Investor Presentation • Aug 5, 2022
Investor Presentation
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Consolidate the position as a solution provider in the reference markets driven by the trends of energy transition, digitalization, and sustainability.
| Vision | Mission | Value proposition | Strategy |
|---|---|---|---|
| To be a technological partner in a changing world |
To operate in the market of infrastructure for the transport of energy, data and material (oil and derivatives, gas, water). |
To supply added-value integrated solutions for our customers |
▪ Innovation ▪ Integration ▪ Internationalization |
ACTIONS TO BE PERFORMED
Calculate the carbon footprint of the
organization and implement actions to reduce it
Commitment to this target
Follow up on the several ongoing initiatives both for employees and for stakeholders
Increase engagement in sustainability practices
Strengthen the organization's governance around sustainability challenges and opportunities
8 Making every department accountable to sustainability
| PRIORITY TOPICS | TASKS (in progress or delivered) |
|---|---|
| Ethic and sustainable governance |
▪ Growing involvement and awareness on sustainable governance both in Italy and among the foreign subsidiaries of the Group ▪ Strengthen of the sustainability team in order to properly face the increasing opportunities |
| Green & digital solutions | ▪ Sizing the businesses that are associated with environmentally sustainable economic activities in compliance with the European Taxonomy Regulation ▪ Priority to green innovation and actions to meet the Technical screening criteria of the EU Taxonomy Regulation ▪ R&D focused on electrification and digitalization of equipment to reduce the carbon footprint |
| Climate Change and environmental protection |
▪ Sharing the ESG commitment with major suppliers ▪ Actions to correctly manage the use of resources, promoting the reduction of direct and indirect environmental impacts |
| Development of local communities and areas, enhancement and protection of people |
▪ Workplace Health Promotion – WHP project ▪ Charity initiatives for local communities and non-profit organizations ▪ Continuous training program for skills development and professional growth |
2021 is the first year of application of the European Taxonomy. For this reason, the below findings are based on currently available information, which may be subject to future revisions also based on the evolution of the legislation.
Tesmec is confirmed leader of Sustainability 2022: it is among the 200 most sustainable Italian companies, published by Il Sole24Ore & Statista
R&D efforts are increasingly focused on electrification and digitalization of product lines of the Group with the aim to reduce the environmental impact
Launch of corporate volunteer initiatives among the Italian companies of the Group
Tesmec S.p.A. signed an agreement for the supply of the 100% energy from renewables sources
Market in the US has seen a consistent rebound, leading to a steep increase in activity, revenues and market recognition
New Multicut 400 multipurpose digging solution has successfully debuted on the market
On the mining side, the Group has entered New Zealander market. Flexibility and compact design are key features that are highly appreciated in the region
Arabic Peninsula activity – especially in Saudi Arabia and Qatar - has been restructured and has taken over in the 1st half of 2022
Western Europe market recovery with important orders acquisition
Slight drop trends in raw materials
Several job sites visits to push on development of special solutions dedicated to underground transmission lines
Active audit for expanding steel suppliers range in order to deal with negative impact on steel strands supply
Business growth in the Italian market
Kick-off of new strategic projects to offer integrated solutions for the full monitoring of MV/LV secondary substations
Significant progress in the development of Substation Automation solutions
Strong challenges to guarantee reliable delivery plans and positive closing results due to lack of components
This contract consolidates the international positioning of Tesmec Group in the catenary stringing field in Egypt.
Thanks to its unique technologies, Tesmec has the capability to satisfy client' needs in terms of job site efficiency, as timing and services.
The "AMIS" is the "European Certification" issued by ANSFISA – the National Agency for Railway Safety.
Completed the long certification process to allow also the catenary vehicle bogie configuration to travel as a passenger train on active line without line interruption.
This vehicle model OCPD001 is our flagship product on which we have already gained considerable experience worldwide.
The new diagnostic vehicle is a turning point thanks to the integrated design between vehicle & diagnostic systems.
The first phase of the homologation process verified by ITALCERTIFER, the Italian Notify Body, was completed with success.
▪ All the Tesmec diagnostic fleet will be authorized to travel as a passenger train on active line thanks to the European Certification.
| (€ mln) GROUP |
2022 H1 |
2021 H1 |
Delta 21 vs |
|---|---|---|---|
| REVENUES (1) |
113 3 , |
96 9 , |
16 9% , |
| (2) (3) EBITDA |
18 7 , |
13 7 , |
36 5% , |
| % Revenues on |
16 5% , |
14 2% , |
|
| EBIT | 8 0 , |
2 9 , |
|
| % Revenues on |
1% 7 , |
3 0% , |
|
| Differences (4) in Exchange |
5 3 , |
1 1 , |
|
| % Revenues on |
4 7% , |
1 2% , |
|
| (LOSS) PROFIT BEFORE TAX |
11 4 , |
1 8 , |
|
| % Revenues on |
10 1% , |
1 8% , |
|
| INCOME/(LOSS) NET |
9 7 , |
1 0 , |
|
| Revenues % on |
7 0% , |
1 0% , |
|
| GROUP (€ mln) |
H1 2022 |
H1 2021 |
Delta 21 vs |
| IFRS NFP 16 ante |
108 2 , |
96 8 , |
-11 8% , |
| NFP IFRS 16 post |
133 1 , |
118 5 , |
-12 3% , |
Sales stable compared to 2021.H1 lead by the Energy industry trend
EBITDA: impacted by the utilities, raw material and freight costs increase, with higher effect on the Stringing segment. Started the process of reviewing the price related to the contract already signed. Still in line with the 2021.H1 results.
> Increase respect to 2021.H1 thanks to the rebound of the US market
EBITDA: impacted by the utilities, raw material and freight costs increase related to the worldwide criticalities however still increasing respect to 2021.H1.
> The confirmed order backlog was Euro 75,3 million
The revenues are related to the medium-long term contracts and are increased compared to 2021.H1.
EBITDA: the increase compared to 2021.H1 is related to a different products range with higher marginality and value added (i.e.: diagnostic). The price variation process related to the contract already signed is in an advanced stage and partially already secured
ITALY: railway, trencher & energy automation impact USA&EU: trencher impact BRICS: trencher and stringing impact
Recurring: Rental, Projects, Spare Parts, Services (maintenance, revamping & refurbishing, consulting & training), long term backlog (Automation & Rail)
Non recurring: Sales of goods
€ mln
| Financial Information (€ mln) |
2022 H1 |
2021 |
|---|---|---|
| Capital Net Working |
98 1 , |
76 5 , |
| Non Current assets |
81 6 , |
79 6 , |
| Right of IFRS 16/IAS 17 use - |
22 3 , |
23 4 , |
| Other assets/liabilities Long Term |
14 6 , |
14 2 , |
| Capital Net Invested |
216 6 , |
193 7 , |
| Net Financial Indebtness |
108 2 , |
96 6 , |
| IFRS 16/IAS Lease liability 17 - |
24 9 , |
24 5 , |
| Equity | 83 5 , |
72 6 , |
face the conjunctural criticalities on supply chain and logistics
2021 Impacted by the increase of NWC to support the 2nd half growth, totally mitigated by operating cash generation 2022.H1
NFP ante IFRS 16 IFRS 16 4service NFP impact
From 1 st January 2019, the new IFRS 16 has been introduced, the impact in term of NFP is around 24,9 M€, otherwise the NFP would have been around 108,2. Since April 2020 the NFP included the financial debt from the acquisition of 4service around 6,3 M€ (of which 9,1 M€ related to the IFRS 16) at 30 June 2022.
| MACRO ECONOMIC SCENARIO |
MAIN ACTIONS to support the growth |
|
|---|---|---|
| ▪ | Inflation speed up ▪ Increase of raw materials & commodities costs and freight & logistic costs ▪ Increase in utilities |
▪ Reverse the inflation on selling price of products and services, negotiating the review of the medium-long contracts with public administration and with cost efficiencies |
| ▪ | Shortage of materials, longer delivery time | ▪ Diversification of the suppliers, rationalization and better cost/revenues ratio |
| ▪ | Uncertain geopolitical context, due to the Russian invasion in Ukraine, but partially compensate by the booming of specific geographic areas |
▪ Cover the criticalities regarding the exchange rate ▪ Face the conjunctural situation in Russia-Ukraine, focalizing on other country with high incoming opportunities (i.e.: Middles East, U.S.A.) |
| ▪ | Positive impact of recovery plans on reference markets of the Group: ▪ ITALY: strong push to business thanks to incentives, especially in Southern Italy ▪ EUROPE: important stimulus packages to boost the recovery ▪ USA: focus on Clean Energy and big high speed railway projects |
▪ Focus on strategic sectors driven by the energy transition trend ▪ Green innovation and process digitalization |
| ▪ | Strong impact of sustainable projects and climate change issue in the development plans worldwide |
| 2019pf | 2020pf | 2021 | 2022 | 2023 | Confirmed | ||
|---|---|---|---|---|---|---|---|
| TURNOVER | 199,6 M€ |
172,8 M€ |
194,3 M€ |
>240,0 M€ |
>> Significant performance of the Energy Automation segment; Stringing segment back to historical performances >> Focus on recurring revenues (rental & services) >> Growth in each business line >> Price lists variation and review of the medium-long term contracts (actual context) |
275 | ~ 290 M€ cagr : 19-23 8.5%~10.0% |
| EBITDA | 30,0 M€ |
22,9 M€ |
28,1 M€ |
>16% | >> Better mix of products & systems, premium price policy, impact of new high margin activities such as rental and hi-tech solutions >> Rationalization and standardization of the products portfolio >> Broadly stable fixed costs and review of the price lists and the medium-long term contracts >> Facing the price variation with alternative suppling solutions, new applications and reversing the cost to the price |
~ 53 58 M€ cagr : 19-23 17.0%~18.0% |
|
| NFP | 130,0 M€ |
104,4 M€ |
121,0 M€ |
Improvement | >> Net working capital improvement and efficiency actions on inventory >> Optimization of credit management policies >> 2020-2023: Cumulated Capex in 4 years 75/80M€ (including 2021 variation), progressive reduction to 5% of the CAPEX/Revenues |
Improvement |
Tesmec is strenghtening its presence in the Arabian Gulf area, to provide specialized service for the upcoming development projects in the area
Growth measures passed in Europe and America are favoring Trenchers & Surface Miners provision
Raw materials and semi-finished products shortage represent a tough challenge, Tesmec is coping with it thanks to flexibility, knowledge and stocks
Electrification path is being undertook, to make urban works emission-less. GreenPose sustainable digging&laying recycling system is being recognized on the market
Focus on re-lining & transmission projects in Middle East with important orders acquisition on Q1
Push on German corridors with special solutions dedicated to underground transmission lines
Development of a special light solution for reconductoring projects, enlargement of the zero emissions machines range for distribution.
Supply Chain disruption with a critical impact on delivery & warehouse management (push on standard solutions)
• Participation in international events to expand business network and penetrate new market
channels and geographical areas
Completion of product portfolio and promotion of innovative solutions to develop new market channels
Consolidation of existing market with accurate sales initiatives and participation to new and on-going tenders
Reinforcement of service activities to support business growth and generate new revenue streams
Relevant steps forward to increase the positioning in the Substation Automation market
From the domestic market to the international market: increase of the portfolio of customers.
From traditional vehicles with diesel engine to sustainable vehicles (bimodal & full electric) with zero environmental impacts.
Artificial Intelligence applied to vision systems to identify and validate defects for safety of rail infrastructures
Export the business from Italy increasing the portfolio of key clients: participation to domestic & international tenders.
▪ 25% International
From a standard centralized diagnostic platform with the operator….
..to AI applied to diagnostic vision systems to identify and validate defects on railway infrastructure for a safety & reliable network
| Profit & Loss Account (Euro mln) |
H1 2022 |
H1 2021 |
Delta 2021 vs |
Delta % |
|---|---|---|---|---|
| Net Revenues |
113 3 , |
96 9 , |
16 4 , |
16 9% , |
| Raw materials (-) costs |
(43 6) , |
(39 4) , |
(4 2) , |
10 6% , |
| Cost (-) for services |
(22 1) , |
(16 7) , |
(5 4) , |
32 3% , |
| Costs (-) Personnel |
(29 8) , |
(27 3) , |
(2 5) , |
9 2% , |
| Other revenues/costs operating |
(+/-) (3 6) , |
(2 6) , |
(1 0) , |
38 3% , |
| revenues/costs (+/-) Non recurring |
- | - | 0 0 , |
na |
| gain/(losses) Portion of from equity investments evaluated using the equity method |
(0 1) , |
(0 3) , |
0 2 , |
-73 5% , |
| Capitalized R&D expenses |
4 6 , |
3 1 , |
1 5 , |
47 7% , |
| operating Total costs |
(94 6) , |
(83 2) , |
(11 4) , |
13 7% , |
| % Net Revenues on |
(83 5%) , |
(85 8%) , |
||
| EBITDA | 18 7 , |
13 7 , |
5 0 , |
36 5% , |
| Net Revenues % on |
16 5% , |
14 2% , |
||
| Depreciation , amortization (-) |
(10 7) , |
(10 8) , |
0 1 , |
-0 9% , |
| EBIT | 8 0 , |
2 9 , |
5 1 , |
176 1% , |
| Net Revenues % on |
7 1% , |
3 0% , |
||
| Net Financial Income/Expenses |
(+/-) 3 4 , |
(1 1) , |
4 5 , |
-407 1% , |
| Taxes (-) |
(3 5) , |
(0 8) , |
(2 7) , |
347 6% , |
| Minorities | (0 0) , |
0 0 , |
(0 0) , |
|
| (Loss) Group Net Income |
7 9 , |
1 0 , |
6 9 , |
n/a |
| % Net Revenues 5th August 2022 on |
0% 7 , |
1 0% , |
| Sheet (€ mln) Balance |
2022 H1 |
2021 | |
|---|---|---|---|
| Inventory | 91 8 , |
81 3 , |
|
| Work in contracts progress |
20 9 , |
15 7 , |
|
| Accounts receivable |
68 7 , |
54 4 , |
|
| Accounts payable (-) |
(64 9) , |
(56 0) , |
|
| Op . working capital |
116 5 , |
95 4 , |
|
| Other (liabilities) current assets |
(18 4) , |
(18 9) , |
|
| Net working capital |
98 1 , |
5 76 , |
|
| Tangible assets |
47 1 , |
47 6 , |
|
| Right of - IFRS 16/IAS 17 use |
22 3 , |
23 4 , |
|
| Intangible assets |
26 0 , |
23 9 , |
|
| Financial assets |
8 5 , |
8 1 , |
|
| Fixed assets |
103 9 , |
102 9 , |
|
| (liabilities) Net long term assets |
14 6 , |
14 2 , |
|
| Net invested capital |
216 6 , |
193 7 , |
|
| Cash (-) & cash items near |
(33 4) , |
(50 2) , |
|
| Short financial (-) term assets |
(17 8) , |
(16 8) , |
|
| - IFRS 16/IAS Lease liability 17 |
24 9 , |
24 5 , |
|
| Short borrowing term |
70 1 , |
59 3 , |
|
| Medium-long borrowing term |
89 3 , |
104 2 , |
|
| Net financial position |
133 1 , |
121 0 , |
|
| Equity | 83 5 , |
72 6 , |
|
| 5th August 2022 | Funds | 216 6 , |
193 7 , |
This presentation has been prepared by Tesmec S.p.A. ("Tesmec", the "Company" or the "Group"). As used herein, "Presentation" means this document, any oral presentation, the question and answer session and any written or oral material discussed or distributed during the presentation. The Presentation comprises written material/slides which provide information on the Company and its subsidiaries. The information contained in this Presentation has not been verified, approved or endorsed by or independently verified by any independent third party. Save where otherwise indicated, the Company is the source of the content of this Presentation. Care has been taken to ensure that the facts stated in this Presentation are accurate and that the opinions expressed are fair and reasonable. However, no representation or warranty, express or implied, is made or given by or on behalf of the Company, or the management or employees or advisors of the Company, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document or any other material discussed at the Presentation. None of the Company nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith.
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