3.03 MB - Investors - Hexagon

INTERIM REPORT Q2 2012 9 August 2012

AGENDA

HEXAGON INTERIM REPORT Q2 2012 2

01

02

03

04

05

Net sales and earnings

Market development

Segment information

Orders and product releases

Summary

NET SALES

AND EARNINGS


Overview Q2 2012

• Recorded growth of 12 per cent – organic growth 6 per cent • All geographic regions display organic growth in

net sales. There is an acceleration in Asia & South America and more normalised growth in the US compared to previous quarters. Europe is still very much a two-speed story, with growth contributions primarily from the Northern and Eastern regions

• Geosystems back to growth - previous contraction in China, due to the lack of activity in the high-speed rail sector, came to an end

• Metrology business and the PP&M division of Intergraph continue to be the primary engines of growth

• Intergraph SG&I has seen a turnaround - reported growth & improved profitability

• Strong Gross and EBIT margin in MT • Record gross margin of 56 per cent and EBIT

margin at 22 per cent

• Strong cash flow

4 HEXAGON INTERIM REPORT Q2 2012

Seasonality in profit

• Seasonal pattern still valid

• Although less accentuated with Intergraph in the Group

Q1 Q2 Q3 Q4


Key figures Q2 2012

MEUR Q2 2012 Q2 2011 Change %

Operating net sales 607.1 543.5 61)

Revenue adjustments 2) - -4.1 na.

Net sales 607.1 539.4 61

Operating earnings (EBIT1) 127.5 114.3 12

Operating margin, % 21.0 21.0 0

Earnings before taxes excl. non-recurring items 114.7 99.5 15

Non-recurring items - -4.1 n.a.

Earnings before taxes 114.7 95.4 20

Net earnings 92.8 76.3 22

Earnings per share, EUR 0.26 0.22 18

Earnings per share excl. non-recurring items, EUR 0.26 0.22 18

1) Adjusted to fixed exchange rates and a comparable Group structure (organic growth).

2) Non-recurring reduction of acquired deferred revenue in Q2 2011 related to the acquisition of Intergraph.


Key figures first six months 2012

MEUR H1 2012 H1 2011 Change %

Operating net sales 1,172.9 1,064.8 61)

Revenue adjustments 2) - -8.5 n.a.

Net sales 1,172.9 1,056.3 61)

Operating earnings (EBIT1) 238.5 219.1 9

Operating margin, % 20.3 20.6 -0.3

Earnings before taxes excl. non-recurring items 212.2 189.7 12

Non-recurring items - -8.5 n.a.

Earnings before taxes 212.2 181.2 17

Net earnings 171.8 144.9 19

Earnings per share, EUR 0.48 0.41 17

Earnings per share excl. non-recurring items, EUR 0.48 0.42 14


2) Non-recurring reduction of acquired deferred revenue in H1 2011 related to the acquisition of Intergraph.


Cash flow

MEUR Q2

2012

Q2

2011

H1

2012

H1

2011

FY

2011

Cash flow from operations before changes in

working capital

120.7 80.3 233.2 179.0 397.2

Changes in working capital -8.6 -25.9 -33.6 -50.4 -28.2

Cash flow from operations 112.1 54.4 199.6 128.6 369.0

Ordinary investment activities -40.6 -28.4 -75.6 -56.8 -135.9

Operating cash flow 71.5 26.0 124.0 71.8 233.1

Non-recurring cash flow - - - -16.0 -16.0

Operating cash flow after non-recurring items 71.5 26.0 124.0 55.8 217.1


• Cash flow from operations increased by 106 per cent in the quarter

• Operating cash flow increased by 175 per cent in the quarter

Movement Income - cost Profit impact

CHF Strengthened Negative Negative

USD Strengthened Positive Positive

CNY Strengthened Positive Positive

EBIT, Q2 2012 5.1 MEUR

Sales, Q2 2012 34.5 MEUR

Currency effects as compared to EUR


• CHF strengthening has had a negative impact on Group EBIT margin of

0.4 percentage points in Q2 and approximately 1 percentage point for the

first six months

MARKET

DEVELOPMENT


Sales mix Hexagon MT Q2 2012 (Q2 2011)

South America

4% (3)

North America

27% (27)

Western Europe

35% (38)

EMEA excl. Western Europe

5% (5)

China

15% (14)

Asia Pacific

14% (13)


Q2 business trends

1) Sales per customer segment is per December 31, 2011 and sales by region is as of Q2 2012.

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W EU

35%

MEA

5%

NA

27%

SA

4%

CN

15%

APAC

14%

Surveying 22%

Power & Energy 19%

Aerospace & Defence 12%

Construction 11%

Public Safety & Security 10%

Automotive 9%

Manufacturing 9%

Other 8%

0-8% Negative >8%

TOTAL

Share of

sales 1)

Q2 2012

= Shift in trend since previous quarter

EMEA market trends, Q2


Q2 Share of Group sales 41 %

Growth, % Group MT

Net sales 3 3

• The demand for Hexagon’s products and

services in EMEA grew slightly in the second

quarter

• Improved demand for measurement

solutions used in automotive, aerospace and

manufacturing

• Customers continue to invest in enterprise

engineering, construction and data

management software used in power and

process industries

• Construction related activities and

governmental businesses remained weak

• Eastern Europe and Middle East continued to

grow

• Southern Europe remained weak

Americas market trends, Q2



Growth, % Group MT

Net sales 5 5

• Automotive, aerospace and general

engineering primary growth drivers

• Infrastructure projects grew Geosystems sales

in NAFTA

• Defence and security products – negative

sales growth

• High demand in the natural resources sector

in Canada

• Significant organic growth in South America as

all end markets are growing

Asia market trends, Q2



Growth, % Group MT

Net sales 10 10

• Asia recorded an organic growth of 10 per

cent as all of Hexagon’s application areas

recorded growth in China in the quarter

• The growth primarily came from strong

demand in the automotive, aerospace, power

and energy markets

• Geosystems returned to growth and further

recovery in China is expected as new

business initiatives start to contribute during

2012

• Other regions such as Korea and Japan also

reported growth in the quarter

-40

-20

0

20

40

2007 2008 2009 2010 2011 2012

Organic growth1) per geographic region (MT)

Asia 28%

Total 100 %

Americas 31%

%

EMEA 41%

1) Adjusted to fixed exchange rates and a comparable Group structure.

Share of sales Q2


Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

SEGMENT

INFORMATION


Measurement Technologies (MT)

MEUR Q2

2012

Q2

2011

Change

%

H1

2012

H1

2011

Change

%

Net sales 590.3 526.7 61) 1,138.8 1,029.8 61)

Operating earnings (EBIT1) 130.9 117.2 12 244.3 224.1 9

Operating margin, % 22.2 22.3 -0.1 21.5 21.8 -0.3



• CHF strengthening has had a negative impact on Group EBIT margin of 0.4

percentage points in Q2 and approximately 1 percentage point for the first six

months

-40

-30

-20

-10

0

10

20

30

40

50

60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009 2010 2011 2012

Organic growth1) by application area (MT)

%

1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)

Share of sales Q2 2012

Metrology

30%

Technology

34%

Geosystems

36%

Metrology

Geosystems

Technology

Total


0

10

20

30

40

50

60

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Q2

Gross margin (MT) – yearly data

Gross margin

Trend line


Q2 2012 56% (55) %

EBIT margin (MT) – quarterly data

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EBIT MT

Trend line


%

ORDERS AND

PRODUCT

RELEASES


NovAtel Technology Customer Order

Chinese Internet company, Tencent, invests in Novatel technology as part

of its effort to develop its social network services, mobile offering and

overseas presence

• Purchased NovAtel SPAN-CPT GNSS &

Inertial systems for mobile mapping

applications


Soso.com is a Chinese search engine owned by Tencent Holdings Limited, which is well known for its other creation QQ.

QQ, is a free instant messaging computer program in China. In February 2011, QQ.com ranked 10th overall in the Alexa Internet rankings

just behind Twitter.


Hexagon Guides Nasa on Mars

“Errors are not an option when it comes to manufacturing the largest Mars

rover to date…”

• Novatel and Hexagon Metrology equipment key parts of solution

• Parts had to have no tolerance for failure

• NASA JPL (Jet Propulsion Laboratory) own

and operate:

• Brown & Sharpe CMMs in various sizes

• ROMER portable measuring arms

• Leica Laser Trackers

NovAtel SPAN system

Significant Intergraph PP&M Enterprise/Software Wins

• The Dow Chemical Company, the second-largest chemical

manufacturer in the world by revenue, signed a three-year multi-

million dollar agreement, representing a continued commitment

to Intergraph 3D solution (plus additional software)

• Petrofac, a global engineering company with headquarters in the

UAE, purchased millions of dollars in software and maintenance

involving 3D and schematics solutions

• NIAEP, a leading Russian design and construction company

specializing in nuclear plants, purchased SmartPlant® 3D and a

range of other solutions

• China Institute of Atomic Energy, the entity responsible for atomic

energy research, design, construction, and operation in China,

purchased software, maintenance, and services


Major Software/Support Announcements from Intergraph PP&M

Smart 3D 2011 R1

• Next-generation plant, offshore, and

material handling design solution released

in June

• Includes features to enhance quality and

productivity, as well as licensing flexibility

CADWorx® Plant Professional 2013

• AutoCAD® -based, intelligent 3D plant

design and modeling solution

• New pipe routing engine which can

significantly reduce design times

Expanded Intergraph Global Marine Center

• Opened in Busan, South Korea and features

a dedicated team of marine experts to

support customers in marine and offshore

projects

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Image: SmartPlant 3D Ltd.

HEXAGON INTERIM REPORT Q2 2012

Large Customer Order from ESB Networks, Ireland

• Intergraph’s solutions to automate the

generation of reports, plots, network

diagrams, and interfaces with other business

and operational management systems

• Intergraph’s G/Technology and GeoMedia®

solutions to deliver full two-way integration

with SAP and Oracle Outage Management


ESB Networks Ltd., the licensed operator of electricity distribution system

in Republic of Ireland – is responsible for building, operating, maintaining

and developing the electricity network and serving all electricity customers

Lifeline for City of Calgary Relies on Intergraph


Public Safety Communications (PSC) 9-1-1 centre – the lifeline for the City

of Calgary in Alberta, Canada – chose Intergraph

• PSC links people who need the help of police, fire

and emergency medical services, managing

almost a million 9-1-1 calls each year

• PSC selected Intergraph's Business Intelligence

solution for Public Safety to improve visibility and

evaluation of its services and ultimately – improve

response

• Intergraph's Business Intelligence tools enable

timely and meaningful reporting to Alberta Health

Services (AHS) and other stakeholders

Ministry of Agriculture in Brazil

The Ministry of Agriculture in Brazil selected

Intergraph’s products to facilitate the monitoring

of sugar cane crops used for producing

eco-friendly biofuels

• Intergraph’s ERDAS IMAGINE and ERDAS APOLLO

products will be used to create the AgriCana web

portal



Customer Order – City of Lucerne

Football Stadium Lucerne

City of Lucerne (Switzerland) selected Leica ScanStation C5

to create 3D city model with airborne scan data and

terrestrial laser scanning


Customer Order – Swiss Earthwork Companies

Two Swiss earthwork companies equip entire fleet with guidance systems

from Hexagon – Hess HG and JMS

• Hess AG specializes in complex excavations

• JMS specializes in Civil Engineering, including drilling and pile work

• Both equipped entire fleet with Leica Power Digger 2D and 3D guidance systems

Sinclair Knight Merz (SKM) Australia

Sinclair Knight Merz (SKM) Australia is a

leading global EPC

SKM has been an Intergraph PP&M

customer customer since 2009, using

Smartplant3D

• SKM will integrate new Leica products into

existing software solutions that include

Intergraph SmartPlant 3D


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Changjiang Institute of Survey, Planning, Design and Research (CISPDR) is

relying on monitoring solutions from Hexagon Geosystems for the

Nuozhadu Hydropower Station project

Customer Order: CISPDR


• Largest hydropower station in Yunnan

Province – an important base and

backbone of the Yunnan project to send

electricity power eastwards

• CISPDR purchased Leica Total Stations

and GNSS systems


Anglo American’s Dawson Mine, in

Australia’s Bowen Basin which contains the

largest coal reserves in the country,

completed a multimillion dollar platform and

software upgrade

Large Mining Orders

Lumina Copper’s Caserones Mine, in Chile,

to use a full Hexagon Mine Management

Solution


Newmont Boddington Gold Mine, in Western Australia, completes world’s

1st commercial deployment of Leica Jigsaw Positioning System (Jps),

powered by Locata

A New Constellation for Mining

• Drills using Locata and GNSS signals

experience unprecedented 98%

availability

• Co-developed Leica Jps network: only

precision (HP) solution that augments

standard RTK GPS/GLONASS signals with

Locata signals


Swedish National Land Survey (Lantmäteriet) chose Leica Geosystems

Sweden as exclusive supplier to deliver all instruments for their cadastral

surveying division

Customer Order: NLS Sweden chose Leica Geosystems

• Lantmäteriet expects significant cost reduction

due to instrument standardization

• Four-year contract covers delivery, training,

support and maintenance

New Product Release and Initial Order

New generation of successful mid-range

series of total stations

• Best-in-class Electronic Distance Measurement

(EDM)

- 1,000m range without a prism

- 2mm accuracy

• Integrates new mySecurity theft protection

system that disables instrument if stolen

• New touch screen colour display

• USB stick and Bluetooth cable-free connection


Grupo GinPro in Monterrey Mexico – one of the

largest wholesalers of Surveying Equipment in

the region – ordered hundreds of FlexLine

instruments

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Foxconn Group, a supplier of Apple,

ordered hundreds of shop floor bridge

machines

• All purchased machines will be used to support

future iPhone products

Large Order from Foxconn Group for New Shop Floor CMM


Small Size Shop Floor CMM

• First one of small size for shop floor, specially

designed for smaller parts and tight spaces

• Built to excel in manufacturing environments,

shoulder-to-shoulder with machine tools

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Hexagon 2012 Exceeded All Expectations


Combined 30,000 hours of info sharing, including:

• Over 400 sessions totaling 480+ hours of

presentations and 115 hours of training

• Over 100 TechPark displays and

demonstrations

Synergies Took Center Stage with presentations on how our brands are

coming together to shape new solutions

Over 3,000 attendees – 76 nationalities represented

• Additional 4000 watched opening live

streaming

Over 90% of attendees felt it met their expectations

and would recommend the event to a colleague

SUMMARY


Hexagon had another strong

quarter:

• Sales growth of 12 per cent

• 6 per cent organic growth

• Gross margin of 56 per cent and

22 per cent EBIT margin in MT

• Operating cash flow increased

by 175 per cent

Summary Q2 2012


Disclaimer

"This presentation contains forward-looking statements. When used in this presentation, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the measurement field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Hexagon's management as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by Hexagon's management and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Hexagon disclaims any intention or obligation to update these forward-looking statements.

This communication is directed only at persons who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) or to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

It should be noted, that past performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of the full year results. Persons requiring advice should consult an independent adviser.

THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES; SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS."


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3.03 MB - Investors - Hexagon