Investor Presentation January-June 2016 - PKC Group...Investor Presentation January-June 2016 Half Year Financial Report PKC Investor Presentation Q2 2016 August 10, 2016 Matti Hyytiäinen,

Investor Presentation

January-June 2016Half Year Financial Report

PKC Investor Presentation Q2 2016 August 10, 2016 Matti Hyytiäinen, President & CEO

• North American heavy-duty truck market has continued on a down-slope

• Heavy-duty truck demand in Europe has continued to recover while Brazilian market is in recession. In China truck demand and production have grown

H1 2016 Highlights

PKC Investor Presentation Q2 2016

Business Environment

PKC’s Operations

PKC’s Financial Performance

• European manufacturing footprint improvement and program transfers continue including freeing up capacity for higher rolling stock volumes

• North American capacity is to be adjusted to a lower level for the medium term

• EBITDA improved q-to-q and y-on-y

• H1 cash flow negative due to seasonality, but improved from year earlier

North America Market


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2011 2012 2013 2014 2015 2016 2017 2018

Heavy Duty Trucks Medium Duty TrucksSource: LMC Automotive forecasting Q4/2014

Production units

-27%+2% +14%

-3%

EPA 2014 1st stage

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Heavy Duty Trucks Medium Duty Trucks

+9%

+5%

Source: LMC Automotive forecasting Q2/2016, ACT Build History July 2016, PKC Group

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2011 2012 2013 2014 2015 2016 2017 2018

Light Vehicle (Pick-up and SUV)

+4%+7%

60%

40%31%

69%


Market Share 1-6/2016

Production units

Production units

-5%-11%

EPA 2014 2st stage

EU + 2 Market


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011 2012 2013 2014 2015 2016 2017 2018


Production units

+8%

+0%

+14%

-3%

EURO 6

0

20,000

40,000

60,000

80,000

100,000

120,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16


+13%

+14%

Source: LMC Automotive forecasting Q2/2016, PKC Group

43%

57%

23%

77%



Production units

+4%

+6%

Brazil Market


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2011 2012 2013 2014 2015 2016 2017 2018


Production units

-10%

-37%

+14%

-3%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16


-53%

-32%


32%

68%

2%

98%



Production units

+28%

+23%

PKC estimates production volume to continue to decrease

China Market


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2011 2012 2013 2014 2015 2016 2017 2018Heavy Duty Trucks Medium Duty Trucks

Source: LMC Automotive forecasting Q4/2014

Production units

+9%

+2%

+14%

-3%

0

50,000

100,000

150,000

200,000

250,000

Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16


-28%

-18%


8%

92%

0%

100%



Production units

+23%

+9%

EURO 4 EURO 4

Revenue from Continuing Operations


12 9 9 6 7 10

0

25

50

75

100

125

150

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

South America

1 1 414 10 14

0

25

50

75

100

125

150

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

APACEUR million EUR million

54 5864

77 7684

0

25

50

75

100

125

150

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

EuropeEUR million

138 142136

123 120113

0

25

50

75

100

125

150

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

North AmericaEUR million

Headcount, Average in Continuing Operations


12,306 12,713 12,304 12,18611,281 11,373

0

2,500

5,000

7,500

10,000

12,500

15,000

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

North America

5,248 5,466

7,501 7,607 7,829 7,852

0

2,500

5,000

7,500

10,000

12,500

15,000

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Europe

2,213 1,736 1,553 1,301 1,284 1,218

0

2,500

5,000

7,500

10,000

12,500

15,000

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

South America

69 64 294 786 873 864

0

2,500

5,000

7,500

10,000

12,500

15,000

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

APAC

• North American heavy-duty and medium-duty truck production is estimated to decrease by 15% compared to previous year’s level

• European heavy-duty and medium-duty truck production is estimated to increase by 6% compared to previous year’s level

• Brazilian heavy-duty and medium-duty truck production is expected to continue to decrease

• Chinese heavy-duty and medium-duty truck production is expected to grow by about 7% compared to previous year’s level

• The demand for the rolling stock is expected to continue to grow steadily

Market Outlook – Full Year 2016


• PKC Group estimates that with prevailing exchange rates 2016 revenue from continuing operations (i.e. excluding Electronics business) will be close to previous year level and comparable EBITDA from continuing operations will be higher than previous year level.

• Outlook includes higher than average uncertainty related to the North American heavy-duty truck production volumes during rest of the year

• In 2015, PKC’s revenue from continuing operations was EUR 847.3 million and comparable EBITDA from continuing operations was EUR 59.5 million

PKC Group’s Outlook


• YTD revenue from continuing operations increased +4%

– YTD negative FX impact of -2%

– Revenue in North America declined due to lower heavy-duty truck volumes

– European truck revenue grew

– Increased production in China and in the rolling stock segment

• Comparable EBITDA from continuing operations improving

– Better productivity and production arrangements in Europe

– EBITDA in North America declined owing to lower volumes, weakened utilization rates and unfavourableproduct mix

– The recent transactions in Poland and China contributed to EBITDA

– Brazil achieved positive result in June

Revenue and EBITDA, Q2 2016


205.9209.4

212.2

220.0

212.7

220.4

170

180

190

200

210

220

230

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

Revenue

EUR million

13.9 15.0 15.2 15.4 15.8 17.4

-0.6 -5.4 -1.8 -1.0

0.0 0.0

6.8 7.2 7.2 7.0 7.4 7.9

-4

-2

0

2

4

6

8

10

-10

-5

0

5

10

15

20

25

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/15

Comparable EBITDAItems affecting comparabilityComparable EBITDA, % of revenue

EUR million %

Key Figures


EUR million

(from continuing operations

unless otherwise noted)

4-6/16 4-6/15 Change

%

1-6/16 1-6/15 Change

%

1-12/15

Revenue 220.4 209.4 +5.3 433.1 415.2 +4.3 847.3

EBITDA1)17.4 15.0 +16.1 33.3 28.9 +15.0 59.5

EBITDA%1)7.9 7.2 7.7 7.0 7.0

Items affecting comparability 0.0 -5.4 0.0 -5.9 -8.8

Operating profit 9.6 2.5 +286.4 17.6 8.7 +103.7 20.2

EPS (EUR) 0.21 -0.06 0.35 0.06 +533.1 0.23

Net cash from operating activities2) 15.1 4.5 +236.0 -18.9 -25.2 14.8

Working capital2)3) 122.3 96.5 +26.8 122.3 96.5 +26.8 92.7

ROCE, %4) 10.6 10.9 9.9

Gearing, %2) 62.7 21.1 31.4

Average headcount 21,330 19,988 +6.7 21,309 19,926 +6.9 20,855

1) Excluding items affecting comparability2) Comparison periods include discontinued operations3) Inventories + trade receivables - trade payables4) ROCE, % = Adjusted operating profit (excl. items affecting comparability) / ((Total equity + interest-bearing liabilities)(average))

Cash Flow


41.0

14.8

-20.3

-15.7

20.7

-0.9

0.0

-22.5

20.7

-23.4

-30

-20

-10

0

10

20

30

40

50

2014 2015

Cash from operations Net capex (organic)

Cash after net capex Acquisitions

Free cash flow

EUR million EUR million

-29.7

-34.0

4.5

15.1

-13.6

53.6

-40

-30

-20

-10

0

10

20

30

40

50

60

2015 2016

Q1 Q2 Q3 Q4

Cash from operations

EUR million

Q1 and Q2 2016 from continuing operations

Balance Sheet and Return


29.0

32.6

27.3

0

5

10

15

20

25

30

35

40

2015 Q2/15 Q2/16

Equity ratio, %*

31.4

21.1

62.7

0

10

20

30

40

50

60

70

80

90

100

2015 Q2/15 Q2/16

Gearing, %*

49.4

91.2

59.563.9

0

10

20

30

40

50

60

70

80

90

100

2015 Q2/16

Net debt* EBITDA**

9.910.9 10.6

0

2

4

6

8

10

12

14

16

18

20

2015 Q2/15 Q2/16

ROCE, %*

%

EUR million %

%

* *EBITDA of previous 12 months excl. items affecting comparability ROCE % = Adjusted operating profit (excl. items affecting comparability) /

((Total equity + interest-bearing liabilities)(average))

* Comparison periods include assets and liabilities of discontinued operations

PKC’s Strategy Captures Growth

Opportunities



PKC’s existing addressable market amounts to about EUR 4 billion

• Trucks in North America, Europe and South America EUR 1.5 billion

• Construction equipment globally EUR 0.7 billion

• Agriculture equipment globally EUR 1.5 billion• Buses globally EUR 0.2 billion

New market opportunities equal to addressable market growth by about EUR 5 billion by 2018

• APAC truck wiring harnesses EUR 1 billion• Rolling stock control panels, power packs and

wiring harnesses globally EUR 2 billion• Aerospace wiring harnesses globally

EUR 2 billion

PKC Strategy 2018 – Doubling

the Addressable Market

1.5

1.5

0.7

0.2

Existing marketabout EUR 4 billion

Truck

Agriculture

Construction

Bus

1.0

2.0

2.0

New market opportunitiesabout EUR 5 billion

APAC Truck

Rolling stock

Aerospace


• Doubling the addressable market

• Westerns truck markets entering new phase. OEMs are launching or planning to launch new generation trucks. PKC’s capability aligned with customers future requirements.

• Expansion into rolling stock market well received by the customers. Global Partnership Agreement signed with Bombardier, followed by some major new contracts in the size of EUR 200 million. Other opportunities in progress

• 2nd Chinese PKC joint venture signed. PKC knowhow recognized by the market and further organic and inorganic opportunities identified and in progress

Strategy Execution Proceeding

PKC Group Plc

Bulevardi 7

FI-00120 Helsinki, Finland

www.pkcgroup.comPKC Investor Presentation Q2 2016

Documents

Investor Presentation January-June 2016 - PKC Group...Investor Presentation January-June 2016 Half Year Financial Report PKC Investor Presentation Q2 2016 August 10, 2016 Matti Hyytiäinen,