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SP Group 1. half year 2007 Presentation by CEO Frank Gad August 2007.

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Presentation on theme: "SP Group 1. half year 2007 Presentation by CEO Frank Gad August 2007."— Presentation transcript:

1 SP Group 1. half year 2007 Presentation by CEO Frank Gad August 2007

2 2 Presentation August 2007 / SP Group AGENDA 1. SP Group – an overview 2. Results 1. half year 2007 Group Injection moulding Polyurethane Vacuum forming Coating Share price and liquidity 3. Strategic focus areas Increasing sales and globalization Growth industries and own brands Higher efficiency in the Danish production Expansion in low-cost areas 4. Financial objectives Frank Gad (born 1960, M. Sc.) Career: Nov. 2004:CEO, SP Group A/S :CEO, FLSmidth A/S :President, Mærsk Container Industri A/S :Odense Steel Shipyard A/S latest as EVP

3 3 Presentation August 2007 / SP Group SP Group A/S INJECTION MOULDING POLYURETHANEVACUUMCOATINGS SP Moulding A/S Tinby A/S Ergomat A/S Gibo Plast A/SAccoat A/S TPI Polytechniek bv SP Medical A/S SP GROUP – AN OVERVIEW Manufacturer of moulded plastic components and coatings Supplier of customer specified solutions for manufacturing industries Increasing exports from Denmark; increasing production in China and Poland Strong international niche positions – also within own brands Revenue split in the business units of the Group H and 2006:

4 4 Presentation August 2007 / SP Group RESULTS 1. HALF YEAR 2007

5 5 Presentation August 2007 / SP Group GROUP HIGHLIGHTS Results in H1 better than expected in spite of increasing prices in raw material and energies Growth in 3 of 4 business units Higher efficiency throughout the Group Continuing rationalisation of Danish production Two new Polish manufacturing units run on schedule Outlook 2007 is upgraded in spite of costs for the close-down of Sønderborg Revenue in DKKm +15% Operating profit (EBITDA) i DKK m +30%

6 6 Presentation August 2007 / SP Group GROUP HIGHLIGHTS 1. HALF YEAR 2007 DKKmH1 2007H Revenue EBITDA EBIT Result before tax and minorities Net profit Equity incl. minorities Cash flows from: Operations Investments Financing Net profit ratio (EBITDA) in % +1,2pp

7 7 Presentation August 2007 / SP Group SP Moulding A/S manufactures injection moulded advanced plastic components for a wide range of industries. SP Medical A/S produces for customers in the medical appliance industry, including finished articles such as medical guide-wires. The production takes place in clean rooms. SP Moulding is the leading manufacturer in Denmark and among the largest in Scandinavia. SP Medical ranks 3-4 in Scandinavia. Locations: Juelsminde (DK), Stoholm (DK), Karise (DK), Sønderborg (DK), Suzhou (China), Sieradz (Poland) and Zdunska Wola (Poland). INJECTION MOULDING (1) Technical plastics Medico 2K and 3K moulding

8 8 Presentation August 2007 / SP Group INJECTION MOULDING (2) 1. half year 2007:  6.1% organic growth; increasing sales to all industries on the whole  24.3% growth in total  New Polish sites run on schedule, but still have negative impact on earnings  Earnings in Sønderborg not satisfactory; others Danish sites and site in China are generating profits DKKmH1 2007H Revenue EBITDA EBIT Result before tax and minorities Employees (average) Net profit ratio (EBIT) in % DKKm Revenue EBITDA EBIT Full-year result Outlook 2007:  Growth in SP Moulding and SP Medical  Modest positive contribution from Poland in H2  Improved revenue and earnings before close down of Sønderborg

9 9 Presentation August 2007 / SP Group 3 activities: Tinby A/S, Ergomat A/S and TPI Polytechniek BV Locations: Søndersø (DK), Zdunska Wola (POL), Vught and MK Teuge (NL), Cleveland (US), Montreal (CAN), Zeil am Main (DE) and Helsingborg (SE) Tinby is one of the leading suppler in Northern Europe of moulded products in solid foamed and flexible polyurethane (PUR). Global market leader within hard rollers. Rollers Solid foamed PUR TPI Polytechniek produces and sells light-foamed ventilation equipment for industrial buildings and poultry and pig houses. Market leader in the EU. POLYURETHANE (1) Ergomat produces and sells ergonomic solutions under own brands: Primarily mats (Ergomat), chairs (ErgoPerfect), tables and DuraStripe striping tape. Market leader in the EU. MatsDuraStripe

10 10 Presentation August 2007 / SP Group POLYURETHANE (2) 1. half year 2007:  11.5% growth – higher than expected  Growth in TPI, especially in Eastern Europe  Growth in Tinby, e.g. wind mill industry  Ergomat: Flat growth, strongly improved earnings  Increasing net profit ratio due to better product mix and growing activities DKKm Revenue EBITDA EBIT Full-year result Outlook 2007:  Growth in all activities  Improved efficiency and tight cost management will result in higher earnings than in 2006 DKKmH1 2007H Revenue EBITDA EBIT Result before tax and minorities Employees (average) Net profit ratio (EBIT) in %

11 11 Presentation August 2007 / SP Group Gibo Plast develops and manufactures thermo-formed plastic products in different materials and colours. The products are mainly used in refrigerators and freezers, caravans as well as within transportation, medical equipment, lighting industries, wind turbines etc. Market leader in Denmark and Scandinavia, among the 10 largest suppliers in the EU as regards traditional vacuum forming. Strong position within the new High-pressure and Twinsheet technologies. Location: Skjern (DK) Vacuum formingCNC millingHigh pressureTwinsheet VACUUM FORMING (1)

12 12 Presentation August 2007 / SP Group VACUUM FORMING (2) 1. half year 2007:  Expected drop in sales to the refrigerator and freezer sector  New activities in transportation equipment, the medico industry and parts for wind turbines etc.  Finding new customer segments takes longer than expected  Capacity utilisation too low DKKm Revenue EBITDA EBIT Full-year result Outlook 2007:  Drop in sales to the refrigerator and freezer sector. Therefore new customer segments to be found  Drop in revenue; lower earnings DKKmH1 2007H Revenue EBITDA EBIT Result before tax and minorities Employees (average)6672 Net profit ratio (EBIT) in %

13 13 Presentation August 2007 / SP Group Accoat develops and manufactures high-build corrosion protection, non- stick and low-friction coatings in Teflon, PTFE, and other refined materials for a wide range of industries. Accoat engages in coating of both industrial products and production equipment. Within industrial teflon coating Accoat is among the 5 largest suppliers in the EU. Location: Kvistgård (DK) COATINGS (1) Coating Medico

14 14 Presentation August 2007 / SP Group COATINGS (2) 1. half year2007:  60.3% growth adjusted for transfer of Accoat Medical to SP Medical  High growth in the chemical industry, medico and oil/gas industry  EBIT margin rose from 10.4% to 20.8% due to better mix and capacity utilisation  Lower growth in Q2 due to speed up of projects to Q1  Trial production with nano coating DKKm Revenue EBITDA EBIT Full-year result Outlook 2007:  Higher revenue and earnings, even after the transfer of Accoat Medical DKKmH1 2007H Revenue EBITDA EBIT Result before tax and minorities Employees (average)6498 Net profit ratio (EBIT) in %

15 15 Presentation August 2007 / SP Group ADDED VALUE TO THE SHAREHOLDERS Share price development 2 January 2006 to 31 July 2007 SP Group Total index Approx. 50% return in % return in % return in 2005 Source: Copenhagen Stock Exchange and Danske Markets Major shareholders’ ownership Major shareholders Others % 53.6% 46.4% 71.4% 28.6% 6.0%

16 16 Presentation August 2007 / SP Group SMALL-CAP+ AND MID-CAP+ COMPLIANCE Order frequency Source Copenhagen Stock Exchange - Gudme Raaschou Bank Market value, EURmSpread Day-to-day revenue (average), DKKm Both index

17 17 Presentation August 2007 / SP Group Action WhoNumberExercise price Warrants 2005 Frank Gad54,000 warrantsDKK % p.a. Options 2006 Frank Gad13,975 optionerDKK % p.a. Warrants managers80,000 warrantsDKK % p.a. INCREASED USE OF WAGES BASED ON SHARES New wage instruments to keep key employees in the Group Agreements based on shares underline common interest in added value The Annual General Meeting has adopted a new warrant programme All programmes are muti-annual to promote longterm behaviour The new warrant programme expires on 31 March 2011 The programmes will be of value to the managers, when the shareholders have realized an increase in value – therefore a 7.5% annual adjustment of the share price

18 18 Presentation August 2007 / SP Group STRATEGIC FOCUS AREAS

19 19 Presentation August 2007 / SP Group INCREASED SALES AND INTERNATIONALISATION Strengthened sales and marketing in all units Focus on both present and new customers Increased export from the Danish production sites Increasing sales from units in Poland and China International revenue rose by 21% i 1. half year Goal to win market shares in Northern Europe Differentiation on processes, design and knowledge of raw material International sales in DKKm +21% International sales in % +2,2pp Organic growth in % (group revenue) -5pp

20 20 Presentation August 2007 / SP Group GROWTH INDUSTRIES AND OWN BRANDS Stronger engagement in growth industries and new customers, e.g. medico and wind mills Medico revenue rose by 33% since 2005 Competencies gathered in SP Medical with FDA-certified production in Denmark and Poland Globalization of high-margin products under own brands (TPI og Ergomat) Potential in other product niches must be utilized New niche products with control of brands and distribution Medico revenue in DKKm +6% Revenue in own brands in DKKm +6%

21 21 Presentation August 2007 / SP Group RATIONALISATION OF DANISH PRODUCTION (1) Sites closed since 2004 Existing sites 1.Skjern 2.Kvistgaard 3.Søndersø 4.Karise 5.Juelsminde 6.Stoholm 7.Sønderborg

22 22 Presentation August 2007 / SP Group RATIONALISATION OF DANISH PRODUCTION (2) Polen Poland Denmark Negotiations concerning the close- down of Sønderborg Production transferred to Juelsminde, Stoholm and Poland in H Transfer in close co-operation with the customers 50 jobs affected Close-down will strengthen SP Moulding’s earnings as of 2008 Restructuring costs included in new outlook for 2007 Production transfer to Stoholm, Juelsminde and Poland

23 23 Presentation August 2007 / SP Group EXPANSION IN POLAND AND CHINA New PUR factory in Poland to be built during Investment of approx. DKKm 30 Need for a 100% expansion of capacity due to expected growth Polish injection moulding factory from 2006 on break-even in June Polish medico factory from 2006 on break-even in Q2 Continuing expansion of capacity at SP Moulding in China SP Group will follow the customers’ transfer of production to low-cost countries Sites in Poland 1.Zdunska Wola 2.Sieradz Poland 1 2

24 24 Presentation August 2007 / SP Group FINANCIAL OBJECTIVES AND OUTLOOK

25 25 Presentation August 2007 / SP Group LONG-TERM FINANCIAL OBJECTIVES Result before tax and minorities of 5% of revenue within 3 years Group revenue in the range of DKK 1bn i 2009 EBITDA margin to exceed 10% Lower net interest-bearing debt Increased cash flows from operations NIBD/EBITDA ratio at 3-4 in 2009 – 11.5 in 2004; 4.6 in 2006 Solidity (incl. equity of minorities) in the range of 20-35% Competitive return to shareholders from rising share price Result before tax and minorities in % of revenue +2pp Equity (solidity) incl. minorities in % +1,8pp

26 26 Presentation August 2007 / SP Group New outlookPrevious outlook2006 Revenue Growth of 6-10% = DKKm Growth of 4-8% = DKKm DKKm Result before tax and minorities Approx. DKKm 30 after restructuring costs DKKm excl. restructuring costs DKKm 20.7 OUTLOOK FOR 2007 Growth in 3 business units, shortfall of revenue in Gibo Plast Modest positive contribution from new Polish factories in H Based on present activities, prices in raw material and energies, exchange rates and macro economic activities

27 27 Presentation August 2007 / SP Group FORWARD-LOOKING STATEMENTS This presentation reflects the management’s expectations of future events and financial results. The statements as regards 2007 and the years to come are subject to certain uncertainties and actual results may therefore deviate materially from the outlook and the financial objectives. Circumstances that could cause changes are among others – but not exclusively – price changes in raw material and energies, changes in exchange rates, changes in the macro economic and political conditions, changes in the customers’ demands and production ways and other circumstances on which we do not have any influence. This presentation is not a request for buying or selling shares in SP Group A/S.

28 28 Presentation August 2007 / SP Group Q&A SESSION

29 Thank you for your attention For more information: Frank Gad, Chief Executive Officer SP Group A/S Snavevej Søndersø Phone: /


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