Worldwide. On Site.
Analyst‘s ConferenceDrägerwerk AG & Co. KGaA
Lübeck, March 8, 2017
OVERVIEW GROUP AND REGIONSFINANCIALSFIT FOR GROWTHOUTLOOK
OVERVIEW GROUP AND REGIONS
2,609
532 579 593820
2,524
2015 Q1 Q2 Q3 Q4 2016
Strong EBIT improvement despite disappointing net salesBusiness development Dräger Group
Net Sales (in EUR million)
-1.5%Currency adjusted
-3.3%Nominal
2.6%EBIT-Margin
5.4%EBIT-Margin
Order intake +2.1% cc, but disappointing net sales development with a decline of 1.5% cc.
Strong year-end business. Again record Q4.
„Fit for growth“ efficiency measures on track. Good cost containment with functional expenses down -6.1%*
FY EBIT-margin 5.4% at the top end of guidance.
Full-year FX impact negative on net sales and EBIT. (FY FX: Net sales -1.8pp, EBIT margin ~ -0.5pp)
Highlights
4
* excluding currency effects and restructuring charges
Positive order intake in all regionsOrder development Dräger Group
Order entry (in EUR million)Group
2,539
1,383
641
515
Group
Europe
Africa, Asia,Australia
America +7.2%
+0.9%
+0.9%
+2.1%
Net Sales
+2.1%
-5.1%
-1.1%
-1.5%
Growth rates are net of currency effects; incl. allocations
+7.1%+7.2%
Medical Safety
-5.8%+3.7%
+1.1%+0.7%
+0.7%+2.9%
5
New regional setup increases execution capabilitiesRegional responsibilities
Regional setup
Americas
Asia, Africa & Australia
Europe Full regional business
responsibility is assigned to three board members in addition to their functional role.
Strategic importance of three direct reporting countries is reflected.
Local management fully accountable for executing business plan.
6
Anton Schrofner
Dr. Reiner Piske
Rainer Klug
Business development Americas
Order intake Q4 (FX adjusted): +12.4%
Order growth in North America, as well as Central-, South-America.
Gross profit margin: +1.6pp yoy
Functional expenses (FX adjusted): FY -7.0% yoy
Opening of Houston site in the heart of the Oil&Gasindustry.
Pittsburgh site closed as planned. Cost targets achieved.
7
-18.6
10.3
Order Entry
EBIT
497 515
2015 2016
+7.2%Currency adjusted
>100%-3.7%EBIT-margin
2.0%EBIT-margin
Net Sales
509 504
2015 2016
+2.1%Currency adjusted
Comments
2015 2016
Business development Europe
Order intake Q4 (FX adjusted): +3.1%
Strong top line growth in Germany, Switzerland, Russia
Large Orders from Swiss Rail and UKSH Lübeck.
Gross profit margin: -0,6pp yoy
Functional expenses (FX adjusted): FY -7.6% yoy
59.484.5
2015 2016
Order Entry
EBIT
1,391 1,383
2015 2016
+0.9%Currency adjusted
+42%4.2%EBIT-margin
6.1%EBIT-margin
Net Sales
1,421 1,384
2015 2016
-1.1%Currency adjusted
Comments
7
Business development Africa, Asia, Australia
Order intake Q4 (FX adjusted): +21.8%
Strong decline in the Middle East, driven by low oil price and public budget restraints.
Strong demand in India.
Improvement in Greater China. Medical business with solid recovery.
Gross profit margin:+0.5% yoy
Functional expenses (FX adjusted): FY -10.1% yoy
9
25.842.1
2015 2016
Order Enty
EBIT
645 641
2015 2016
+0.9%Currency adjusted
+63%3.8%EBIT-margin
6.6%EBIT-margin
Net Sales
679 636
2015 2016
-5.1%Currency adjusted
Comments
FINANCIALS
66,5
Q4‘15 Q4‘16
108.9 66,7136,9
FY15 FY16
Business developmentDräger Group
Net Sales
EBIT
825,4 819,5
Q4‘15 Q4‘16
2.608,92.523,8
FY15 FY16
+0.7%Currency adjusted
-1.5%Currency adjusted
+63.7% +105.3%8.1%EBIT-margin
13.3%EBIT-margin
2.6%EBIT-margin
5.4%EBIT-margin
11
Order intake (FX adjusted)
Orders on hand ~+5% cc Gross profit margin
12M 45.0% (py 44.9%) 12M Functional Expenses
yoy -8.2% (cc); excluding restructuring -6.1%
12M Other financial result€ 0.2m (py € -6.8m)
12M restructuring cost€ ~10m (py € ~35m)
EBIT-margin incl. ~ -0.5 pp from FX
DVA €49.8m (py € -46.3m)
Comments
Q4 FYMedical +9.0% +2.9%Safety +9.4% +0.7%Group +9.1% +2.1%
Functional ExpensesDräger Group
12
12M 2015 12M 2016 Changenet of FX and restructuring
€ million € million %
R&D -231.1 -219.0 -5.2 -4.8 % of Net Sales -8.9% -8.7%
Sales & Marketing -611.0 -554.7 -9.2 -8.2 % of Net Sales -23.4% -22.0%
Administration -250.2 -207.4 -17.1 -7.6 % of Net Sales -9.6% -8.2%
SG&A -861.2 -762.1 -11.5 -8.0 % of Net Sales -33.0% -30.2%
Functional Expenses total -1,098.4 -999.2 -9.0 -6.1 % of Net Sales -42.1% -39.6%
Headcount1 13,936 13,263 -4.8 1 Values as of reporting date
Change
%
Key FiguresDräger Group
13
12M 2015 12M 2016
€ million € million
Cashflow from operating activities 39.9 195.3 >100Investments 196.8 99.9 -49.2
Cash and cash equivalents1 172.8 221.5 28.2
Net financial debt1 145.3 34.7 -76.1 Net financial debt 1 /EBITDA 2 0.96 0.16
Capital employed 1 1,269.3 1,247.0 -1.8 ROCE (EBIT 2/Capital employed 1) 5.3% 11.0% +5,7pp
Net Working Capital1 582.3 563.2 -3.3
Equity ratio 40.9 43.4 2.5pp
EPS per common shares (on full distribution) 1.40 3.40 >100EPS per preferred shares (on full distribution) 1.46 3.46 >1001 Values as of reporting date2 EBITDA and accordingly EBIT of the last twelve months
Change
%
Business development regions and productsDräger Group
14
2016 2016€ million € million
Order entry 1,662.6 2.9 876.1 0.7
Europe 835.8 0.7 546.7 1.1
America 359.5 7.2 155.5 7.1
Africa, Asia, Australia 467.2 3.7 174.0 -5.8
Net Sales 1,647.4 -1.3 876.5 -2.0
Europe 829.2 -0.9 555.0 -1.5
America 353.5 2.3 150.3 1.9
Africa, Asia, Australia 464.7 -4.5 171.2 -6.9
EBIT 85.3 84.5 * 51.6 >100 *
EBIT-margin 5.2 +2.5 pp 5.9 +3.6 pp
* nominal growth rate
Medical products Safety productsChange
% (FX adj.)Change
% (FX adj.)
2015 2016
0.13 € 0.13 €
Dividend proposal for FY 2016
* after earnings attributable to non-controlling interests** Without minimum dividend, after taxes
Dividend percommon share preferred share Dividend policy
2015 (in EUR million) 2016 (in EUR million)
Net profit* 33.3 81.7
Dividend 3.7 3.7
Participation certificates** 0.9 0.9
Common shares 1.3 1.3
Preferred shares 1.4 1.4
Net payout ratio 10.9% 4.5%
15
2015 2016
0.19 € 0.19 € unchangedUntil earnings development has significantly improved and stabilized, Dräger will retain generated earnings to the greatest extent and only pay out a minimum dividend.
FIT FOR GROWTH
FIT FOR GROWTH is on track and delivering results
FIT FOR GROWTHFIT FOR
GROWTH1122
33SHAPE
Optimize global Sales, Marketing &
Administration set-up
FIT!Optimize
innovationset-up
Global footprint
Optimizeproduction
set-up Improveworkflow 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
Improve SG & A expense ratio
17
20172016
SHAPE Short term cost savings show positive impact
2016 2017
Continue roll-out of pricing project, Purchasing optimization, ERP harmonization and further legal consolidation within sales organization
Measures for shorter term cost savings: ~70% of the 250
measures implemented
~700 headcount reduction vs. ~350 originally planned
substantial reduction of functional cost base
New organizational set up and international governance model implemented
18
Additional countries included in harmonized ERP landscape
Pricing excellence project started
......
Continue strict expense management and implementation of the remaining ~30% cost cutting measures
......
SG&A2017~30%
SG&A2017~30%
Global FootprintAll milestones and savings achieved
2016 2017
Closure our Pittsburgh site and relocation of activities to predominantly Houston and Telforth. annual savings of ~3m€ Dräger office in the heart
of the Oil&Gas industry
Transfer of production lines with high labor content to our production site in the Czech Republik. annual savings of ~3m€ project completed in Q2
2016
19
Consolidation of the production at our Lübeck site in the “Zukunftsfabrik” Investmentbudget of ~72m€ on target annual savings of ~9m€ Site up and running without major disruptions project completed in Q4 2016
......
Major measures of the project completed. further improvement of
new production and logistic workflow
StabilizeGP
margin
StabilizeGP
margin
FIT!Innovation organization is implementing FIT! measures
2016 2017
Merger of segment-and product management into the innovation organization increase speed reduce complexity Transfer of goals and
measures of the FIT project into line organization
20
Vitalize Innovation @ Dräger: Innovation incubator “Garage”
......
Continue to focus on Time to Market target achievementAfter 2 years of intense reshaping the innovation organization no further major changes planned in 2017 –let’s get to work!
......
2019
-50%
2019
-50%Time to Market
Portfolio phase-out reduce complexity increase capacity for
new innovation
Reduction of internal standards where useful
Vitalize Innovation @ Dräger: new methods and tools to increase speed of innovation projects
Faster. Connected. Innovative.Selection of new products 2016
MEDICAL SAFETY
BabyFlow® PlusMview®
Infinity Delta®
(SW Lösung)Integr. Care Mgmt(SW Update)
AlcotestNeu 2x
Dräger Röhrchen
Pointgard® 2000
Polytron® C300(Ammoniak)
Polytron® 8000Fixed Gas
Doppelsensor XXS Regard® 7000Gasmesscontroller
Dräger Flame 2xx0
Babyleo®
Babyleo® Regard® 7000Gasmesscontroller
BabyFlow® PlusMview®
Infinity Delta®
(SW Lösung)Integr. Care Mgmt(SW Update)
AlcotestNeu 2x
Dräger Röhrchen
Pointgard® 2000
Polytron® C300(Ammoniak)
Polytron® 8000Fixed Gas
Doppelsensor XXS Regard® 7000Gasmesscontroller
Dräger Flame 2xx0
Babyleo®
21
OUTLOOK
Outlook
2016 guidance 2016 2017e
Net Sales(net of currency effects)
0.0 % – 3.0 %(lower end)
- 1.5 % 0.0 % – 3.0 %
EBIT margin 3.5 % – 5.5 % 5.4 % 5.0 % – 7.0 %*
Gross profit margin Below prior year(2015: 44.9 %)
45.0 % 44.0 – 46.0 %
Dräger Value Added Improvement(2015: EUR -46.3m)
EUR 49.8m EUR 40m – 90m
* based on exchange rates at the start of the year 2017
23
Assumptions for FY 2017 Guidance
Downside risk of strong market interruptions caused by rising political protectionism (new import taxes, cancellation of international trade agreements) or caused by high level of uncertainty (e.g. repeal of Obamacare) not reflected in guidance.
Demand improvement in AAA region and Europe (ex DACH). Continuously strong development in North America , but increasing challenges in Central- and South America. Possibly softer development in DACH in light of strong 2016.
FX effects of ~+1 pp on net sales. No support from FX on EBIT-margin.*
Restructuring cost of EUR ~10 million (PY EUR 10 million).
24
Questions & Answers
25
Appendix
March 8, 2017 - Accounts press conference, Lübeck- Analysts meeting
May 4, 2017 - Report for the first three months 2017 Conference call, Lübeck
May 10, 2017 - Annual shareholders' meeting, Lübeck
July 27, 2017 - Report for the first six months 2017 Conference call, Lübeck
November 2, 2017 - Report for the first nine months 2017 Conference call, Lübeck
Financial calendar 2017
26
Guidance 2017
27
2016 Forecast 2017
Net sales -1.5%(net of currency effects)
0.0 - 3.0%(net of currency effects)
EBIT margin 5.4% 5.0 - 7.0%1
Dräger Value Added EUR 49.8 million EUR 40 - 90 million
Other forecast figures:Gross margin 45.0% 44.0 - 46.0 %
Research and development costs EUR 219 million EUR 230 - 245 million
Interest result EUR -15.5 million EUR -13 to -17 million
Days wokring capital (DWC) 121.7 days Slight improvement
Investment volume EUR 99.9 million EUR 90 - 105 million
Net financial debt EUR 34.7 million Improvement
1 Based on exchange rates at the start of the year2 excluding company acquisitions
Business Development Group
28
Q4 2015 Q4 2016 12M 2015 12M 2016
€ million € million € million € million
Order Intake 637.2 689.6 8.2 2,532.2 2,538.7 0.3
Net Sales 825.4 819.5 -0.7 2,608.9 2,523.8 -3.3 % growth 7.2% -0.7% 7.2% -3.3%% growth (FX adjusted) 4.4% 0.7% 2.9% -1.5%
Gross Profit 378.1 387.8 2.6 1,171.7 1,134.5 -3.2 Gross margin 45.8% 47.3% 44.9% 45.0%
Functional Expenses -310.9 -278.7 -10.4 -1,098.4 -999.2 -9.0 % of Net Sales -37.7% -34.0% -42.1% -39.6%
EBIT 66.5 108.9 63.7 66.7 136.9 >100EBIT Margin 8.1% 13.3% 2.6% 5.4%
Net Profit 33.3 81.7 >100
DVA -46.3 49.8 >100
1 Currency adjusted 12M: order intake 2.1%, net sales -1.5% Currency adjusted quarter: order intake 9.1%, net sales 0.7%
Change
% %
Change
Business Development Segments
29
2012 2013 2014 2015 2016SEGMENT EUROPEOrder Entry 1 € million 1,396.8 1,322.4 1,357.0 1,391.0 1,382.5Net Sales 1 € million 1,367.8 1,333.5 1,362.2 1,420.7 1,384.3EBIT € million 142.4 131.2 128.5 59.4 84.5EBIT margin % 10.4 9.8 9.4 4.2 6.1
SEGMENT AMERICAOrder Entry 1 € million 453.2 465.2 461.5 496.8 515.0Net Sales 1 € million 455.8 458.7 471.2 509.1 503.7EBIT € million 16.3 8.5 -0.4 -18.6 10.3EBIT margin % 3.6 1.8 -0.1 -3.7 2.0
SEGMENT AFRICA, ASIA, AUSTRALIAOrder Entry 1 € million 555.5 597.0 597.0 644.5 641.2Net Sales 1 € million 549.8 581.9 601.3 679.1 635.8EBIT € million 71.5 61.2 50.5 25.8 42.1EBIT margin % 13.0 10.5 8.4 3.8 6.6
1 years 2012–2014 were adjusted pro-forma due to the change in segment reporting.
Cash-flow statement
30
12M 2015 12M 2016€ million € million
Group net profit 33.3 81.7 >100
Change in inventories -5.4 17.4 >100
Change in receivables -44.6 31.3 >100
Change in payables -22.8 -10.2 55.0
Depreciation and amortization 84.2 85.8 1.9
Other operating cash flow items -4.8 -10.6 >-100
Operating cash flow 39.9 195.3 >100
Investing cash flow -167.0 -77.3 53.7
Free cash flow -127.1 118.1 >100
Financing cash flow -1.3 -70.0 >-100
Change in cash1 -128.4 48.1 >100
Cash and cash equivalents2 172.8 221.5 28.2 1 Change in cash and cash equivalents, i.e. without any effect of exchange rates2 Values as of reporting date
Change%
Consolidated balance sheet
31
31 Dec 2015 31 Dec 2016 Change€ million € million %
Intangible Assets 351.8 347.6 -1.2 Property, plant and equipment 406.4 420.9 3.6 Other noncurrent assets 149.0 150.1 0.7 Noncurrent assets 907.2 918.6 1.3
Inventories 402.0 386.8 -3.8 Trade receivables 711.3 681.7 -4.2 Other current assets 114.8 103.8 -9.6 Cash and cash equivalents 172.8 221.5 28.2 Current assets 1,400.9 1,393.8 -0.5
Total assets 2,308.1 2,312.3 0.2
Consolidated balance sheet
32
31 Dec 2015 31 Dec 2016 Change€ million € million %
Equity 945.9 1,003.5 6.1
Liabilities from participation certificates 21.8 22.7 4.2 Provisions for pensions and similar oblig 288.1 318.3 10.5 Noncurrent interest bearing loans 138.1 188.6 36.6 Other noncurrent liabilities 97.8 108.6 11.0 Noncurrent liabilities 545.9 638.2 16.9
Current Provisions 233.0 211.2 -9.3 Current loans and liabilities to banks 169.7 57.0 -66.4 Trade payables 186.4 179.8 -3.6 Other current liabilities 230.5 222.6 -3.5 Current liabilities 819.6 670.6 -18.2
Total equity and liabilities 2,311.4 2,312.3 0.0
33
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 +49 451 882-3296Mobile +49 170 8558152 Mobile +49 151 12245295
[email protected] [email protected] www.draeger.com
Contact