2008-02-13 - small & mid cap seminar sns securities · pdf filesmall & mid cap seminar...

Power of PartnershipPage 1

KENDRION N.V.

Small & Mid Cap Seminar SNS Securities

13 February 2008

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Agenda 13 February 20081. Kendrion at a glance

2. Most important developments 2007

3. Acquisition Linnig Antriebstechnik

4. Disposal Automotive Metals

5. Key figures 1st nine months 2007

6. Our divisions

7. Financial position

8. Dividend policy

1. Kendrion at a glance

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Kendrion: Niche player in B2B markets

Division Kendrion ElectromagneticTurnover approximately EUR 200 million

Active in 10 countriesAbout 1,300 employees

Division Kendrion Distribution ServicesTurnover approximately EUR 350 million

Active in 13 countriesAbout 1,100 employees

Kendrion N.V.

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Kendrion aims to be high performer in selected business areas

MissionMission StrategyStrategy ObjectivesObjectives

Organic Growth > 5%

ROI > 20%

More and more focused company

Organic Growth > 5%

ROI > 20%

More and more focused company

Build niche market leader positions in business-to-

business markets

Create operational and commercial synergies

between companies in each business area.

Drive efficiency improvement of operations

Build niche market leader positions in business-to-

business markets

Create operational and commercial synergies

between companies in each business area.

Drive efficiency improvement of operations

Developing business areas with strong international

market positions in selected business-to-business niche

markets, whereever possible as market leader

Developing business areas with strong international

market positions in selected business-to-business niche

markets, whereever possible as market leader

2. Most important developments 2007

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Most important developments so far

Improved focus according to strategy “Focused acceleration”

Acquisition of Linnig Antriebstechnik

Disposal of Automotive Metals

New finance arrangement

Publication results 2007 on 26 February 2008

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“Focused Acceleration”

Kendrion in 2008Real niche playerMarket leaderClear focusStrong balanceROI target > 20%

3. Acquisition Linnig Antriebstechnik

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Facts Linnig Antriebstechnik

- Turnover 40 Mill. Euro- 5 Companies- 210 Employees- 5 Countries

Production in:- Germany 160 Employees- USA 15 Employees- China 10 Employees- Mexico 15 Employees- Brasil 10 Employees

Facts and figures:

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Facts Linnig Antriebstechnik

Linnig products

- Angle gear fan drive- Fan bracket- Torsional vibration damper- Deflection pulley- Compressor clutch

4. Disposal Automotive Metals

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Facts

Turnover approximately EUR 110 millionSold to Swedish investors with management participationRevenue EUR 35 millionBook loss EUR 10 million including write off goodwill, deferred tax assets and expenses.Closing end 2007

5. Key figures 1st nine months 2007

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Key figures 1st nine months 2007

Excluding non-recurring writedown of deferred tax assets (non-cash) of EUR 3.1 million reflecting the reduction in the German corporation tax rate as from 1 January 2008. Including this non-recurring writedown, there was a net loss of EUR 1.2 million in the third quarter.

1

Q1-3 2007 Q1-3 2006

Revenu 455.2 418

Operating profit 20.6 18.8

Net profit 1 11.2 10.5

6. Our divisions

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Turnover 2008 > EUR 200 million

Leading position in Europe

Size market EUR 3.0 billion, Europe EUR 1.5 billion

Good geographical spread

Increasing market (applications)

Division Kendrion Electromagnetic

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Plant Villingen, Germany

Division Kendrion Electromagnetic

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Plant Donaueschingen, Germany

Division Kendrion Electromagnetic

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Plant Engelswies, Germany

Division Kendrion Electromagnetic

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Plant Eibiswald, Austria

Division Kendrion Electromagnetic

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Plant Prostejov, Czech republic

Division Kendrion Electromagnetic

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Plant Suzhou, China

Division Kendrion Electromagnetic

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Production Know-how

- Product-specific assembly line

- Highly automated production

Division Kendrion Electromagnetic

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Production Know-how

- State of the art production technology and assembly plants

- Integrated 100% end of line testingfor each product

Division Kendrion Electromagnetic

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small competitors world wide

Lenze

ETO

KECSchulzKuhnke

Warner ElectricBorg Warner

Bosch

Harting NASS EKS Thomas small competitors world wide

Lenze

ETO

KECSchulzKuhnke

Warner ElectricBorg Warner

Bosch

Harting NASS EKS Thomas

Consolidation is a mustin this fragmentedmarket.

- Technology driven, over engineered

Historical sales trends

> 3 Billion € world wide (1.5 Billion € in Europe)

Size

- Technology driven, over engineered

Historical sales trends

> 3 Billion € world wide (1.5 Billion € in Europe)

Size

- Outsourcing by big OEM‘s(active partners)

- Looking for problem solver(global competitiveness)

- Cost pressure- Global presence

Factors impacting trends

- Outsourcing by big OEM‘s(active partners)

- Looking for problem solver(global competitiveness)

- Cost pressure- Global presence

Factors impacting trends

Market characteristics

Main competitors

Market and competitive

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Customers

Type of contracts

- 60 % long term > 5 years- 25 % applications- 15 % standard

Company dependency on customers: low

Customer sales drivers

2% 2% 2% 3% 3%4%

4%

10%

8%

12%

50%

Bosch Rexroth Schindler Stoll Automotive LigthingBosch Hydraulikring Hella KG ZF LemföferSiemens AG Daimler Others

- Technology- Problem solver- Global positioned (NA, Asia)- Price

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Division Kendrion Electromagnetic

Excellent development, good market circumstances

Organic growth in turnover 10-15%

Growth in both industrial activities as well as in automotiveactivities

Many new orders

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Division Kendrion Electromagnetic

Limited niches innovation leadership by R + D synergies

Clear structure efficiency decentralized, unbureaucratic

Kendrion Electromagnetic

Automotive Industrial

Cars

Busses

Magnetic Systems

Power Transmission

Focused

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Division Kendrion Electromagnetic

Worldwide increasing importance for:

- Safety

- Environment target markets for KE

- Comfort

New acquisition Linnig is exactly in line:Focused on fuel – consumption and comfort.

Focused acceleration

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Division Kendrion ElectromagneticAutomotive Systems

Possible applications in the automotive sector Safety Environment ComfortSafety Environment Comfort

Oil control

Headlights:• Adjustment

Air conditioning technology:• Thermal management

Top operation:• 3/2 solenoid valve

Switch mechanisms:• Shift lock-solenoids• Key lock-solenoids• Interlock-solenoids

Transmissions:• Automatic control gear• All-wheel hook up / cut off• Interlock• Power allocation

Doors/deck lids:• Doors/deck lid

actuation• Closing systems

Chassis:• Active buffer

Motor management:• Camshaft displacement• 3/2 pneumatic solenoid• Common rail injection

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Division Kendrion ElectromagneticAutomotive Systems

Automotive Systems in 1st nine months 2007

Organic growth 16%

Remains turbulent market with a lot of price pressure

Good expectations for common rail technology(>EUR 30 mln turnover in 2009/2010)High investments

Strong growth in Czech Republic (this year expansion of the production)Also growth in USA in the coming years (new projects)

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Business model

Increased customised solenoids

Service model for catalogue products

Many customers a.o. world players

Engineering, logistics and delivery time most important drivers

Division Kendrion ElectromagneticIndustrial Systems

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Division Kendrion ElectromagneticIndustrial Systems

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Division Kendrion ElectromagneticIndustrial Systems

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Division Kendrion ElectromagneticIndustrial Systems

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Division Kendrion ElectromagneticIndustrial Systems

Industrial Systems in 1st nine months 2007

Organic growth 15%

Benefits from good market situation in machine building

Strengthened international sales organisation

First large order in USA (Siemens, post ordering system)

China develops step by step

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Competitive advantagesKnow how of decadesReliable partner, solid and edifying know howFast delivery time

RisksRaw material market, especially copper

Division Kendrion Electromagnetic

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Division Kendrion Electromagnetic

Conclusion

Excellent development with strong organic growth

Acquisition opportunities get a lot of attention

A lot of perspective

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Preferred plastics supplier in Europe

Market leader active in 14 countries

More and more focus on added value (machining, industry)

Central marketing and logistics improvement

Increasing market share in key countries

Division Kendrion Distribution ServicesVink

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Division Kendrion Distribution ServicesVink and Servico (1)

Organic growth in turnover 1st nine months 2007 approximately 4% (Q3 5.5%) Growth in turnover and growth operating result depressed by implementation Vink broad applied ICT system in NLExcellent performance in Scandinavia and BelgiumImprovements visible in France, strong revenue growthAlso strong revenue growth in Germany, margin still too low

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Division Kendrion Distribution ServicesVink and Servico (2)

In Germany new warehouse brought into use in accordance with strategy (extra costs)Central management Vink Group more and more in place (purchase, marketing, logistics)Small acquisition France

Unexpected sharp decline Q3 revenue / results Servico due to model changes

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Vink Group

In most European countriesVink is is synonymouswith Plastics

– Distribution

– Knowledge

– Application

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Vink is focused on serving in the following market segments

• Signs & Graphics• Industry• Building & Construction

What does Vink do?

Vink is a plastics supplier offering competency in the following main areas:

• Distribution of semi-finished plastic materials• Engineering and production of customer specific, manufactured

plastic products and components• Systems solutions

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Brief description of the market segments

• Signs & Graphics:From signs, selfadhesive lettering and banners to shop interiors and displays.

• Industry:From transport guides in conveyor systems, glazing forforrestry machines to parts of water treatmentinstallations and windwills.

• Building & Construction:From facades, stadion roof, green houses to shop securityand sound walls.

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Vink Group in 2008

• 33 locations in 13 European countries

• 50,000 active customers

• 1,100 dedicated employees

• Over 400 persons in commercial functions

• 30,000 different products on stockin 26 warehouses

• 5 modern machine shops in NL, B, DK, S and Fi

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Locations in Europa2008

• “Act Local - Support Global”• 13 countries / 4 regions• Headquarters in Zeist• Group Functions

– Marketing / business development

– Production development– “Supply Chain”– Purchasing– IT / Systemen– Controlling & Analysis

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Plaatjeolie

plaatjeraffinage

Now and in the future

Find and deliver the best plastic solution, starting from the application atthe customer

Oil

Extrusion

Machining

Refinery

End customerApplication

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Market situation and competition Vink

DK

Nor

Swe

Fin

Bel

NL

Ger

Fra

UK

Ire CH

Cze

Hun

VinkAmari

0

5

10

15

20

25

30

35

Vink Thyssen Amari Sunclear

Market share %

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What are Vink’s markets and who areour customers?

Signs & Graphics

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Industry

from machine part to wind mill

Industry: machined product

Industry: installation

Corrosion free constructions for theChemical- and water treatment industry

Building & Construction

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Billboards in stadiumsCustomers: advertisingagencies

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Shop interiors

Customers: interior decorators and shop fitters

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Cinema lobby

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Printed foil for a restaurant interior

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The perception of plasticshas changed

• Perception then:– “plastic” and “nylon”– cheap, fake – bad for the environment

• Perception now:– plastics have countless applications– high tech– durable and responsible

Total plastics market in Europe; more than Euro 200 billionof which 6 billion in semi finished products

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Vink combines competencies in 3 areas

Distribution:High serviceleveland cost efficiency

DistributionProduction

Plastics

Information Technology

Clearprocesses

People

VINKAdded value:KnowledgeDrivensolutions

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Main points Vink strategy

• Focus on the customer

• Market segment focus

• Supply Chain Excellence

• Services (added value) aimed at solutions

• Targeted acquisitions:– Critical mass in existing countries (France and Germany)– New growth markets– Machining facilities

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Organic growth

9 months 2007 2006 2005 2004 Target

Electromagnetic 15.0% 12.6% 8.0% 7.8% > 10%

Distribution Services 4.0% 5.3% 7.8% 4.6% > 5%

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ROS (12 months rolling)

HY1 2007 2006 2005 2004 2003 Target

Electromagnetic 9.2% 9.0% 9.0% 9.2% 7.2% > 10%

Distribution Services 4.3% 4.2% 4.2% 3.5% 1.9% > 5%

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ROI (12 months rolling)

HY1 2007 2006 2005 2004 2003 Target

Electromagnetic 24.7% 24.3% 22.4% 20.0% 14.9% > 25%

Distribution Services 23.0% 23.4% 22.3% 15.5% 10.6% > 20%

7. Financial position

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Financial position

Solvency approximately 28 - 30%

Renewed financial arrangements with our bank consortium

High capital expenditure 2007 (as planned)

Available for acquisitions approximately EUR 40 million

8. Dividend policy

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Dividend policy

With continuation current state of affairs paying dividend over 2007 is considered

Decision will be taken beginning 2008

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