Dksh Holding Ltd · SIX:DKSH
Dksh — Investor Day (2020)
110 slides from Dksh's investor day presentation, 2020
Slide 1: DKSH Capital Markets Day 2020
DKSH Capital Markets Day 2020 Delivering growth – in Asia and beyond. Page 1 © DKSH
Slide 2: Today's speakers
Today’s speakers Stefan P. Butz Marco Gadola Bernhard Schmitt Chief Executive Officer Chairman Chief Financial Officer Bijay Singh Terry Seremetis Hanno Elbraechter Natale Capri Thomas Sul Head Business Unit Head Business Unit Head Business Unit Co-Head Business Unit Co-Head Business Unit Healthcare
Slide 3: Agenda
Agenda Time Topic (all sessions incl. Q&A) Speakers Page 09:00 Welcome and Strategy update Stefan P. Butz, CEO 1-15 09:20 Chairman address Marco Gadola, Chairman 17-19 09:35 Business Unit Healthcare Bijay Singh, Business Unit Head 21-36 10:10 Business Unit Consumer Goods Terry Seremetis, Business Un
Slide 4: Objectives of today's Capital Markets Day
Objectives of today’s Capital Markets Day Provide an update on strategic priorities and actions to deliver growth Update on our evolution Get to know our leadership team and their focus on diligent execution Deepen understanding of our business and growth drivers Page 4 © DKSH
Slide 5: We are the leader in Market Expansion Services in Asia
We are the leader in Market Expansion Services in Asia Omni-channel service portfolio along the value chain 1,900 Clients Sourcing Market insights Marketing eCommerce Distribution After-sales and and sales and Digital and logistics services 525,000 1,900 Customers Suppliers Market insights Market an
Slide 6: More than 150 years of experience in Asia
More than 150 years of experience in Asia … setting the stage for a new chapter Transforming DKSH… to deliver growth in Asia and beyond. • Nurture high-performance culture We deliver • Drive Business Unit strategies growth in Asia Foundation Merger IPO • Expand regional footprint and beyond. Diethel
Slide 7: Three drivers fueling our business
Three drivers fueling our business… Market growth 1 2 Industry trends 3 M&A Mid- to long-term Well-positioned in fast- Opportunity to capitalize Supplement growth growing, resilient markets on industry trends with M&A Sound economic fundamentals Outsourcing and digitization Expand geopraphic footpri
Slide 8: Six pillars to deliver on our growth strategy
Six pillars to deliver on our growth strategy Nurture high-performance culture Drive Business Unit strategies Expand regional footprint Strengthen and update Drive operational excellence Champion digitization supply chain Page 8 © DKSH
Slide 9: Nurture high performance culture
Nurture high performance culture New DKSH Identity launched in 2020 25% change of Top 50 management since 2018 4.5x more people in LTIP ¹ than three years ago +25% increase in training targeted by 2025 ² New Chief HR Officer appointed in 2020 1 Long-term incentive plan 2 See DKSH Sustainability Repo
Slide 10: Drive Business Unit strategies
Drive Business Unit strategies Business Unit Business Unit Healthcare Consumer Goods Expand our strong market Capitalize on our position and drive into leadership in higher value segments Asia Pacific and services Business Unit Business Unit Technology Performance Materials Build resilience and deli
Slide 11: Expand regional footprint
Expand regional footprint Around CHF 530 million of value- European specialty Asia Pacific market consolidation accretive net sales acquired in last chemicals expansion three years Value-added services and capabilities Complementary to geographical footprint Sound financials Cultural fit Attractive
Slide 12: Drive operational excellence
Drive operational excellence 4.8 percent overhead cost savings (excl. IT and Digital) 1 Further focus on mid-term efficiency improvements based on operational KPIs Increased focus on Sustainability • Commitment to SDGs 2 • Targets for all Executive Committee members • External ratings improved 1 202
Slide 13: Champion digitization
Champion digitization > CHF 150 million target DKSH eCommerce development 2016 to 2020 eCommerce net sales (2020) • Pan-Asian coverage Target 2020 • Present on all top marketplaces > CHF 150 million Expanded eCommerce • Highest integrity standards to all four Business Units • Full direct-to-consumer
Slide 14: Strengthen and update supply chain
Strengthen and update supply chain Transport Management System (TMS) roll-out status per market New advanced data-driven Transport Management System implemented in key markets v South East Asia Introducing automated service processes Two semi-automated distribution centers Increase flexibility and a
Slide 15: DKSH proves resilience during unprecedented times
DKSH proves resilience during unprecedented times Broad diversification Focus on High share of items Strong balance sheet attractive industries consumed daily Highest priority on Reliable delivery and Accelerated digital Increased cost control health and safety business continuity transformation Ove
Slide 16: Chairman address
Chairman address
Slide 17: New DKSH Chairman since 2020
New DKSH Chairman since 2020 Marco Gadola Chairman of the Board of Directors Delivering growth ‒ Joined DKSH: in Asia and beyond. 2020 Page 17 © DKSH
Slide 18: Initial impressions since assuming Chairman role
Initial impressions since assuming Chairman role • Asia Pacific remains an attractive growth region • Proven and resilient business model that creates value • Strong team driving transformation • Potential to further expand our leadership positions and market share • Opportunities to enhance profita
Slide 19: Key messages
Key messages Sound corporate strategy continues to be in place Strategy – H1 2020 results show resilience and potential of our business Strong management team focussing on business execution Team and developing future leaders Cash Flow generation, FMCG transformation, Performance Materials expansion
Slide 20: Business Unit Healthcare
Business Unit Healthcare
Slide 21: DKSH Business Unit Healthcare
DKSH Business Unit Healthcare Bijay Singh Head Business Unit Expand our strong market Healthcare position and drive into higher Joined DKSH: value segments and services 2015 Page 21 © DKSH
Slide 22: Our Healthcare business in Asia Pacific
Our Healthcare business in Asia Pacific 14 markets Net sales split 2019 Net sales CHF 6.0 billion 1 2% Pharma EBIT 13% CHF 134.5 million 1 Medical Devices 21% Over-the-Counter Leading in 64% commerical Own Brands outsourcing Top 2 in distribution 2 130,000 8,220 550 Specialists Clients Customers 1 F
Slide 23: Adding value for healthcare stakeholders in Asia
Adding value for healthcare stakeholders in Asia Key benefits Among the largest distribution networks (>80% direct hospital and pharmacy coverage) Leading commercial team (4,500 local sales and marketing specialists) High quality and compliance standards (international certifications e.g. ISO, GMP,
Slide 24: Well-established portfolio of 550 Blue Chip clients and emerging players
Well-established portfolio of 550 Blue Chip clients and emerging players… Pharma Medical Devices Over-the-Counter (OTC) …across categories and markets Page 24 © DKSH
Slide 25: Modular partnership models to support our clients' growth strategies
Modular partnership models to support our clients’ long-term, cost-efficient growth strategies in Asia 4% 57% Commercial sales and Full Service In - Licensing Marketing organization or Acquisition Marketing / sales Marketing / sales 36% 3% Credit and collection Credit and collection Credit and colle
Slide 26: Unique direct omni-channel approach connecting clients to 130,000 customers
Unique direct omni-channel approach connecting clients to 130,000 customers across Asia Medical channel (mainly hospitals/clinics) 63% 63% Traditional Trade (independent pharmacies) 26% 26% eCommerce <1% Modern Trade (mainly chain pharmacies) 11% Customer split by net sales 2019 Page 26 © DKSH
Slide 27: DKSH is a leading healthcare distributor in Asia
DKSH is a leading healthcare distributor in Asia Estimated revenue size Zuellig Pharma DKSH DCH Auriga Kalbe Mega No. of markets covered 13 13* 9 1 3 Source: Company information. DCH Auriga excluding Mainland China and combined consumer and healthcare businesses. For Mega and Kalbe distribution busi
Slide 28: Healthcare: Strategic direction
Healthcare: Strategic direction Maximize: strengthen Realize: enhance value Optimize: build critical Launch: enter and leadership in high market- proposition in low mass in niche markets build businesses in Markets share markets market-share markets via targeted BLs Indonesia, Philippines Industries
Slide 29: Customized Healthcare strategy per market
Customized Healthcare strategy per market GDP/capita = population ~40 million ~100 million • Low absolute GDP ~450 million TH TW HK SG • Underdeveloped healthcare MY infrastructure ID PH • High absolute GDP VN • Well developed and mature ~80 million healthcare infrastructure • High GDP growth • Mode
Slide 30: Resilient growth expected for Asian Healthcare industries
Resilient growth expected for Asian Healthcare industries Healthcare market size (in USD billion) 1 Key highlights CAGR Long-term growth driven by: mid- to 2016–2019 long-term 72 • Still relatively low healthcare 68 Total 71 6-7% 5-6% spending per capita Healthcare 63 58 15 14 Medical • Aging popula
Slide 31: Double-down on fast-growing Medical Devices categories
Double-down on fast-growing Medical Devices categories Medical devices market size (in USD billion) 1 Mid-to long- Win in selected categories term CAGR (cardiovascular, orthopedics, diabetes, CAGR ~ 8% ophthalmology, in vitro diagnostics) ~ 6% Differentiated distribution solutions (e.g. 24h delivery
Slide 32: Multiple client trends driving need for commercial outsourcing solutions
Multiple client trends driving need for commercial outsourcing solutions Continuously emerging client trends ... … driving share of commercial outsourcing 1 Focus on core competencies 2020 78% 22% (e.g. R&D, key brands etc.) 2019 67% 33% Market prioritization with a focus on 2018 63% 37% large marke
Slide 33: Attractive long-term product pipeline in own brands
Continuous shareholder value generation and attractive long-term product pipeline in own brands Our own brands portfolio Showcase future product pipeline remains attractive Alvotech and DKSH partner to bring key biosimilar to Asia • Proven growth track record • Expansion opportunities • Good profita
Slide 34: Increased focus on value-added services
Increased focus on value-added services driving higher benefits for clients, customers and patients Regulatory Affairs Patient Solutions Omni-Channel Analytics and Sales and Marketing Insights Client-specific regulatory affairs Beyond-the-pill support Increase customer reach Deep understanding of ma
Slide 35: DKSH successfully navigating through COVID-19 crisis
DKSH successfully navigating through COVID-19 crisis Thailand – development of monthly patient numbers per channel Medical Channel Medical Channel Pharmacy Channel (Pharma) (Medical device) Patient # Patient # Patient / Consumer # vs. pre-COVID-19 level vs. pre-COVID-19 level vs. pre-COVID-19 level
Slide 36: Highlights Business Unit Healthcare
Highlights Business Unit Healthcare DKSH is the leader in healthcare commercial outsourcing in Asia We run a resilient, asset-light and cash-generative business model DKSH is successfully navigating through COVID-19 challenges We see growth opportunities through the expansion of higher value-added s
Slide 37: Business Unit Consumer Goods
Business Unit Consumer Goods
Slide 38: DKSH Consumer Goods
DKSH Consumer Goods Terry Seremetis Head Business Unit Consumer Goods Capitalize on our leadership Joined DKSH: in Asia Pacific 2019 Page 38 © DKSH
Slide 39: Business Unit Consumer Goods at a glance
Business Unit Consumer Goods at a glance 22 markets Net sales split 2019 1 Net sales CHF 4.1 billion 1 ~1% Rest of the World Luxury & Lifestyle EBIT < 10% CHF 82.9 million 1 FMCG > 90% Leading regional player ~99% Asia-Pacific 20,300 700 350,000 Specialists Clients Customers 1 Numbers for 2019. EBIT
Slide 40: One-stop-shop solutions tailored to client and customer needs
We offer one-stop-shop solutions tailored to specific client and customer needs What are our clients’ needs? What services do we offer? Sales and marketing incl. value-added services Pan-Asian expansion + Field Marketing + Digital + Route-to-Market Access to relevant trade channels Credit and collec
Slide 41: Product portfolio covers highly resilient categories for daily use
Our product portfolio covers a large variety of highly resilient categories for daily use Nutritional products Dry grocery and beverages Beauty and personal care Snacks and confectionery 20% 19% 17% 17% Household and Home care 8% 19% Other categories 1 Net sales split for FMCG distribution in 2019 P
Slide 42: Omni-channel approach provides access to 350,000 customers
Our omni-channel approach provides access to 350,000 customers in Asia Pacific Traditional Trade Modern Trade • “Mom-and-pop” stores • Hyper- and supermarkets • Independent pharmacies and • Convenience and personal personal care stores care stores • Traditional medicine stores • Pharmacy chains ~45%
Slide 43: Mid-term growth potential after COVID-19-related contraction
Mid-term growth potential across categories and markets after COVID-19-related contraction FMCG growth in Asia per category 1 FMCG growth in Asia per market 1 CAGR 2020-2023 (%) CAGR 2020-2023 (%) Australia 2.6 Nutritional products 3.9 Cambodia 4.5 Hong Kong 3.2 Dry grocery and beverages 3.6 Indones
Slide 44: DKSH is the only player with comprehensive regional coverage
DKSH is the only player with comprehensive regional coverage as clients streamline distribution partnerships ASEAN-5 Indochina North-Asia 2015 2020 100 123 Number of DKSH’s regional clients 2015 2020 4 5 Average number of markets covered for Top 30 clients Bubble size represents estimated sales BJC:
Slide 45: FMCG business remains highly relevant as client wins show
DKSH’s FMCG business remains highly relevant as recent client wins and awards show Expansion of partnerships Consolidation of eCommerce across markets distributor network May 2020 July 2020 August 2020 DKSH appointed to increase market DKSH became anchor partner and DKSH won from Lazada the coverage
Slide 46: Underperformance in recent years and transformation since 2019
Various factors led to underperformance in recent years ‒ initiated transformation with higher results since 2019 Market challenges Net sales (Consumer Goods in CHF billion) -1.8% Shift in core categories CAGR +6.8% 4.1 3.9 Shift in core channels Shift in core markets 2014 2015 2016 2017 2018 2019 I
Slide 47: Our FMCG transformation is gaining traction
Our FMCG transformation is gaining traction … scale up as the preferred partner in Asia Pacific to capture future growth opportunities Pursue targeted market Phase 2 strategies and enhance capabilities Phase 1 Fixing the basics 2019 2020 2021 2022… Page 47 © DKSH
Slide 48: Fixing the basics - Phase 1 overview
Fixing the basics ‒ Phase 1 overview People Portfolio Supply Chain Strengthened leadership Optimized client portfolio Enhanced collaboration Delayered organization Rationalized products Saved logistics costs Increased accountability Improved Business Increased focus on Development inventory levels K
Slide 49: Pursue targeted market strategies - Phase 2 overview
Pursue targeted market strategies and enhance capabilities ‒ Phase 2 overview Market strategy Business Development Winning channels Deliver higher value for Build sustainable client Grow attractive channels clients by pursuing relationships to support like eCommerce, Food targeted market strategies
Slide 50: Deliver higher value by pursuing targeted market strategies
Deliver higher value for clients by pursuing targeted market strategies Expansion opportunities across most markets with targeted strategies to realize potential Focus on profitable Capitalize on high- growth growth markets • Thailand • Cambodia • Malaysia • Vietnam • Singapore • Myanmar • Laos • In
Slide 51: New Business Development as key enabler for growth
New Business Development as a key enabler for future profitable growth … Objectives Key initiatives Status vs. last year Key pillars focus Net sales up 75% Support Regional clients to around growth CHF 200 million Asia heros footprint Improve Accretive EBIT Accretive financials Transformation New or
Slide 52: Keeping omni-channel approach while investing in winning channels
Keeping our proven omni-channel approach while investing in winning channels to capture growth eCommerce New Retail Food Service • Aligned omni-channel marketing • Collaborate with all relevant • Strong footprint in Malaysia, and pricing approach players to digitally connect Singapore and Hong Kong
Slide 53: Luxury and Lifestyle business
Luxury and Lifestyle business FMCG Luxury & Lifestyle Capitalize on our leadership in Niche market strategy Strategy Asia Pacific Mainly daily necessities Mainly discretionary products Low price point Higher price point Business High volumes Lower volumes characteristics Lower profit margins Higher
Slide 54: Highlights Fast Moving Consumer Goods
Highlights Fast Moving Consumer Goods Factors leading to underperformance in recent years have been addressed ‒ substantially higher H1 2020 results as proof point DKSH remains highly relevant for clients and customers FMCG transformation is gaining traction Future growth opportunities with transfor
Slide 55: Business Unit Technology
Business Unit Technology
Slide 56: DKSH Business Unit Technology
DKSH Business Unit Technology Hanno Elbraechter Head Business Unit Technology Build resilience, deliver growth to exceed pre-COVID-19 levels Joined DKSH: 2014 Page 56 © DKSH
Slide 57: Our Technology business in Asia Pacific
Our Technology business in Asia Pacific 18 markets Net sales split 2019 Net sales CHF 431.9 million 1 EBIT 32% 27% CHF 26.8 million 1 Leading solutions 15% 26% provider of capital investment goods and technical Scientific Instrumentation services Precision Machinery Hospitality 2 Other Business Line
Slide 58: Sound financial track record
Sound financial track record Net sales in CHF million EBIT in CHF million CAGR CAGR 3.8% Asset-light model 1 431.9 0.9% capex / net sales 7.5% 26.8 372.2 20.1 Continuous EBIT margin increase in the last five years 2015 2019 2015 2019 1 Average 2015 to 2019 Page 58 © DKSH
Slide 59: Strong relations with industry-leading manufacturers
Strong relations with industry-leading manufacturers… Scientific Precision Hospitality Other Instrumentation Machinery Equipment Business Lines … spanning a diversified portfolio of 650 clients/suppliers Page 59 © DKSH
Slide 60: Serving a portfolio of 25,000 reputable customers
Serving a portfolio of 25,000 reputable customers… Scientific Precision Hospitality Other Instrumentation Machinery Equipment Business Lines • Academia • Aerospace • Restaurants • Banking • Pharma • Die & Mold • Hotels • Packaging • Food & Beverage • Electronics • Convenience Stores • Telecommunicat
Slide 61: Case study: Scientific Instrumentation in Vietnam
Case study: Scientific Instrumentation in Vietnam Vietnamese government adopts DKSH’s integrated testing solutions to comply with international regulations and standards See more at: DKSH Scientific Instrumentation Vietnam Page 61 © DKSH
Slide 62: Bringing unique value to our business partners
Bringing unique value to our business partners Key benefits: Extensive Pan-Asian footprint (Coverage of 18 markets) Coverage of entire product lifecycle • > 500 service and application engineers • 18 demo labs Systematic market development • CRM with >125,000 customers 1 • Integrated marketing platf
Slide 63: Technical, industry and service expertise for business partners
We provide extensive technical, industry and service expertise to ensure our business partners’ success Case study HP 3D printers Market growth Sales and Distribution and strategy marketing logistics • Partnership since 2018 • Malaysia, Singapore and Thailand • DKSH HP Southeast Asia Training Instal
Slide 64: Our mid-term ambition is to exceed pre-COVID-19 levels
Our mid-term ambition is to exceed pre-COVID-19 levels Build resilience, EBIT development 2015 – H1 2020 (in CHF million) deliver growth • Consistent EBIT growth in the last five years (CAGR +7.5%) Higher EBIT CAGR +7.5% 26.8 • H1 2020 results substantially 24.0 impacted by COVID-19 23.1 21.3 20.1 •
Slide 65: High single-digit million cost savings plan
High single-digit million cost savings plan to recover profitability • Headcount reductions in selected businesses Personnel cost • Salary cuts and unpaid leaves • Focus on process optimization • Reduction of non-essential travel Travel and • Cut of entertainment expenses entertainment • Shift to vi
Slide 66: Strategic direction
Strategic direction Build resilience, deliver growth to exceed pre-COVID-19 levels in the mid-term Solidify position as a Streamline and focus on Intensify efforts to leading Pan-Asian key value generating grow service business provider industries in strategic markets Consumables, technical Scientif
Slide 67: Solidify position in Scientific Instrumentation
Solidify our position as a leading integrated solutions provider for Scientific Instrumentation Focus on high value generation and resilient industries Life Sciences 1 Pharmaceuticals 1 Food & Beverage 1 Market size: CHF 3.0 billion Market size: CHF 2.6 billion Market size: CHF 3.2 billion CAGR: >10
Slide 68: Expansion opportunities in Scientific Instrumentation across Asia Pacific
Attractive expansion opportunities in Scientific Instrumentation across Asia Pacific Total market size (USD billion) 1 Size per industry (in %) 1 40 35 Food & Beverage 35 CAGR (F&B) 8% 31 29 Life Sciences 30 20% 19% CAGR 26 25 11% 24 Pharma 22 20 7% 20 18 Materials 16 18% 15 10% Environmental 10 10%
Slide 69: Streamline and focus on key value-generating industries
Streamline and focus on key value-generating industries in strategic markets... Focus and Pan-Asian focus Scientific Instrumentation investments • Precision Machinery Regional competences • Packaging, Printing and Converting • Data centers Examples of other Business Lines: • Hospitality, Semiconduct
Slide 70: Case study: new business development
Case study: new business development DKSH’s innovative data center solution helps Indonesian bank BNI Syariah to increase efficiency by up to 27% See more at: DKSH Data Center Indonesia Page 70 © DKSH
Slide 71: Growing our higher margin service business
Capitalize on future growth opportunities by growing our higher margin service business Business split and profitability Business share – Scientific Instrumentation (DKSH data, in CHF million) 1 (inner ring DKSH data 2019, outer ring market data) 2 Equipment 39% 47% 53% 61% Service 2015 2016 2017 20
Slide 72: Digital transformation to enhance customer experience
Digital transformation to enhance customer experience and to drive productivity A growing digital …and powerful digital …to increase revenues ecosystem… marketing… and lower cost to serve • 360° Reporting > 710 emailing campaigns Drive data-driven sales • Data analytics > 120 online ad campaigns • C
Slide 73: Highlights Business Unit Technology
Highlights Business Unit Technology Proven track record with 7.5% EBIT CAGR in the last five years Recovering profitability with high single-digit million cost savings program Strategic plan in place: Solidify leading position in Focus on key industries Grow higher margin Scientific Instrumentation
Slide 74: Business Unit Performance Materials
Business Unit Performance Materials
Slide 75: DKSH Business Unit Performance Materials
DKSH Business Unit Performance Materials Thomas Sul Dr. Natale Capri Co-Head Business Unit Co-Head Business Unit Performance Materials Performance Materials Joined DKSH: Joined DKSH: 1996 (24 years) 1998 (22 years) Expand leading position in specialty chemicals and ingredients distribution Page 75 ©
Slide 76: DKSH Performance Materials at a glance
DKSH Performance Materials at a glance Global Top 3 pure-play provider of specialty chemicals Facts and figures and ingredients distribution 1,900 Focused on highest growth markets and segments: Clients/ suppliers Asia and Life Sciences Long-standing and well-diversified partnerships 80 with clients
Slide 77: We focus on most attractive regions and Business Lines
We focus on most attractive regions and Business Lines Europe (13 markets) Asia (18 markets) Americas (1 market) 30% 68% Regions 2% Business Lines Life Industrial Sciences 35% 65% Specialty Food & Personal Pharma Chemicals Beverage Care Note: Bubble sizes represent 2019 net sales split Page 77 © DKS
Slide 78: Positive outlook for specialty chemicals distribution
Positive outlook for specialty chemicals distribution Market size for third-party chemicals distribution 1 Key highlights CAGR 271 CAGR 263 Mid- to • Sound fundamentals for 2015-2019 252 DKSH focus 236 long-term 1 specialty chemicals distribution 232 4-5% 117 4-5% 112 107 • Life sciences industry is
Slide 79: Further outsourcing potential in specialty chemicals
Further outsourcing potential in specialty chemicals 100% Outsourcing of specialty chemicals distribution 80% expected to increase 75% 80% • Worldwide industry consolidation 65% • More complex and fragmented customer landscape 60% • Increased regulatory 45% requirements 40% • Customers require produ
Slide 80: Leading position in fragmented specialty chemicals market
DKSH has a leading position in the fragmented specialty chemicals and ingredients market Other relevant Global APAC Europe distributors #1 Pure specialty distributors #2 #3 DKSH Top position 3 1 10 Source: ICIS report 2019 and DKSH management estimates Specialty chemicals focus defined as per BCG re
Slide 81: Long-standing and well-diversified client relationships
Long-standing and well-diversified client relationships Food & Beverage Personal Care Pharmaceutical Specialty Chemicals Page 81 © DKSH
Slide 82: Specialty chemicals and ingredients sold through technical know-how
A wide range of specialty chemicals and ingredients is sold through deep technical know-how and formulation expertise We source and supply… ...for the formulation of: Extracts for Nutraceuticals Health drinks Pigments for Cosmetics Foundation Pharmaceutical Intermediates for Tablets formulations Add
Slide 83: Performance Materials: Strategic Direction
Performance Materials: Strategic Direction Increase Markets Be Top 10 in Be No.1 in Asia geographic Europe footprint Industries Specialty Food & Personal Pharma Chemicals Beverage Care Focus on Expand Close portfolio Strengthen Go digital Business Positioning models distribution project gaps service
Slide 84: Value-added services: Innovation & Formulation
Beyond distribution, we provide value-added services: Innovation & Formulation Product innovation 46 80 Formulation support Innovation Employees in centers innovation and worldwide formulation Technical consulting Page 84 © DKSH
Slide 85: Doubled global network of innovation centers to 46
We doubled our global network of innovation centers to 46 over the last 10 years Key competences: Specialty Food & Pharmaceutical Personal Care Chemicals Beverage Localization of formulations Portfolio selling concepts Technical trainings Benchmarking 12 16 3 15 Strategic investments in inno
Slide 86: Our food blending facility in the Philippines
Our food blending facility in the Philippines Key benefits: Tailor-fit solutions for leading fast- food players Formulation expertise (data base of ~6.000 proprietary formulations) Blending capabilities (expanded from ~34.000 to 50.000 tons) Certifications for all local food regulations Savory Sweet
Slide 87: Increasing regulatory complexity in South East Asia food regulations
Increasing regulatory complexity: examples of some of the food regulations in South East Asia… Page 87 © DKSH
Slide 88: Value-added services: Regulatory
Beyond distribution, we provide value-added services: Regulatory Regulatory H&S and Quality Quality Quality compliance Environment assurance control management Regulatory consulting 14 80 Supplier certification Local / regional Regulatory experts regulatory teams (8% of headcount) Product registrati
Slide 89: Value-added services: Sourcing
Beyond distribution, we provide value-added services: Sourcing Technology scouting 17 60 Supplier audit/identification Sourcing Sourcing offices employees worldwide worldwide Locating new supply sources Page 89 © DKSH
Slide 90: Value-added services: Digital@PM
Beyond distribution, we provide value-added services: Digital@PM Key client reporting Driving digital Multicultural team of transformation digital specialists in specialty chemicals Sales Force Effectiveness across Asia and and ingredients Europe distribution Digitization Page 90 © DKSH
Slide 91: Fully integrated Digital Ecosystem
The full-integrated Digital Ecosystem provides state-of-the-art digital services Business opportunities Actual business Management and output Numbers per year 20,000 customers Project 1,900 clients Supplier ~ 400 development 16,000 pitches customer projects Client reports ~ 6,700 Digital advertising
Slide 92: M&A track record with further value creation potential
M&A track record with further value creation potential S&N A. JENNOW Switzerland Northern Europe Axieo Australia/New Zealand 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ZEUS 2 DOLS VOLTAS India Spain/Portugal BeNeLux DKSH has successfully integrated several Future M&A-led growth
Slide 93: Proven growth track record and scalable business model
Proven growth track record and scalable business model Net sales in CHF million EBIT in CHF million Asset-light model 1 CAGR CAGR 0.2% capex / net sales 6.6% 14.9% Uninterrupted sales growth 1’012 89.7 in last 10 years 783 51.4 Increasing EBIT margins 2015 2019 2015 2019 1 Average 2015 to 2019 Page
Slide 94: DKSH ranks high among listed leading chemical distributors
DKSH ranks high among listed leading chemical distributors EBITDA margin 2019 (%) Cash conversion 2015 - 2019 1 (%) 10% 100% 8% 80% 6% 60% 4% 40% 2% 20% 0% 0% DKSH IMCD Brenntag Univar DKSH IMCD Brenntag Univar Sales CAGR 2015 - 2019 (%) Capex / sales 2015 - 2019 (%) 16% 1.5% 12% 1.2% 0.9% 8% 0.6% 4
Slide 95: Highlights Business Unit Performance Materials
Highlights Business Unit Performance Materials Leading pure-play specialty chemicals and ingredients distributor Resilient and cash-generative business model (14.9% EBIT CAGR 2015-2019) High share of life sciences (65%) and strong Asian footprint (68%) ¹ Focus on further expansion of value-added ser
Slide 96: Finance update
Finance update
Slide 97: DKSH Financial Update
DKSH Financial Update Bernhard Schmitt CFO Setting the stage for future growth with a resilient, asset- Joined DKSH: 2004 (CFO since 2011) light and cash-generative business model Page 97 © DKSH
Slide 98: CFO key messages
CFO key messages DKSH has ... ... enabling us to ... … master COVID-19 challenges … a resilient, asset-light, cash-generative and scalable business model that is … … pursue our M&A strategy + … follow a progressive dividend policy … a proven set of established KPIs … … be positioned for future growt
Slide 99: DKSH is resilient across Business Units and markets
DKSH is resilient across Business Units and markets EBIT by Business Unit 1 Net sales by region FY 2012 (inside) vs. FY 2019 (outside) FY 2012 (inside) vs. H1 2020 (outside) 8.4% 3.5% Thailand Healthcare 20.2% 3.1% 32.0% 21.4% 7.0% 36.4% Greater China 2 25.3% 42.1% Performance Materials 21.6% Malays
Slide 100: Low capital intensity and sound cash generation
Low capital intensity and sound cash generation Capex / net sales (in %) 1 Free Cash Flow (in CHF million) 2 0.8% 250 0.6% 200 Average 0.4% 150 0.4% 100 0.2% 50 0.0% 0 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2012 2013 2014 2015 2016 2017 2018 2019 Distribution centers and offices Continue best
Slide 101: Continued strong balance sheet with substantial leverage headroom
Continued strong balance sheet with substantial leverage headroom in CHF million H1 2020 Despite COVID-19 challenges, our balance sheet remains strong … Cash/Liquid assets 506.6 Trade receivables 1,982.5 • High equity ratio of 34.3% Inventories 1,295.2 • Low goodwill to equity ratio of 14.1% Intangi
Slide 102: We keep our proven KPIs and focus on RONOC
We keep our proven KPIs and increase our focus on capital returns (RONOC) Key KPIs DKSH RONOC profile per Business Unit Higher EBIT or Healthcare Partly consignment model Profit after tax Performance Materials RONOC level Specialty chemicals and ingredients RONOC DKSH Group average (H1 2020: 15.2%)
Slide 103: Our progressive dividend policy
Our progressive dividend policy Development of ordinary dividend (in CHF per share) 1.85 1.90 CAGR 13.2% 1.65 1.50 1.30 1.15 0.95 0.80 2012 2013 2014 2015 2016 2017 2018 2019 Page 103 © DKSH
Slide 104: We provide additional financial disclosure
We provide additional financial disclosure Sales per relevant markets/regions Sales split per Business Line RONOC indication per Business Unit Capex / sales per Business Unit Market data per Business Unit Other Business Unit specific data e.g. split per business model Page 104 © DKSH
Slide 105: Business Update - first eight months in 2020
Business Update – first eight months in 2020 Market demand DKSH ... still tracking below pre- ... with higher focus on client COVID-19 levels wins and efficiency • Continued low patient flow • Business Development Healthcare • Medical tourism subdued • FMCG resilient • FMCG transformation on track C
Slide 106: Additional financial indications
Additional financial indications 2020 Mid- to long-term Comments M&A Further M&A Annualized contributions +2% (net sales contribution) ambitions from closed acquisitions Conversion from local FX -4% to -5% 1 currencies to stronger (net sales contribution) Swiss franc Higher tax rate in Tax rate 27%
Slide 107: Closing remarks
Closing remarks
Slide 108: DKSH generates value and is set for future growth
DKSH generates value and is set for future growth DKSH has successfully navigated through the COVID-19 challenges so far while investing for future growth …based on 4 key pillars Resilient, asset-light Renewed leadership Promising trends Compelling strategy and cash-generative and specialized teams
Slide 109: DKSH Capital Markets Day 2020
DKSH Capital Markets Day 2020 Delivering growth – in Asia and beyond. Page 109 © DKSH
Slide 110: Disclaimer
Disclaimer While this presentation has been prepared by DKSH with due care and based on information it reasonably believes to be accurate, complete and up-to-date on the date hereof, this presentation may be inaccurate or incomplete or contain typographical errors or information that is not up-to-da