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					Credit Suisse
European Capital Goods Conference

13 September 2006

Ulf Henriksson
CEO
                                                   2



Who are we ?

 Diversified global engineering company
 Serving customers that have need for
  industrial process automation, rail signalling
  and control products for residential
  applications
 The values we bring are safety, durability,
  efficiency and attractiveness
 We do it with engineered solutions, software
  and products and supported with service
                                                                                                   3

            Our global footprint*                                         Employees
                                                                          UK 3,000
                                            Europe                        Western Europe 5,000
                                                                          Eastern Europe 1,000
                                      70        25     9,000



                                                                                APAC
                                                                           40      8       4,700
               Americas
       90         25    14,300                                                         Employees
                                                                                       Japan 500
                                                                                       Australia & NZ 800
                                                                                       China 2,100
                                                                                       Other 1,300

Employees
North America 6,800                                  Rest of World
Mexico 5,300                                         8       1   420
South America 2,200



                                                                         40% of employees are
                                                                         in Low Cost Countries

                                 Production sites      R&D sites       Employees

            *at 31 March 2006
                                                                         4


      Market served
      FY 2006 revenue - continuing operations




                     Rail 18%                   Appliance 15%


                                                        Residential 6%

Beverage & Dairy 12%

                                                        General Industries 12%

             Other 7%
Discrete Manufacturing 6%
                                                 Oil & Gas 13%
           Utilities & Power 7%
                                    Petrochemicals 4%
                                                                                   5


         Well-known brands
                                                                       Residential
            Industrial Process Automation                   Rail       Applications

Process Systems         APV                 Eurotherm   Rail Systems    Controls
                                                               6



      Approach to create value

EPS
              Grow market share / earnings
                                            Objectives
                                1. People

        Built a foundation     2. Execution efficiency
                                3. Improve free cash flow
                                4. Increase operating margin
   Dealt with the past         5. Improve capabilities to grow
                                6. Reduce legacy liabilities
                                7. Divest businesses for sale
                          P/E
                                                                                          7


      Free cash flow trend pre legacy

     150    2004/05             2005/06          2006/07    Solid progress
     120

      90
                                                            £89m improvement in
      60
                                                             working capital since
£m    30
                                                             March 2004
       0

     (30)   Q1   Q2   Q3   Q4    Q1   Q2   Q3   Q4   Q1


                                                            Improved relationship
                                                             with our customers




                                                                      Note: Total Group - MAT
                                                                                                             8


           Operating margin trend
    10.0
           2004/05                       2005/06             2006/07
                                                                        Improved from 7.2% (Q1
     9.0                                                                 04/05) to 8.2% (Q1 06/07)
     8.0
                                                                        Through cost reduction
     7.0

%    6.0
                                                                        Improved linearity in
     5.0
                                                                         2005/06 and execution
            Q1      Q2      Q3      Q4   Q1   Q2   Q3   Q4   Q1
                                                                         efficiency




                                 Group ROCE* improved from 2% to 9%

                               Group RONA* improved from 6% to 39%
           *from Q1 04/05 to Q1 06/07




                                                                                Note: Continuing operations - MAT
                                                                                                   9


            Growth trend: Orders and revenue

            2004/05
                                                                Growth in Rail Systems,
     2800                        2005/06             2006/07
                                                                 Process Systems and APV;
     2700                                   Orders               Controls is stabilising
     2600

£m   2500                                    Revenue            New offerings brought to
     2400
                                                                 market
            Q1   Q2    Q3   Q4    Q1   Q2   Q3   Q4    Q1


                                                                Revenue gaining
                                                                 momentum from a large
                                                                 order book

                      11% Orders growth
                       from Q1 2004/05
                                                                         Note: Continuing operations - MAT
                                                                                                           10


              Performance trends
               Free cash flow – total Group
      150
              2004/05                    2005/06           2006/07        Succeeded to improve cash
      120

       90
                                                                           generation
       60
£m
       30

        0

      (30)    Q1    Q2       Q3    Q4    Q1    Q2   Q3    Q4     Q1



     Operating margins – continuing operations
       10.0
              2004/05                    2005/06           2006/07
                                                                          Improved financial stability and
        9.0

        8.0
                                                                           platform for growth
%       7.0

        6.0

        5.0
              Q1    Q2       Q3    Q4    Q1    Q2    Q3   Q4     Q1


     Orders and revenue – continuing operations
       2800
              2004/05                    2005/06               2006/07
                                                                          Orders growing in line with
                                                     Orders
£m
       2700
                                                                           market
       2600

       2500                                         Revenue               Large order book £2.1 billion
       2400
                                                                                                      Note: MAT
               Q1       Q2    Q3    Q4    Q1   Q2    Q3   Q4      Q1
                                                                                                                 11


       Net debt movement from March 2004
     1200


             £997m                            Pension legacy payments    £229m
                                              Operating pension payments £92m
     1000
                                              Total pension payments     £321m


      800
                                                                                                £757m

      600

£m
      400
                                                                                                           £298m

      200


        0
            At March   Free Cash Divestment    Pension         Other         Currency   Other   At March    At June
              2004       before   proceeds      legacy        legacy                              2006       2006
                         legacy    (Net of    payments       payments                                      Proforma
                          items     costs)                                                                 Net Debt



        Good progress in generating free cash
        Good value from disposals
        Set base to fund pension and other legacy liabilities
        Therefore enabled 2006 Refinancing
                                                                        12

     ‘Legacy’ liabilities, excl.
     Pension
     Environmental / Litigation / Transition / Discounting / Taxation

     800

     700

     600
                                             Down 83%
     500

     400
£m
     300

     200

     100

       0
              FY 2003        FY 2004         FY 2005        FY 2006


      Successful management of liabilities, now more predictable
      Reduced to low levels
      Long tail on remainder
                                                                                   13


       Pensions
      6000                Assets   Deficit
                                                                 FY 2006 has more
      5000
                                                                    conservative
      4000                                                            mortality
      3000
                                                                 assumptions in UK
£m    2000

      1000

         0
                    FY 2003        FY 2004   FY 2005   FY 2006
             FRS17/ IAS19 basis


      All pension benefits are being paid
      Funded schemes are 94% funded compared to 84% at March 2003
      UK scheme deficit is planned to be cleared in a little over 8 years under
       agreement with Trustee
      UK scheme moving to 80% bond investment and 20% diversified other
       assets
      Awaiting new US legislation to clarify how funding deficit in US scheme to be
       dealt with
2006 Refinancing
                                                               15



The 2006 Refinancing
                          Rights Issue
   Raised £341 million
   95% take up by shareholders


              New Senior Credit Facilities
   Raised £700 million of new borrowing facilities
   Banking syndicate by HSBC, Banc of America, Deutsche
    Bank, Lloyds TSB, RBS and Morgan Stanley
   Syndication 3 times oversubscribed – creating additional
    earnings improvement
                                                 16



  The 2006 Refinancing
 2006 pro forma cash interest cost down by £45m

 Pro forma earnings improve by £51m due to no
  tax impact due to losses

 End of expensive escrow arrangement

 Developing normal banking relationships
                                                 17



Operational benefits
 Increased customer/ supplier confidence

 More flexible operational covenants i.e.
  strategic flexibility to partner

 Enabling improved growth dialogue with
  employees, customers and suppliers

 Improved ability to attract and retain staff

 Lower bonding costs
                         18


What now !

  A gradual transition
         from
  accumulating cash
           to
   growing earnings
                                                           19


Business unit mix
FY 2006 revenue - continuing operations



  Rail Systems 18%

                                            Controls 32%


 APV 16%




Eurotherm 4%



                      Process Systems 30%
                                                       20


Corporate Strategy
   Allocate investments for best value
       •   Stabilise Controls’ performance and
           minimise the effect of a consumer end
           market slow down
       •   Invest for earnings growth for businesses
           with strong end markets, i.e. Oil & Gas
   Stabilise APV performance
   Create headroom for the unforeseen
   Further improve credibility through consistent
    improvements
                                                                                                                        21



               Controls
            Orders and revenue trend
     900
                                                                             Market position/ Environment
              2004/05                    2005/06                   2006/07
     850                                                                      Number one or two in main markets
     800
£m 750
                                                                              Operational inefficiencies have affected
                                                                               customer confidence
     700
     650                                                                      Pricing pressure and raw material cost
              Q1      Q2    Q3    Q4        Q1    Q2    Q3     Q4      Q1      increases
                   Orders
                   Revenue
                   Revenue (without IMServ, contracting business)            Strategy
 OPBIT and operating margin trend                                             Stabilise the business

     150
           2004/05                    2005/06                2006/07
                                                                       16%
                                                                              Improve capabilities to deliver value
     120                                                               14%    Transfer from restructuring to capital
      90
                                                                       12%     expenditure
£m
                                                                       10%
      60                                                               8%
                                                                              Explore joint ventures to reduce risk and
      30                                                               6%
                                                                               spread costs
             Q1      Q2    Q3    Q4    Q1    Q2    Q3   Q4    Q1              Increase price and deliver value to our
             OPBIT
             Operating margin
                                                                               customers
             Operating margin (without IMServ, contracting businesses)                                          Note: MAT
                                                                                                                  22



             Process Systems
      Orders and revenue trend                                              Market position/ Environment
           2004/05                     2005/06                 2006/07
     850
                                                                             Regained technology leadership through
     800                                                                      InFusionTM
£m
     750
                                                                             Leader in rapidly growing oil/gas and
     700                                                                      power markets
     650                                                                     Continued success with large global
             Q1      Q2     Q3    Q4       Q1    Q2    Q3    Q4   Q1          customers
                               Orders       Revenue
                                                                             Large installed base £20+ billion
 OPBIT and operating margin trend                                           Strategy
           2004/05                    2005/06               2006/07
     100                                                              15%    Capture growth in strong end markets
     80                                                               12%
     60                                                               9%
                                                                             Grow outside installed base
£m
     40                                                               6%     Expand service and solutions mix
     20                                                               3%
                                                                             Delivery of InFusionTM
      0                                                               0%
            Q1    Q2      Q3     Q4   Q1    Q2    Q3   Q4    Q1

                          OPBIT        Operating margin                                                      Note: MAT
                                                                                                        23


          InFusion … an industry dream now
                                      TM




          a reality
                                                                    Real-time information available
                                                                     throughout enterprise

                                                                    Market : Invensys installed base
                                                                     and competitors

                                                                    Offers true asset optimisation

                                                                    Partnership with SAP and Microsoft

                                                                    Launch customer – Wisconsin
                                                                     Power

                                                                    AMR “Invensys is decidedly
                                                                     breaking rank with its peer
                                                                     group…..”


For further information: http://www.infusionecs.com/ and Invensys Annual report & accounts 2006 p.17
                                                                                                                24



             Eurotherm
       Orders and revenue trend                                           Market position/ Environment
           2004/05                    2005/06                   2006/07
     130
                                                                           Niche player with high service levels
     125                                                                   Customers demanding solutions
£m   120                                                                   Customers moving East

     115
             Q1      Q2     Q3      Q4     Q1   Q2    Q3     Q4      Q1

                                  Orders    Revenue
                                                                          Strategy
                                                                           Focus on growing end markets and
 OPBIT and operating margin trend                                           solutions
           2004/05                    2005/06              2006/07
                                                                           Improve sales and engineering skills
     18                                                           14.0%
                                                                            for solution model
     17                                                           13.5%
£m
     16                                                           13.0%
                                                                           Creating Polish and Chinese
                                                                            manufacturing facilities
     15                                                           12.5%

     14                                                           12.0%    Outsourcing of component
            Q1    Q2 Q3       Q4     Q1    Q2   Q3 Q4      Q1
                                                                            manufacturing
                          OPBIT       Operating margin
                                                                                                           Note: MAT
                                                                                                                    25



             APV
       Orders and revenue trend                                             Market position/ Environment
           2004/05                     2005/06                   2006/07
     450                                                                     Strong brand name in global food
     430                                                                      and beverage market
     410
                                                                             Market players have no significant
£m   390
                                                                              technological advantage
     370
     350                                                                     Large installed base
            Q1       Q2    Q3     Q4     Q1      Q2    Q3   Q4     Q1

                               Orders       Revenue

                                                                            Strategy
 OPBIT and operating margin trend
                                                                             Create profitable and stable growth
           2004/05                     2005/06              2006/07
     20                                                               4%     Change sales mix to more products
     15                                                               3%      and aftermarket
     10                                                               2%
£m                                                                           Reduce project execution risk
      5                                                               1%
      0                                                               0%     Overhead to match future business
      -5    Q1   Q2       Q3    Q4     Q1   Q2    Q3   Q4    Q1       -1%     model and mix
     -10                                                              -2%
                          OPBIT         Operating margin
                                                                                                              Note: MAT
                                                                                                                    26



             Rail Systems
       Orders and revenue trend                                               Market position/ Environment
           2004/05                         2005/06                  2006/07
     600                                                                       Major supplier of signalling and
     550                                                                        other equipment in UK, Iberia, US
     500                                                                        and Australia
£m
     450
                                                                               High market shares in major
     400
                                                                                markets
     350
            Q1       Q2     Q3        Q4     Q1      Q2   Q3   Q4     Q1       Leading innovator – European Rail
                                 Orders         Revenue                         Traffic Management System and
                                                                                Westlock
 OPBIT and operating margin trend
           2004/05                         2005/06             2006/07
     70                                                               20%

     65                                                                18%    Strategy
                                                                       16%
£m
     60                                                                        Secure core market with excellent
                                                                       14%
     55                                                                12%
                                                                                delivery and technology
     50                                                                10%     Grow in targeted export markets
           Q1    Q2       Q3     Q4    Q1      Q2    Q3   Q4   Q1

                          OPBIT            Operating margin
                                                                                                              Note: MAT
                                                                 27


   Business group summary
1. Controls          Resolving operational issues to regain
                     customer confidence and organising for
                     flexibility to create value


2. Process Systems   Going for growth in strong markets


3. Eurotherm         Restructuring of business model to enable
                     growth


4. APV               Stabilising and slowly growing earnings whilst
                     changing the sales mix


5. Rail Systems      Going for growth in strong markets
                                                         28



Summary
 Considerable progress made since the 2004
  refinancing
 Legacy liabilities have been sharply reduced and a
  funding agreement has been reached with the UK
  pension Trustee
 The 2006 Refinancing has resulted in a more
  normalised capital structure
 The Group has firm basis from which to invest in its
  future and to generate shareholder value
 Our future is about being a growth company
Credit Suisse
European Capital Goods Conference

13 September 2006

				
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