Steve True, Finance Director Sapa Profiles UK 7th November 2006

Todays Agenda

Sapa Company & Group background

UK Aluminium Extrusion Market

Movex Requirement & Implementation

Senior Management meet pVelocity

Sapa Customer Case Study

Future Plans with pVelocity MPITM

Sapa Profiles Limited – Who we are

Sapa AB - Aluminium Manufacturing Group

• 27 companies operating in 15 countries

• Collective turnover of c£1 Billion

• 8,200 employees

Sapa Profiles Ltd - Major supplier of Aluminium extrusions in the UK with T/O of £80 Million, employing 350 people• 2 manufacturing sites (Derbyshire/Gloucestershire)

• 4 extrusion presses (+30,000 tonnes per annum)

• 850 customers (building & construction, transport, engineering)

• One raw material, 20,000 different products!

Movex Implementation

In 2000 Sapa Ltd and Indalex Ltd merged to become Sapa Profiles Ltd

Movex project commenced in 2001 and implemented in 2003

Implementation difficulties:-– Movex used as a vehicle to ‘merge’ the businesses

– Differing bespoke legacy systems, data migration

– Extrusion ‘not the norm’, some heavy modifications

– Reporting – lack of costing/profitability analysis

UK Extrusion Market

Approx 220,000 tonnes per annum, 2% growth

UK market traditionally supplied by UK extruders, but no longer the case– 5 years ago import penetration 15%

– Now over 50%, leading to over capacity in UK

– UK extruders (big and small) have suffered through volume losses and selling price

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Estimated total market size: £500 M

Differentiated service offering, based on the value of local supply, is now key to Sapa’s success in the UK. But instant profitability analysis is also critical, particularly with the need for a changing mix of customers

Our challenge:Improve Margins While Protecting Volume

Value Generating Opportunities

Manufacturing

Product

Contract Terms

Services

Channel

Bra

nd

Customer Buying Behavior

Service Oriented

Price Sensitive

Mar

ket

Cost to Serve

Profit

Balance

Senior Management meet pVelocity

pVelocity asked Sapa Management who is Best / Worst customer?…..resulted in completely different views!

pVelocity took sample data and demonstrated profit mining capabilities – Manufacturing Profit Intelligence TM

– Provides the necessary intelligence about customers, products, and processes

– Enables decision makers to easily identify, analyse, and act on the relevant drivers of profitability

– Bridges the gap between production and financial systems

New KPI’s based on ‘profit velocity’ introduced Based on the success of the UK pilot pVelocity has been chosen by

Sapa Group as the preferred profitability software tool for extrusion companies

Manufacturing Profit Intelligence™

Manufacturing Profit Intelligence™ (MPI™)

– Bridge between production and financial systems

– Identify, Analyse, and Act on drivers of profitability:

– Customers

– Products

– Processes

Customer Segmentation based on Profitability

Strategies to:

Protect

^^

Grow

^^

Improve

Opportunities for

Improvement

High ValueCustomers

Proportion of Total Contribution

Proportion of Total Volume

Tonnage

Contribution

Number of Customers

Contribution per Press Hour

Value Proposition

• Identify poorly performing products

• Adjust batch sizes / price / process inefficiencies

• Allocate capacity to more efficient products

• Improve service level agreements

Low ProfitabilityNominal ProfitabilityHigh ProfitabilityCurrentCurrent

Low Profitability

Nominal ProfitabilityHigh ProfitabilityGoalGoal

Continuous Process

Product Portfolio / Capacity Utilisation

Sapa Customer Case Study

In January 2006 a major customer (15%) threatened to move to cheaper offshore supply

In response Sapa Profiles Ltd created a recovery plan 5 main targets:-

– Reduced price through economic batch sizes

– Eliminate small orders placed (other than samples)

– Reduce the frequency of orders using the same die (tool) within the same week

– Reduce the number of order lines placed by 30% (admin saving)

– Smooth daily ordering patterns to assist planning of presses and improve delivery performance

But, to achieve the plan and increase profit!

Plan implemented April 2006, results

5 main targets:-– Reduced price through economic batch sizes

– Eliminate small orders placed (other than samples)

– Reduce the frequency of orders using the same die (tool) within the same week

– Reduce the number of order lines placed by 30% (admin saving)

– Smooth daily ordering patterns to assist planning of presses and improve delivery performance

Price reduction for 1 ton lot sizes

Price premium if <250kg

Reduced by 1,000 order lines per qtr (35%)

Reduced by 75% for top runners

Improved capacity utilisation & delivery performance

Sapa Customer Case Study

Customer has not only stayed with Sapa Profiles but has increased our share of their business….

Future Plans with pVelocity MPITM

Initiate continuous PIPs (Profit Improvement Programmes) utilising pVelocity ‘profit mining’ capabilities

Roll out pVelocity to Sapa extrusion companies world wide (15 plants)

– All Profiles companies within Sapa Group will implement to a common, but adaptable standard (Framework)

Improved Sapa Group benchmarking opportunities through standardised KPI’s & software

….Visit the pVelocity stand for your interactive CD, containing various profit related white papers

Thank you.