Kendrion N.V. · EURONEXT:KENDR
Kendrion — Investor Day (September 2022)
70 slides from Kendrion's investor day presentation, Sep 8, 2022
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY 8 September 2022 Amsterdam - The Netherlands 1
Slide 2: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 2
Slide 3: Cautionary Note Regarding Forward Looking Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the Company's share of new and existing markets, general
Slide 4: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 4
Slide 5: Kendrion Strategic House
KENDRION STRATEGIC HOUSE Unchanged STRATEGIC INTENT AUTO BRAKES IAC Growth Growth Cash engine 'ACES' ROBOTS CONTROLS WINDPOWER ENERGY LOGISTICS TRANSPORT CHINA CHINA CHINA Growth KENDRION GLOBAL ORGANIZATION 5
Slide 6: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 6
Slide 7: IT Key Initiatives
IT KEY INITIATIVES ▪ Global team, global mindset, business-focused Delivered ▪ Enhanced security posture Investment in people ▪ Strengthened project execution: business value, faster delivery and in technology ▪ Strong analytics platform for better decisions Coming next ▪ Put technology at the heart
Slide 8: Technology Evolution 2022-2027
TECHNOLOGY EVOLUTION 2022-2027 Increasing maturity and value-add, along with business and product changes 2022 2023 2024 Project execution: Data science ERP upgrade Deliver business New PLM & HR End-to-end value platforms automation 2025 2026 2027 Digital Manufacturing Power of data 2.0 Hyper automa
Slide 9: Progressing on Sustainability
PROGRESSING ON SUSTAINABILITY Concluding 2019-2023 target framework Realized in Target Sustainable products contributions HY 2022 Relative reduction of energy consumption 15% 11% Relative reduction of CO2 emission 15% 26% ~45% of Group revenue 9
Slide 10: Progressing on Sustainability
PROGRESSING ON SUSTAINABILITY Accelerating ambitions beyond 2023 Increase Sustainable Health and safety renewable energy sourcing Reduce emissions Gender diversity Reduction emissions 10
Slide 11: EcoVadis Sustainability Rating
ECOVADIS SUSTAINABILITY RATING Kendrion top 22% of rated companies 78th percentile Source: EcoVadis 11
Slide 12: Mergers & Acquisitions
MERGER & ACQUISITIONS ▪ Continues to be part of the strategic growth plan ▪ Clear acquisition criteria, disciplined approach ▪ Strategic fit, in direct support to Kendrion’s strategic objectives ▪ Clear identifiable synergies, justifying the acquisition premium ▪ Strong management ▪ Cultural fit ▪ H
Slide 13: Our Culture of Cooperation
OUR CULTURE OF COOPERATION 13
Slide 14: Electrification Continues to Accelerate
ELECTRIFICATION CONTINUES TO ACCELERATE Million units 93 0 % CAGR 87 74 75 72 71 71 71 69 66 -4 % CAGR 25 21 17 46 % CAGR 14 7 10 2 1 5 2 3 3 4 5 5 5 1 0 2 1 33 % CAGR 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 ICE BEV PHEV Global car production Source: IHS Markit May 2022 14
Slide 15: Video Automotive Strategy
VIDEO Automotive Strategy 15
Slide 16: Automotive 'Core' and Automotive 'E'
AUTOMOTIVE ‘CORE‘ AND AUTOMOTIVE ‘E' TARGET 1-1-2023 ▪ Target: Combustion engine vehicles ▪ Focus: Operations excellence, lean production, cost efficiency TODAY ▪ KPI’s: Profitability and cashflow ▪ Target: ACES ▪ Focus: Innovation, close customer liaison, program management ▪ KPI’s: Profitable grow
Slide 17: Composition of Group Revenue
COMPOSITION OF GROUP REVENUE HY1 2022 in million EUR EUR 256.8 million KAG ▪ Existing E product portfolio is ~30% of Automotive revenue ▪ Automotive Core represents around 33% of Group revenue in HY1 2022
Slide 18: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 18
Slide 19: Automotive 'E'
KENDRION PRECISION. SAFETY. MOTION. AUTOMOTIVE ‘E’
Slide 20: Kendrion Automotive E
KENDRION AUTOMOTIVE E Short term strategy 2022-2023 ▪ Expand our customer base and our portfolio with existing customers ▪ Concentrate our efforts on our 3 existing focus segments, allowing us to market new products and gain market share Active Suspension Vehicle Sound Identity Sensor Cleaning & Spe
Slide 21: Kendrion Automotive E
KENDRION AUTOMOTIVE E Structure follows strategy Enlarge customer base Focus on 3 segments, Become a relevant and portfolio at market products, gain employer, win the war for existing customers market share talent ▪ Dedicated BD who hunts ▪ Dedicated segments ▪ Appoint dedicated for new customers te
Slide 22: Automotive E Organization
AUTOMOTIVE E ORGANIZATION Managing Director Project Recruitment Management Excellence Marketing Sales Segment Segment Segment Active Suspension Sensor Cleaning Sound Identity (Special ECU) R&D Industrial Engineering Project Quality Purchasing 22
Slide 23: Global Electric Vehicle Production
GLOBAL ELECTRIC VEHICLE PRODUCTION CAGR: 40% Source: IHS Markit May 2022 23
Slide 24: Focus Segments
KENDRION PRECISION. SAFETY. MOTION. Vim
Slide 25: Vehicle Sound Identity
Vehicle sound identity KENDRION presentation 25
Slide 26: Vehicle Sound Identity
VEHICLE SOUND IDENTITY ▪ Creates a unique SOUND IDENTITY for each vehicle that gets to the heart of a car brand and conveys a high sense of quality ▪ Enhances DRIVING EXPERIENCE ▪ Comprehensive vehicle sound by combining individual sound components, ready for the future E/E ARCHITECTURE ▪ MODULAR, f
Slide 27: Phantone Vehicle Sound Identity (VSI)
PHANTONE VEHICLE SOUND IDENTITY (VSI) Soundscape of the future PRODUCT CUSTOMER BENEFITS Connection to central car computer (CAN) ECU INDIVIDUAL MODULAR Actuator Speaker ▪ Sound profile tailored to ▪ Complete solution One-box personal needs ▪ Easy to customize ▪ Customized sound experience ▪ For dif
Slide 28: Active Suspension
KENDRION PRECISION. SAFETY. MOTION.
Slide 29: Adaptive Suspension Components (ASC)
ADAPTIVE SUSPENSION COMPONENTS (ASC) Improving driving dynamics for the vehicles of tomorrow PRODUCT CUSTOMER BENEFITS MODULAR INDIVIDUAL ▪ Platform design with high ▪ Individual drive mode (eco |sport | adaptability comfort) ▪ Flexible connector ▪ Customized characteristics SAFETY | COMFORT ▪ Fail
Slide 30: Active Suspension
ACTIVE SUSPENSION Semi-active dampers ▪ eCDV (external Continuous Damper Valve) platform ▪ Nominations in place, first SOP 2023 ▪ iCDV (internal Continuous Damper Valve) platform ▪ In concept study ▪ Customer Specific Damper Valves (for the bigger TIER1) ▪ Majority of our current business Air suspen
Slide 31: eCDV Platform Concept
ECDV PLATFORM CONCEPT Fixed Variable Variables Fixed Fixed Final Fixed components components components components Variable components Final product components components product Fail-safe Hydraulic components Actuatingsystem Hydraulic components variable Coil complete Proportionav valve components
Slide 32: Sensor Cleaning
KENDRION PRECISION. SAFETY. MOTION. Sensor cleaning
Slide 33: Sensor Cleaning
SENSOR CLEANING Improving reliability of Autonomous Driving Vehicles PRODUCT CUSTOMER BENEFITS MODULAR INDIVIDUAL ▪ Valve block, hardware and ▪ LiDAR and cameras could be software are coordinated and cleaned by air and | or water come from a single source SAFETY | COMFORT SAVINGS ▪ 1/3 smaller than
Slide 34: Sensor Cleaning
SENSOR CLEANING Sensor cleaning ▪ Combined air-water distribution valve block with an ECU for air/water pump control ▪ First samples available ▪ Joint development agreement with Kautex ▪ First applications in people carrier shuttles (2025-2026) ▪ Followed by autonomous trucks ▪ Autonomous driving ca
Slide 35: Automotive 'Core'
KENDRION N [ PRECISION. SAFETY. MOTION.
Slide 36: Automotive Core
AUTOMOTIVE CORE Structure follows strategy ▪ Value, profitability, and cash flow ▪ Lean, flexible, and simple organization ▪ Transform the Automotive Group’s manufacturing “Core focuses on excellence increasing the • Shift from a mechanic components producer to profitability of mechatronic systems p
Slide 37: Kendrion Automotive Core
KENDRION AUTOMOTIVE CORE Managing Director Sales Engineering Quality Purchasing Operations Finance HR Malente Villingen Markdorf Prostějov Sibiu Shelby Suzhou
Slide 38: Manufacturing Footprint
MANUFACTURING FOOTPRINT Malente Prostějov Villingen Sibiu Markdorf Suzhou Shelby (NC) 38
Slide 39: Focus Automotive Core
FOCUS AUTOMOTIVE CORE Profitability (EBITDA) and cash flow Operational Streamline Streamline Proactive excellence product production change portfolio capacities management 39
Slide 40: Global ICE Production
GLOBAL ICE PRODUCTION CAGR: -3% Source: IHS Markit May 2022 40
Slide 41: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 41
Slide 42: Wind Power – Global Market Size
WIND POWER – GLOBAL MARKET SIZE 2021 2027 (estimated) 93 GW installed 134 GW to be installed Ø size of wind turbines: 4.5 MW ~21,000 wind turbines installed ~28,000 wind turbines to be installed Pitch adjustment Price per MW: 2,2’ EUR Brake investment per tower: 1,200 EUR (based on 13 brakes) CARG ~
Slide 43: Summary Existing Market
SUMMARY EXISTING MARKET 2021 Total market size CAGR (million EUR) (estimate) Industrial robots 80-90 ~2-3% Industrial trucks 60-70 ~2-4% Wind power 25-30 ~7-12% Electric motors 480-620 ~2-3% Other markets 500-700 ~5-7% Total ~1,2 - 1,5 (billion EUR) ~6% * not considered: material price, logistic inc
Slide 44: Transforming Trends 2022-2027
TRANSFORMING TRENDS 2022-2027 Changing markets – Energy transition and automatization Market changes Impacted applications / portfolio Carbon reduction Alternative energy sources, change of mindset towards environmentally friendly resources Wind power E-mobility Railway Energy efficiency Electrifica
Slide 45: Focus Markets
FOCUS MARKETS Brakes for servo motors, geared motors and brake systems Robotics & Automation AGV Industrial trucks Wind power Electric motors Machine building Hoists & Cranes Medical technology 45
Slide 46: Market Segments
MARKET SEGMENTS Mapping of products (selected: growth + maturity) INTORQ BFK458 Servo Slim Line INTROQ BFK470 High Torque Servo Line PM Line Robotics / Cobots Feasibility/Concept/Design phase AGV Industrial trucks Active sales phase Wind power Legend Electric motors Machine building Hoists & Cranes
Slide 47: Robotics
ROBOTICS Example for customer tailored solutions Surgery robot Customer approach: Precise holding of safety position with zero backlash Customer: Manufacturer of electronic components and devices for medical technology Products: High Torque Line / PM Line sizes 11 and12 Success factors: - Open, tran
Slide 48: Automated Guided Vehicles (AGV)
AUTOMATED GUIDED VEHICLES (AGV) Example for customer tailored solutions AGV logistics applications Customer approach: Customized design-in solution Customer: Manufacturer of electric motors Products: Servo Line sizes 03 and 08 Success factors: - Giving providing technical, smart solutions by intensi
Slide 49: 5 Pillars of Success
5 PILLARS OF SUCCESS ✓ Successful integration: growing together ✓ Extensive product platform: always the right solution ✓ Focus markets: extensive experience in key markets ✓ Human capital: Strong, experienced team ✓ Global footprint: Right next door Industrial Brakes is a reliable and innovative pa
Slide 50: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 50
Slide 51: Industrial Actuators and Controls
INDUSTRIAL ACTUATORS AND CONTROLS CAGR at Trends Technology/ Products +15 % EBITA • Health / medical treatment • Fluid technology (valve modules) 5 – 10% • Locks • Sustainability / energy • Inductive heating systems 15 – 20 % consumption and efficiency • NPP – pilot actuators • Manufacturing automat
Slide 52: Health and Medical Treatment
HEALTH AND MEDICAL TREATMENT Applications / Revenue expectation Power pinch valve + Home dialysis WAS unit + Dental treatment unit Valves & Pressure Regulator + Respiratory Product Type Customers Applications Status Potential (million EUR) Power pinch valve NX-Stage, Stratec Home dialysis, IVD R&D 1
Slide 53: Clean Energy / Induction Heating System
CLEAN ENERGY / INDUCTION HEATING SYSTEM Applications / Revenue expectation Induction Generator Energy Customer Application Status Potential (million EUR) Gas Bühler Waffles baking R&D 1,000,000 Oil Matthews Embossing, foil welding Prototype 200,000 Induction SSM Schärer Texturing R&D 1,000,000 Schwe
Slide 54: Warehouse Technology / Automated Guided Vehicles
WAREHOUSE TECHNOLOGY / AUTOMATED GUIDED VEHICLES Applications / Revenue expectation Product Customer Application Status Potential (million EUR) Bistable solenoid Ocado Online grocery storage Ramp-up 1,000,000 & retrieval Bistable rotary MHS Van Riet Parcel sorting Ramp-up 1,700,000 solenoid Safety c
Slide 55: Smart and Remote Security System
SMART AND REMOTE SECURITY SYSTEM Applications / Revenue expectation Rotary door lock RL Solenoid door lock SL/AL Motorized door locks Product Type Customers Applications Status Potential (million EUR) Solenoid door lock SL/AL Wiesheu, Eloma, AT- Professional baking Ramp-up 1,800,000 OS, Eppendorf ov
Slide 56: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 56
Slide 57: What We Have Achieved & Planned
WHAT WE HAVE ACHIEVED & PLANNED SIMPLIFY FOCUS SCALING GROW Simplify management in Focus strength combinations R&D localization Sustainable Profitable Growth China of Germany/China 5 fingers to 1 fist, Germany + China Strengths R&D localization will be the 5 BUs to 1 China key driver of coming organ
Slide 58: Potential Growth Opportunity
POTENTIAL GROWTH OPPORTUNITY Industrial (IAC & IB) market size Automotive market size = 5 times of Germany = 7 times of Germany = 15+ times of other European countries, like Italy, France etc. GDP from Manufacturing Annual manufacture qty. of Passenger Cars Thousand Cars 5.000 25.000 Billion Euro 4.
Slide 59: Business Strategy: One Kendrion
BUSINESS STRATEGY: ONE KENDRION ▪ Integrated all BGs resources to get more professional economic scale on • Local talent / knowledge • Supply chain • Operation infrastructure • Government PR / policy − Bigger scale, better government support ▪ One factory / organization • Develop all potential busin
Slide 60: Video Update on New Factory in Suzhou
VIDEO Update on new factory in Suzhou 60
Slide 61: Aggressive Growth Plan Towards 2027
AGGRESSIVE GROWTH PLAN TOWARDS 2027 Target CAGR 2022−2027: 20+% CAGR 2016−2021: 25+% 2016 2017 2018 2019 2020 2021 2022E 2027E INTORQ acquisition 61
Slide 62: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 62
Slide 63: 2025 Financial Targets
2025 FINANCIAL TARGETS Revenue EBITDA margin Average organic growth at At least15% in 2025 least 5% per year ROIC Dividend At least 25% in 2025 Between 35% - 50% of normalized net profit * Invested capital excluding goodwill and intangibles arising from acquisitions 63
Slide 64: Organic Growth
ORGANIC GROWTH Realized since HY1 2020 Kendrion Group O 13% annual organic growth, revenue 2% above FY 2019 Industrial Brakes + Annual growth of 17% since, revenue up 26% from 2019 Industrial Actuators and Controls + Annual growth of 12%, organic revenue up 9% from 2019 Automotive E + Revenue 15% hi
Slide 65: Organic Growth
ORGANIC GROWTH 635+ Roadmap to target ▪ Further market and application growth in IB; robotics, 467 464 wind power, factory automation and AGV’s 396 ▪ Selective niche markets in IAC, including inductive heating, smart security systems and nuclear power plants ▪ Focus on fast growing electric car plat
Slide 66: Profitability
PROFITABILITY Realized since HY1 2020 + Normalized EBITDA margin increase of 1.6% compared to FY 2019 + 17.9% EBITDA margin in industrial in HY1 2022 + ~EUR 4 million annual cost synergies in IAC and IB + Stable added value margins despite inflationary pressure on raw materials + Increased ROI drive
Slide 67: Maintain Dividend Policy
MAINTAIN DIVIDEND POLICY Realized since 2020 ▪ Dividend FY 2020 passed to protect financial position during first COVID-19 wave ▪ Pay-out ratio at high end of the policy in FY 2021 and FY 2022 (50% of normalized net profit) 67
Slide 68: Agenda
AGENDA ▪ Introduction ▪ Strategic overview ▪ Kendrion foundation ▪ Business pillars ▪ Automotive ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ Financial targets ▪ Questions & answers 68
Slide 69: Questions & Answers
KENDRION PRECISION. SAFETY. MOTION. Questions & answers
Slide 70: Thank You
KENDRION PRECISION. SAFETY. MOTION.