Schaffner‘s growth engine
Harmonic filters already contribute 5% to Group salesPartnership with Rockwell Automation and gains at Siemens will lead to further growthContinued market share gains: aim for top 3 positionGrowth requires move to larger facilities in Shanghai (China)
Power Quality in FY 2009/10: Continued growth, contribution to profits
Strongest growth from traction and PV customers in China and from harmonic filters in APACHigh upfront investments and operational improvements start to pay off: 7.7% segment result1 in H2 of FY 2009/10
Net Sales Segment Result1
FY08/09
FY09/10
FY08/09
FY09/10
42.7
60.9
0 3.1
CHFm
1) Segment result is based on operating profit before costs for Group functions, other income, restructuring costs and amortization of customer relationships.
Automotive AM
Automotive: Electromobility becomes reality
Accessible market will surpass EMC market between 2015 and 2020Positioned as leading R&D partner of European car manufacturersSignificant project wins in 2010 will turn into sales in FY 2011/12Design-wins for quick-charge stations in Europe, Japan, China, USA
Automotive in HY1 2009/10:Recovery and new projects
General market recoverySOP of new projects in HY1Electromobility will contribute some revenues in FY2010/11Stable operating profits due to manufacturing efficiencies
Net Sales Segment Result1
FY08/09
FY09/10
FY08/09
FY09/10
8.3
16.6
0.8 1.5
1) Segment result is based on operating profit before costs for Group functions, other income, restructuring costs and amortization of customer relationships.
CHFm
The Schaffner GroupFiscal 2009/10Kurt Ledermann, CFO
Financial highlights
Sales CHF 188.9 m (CHF 133.4 m)Book-to-bill 1.10 (0.99)EBIT margin on 7.9 %, 9% for 2nd Semester 2009/10Net profit CHF 12 m (CHF -11.9 m)EPS CHF 18.9 (CHF -18.0)Improved cash-to-cash cycle of 94 days (115 days)Positive free cash flow CHF 0.7 m (CHF 10.7 m)Net debt CHF 11.8 million (30.09.09: CHF 11.9 m)Solid balance sheet with 44% (30.09.09: 37%) equity ratioFirst time reporting of EMC, Power Quality and Automotive SegmentsLow tax rateProposal to the AGM to pay-out CHF 4.50 per share
Earnings before taxes 12.0- Applicable tax rate 13%
Expected tax -1.6
Effect of unrecognized tax losses 1.0
Change in recognition of tax loss carry forwards 0.7
Others -0.1
Income taxes as per income statement 0.0
CHFm
Proposal for the appropriation of retained earnings
The Schaffner Board of Directors proposes to the AGM a distribution of CHF 4.50 per share (entitled to dividends) out of the reserve for additional paid in capital.This distribution will be exempted as of January 1, 2011 from the Swiss Anticipatory Tax (Verrechnungssteuer)
Share capital 20.7
Legal reserve 0.3
Reserve for treasury shares 0.9
Reserve for additional paid in capital 50.4
Retained earnings 17.2
Net profit of FY 2009/10 1.3
Sharehoders Equity Schaffner Holding 90.7
CHFm
The Schaffner GroupGenerating value for shareholders
Generating value for shareholders
Improved operating margins compared to pre-recession levels10% operating margin shall be reached within 2 yearsValue creation through increased PQ marginsStrategic initiatives for sustained growth are on trackReduced debt and improved operating performance lead to reduction of financing costGeneral dividend guideline: Payout of 25% of net profitsPresent risks from CHF appreciation are mostly mitigated
Outlook
Demand for Schaffner power quality solutions continues to growTraditional EMC markets recover (e.g. machine tools)Automotive business is stable on a high levelAM segment result to decline because of R&D expenses related to electromobilityUncertain outlook for photovoltaic in Germany in 2011 due to reduction of feed-in tariffs We guide towards high single-digit sales growth in local currencies and a further increasing operating margin