drägerwerk ag & co. kgaa analyst conference 2015€¦ · marge 7.3% ebit-marge sales increase...

Drägerwerk AG & Co. KGaAAnalyst Conference 2015

Frankfurt, March 11, 2015

Disclaimer

This presentation contains forward-looking statements regarding the future development of the Dräger Group. These forward-looking statements are based on the current expectations, presumptions, and forecasts of the Executive Board as well as the information available to it to date, and have been made to the best of its knowledge and belief. No guarantee or liability for the occurrence of the future developments and results specified can be assumed in respect of such forward-looking statements. Rather, the future developments and results are dependent on a number of factors; they entail risks and uncertainties beyond our control and are based on assumptions which could prove to be incorrect. Notwithstanding any legal requirements to adjust forecasts, we assume no obligation to update the forward-looking statements contained in this presentation.

This presentation does not constitute an offer of securities for sale or a solicitation of an offer to purchase any securities. No money, securities or other consideration is being solicited by this presentation.

Interim financial reports as well as preliminaries are not audited.

2

Agenda

1 Highlights 2014

2 Financials

3 Fit for growth and Outlook

3

Net Sales in 2014 reached a record levelBusiness Development Dräger Group

Net Sales (in EUR million)

2,374.2

513.2 559.9 591.8769.7

2,434.7

2013 Q1 Q2 Q3 Q4 2014

+4.0%Currency adjusted

+2.5%Nominal

8.5%EBIT-Marge

7.3%EBIT-Marge

� Sales increase in line with expectations: net sales of EUR 2.435; +4.0% cc

� Challenging H1, due to FX and weak demand

� Strong year-end business bringing EBIT-margin to a full year level of 7.3%

� Both segments and all Regions contributed to net sales growth

� FX situation improving, but full-year FX impact still negative (FY FX: Net sales -150 bps, EBIT margin ~ -50 bps)

� Very favorable cash conversion

� Equity ratio exceeds 40%

� Dividend pay our ratio increases to 30%

Highlights

4

All Regions contributed to top-line growthRegional Order Entry of Dräger Group

America Europe

Middle East, Africa, Others Asia -Pacific

460 471

2013 2014

191 201

2013 2014

392 402

2013 2014

1,331 1,360

2013 2014

+5.2%constant currency

+2.4%nominal


+2.2%nominal


+5.1%nominal


+2.6%nominal

5

Dividend Policy & Dividend Proposal

� employee participation program in Q1/Q2 (2 years holding period for employee shares)

� all shares will be bought in the market (no new shares will be issued)

� expected volume ~30,000 shares

� 10 remaining warrants expire April 2015

� if exercised, 500,000 new preference shares will be issued (total preference shares: 7.6 million)

� Expected cash inflow of EUR 31.7 m

“Siemens” Warrants

Shares & Dividends

� Equity ratio > 40% (impacts 2014: Options ~+1pp, pensions ~-3pp)

� Dividend proposal will result in 30% pay out ratio

� no change of dividend policy

Employee Participation Program

CommonShares

PreferenceShares

1.39 €1.33 €

411 10*

2013 2014 2015

# warrants exercised

* potentially

6

� 10 employees, revenue < EUR 1m, purchasing price ~ EUR 60m

� disruptive technology for true wireless optical gas sensor solution, currently unique in the market

� proven functionality with globally more than 100 installations

� substantially lower installation and maintenance cost

� 51% of JV with Simsa S.A., Chile; (option on 100%)

� 38 employees, revenue < EUR 3m, purchasing price EUR 3.6m

� development, production and sales of rescue chambers for the growing Mining industry in Central- / South-America

� completion of our high end product portfolio for recue chambers with an upper basic offering

Gas SecureOslo, Norway

Dräger-SimsaSantiago, Chile

M&A Activity

Insert photo

7

Agenda

1 Highlights 2014

2 Financials


8

Business developmentDräger Group

Q4 2013 Q4 2014 12M 2013 12M 2014

EUR million EUR million EUR million EUR million

Order Intake 627.9 672.1 7.0 1 2,384.6 2,415.5 1.3 1

Order on hand 475.4 463.6 -2.5 1

Net Sales 718.2 769.7 7.2 1 2,374.2 2,434.7 2.5 1

Gross margin 46.8% 47.4% 48.3% 46.7%

Functional Expenses -244.5 -267.4 -9.4 -942.2 -967.8 -2.7 % of Net Sales -34.0% -34.7% -39.7% -39.7%

EBIT 89.5 97.3 8.7 200.8 178.6 -11.1 EBIT Margin 12.5% 12.6% 8.5% 7.3%

Interest Result -23.5 -25.0 -6.4

Tax rate 32.4% 31.8%

Net Profit 119.9 104.7 -12.7

DVA 113.9 81.6 -28.4

1 Currency adjusted 12M: order intake +2.8%, orders on hand -5.6%, net sales +4.0%

Currency adjusted quarter: order intake +5.5%, orders on hand -5.6%, net sales +6.3%

Change

%

Change

%

9

Business developmentMedical division: order entry in Q4 2014 and FY 2014

230.8 830.4

99.2 325.0

76.5 269.2

33.2 151.6

Q4 2014 FY 2014

439.7 1,576.2

% nom % cc

+5.4% +4.1%

-12.8% -17.0%+11.5% +7.7%

+16.4% +12.6%

+2.4% +3.2%

% nom % cc

+1.1% +2.8%

-5.1% -4.3%

+3.5% +6.3%

-2.4% +0.6%

+3.0% +4.0%

Middle East, Africa & Others

Asia/Pasific

Americas

Europe

10

76.1 83.0

Q4‘13 Q4‘14

153.3128.9

FY13 FY14

Business developmentMedical division

Net Sales

EBIT

480.6 518.1

Q4‘13 Q4‘14

1,544.71,585.4

FY13 FY14



+9.2% -15.9%

� Good order development in Europe and Asia-Pacific. Weak demand in Americas and decline in Middle East, Africa & Others.

� Good demand for Anesthesia and Hospital Consumables & Service.

� Currency adjusted order book -4.6%. Decline especially in Asia-Pacific and Americas.

� Currency adjusted FY net sales +4.3%. All regions contributed. Strong growth in Q4. (FY FX -1.7pp)

� FY gross profit margin down -1.4% mainly due to negative product- and country mix. (FX ~ -1/2 pp)

� FY EBIT down -16% year over year. (FX ~ -1/2 pp)

15.8%EBIT-margin

16.0%EBIT-margin

9.9%EBIT-margin

8.1%EBIT-margin

11

Business developmentSafety division: order entry in Q4 2014 and FY 2014

160.6 566.3

38.1 140.1

32.0 124.3

15.4 53.0

Q4 2014 FY 2014

246.1 883.7

% nom % cc

+11.8% +9.8%

+71.5% +67.4%+0.3% -4.5%

+19.6% +12.9%

+8.9% +8.8%

% nom % cc

+2.8% +4.0%

+14.8% +17.4%-6.6% -3.2%

+5.1% +6.8%

+3.5% +4.0%

Middle East, Africa & Others

Asia/Pasific

Americas

Europe

12

32.234.8

Q4‘13 Q4‘14

89.2 88.4

FY13 FY14

Business developmentSafety division

Net Sales

EBIT

248.0 264.6

Q4‘13 Q4‘14

864.4890.9

FY13 FY14



+8.1% -1.0%

� Order growth from all product areas, except Engineered Solutions (mainly due to basis effect).

� Currency adjusted order book -5.6% compared to prior year. Strong decline in Asia/Pacific.

� Currency adjusted net sales increased by +4.2%. All regions and all product areas contributed to net sales growth. (FY FX -1.1pp)

� Gross margin declined by -2.2 pp. Product-mix negative. (FX ~ -1 pp)

� EBIT stable. Lower functional expenses could not fully compensate the margin and mix effects. (FX ~ -1 pp)

13.0%EBIT-margin

13.2%EBIT-margin

10.3%EBIT-margin

9.9%EBIT-margin

13

Key Figures

14

Change

%

Cashflow (from operating activities) 175.1 in % of EBIT

Investments 12.7

Cash and cash equivalents1 27.9

Net financial debt1 -90.3

Net financial debt 1 /EBITDA 2

Capital employed 1 5.2 ROCE (EBIT 2/Capital employed 1)

Net Working Capital1 2.9

Equity ratio 1.5

EPS per common shares 6.88 5.67 -17.6 EPS per preferred shares 6.94 5.73 -17.4

EPS per common shares (on full distribution) 5.24 4.52 -13.7 EPS per preferred shares (on full distribution) 5.30 4.58 -13.6

110.0 0.4

1,052.9 19.1%

524.3

39.5

2013

€ million

68.3

110.6

232.1

34%188.0

124.7

296.9

10.7

105%

2014

16.1%

0.04

1,107.2

€ million

40.1

539.4

1 Values at due date2 EBITDA and accordingly EBIT of the last twelve months

0.77 €

1.33 €

2013 2014

Dividended proposal 2014

* after earnings attributable to non-controlling interestes** Without minimum dividend, after taxes

Dividend per common share

0.83 €

1.39 €

2013 2014

Dividend per preferred share

2013 (in EUR million) 2014 (in EUR million)

Net profit* 119.9 104.7

Dividend 18.0 31.6

� Participation certificates** 4.8 8.2

� Common shares 7.8 13.5

� Preferred shares 5.4 9.9

Net payout ratio 15.1% 30.1%

15

Agenda

1 Highlights 2014

2 Financials


16

FIT FOR GROWTH Overview Initiatives

FIT FOR GROWTHFIT FOR

GROWTH1122

33SHAPE

Optimize global Sales, Marketing &

Administration set-up

FIT!Optimize

innovationset-up

Global footprint

Optimizeproduction

set-upImprove

workflow anddelivery timesand reduce

production cost

Improveworkflow anddelivery timesand reduce

production cost

Bring customervalue faster tothe market and

increaseinnovationshare

Bring customervalue faster tothe market and

increaseinnovationshare

Improve SG & A expense ratio

andworking capital

Improve SG & A expense ratio

andworking capital

17


FIT!

Global Footprint

SHAPE*

Optimize global Sales, Marketing & Administration set-up

Objective : improve SG&A expense ratio and working capital efficiency

Fields of action :

� legal entity consolidation within sales organization

� Streamlining, standardization and pooling of central, regional and local tasks and processes

� (cont.) roll-out of standardized ERP system and back-office and outbound logistics processes

� implementation of shared services where useful

� Effective expense management

� Further efficiency measures to be defined by regions (ongoing process)

Targets and timing :

� Reduction of SGA ratio** by 1pp in 2017 and additional 1pp 2019

* SHAPE combines the measures communicated in Q3 telco (customer focused efficiency, expense management, improvement of working capital)** compared to 2014 (SG&A ratio = 31%) at comparable FX rates and before possible on-off expenses for restructuring or similar

18


SHAPE

Global Footprint

FIT!

Optimize innovation set-up

Objective : Bring customer value faster to the market and increase innovation share

Fields of action :

� Improve competency- and capability- (to have the right people) and technology-management (to focus on the right technological trends)

� Strengthen system and platform based development (multiplication of functionalities) and increase global standardization (tools, processes) for efficient x-site collaboration

� Reengineer launch process to improve ramp-up speed for new innovations (address all prerequisites in early stage of development)

� Increase focus on expanding product portfolio targeted at Emerging Markets

Targets and timing :

� Improve time to market by 50% until 2019

� Increase innovation share*

* Innovation share measures the turnover with new products and upgrades (products / upgrades introduced into the markets in the last three years)

19


FIT!

SHAPE

Global Footprint

Optimize production set-up

Objective : improve workflow and delivery times and reduce production cost

� Investment in “Zukunftsfabrik” in Lübeck, Germany

– Complete modernization of main production and logistic site and introduction of efficient material- and workflow to improve flexibility and delivery times

– Investments: € 71m invest (2014: € 7m, 2015: € 39m, 2016: € 25m)

– Savings: from 2017 € ~8m (mainly reduction of 130 FTE)

� Closure of site in Pittsburgh, USA

– Existing production lines (gas detection devices) will be transferred to Lübeck

– Savings: from 2017 €~3m (mainly reduction of 50 FTE)

� Transfer of production with high labor content to Chomutov, Czech Rep.

– Transfer production lines for masks, protective clothing and others

– Savings: from 2017 € ~2m

� Total restructuring cost: €~12m (2015; mainly H1), €~3m (2016)

20

FIT!R&D ratio

FIT!R&D ratio

Global footprint

stabilize GP-margin

Global footprint

stabilize GP-margin

SHAPESG&A ratio

SHAPESG&A ratio

FIT FOR GROWTHEffects on EBIT-margin*

21

~7%

+2%>10%

Net sales growth of CAGR 3 to 6 percent (net of currency effects)

2014 2019

Improve Working Capital Reduce time to market

* The forecasted EBIT margin is based on the assumption of constant currencies (basis FX beginning 2015)

Outlook2015 and mid term guidance

2014 2015 2016 2017 2018 2019

� Net sales growth of 2% to 5% (net of currency effects)

� EBIT-margin of 6.0% to 8.0%*

� GP-margin on par with prior year

� R&D Budget increase to up to 230m

� Improvement of SG&A ratio** of 1pp

� R&D ratio starting to decline

� first improvements in time to market

* based on the assumption of constant currencies (basis FX beginning 2015) ** compared to 2014 (SG&A ratio = 31%) at comparable FX rates and before possible on-off expenses for restructuring or similar*** innovation projects starting 2019

� Net sales growth CAGR 3 – 6 % (net of currency effects)

� Improvement of SG&A ratio** of additional 1pp

� time to market improved by 50%***

� stable gross profit margin

� EBIT-margin above 10%*

22

23

Questions & Answers

24

Appendix

Business developmentDräger Group

25

Q4 2013 Q4 2014 12M 2013 12M 2014


Order Intake 627.9 672.1 7.0 1 2,384.6 2,415.5 1.3 1

Order on hand 475.4 463.6 -2.5 1

Net Sales 718.2 769.7 7.2 1 2,374.2 2,434.7 2.5 1

Gross Profit 1,147.6 1,138.0 -0.8 Gross margin 46.8% 47.4% 48.3% 46.7%

R&D -50.5 -56.6 -12.1 -201.5 -212.0 -5.2 % of Net Sales -7.0% -7.4% -8.5% -8.7%

SG&A -192.4 -206.7 -7.4 -738.4 -749.2 -1.5 % of Net Sales -26.8% -26.9% -31.1% -30.8%

Functional Expenses -244.5 -267.4 -9.4 -942.2 -967.8 -2.7 % of Net Sales -34.0% -34.7% -39.7% -39.7%

EBITDA 108.1 119.8 10.8 270.3 255.6 -5.4 EBITDA Margin 15.1% 15.6% 11.4% 10.5%

EBIT 89.5 97.3 8.7 200.8 178.6 -11.1 EBIT Margin 12.5% 12.6% 8.5% 7.3%

Interest Result -23.5 -25.0 -6.4

Tax rate 32.4% 31.8%

Net Profit 119.9 104.7 -12.7

DVA 113.9 81.6 -28.4


Currency adjusted quarter: order intake +5.5%, orders on hand -5.6%, net sales +6.3%

Change

%

Change

%

Business developmentMedical and Safety division

26

Medical Division Q4 2013 Q4 2014 12M 2013 12M 2014

€ million € million € million € million

Order Intake 417.3 439.7 5.4 1 1,558.6 1,576.2 1.1 1

Order on hand 309.8 307.9 -0.6 1 309.8 307.9 -0.6 1

Net Sales 480.6 518.1 7.8 1 1,544.7 1,585.4 2.6 1

EBIT 76.1 83.0 9.2 153.3 128.9 -15.9

EBIT Margin 15.8% 16.0% 9.9% 8.1%

DVA 97.5 69.2 -29.0


1 Currency adjusted quarter: order intake +4.1%, orders on hand -4.6%, net sales +7.2%

Safety Division Q4 2013 Q4 2014 12M 2013 12M 2014

€ million € million € million € million

Order Intake 220.2 246.0 11.7 1 859.8 883.7 2.8 1

Order on hand 167.1 160.2 -4.1 1 167.1 160.2 -4.1 1

Net Sales 248.0 264.6 6.7 1 864.4 890.9 3.1 1

EBIT 32.2 34.8 8.1 89.2 88.4 -1.0

EBIT Margin 13.0% 13.2% 10.3% 9.9%

DVA 69.3 66.1 -4.7

1 Currency adjusted 12M: order intake +4.0%, orders on hand -5.6%, net sales +4.2%.

1 Currency adjusted quarter: order intake +9.8%, orders on hand -5.6%, net sales +5.1%

Change

%

Change

%%

Change

Change

%

Functional Expenses

27

Q4 2013 Q4 2014 12M 2013 12M 2014


R&D -50.5 -56.6 12.1 -201.5 -212.0 5.2 % of Net Sales -7.0% -7.4% -8.5% -8.7%

SG&A -192.4 -206.7 7.4 -738.4 -749.2 1.5 % of Net Sales -26.8% -26.9% -31.1% -30.8%

Functional Expenses total -244.5 -267.4 9.4 -942.2 -967.8 2.7 % of Net Sales -34.0% -34.7% -39.7% -39.7%

Change Change

%%

2,234.1

1,452.6

Consolidated balance sheet

€ million

Change31 Dec 201431 Dec 2013Assets

7.81,347.8Current assets

4.4

2.6

7.1

27.9

388.5

657.4

109.9

296.9

372.3

640.8

102.6

232.1

Inventories

Trade receivables

Other current assets

Cash and cash equivalents

9.0781.5717.2Non-current assets

4.0

12.6

11.2

294.2

349.9

137.3

283.0

310.8

123.4

Intangible assets

Property, plant and equipment

Other non-current assets

%€ million

8.22,065.0Total assets

28

2,234.1

20.9

297.0

168.6

100.9

Consolidated balance sheet

€ million

Change31 Dec 201431 Dec 2013Equity and liabilities

10.7750.1677.4Current liabilities

1.5

58.6

16.8

-2.6

189.3

127.7

201.3

231.8

186.4

80.5

172.4

238.1

2.8587.4571.6Non-current liabilities

4.3

36.8

-33.2

22.8

20.0

217.2

252.3

82.2

Liabilities from participation certificates

Provisions for pensions and similar obligations

Non-current interest-bearing loans

Other non-current liabilities

9.9896.6816.0Equity

%€ million

8.22,065.0Total equity and liabilities

Current provisions

Current loans and liabilities to banks

Trade payables

Other current liabilities

29

Cash-flow statement

30

2011 2012EUR million EUR million

Group net profit 125.1 135.0 119.9 104.7 -12.7

Change in inventories 19.2 -31.6 -36.5 -1.2 96.8

Change in accounts receivables -52.4 -15.2 -69.5 1.6 >100

Change in accounts payables -0.2 -2.5 6.4 25.2 >100

Depreciation and amortization 61.6 65.8 69.0 77.0 11.6

Other operating cash flow items 8.4 25.2 -21.0 -19.3 8.1

Operating cash flow 161.7 176.8 68.3 188.0 >100

Investing cash flow -67.4 -65.5 -86.5 -102.6 -18.6

Free cash flow 94.3 111.3 -18.2 85.4 >100

Financing cash flow -4.6 -192.0 -70.8 -26.3 62.8

Change in cash 1 89.7 -80.7 -88.9 59.0 >100

Cash and cash equivalents 2 412.3 332.4 232.1 296.9 27.9

1 Change in cash and cash equivalents, i.e. without any effect of exchange rates2 Values at due date

2013EUR million %

2014 ChangeEUR million

March 11, 2015 - Accounts press conference, Hamburg- Analysts meeting, Frankfurt

April 29, 2015 - Report for the first three months 2015 - Conference call, Lübeck

April 30, 2015 - Annual shareholders' meeting, Lübeck

July 30, 2015 - Report for the first six months 2015 - Conference call, Lübeck

November 5, 2015 - Report for the first nine months 2015 - Conference call, Lübeck

Financial calendar

31

32

Melanie Kamann Thomas FischlerCorporate Communications Investor Relations

Drägerwerk AG & Co. KGaA Drägerwerk AG & Co. KGaAMoislinger Allee 53−55 Moislinger Allee 53−5523558 Lübeck, Germany 23558 Lübeck, Germany

Tel +49 451 882-3998 Tel +49 451 882-2685 Fax +49 451 882-3944 Fax +49 451 882-3296

Mobile +49 170 8558152 Mobile +49 151 12245295

[email protected] [email protected] www.draeger.com

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drägerwerk ag & co. kgaa analyst conference 2015€¦ · marge 7.3% ebit-marge sales increase...

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