Annual Report 2019 - Schouw · 06-03-2020 · 2016 2017 2018 2.1 2015 2019 2020E 1.8 1.8 2.0 2.2 2.2 +5.0% 2015 2017 365 2016 2018 2019 2020E 395 362 315 352 280-310-2.8% CAGR Unchanged

Annual Report

2019

Enabling long-term and

responsible transformation

INVESTOR PRESENTATION

6 March 2020

Vis/skjul grid: ALT+F9

Our business model

INTRODUCTION

Active ownership

enabling long-term

and responsible

transformation

Long-term

and visionaryTaking risk and

investing

long-term

Results are

created by peopleCreating returns in a

proper and trust-

worthy manner

Patient,

but demandingOwnership through

and with the

management

teams

Making every

penny countIndustrial mindset

and operational

streamlining

A relevant

ownerContinually adapt

and safeguard

reputation and

values


A portfolio of six strong businesses

3

INTRODUCTION

Quality feed for

fish and shrimps

Fabrics for diapers

and hygiene

Textiles for indus-

trial applications

Electronic Manu-

facturing Services

Hydraulic compo-

nents & solutions

Remanufactured

automotive parts

Aquaculture feed Nonwovens Industrial solutions

Revenue

DKK 11.2bn

Employees

~1,250

~50% of Group EBITDA

Revenue

DKK 2.2bn

Employees

~750

Revenue

DKK 1.7bn

Employees

~1,000

Revenue

DKK 2.9bn

Employees

~3,800

Revenue

DKK 2.1bn

Employees

~1,200

Revenue

DKK 0.9bn

Employees

~1,600

~25% of Group EBITDA ~25% of Group EBITDA

Revenue DKK billion EBITDA DKK million Cash Flow Op DKK million Dividend DKK million ROIC ex GW per cent

Record year for Schouw & Co. in 2019

4

2019 STATUS

2019

20.9

18.3

2018

+15%

20192018

1,951

1,579

+24%

837

20192018

1,410

+68%

14.5

20192018

12.3

-2.2pp

1314

2018 2019

+8%

High growth Increased profitability Very strong cash flow Sizeable dividend Decent return


Significant impact from IFRS 16

5

2019 STATUS

EBITDA DKK million Cash Flow from Operations DKK million

Net Interest-Bearing Debt DKK million Return on Invested Capital excluding goodwill %

1,743

1,951

IFRS 1620192018

164

Change

208

2019

1,579

+10% +24%

IFRS 16

1,410

20192018

391

Change Pro forma

182

837

1,228

+47% +68%

2019

829

2018

44

Change Pro forma IFRS 16

3,298

2,425 2,469

+2% +36%

IFRS 16Pro forma2018 Change

0.9%

2019

12.3%

14.5%

13.2%1.3%

-1.3pp -2.2pp

2019: An active year

6

2019 STATUS

Q1 Q2 Q3 Q4

▪ FIN acquires US

spunlacing facility

▪ HydraSpecma

inaugurates new

factory in Poland

▪ Borg produces first

calipers on new Polish

site in Lublin

▪ BioMar expands

pelletised capacity in

Ecuador

▪ FPC opens greenfield

US print facility

▪ BioMar announces

acquisition of 50%

stake in Chilean JV

▪ HydraSpecma opens

new 3,200 m2 logistics

facility in Finland

▪ BioMar decides to

expand in Ecuador

with extruded feed

▪ Borg streamlines the

Belgian activities

▪ BioMar launches app

to fully enable raw

material traceability

▪ HydraSpecma

announces expansion

of facilities in Sweden

▪ BioMar finishes

expansion of Danish

site

▪ BioMar finishes

building new salmon

site in Australia

▪ GPV successfully fina-

lises CCS integration

▪ HydraSpecma

acquires small Finish

hydraulic activity

▪ GPV inaugurates new

2,300 m2 warehouse in

Thailand


Net Interest-Bearing Debt DKK million

Slight increase in IFRS 16 adjusted NIBD following the finalisation of a major investment programme

NIBD development

7

2019 STATUS

Notes: 1) Adjustments to EBITDA relate to provisions and divestments

182 228

274

259

774

309

829

Divid.

2,468

NIBD

2018

Other NIBD

pro-

forma

IFRS 16 NIBD

2019

EBITDA

before

IFRS 16

1,743

3,297

NWC

62

Adj.1

74

IFRS 16

cash flow

effect

Financials

before

IFRS 16

2,425

Tax M&A Capex

112

+2%

BioMar Australia ~200m

BioMar Denmark ~80m

FIN Greenville ~50m

FIN Greenville 134m

BioMar 50% JV 107m

HySp Finland 18m

Cash Flow from Operations

DKK 1,410m

Investments

DKK 1,033m


A global leader in quality feed for aquaculture focusing on

responsible use of sustainable raw materials, food safety and

traceability in the entire value chain

BioMar: Strong ’19 finish and positive outlook

8

PORTFOLIO COMPANIES

EBITDA DKK million

▪ Solid growth, especially in salmon

(Chile, Scotland) with new Chilean

capacity after full JV ownership

▪ Significant profitability uplift in

salmon, including Norway with effect

from changed market approach

▪ Innovative products/concepts and

close collaboration with customers

▪ NWC increases due to capacity ramp

up and geographic/customer mix

▪ ROIC of 18.8% (21.7% IFRS 16 adj.)

Revenue DKK billion

20172015 2016 2018 2019

9.0 8.910.0 10.3

11.2

2020E

12.0+5.6%

1,000-

1,060

201920172015

838

2016 2018

128

593722 712 713

966

2020E

+13.0%

CAGR

▪ Effect of 20% (~250k t) capacity

expansion in Denmark, Australia,

Chile, Ecuador (pelletised and

extruded) and China

▪ Growth and profit improvement

expected in all regions

▪ Consolidating position by implement-

ting new products and focus on

efficiency and margin management

▪ No news/impact from Chile FNE case

▪ Unchanged positive long-term outlook

on global aquaculture

Strong finish to 2019, better

than expected performance

Positive outlook continues

into 2020


Market leader in spunbond fabrics used in hygiene

applications improving everyday health and well-being for

millions of people worldwide

FPC: Solid ’19 – influenced by FX and raw.mat

9

PORTFOLIO COMPANIES

EBITDA DKK million

▪ Revenue and volume at 2018 level;

up in Europe and decline in Asia

▪ DKK ~50m positive impact from FX,

raw materials, etc.

▪ Start-up of print activities in US are

progressing as planned

▪ Significant cash flow from operations

of DKK 426m, 242m higher than LY

and 371m higher than investments

▪ NWC lowered to 15% of revenue

▪ ROIC improved to 13.0%

Revenue DKK billion

2016 20182017

2.1

2015 2019 2020E

1.8 1.82.0

2.2 2.2

+5.0%

2015 2017

365

2016 2018 2019 2020E

395362

315352

280-310

-2.8%

CAGR

▪ Unchanged though competition in

Europe with new capacity coming on

stream in 2020

▪ Dynamic market conditions in Asia,

especially China is challenging

▪ Focus on innovation, speciality

products and post-treatment

applications

▪ Flat 2020 revenue with EBITDA

guidance DKK 280-310m, more or

less comparable with underlying

2018/2019 performance

Strong 2019 positively affected

by raw materials and FX

Competitive environment to

continue into 2020


Leading manufacturer of lightweight non-woven fabrics used

e.g. to reduce CO2 emissions in cars, to improve global

infrastructure and in filtration to secure clean air

FIN: Profitability improvements in 2020

10

PORTFOLIO COMPANIES

EBITDA DKK million

▪ Weak Q4 following general economic

decline in Europe

▪ Revenue up 8% due to US acquisition

and North American growth

▪ Write-down in India/South Africa of

DKK 13m not included in guidance

▪ Improved cash flow generation

▪ Improved NWC management with

NWC/sales dropping 3.4%-points

▪ ROIC at highly unsatisfactory 3.1%

expected to increase significantly

Revenue DKK billion

2017 20192015 2016 2020E2018

1.2 1.31.4

1.61.7 1.75

+8.7%

20192015 2016 2017 2018 2020E

153 162179

160141

165-185

-2.1%

CAGR

▪ Market position confirmed and

development areas identified

▪ North America key in the current and

future profitability

▪ Relocating a production line from

South Africa to South Carolina

▪ Solid interest for nano products

▪ Optimising European factory footprint

▪ Expected 2020 progress in North

America but challenges in Europe

▪ Margins expected to increase over

the coming years

Weak 2019 profitability after

India/South Africa write-down

Earnings uplift expected in

2020 after strategic review


European top 10 EMS company serving global industrial and

cleantech customers from Asian factories with significant

better-than average health & safety and working conditions

GPV: Transformed into the European Top 10

11

PORTFOLIO COMPANIES

EBITDA DKK million

▪ Revenue and profit increase

attributable to CCS acquisition

▪ DKK ~17m negative EBITDA effect

from surging THB during the year

▪ Phase 1 of integration successfully

finalised without negative surprises

▪ Inventory management lowers NWC

▪ ROIC declines to unsatisfactory level

Revenue DKK billion

2015 2016 2017 2018 2020E2019

0.9 0.91.21.1

2.9 2.8+35.2%

2015 20172016 2018 2019

162

34

2020E

79 84

196

107 115

210-240

+25.8%

CAGR

▪ Strong European market coverage in

both Scandinavia and DACH

▪ Solid pipeline, both new and existing

customers looking to grow with GPV

▪ Investment programme to step up on

automation and efficiency

▪ Expanding Thai facilities by 50%

▪ General uncertainty to affect

customer demand in 2020

▪ 2020 revenue guidance below ’19

▪ 2020 EBITDA increase due to

stronger and more profitable platform

Significant changed GPV after

acquisition of CCS

2020 profitability uplift despite

soft revenue outlook


Leading Nordic hydraulic component and solutions specialist

servicing wind turbine and other cleantech customers globally

HydraSpecma: High activity in wind segment

12

PORTFOLIO COMPANIES

EBITDA DKK million

▪ FY revenue up 6% to DKK 2.1bn

▪ Strong sales to wind throughout 2019

▪ Setback in Q4 sales to vehicles

▪ EBITDA margin expanded to 10.1%,

however with effect from IFRS 16

▪ NWC reduced despite revenue

growth

▪ IFRS adj. ROIC increased to 15.0%

▪ New factory in Poland commissioned

and new setup in Finland

implemented

Revenue DKK billion

20162015 2017 2018 2019 2020E

0.6

1.7 1.82.0 2.1

2.0

+37.0%

20192015 2016

215

2017 2018 2020E

93

170148

175

200-220

30

185

+23.3%

CAGR

▪ Further optimisation of logistics and

production network and footprint

▪ Strong outlook in wind segment

▪ Ramping up in China

▪ Offerings within electrification to

complement hydraulic core business

▪ Lower activity expected in 2020,

mainly due to soft vehicle segment

▪ 2020 profitability around 2019 level

Significant margin expansion

in year with high activity

Soft outlook in vehicle segment

however stable profitability


European leader in remanufacturing of automotive parts in a

business model fundamentally build on circular economy

Borg: Strong player in current soft market

13

PORTFOLIO COMPANIES

EBITDA DKK million

▪ Soft demand in Q4 and FY revenue

lower than expected

▪ EBITDA however, within guidance

range despite lower efficiency

▪ No loss of market share

▪ IFRS adj. ROIC remains attractive at

15.6%

▪ Streamlining Belgian activities

Revenue DKK million

958

2015 201920172016 2018 2020E

910 946 918975

+0.3%

2015 2016 2017 2018 2019 2020E

138

102110-120

131

11011

99

-7.3%

CAGR

▪ Strongest reman platform in Europe

▪ Preparations and investments to

handle greater complexity and

electrification of cars

▪ New site in Lublin, Poland has

capacity for further growth

▪ Ongoing IAM customer consolidation

▪ Volume expectations remain sub-

dued, however signs of improvement

▪ Slight increase in both revenue and

EBITDA expected

Volume and profitability under

pressure in 2019

Progress expected in 2020,

however still uncertainty


NWC/sales Operating CF NWC/sales Operating CF NWC/sales Operating CF

NWC/sales Operating CF NWC/sales Operating CF NWC/sales Operating CF

2019 Cash Flow focus continues into 2020

14

OUTLOOK

149

75

2018

10

2019

85

-43%

2018 2019

14.717.0

+2.3pp

BioMar

GPV

Fibertex Personal Care

HydraSpecma

Fibertex Nonwovens

Borg Automotive

2019

27

2018

150

10

177

+1.625%

33.8

2018 2019

31.3

-2.5pp

40

2018

31

204

2019

235

+495%

20192018

66.4

26.8

-39.6pp

2018: Full CCS balance sheet but no P/L effect

2018 2019

112

60

+86%

2018 2019

33.329.9

-3.3pp

20192018

426

184

+131%

15.2

2018 2019

20.4

-5.2pp

20192018

110

366

218

328

-10%

8.2

2018

11.8

2019

+3.6pp


Covid-19 impact not included in guidance

15

OUTLOOK

▪ Directly exposed in Chinese JV, and

start-up of Wuxi factory postponed

▪ Positive long-term effect from

increased focus on quality feed likely

▪ Potential risk in Ecuador shrimp

export to restricted areas

▪ Malaysian site both positively and

negatively affected

▪ Lower direct FPC sales to China

▪ Less export from China means (short-

term) additional volume to Malaysia

▪ Limited exposure to China/Asia

▪ Strong demand for fabrics for face

masks

▪ Site in China has been affected

▪ Long-term potential supply chain

effects as majority of electronic

components are produced in China

▪ Risk of lower activity with global

customers

▪ Two smaller sites in China are now

running after long Chinese new year

▪ Soft OEM demand

▪ Short-term positive effect as Europe’s

import of high-runners is limited

▪ Medium-term risk of component

shortage from China/Asia

▪ Potential long-term positive effect

supporting local circular economy


Revenue DKK million

Depreciations DKK million

Profit DKK million

2020 guidance – growth of ~3%

16

OUTLOOK

2020E 2019R

BioMar 1,000-1,060 966

Fibertex Personal Care 280-310 352

Fibertex Nonwovens 165-185 141

GPV 210-240 196

HydraSpecma 200-220 215

Borg Automotive 110-120 110

Other -30 -29

Total EBITDA 1,935-2,105 1,951

PPA depreciations -100 -88

Other depreciations -745 -714

Total EBIT 1,095-1,260 1,149

Associates etc. 60 50

Divestments - 29

Other financial items -100 -79

Profit Before Tax 1,050-1,220 1,149

2020E 2019R

BioMar c. 12,000 11,180

Fibertex Personal Care c. 2,100 2,183

Fibertex Nonwovens c. 1,750 1,705

GPV c. 2,800 2,856

HydraSpecma c. 2,000 2,123

Borg Automotive c. 975 918

Other - -18

Total EBITDA c. 21,625 20,946

2020E 2019R

BioMar 340 311

Fibertex Personal Care 140 137

Fibertex Nonwovens 110 107

GPV 120 118

HydraSpecma 85 79

Borg Automotive 49 48

Other 1 1

Total EBITDA 845 802


Globalise and

create platform

Utilise new

capacity

Utilise strong

platform

Continue long-

term growth

Regain volume

in Europe/Asia

Further

innovation

Transform and

improve Sweden

Optimise

footprint

Focus and

capture value

Leverage on

investments

Regain top line

momentum

Expand in new

products

Summing up: Priorities for 2020

17

OUTLOOK

▪ Maintain positions and keep volumes

▪ Streamline costs and margin mgmt.

▪ Fix underperformersProfit

improvement

▪ Capital allocation to ongoing

transformation

▪ Invest to secure long-term

competitiveness

Growth

investments

▪ Reduce NWC

▪ Generate cash flow

▪ Improve ROICCapital

optimisation

▪ Secure financial and management

resources

▪ Create value from ESGFuture-

proofing

Aktieselskabet Schouw & Co.

Chr. Filtenborgs Plads 1 8000 Aarhus C Denmark

+45 86 11 22 22

[email protected]

www.schouw.dk

www.linkedin.com/company/schouw

Nasdaq Copenhagen ticker SCHO

Enabling long-term and responsible transformation

Documents

Annual Report 2019 - Schouw · 06-03-2020 · 2016 2017 2018 2.1 2015 2019 2020E 1.8 1.8 2.0 2.2 2.2 +5.0% 2015 2017 365 2016 2018 2019 2020E 395 362 315 352 280-310-2.8% CAGR Unchanged