Helvea Swiss Equities Conference 2015 - OC Oerlikon · 2015. 1. 15. · Page 3 20150115_Oerlikon Presentation_Helvea Conference 2015 1 2013 pro-forma figures; Surface Solutions Segment

It's not allowed to change the master It's not allowed to change the master

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Version September 2012

Helvea – Swiss Equities

Conference 2015

Bad Ragaz, January 15, 2015

Dr. Brice Koch, CEO Oerlikon Group


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Agenda

20150115_Oerlikon Presentation_Helvea Conference 2015 Page 2

1 Current status

2 Roadmap for the Segments

3 Positioning of the Group

4 2014 outlook


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Oerlikon – a global industrial player

Manmade

Fibers

Segment

Advanced

Technologies

Segment2

Drive

Systems

Segment

Surface

Solutions

Segment1

Vacuum

Segment

CHF 1 130m CHF 734m CHF 396m CHF 1 218m CHF 113m

CHF 188m CHF 26m CHF 41m CHF 176m CHF 4m

Oerlikon

Group1

Sales: CHF 3 591m

EBIT: CHF 437m

~15 500 employees

> 170 locations

35 countries

~CHF 146m in R&D


1 2013 pro-forma figures; Surface Solutions Segment incl. Oerlikon Metco (Metco transaction closed on June 2, 2014) 2 Divestment announced on December 23, 2014

//upload.wikimedia.org/wikipedia/commons/0/07/Oerlikon-Balzers-Logo.jpg


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The Oerlikon Group from various angles*

Adv. Technologies

Surface Solutions

Vacuum

Drive Systems

Manmade Fibers

Rest of World

Europe

Asia / Pacific

North America

Sales: CHF 3 591m Sales: CHF 3 591m

31%

3%

34%

11% 20%

38% 40%

18%

4%

Segment split Regional split

* 2013 pro-forma figures incl. Oerlikon Metco

Corporate

Manmade Fibers

Adv. Technologies

Drive Systems

Surface Solutions

Vacuum

Goods, Equipment

& Components

Service & Spare Parts

Sales: CHF 3 591m ~15 500 employees

38%

1%

34%

10%

1%

16%

74%

26%

Service business Employees



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The Oerlikon Group has undergone a major

transformation in the past three years


Manmade

Fibers

Segment

Textile

Segment

Solar

Segment

Drive

Systems

Segment

Vacuum

Segment

Advanced

Technologies

Segment

Coating

Segment

Starting point


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The Oerlikon Group has undergone a major

transformation in the past three years


Divestment

announced on

Dec. 23, 2014

Surface

Solutions

Segment

Advanced

Technologies

Segment

Manmade

Fibers

Segment

Additional structural measures:

Carding and Melco business sold (former Textile Segment)

Footprint optimization in Drive Systems Segment

Rox acquisition (regrinding business) in Surface Solutions Segment

Drive

Systems

Segment

Vacuum

Segment

Today


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Today’s structure and performance is the

result of...


Streamlining of portfolio

Divestment of non-operating assets

Reduction of cyclicality, volatility and complexity

Operational & financial restructuring

Reduction of break even costs

Operational excellence initiatives to sustainably increase profitability

Repositioning of balance sheet

Syndicated credit line and three Swiss bonds

Unleveraged balance sheet to maintain financial flexibility

Investment in organic and inorganic growth

Disciplined use of cash and balance sheet capacity as premise for all actions

Metco as first major transaction in the context of strengthening around core competencies


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Agenda


1 Current status



4 2014 outlook


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Roadmap for Surface Solutions Segment


Areas of action

Secure Metco integration with dedicated

team with detailed actions plan

Accelerate synergies realization

Challenge

Speed of new/ combined

technologies penetration

Opportunities

Market penetration: New applications/

solutions in growing end markets

Combined R&D strength: Development

of multi-layer surface solutions


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Surface Solutions Segment –

Integration update

Delivering on deal rationale:

Complementarity of technologies, business

model, customer-/market-access and footprint

– Balzers’ PVD applications for Metco customer

=> 8 out of 37 customer roadmap workshops

held in December

– Ramp up of new Thermal Spray Service Centers

on track

– Joint customer approach i.e. at Performance

Racing Industry show in Indiana (US) with

promising customer feedback

– Utilization of Balzers footprint for Thermal Spray

equipment sales & distribution => new setup

established in two Asian countries

Integration process is well on track and

according to plan:

– Joint leadership meeting with 180 leaders

– Thin Film business organizationally integrated

into Oerlikon Balzers as of January 1, 2015

– Optimized Thin Film footprint – closure of one

site in Germany and one in the US announced



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Financial impact of Metco transaction –

Confirming our cost assessments

H1 14 H2 14 2015 2016 2017ff

>CHF 20 million >CHF 30 million >CHF 30 million >CHF 30 million

Amortization of acquired identified intangibles assets

Inventory step up

>CHF 20 million

as of closing

Integration costs Transaction costs

>CHF 20 million,

thereof CHF 6 million

already booked in 2013

>CHF 10 million >CHF 10 million <CHF 10 million

Cost synergies (cumulative)

<CHF 5 million ~CHF 5 million >CHF 10 million

Top-line synergies

Cash

ite

ms

N

on

-cash

ite

ms



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Surface Solutions Segment expected to

grow ~2x GDP with profitability expansion


FY 2013 pro-forma

1,218

2017E

around 1,500

Mid-term expectation

Surface Solutions Segment

Based on a current global GDP

growth assumption of ~3 %

2017E

around 22.0%

current trading

14.6%

around 14.5%

2017E current trading

5.7%

CAGR: ~2x global GDP

Incl. full absorption of one-time

transaction/integration costs and

acquisition accounting effects

Incl. full absorption of one-time

transaction/integration costs and

acquisition accounting effects

Sales

EBIT

EBITDA


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Roadmap for Manmade Fibers Segment


Challenge

Approaching end of the current

5-year plan (FYP) in China

Orders normalizing after the peak levels

in 2013

* Source: EAC International Consulting: „Early Indications on China‘s 13th Five Year Plan“

Areas of action

Increase service/ after sales business

Leverage regions outside China

Expand value chain around core

competencies

Accelerate innovations

Opportunities

Increased installed base

Preliminary indications on potential

content of 13th Chinese FYP*:

– Chemical fibers (high- and new-tech fibers)

– Develop substitutions for natural fibers

– Industrial textile proportion in textile industry

to exceed 30 % (25 % in 12th FYP)


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Roadmap for Drive Systems Segment


Areas of action

Streamline organization (integration)

Further reduce cost base

Focus product portfolio

Increase value added

Leverage global footprint

Challenge

End market performance

(agriculture, mining, gas fracking)

Operational performance

Opportunities

Hybridization and E-Drives

Start of production of 3rd plant in India

in 2015 to address local demand


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Roadmap for Vacuum Segment


Areas of action

Innovation

Operational excellence

Service and distribution network

Opportunities

High-tech applications for vacuum

technologies and solutions

New applications in new industries

Challenge

End market development

(i.e. process industry)

Profitability

Scale/ volume


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Agenda


1 Current status



4 2014 outlook


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Looking at future development of Oerlikon

from three different perspectives


Competencies

perspective:

Use existing competencies

to enhance product and

services offering

Megatrends

Resource scarcity

Productivity increase

Global mobility

Environmental

sustainability

Competencies

(Process) Engineering

Materials and surfaces

characteristics

Precision machinery &

equipment

Customers domain

knowledge

Services expertise

Technologies

Deposition technology

Yarn formation technology

incl. polycondensation

Materials technology

High rotation speed,

torque & balancing

technologies

Technology perspective:

Invest into complementary

or adjacent technologies

(organic and inorganic) to

strengthen existing portfolio

(e.g. Metco transaction)

Future

direction of

Oerlikon

Megatrends:

Foster products and services

offerings supporting and

leveraging visible and

sustainable megatrends


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What does this mean for Oerlikon?


Oerlikon will:

… leverage and strengthen Best-in-Class businesses

… improve businesses which are not yet Best-in-Class

… leverage attractive end-markets

… balance market exposure (regions and end-markets)

… further strengthen its core competencies

… further reduce cyclicality and volatility

… use its cash in a disciplined and value accretive way


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Metco transaction in the context of the

Group strategy


The Metco acquisition strengthens Oerlikon from a technological,

competencies and megatrends exposure point of view!

Megatrends

Resource scarcity

Productivity increase

Global mobility

Environmental

sustainability

Competencies

(Process) Engineering

Materials and surfaces

characteristics

Precision machinery &

equipment

Customers domain

knowledge

Services expertise

Technologies

Deposition technology

Yarn formation technology

incl. polycondensation

Materials technology

High rotation speed,

torque & balancing

technologies Future

direction of

Oerlikon


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Agenda


1 Current status



4 2014 outlook


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2014 outlook for the Oerlikon Group

confirmed – Upside on profitability

Sales

EBIT

EBITDA

>15%

2014E 2013 reported

2,883

2014 Group Guidance Consolidating Metco for seven

months and with full absorption of

Metco impacts, Oerlikon expects,

compared to 2013 reported figures

based on stable exchange rates:

Order intake growth

to exceed 10 %

Sales growth to exceed 15 %

EBITDA1 margin to exceed 15 %

EBIT1 margin to exceed 10 %

1 including full absorption of all related transaction/integration costs and acquisition accounting effects

492

2014E 2013 reported

Impacted by Metco

transaction (one-offs)

Gross margin effect

from inventory

step-up

Transaction costs

Integration costs

2014E 2013 reported

366

Impacted by Metco

transaction

One-offs (same as

for EBITDA)

Amortization of

acquired identifiable

intangible assets

Consolidation of Metco

for 7 months

>15% margin

prev.: around 15%

>10% margin

prev.: around 10%



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Thank you.



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Financial Calendar 2015

Page 23

February 24, 2015 Q4 / FY 2014 results and publication of Annual Report 2014

- Annual Press Conference

April 8, 2015 Annual General Meeting of Shareholders

- KKL Lucerne

April 28, 2015

Q1 2015 Results

- Media & Analyst Conference Call

August 4, 2015 Q2 / HY 2015 results and publication of Interim Report 2015


October 27, 2015 Q3 / 9M 2015 results


20150115_Oerlikon Presentation_Helvea Conference 2015


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Investor Relations Contact

Page 24

OC Oerlikon Management AG, Pfäffikon

Churerstrasse 120

CH – 8808 Pfäffikon SZ

Switzerland

Andreas Schwarzwälder

Head of Investor Relations

Phone: +41-58-360-9622

Mobile: +41-79-810-8211

E-mail: [email protected]

20150115_Oerlikon Presentation_Helvea Conference 2015


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Oerlikon has made great efforts to include accurate and up-to-date information in this document. However, we make no representation or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this document or any oral communication in connection therewith and we disclaim any liability whatsoever for the use of it.

This presentation is based on information currently available to management. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected. Oerlikon is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise or to correct any inaccuracies therein.

All information provided in this document is not intended as, and may not be construed as, an offer or solicitation for the purchase or disposal, trading or any transaction in any Oerlikon securities. Investors must not rely on this information for investment decisions.

Disclaimer


Documents

Helvea Swiss Equities Conference 2015 - OC Oerlikon · 2015. 1. 15. · Page 3 20150115_Oerlikon Presentation_Helvea Conference 2015 1 2013 pro-forma figures; Surface Solutions Segment