Business and Financial Review • Apr 5, 2019
Business and Financial Review
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APRIL 5TH 2019 PARIS, 37TH ESN EUROPEAN CONFERENCE
2019-2021
WE HAVE BEEN DESIGNING INNOVATION FOR FIFTY YEARS, DRIVEN BY AN INCREDIBLE ENGINE, POWERED BY PEOPLE, PASSION AND PRECISION.
Biesse Group is a global leader founded in Pesaro in 1969 by Giancarlo Selci. listed on the Borsa Italiana since 2001 – STAR segment. The Group has a strong Italian identity and strongly believe in:
Biesse Group's vision is embodied by the word THINKFORWARD:
We manufacture technology for processing wood, glass, stone, advanced materials and metal through specialised business units and 12 manufacturing sites in Italy and worldwide. We operate worldwide with our own key brands: Biesse, Intermac, Diamut, HSD.
4 12 PRODUCTION SITES
We support our colleagues everywhere in the world, using the most advanced management, sales and support system. Our global network enables us to be always close to our customers.
39 SUBSIDIARIES AND REPRESENTATIVE OFFICES
+300
DISTRIBUTORS
SELECTED
Customers in 120 Countries. Manufacturers of furniture, design items and door/window frames, producers of elements for the building, nautical and aerospace industries.
120 COUNTRIES
4400*
We acknowledge that Peopole are essential to our development, because the ability to innovate and pursue excellence in the realisation of products is the consequence of the passion and dedication of all those are part of the Biesse family.
3 -Year Business Plan
We design, manufacture and distribute a comprehensive range of machinery and technologies for processing wood, glass, stone, metal and advanced materials
We create engineered solutions, from plant design to production, Systems 02 We design, manufacture
implementation, installation and maintenance
Mechatronics 03
and deliver high-tech mechanical and electronic components for machinery INDUSTRY 4.0 ready.
We manufacture tools for the processing of glass, stone and ceramic. Its synergy with Intermac has enabled it to develop a range of tools, which in terms of reliability, have become a benchmark in the market.
05 Through dedicated personnel, we provide professional pre-sale consulting services, and continuous after sales assistance to ensure the correct installation and startup of machinery, software and Systems.
05 We have developed our software solutions by closely observing the work carried out by the customer every day, with simple interfaces, designed to make everyday use of the machine practical.
3 -Year Business Plan
Advanced Material, Automotive Frames (doors, windows) Structural Woods
3 -Year Business Plan
China - U.S.A. (decoupling & custom duties)
Russia - Turkey - Iran - Venezuela
Worldwide slowdown and downgrade in economic growth (i.e. China)
(i.e. "Yellow Vest" protest)
Change of economic Strategy
Brexit
In the Global Risks Perception Survey, nearly 1,000 decision-makers assess the risks facing the world. Nine out of 10 respondents expect worsening economic and political confrontations between major
Economic confrontation / frictions between major powers
Erosion of multilateral trading rules
Political frictions between major powers
Cyber-attack: Theft of data-money
Cyber-attack: Disruption of operations and infrastructures
Loss of confidence in collective security alliances
Populist and nativist agenda
Media echo chambers and "fake news"
Domestic political polarization
79%
85%
years?
76%
Complicated What will impact Business Model over next
Difficult Today The day after Tomorrow Automation Machine Learning Artificial intelligence Advanced Robotic Tomorrow Easy Predictive Maintenance Digital will provide significant opportunities to reduce cost Digital will help us engage our partner like never before Digital channels and technologies will significantly improve our interactions with business customer
How, When, What will impact our business
3 -Year Business Plan
What are the top technologies that will drive business disruption over the next three years? A survey to 750 Global Industry Leaders (C-Level). Faster
The Internet of Things Connected devices are becoming intelligent things
Robotics
Robots and automation are changing the limitations of what humans can do 11%
10%
20%
AI is designed to simulate how humans brain learns, reasons and make decisions that results in an action
3 -Year Business Plan
3 -Year Business Plan
We are among leaders in our reference markets: Wood, Glass, Stone working machinery and Tooling
Wood Estimated CAGR 2019-2021
Market Estimated CAGR 2019-2021 03
We defined guidelines of the Action Plan to achieve our targets:
Expand our product offering to meet Customers needs for more automation, more flexibility and easy-use machines
02
01
Enlarge our offering of Full Liner products and machines integrated with our handling and storage solutions
Strength our R&D on innovative solutions to process furnishing (new materials)
We defined guidelines of the Action Plan to achieve our targets:
Full Liner.
01 Expand our offering in Automation and
02
Focus on the new product range for space, storage and handling needs of Ceramic working Factories
Protect our leading position in the 03 stand-alone machines segment.
G&S Division Estimated CAGR 2019-2021
Market Estimated CAGR 2019-2021
Tooling Division Estimated CAGR 2019-2021
Market Estimated CAGR 2019-2021
We defined guidelines of the Action Plan to achieve our targets:
01
02
Expand our presence in the U.S. market, through a dedicated production line inside the Biesse America Campus. In 2018 Biesse Group made its debut in the Ceramic sector. The Group approached this new segment through an innovative range of tools and solutions dedicated to the squaring, lapping and polishing of all ceramic materials. In next three years we want to enlarge our offering of tooling products for ceramic CNC machines.
important are Hundegger (the Market Leader), HOMAG and Weinmann.
3 -Year Business Plan
We entered in new market segment, we want to continue increase our market penetration.
STEPTEC.
Industrie, Breton, Mecanumeric, and Multicam.
We defined guidelines of the Action Plan to achieve our targets:
Estimated CAGR 2019-2021
Expand our offering, introducing new products both in high–end and mid-end segment: RC and CLT series
01
Empower our salesforce team especially in Key Markets
03
Increase our production capacity (Italy)
6%
Market Estimated CAGR 2019-2021 01
15%
metal spindle sales estimated CAGR 2019-2021
We defined guidelines of the Action Plan to achieve our targets:
Expand abroad, especially in Asian (Taiwan) and Western Europe Market
02
03
Increase our production capacity (Italy)
30%
Estimated CAGR 2019-2021
3 -Year Business Plan
We defined guidelines of the Action Plan to achieve our targets:
Invest in Commercial development, empowering our sales organization worldwide with special focus on the American market
Invest to increase our production capacity 03 of Advanced Materials Machines
Enlarge our product offering for Advanced Materials working also in Full Liner 02 solutions
*Advanced
01
New thermoforming machine.
Development of System for Advanced Material working.
Expansion and complete renewal of the Rover and Materia product lines.
New projects based on additive manufacturing from 2021.
We increased our market share becoming a leading company in the engineering solutions sector.
Systems Sales Estimated CAGR 2018-2021 The guiding strategy of the Biesse Systems team is based on clear key concepts:
We defined guidelines of the Action Plan to achieve our targets:
Automaction: strong focus on Industry 4.0 oriented solutions
Introduce and integrate new software solution (MES - Manufacturing Execution System) to manage the entirefactory production processes
Approach the market with Global Key Accounts for large manufacturing companies Becoming leader in the engineering solutions sector, focusing also on small and medium Clients
Automaction is a Biesse's new concept that represents the concreteness of the new technological innovations developed by the company.
The company's spirit of innovation takes a huge step forward in the evolution of robotic systems for panel handling
Automated supervisor (software) for the integrated and efficient management of all production flows according to machining requirements.
21.5%
Expected Service Contribution to net sales in 2021
We will focus on Services development, increasing covering and efficiency.
We defined guidelines of the Action Plan to achieve our targets:
Increase services sales using SOPHIA and Predictive Maintenance Services
Services market place development: Parts
Target of Spare Parts Orders made with Sophia in 2021
<1h 2021 target response
time on machine down for Sophia Customers
02
01
03
Establish the Academy Service in Headquarter (Italy), Asia and America
Integration of Self Diagnostic Systems on machines
52
Empower corporate culture to achieve greater results.
"One Service" wants to be the way to work well and efficiently together and with Lean processes.
Training, through the Biesse Academy we intend to manage the skills of the Services resources and to increase knowledge about products and processes. After the successful experience of the CRM project for the Commercial Area,
Biesse has also activated Salesforce
teams to support the Service
processes.
04
01
New Global Organization, to simplify the relation with our Client introducing the Customer Care Manager
Parts Sophia is the easy, intuitive and personalized new tool for ordering Biesse spare parts
The main features of Parts services are:
With SOPHIA, Biesse is defining new standards in digital technologies that enable Smart Factory.
SOPHIA is Biesse's IIoT (Industrial Internet of Things) platform, developed with Accenture and Microsoft, that enable new services: long distance diagnostics, analysis and proactive maintenance, analysis of manufacturing events in order to optimize our Client's production.
SOPHIA is made up of two integrated areas: IoT and Parts. They're linked with
two apps so that the customer can easily access the functions offered by the platform.
3 -Year Business Plan
Biesse supports its customers, offering technological connectivity, sharing of expertise, professional consulting services, training and ongoing assistance.
SOPHIA helps to prevent problems that could damage customer production. Biesse takes proactive steps to contact customers, reducing machine downtime and inefficient wasted time.
The information gathered and analysed is transformed into useful indications for optimising customer production and product quality, providing extremely opportunities for growth. Source: Biesse estimations
Machines already sold having SOPHIA package
Digital innovation creates the future: an inevitable process, that is yet to be developed in machinery industry. SOPHIA paves the way for the future of Industry 4.0, starting now.
2000,0 Number of Machines sold with SOPHIA Packages and average revenues per package 2018-2021
CAGR 2018-2020
2018-2020 plan
Value Added margin 2018-2020 plan
€/mln - %
3 -Year Business Plan
EBIT margin 2018-2020 plan
Net Result Net Result %
3 -Year Business Plan
3 -Year Business Plan
68
Net sales year -1
Cost of goods sold 178
| 3 -Year | Business Plan | |||||||
|---|---|---|---|---|---|---|---|---|
| €/mln | 2014 | 2015 | 2016 | 2017 | 2018 | 2021e | ||
| Net sales year -1 |
427 +12.9% |
519 +21.5% |
618 +19.1% |
690 +11.6% |
740 +7.3% |
CAGR 2009-2018 11.9% |
882 | |
| 41.6% | 206 39.8% |
245 39.6% |
270 39.1% |
295 39.9% |
349 39.6% |
|||
| % | 168 39.3% |
212 40.9% |
252 40.8% |
289 41.8% |
307 41.5% |
370 42.0% |
||
| Labour cost |
128 30.0% |
148 28.6% |
177 28.6% |
199 28.9% |
214 29.0% |
256 29.0% |
< 30.0% incidence |
|
| Overhead | 91 21.3% |
105 20.2% |
125 20.1% |
136 19.7% |
144 19.5% |
168 19.0% |
< 20.0% incidence |
|
| EBITDA % |
40 9.3% |
64 12.4% |
76 12.3% |
89 13% |
93 12.5% |
114 13.0% |
||
| EBIT % |
25 5.8% |
44 8.4% |
55 8.9% |
64 9.2% |
64* 8.6% |
80 9.0% |
||
| Value added % |
168 39.3% |
212 40.9% |
252 40.8% |
289 41.8% |
307 41.5% |
|---|---|---|---|---|---|
| Labour | 128 | 148 | 177 | 199 | 214 |
| cost | 30.0% | 28.6% | 28.6% | 28.9% | 29.0% |
| Overhead | 91 | 105 | 125 | 136 | 144 |
| 21.3% | 20.2% | 20.1% | 19.7% | 19.5% | |
| EBITDA | 40 | 64 | 76 | 89 | 93 |
| % | 9.3% | 12.4% | 12.3% | 13% | 12.5% |
| EBIT | 25 | 44 | 55 | 64 | 64* |
| % | 5.8% | 8.4% | 8.9% | 9.2% | 8.6% |
*after non recurring items
3 -Year Business Plan
€ 77 mln the positive 2019e PFN in the previous plan
-56,2
70
| €/mln | 2014 | 2015 | 2016 | 2017 | 2018 | 2021e |
|---|---|---|---|---|---|---|
| Gross Cashflow(*) | 38 | 46 | 47 | 74 | 53 | 69 |
| % net sales | 9.0% | 8.9% | 7.4% | 10.9% | 7.1% | 7.9% |
| Capex | -21 | -25 | -32 | -39 | -45 | -48 |
| % net sales | 4.9% | 4.9% | 5.2% | 5.7% | 6.1% | 5.4% |
| Net Cashflow | 17 | 21 | 15 | 35 | 8 | 21 |
| % net sales | 4.1% | 4.1% | 2.2% | 5.2% | 1.1% | 2.4% |
| Dividends | -4.8 0.18 per share |
-9.8 0.36 per share |
-9.8 0.36 per share |
-9.8 0.36 per share |
-13.1 0.48 per share |
-14.0 30% of net profit(e) |
(*) Gross Cashflow calculated: net profit + amortization + provisions +/- delta operative CCN +/- delta funds (taxes)
inventories below 22% incidence on Net Sales
Group DSO around 50-60 days max
3 -Year Business Plan
Group DPO around 105-110 days
| €/mln | 2014 | 2015 | 2016 | 2017 | 2018 | 2021e |
|---|---|---|---|---|---|---|
| Inventories % net sales |
23.0% | 21.5% | 21.1% | 20.8% | 22.0% | 21.3% |
| Receivables % net sales |
18.9% | 20.3% | 20.8% | 17.3% | 18.1% | 19.0% |
| Payables % net sales |
28.8% | 29.5% | 31.1% | 32.4% | 32.9% | 31.2% |
| operative Net Working Capital % net sales |
56 13.0% |
63 12.2% |
67 10.8% |
39 5.6% |
53.1 7.2% |
81 9.2% |
74
3 -Year Business Plan
tangible: € 32.9mln intangible: € 18mln
main investments items:
3 -Year Business Plan
| FY 2011 |
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | |
|---|---|---|---|---|---|---|---|---|
| Production % of total people |
1,250 46% |
1,265 45% |
1,175 44% |
1,201 42% |
1,335 42% |
1,482 41% |
1,494 39% |
1,621 38% |
| Service & After sale % of total people |
577 21% |
574 21% |
613 22% |
628 22% |
690 22% |
803 22% |
894 23% |
1,001 24% |
| R&D % of total people |
316 12% |
338 12% |
321 12% |
361 13% |
383 13% |
436 12% |
479 12,5% |
551 13% |
| Sales & Marketing % of total people |
361 13% |
364 13% |
351 13% |
439 15% |
495 15% |
587 16% |
641 17% |
715 17% |
| G&A % of total people |
233 9% |
242 9% |
235 9% |
252 9% |
273 9% |
310 8,5% |
338 8,8% |
339 8% |
| ITALY % of total people |
1,656 61% |
1,646 59% |
1,547 57% |
1,605 56% |
1,780 56% |
2,009 56% |
2,176 56% |
2,483 59% |
| OUTSIDE ITALY % of total people |
1,081 39% |
1,136 41% |
1,148 43% |
1,276 44% |
1,396 44% |
1,609 44% |
1,670 44% |
1,744 41% |
| TOTAL | 2,737 | 2,782 | 2,695 | 2,881 | 3,176 | 3,618 | 3,846 | 77 4,227 |
77
| FY 2017 | FY 2018 | DELTA % | |
|---|---|---|---|
| Production | 1,494 | 1,621 | +8.5 |
| Service & After Sales |
894 | 1,001 | +12.0 |
| R&D | 479 | 551 | +15.0 |
| Sales & Marketing | 641 | 715 | +11.5 |
| G&A | 338 | 339 | |
| ITALY | 2,176 | 2,483 | + 14.1 |
| OUTSIDE ITALY | 1,670 | 1,744 | + 44.3 |
| TOTAL | 3,846 | 4,227 | +9.9 |
3 -Year Business Plan
the labour cost increase is EURO 16.3 mln (2018 vs 2017)
interim people at the end of Dec 2018: 170 interim people at the end of Dec. 2017: 196 interim people at the end of Dec. 2016: 181
employees 4,397
including interim people
people outside Italy: nr. 1,744 people in Italy: nr 2,483
3 -Year Business Plan
a) staff outside Italy: nr. 1,915 b) staff in Italy: nr 2,831 a+b (4,746)= +7.9% vs 2018
World, Advanced Economies & EMDEs YoY Growth (%)
Source: Bloomberg, January 2019
83
Source: Bloomberg, January 2019, Biesse
Furniture demand by countries
China U.S.A. Germany Italy India Other
Furniture consumption. Countries grouped by geographical region, 2019. Forecast of yearly changes in real terms.
Building Investments comparing China, Italy, World
World trade of furniture and annual percentage changes.
| Origin of furniture imports |
Destination of furniture exports |
||
|---|---|---|---|
| Italy | 18,8% | USA | 36,9% |
| Germany | 14,8% | Japan | 5,6% |
| Vietnam | 8,5% | UK | 4,9% |
| Poland | 7,0% | Australia | 3,8% |
| USA | 6,0% | Germany | 3,7% |
| JAPAN | 5,7% | Hong Kong | 3,3% |
| South Korea |
4,4% | South Korea | 3,2% |
| Taiwan | 2,9% | Canada | 3,1% |
| China | 2,7% | France | 2,4% |
| UK | 2,6% | Singapore | 2,2% 88 |
Source: CSIL 2018
ORDERS (INTAKE & BACKLOG)
"…..IFRS 16 is an International Financial Reporting Standard (IFRS) providing guidance on accounting for leases. IFRS 16 was issued in January 2016 and will be effective for most companies that report under IFRS in 2019. Upon becoming effective, it will replace the earlier leasing standard, IAS 17. ….The new standard will provide much-needed transparency on companies' lease assets and liabilities, meaning that off balance sheet lease financing is no longer lurking in the shadows. It will also improve comparability between companies that lease and those that borrow to buy……"
€/mln
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