Tt Electronics Plc · LSE:TTG
Tt Electronics — H1 2013 Earnings Presentation
32 slides from Tt Electronics's earnings presentation, Aug 20, 2013
Slide 1: Half Year Results - Accelerating Performance
Half Year Results 20 August 2013 Accelerating Performance August 2013: Half Year Results
Slide 2: Summary
Summary • Trading improved in Q2 with encouraging bookings • Operating profit affected by reduced sales in Components and ongoing revenue investment • Implementing a business transformation programme to accelerate organic growth and drive towards sustainable double digit performance • New organisati
Slide 3: Value Creation
Value Creation Revenue £499.6m Revenue c.£500m* Margin 1.3% Margin 6.2% Net Debt £113.2m Net Cash £46.7m Secure Power Investment for & General growth; drive Industrial sold; shareholder balance sheet value strengthened *Includes ACW pro-forma revenue August 2013: Half Year Results ©2013 TT electroni
Slide 4: Accelerating Performance - Sensing and Control
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 5: Financial Summary: Key Financials
Financial Summary Key Financials 2013 2012 1st half 1st half Continuing operations £m £m Change Revenue 261.0 247.2 3.7%1 Operating profit2 12.7 13.9 £(1.2)m Operating profit margin 4.9% 5.6% (70)bps Profit before tax2 11.5 11.8 £(0.3)m Earnings per share (pence)2 5.5 5.5 - Underlying operating cash
Slide 6: Financial Summary: Operating Profit Bridge
Financial Summary Operating Profit Bridge Operating profit 16 £1.0m £13.9m £(1.4)m £0.1m £(1.4)m 14 £0.9m £(0.4)m £12.7m 12 S&C: £(0.8)m 10 Cpts/IMS: £(0.6)m 8 6 4 2 0 Op profit H1 2012 Foreign exchange Volume change Volume change Inflation on SG&A Productivity, Margin, mix & Op profit H1 2013 S&C/I
Slide 7: Financial Summary: Operating Cash Flow
Financial Summary Operating Cash Flow 2013 2012 1st half 1st half £m £m Operating profit1 12.7 13.9 Depreciation 8.6 8.1 Amortisation and impairment of intangible assets 2.0 3.1 Working capital (20.9) (17.7) Other 0.5 - Underlying operating cash flow 2.9 7.4 Exceptional costs (2.5) (2.2) Special pen
Slide 8: Financial Summary: Net Cash Flow
Financial Summary Net Cash Flow 2013 2012 1st half 1st half £m £m Cash (used in)/generated from operations (0.6) 3.3 Tax and interest (2.7) (0.9) Capital expenditure (including software) (13.5) (11.9) Development expenditure (2.3) (2.1) Acquisition and disposal of businesses (12.5) (3.6) Proceeds fr
Slide 9: Operating Profit Margin Bridge
Operating Profit Margin Bridge 9 1.0% 8-10% 8 0.7% 7 0.5% 6.0% 6 5 4 3 2 1 0 2012 Volume Portfolio Productivity 2015 Management August 2013: Half Year Results ©2013 TT electronics plc 9
Slide 10: Operational Improvement Plan - Sensing & Control (S&C)
Operational Improvement Plan – Sensing & Control (S&C) • Significant opportunity to improve operational efficiency of business and accelerate productivity • Direct cost within S&C in higher cost regions represents 51% by headcount and over 80% in terms of cost • Anticipated costs of Operational Impr
Slide 11: Divisional Review: Sensing and Control
Divisional Review Sensing and Control 2013 2012 2012 1st half 1st half Full year £m £m £m Revenue 141.5 135.3 259.6 Operating profit 8.9 8.1 16.6 Operating profit margin 6.3% 6.0% 6.4% • Underlying revenue (excluding FX) increased by 2.4% underpinned by progress in industrial and transportation • Op
Slide 12: Divisional Review: Sensing and Control (cont'd)
Divisional Review Sensing and Control (cont’d) • Good pipeline of sales opportunities and focused NPI pipeline • Recent wins with Chinese OEMs • Business in India now 100% controlled and expansion of Bangalore engineering centre • Line transfers from Germany and Austria facilities to Romania in prog
Slide 13: Increasing Value - Average Content Per Vehicle
Increasing Value Average Content Per Vehicle* 300 € Position Sensor for headlights Accelerator Pedal 200 € Water pump 100 € Engine temperature sensor power module 0€ LED lighting module Speed Sensor incl. direction detection <2010 2013 For example, every BMW 6 Series realises up to €407 revenue *Ger
Slide 14: Technology Roadmap
Technology Roadmap Greater Resilience to Harsh Environments Key Value Miniaturisation enhancing Form and Function Drivers Improved Energy Efficiency Increased Power Density Expanded Application Range 2014-2015 2016-2017 2018-2020 Optical CMOS Light Quality Fluid Quality Sensing Position / Speed SIMS
Slide 15: Platform Approach to Technology: Speed Sensor
Platform Approach to Technology: Speed Sensor Start of production 2013 10m units p.a. by 2016 Core Technology Core Building Block Product Variants Global Applications – Gear box – Direct overmould, – Speed sensor – Engines – Cam shaft lead frame, no pcb module – Transmissions – Crank shaft Benefit:
Slide 16: Divisional Review: Components
Divisional Review Components 2013 2012 2012 1st half 1st half Full year £m £m £m Revenue 51.1 58.1 109.6 Operating profit 1.0 3.0 5.9 Operating profit margin 2.0% 5.2% 5.4% • Underlying revenue reduced by 12.7% • Operating profit reduced to £1.0m due to the lower volume and an adverse product mix •
Slide 17: Divisional Review: Components (cont'd)
Divisional Review Components (cont’d) • New organisation structure is giving greater clarity on business issues, enabling faster resolution and clearer accountability • Plans being implemented to improve margins through cost reductions and addressing manufacturing and process inefficiencies • The Re
Slide 18: Divisional Review: Integrated Manufacturing Services (IMS)
Divisional Review Integrated Manufacturing Services (IMS) 2013 2012 2012 1st half 1st half Full year £m £m £m Revenue 68.4 53.8 107.7 Operating profit 2.8 2.8 6.2 Operating profit margin 4.1% 5.2% 5.8% • Underlying revenue increased by 3.9% after excluding FX and the ACW acquisition • Operating prof
Slide 19: Divisional Review: Integrated Manufacturing Services (cont'd)
Divisional Review Integrated Manufacturing Services (cont’d) • New customer wins tracking ahead of expectations • ACW business successfully integrated in accordance with acquisition plan: sites consolidated in UK, China production transfer completed and building up customer base • Malaysia productio
Slide 20: Transformation - Sensing & Control
Transformation – Sensing & Control Milestone 2013 2014 2015 Launch new organisation S&C Create focused sales team Build engineering capacity (# engineers in 104 130 170 India) Accelerate delivery of identified ‘NPI’ programmes Capture customer opportunities through new global sales team and increase
Slide 21: Transformation - Components / IMS
Transformation – Components / IMS Milestone 2013 2014 2015 Components Create focused sales team Drive profit improvement plan IMS Transfer UK and US harness / box build from Components Exit IMS business on Kuantan site, Malaysia Establish and scale ‘nearshore’ capability in Romania August 2013: Half
Slide 22: Conclusion
Conclusion • Resilient first half performance • Recent trading encouraging with positive book-to-bill, giving the Board confidence for a better second half performance • Transformation programme well underway Accelerating Performance August 2013: Half Year Results ©2013 TT electronics plc 22
Slide 23: Q&A
Q&A August 2013: Half Year Results ©2013 TT electronics plc 23
Slide 24: Appendices
Appendices August 2013: Half Year Results ©2013 TT electronics plc 24
Slide 25: Balance - Global Reach, Growth Markets
Balance Global Reach Growth Markets Rest of World Defence and Telecom and 3% computer Asia 1% aerospace North America 13% Other 14% 18% transportation United Kingdom 9% 19% 40% Passenger car Medical 7% 49% 27% Industrial Rest of Europe Revenue by geography Revenue by market August 2013: Half Year Re
Slide 26: Appendix: Income Statement
Appendix Income Statement 2013 2012 2012 1st half 1st half Full year Continuing operations £m £m £m Revenue 261.0 247.2 476.9 Gross profit margin1 19.0% 20.1% 19.8% Operating profit1 12.7 13.9 28.7 Net interest payable (0.5) (1.4) (2.2) Net finance cost on pension schemes (0.7) (0.7) (1.2) Profit be
Slide 27: Appendix: Changes to Comparatives - 2012
Appendix Changes to Comparatives - 2012 Pension IAS19 Discontinued - As reported admin costs interest Ottomotores Revised £m £m £m £m £m Half Year Operating profit (before exceptionals) 15.1 (0.4) (0.8) 13.9 Interest – bank (1.5) 0.1 (1.4) – IAS19 (0.3) 0.4 (0.8) (0.7) PBT (before exceptionals) 13.3
Slide 28: Appendix: Exceptional Items
Appendix Exceptional Items 2013 2012 1st half 1st half £m £m Restructuring costs (2.6) (0.8) Negative goodwill adjustment on ACW 0.4 - ACW – amortisation of fair value inventory (0.4) - Total (2.6) (0.8) • Restructuring costs in 2013 comprise: - post acquisition restructuring of ACW (£1.1m) - Malays
Slide 29: Appendix: Taxation
Appendix Taxation 2013 2012 1st half 1st half £m £m Tax charge Underlying 2.8 3.3 Exceptional items (0.3) (0.3) 2.5 3.0 Effective tax rate Underlying 24.3% 28.0% • Full year effective tax rate expected to be 25.3 per cent • Further progress in reducing effective rate due to proactive tax planning Au
Slide 30: Appendix: Earnings Per Share
Appendix Earnings Per Share 2013 2012 1st half 1st half £m £m Profit before tax and exceptional items 11.5 11.8 Tax on profits before exceptional items (2.8) (3.3) Underlying earnings 8.7 8.5 Average number of shares (million) 157.2 155.5 Headline earnings per share (pence) 5.5p 5.5p Basic earnings
Slide 31: Appendix: Pensions
Appendix Pensions 2013 2012 2012 1st half 1st half Full year IAS 19 (revised) valuation £m £m £m Fair value of assets 391.5 363.9 387.5 Liabilities (419.4) (401.8) (424.3) Deficit (27.9) (37.9) (36.8) • UK defined benefit scheme closed to future accrual in 2010 • Deficit recovery plan in place: cont
Slide 32: Important Information
IMPORTANT INFORMATION • For the purposes of the following disclaimers, references to this “document” shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. • This document contains certain “forward-lo