Q1 REPORT, JANUARY – MARCH 2012TELEPHONE CONFERENCE 26 APRIL, 2012
JOHAN WESTMAN, PRESIDENT AND CEO
TO PARTICIPATE IN THE TELEPHONE CONFERENCE, PLEASE CALL: SWEDEN +46 (0)8 506 269 00, UK +44 (0)207 750 9905, US +1 631 886 5378. CODE: 639744#.
AGENDA
1. Company presentation2. Market Development3. Q1 report 20124. Going forward
FinnvedenBulten develops and manages industrial businesses, offering products, technical solutions and systems in metallic materials
Q1 REPORT 2012 | Company presentation
The Group
FinnvedenBulten is structured into two
divisions, both with strong positions in their respective
customer segments.
Division Bulten Division Finnveden Metal Structures
SALES DISTRIBUTIONQ1, 2012
SALES PER CUSTOMER SEGMENT Q1, 2012SAMPLE OF CUSTOMERS
Bulten Finnveden Metal Structures 3
• Deliveries to LV (Light Vehicles) amounted to 73 percent and HCV (Heavy Commercial Vehicles) to 27 percent, including Tier 1, of Groups sales 2011
41%
59% 53%28%
15%4%
LV HCV Tier 1 Industrial
64%18%
18%
3
FinnvedenBulten offers an advanced product portfolio with new technology and quality leadership
Q1 REPORT 2012| Company presentation
4
SEAT BELT FASTENERS
An innovative seat belt fastener, on which a plastic retaining ring is pre‐assembled on the screw.
LOAD RETENTION EYE
Load loops in multi‐material to help keep the luggage in the trunk in place.
CONVERTIBLE FRAME
Light weight product made from magnesium.
OIL PAN
Complex deep‐drawn product.
TRUCK FOOT STEPLow‐weight product made from aluminum.
CURTAIN AIR BAG ATTACHMENT
Clip screw pre‐assembled in inflatable curtains.
ENGINE FASTENERSHigh quality fasteners often specialized for engine applications.
Many vehicles contain a total of 1,500‐2,000 fasteners supplied by FinnvedenBulten.
FASTENERS
Q1 REPORT 2012 | Company Presentation
Lean and well positioned manufacturing facilities in Europe and Asia
Significant investments in production in recent years with focus on Bielsko‐Biala, Poland and Hallstahammar, Sweden
Number of FTEs amounts to 1,802 (down from 1,936 in 2007) of which 600 in Poland and China
Production takes place mainly in Western and Eastern Europe with significant low‐cost production in Poland and China
5
FinnvedenBulten’s strategy is to continue the development of Bulten and Finnveden Metal Structures to realise the full potential in both divisions
Bulten’s strategy
Organic growth
– Gain market share in Europe– Follow key customers into emerging
markets
Preferred full service provider, covering everything from development, production and logistics to final delivery to the customer’s production line
Competitive cost structure and geographic proximity
Innovative and technologically advanced products
Finnveden Metal Structures’ strategy
Organic growth
– Capture business opportunities linked to weight reduction
– Strengthen position within light metals and multi‐material solutions
– Continued cost and capital rationalization– Invest in new, strategic, production capacity
Geographical and industry expansion
– Follow key customers into emerging markets– Grow and develop the industry segment in e.g.
renewable energy, food processing industry, furniture and agricultural products
Growth through acquisitions
Q1 REPORT 2012 | Company Presentation
6
2. MARKET DEVELOPMENT
Market development
Production rates initially marked by the lower level seen at the end of Q4, 2011
Volumes increased towards the end of the quarter, mainly for heavy commercial vehicles
A tendency of increased spread between different customers’ volume development has been noticed during the quarter
IHS Global Insight latest estimates for automotive production in Western Europe, 2012:
– Production of LV will be approximately 12.7 millon in 2012, down 7% compared to 2011– Production of HCV (>15 t) will be approximately 317,000 in 2012, down 6.1% to 2011– Over all production, weighted to FinnvedenBulten’s exposure, down 6.6% in 2012 compared
to 2011*
FinnvedenBulten’s sales increased by 1.4 % in Q1, 2012 vs. the strong first quarter 2011
*FinnvedenBulten deliveries at present:• LV stands for 73% of sales• HCV stands 27% of sales
Q1 REPORT 2012 | Market development
8
3. Q1 REPORT 2012
Comments
Organic growth and order bookings up in a weaker market
Weak demand initially, significantly higher in March
Imbalanced demand and disturbances in production had a negative impact on EBIT margin, firm measures taken
High leverage on increased volumes in the beginning of 2011
Good business opportunities ahead
Term sheet signed with GAZ
Group summaryFirst quarter
Net sales up 1.4%
Operating margin 5.0%
Profit after tax SEK 30 million
10
FINANCIAL SUMMARY (MSEK)Q1
2012 2011 ∆ Rolling 12 month Full Year 2011
Net sales 807.1 796.1 1.4% 3,096.0 3,085.0
Gross profit 132.9 152.6 ‐19.7 539.2 558.9
Earnings before depreciation (EBITDA) 59.0 71.5 ‐12.5 260.7 273.2
Operating earnings (EBIT) 40.2 53.7 ‐13.5 188.0 201.5
Operating margin, % 5.0 6.7 ‐1.7 6.1 6.5
Adjusted operating earnings (EBIT) 40.2 66.2 ‐26.0 193.7 219.7
Adjusted operating margin, % 5.0 8.3 ‐3.3 6.3 7.1
Earnings after tax 29.9 22.6 7.3 121.8 114.5
Order bookings 864.7 838.4 3.1% 3,235.2 3,208.9
Return on capital employed, % ‐ ‐ ‐ 14.6 15.4
Adjusted return on capital employed, % ‐ ‐ ‐ 15.0 16.8
Q1 REPORT 2012 | Group summary
Sales, order intake and margins
Q1 REPORT 2012 | Sales, order intake and margins
11
Q1 2011 included cost related to the IPO of 12.3 MSEK
MSEK
2 863
2 042
2 607
3 085
796 807
2 535
2 002
2 9653 209
838 865-1.7%
-7,2%
4.4%
6.5% 6.7%
5.0%
0.2%
-4.6%
4.8%
7.1%
8.3%
5.0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2008A 2009A 2010A 2011A Q1 2011 Q1 2012
Net sales Order intake EBIT margin Adj. EBIT margin
Net sales and gross margin
Q1 REPORT 2012 | Net sales and gross margins
12
830
802
623
608
489
505
481 56
7 612 67
4
591
730 79
6
782
704
803
807
0%
5%
10%
15%
20%
25%
30%
0
200
400
600
800
1 000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2008 2009 2010 2011 2012
MSE
K
Net sales Gross margin
Division Bulten
Continued to gain market share and increased sales on a weaker market during the quarter
Growth in new and existing FSP contracts ‐ in line with division strategy
Profitability was held back by imbalanced demand and factory loading which affected productivity negatively compared to last year when leverage was very high
Net sales increased to SEK 475 million, up 4.5% compared to the same period last year
Operating earnings first quarter SEK 28 million, operating margin 6.0%
Signed term sheet in April with GAZ Group regarding JV
Q1 REPORT 2012 | Division Bulten
13
FINANCIAL SUMMARY (MSEK) Q1 Full Year
2012 2011 ∆ 2011
Net sales 474.6 454.1 4.5% 1,768.5
Earnings before depreciation (EBITDA) 38.6 49.0 ‐10.4 155.2
Operating earnings (EBIT) 28.4 39.3 ‐10.9 117.1
Operating margin, % 6.0 8.7 ‐2.7 6.6
Adjusted operating earnings (EBIT) 28.4 39.3 ‐10.9 117.1
Adjusted operating margin, % 6.0 8.7 ‐2.7 6.6
Order bookings 479.1 450.9 6.3% 1,799.4
59%
BULTEN'S PROPORTION OF GROUP SALES
Bulten Finnveden Metal Structures
Division Bulten: signed term sheet with GAZ
FinnvedenBulten to invest approximately EUR 6.6 million to become the majority shareholder by 63%, GAZ Group 37%
The operations included in the joint venture currently has a turnover of approximately EUR 11 million annually with significant growth potential
Great interest from new and existing customers since Letter of Intent announcement in spring 2011
Q1 REPORT 2012 | Division Bulten
14
Leader in the Russian commercial vehicles market
Market shares in Russia 2010:
― 50% of the light commercial vehicles segment
― 45% of the all‐wheel drive heavy‐duty trucks segment
― 70% of the bus segment
GAZ’s operations include 18 production plants in Russia, distribution and a service network
Source: GAZ Group
RUSSIAN AUTOMOTIVE MARKET CONCENTRATION
GAZ GROUP – QUICK FACTS
Bulten/GAZ Joint venture
Automotive industry concentration
St. Petersburg
Nizhniy Novgorod
Moscow
INTENDED JOINT VENTURE SETUP
Division Bulten: Unique bridgehead on Russian market
Q1 REPORT 2012 | Division Bulten
15
The potential of the Russian market is estimated to be significant
Growing middle class drives demand for both LV and HCV
High import duties in Russia and high demand for quality products create great opportunities of efficient development for local manufacturers
Trend of international OEM:s establishing production in Russia
RUSSIAN AUTOMOTIVE PRODUCTION
Source: 2014‐15 FinnvedenBulten estimate, IHS Global Insight.
0
0,5
1
1,5
2
2,5
3
2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e
Light Vehicles Medium and Heavy Commercial Vehicles
CAGR MHCV 2012e‐2015e: 4,0%
CAGR LV 2012e‐2015e: 9,5%
Million un
its
FINANCIAL SUMMARY (MSEK) Q1 Full Year
2012 2011 ∆ 2011
Net sales 335.1 344.2 ‐2.6% 1,325.5
Earnings before depreciation (EBITDA) 23.2 38.4 ‐15.2 140.6
Operating earnings (EBIT) 14.6 30.4 ‐15.8 107.1
Operating margin, % 4.4 8.8 ‐4.4 8.1
Adjusted operating earnings (EBIT) 14.6 30.6 ‐16.0 107.5
Adjusted operating margin, % 4.4 8.9 ‐4.5 8.1
Order bookings 388.1 389.5 ‐0.4% 1,418.5
Division Finnveden Metal Structures
Low volume at the beginning of the quarter but increased towards the end of the quarter
– Imbalanced production temporarily led to an unfavorable resource utilization and low productivity
Continued high costs for starting up new customer projects, firm measures taken
Challenges isolated to two units in the division ‐ a sheet metal stamping unit and a foundry unit
Net sales of SEK 335 million, down 2.6% on the same period last year when the operational leverage was very good with balanced production
Operating earnings first quarter SEK 15 million, operating margin of 4.4%
Q1 REPORT 2012 | Division Finnveden Metal Structures
16
41%
FINNVEDEN METAL STRUCTURES' PROPORTION OF GROUP SALES
Bulten Finnveden Metal Structures
Division Finnveden Metal Structures : further comments to Q1 results
Low volume and production disturbances in the beginning of the quarter for one stamping unit– The situation improved towards the end of the quarter with profitability back on track in
March
Challenges with new product introductions are related to one foundry unit where several new products, complex magnesium structures, are being ramped up– Firm measures have been taken and the situation has started to improve – Initiated actions are expected to gradually improve the cost structure coming quarters
Strategic objective to grow within more complex light weight structures – New customer projects with complex structures in magnesium is a strategic direction that
has resulted in increased business opportunities from existing and new customers – It is also in line with the trend towards lighter components in the automotive industry and
contributes to lower fuel consumption
Q1 REPORT 2012 | Division Finnveden Metal Structures
17
Q1 FULL YEAR
SEK MILLION 2012 2011 ∆ 2011
Net sales 807.1 796.1 11.0 3,085.0
Cost of goods sold ‐674.4 ‐643.5 ‐30.7 ‐2,526.1
Gross profit 132.9 152.6 ‐19.7 558.9
Operating expenses net ‐92.7 ‐98.9 ‐6.2 ‐357.4
Operating earnings 40.2 53.7 ‐13.5 201.5
Adjusted operating earnings 40.2 66.2 ‐26.0 219.7
Financial expenses net 1.7 ‐21.0 22.7 ‐45.6
Earnings before tax 41.9 32.7 9.2 155.9
Tax on year’s earnings ‐12.0 ‐10.1 ‐1.9 ‐41.4
Earnings after tax 29.9 22.6 7.3 114.5
Income statement
Q1 REPORT 2012 | Income statement
18
Q1 FULL YEAR
THE GROUP 2012 2011 2011
EARNINGS PER SHARE
Earnings per share, SEK 1) 1.42 1.98 6.57
Earnings per share‐proforma, SEK 1) 2) 1.42 1.93 6.68
Weighted outstanding ordinary shares, ’000 1) 21,040.2 11,336.6 17,433.9
Outstanding ordinary shares, closing day ’000 1) 21,040.2 12,000.0 21,040.2
1) No dilution effect
2) Earnings per share‐proforma. Profit/loss for the year adjusted for one‐off costs, interest cost for shareholders loan and preference share. All adjustments are after current tax. Divided with number
of outstanding shares as per closing day.
Earnings per share
18
Cash flow statement
Q1 REPORT 2012 | Cash flow statement
19
Q1 FULL YEAR
MSEK 2012 2011 2011
Cash flow from operating activities before changes in working capital 52.6 54.9 231.6
Cash flow from operating activities 50.1 39.5 143.6
Cash flow from investing activities ‐22.9 ‐13.5 ‐84.1
Cash flow from financing activities ‐4.2 ‐17.5 ‐143.7
Cash flow for the period 23.0 8.5 ‐84.2
Cash and cash equivalents at end of period 124.7 192.5 102.7
Key indicators – Capital structure, Return indicators
Q1 REPORT 2012 | Key indicators, Capital structure, Return indicators
ROLLING 12 FULL YEAR
THE GROUP, 12 MONTHS April 2011‐March 2012
April 2010‐March 2011 2011
RETURN INDICATORS
Return on capital employed, % 14,6 13,3 15.4
Return on capital employed, adjusted % 15,0 14,7 16.8
Return on equity, % 12,2 45,7 15.1
Return on equity, adjusted % 12,2 22,9 15.1
CAPITAL STRUCTURE
Capital turnover, times 2.3 2.3 2.4
20
Balance sheet
Q1 REPORT 2012 | Balance sheet and Key indicators Capital structures
21
MSEK 2012‐03‐31 2011‐03‐31 2011‐12‐31
ASSETSTotal fixed assets 702.8 712.0 692.7
Total current assets 1,267.2 1,241.6 1,208.1
Total assets 1,970.0 1,953.6 1,900.8
EQUITY AND LIABILITIES
Total equity 1,067.6 595.8 1,032.8
Total non‐current liabilities 246.2 726.9 243.4
Total current liabilities 656.2 630.9 624.6
Total equity and liabilities 1,970.0 1,953.6 1,900.8
THE GROUP 2012‐03‐31 2011‐03‐31 2011‐12‐31
CAPITAL STRUCTURE
Net debt/equity ratio, times 0.1 0.9 0.2Adjusted net debt/equity ratio, times 0.1 0.2 0.2
Equity/assets ratio, % 54.2 30.5 54.3
Adjusted equity/assets ratio, % 54.2 48.3 54.3
Net debt/EBITDA 0.5 0.6 0.6
Adjusted net debt/EBITDA 0.5 0.9 0.6
OTHER
Net debt, MSEK 135.6 543.5 161.6
Adjusted net debt, MSEK 135.6 196.2 161.6
Key indicators – Capital structure
4. GOING FORWARD
The macro environment is still uncertain but FinnvedenBulten has a solid financial position and a good flexibility to adjust its operations
Concerns about consumption effects due to European debt crisis
Concerns about Chinese economy slow‐down and effects on global growth
But…
Demand stabilized and outlook now more positive than a few months ago
Pent up demand still a medium term driver
The automotive industry in general seems well prepared: good financials, staff flexibility, low inventories, etc.
Europe has a significant automotive export e.g. to emerging markets
Significantly lower break even level and better margins compared to the company status in 2008/2009
Solid financial situation with a low net debt to EBITDA of 0.5
Good flexibility in operations
Growing exposure to emerging markets (less affected) through e.g. joint venture GAZ and growth initiatives in China
Opportunities to increase market share further
23
GLOBAL MARKET UNCERTAINTY FINNVEDENBULTEN HAS A GOOD FINANCIAL POSITION
Q1 REPORT 2012 | FinnvedenBulten has a solid financial position
Outlook for 2012
Initiated improvement actions are expected to improve the cost structure coming quarters
IHS Global Insight estimates for Western Europe automotive production show a volume reduction of 6.6% in 2012 compared to 2011, weighted to FinnvedenBulten’s exposure
– Production of LV estimated at 12.7 million vehicles in 2012, down 7% on 2011 – Production of HCV (>15 ton) estimated at around 317,000 in 2012, down 6.1% on 2011
FinnvedenBulten has a good position to continue gaining market share thanks to new customer contracts and a favorable customer base
Q1 REPORT 2012 | Outlook for 2012
24
Financial objectives
TARGETSQ1
2012Actual
Q12011
Actual
FULL YEAR2011
Actual
Sales growth Target to achieve a profitable organic growth in excess of the market growth on the Company’s respective markets.
1.4% 9.9 % 18.3 %
Adjusted EBIT margin1 Target to achieve an EBIT margin of at least 7 %. 5.0% 8.3% 7.1%
Return on capital employed (ROCE)
Target to achieve a ROCE exceeding 15 %. 14.6% 13.3% 15.4%
Adjusted return on capital employed (ROCE)2
Target to achieve a ROCE exceeding 15 %. 15.0% 14.7% 16.%
Dividend policy FinnvedenBulten has a target to pay dividends corresponding to approximately 1/3 of net income after tax. FinnvedenBulten's financial position, cash flow and future prospects should however be considered.
n.a. n.a 37%SEK 2.00
per share3
25Notes: (1) Adjusted EBIT margin shown excluding primarily IPO related costs. (2) Excluding primarily IPO related costs. (3) Proposed by the board to the AGM
Q1 REPORT 2012 | Financial objectives
THANK YOU FOR YOUR ATTENTION!
FinnvedenBulten develops and manages industrial businesses, offering products, technical solutions and systems in metallic materials. The Group operates as a business partner to international customers in the engineering industry, primarily the automotive industry. FinnvedenBulten is structured into two divisions – Finnveden Metal Structures and Bulten –both with strong positions in their respective customer segments. FinnvedenBulten is listed on NASDAQ OMX Stockholm.
www.finnvedenbulten.com