THYSSENKRUPP INDUSTRIAL SOLUTIONS Ready for Growth
Transcript of THYSSENKRUPP INDUSTRIAL SOLUTIONS Ready for Growth
Developing the future.
Ready for GrowthTHYSSENKRUPP INDUSTRIAL SOLUTIONS
Dr. Hans Christoph AtzpodienCEO ThyssenKrupp Industrial Solutions Capital Market Day I December 11, 2014
Developing the future.
Industrial Solutions | Ready for GrowthThyssenKrupp Capital Market DayDecember 11, 2014
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Industrial Solutions – Global EP/EPC and Service Provider with StrongTechnology Base and Growth Push from Integration & Regionalization
More efficiency by new organizational setup
Improved stringent market and customer focus
State-of-the-art proprietary technology solutions
Positioned to exploit further market opportunities
Dedicated to grow not the least in service business
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ThyssenKrupp Industrial Solutions
Business Models | ProjectsBusiness Models | Projects
Performance | MarketsPerformance | Markets
Growth StrategyGrowth Strategy
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22
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Sales (m €)
EBIT* (m €)
Employees
Sales (m €)
EBIT* (m €)
Employees
Sales (m €)
EBIT* (m €)
Employees
Sales (m €)
EBIT* (m €)
Employees
Sales (m €)
EBIT* (m €)
Employees
Sales (m €)
EBIT* (m €)
Employees
Components Technology
6,172 268
28,941
Elevator Technology
6,416674
50,282
Industrial Solutions
6,271420
18,546
Materials Services
13,660212
30,289
Steel Europe
8,857206
26,231
Steel Americas
2,060(68)
3,466
Diversified Industrial Group: ThyssenKrupp Business AreasKey Indicators FY 2013/14
* pro forma, based on new EBIT definition effective Oct 1st, 2014
Sales: €41.3 bnEBIT adj.*: €1,314 mEmployees: 160,745
ThyssenKrupp Group
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Industrial Solutions – Engineering Powerhouse within ThyssenKrupp
Industrial SolutionsOrder intake: €5,732 m | Sales: €6,271 m | Employees: 18,546
Market
Sales (m€)
Employees
UnitResource
Technologies
~2,200~5,900
MarineSystems
~1,800~3,300
Naval Surface Vessels
SystemEngineering
~800~3,700
ProcessTechnologies
~1,600~5,500
SubmarinesChemicals Mining
Fertilizers
Automotive
Order intake, sales and employees as of FY 2013/14 and Sep 30, 2014
AerospaceCement
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Industrial Solutions – Joint EPC-S Business Model with Aspiration to Grow
Leading Technologies & Engineering Skills
Employeeswordwide
~25%Technicians
~45% Engineers
~30% Others
Global Network & Efficiency
Local Know-how & Presence
Construction (C)Engineering (E) Procurement (P) Services (S)
Reliability & Customer Proximity
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World’s Largest Fertilizer Complex in Saudi Arabia
Annualproduction
4.3 m ha
3,300 t/day ammonia
Production capacity Cultivatedarea
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Lump-sum Turn-key Cement Plant in Namibia
2,100 t/day cement
Production capacity Freeway
222 km
2x2 lanes
Annualproduction
Clinkerproduction
Raw materialprocessing
Cementmanufacturing
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Fully Mobile Crushing System in China
Overburden
3,500 t/h rock
Capacity
15 m m³
6xPyramid of Cheops
Annualcapacity
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Fully Automated Engine Assembly Plant in the US
Production capacity
96 engines/h
Equipped cars
325,000Annualproduction
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World’s Most Modern Non-nuclear Submarine in Germany
Submarine350,000 Parts
Boeing 777100,000 Parts
Car3,000 Parts
Boeing 777
Car
Production time (months)
50,000 hrs254 t
23 hrs2 t
700,000 hrs1,650 t
0 40 10 20 30
Complexity
Submarine
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Industrial Solutions with Comprehensive Risk Management
Proven track record to deliver large projects on time and in budget
Close Project
Bid Phase Execution Phase
Effective Date of Contract
ProvisionalAccept. Certif.
FactoryAccept. Certif.
ContractSigning
Bid / No Bid Decision
BidSubmission
Bid / No-Bid
Reporting
Project Management
Cost Controlling
SchedulingBid Preparation
Bid Submission& Negotiation
Aw
ard
of O
rder
/ C
ontr
act
Bid Calculation
factor for technical and economic risk
Bid price (schematic)
expected costs+
Monthly risk reviews
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ThyssenKrupp Industrial Solutions
Business Models | ProjectsBusiness Models | Projects
Performance | MarketsPerformance | Markets
Growth StrategyGrowth Strategy
11
22
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Cash Generator with High Visibility
* excl. notional interest credit on excess prepayment surplus; CCR = cash conversion rate
in million €
BCF
EBIT Margin adj.*
Sales
Order Backlog
Order Intake
EBIT adj.*
FY 2012/13
524
5.5%
5,641
14,641
5,283
311
FY 2013/14
316
6.7%
6,271
13,974
5,732
420
Cash provider with Ø CCR >1*
Good profitability with benchmark ambitionand EBIT margin target of 6-7%
Sustainably high order intake
Mid-term sales supported
Ø >5% p.a. top line growth
Perspective
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High Order Backlog Supports High Visibility
Order BacklogSep 30, 2014
€14 bn
2014/15E 2015/16E 2016/17E
>85% of sales 14/15E covered
~50% of sales15/16E covered
Process Technologies
Resource Technologies
Marine Systems
System Engineering
€14 bn
~20%
~20%
~5%
~55%
Order backlog
Expected sales
>80% of sales 14/15E covered
~50% of sales15/16E covered
~25% of sales16/17E covered
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4.4
Process Technologies
ResourceTechnologies
System Engineering
Marine Systems
7.5 7.6
5.35.7
Order intake (bn €) SalesBook-to-Bill (IS)
0.9 1.4 1.5 0.9 0.9
Long-term Track Record of Ø Book-to-Bill >1
2009/10 2010/11 2011/12 2012/13 2013/14
Significant sales contribution from Marine Systems projects
1.0 1.1 1.0 1.2 0.9
Big ticket US fertilizer awarded,additional orders in pipeline
Book-to-Bill (PT + RT)
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Target: >€8 bn Sales | 6-7% EBIT Margin
EBIT Margin
Sales
Growth
Market Growth / Project Pipeline
Targeting Strong Growth with High Profitability
Growth Strategy
EBIT margin excl. notional interest credit on excess prepayment surplus
Order Backlog of €14 bn
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Market Trends
Global Accessible Market Size (bn €)
Regional Developments
2013 2019
CAGR
Source: own estimates
Market Segments
Electrolysis Gasification Oil & Gas
Coking PlantsPolymersFertilizers
Trend towards large scale plants and EPC
Shale gas drives additional momentum along petrochemical value chain (i.e. fertilizers, polymers)
Lower oil price leads to market shifts and opportunities
Process Technologies – Market Perspective:Growing Global Consumption and Wealth Drive Demand for Chemicals
Source: own estimates
~17+2%
~15
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Decoupled Oil and Gas Price Development
2010 2011 2012 2013
Source: Oil, Average of UK Brent, Dubai and WTI; USA Spot Burner Tip, delivered Texas (CMAI)
Brent oil price (in $/barrel); Gas price (in $/MMBTU)
2014
120
100
80
70
60
110
90
Dec 2014: $ 60-65
Oil
20
0
$/barrel
10
$/MMBTU
Gas
Dec 2014: $ 3.5-4
Gas price-driven investments in chemical industry expected to continue
Lower oil price may lead to additional dynamic in consumer spend and industry investments
Potential push-outs in oil sands exploration investments cushioned by ongoing efficiency and maintenance efforts at existing capacities
Fundamentals should support higher oil price going forward
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Global Accessible Market Size (bn €)
Source: own estimates
2013 2019
CAGR
2013 2019
Mining Cement
CAGR
Market TrendsRegional Developments
Market Segments
Mining Cement
Slow recovery of mining customer new installation CAPEX expected
Infrastructure growth in emerging markets driving demand for cement plants
Growing service and maintenance business
+4%~6
~5
Resource Technologies – Market Perspective: Growing Cement Demand and Additional Opportunities Compensate for Muted Mining Investments
+1%~7 ~8
Additional Market Access
Source: own estimates
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Resource Technologies – Premium Player in Overall Mining Market with Promising Potential to Expand Accessible Market
~7
~100Total Mining Market
ThyssenKruppPrimary Accessible Marketin Mining
Our Primary Accessible Market in Mining: machinery investments
open-pit mining
specialized technologies (e.g. no trucks)
in bn €
Broaden Technology Portfolio
New Business Models
Expand Regional Footprint
Strengthen Service Business
Potential Market ExpansionsMining Market 2014
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Marine Systems – Market Perspective:Naval Demand Driven by Global Defense Budgets
Global Accessible Market Size (bn €)
Market TrendsRegional Developments
Market Segments
Submarines Naval Surface Vessels
Solid global project pipeline
Governmental defense programs driving investments across regions
Growing service market with demand for modernization and maintenance
CAGR
+5%~5
~4
2013 2019
Source: own estimates
Source: own estimates
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System Engineering – Market Perspective:Demand for Auto Plants Driven by Growing Global Car Production
Global Accessible Market Size (bn €)
Source: own estimates
+6%~8
~6
2013 2019
Market TrendsRegional Developments
Market Segments
Automotive Aerospace
OEM investments driven by car model cycles
Main growth markets Asia-Pacific and China
Project volume expected stable on high level
New project opportunities in aerospace industry and e-mobility
CAGR
Source: own estimates
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ThyssenKrupp Industrial Solutions
Business Models | ProjectsBusiness Models | Projects
Performance | MarketsPerformance | Markets
Growth StrategyGrowth Strategy
11
22
33
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Committed to Growth and Performance
Global EP/EPC & Service Provider with Strong Technological Expertise
Target
>€8 bn
EBIT margin6-7%
2013/14
€6.3 bn
2012/13
€5.6 bnMarket Growth
Expansion of Accessible Market
Increased Flexibility & Synergies
EBIT margin~6%
EBIT margin6-7%
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Expansion of Service as a Sustainable Source of High Margins
Grow Service Share of Sales to >20%
Service Portfolio Overview
Target
Service Growth Potential
ServiceArea
Highlights 2013/14
Future Potential
OCP contract in Morocco
Life cycle management for electrolysis plants
Naval School Qatar
New Service Centerin Chile and Brazil
Relocation of autom. fabrication fromS. America to Russia
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Regional Clusters – Improved Collaboration in a Global Network
Setup of regional management structures
Americas CIS
MENA
Sub-Saharan Africa
India
Asia-Pacific
Empowered regional business development
Integration of local resources
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Integration & Regionalization to Raise Synergies and Join Forces Worldwide
Commitment to Local Markets: Critical Size to Maintain a Permanent Organization
Integrated Entity in South Africa
Before
Fördertechnik
Uhde
Today
Improved implementation capabilitiesthrough joint capacities and competences
Reduced costs by shared infrastructure
Higher visibility and trustability
Regional Network Asia-Pacific
Regional networks to support local markets (e.g. Oil & Gas markets)
Combined capabilities to serve larger projects
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Integration & Regionalization – Using Our Global Footprint More Effectively
Technology Support from Germany
Competitive Project Implementation from India
Customer with Demand for Sustainable Solutions
Regional Market Know-how from South Africa
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Integration & Regionalization – Successful Fertilizer Projects in USA by Combination of Technological Competence and Regional Footprint
Process Technologies Resource Technologies
Technological Competence in Fertilizer Regional Footprint in North America
Own technology (except Urea: Stamicarbon)
130 fertilizer reference projects worldwide
Plants of the same size in operation
Denver
Long EPC track record in North America
Strong regional set-up as basis for further resource expansions
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Committed to Growth and Performance
Global EP/EPC & Service Provider with Strong Technological Expertise
Target
> bnSales
>€8 bn
EBIT margin6-7%
2013/14
€6.3 bn
2012/13
€5.6 bnMarket Growth
Expansion of Accessible Market by• new technology solutions• service focus• regional presence / customer proximity• joint marketing approach
Increased Flexibility & Synergies by• bundling of capacities• harmonization of processes and tools
EBIT margin~6%
EBIT margin6-7%
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Disclaimer ThyssenKrupp AG
“The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or sale of a security and is intended for informational purposes only.
This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may” or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differmaterially from those indicated. These factors include, but are not limited to, the following:(i) market risks: principally economic price and volume developments, (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks;(iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures, (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection, (vi) volatility of steel prices and dependence on the automotive industry, (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition. Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.”