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From melting steel to 3D-printing: investing in the technology-driven German “Mittelstand” as at 23 December 2015.

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Presentation on theme: "From melting steel to 3D-printing: investing in the technology-driven German “Mittelstand” as at 23 December 2015."— Presentation transcript:

1 From melting steel to 3D-printing: investing in the technology-driven German “Mittelstand”
as at 23 December 2015

2 1. Business model GESCO Group – an association of industrial SMEs with market and technology leaders Segments tool manufacture / mechanical engineering and plastics technology Currently 17 operating subsidiaries under the roof of GESCO AG as a holding company We think and act in a sustainable and entrepreneurial manner We do business in established sectors with innovative technologies We provide technology “made in Germany” for global markets GESCO is comprised of adaptable, independent operating units that benefit from being part of a strong group GESCO AG – a long term investor and a safe haven for succession issues We acquire and develop industrial SMEs an a long-term basis – exit is not part of the business model We take over majorities, almost always 100 % Most takeovers are part of succession planning The new managing directors invest up to 20 % in the company they run (“entrepreneur companies”) 2

3 1. GESCO Group The GESCO share offers a focussed portfolio of 17 “Hidden Champions” serving broadly diversified customer sectors 3% 5% 6% 12% 15% 25% 4% Passenger and commercial vehicles Other Agricultural engineering Machine and plant construction Foundries and roller mills Consumer goods industry Iron, plate and metal processing, tool construction Energy Chemical and petrochemical industry Electrical, medical technology, household goods Construction, air conditioning, sanitary industry 4% 3

4 1. The 4 biggest companies (sales and staff: FY 2014)
Dörrenberg Edelstahl GmbH Leading European specialist for tool steel Steel mill, trading, mould castings and surface technology Strong internationalization Sales € 172 m, staff 501 SVT GmbH Systems for (un)loading liquids and gases Specialty LNG: No. 2 worldwide Export ratio: 80 % Sales € 44 m, staff 182 MAE Maschinen- und Apparatebau Götzen GmbH World market leader for straightening machines and wheel set presses Highly innovative Acquired US competitor in Jan. 2014 Sales € 25 m, staff 160 Frank Walz- und Schmiedetechnik Group Europe‘s leading forge for wearparts for the agricultural industry 70 % of sales to OEMs, % to wholesale and farmers Sales € 28 m, staff 274

5 1. Two very special companies (sales and staff: FY 2014)
Setter Group Paper and plastic sticks for the sweets and hygienic industries, world market leader for paper sticks 90 % export ratio 20 bn sticks produced in Germany each year Acquired US-based Setterstix Inc. in Jan. 2015 Sales € 15 m, staff 59 C.F.K. CNC-Fertigungs- technik Kriftel GmbH Leading centre in high- precision wire erosion and die sinking Cutting-edge production line, 45 machines Advanced laser melting systems (3D printing) for functional prototypes, medical implants etc. Sales € 8 m, staff 57

6 2. Financial year 2015/2016 Please keep in mind:
GESCO AG and GESCO Group financial year = 1 April to 31 March Subsidiaries’ financial year = calendar year

7 2. Financial year 2015/2016 Initial situation and expectations (as at annual accounts press conference on 25 June 2015) Economic forecasts indicate growth (GDP:+2.1 %, VDMA: Increase in production +2 %, GKV: Sales +2.6 %) Frank Walz- und Schmiedetechnik GmbH: continued weakness in the agricultural technology sector due to Russia/Ukraine etc. SVT GmbH: low energy prices lead to restraint in investments of the oil industry  decreasing demand for SVT GmbH’s loading arms Tool manufacturers are expecting decreases in results, partly due to cyclical effects Restructuring measures at two companies continue to have a negative effect on earnings Among others, Dörrenberg, Setter, Haseke and CFK are operating at a satisfactory level Overall sales within the GESCO Group should increase organically, further inorganic growth will be contributed by Setterstix, but margins continue to be far too low

8 2. Financial year 2015/2016 – H1 Where are we now? Situation after H1
Comprises operating business of subsidiaries from Jan. to June 2015 Order intake and sales increased Setterstix provides external growth Earnings grew even stronger, especially due to: operating improvements restructuring activities at 2 subsidiaries proceeding 8

9 2. Financial year 2015/2016 – H1 (Jan. to June 2015 at subsidiaries)
Satisfactory customer demand H1 2014/2015 2015/2016 Change Order intake € m 226.6 258.1 13.9% Sales 220.1 237.3 7.8% EBITDA 20.1 26.1 30.2% EBIT 10.8 16.0 48.5% Group net income after minority interest 5.5 7.9 44.8% EPS acc. to IFRS 1.65 2.39 Equity 182.8 184.8 1.1% Equity ratio % 45.3 42.3 - Liquid funds 35.3 27.2 -22.9% Organic: +11.2% Organic: +5.0% Operating improvements, restructuring activities proceeding Strong balance sheet, room for growth € 5.8 m dividend paid out in Q2

10 2. Financial year 2015/2016 – Q3 (July to Sept. 2015 at subsidiaries)
How are we proceeding? Stable business development in Q3 with growth yoy. Order intake Group sales  € 120 m  € 130 m € m € m +5.8% +10.4% Q3 2014/2015 Q3 2015/2016 Q3 2014/2015 Q3 2015/2016

11 2. Financial year 2015/2016 Within GESCO Group 
Where do we go from here? General current situation: a mixed picture. Already in July, VDMA cut outlook from +2% to zero growth Oil and chemical industry still hesitant to invest Declining demand from China due to decreasing growth Many profit warnings on the stock market Within GESCO Group  No indication of a significant, widespread decline in demand But no notable growth impetus either We expect demand to dip slightly in Q4 11

12 2. Financial year 2015/2016 – Outlook
Target figures for Group sales. confirmed € 490 m to € 480 m € 490 m to € 480 m +8.5% € 451 m +6.3% 2014/2015 Actual 2015/2016 Guidance June 2015 2015/2016 Guidance Nov. 2015

13 2. Financial year 2015/2016 – Outlook
Target figures for Group net income after minority interest. at or slightly above € 14.0 m € 14.0 m to € 12.5 m +13.4% € 12.4 m +1.2% fully confirmed 2014/2015 Actual 2015/2016 Guidance June 2015 2015/2016 Guidance Nov. 2015

14 3. M&A Current situation with regard to M&A
On the one hand: M&A in the “good” SME sector is currently a seller’s market A lot of available funds, low interest rates, few attractive investment opportunities Comparably small number of interesting SMEs On the other hand: The market continues to be strongly fragmented at all levels (sellers, intermediaries, buyers), there are still interesting opportunities GESCO strengthened its team in September (Christoph Borges, Head of M&A)

15 3. M&A and portfolio development
January 2015: Setter Group acquires Setterstix Corp. / USA Setterstix is the leading US producer of paper sticks for the confectionary industry with approx. € 10 m sales and 40 employees GESCO subsidiary Setter is market leader for paper sticks for the hygiene industry in the US  acquisition rounds off Setter’s position in the US market perfectly The companies have common origins, but have been separate companies for decades

16 4. The GESCO share Free float: 85.5%
Stefan Heimöller, entrepreneur, member of supervisory board: 14.5 % Investmentaktiengesellschaft für langfristige Investoren TGV: 10.5 % Dividend policy: payout ratio approx. 40 % of Group net income after minority interest

17 4. Share price development (in %) – 1 and 5 years
GESCO vs. SDAX, 1 Jahr GESCO vs. SDAX, 5 Jahre ─ GESCO ─ SDAX

18 4. Share price development (in %) – 10 years
GESCO vs. SDAX, 10 Jahre ─ GESCO ─ SDAX

19 Facts and figures on GESCO AG
Founded: Share capital: € 8,645,000 Shares: 3,325,000 registered shares Free float: % Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market) Sec. identification number: A1K020 ISIN: DE000A1K0201 IPO: 24/03/1998 End of financial year: 31 March Designated sponsors: equinet Bank AG Oddo Seydler Bank AG

20 GESCO Group overview Company Sales 2014 €‘000 Staff 31/12/2014
GESCO AG shareholding Astroplast Kunststofftechnik GmbH & Co. KG 16,646 92 80% Paul Beier GmbH Werkzeug- und Maschinenbau & Co. KG 9,492 108 100% C.F.K. CNC-Fertigungstechnik Kriftel GmbH 8,330 57 Dömer GmbH & Co. KG Stanz- und Umformtechnologie 14,719 102 Dörrenberg Edelstahl GmbH 171,683 501 90% Frank Group 28,225 274 Franz Funke Zerspanungstechnik GmbH & Co. KG 16,861 81 Haseke GmbH & Co. KG 12,742 63 Hubl GmbH 10,806 101 Georg Kesel GmbH und Co. KG 12,454 69 MAE Maschinen- und Apparatebau Götzen GmbH 24,768 160 Modell Technik Formenbau GmbH 13,948 115 Protomaster Riedel & Co. GmbH 8,630 110 82.17% Setter Group 14,567 59 SVT GmbH 44,104 182 VWH Vorrichtungs- und Werkzeugbau Herschbach GmbH 11,151 109 Werkzeugbau Laichingen Group 25,196 178 85%

21 Financial calendar and Investor relations contact
7/8 January 2016 ODDO Forum, Lyon 15 February 2016 Q3 figures ( to ) 16/17 February 2016 ODDO Small & Mid Cap Conference, Frankfurt / Main 30 June Annual Accounts Press Conference and Analysts’ Meeting 15 August Q1 figures ( to ) 25 August 2016 Annual General Meeting 15 November 2016 Q2 figures ( to ) Investor Relations GESCO AG Phone: Investor Relations Fax: Oliver Vollbrecht Johannisberg 7 Internet: 42103 Wuppertal Germany


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