Business and Financial Review • Mar 15, 2016
Business and Financial Review
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Our customers define the shape of the world, we make it possible.
STAR Conference Milan March 15th-16th, 2016
3-Years Business Plan
4-10 11-21 22-25 26-32 33-66 67-74 75-97 pages
Group description / Purposes & beliefs
Who / How / Where / With / We / Innovation / Reliability / Sustainability
Excellence / More revenue / More profit / More cash
Business model (production, delivery, products) / Customers
Strategy (wood, glass & stone, mechatronics)
The future in figures
Annex
Biesse Group is a global leader in the technology for processing wood, glass, stone, plastic, advanced materials and metal.
Founded in Pesaro in 1969 by Giancarlo Selci, the company has been listed on the Italian Stock Exchange (STAR) since June 2001. Starting from October 2015 Biesse is included in the Mid-Cap segment.
We believe in challenging standards, in thinking forward and in acting differently. Creating advanced technologies and beautifully -designed solutions is the key to transforming our beliefs into real value.
We shape our customer dreams.
Since 1969, we have tirelessly dedicated ourselves to creating value for our customers first and foremost.
"…back when we were simply producing machines, I was talking with a dear friend, and realised that the rough, imprecise way he was working was ineffective, and above all, dangerous to his personal safety. At that moment, I recognised a need for change, and immediately understood that we could do something - we could introduce innovative new ways of working, automate processes, and above all, create safer working conditions. A new kind of machine was about to be born".
Founder and CEO
0 1 Implementing lean production in order to fully satisfy customer requirements, increasing quality and reducing waste.
Understanding sector trends and deciding when and how to invest in order to grow. 0 2
Finding the best solutions ahead of competitors. 0 3
Anticipating customers' needs.
0
4
Forward-thinking automation and software solutions to help our customers leverage the fourth industrial revolution.
Orders processed on the same day. Custom-designed, integrated machines. Streamlined, intelligent warehousing. Impeccable quality and simplified processes without unnecessary costs.
| 1. | Who we are |
1.1 Group description In How Where With We |
11 12 13 14 15 16 |
1.2 Our Values Innovation Reliability Sustainability Excellence |
17 18 20 21 22 |
1.3 Our Business Model Knowledge Delivery Products Customers |
26 27 28 29 30 |
|---|---|---|---|---|---|---|---|
| 2. | Evolution journey |
2.1 More products Wood Glass & Stone Mechatronics Advanced Materials* |
35 37 39 42 48 |
2.2 More solutions Service Systems bSuite |
50 52 53 55 |
2.3 Biesse Customer Experience Close to customers Feeling the products Total Care Predicting your needs |
57 58 61 64 65 |
| 3. | Our future in figures |
3.1 More revenue Annex |
68 75 |
3.2 More profit | 70 | 3.3 More cash | 71 |
1.1 Group description 1.2 Our Values 1.3 Our Business Model
1.
We manufacture machines and components for wood, glass, stone, plastic and metal processing through specialised business units and 8 manufacturing sites in Italy and worldwide.
industrial group
1
business divisions
production sites
8
Growing investments in R&D have enabled us to create software programs that have simplified the management of CNC machines, improving our customers' processes revolutionising market standards.
13
3-Years Business Plan 2016 - 2018
more than
200 patents duly registered
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.
34
branches and representative offices
agents & certified dealers
3-Years Business Plan 2016 - 2018
Our Human capital.
more than
3,150
employees throughout the world (temporary workers included)
Our Values 2016-2018 3-Years Business Plan
Our values /
meets creativity.
Customer focus Internet of Things Digital Manufacturing Industry 4.0 / Think4ward
Biesse, the perfect combination of innovation and italian creativity.
Our values /
generates value.
Our values /
to enhance trust and compliance.
Satisfied Customers
Trusted & Loyal Partners
Winning & Committed Employees
Growing & Qualified Investors
Our values /
to get widespread goodwill and strong reputation.
2016-2018 3-Years Business Plan
Society Environment People Regulation Financial
Only the culture of strictly adherence to good compliance can keep our Group ahead on sustainable basis.
for a consistent growth.
Wood
Glass
Stone
Mechatronics Metal
bSoft (software)
23 Plastic & Advanced Materials
We make top-quality Italian products
We deliver top-quality, dedicated solutions worldwide Knowledge Delivery Products Customers
Our Business Model / Italian creativity and knowledge district
On Machineries sold
Our Business Model / Global presence and network
Our Business Model / Wide offering for a wide customer base
We create engineered solutions, from plant design to production, implementation, installation and maintenance
Systems
02
WOOD
PLASTIC
01
04
We design, manufacture and distribute a comprehensive range of machinery and technologies for processing wood, glass, stone and, in recent years, plastics.
We create customized diamond and binder mixes for stone and glass processing machinery.
We design, manufacture and deliver high-tech mechanical and electronic components for machinery.
03
29
Our Business Model
| Ikea | Lube Cucine |
|---|---|
| Howdens | Lago |
| Masonite | Fiam |
| Colombini Group |
Onsrud |
| Veneta Cucine |
Heian |
| Roland Gerling |
Joiners
Makers of large furniture items
Wood building companies and manufacturers
Windows and doors
Saint Gobain Pilkington Fidia Glaströsch Cosentino Sauder
2.1 + Products
2.2 + Solutions
2.3 + Customers
Evolution journey
-2018 3 -Years Business Plan
We reinforced our industry -leading position, increasing our market share in the actual products segment.
We successfully introduced electrospindles and electroheads for machine tools for metals.
We enhanced our product offering and became more competitive on the market.
We successfully transferred our product knowledge to the new business unit and achieved great results.
Wood Division Estimated CAGR 2015 -2018 4 % Market Estimated CAGR 2015 -2018 10 % Mechatronics Unit Estimated CAGR 2015 -2018 5 % Market Estimated CAGR 2015 -2018 12 G&S Division Estimated CAGR 2015 -2018 7 % Market Estimated CAGR 2015 -2018 78 % Plastic & A.M. Division Estimated
CAGR 2015
-2018
Targets
Our strategy in action Think
2016 -2018 3 -Years Business Plan
Enhance R&D for innovative solutions (technologies and new materials)
completion of the range of machines
0 2
0
1
0 3
Improve product reliability, renew existing 4ward product range
Expand the product range: renovation and
9 %
Wood Division Estimated CAGR 2015 -2018
4 %
Market Estimated CAGR 2015 -2018
37
Market
38
Estimated worldwide market share 2015
Market Size
Whole market potential
€3.3bn
2015
Looking forward, we expect the market to continue grow at about 3.7 times the reference sector average growth rate.
The competition in the current market is consolidated. We are the second leading company in the sector. Main competitors are located in Germany and in Italy. The most important of these are HOMAG (29% estimated market share) and SCM (7% estimated market share).
CUSTOMERS
Strategy in actions Think4ward
Targets
2016-2018 3-Years Business Plan
01 Maintain and reinforce our leading position in the glass sector
02
Expand our offering in new product segments
03
Increase our market share in the stone segment, reinforcing our leadership in this area
12%
G&S Division Estimated CAGR 2015-2018
7%
Market Estimated CAGR 2015-2018
39
In the near future, we anticipate that the glass processing market will grow at about 3.7 times the reference sector average growth rate.
We are currently the industry leader in the glass processing market in which we operate. Main competitors are located in Italy and they are CMS, Bottero, and Hegla.
CUSTOMERS
Ciudad de las Artes y las Ciencias (Valencia)
Market
Estimated worldwide market share 2015
Whole market potential €600mln
Outlook
Looking to the future, as the in the wood sector, we expect the market to continue to grow at about 3.7 times the reference sector average growth rate.
The competition in the current market is consolidated. We are among the leading companies in the sector and we intend to reinforce our positioning. Main competitors are located in France and in Italy and they are CMS, Breton and Thibaut.
CUSTOMERS
"Bicefalo" marble sculpture Marmi Fontanelli
2016-2018 3-Years Business Plan
41
Strategy in actions Think4ward Maintain and reinforce our leading positioning in the Wood- Aluminum- Plastic (WAP) sector
02
01
Reinforce our partnership with our current customers
03
Diversify into other sectors, continuing to expand our presence in the metal sector and replicating our WAP standards of excellence in new sectors
10%
Mechatronics Unit Estimated CAGR 2015-2018
5%
Market Estimated CAGR 2015-2018
Targets
Strategy in numbers Focus Metal Sector
Targets
2016-2018 3-Years Business Plan
5,6 mln/€
2015 target
15 mln/€
2018 target in metal sector
6,7 mln/€ 2015e Result
+19,7%
on target
Our expansion in the metal segment has shown that we have the capabilities to successfully extend our areas of competence and compete in new sectors.
We will continue to invest in R&D in order to identity new product expansion opportunities in other sectors.
Estimated
2015
share 2015
worldwide market
Market Size
Whole market potential (WAP + Metal + G&S)
€1.1bn
In the near future, we anticipate that the spindles market will grow in line with the reference markets of WAP and metal working machines.
CUSTOMERS
Our mechatronics division is currently the leader in the WAP (Wood Advanced Materials*, Plastic) spindles sector. We recently entered the metal spindles sector. Our main competitors are from Germany. They are KESSLER, IBAG, GMN, WEISS (Siemens), FISHER PRECISE and STEP TEC.
*Advanced
Markets
materials Carbon Fiber
Foam
Composite
Alluminium Titanium
44
2016-2018 3-Years Business Plan
Competitive Advantage Offering structure Offering
Biesse Group directly designs and manufactures all high-tech components for its machines. Through our Mechatronics Unit, we guarantee our technological independence.
The vocation of our Mechatronics Unit is continuous innovation. Until a few years ago, our business activity was focused on creating and selling mechanical components.
Our devices interact with the machinery to support predictive logics with regard to functionality, performance and preventive maintenance of the machines, and of the factory as a whole.
our technologically-advanced offering, our ability to introduce innovation into the market. These are our Competitive Advantages.
Sector
Offering structure
Our Mechatronics Division is the trailblazer for expansion into new sectors.
materials* & plastic processing machinery sector, thanks to our dedication to constant
Through our capability to create top-quality solutions, we also successfully entered the metal electro-spindles sector.
Our Mechatronics Division is the key to breaking into new sectors
We successfully entered the advanced innovation. Diversification and diversifying our business. Offering
Offering structure Product Innovation
Offering
We combined 2 Axis Heads and Direct Drive Technology
01
We will introduce new electrospindles models to enhance our offering in the metal sector
Strategy in actions Think4ward
Targets
3 mln/€ 2015 target +16,7% On target 3,5 mln/€ 2015e result
Our successful entry into the plastic & advanced materials sector confirms our capability to diversify into new sectors through our innovative Mechatronics Division and our consolidated expertise.
20 mln/€ 2018e target
In the future, we will expand our product offering in order to meet the needs of the entire market.
0.8 bln
Whole market potential
0.9
%
€
Outlook
In the near future, we expect that the market of Advanced Materials* processing where we insist will double around the GDP grow rate.
The plastic processing machinery market is highly fragmented worldwide and there are not the same number of companies as in the woodworking machines sector (CMS Industrie - Multicam - Flow Corporation).
CUSTOMERS
49
We are continually strengthening our services worldwide. We continue to invest in the training of our engineers, in order improve the level of service we deliver
We have successfully adopted a Lean Production approach, and have implemented an order management system which covers each stage, from sales to installation.
We have successfully developed new tools to satisfy the majority of our customers' software requirements with a single, integrated solution.
Our new targets
2016 -2018 3 -Years Business Plan
To evolve to Service 2.0: from a "break and fix" approach to a predictive service
To increase our market share in the system solutions market.
To begin to profit from software fees on a yearly basis.
Strategy in actions Think 4ward Our network supports our customers worldwide. Through Biesse service and Biesse parts, we offer technical services and machine/component spares to businesses anywhere in the world on -site, as well as on -line - 24/7.
18,5 % 2018 Target
incidence on Net Sales
Targets
Targets
Strategy in actions Think 4ward 2016 -2018 3 -Years Business Plan
We want to reinforce our positioning and increase our market share, becoming a leading company in the engineering solutions sector.
65 mln/ €
2015e results
2018 Target incidence on Machine Sales
%
20
Strategy
Biesse Systems is a team of sector experts, capable of understanding and anticipating business needs, who work with the customer from inception through to system installation and testing.
From engineering to the manufacturing, from the installation to the after-sales support, we are able to realize complete solutions for our Clients.
01 Boost our sales and after-sales approach
02 Ensure dedicated and highly-specialized services with key accounts for 360-degree customer management
Enhancing our offering of flexible systems
03
Offering
Targets
Offering structure Think 4ward 2016 -2018 3 -Years Business Plan
Consolidation, reliability and rationalization. Superior technology for creating synergies in machine automation.
Technological superiority and sustainability. Ensuring advanced, sustainable know -how in order to develop intelligent machines.
0 3
Simple, smart software. Meeting growing technological needs through application software and smart apps.
0 4
0
0
1
2
Business software. Business -oriented software to enhance collaboration with our customers' businesses.
0,5 Potential Software Fees contribution to Net Sales % 55
Offering structure bSuite Platform
bPlatform Challenging market standards. furniture design. Offering
bSolid is a 3D cad cam software application
bEdge is a bSuite plug -in, seamlessly integrated for edgebanding planning.
bWindows is a seamlessly integrated plug -in for the planning of windows/door frames.
bNest is the bSuite plugin specifically for nesting operations.
bProcess is the tool that allows in a simple and intuitive way to organize production for a cell of machines.
bCabinet is the bSuite plugin for
Our strategy in action
companies that build houses, companies that build furniture, companies that build windows,
companies that build the shape of the world.
Trade
We want to strengthen our dealer network - this is crucial in helping us to engage our clients. 58
BCx
Continue the Trade Markets Investments towards the "Roadmap to success".
Increase market share
01
Hire dedicated resident key account managers & skilled sales force
03
Focus on growing customers through a production upgrade
Strengthen the dealer network and increase the integration
2016 -2018 3 -Years Business Plan
Continue to promote the "Roadmap to success" for our subsidiaries: moving from reactive to proactive, fostering entrepreneurship at all levels, defining market and customer -oriented strategies
Create 3 new Clusters of business:
New more "aggressive" Sales Matrix
0 4
0
0
0
1
2
3
Invest in human resources and capabilities as growth drivers
The production abroad is constantly growing in India & China.
BCx
We want to continue increase our production in 01 the Chinese and Indian facilities.
Local4Global: we want to increase the percentage of production exported 0 worldwide from Asian production sites.
2018 Target 20% production abroad quote
Overseas
In order to create a 360-degree experience for our customers worldwide, we have designed a roadmap that will help us to increase brand awareness, engage our customers and improve the Biesse customer experience.
BCx
2016-2018 3-Years Business Plan
Continue to improve our Showroom, increase the number of events, demos and "Insider"-dedicated events held.
Improve and strengthen existing showroom events and measure their impact on the local market.
6.600m2
Headquarters Showrooms (wood + glass & stone) 18.000m2
Showrooms worldwide
We want our customers to see how our products work. We want our customers to touch our products, to understand how they can satisfy their needs. We want our customers to live the Biesse Experience.
BCx
We must be forever present in our sector, and ensure that we are the best.
Increase the number of events on specific materials for specific audiences ("Made In Biesse")
We want to show our incredible solutions around the world.
Fairs and exhibits worldwide
By demonstrating the perfect functionality of our products and engaging our customers through training and events, we will spread the Biesse Experience worldwide.
BCx
Nominating "Best Dealers" and "Best Customers" is another way to engage our entire customer base and show how our products work locally through trade shows, dealer openhouse events and Tech Tour plan.
Customers and dealers taking part in training on Biesse Products, and how they can exploit the full potential of these.
We want to engage our customers with dedicated events on specific materials.
Demos per Year
Our Total Care package not only contributes to building long-term relationships with our customers - it also exceeds the standards of the packages offered within the industries in which we operate.
Total Care is a multi-year Warranty and Financial Plan currently testing in UK and Canada.
Total Care is definitely not a 'marketing tactic' –it is a long-term strategy designed to make dealing with Biesse an easy, enjoyable and rewarding experience.
Total Care enables customers to run their business. Cover for preventive maintenance, breakdowns and even damage due to operator error are all included.
03
04
05
Our multi-years warranty is based on our excellent machine reliability statistics.
The cost of ownership and the risks normally associated with purchasing and operating capital plants are minimized.
At the end of the 5-year plan, customers can decide to upgrade to a new machine, and the original machine is placed on the second user market, with the benefits of a full service history and increased value.
We make Smart Factory of our Customers. 2016-2018 3-Years Business Plan
We offer innovative solutions with high levels of flexibility, not only thanks to our production logic, but also the ability of our machines to adapt to customer requirements in accordance with the increased availability of information (IoT).
The Internet of Things, transformed from a simple resource to a central element of the Customer Value Chain.
In 2013 we were the first to introduce smart devices to the Wood- Aluminum- Plastic (WAP) sector.
Our working approach evolved from a break-and-fix logic to a more advanced, predictive logic.
Now we want to drive our Customer into the Future.
3.
3.1 More Revenue 3.2 More Profit 3.3 More Cash
More Revenue
2015: Group orders intake +17,8% (vs. the same period 2014)
2015: Group backlog December 2015 +21,5% (vs. the same period 2014)
Ebitda
Continue to strictly control our Operating Net Working Capital.
Capex
Main Investments drivers
ROE
2016-2018 3-Years Business Plan
77
| Annex | |||||||
|---|---|---|---|---|---|---|---|
| Extract of the P&L | Growth Rate without FX effect |
||||||
| €/mln | 2013 | 2014 | 2015 | +17% | 2018e | Targets | |
| Net sales year -1 |
378,4 -1,2% |
427,1 +12,9% |
519,1 +21,5% |
CAGR 10.7 | 704,2 +11,2% |
decrease COGS incidence % on Net Sales of 1.2% |
|
| Cost of good sold |
156,5 41,4% |
171,2 40,1% |
206.1 39,8% |
271,8 38,6% |
through footprint optimization and efficiency |
||
| Value added |
143,5 | 169,1 | 212,4 | 298,6 | |||
| % | 37,9% | 39,6% | 40,9% | CAGR 12,0% | 42,4% | ||
| Labour cost |
112,7 29,8% |
128,2 30,0% |
148,2 28,6% |
203,,0 28,8% |
< 29% incidence |
||
| overhead | 81,4 21,5% |
89,7 21,0% |
104,7 20,2% |
136,0 19,3% |
< 20% incidence |
||
| EBITDA | 30,9 | 40,9 | 64,1 | 95,6 | |||
| % | 8,2% | 9,6% | 12,4% | CAGR 14.2 | 13,6% | ||
| EBIT* | 18,1 | 26,5 | 43,8 | 71,6 | |||
| 78 | % | 4,8% | 6,2% | 8,4% | CAGR 17,9% | 10,2% |
* before non recurring items
| €/mln | 2013 | 2014 | 2015 | 2018e | Targets |
|---|---|---|---|---|---|
| Inventories % net sales |
22,8% | 23,0% | 21,5% | 19,4% | <22% |
| Receivables % net sales |
20,1% | 18,9% | 20,3% | 19,1% | DSO 60 days |
| Payables % net sales |
29,4% | 28,8% | 29,5% | 26,6% | DPO 110 days |
| Operating Net Working Capital % net sales |
51,4 13,6% |
55,6 13,0% |
63,4 12,2% |
83,5 11,9% |
|
| €/mln | 2013 | 2014 | 2015 | 2016e | 2017e | 2018e |
|---|---|---|---|---|---|---|
| Gross Cashflow % net sales |
52,1 13,8% |
38,3 9,0% |
46,1 8,9% |
64,1 9,1% |
||
| Investments % net sales |
-19,9 5,2% |
-20,8 4,9% |
-25,2 4,9% |
-25,0 3,5% |
||
| Net Cashflow % net sales |
32,3 8,5% |
17,5 4,1% |
20,9 4,0% |
39,1 5,6% |
||
| dividends | -4,8 0.18 per share |
-9,8 0.36 per share 71% of 2014 net result |
Target Dividend |
|||
| Δ Net Debt |
12,7 | 11,1 | Payments 40% of Net |
|||
| Net Debt | -23,9 | -11,2 | 0,1 | Result | 44,3 | |
labour cost labour cost margin
203,0
Labour cost
34,6% 32,9%
Annex
€/mln - %
87
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2018e | |
|---|---|---|---|---|---|---|---|
| Production % of total people |
965 41% |
1.250 46% |
1.265 45% |
1.175 44% |
1.201 42% |
1.335 42% |
|
| Service & After sale % of total people |
568 24% |
577 21% |
574 21% |
613 22% |
628 22% |
690 22% |
|
| R&D % of total people |
293 12% |
316 12% |
338 12% |
321 12% |
361 13% |
383 13% |
|
| Sales & Marketing % of total people |
340 13% |
361 13% |
364 13% |
351 13% |
439 15% |
495 15,6% |
|
| G & A % of total people |
202 9% |
233 9% |
242 9% |
235 9% |
252 9% |
273 9% |
|
| ITALY | 1660 | 1.656 | 1.646 | 1.547 | 1.605 | 1.780 | |
| % of total people |
70% | 61% | 59% | 57% | 56% | 56% | 50% |
| OUTSIDE ITALY | 708 | 1.081 | 1.136 | 1.148 | 1.276 | 1.396 | |
| % of total people |
30% | 39% | 41% | 43% | 44% | 44% | 50% |
| TOTAL | 2.368 | 2.737 | 2.782 | 2.695 | 2.881 | 3.176 |
2016-2018 3-Years Business Plan
Annex
Source: CSIL furniture demand (world) - CRESME / SIMCO GDP and new housing (world)
World GPD 2016-2018 +3,8%
Consolidated net sales CAGR 2016-2018 +10,7%
+2,9%
Furniture 2016-2018
Housing +2,9%
%
2016-2018
2016-2018 3-Years Business Plan
95
(historical basis)
* world"furniture" 2016-2018: +2,9% world"new housing residential" 2016-2018: +2,9% world furniture & housing average 2016-2018: +2,9%
«During the year that has just ended, we saw an increase in production of 7.2%, once again characterized by a growth of the export sector to the tune of 6.8%. A positive result was also achieved by the domestic sector, which is clearly recovering from the recent challenges suffered. With regard to expectations for 2016, Acimall anticipates a growth of between 5-10%, conditioned, as ever, by the results of the planned policies of incentivization».
Press release dated December 16th, 2015 - Extract
«Excellent results were seen for the year 2015, with an increase in production of 12.2%, while consumption of machine tools increased by 31.3% compared to 2014. This was driven in particular by domestic demand, which increased by 45.4% (again compared to the results achieved in 2014) . For 2016, welcomed by many as a good year for the Italian manufacturing industry, an increase in production of 7.2% is anticipated, with particular emphasis on the export sector, which is up by 6.6%. As with other production segments, the contribution expected in the wake of the proposed tax relief legislation (tax incentives) is a decisive factor».
Italian machines tools, robots and automation manufactures association
Press release dated December 15th, 2015 - Extract
2016-2018 3-Years Business Plan
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