Q2 2011 Results Presentation by J81qx7

VIEWS: 3 PAGES: 11

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New Company, Great Possibilities
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Ian Dugan
      • Second level
            • Third level
CEO and President • Fourth level
                        • Fifth
 Q2 2011 Interim Report level

21 July 2011




1    June 2011
Results Summary
Q2 2011

     •     Sales at SEK 559 m increased by 3% in constant currencies compared to first

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           quarter 2011, and 30% compared to second quarter 2010

     •     Market demand is being sustained with orders slightly ahead of sales activity

   • Operating income was SEK 76 m, styles
Click to edit Master subhead textadjusting for SEK 16 m one-off costs associated
           with the demerger

          Operating income margin for the second quarter 2011 was 13.6% compared to
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       • 11.9% for first quarter 2011
           Second level
             • Third level
     • Earnings after tax were SEK 33 m (2); Earnings per share amounted to SEK 0.74
                   • Fourth level
          (0.06); After adjusting for the post-tax impact of one-time de-merger costs, the
                         • Fifth level
           earnings per share was SEK 1.00

     •     Cash flow from operating activities was SEK 36 m (38)

     •     Net debt was reduced to SEK 269 m (404) and gearing was reduced to 36% (53%)




21        21 July 2011
         June 2011
Market Data
Strong demand in Q2 2011

                                    Q2-11 vs. Q2-10                                               Q2-11 vs. Q1-11

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   Truck +50%       +38%   +13%
                                North America
                                     +5%
                                                Europe                                        North America Europe

   Construction equipment +16%       +9%      +6%      +4%
Click to edit Master subhead text styles +13%
   Agricultural machinery  +14%      +5%               +5%
   Industrial applications +28%      +20%     +16%     -1%
Click to edit statistics from Power Systems & Research, Off-Highway Research and International Truck Association Q2 2011 update
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        • Second level
               • Third level
• Increasing demand in US Heavy Truck sector as industry capacity restrictions are easing
                     • Fourth level
                                Fifth level
• Strong sustained• demand across all end markets, driven by:
             • New emission requirements for off-road diesel engines
             • Global infrastructure growth
             • Rising commodity prices (agriculture and mining)



32      21 July 2011
       June 2011
               Market Data
               Continued growth beyond 2011
                                                     Truck                                                                                  Construction equipment


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                       7,000                                                                                                      800
                                                                2%                                                                                               6%
                                                         3%             Europe, 20% CAGR                                          700                      10%          Europe, 13% CAGR
                       6,000                    7%                                                                                                  11%




                                                                                                           Engine volumes ‘000s
                                        2%
Engine volumes '000s




                                                                                                                                  600         9%
                       5,000
                                                                        North America, 14% CAGR                                                                         North America, 14% CAGR
                                                                                                                                  500
                       4,000
                                                                                                                                  400
                       3,000                                            China/India, 0% CAGR                                                                            China/India, 14% CAGR
                        Click to edit Master subhead text styles 300
                       2,000
                                                                        Latin America, 5% CAGR                                    200                                   Latin America, 5% CAGR
                       1,000                                                                                                      100
                                                            ROW, 1% CAGR                                                                                                ROW, 6% CAGR
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                           0                                                                                                       0
                            2010  2011  2012   2013   2014                                                                          2010    2011   2012   2013   2014
                               • Second level
                                  Agricultural machinery
                                    • Third level                                                                                           Industrial applications
                       1,500                         2%                                                                   1,200                                  4%
                                          • Fourth level
                                         5%
                                               3%                                                                                                          7%
                                   5%                      Europe, 5% CAGR                                                                         8%                   Europe, 12% CAGR

                                                                                                  Engine volumes ‘000s
Engine volumes ‘000s




                       1,250                    • Fifth level                                                             1,000              8%
                       1,000                                           North America, 2% CAGR                                     800                                   North America, 10% CAGR

                        750                                                                                                       600
                                                                       China/India, 5% CAGR                                                                             China/India, 8% CAGR
                        500                                                                                                       400
                                                                       Latin America, 4% CAGR                                                                           Latin America, 8% CAGR
                        250                                                                                                       200

                            0                                          ROW, 2% CAGR                                                 0                                   ROW, 4% CAGR
                             2010     2011    2012     2013    2014                                                                  2010   2011   2012   2013   2014

                               Source: Based on statistics from Power Systems & Research, Off-Highway Research and International Truck Association Q2 2011 update


                       43          21 July 2011
                                  June 2011
Sales & Operating margins
Profitable growth
                                        Sales (constant currencies)
                     700
                                                                          3%                  Above market sales growth driven by:

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                     650                                          11%
Sales value (SEKM)




                                                                                                 •   Inventory replenishment and
                     600                                  2%
                                                  13%                                                sustained demand thereafter
                     550                                                  7%     Concentric
                                        15%
                                                                  10%            Market          •   Introduction of new Tier 4
                     500
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                 5%
                       0%
                                                                                                     emissions programs in Europe &
                     450
                                            7%
                                                                                                     North America
                     400                                                                         •   Market share growth in India
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          Q1-10 Q2-10   Q3-10  Q4-10  Q1-11                              Q2-11
                                                                                                     and China
        • Second level
                  Operating margins
             • Third level
  15.0%
  13.0%
                  • Fourth level                                                              Improved operating margins driven by:
  11.0%                 • Fifth level
                                                                                                 •   Increased sales volumes
                     9.0%
                     7.0%                                                                        •   Realisation of benefits from cost
                     5.0%                                                                            reduction program
                     3.0%
                                                                                                 •   Ongoing cost management
                     1.0%
               -1.0%
               -3.0%
                              Q1-10   Q2-10      Q3-10   Q4-10   Q1-11   Q2-11



54                           21 July 2011
                            June 2011
Development per segment
- Americas
     Amounts in SEK m                               Q2-11        Q2-10       Change


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     Net sales
     Operating income 1)
                                                    305
                                                    32
                                                                 272
                                                                 23
                                                                             12%
                                                                              9
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     Operating margin, % 1)                         10.6         8.5          2.1
     Return on capital employed, % 1,2)             24.2         6.1         18.1
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   1) The operating income and margin is stated before one-off advisor fees associated with the de-merger.
       • Second level
   2) The quarterly ROCE has been calculated on a rolling 12 month basis.
               • Third level
   • Second quarter sales increased 33% compared to 2010 in constant currencies
                       • Fourth level
                              • Fifth all end
           • Increase applies to level sectors
           • Sales in the second quarter were up 8.5% on first quarter 2011 in constant currencies


     •   Operating income SEK amounted to 32 m (23)
           •   Operating margin of 10.6 % (8.5%)
           •   Operating income continued to improve, due to increased sales volumes, pass through of
               material escalators and a lower cost base.


65        21 July 2011
         June 2011
Development per segment
- Europe & ROW
     Amounts in SEK m                              Q2-11      Q2-10       Change


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     Net sales
     Operating income/loss 1)
                                                   254
                                                   40
                                                              221
                                                              -6
                                                                          15%
                                                                          46
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     Operating margin, % 1)                        15.7       -2.7        18.4
     Return on capital employed, % 1,2)            20.2       -8.5        28.7
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   1) The operating income and margin is stated before one-off advisor fees associated with the de-merger.
       • Second level
   2) The quarterly ROCE has been calculated on a rolling 12 month basis.
               • Third level
   • Second quarter sales increased 26% compared to 2010 in constant currencies
                       • Fourth level
                              • Fifth quarter reduced by 3.6% compared to the first quarter 2011 in constant
           • Sales in the second level
                currencies, as a result of less working days in the calendar at the Birmingham plant


     •   Operating income amounted to SEK 40 m (-6)
           •   Operating margin of 15.7% (-2.5%)
           •   Operating income continued to improve as a result of increasing sales, pass through of
               material escalators and a lower cost base


76        21 July 2011
         June 2011
Actual 2011
Balance sheet

 Amounts in SEK m            Q2-11      Q2-10   COMMENTS

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     Working Capital             42       -38   • SEK 57 m of non-operating working capital
                                                  balances with Haldex AB were settled as part
                                                  of the refinancing arrangement.
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     Intangible assets          864     1,077   • Largely relates to Concentric PLC acquisition
                                                  accounting – reduction primarily due to FX
Click to edit Master text styles                  retranslation and amortisation in the period.
      • Second level
  Capital Employed             1,153    1,405
            • Third level
  Total Assets • Fourth level  1,716    2,080   • Reduction in intangibles (see above) and
                        • Fifth level             utilisation of excess cash on refinancing.
     Net Debt                   269       404   • Strong cash flow in period.
     Equity                     756       759
     Gearing ratio              36%       53%




87       21 July 2011
        June 2011
Actual 2011
Cash flows

 Amounts in SEK m                   Q2-11     Q2-10   COMMENTS

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     EBITDA                             94       60   • Increase derived from strong
                                                        operating performance
 De-merger costs           -16       -                • One-off advisor fees and duplicate
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                                                        corporate costs
     Working capital change             -14      -8   • Pressure from increased sales activity
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      • Second level
  Capital expenditure                   -12     -12
            • Third level
                  • Fourth
  Operating cash flow level             52       40
                        • Fifth level
     Net interest & taxes paid          -28     -14   • Higher taxes due to improved trading

     Cash inflow before financing       24       26




98       21 July 2011
        June 2011
Outlook


     •     Latest market indices suggest year on year growth of 15% in constant


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           currencies

     •     Orders received during the second quarter 2011 indicate that sales activity
           levels during the second quarter will be sustained in the third quarter of
Click      2011. Therefore, we believe we styles
          to edit Master subhead textwill exceed the market projection for the
           full year 2011

          Further US heavy truck sales growth as industry capacity restrictions are
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       • easing level
           Second
             • Third level
     • Demand remains stable and we see no signs of weakening
                   • Fourth level
                         • Fifth focus
     • We will continue to level on cost and working capital control, material
           availability and cost, and we will continue to pass on all material increases
           through escalator agreements

     •     The relative strength of the SEK against the USD, EUR and GBP will continue
           to have an significant impact on the reported results



 9
10        21 July 2011
         June 2011
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      • Second level
            • Third level
                  • Fourth level
                        • Fifth level




11    June 2011

								
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