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SIX MONTHS REPORT, JAN‐JUN 2017TELEPHONE/AUDIO CONFERENCE 12 JULY 2017, AT 11.00 CETTOMMY ANDERSSON, PRESIDENT AND CEO | HELENA WENNERSTRÖM, EVP AND CFO
SAVE THE DATE
CAPITAL MARKET DAY SEPTEMBER 21, 2017
AGENDA
1. Bulten in brief2. Market development3. Second quarter 20174. Going forward
4
BULTEN IS A LEADING SUPPLIER OF FASTENERS TO THE INTERNATIONAL AUTOMOTIVE INDUSTRY
VISION
FOOTPRINT
Bulten shall be the leading business partner and the most cost‐effectivesupplier of fasteners and services to the automotive industry. Bulten shall with empowered and dedicated people continuously develop its full service concept and actively launch innovations. Bulten shall develop long‐term relations based on professionalism and good business ethics.
BUSINESS CONCEPT FINANCIAL TARGETS
To grow stronger than the industry in averageOperating Profit (EBIT) > 7%Return on Capital Employed (ROCE) > 15%
Supporting the global automotive industry with state of the art fastener technology and services.
Corporate presentation
HEAD OFFICE
PRODUCTION
SALES
LOGISTICS
PRE DEVELOPMENT
PRODUCT DEVELOPMENT
STRONG CUSTOMER BASE AND RELATIONSHIPS WITH MAJOR VEHICLE OEMS AS WELL AS TIER 1 SUPPLIERS
75%Share of Bulten’s sale, YTD 2015 .
v
11%
TIER AUTOMOTIVE SUPPLIERS
OEMs LIGHT VEHICLES
76%
OEMs HEAVY VEHICLES
13%
Selection of customers. Share of Bulten’s sales YTD
28%
5SIX MONTHS REPORT, 2017
2. MARKET DEVELOPMENT
BULTEN MARKET SHARE DEVELOPMENT
Management estimates*:
Market share 17% of the European market of fasteners for the automotive industry 2016, flat versus 2015.
Market share of FSP contracts for the same market to be 60% 2016, flat versus 2015.
7
BULTEN MARKET SHARE DEVELOPMENT
45%56% 60% 60%
0%10%20%30%40%50%60%70%
Market share of European fastener FSPcontracts
2013
2014
2015
2016
* Based on data from EIFI (European Industrial Fasteners Institute)
11%14%
17% 17%
0%
5%
10%
15%
20%
Market share of total European fasteners
2013
2014
2015
2016
SIX MONTHS REPORT, 2017
MARKET DEVELOPMENT
LMC Automotive reports for automotive production in Europe, 2017:
Production of LV in 2017 up by 1.8% compared to 2016 Production of HCV (>15 t) in 2017 up by 4.0% compared to 2016 For Bulten’s mix, up 2.1%
• LV stands for ~87% of sales • HCV stands ~13% of sales
ACEA reports for LV sales in Europe for the five first months, 2017
European LV sales for the five first months, 2017 up 5.3% compared to 2016
8SIX MONTHS REPORT, 2017
Source: LMC Automotive Q2, 2017. ACEA five months, 2017
LMC AUTOMOTIVE REPORTS FOR AUTOMOTIVE PRODUCTION IN EUROPE
LMC Automotive (Q2 2017 report) has not changed its forecast level on LV production 2017 compared to the Q1 2017 report. LMCA forecast an increase of 1.8% compared to 2016.
LMC Automotive (Q2 2017 report) has increased its forecast of HCV production 2017 compared to the Q1 2017 report with 1.1%, to an increase of 4.0% compared to 2016.
9SIX MONTHS REPORT, 2017
PRODUCTION GROWTH RATE (YEAR ON YEAR) LIGHT VEHICLES EUROPE
2,9%
2,0%
4,1%
2,7%
1,8% 1,9%
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
2014E 2015E 2016E 2017E 2018E 2019E
Q1 2017 Q2 2017
PRODUCTION GROWTH RATE (YEAR ON YEAR) HEAVY COMMERCIAL VEHICLES (>15t) EUROPE
-12,5%
4,6%
7,3%5,1% 4,3%4,0%
‐15%
‐10%
‐5%
0%
5%
10%
2014E 2015E 2016E 2017E 2018E 2019E
Q1 2017 Q2 2017
Source: LMC Automotive Q2 2017
3. SECOND QUARTER 2017
OPERATIONAL HIGHLIGHTS FOR THE QUARTER
Sales increased by 3.0% Despite fewer production days vs Q2 2016 Model shifts
Strong order intake of 13.9%
Strong EBIT margin 7.9% Good cost control and flexible production
Improved financial key ratios All financial targets reached
FSP contract of approximately EUR 30 m annually at full volume in 2020
Ram‐Bul contract USD 5.5 m annually at full volume in 2019/2020
Ford honors Bulten JV (BBB Services Ltd) with a special award Recognition World Excellence Award
11SIX MONTHS REPORT, 2017
TWO NEW IMPORTANT CONTRACTS SIGNED AFTER THE QUARTER
FSP CONTRACT
FSP contract signed with a major vehicle manufacturer
The annual order value amounts to approximately EUR 30 million
Deliveries starts end of 2018 and gradually increase to full capacity in 2020
Thereafter, deliveries will extend over a number of years
Strengthens the relationship with the customer in the coming years
RAM‐BUL CONTRACT
Through Bulten’s JV Ram‐Bul in the US, contract signed with a major vehicle manufacturer
The annual order value amounts to approximately USD 5.5 million. The delivery value is distributed USD 5.0 million to Bulten and USD 0.5 million to Ramco
Deliveries will continue over a number of years, with start and ramp up during 2018. Full volumes are expected to be reached in 2019/2020
Significant breakthrough on the north American market and further strengthens our position as manufacturer of high quality fasteners
12SIX MONTHS REPORT, 2017
THE NEXT GENERATION OF ELECTRIC CARS CONSIST OF SUBSTANTIALLY MORE FASTENERS THAN TRADITIONAL CARS
Bulten has started deliveries of fasteners to the pre‐series of the next generation of electric vehicles
These deliveries entail a considerably higher delivery value per car compared to an equivalent model with a combustion engine
Up to approximately 40%
The number of fasteners increase, mainly in the body, depending on material selection and design
Still very low volumes for the industry
13SIX MONTHS REPORT, 2017
GROUP SUMMARYSECOND QUARTER
Net sales SEK 708 m (686)
EBIT margin 7.9% (7.8)
Earnings after tax SEK 39 m (39)
EPS 2.01 SEK (1.92), increased by 4.7%
COMMENTS
Sales up with 3.0% and strong order intake, up 13.9%
Return on capital employed increased to 15.0%, (adjusted for goodwill 17.4%).
All financial target reached
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FINANCIAL SUMMARY (MSEK)
Q1 12M ROLLING FULL YEAR
2017 2016 ∆Apr 2016‐
Mar 20172016 ∆
Net sales 708 686 3.0% 2,760 2,676 3.2%
Gross profit 141 138 3 551 531 20
Earnings before depreciation (EBITDA) 76 71 5 287 271 16
Operating earnings (EBIT) 57 54 3 211 200 11
Operating margin, % 7.9 7.8 0.1 7.6 7.5 0.1
Earnings after tax 39 39 ‐ 157 146 11
Order bookings 765 672 13.9% 2,831 2,717 4.2%
Return on capital employed, % ‐‐ ‐‐ ‐‐ 15.0 13.9 1.1
Return on capital employed excluding goodwill, % ‐‐ ‐‐ ‐‐ 17.4 16.2 1.2
SIX MONTHS REPORT, 2017
CONTINUED INCREASE IN SALES AND ORDER INTAKE
Sales up 3.0% in Q2 vs last year and ‐1.3% currency adjusted The number of production days have been lower in the quarter compared to the same quarter
prior year Low volumes due to model shifts
Order intake up 13.9% in Q2 vs last year15
SEK m
708
765
0
100
200
300
400
500
600
700
800
900
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Net Sales Order bookings
SIX MONTHS REPORT, 2017
16
IMPROVED EBIT TREND CONTINUED IN Q2SEK m
EBIT amounted to SEK 57m (54), EBIT margin of 7.9% (7.8) Positive effect of 4 MSEK from reclaimed receivables Negative effect of 4 MSEK from higher raw material prices after consideration of raw material compensation
57
7.9%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
0
10
20
30
40
50
60
70
Q1 14Q2 14Q3 14Q4 14Q1 15Q2 15Q3 15Q4 15Q1 16Q2 16Q3 16Q4 16Q1 17Q2 17
EBIT
EBIT margin
SIX MONTHS REPORT, 2017
CASH FLOW, BALANCE SHEET AND NET CASH
17
CASH FLOW STATEMENT, MSEK Q2 JAN‐.JUNE FULL YEAR
2017 2016 2017 2016 2016
Cash flow from operating activities before changes in working capital 70 66 149 134 247
Cash flow from operating activities 37 95 35 173 351
Cash flow from investing activities 2 ‐6 28 ‐22 ‐82
Cash flow for the period ‐43 ‐46 ‐29 7 67
Cash and cash equivalents at end of period 81 49 81 49 109
BALANCE SHEET, MSEK 2017‐06‐30 2016‐06‐30 2016‐12‐31
ASSETS
Total assets 1,969 1,889 1,969
EQUITY AND LIABILITIES
Equity 1,367 1,267 1,357
Liability 602 622 612
Total equity and liabilities 1,969 1,889 1,969
MSEK 2017‐06‐30 2016‐06‐30 2016‐12‐31
Net cash (+)/net debt (‐) 354. ‐89 30.
Adjusted net cash (+)/net debt (‐) 4054. ‐53 68.
SIX MONTHS REPORT, 2017
THE GROUP 2017‐06‐30 2016‐06‐30 2016‐12‐31
CAPITAL STRUCTURE
Net cash/equity ratio, times 0.0 ‐0.1 0.0
Equity/assets ratio, % 69.4 67.1 68.9
KEY INDICATORS – CAPITAL STRUCTURE AND RETURN INDICATORS
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12 M ROLLING Full Year
THE GROUP, 12 MONTHS July 2016‐June 2017
July 2015‐June 2016 2016
RETURN INDICATORS
Return on capital employed, % 15.0 13.4 13.9
Return on capital employed excluding goodwill, % 17.4 15.7 16.2
Return on equity % 12.4 10.5 11.5
Return on equity, adjusted % 12.4 10.3 11.5
CAPITAL STRUCTURE
Capital turnover, times 1.9 1.9 1.8
Net cash (+) Net debt (‐) / EBITDA 0.0 ‐0.3 0.1
SIX MONTHS REPORT, 2017
FINANCIAL GUIDELINES
NWC lower than guidelines
Capex in line with our guidelines
investments in new plating lines in Germany and Poland in 2017
Tax rate in line with our guidelines
19SIX MONTHS REPORT, 2017
THE GROUP12 M ROLLING
Q2FULL YEAR
2016 GUIDELINES
Average net working capital as % of sales 19.4 18.8 20
CAPEX as % of sales 3.5 3.1 2‐3
Depreciation as % of sales 2.8 2.7 2‐3
Tax rate 24.6 24.9 24‐28
20
ALL FINANCIAL TARGETS REACHED IN Q2
Q2
R12
Profitable organic growth more strongly than the industry average
Operating margin of at least 7%
At least 15% At least one third of net earnings after tax
3.0%
3.2%
7.9%
7.6%
Na15.0%17.4%
excl. goodwill
ROCEMargin
✔
Growth
✔
Dividend
2.01 SEK
7.93 SEK
EPS
4.50 SEK
(3.50 + 1.00SEK /share)62% for 2016
EPSdevelopment
SIX MONTHS REPORT, 2017
✔ ✔
BULTEN DEVELOPMENT
0
500
1000
1500
2000
2500
3000
3500
2013 2014 2015 2016 2017 12 m rolling
21
6.0%
5.5%6.1%
7.5%
7.6%
50 SEK
67 SEK
82 SEK
89 SEK
120 SEK
GROUP STRUCTURE GROWTH AND DIVESTMENT
CONSOLIDATION GROWTHCONSOLIDATION
SalesShare development
Operating margin
Bulten part of FinnvedenBultenGroup.
Divestment of FinnvedenMetal Structures. Several new FSP contracts.
Executing new FSP contracts.
Focus on operation/optimization program
Investments for the future and executing new contracts
+34% growth
+12% growth
Flatdev.
CAPTURE FUTURE GROWTH
+3% growth
SIX MONTHS REPORT, 2017
4. GOING FORWARD
23
PREDICTED STRONGER BULTEN GROWTH VS THE MARKET
Existing contracts & market growth
New signed not yet started contracts
Future contracts
& increased delivery value in EV’s
Bulten growth late 2017
and onward
Market growth according to LMC Automotive 1.9% 2017. Market share gains through existing contracts New contracts under ramp up for Bulten:
- LV FSP contract. SEK 130 million/year at full pace 2020. Started 2015 with slow ramp‐up - HCV contract. SEK 17 million/year. Started late 2016- China LV contract. SEK 60 million in total. Started 2017, contract period 2017‐2018
New signed contracts to be ramped up:- LV FSP contract. EUR 20 million/year. Starts late 2017 full pace 2019- Russia LV contract. EUR 700 thousand/year. Starts 2017 full pace 2018 - US LV contract (Ram‐Bul) of USD 5.5 million at full volume 2019/2020. Bulten part USD 5.0 million.- LV FSP contract of approx. EUR 30 million at full volume 2020
Future contracts; ongoing customer discussions and increased value/car in EV’s
Ramp up of new
contracts
Market volatility and model
shifts
SIX MONTHS REPORT, 2017
Bulten has taken significant steps forward in the market and has
created a high credibility in the automotive
industry
GOING FORWARD
Continued long‐term organic growth potential Capture future growth, based on already won contracts
and ongoing discussions• New major FSP contract at an annual value of 30 MEUR• New contract in USA at an annual value of 5.5 MUSD
Opportunities in emerging markets Continuing interesting possibilities in the US market
through new establishment
Preparing for future growth through investments and continued streamlining
Development of fasteners technology for EV is ongoing,
Becoming the most cost‐effective FSP supplier in the industry
Strong financial position All financial targets reached Q2, 2017
24SIX MONTHS REPORT, 2017
BULTEN – A STRONGER SOLUTION