Wacker Neuson Se · XETR:WAC

Wacker Neuson — FY2016 Earnings Presentation

36 slides from Wacker Neuson's earnings presentation, Mar 16, 2017

  1. Slide 1: Analyst and Investor Conference – Results FY 2016 and Q4 2016

    Wacker Neuson SE Analyst and Investor Conference – Results FY 2016 and Q4 2016 Cem Peksaglam (CEO) – Wilfried Trepels (CFO) March 16, 2017 1

  2. Slide 2: Changes to Executive Board

    Changes to Executive Board Executive Board Cem Peksaglam Wilfried Trepels Alexander Greschner Martin Lehner CEO CFO CSO CTO Strategy/M&A, HR, legal Finance, audit, IT Sales, logistics, service, Procurement, production, matters, compliance, real marketing technology, quality estate, investor relation

  3. Slide 3: Agenda

    Agenda Highlights FY 2016 Outlook Market Trends Financial Information 3

  4. Slide 4: Highlights of fiscal 2016

    Highlights of fiscal 2016  FY revenue at PY’s level (€ 1,36bn; -1% in €, adjusted by  Challenging market environment in energy sector (oil & gas), currency effects +0.3%) agricultural and mining sector as well as persisting market  Solid revenue growth in Europe (+4%; € > 1bn) weakness in Latin A

  5. Slide 5: Latest News (2017)

    Latest News (2017) Real estate  Wacker Neuson SE sounding out market interest in a real estate company held by the Group (possible one-off profit in mid double-digit million euro range by end of FY 2017) in February 2017 Financing  Successful placement of new promissory note (Schuldscheindarlehen)

  6. Slide 6: Financials of Q4/16 and FY 2016 at a glance

    Financials of Q4/16 and FY 2016 at a glance  Q4/16: Revenue slightly below previous year  Revenue: -3% Q4/yoy to € 348m (adjusted for currency effects: -2%)  Agricultural revenue decreased by 10%  EBIT: -19% Q4/yoy to € 18m; EBIT margin: 5.2% (Q4/15: 6.3%)  EPS: -11% Q4/yoy to € 0.16 (Q4/15: €

  7. Slide 7: Group revenue (half year comparison 2012–2016)

    Group revenue (half year comparison 2012–2016) Revenue half year 2012–2016 (in € m) H1 H2 +14% 800 +6% +5% -5% -5% +7% 700 -2%  Down-turn started 2nd half of 2015 -4% 600  2016 in revenue a repetition of 2015 500 (‘side step’) 400 300 200 100 0 2012 2013 2014 2015 2016 7

  8. Slide 8: Agenda

    Agenda Highlights FY 2016 Outlook Market Trends Financial Information 8

  9. Slide 9: Global construction machinery lowest in 5 years

    Global construction machinery lowest in 5 years Global unit sales of construction equipment Development since 2012  Construction equipment sold in 2016 represented the (Units) bottom of the industry’s economic cycle -30%  Global unit sales -30% Trends 2016  Sales were affected by weak economic gr

  10. Slide 10: Global agricultural machinery -10% in 4 years

    Global agricultural machinery -10% in 4 years Global market volume for agricultural machinery Development since 2012 (Volume in € bn)  2016 represented the bottom of the industry’s economic cycle for agricultural machines 110 -10%  Global market volume -10% +3% Trend 2016 100  High saturation lev

  11. Slide 11: Commodity prices – development of oil price (example)

    Commodity prices – development of oil price (example)  Since the start of 2014, the oil price 2016 has been under heavy pressure due to oversupply  In 2016 the average price for a barrel increased to USD 43, lower than the USD 49 forecasted by the top-3 countries  US is major shale oil producer a

  12. Slide 12: 2016: Comparison with peer group (construction equipment)

    2016: Comparison with peer group (construction equipment) Revenues and earnings (2016 vs 2015) in local currency Company Profitability 2016 Change revenue 2016 vs 2015 in local currency Peer 1 (in ¥) n.a. 6% Peer 2 (in €) Op. Income: +17% (margin: 5.3%; 2015: 4.7%) 3% Wacker Neuson (in €) EBIT: -15%

  13. Slide 13: 2016: Comparison with peer group (agricultural equipment)

    2016: Comparison with peer group (agricultural equipment) Revenues and earnings (2016 vs 2015) in local currency Company Profitability 2016 Change revenue 2016 vs 2015 in local currency Peer 11 (in US-$) Adj. Op. Inc.: -22% (margin: 4.1%; 2015: 5.2%) -1% Wacker Neuson Agriculture (in €) n.a. -4% Pee

  14. Slide 14: Impact on cost: New emission regulations for diesel engines

    Impact on cost: New emission regulations for diesel engines * Non-harmonized engine emission regulations – a cost driver and resource consumer * from 2019/2020 onwards 14

  15. Slide 15: Leading alternative drive technologies

    Leading alternative drive technologies 2016 15

  16. Slide 16: North America biggest market for skid steer loaders (SSL)

    North America biggest market for skid steer loaders (SSL) Units-Split 2016e Forecast 2016e – 2020e (Global market 2016: 105.700) (Units)  Globally, the North American market has accounted for ~70% of the global units sold 140000 +23% (2016e: 74,000 units) 130.000 120000  The global market will gro

  17. Slide 17: Production of skid steer loaders (SSL) in the US

    Production of skid steer loaders (SSL) in the US Skid Steer loaders (SSL) relocation of R&D and production from Wacker Neuson Austria to US (Wisconsin) in 2015 2016  Unexpected difficulties in ramp-up of production and delays due to quality issues with suppliers  Production halts and field campaig

  18. Slide 18: Relocation of R&D center from Munich to factory in Reichertshofen

    Relocation of R&D center from Munich to factory in Reichertshofen 2016  Marriage of all technical areas for light equipment Europe at existing production location in Reichertshofen  Advantages: process improvements, increase of productivity and time-to-market  Investment of € 10m in 2016 (9 month

  19. Slide 19: New production of mobile generators in Brazil

    New production of mobile generators in Brazil  Located in Itatiba, São Paulo, Brazil  Building on local/regional presence, target market: Latin America  Products tailored to local market’s need, engineering and production “in the region – for the region”  Generator production (models: 50-70 kilo

  20. Slide 20: Breaking ground for new plant in China

    Breaking ground for new plant in China  Located in Pinghu, 30 km from Shanghai city border  Building on local/regional presence  demand for repair and maintenance work on infrastructure is growing, especially in megacities  Starting with the production of compact excavators for local market, mor

  21. Slide 21: Agenda

    Agenda Highlights FY 2016 Outlook Market Trends Financial Information 21

  22. Slide 22: Business performance – sales split by region 2016

    Business performance – sales split by region 2016 Revenue by region1,2 Europe  All-time high: revenue above EUR 1bn; +4% to EUR 1,021 m despite (in € m) weak agriculture market, difficulties in Turkey, Russia and South Africa 1,375  EBIT of EUR 97.9m → EBIT margin of 9.6% (PY: 11.5%) +3% (+6%) 1,3

  23. Slide 23: Business performance – sales split by business segments 2016

    Business performance – sales split by business segments 2016 Revenue by business segment1, 2 (in € m) Light equipment  Difficult market environment (oil & gas, emerging markets)  revenue decrease by 9% to EUR 378m 20% 284 +5% (+6%) 297 21%  Solid performance in Europe but weak demand in the US Co

  24. Slide 24: Development of revenue and profitability 2016

    Development of revenue and profitability 2016 Income statement (extract) and number of employees (in € m) Comparison of EBIT vs. previous year 2015  2016 Change 2016 in % 2015 in % in % Gross profit: Revenue 1,361.4 100.0 1,375.3 100.0 -1.0  Volume effect: € -3.9m vs. PY Gross profit 376.2 27.6 38

  25. Slide 25: Key figures from balance sheet – excellent credit standing

    Key figures from balance sheet – excellent credit standing Net financial debt and Gearing Financial debt/EBITDA (in € m) (as %) (x) 250 40% 1,6 1,5 214 206 199 35% 1,4 1,3 200 177 180 1,2 1,2 30% 1,2 23% 150 19% 19% 19% 25% 1,0 0,9 18% 20% 0,8 100 15% 0,6 10% 0,4 50 5% 0,2 0 0% 0,0 2012 2013 2014 20

  26. Slide 26: Business performance: Increase of free cash flow in 2016

    Business performance: Increase of free cash flow in 2016 Free cash flow (qoq 2015 – 2016) Inventories (qoq 2015 – 2016) (in € m) (in € m) (DIO) 46 495 494 514 50 475 464 250 35 500 445 448 443 30 400 200 15 19 11 146 128 124 134 127 10 3 300 117 115 150 107 -10 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3

  27. Slide 27: Share price

    Share price Share price performance since January 2016 % 18.00€ 15.42€ 15.98€ 12.34€ 14.23€ Adaption of FY guidance Termination CAT alliance Possible sale of real estate company KPIs (€) 2015 2016 Earnings per share FY 0.94 0.81 Book value per share Dec. 31 15.17 15.52 Market capitalization (€m) Dec

  28. Slide 28: Agenda

    Agenda Highlights FY 2016 Outlook Market Trends Financial Information 28

  29. Slide 29: Global construction machinery sales back on growth path: +7% for 2017

    Global construction machinery sales back on growth path: +7% for 2017 2016–2020 machinery sales CAGR: 5,7% Wacker Neuson’s expectations -30% +25%  Europe main growth driver, esp. Central Europe  Market recovery in North America  stronger +7% revenues from SSL, no more one-off effects expected  L

  30. Slide 30: Positive signs of recovery in agricultural business after 3 difficult years

    Positive signs of recovery in agricultural business after 3 difficult years Opinion barometer for economic outlook concerning agriculture business in Germany Source: German Farmers’ Association, December 2016 30

  31. Slide 31: Conexpo trade fair in Las Vegas (March 7–11, 2017)

    Conexpo trade fair in Las Vegas (March 7–11, 2017)  60th anniversary of Wacker Neuson USA and 50th anniversary of Canada  Presentation of new SSL models (mid frame)  128,000 visitors, >2,800 exhibitors  Optimistic climate of exhibitors and customers in the Americas 31

  32. Slide 32: Optimistic forecast for 2017 – good start and indications

    Optimistic forecast for 2017 – good start and indications Financials Forecast 2017e 2016 FYe 20171 Mid term Revenue EUR bn 1.36 1.40 – 1.45 >2.0 2017e vs. 2016 EBIT margin %  Revenue increase by 3 to 7% 6.5 7.5 – 8.52 >9.0 (operational)  Increase of EBIT margin by 1 to 2 PP Working Capital 42 <40

  33. Slide 33: Selected actions to improve profitability

    Selected actions to improve profitability  Targeted expansion of aftermarket and services business  Continued program cleanup (elimination or out-sourcing)  Allocation of product groups according strategic principle of developing and manufacturing products “in the region, for the region”  Furthe

  34. Slide 34: Dividend proposal to AGM (May 30, 2017)

    Dividend proposal to AGM (May 30, 2017) Dividend payouts 2014 2015 20161  € 0.50 per share Total payout (€ million) 35.07 35.07 35.07 (payout of EUR 35.07m on May 31,2017) Payout ratio (as a %) 38.3 53.0 61.7  Keeping level of last two years, ensuring dividend Eligible shares (in m) 70.14 70.14 70

  35. Slide 35: Financial calendar and IR contact

    Financial calendar and IR contact Financial calendar March 16, 2017 Publication of financial results 2017 May 11, 2017 Publication of first-quarter report 2017 May 30, 2017 AGM, Munich August 8, 2017 Publication of half-year report 2017 November 9, 2017 Publication of nine-month report 2017 IR conta

  36. Slide 36: Disclaimer

    Disclaimer Cautionary note regarding forward-looking statements  The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctn

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