commerzbank sector conference august 28, 2019 · takkt ag agenda 1. business model 2. strategy 3....

Commerzbank Sector Conference

August 28, 2019

TAKKT AG

Agenda

1. Business model

2. Strategy

3. Key performance figures and indicators

4. Financials Q2 and H1 2019

5. Impact IFRS 16

6. Outlook 2019

7. TAKKT share, dividend policy and equity story

August 2019 2Commerzbank Sector Conference

TAKKT AG

Business model


TAKKT AG

TAKKT is a group of B2B direct marketing specialists


TAKKT AG

TAKKT is organized into two segments and seven divisions

August 2019 5

TAKKT AMERICATAKKT EUROPE

Kaiser+Kraftgroup

Ratioformgroup

newportgroup

Hubert group

Central group

D2Ggroup

NBF group


TAKKT AG

restaurant equipment

Our divisions are product specialists and sell equipment and specialties with an overall average order value of 450 EUR

Kaiser+Kraftgroup

plant, warehouse and office equipment

ratioformgroup

packaging solutions

Newport group

new business models and

start-ups

D2Ggroup

displayproducts

Hubert group

merchandising and food

equipment

NBFgroup

office equipment

Central group

TAKKT EUROPE TAKKT AMERICA


TAKKT AG

Fragmented market environment offers good growth potential

August 2019 7

TAKKT companies either run a multi-channel or a web-focusedmodel

TAKKT companies partially use marketplaces as an additional sales channel

platform models (marketplaces)

multi-channel models

web-focused models70-90% 10-30%

Store-based businesses Direct-marketing


TAKKT AG

Our market position – value-add services for customers beyond pure distribution

Digital solutions

• Customers are offered tailored web shops and access to e-procurement solutions

• New solutions are developed based on new technologies and in collaboration with the customers

• More portals with self-service features being built

• Innovative solutions can be tested through investments in start-ups

Personal advice

• Experts help customers select the relevant product

• Sales representatives prepare personalized offers

• Product managers provide customized solutions and products on request

Easy procurement process

• Customers choose from preselected products

• Customers place the order using their preferred sales channel (online, print, tele and field activities)

• Own warehouses ensure fast deliveries

Full service

• Services range from personal advice, needs analysis, planning and offers through to delivery and assemblyof the products

• Long warranty periods

• Availability guarantee and ordering of spare parts over several years

Added valuesfor our

customers


TAKKT AG

Our multi-channel strategy offers multiple touch points for our customers according to individual preferences

Small businesses

Mid-sized corporates

Largecorporates

Customer Characteristics Channels

• Frequent and regular demand

• Focus on efficiency of procurement process and services

• Customer lifetime value (loyal)

• Less frequent, irregular demand

• Focus on price

• Transaction-oriented and less loyal


TAKKT AG

B2B direct marketing at a glance

August 2019 10

• Most efficient way to market and distribute in the B2B market

• Constant gain of market share versus local, store-based retail network

• Clear business model which will benefit from the trends towards e-commerce and digitalization

• High profitability (EBITDA margin 12-16%) with a comparably low capital need (capex 1-2% of sales)


TAKKT AG

Strategy


TAKKT AG

Four strategic goals

August 2019 12

Grow profitably

Organic growth(3-5% p.a. on average)

• Attractive market environment• Digitalize the core business• Develop new business models• Reshape the role of TAKKT AG

Growth through acquisitions(around 5% p.a. on average)

• Expansion of the customer valueproposition

• Strengthening existing businesses• Tapping into new target markets

Profitability(EBITDA margin between 12 and 16%)

• Best balance to develop a sustainable and profitable Group

• Significantly increase e-commerce business until 2020

• Sustainable organizational transformation

• Investments of EUR 50 million

Digitalize the core business

• Regional diversification• Diversified share of sales with

various customer groups• Balanced product range

Diversify risk

• Industry role model for sustainability

• Sustainability as “built-in” rather than an “add-on” in the day-to-day corporate management

Act sustainably

1

2 3 4


TAKKT AG

Environment for younger, fast-growing business models

Allow a more independent positioning and enable a better focus on the requirements of smaller business customers

Investments in innovative start-upsand implementation of digital solutions and technologies

Grow profitably: Three strategic initiatives to drive organic growth

August 2019 13

More than 100 measures in 6 areas

Digitalize the core business Develop new business models Reshape the role of TAKKT AG

Expand activities to increase thevalue of individual companies

Among others, this includes drivingstrategic intitatives, selection oftarget markets, portfoliomanagement and strategic personnelmanagement

Increased focus on operational excellence as well as data & analyticswith an expert team for each thesetopics in both Europe and the US


TAKKT AG

Grow profitably:E-Commerce competency secures growth

August 2019 14

10.6%

7.9%

11.6%

2016 2017 2018

Organic e-commerce growth (in percent)

52.1%

30.1%36.5%

43.9% 46.8%

2014 2015 2016 2017 2018

Share of e-commerce in order intake (in percent)


TAKKT AG

• Suitable additions to existingactivities

• Focus on unlocking synergiesand improving the marketposition

Grow profitably: Revised M&A strategy with broader profile

August 2019 15

• Increase customer valueproposition by acquiring(smaller) pre- and post-salesactivities

• Expand existing range ofservices with solutions formanufacturing or refiningproducts

Enriching thecustomer value proposition

Expanding existing businesses

• Establish an additional divisionin the TAKKT Group

• Targets should have a sufficientsize (over EUR 50m) and operate in attractive marketenvironment

Tapping into new target markets


TAKKT AG August 2019 16

Grow profitably: Strengthening market intelligence and refining criteria to reflect broader profile

• Profitability requirementrelevant for ‚new targetmarkets‘ and ‚expanding ofexisting activities‘

• Advanced digital maturitylevel and e-commerceexpertise

• Gaining expertise and talent

Acquisition criteria

• Broaden the Group‘s profileand customer valueproposition

• Stronger focus on addedvalue through additional service offerings

• Additional growth and diversification of the Group

Acquisition goals

• Strengthen marketintelligence capabilities

• Implementation of a processto identify relevant trendsand attractive target markets

• Shift away from a moreopportunistic M&A approach

Market intelligence



Grow profitably:Acquisition of XXLhoreca strengthens newport division in Europe

• E-commerce business specialized in food service products for hotels, restaurants and catering companies

• Sales of EUR 14m with a double-digit EBITDA margin

• Active as a one-stop shop in the Netherlands, Belgium and France, and now also in Germany and Austria


TAKKT AG

Diversify risks:Diversification on regions, customers and product ranges

August 2019 18

44%

23%

33%

Regions

North America

Germany

Europe without Germany

2018

Balanced contribution to sales from two continents

28%

16%23%

13%

20%

Costumer groups

ManufacturingTradeServicesNon-profit and public organizationsOthers

2018

Low dependency from single customer groups

17%

17%

25%

14%

9%

13%5%

Product ranges

Storage and TransportPlant and EnvironmentOfficeFood and DiningPackaging and ShippingSales Promotion

2018

Broad product portfolio –multi-purpose use


TAKKT AG

Act sustainably:Role model for sustainability in our industry

August 2019 19

Direct marketing is more carbon-efficient than local stores

Lower carbon footprint by increased efforts to furtherreduce or compensate for emissions(e.g. carbon-neutral shipping)

Efficiency of the direct marketing model

Compliance with UN Global Compact since 2012

Reporting according to most recent GRI standards at “comprehensive” application level

German CSR Award 2018 in the „Ecological Commitment“ category

Compliance and reporting

Expansion of the supplier evaluation program

Carbon-neutral print advertising

Emissions from parcel and cargo shipmentsto be offset to a large degree

Activities along the value chain

TAKKT has defined non-financial performance indicators and determined goals and

measures to be achieved by 2020

Focus areas entail sourcing, marketing, logistics, resources & climate, employees and society

Ambitious targets for 2020


TAKKT AG

Key performance figures andindicators


TAKKT AG

Overview of key performance figures and indicators

August 2019 21

• Organic sales development• Number of orders and average order

value• Gross profit margin• EBITDA margin• TAKKT cash flow margin• Capital expenditure ratio

Financial key figures

• TAKKT value added• Return on Capital Employed (ROCE)

Value-based figures

• Share of private labels in order intake• Share of direct imports in purchase

volume

Product range figures

• Equity ratio• Debt repayment period• Interest cover• Gearing (debt-equity ratio)

Internal covenants

• Launched and completed measures• Newly created positions• Additional personnel expenses• Other expenses• Capital expenditure and start-up

investments• Organic e-commerce growth• Share of e-commerce in order intake

Digital agenda indicators

• A total of 16 indicators across the six focus areas sourcing, marketing, logistics, resources & climate, employees and society

Sustainability indicators


TAKKT AG

Financial key figures

August 2019 22

in EUR million 2014 2015 2016 2017 2018

Organic sales development in percent 5.5 4.7 5.2 0.4 3.4

Number of orders in thousand 2,182 2,225 2,409 2,465 2,676

Average order value in EUR 450 482 469 458 449

Gross profit margin in percent 42.6 42.6 42.6 42.5 41.5

EBITDA margin in percent 14.0 14.8 15.2 13.5 12.7

TAKKT cash flow margin in percent 10.1 10.7 11.2 9.8 10.2

Capital expenditure ratio in percent 1.4 1.3 1.5 2.1 1.8


TAKKT AG

10.0%12.1%

13.7%15.5%

17.9%

2014 2015 2016 2017 2018

Product range figures

August 2019 23

14.7%15.9%

18.3%20.7% 21.7%

2014 2015 2016 2017 2018

Share of private labels in order intake (in %) Share of direct imports in purchase volume (in %)


TAKKT AG

Digital agenda indicators

August 2019 24

30.1%36.5%

43.9%46.8%

52.1%

2014 2015 2016 2017 2018

26

78

98

130

2016 2017 2018 2019e

Number of digital talents

100114

27

44

2017 2018

Launched and completed measures Share of e-commerce in order intake (in percent)

7.9%

11.6%

2017 2018

Organic e-commerce growth (in percent)

Launched

Completed


TAKKT AG

Our plan is to invest around € 50 million until 2020 for the implementation of our digital agenda and up to € 20 million for start-up investments

August 2019 25

In EUR million 2016 2017 2018 2019 BUD 2020e

Additional personnel expenses (year-on-year) 0.6 3.9 2.9 2 2

Other expenses 1.9 3.8 4.0 4 4

Capital expenditure 1.4 8.7 8.4 6 6

Digital agenda cost (investment view) 3.9 16.5 15.3 12 12

Personnel expenses (cumulative) 0.6 4.4 7.3 9 11

Other expenses 1.9 3.8 4.0 4 4

Digital agenda cost (EBITDA impact) 2.5 8.3 11.3 13 15

TAKKT Start-up investments 1.0 4.5 2.3 4 4


TAKKT AG

18.928.5

38.3 43.130.4

7.6

8.4

8.57.3

7.226.5

36.9

46.850.4

37.6

2014 2015 2016 2017 2018

14.4%

15.7%16.5%

14.6%14.0%

2014 2015 2016 2017 2018

Value-based figures

August 2019 26

Return on Capital Employed (in %)TAKKT value added (in EUR million)

* Adjusted for amortization of intangible assets resulting from acquisitions and the related tax impact.

*

*

**

*


TAKKT AG

Internal covenants

August 2019 27

2.52.2

1.61.4 1.4

2014 2015 2016 2017 2018

9.8

14.4

18.316.3

23.8

2014 2015 2016 2017 2018

0.6

0.5

0.3

0.2 0.2

2014 2015 2016 2017 2018

43.8%49.1%

55.2%61.2% 60.8%

2014 2015 2016 2017 2018

Equity ratio (in %) Debt repayment period (in years)

Interest cover Gearing


TAKKT AG

Sustainability indicators

August 2019 28

Focus area Key figure 2014 2015 2016 2017 2018

Sourcing

Share of sourcing volume from certified suppliers 23.7% 36.3% 40.5% 46.8% 44.2%

Share of direct imports sourcing volume from certified suppliers 39.8% 39.3%

Share of sales from sustainable product ranges 6.6% 9.6% 9.8% 9.3% 9.5%

Marketing

Carbon-neutral web shops for major companies 7 12

Paper consumption print advertising materials per order 5.4kg 4.2kg

Share of carbon-neutral advertising materials 12.1% 19.9%

LogisticsShare of carbon-neutral parcel delivery 91.4% 93.5%

Share of carbon-neutral general cargo delivery 44.7% 48.9%

Resources and Climate

Major companies with carbon footprint 7 10 10 13 13

Major companies with a certified environmental mgmt. system 1 3 3 6 6

Major companies with a certified energy management system 4 4

Energy consumption at GER / US locations per order in megajoule 70.6 66.7

EmployeesShare of retained „digital talents“ 90.9% 89.9%

Share of women in top executive positions 10.5% 12.3%

Society

Percentage of employees who have the opportunity to take a paid leave for local volunteer involvement

18.4% 37.9% 41.2% 65.7% 70.2%

Percentage of employees who took part in local volunteer projects 15.1% 18.0%


TAKKT AG

Financials Q2 and H1 2019


TAKKT AG

As expected, the Group is feeling the impact of a weaker economy in the second quarter

August 2019 30

• Sales increase by 3.6% • Positive effects from portfolio changes (+1.5%) and from

currency fluctuations (+2.8%)• Organic sales development of minus 0.7%, also due to less

working days and a slowing demand in Europe• Expected termination of a business relationship with a major

Hubert customer has a negative impact on organic growth (around 1.5%)

• EBITDA margin at 13.1% (12.2%)• First-time application of IFRS 16 has a positive effect of

around one percentage point on the EBITDA margin• Cost management allows for stable profitability on a like-

for-like basis despite slow growth

291.2 301.8

Q2/18 Q2/19

35.639.6

12.2% 13.1%

Q2/18 Q2/19

Sales (in EUR million) EBITDA (in EUR million) and margin (in %)


TAKKT AG

Slowing demand from individual customer groups in Europe

August 2019 31

159.5 164.5

Q2/18 Q2/19

26.1 27.4

16.4% 16.7%

Q2/18 Q2/19


• Sales increase by 3.1%• Contributions from acquisitions of Runelandhs and XXLhoreca

(+3.9%) while currency effects are marginal (+0.2%) • Organic sales development of minus 1.0% due to less working

days and very slow demand from individual customer groups• KAISER+KRAFT and ratioform with a slightly negative organic

development; Newport with double-digit growth


around one percentage point on the EBITDA margin• Structural adjustments at Ratioform with a negative impact

on profitability


TAKKT AG

Underlying growth in the US still on a solid level

August 2019 32

131.7 137.4

Q2/18 Q2/19

12.9

15.5

9.8%11.3%

Q2/18 Q2/19


• Sales increase by 4.2%• Negative portfolio effect (-1.2%) from discontinuation of

Hubert Europe while currency effects are positive (+5.9%)• Organic sales development of minus 0.5%• Negative impact of around 3 percent on organic growth from

phase-out of business with a major Hubert customer • Underlying business at Hubert with organic growth; D2G with

low and NBF with mid single-digit growth; Central slightly negative


around one percentage point on the EBITDA margin• Discontinuation of Hubert’s unprofitable European activities

with a positive impact on the margin while repositioning of Hubert and integration of Post-Up Stand into Displays2go weigh on earnings


TAKKT AG

TAKKT Group with the expected weaker Q2 after a good start to the year

August 2019 33

• Sales increase by 7.3% • Organic sales growth of 2.1%• Positive effects from portfolio changes (+2.0%) and from

currency fluctuations (+3.2%)


around one percentage point on the EBITDA margin

567.2608.7

H1/18 H1/19

69.078.7

12.2% 12.9%

H1/18 H1/19



TAKKT AG

319.5 340.5

H1/18 H1/19

53.357.4

16.7% 16.8%

H1/18 H1/19

Substantial contributions from acquisitions allow good growth at TAKKT EUROPE

August 2019 34


• Sales increase of 6.6%• Additional contributions from acquisitions of Office-

FurnitureOnline, Runelandhs and XXLhoreca (+4.7%) while currency effects are marginal (+0.1%)

• Organic sales growth of 1.8%• KAISER+KRAFT with a slightly negative organic development.

ratioform with low single-digit organic growth; Newport in the double-digits


around one percentage point on the EBITDA margin• Structural effect from acquisitions and structural

adjustments at ratioform have a negative impact on profitability


TAKKT AG

23.4

28.4

9.4%10.6%

H1/18 H1/19

Positive currency effect from the US-Dollar adds to good organic growth in the US

August 2019 35


• Sales increase by 8.2%• Discontinuation of Hubert’s European business with a

negative portfolio effect (-1.4%)• Positive currency effects (+7.1%) due to a stronger USD• Organic sales growth of 2.5%• Negative impact of around 2 percent on organic growth from

phase-out of business with a major Hubert customer • Hubert on a like-for-like basis and D2G with mid, NBF with

high single-digit organic growth; flat development at Central


around one percentage point on the EBITDA margin• Discontinuation of Hubert’s unprofitable European activities

with a positive impact on the margin• Repositioning of Hubert and integration of Post-Up Stand into

Displays2go with a negative effect on earnings

247.9268.2

H1/18 H1/19


TAKKT AG

Increase in TAKKT cash flow also due to IFRS 16

August 2019 36

in EUR million H1/18 H1/19

profit 37.9 39.6

+ depreciation +14.1 +19.9

+/- deferred taxes expense/income +0.9 +1.3

+/- other non-cash expenses/income +2.5 +1.5

TAKKT cash flow 55.4 62.3

55.4

62.3

9.8% 10.2%

H1/18 H1/19

TAKKT cash flow (in EUR million) and margin (in %)


EBITDA 69.0 78.7

- financial result -2.9 -4.6

- current taxes -13.2 -13.3

+/- other non-cash expenses/income +2.5 +1.5


• Definition of TAKKT cash flow was adjusted at the beginning of 2019. Adjusted TAKKT cash flow shown for H1/18 is EUR 2.5 million higher compared to the figure published last year

• Positive impact on TAKKT cash flow margin from new lease accounting (IFRS 16) of around one percentage point


TAKKT AG

Strong cash flow generation

August 2019 37



Change in net working capital as well as other adjustments

-12.0 +1.9

Cash flow from operating activities 43.4 64.2

Capital expenditure in non-current assets -13.4 -11.9

Proceeds from disposal of non-current assets +0.2 +0.6

Free TAKKT cash flow(for acquisitions, payout to shareholders and loan repayments)

30.2 52.9

• IFRS 16 with the same positive impact on TAKKT cash flow as on EBITDA

• Net working capital: Release of inventory in H1/19 after inventory build-up due to expectation of rising import tariffs in 2018

• Capital expenditure: Slightly lower than prior year; continued investments into digital agenda


TAKKT AG

Still a very solid balance sheet despite acquisition and dividend payouts

August 2019 38

150.8

231.4

12/31/2018 06/30/2019

60.8%55.0%

12/31/2018 06/30/2019

Net financial liabilities (in EUR million)

• Application of IFRS 16 resulted in an increase of around EUR 54 million in net financial liabilities

• Financing of XXLhoreca acquisition and dividend payout also led to an increase in liabilities

• Decrease in equity, mainly due to dividend payout, andincrease in liabilities resulted in lower equity ratio

Equity ratio (in %)


TAKKT AG

Impact IFRS 16


TAKKT AG

Application of IFRS 16 will impact balance sheet and earnings figures

August 2019 40

Expected impact on profit and loss in 2019(in EUR million)

∆

Other operating expenses(Operating leasing and rents)

-12

EBITDA +12

Depreciation -11

Finance expenses -2

Profit -1

Expected impact on balance sheet in 2019(in EUR million)

∆

Property, plant and equipment +55

Liabilities +55

• Positive effect of around one percentage pointon EBITDA margin from 2019 onward

• Negative effect of around 3 percentage pointson equity ratio

→ As a result, TAKKT has widened its EBITDA margin targetcorridor to 12 – 16 percent


TAKKT AG

Outlook 2019


TAKKT AG

Organic sales growth

42August 2019

Organic growth 2017 Q1/18 Q2/18 Q3/18 Q4/18 2018 Q1/19 Q2/19 H1/19

TAKKT Group +0.4% -1.0% +4.7% +5.0% +5.0% +3.4% +5.0% -0.7% +2.1%

TAKKT Europe +2.6% +0.6% +5.9% +6.1% +4.1% +4.1% +4.5% -1.0% +1.8%

TAKKT America -1.9% -2.8% +3.5% +4.0% +6.1% +2.7% +5.8% -0.5% +2.5%



Outlook: If market conditions do not deteriorate further, TAKKT expects slightly positive organic growth and an EBITDA margin between 12 and 14 percent for the full year

Expectations for H2/19Economic environment Forecast TAKKT Group

• Decreasing GDP growth projections for 2019 for both Europe and the US

• US with significantly stronger growth rate than Europe

• Trade conflict with negative impact on economic development

• Industry indicators point to difficult environment in Europe, while US markets are still positive

• Forecast remains valid under the assumption that the market conditions do not deteriorate further

• The termination of the business relationship with a major Hubert customer will continue to have the expected negative impact on organic growth in the second half

• TAKKT will continue with disciplined cost management

• If the reluctance of individual sectors intensifies or spreads to other markets and regions, a slightly negative organic sales development is also possible. In this case, profitability could be toward the low end of the range of 12 to 14 percent.

Slightly positiveorganic sales growth

EBITDA marginof 12 - 14%


TAKKT AG

TAKKT share, dividend policy and equity story


TAKKT AG

TAKKT share performance, shareholder structure and analyst recommendations

August 2019 45

50

100

150

200

TAKKT DAX MDax SDAX

50.2%49.8%Franz Haniel &Cie.Free float

Shareholder structure

5

2

1

Buy

Hold

Sell

Analyst recommendations

Total Shareholder Return: TAKKT and indices

Average price target of EUR 16.6


TAKKT AG

TAKKT dividend policy

August 2019 46

Annual payment of base dividendincreased or stable since IPO in 1999

Payout for 2018

EUR 0.85 per share(EUR 0.55 base dividend plus

EUR 0.30 special dividend)

Reliable dividend policy

• Payout ratio within a corridor of 35 to 45 percent of the profit

• TAKKT aims for a consistent and reliable dividend stream

• Willingness to return funds to shareholders via a special dividend when equity ratio is high and funds cannot be reinvested. Payment of special dividend for fiscal years 2008, 2011 and for 2018.

Attractive dividend

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dividend per share in Euro

0.85

0.32

0.80

0.32 0.32 0.32 0.32

0.50 0.55 0.55

0.85

0.32 0.32

0.55


TAKKT AG

TAKKT equity story at a glance

August 2019 47

38.5% 40.5% 41.4% 43.6% 41.5%

1999 2003 2008 2013 2018

Gross profit margin > 40% (target)

Reliable dividend payouts (in EUR)

11.2% 11.2%14.3% 12.9% 12.7%

1999 2003 2008 2013 2018

EBITDA margin 12-15% (target)

7.4% 7.3%10.4% 8.8% 10.2%

1999 2003 2008 2013 2018

TAKKT cash flow margin > 8% (target)

0.32 0.32 0.50 0.55 0.55 0.85

2013 2014 2015 2016 2017 2018

Dividend EPS

1.34

0.801.00

1.24 1.39 1.47

Group companies are market-leaders in attractive market niches with high operational margins

TAKKT is a worldwide, diversified group of B2B direct-marketing specialists for business equipment

Growth opportunities through organic initiatives (digital agenda)as well as upside from opportunistic acquisitions

Business model generates high free cash flows and allows stable dividend payouts

EBITDA margin corridor between 12 and 16%

Stable, long-term oriented shareholder structure with Franz Haniel & Cie. GmbHas majority shareholder


TAKKT AG

TAKKT investor relations

August 2019 48

10

12

14

16

18

20

Aug Oct Dec Feb Apr Jun Aug

IR Contact

Christian Warns / Benjamin BühlerPhone: +49 711 3465-8222 / -8223Fax: +49 711 3465-8100e-mail: [email protected]

www.takkt.comTAKKT AG is headquartered in Stuttgart, Germany.

Upcoming Events

Basic data TAKKT share Historic share price development (Xetra)

ISIN / WKN / Ticker DE0007446007 / 744600 / TTK

No. shares 65,610,331

Type No-par-value bearer shares

Share capital EUR 65,610,331

Listing September 15, 1999

Index SDAX, prime standard

Designated sponsors Pareto Securities, Oddo Seydler, Hauck & Aufhäuser

TAKKT AG

August28. Commerzbank Sector Conference, Frankfurt

September24. Berenberg and Goldman Sachs GCC, Munich

October24. Earnings Call Q3 2019


mailto:[email protected]

http://www.takkt.com/

commerzbank sector conference august 28, 2019 · takkt ag agenda 1. business model 2. strategy 3....

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