Management Reports • Feb 21, 2020
Management Reports
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3-YEAR BUSINESS PLAN 2020-2022
1.1 OUR IDENTITY 1.2 SUSTAINABILITY 1.3 BUSINESS MODEL
GROUP STRATEGY THE 1 GROUP 2 3
2.1 CONTEXT 2.2 PERFORMANCE 2.3 STRATEGY 2.4 DIGITALISATION 2.5 INNOVATION 2.6 NETWORK
EXPANSION 2.7 ONE COMPANY
3.1 OUR FUTURE IN FIGURES 3.2 OTHER FIGURES 3.3 THE SHARE
1
1.1 OUR IDENTITY 1.2 SUSTAINABILITY 1.3 BUSINESS MODEL
1.3 BUSINESS MODEL
1.1
WITH OUR PEOPLE
3 -Year Business Plan
Biesse Group is a global leader founded in Pesaro in 1969 by Giancarlo Selci. Listed on the Borsa Italiana since 2001 – STAR The Group has a strong Italian identity and strongly believes in:
Biesse Group's vision is embodied by the word THINKFORWARD:
3 -Year Business Plan
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, 4 12 Intermac, Diamut, HSD.
3 -Year Business Plan
MAIN BUSINESS DIVISIONS
PRODUCTION SITES
We support our colleagues all over the world, using the most advanced management, sales and support systems. Our global network enables us to be always close to our customers.
3 -Year Business Plan
39
+300
SELECTED DISTRIBUTORS
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
CUSTOMERS IN
3 -Year Business Plan
We acknowledge that people 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 that are part of the Biesse family.
1.1 OUR IDENTITY 1.2 SUSTAINABILITY 1.3 BUSINESS MODEL PLANNING FOR A MORE SUSTAINABLE FUTURE
1.2
3 -Year Business Plan
All activities are carried out in recognition of the moral and social responsibilities that we have towards our stakeholders, in the belief that the achievement of sales objectives cannot overlook our values of honesty, integrity, fair competition and correctness in dealings with all our stakeholders, including shareholders, customers, employees, suppliers and local communities.
ECONOMIC SUSTAINABILITY
More than
300
persons involved in R&D activities
89%
of purchases by our manufacturing plants in Italy, India and China come from local suppliers
SOCIAL SUSTAINABILITY
95%
of employees have permanent contracts
+100K
hours of training provided to personnel during the course of 2019
3 -Year Business Plan
ENVIRONMENTAL SUSTAINABILITY
photovoltaic panels installed compared to the previous year
of waste products are non-hazardous
REDUCTION OF THE EMISSION IN THE ATMOSPHERE
-40% CO2 at least
* Through strategies of carbon footprint reduction aimed at utilising energy from renewable sources combined with energetic efficiency.
*C02 scope 2 market based
ISO 45001
3 -Year Business Plan
CERTIFICATION OF THE HEALTH AND SAFETY SYSTEM FOR BIESSE SPA
Biesse Spa has started the process of formalization and certification of the health and safety system in accordance with ISO 45001 international standards.
1.1 OUR IDENTITY 1.2 SUSTAINABILITY 1.3 BUSINESS MODEL
1.3
CUSTOMERS
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, implementation, installation and maintenance SYSTEMS 02 We design,
Through dedicated personnel, we provide professional pre-sale consulting services, and continuous after sales assistance to ensure the correct installation and start-up of machinery, software and Systems SERVICES 05
manufacture and deliver high-tech mechanical and electronic components for machinery Industry 4.0 ready MECHATRONICS 03
We have developed our software solutions by closely observing the work carried out by the customer every day, with simple interfaces, designed to make practical the everyday use of machines
We manufacture tools for the processing of glass, stone and ceramics. Synergies with the Glass & Stone Division have enabled the development of a range of tools that have become a benchmark in the market SOFTWARE 04 06
>67,000
3 -Year Business Plan
A wide and fragmented customer base with no risk of concentration. From small manufacturers to medium/large industries.
A wide and fragmented customer base with low risk of concentration
average 95
Large industries
20 10,000> (€/000) (€/000)
Sales per Client
Small-medium companies
n° of Clients
2.7 ONE COMPANY
MAIN THREATS
2.1
26
What will impact Businesses over next years?
Digital channels and technologies will significantly improve our interactions with business customers
significant opportunities to reduce cost
Digital will help us engage our partners like never before
HOW, WHEN, WHAT WILL IMPACT OUR BUSINESS
79%
85%
76%
Woodworking Machinery market will experience a decrease in demand also in 2020e.
In the period 2019-2022e the estimated CAGR in the reference market is approximately 0.8%
As highlighted by sector studies regarding the Biesse industries of reference (Acimall, VDMA, UCIMU), 2019 has witnessed a considerable cooling of the demand, following a positive cycle that lasted 4 years (2015-2018). In particular, for this wide sample basket of markets/companies, new orders intake between 2019 compared to the same period of 2018 is on average approximately -15%.
3 -Year Business Plan
2.7 ONE COMPANY
REVENUE
30
REVENUE PROFIT CASH 77 €/mln EBITDA Estimated
€/mln Net Financial Position Estimated (before IFRS 16 impact)
2.7 ONE COMPANY
STRATEGY
2.3
In the next 3 years, Biesse's strategy will be focusing on four main directives: the strengthening of our offering through Digitalisation and Product Innovation supported by the reorganization of the Company's processes and the extension of our sales network.
TARGETS
3 -Year Business Plan
Establish a new operating model Consistent management model
One Leadership Implement a global management model to foster the culture of a synergy-driven enterprise, enabling cross fertilization across Headquarters, Divisions & Subsidiaries
Strengthen the global leadership model to ensure a cohesive and independent Management Team
Shared tools & processes
Guarantee IT solutions to support the Company's global processes
2.7 ONE COMPANY
BIESSE SMART FACTORY
Solutions that allow manufacturing companies of the fourth industrial revolution to evolve technologically, combining human skill and experience with total production automation and interconnectivity.
with advanced technologies and services that can digitalise and automate factories and production processes, optimising all their main assets - whether technological, strategic, organisational or human.
3 -Year Business Plan
The use of Artificial Intelligence solutions and IoT technologies enable our clients to remotely activate and manage their manufacturing systems.
Biesse responds to the future
SOPHIA is a central hub of services connected to machines. The future objective is to evolve the platform into a centralised coordinator of services based on Artificial Intelligence.
3 -Year Business Plan
Smart Objects
Internet of Things
Machine Learning
"Focus on your work, Sophia takes care of the rest".
>2,000
Connected Machines by SOPHIA in 2019
>50,000
Carts Created on Parts, the Online and in-app SOPHIA Marketplace
1Hour
With SOPHIA the average response time for a machine downtime ticket is 1 hour in 80% of cases
of Customers in Italy and 70% worldwide have renewed the service
3 -Year Business Plan
SOPHIA Marketplace (Parts) by 2022
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.
Number of SOPHIA packages sold with new machines and renewal 2018-2022
Customer Experience is the driver of our Services growth on people competences, services solutions and customer care. We deliver performance as value
Expected Service Contribution* to Net sales in 2022
Service Academies to improve knowledge and productivity
Biesse Group Service processes evolve through Salesforce After the successful experience of the CRM project for the Sales Area, Biesse will also implement Salesforce in support of Service processes.
The new platform will provide a better user experience and will include new features to simplify and increase the efficiency of the daily activities of Contact Centres, Hot-liners, Planners, Field Technicians and Service Administration.
This is an important step towards providing our Customers with an ever-improving level of service in the management of customer requests, the planning of activities and resources, guidance in the execution of works, and for onsite reports on mobile devices.
It is a complete suite of advanced software tools, giving users access to cutting edge technology, offering endless possibilities.
It is a unique solution for managing furniture production from the 3D design phase to production flow monitoring.
B_CABINET FOUR, supplementary module, makes it easy to manage all the work phases with a click. It includes an environment dedicated to the real time monitoring of the progress of the production phases.
2.7 ONE COMPANY
CORE SEGMENTS MARKET 2019
We are in leading positions in our reference markets: Wood, Glass, Stone working machines. We want to consolidate our positioning fostering product innovation Entire market
3 -Year Business Plan
operate.
we operate.
a change in manufacturing processes that enables companies to accept the largest possible number of orders. This is coupled with the need to maintain high quality standards while offering product customisation with quick and defined delivery times, as well as responding to the needs of the most highly automated enterprises.
with the Batch-One project, aimed at innovating a wide range of Biesse's machines introducing advanced technologies to meet the need for total flexibility of medium and large companies.
Designed for the company that needs to diversify the production of small batches of panels according to market trends, the MDS (Measuring Dimensioning System) is an advanced technology that Biesse in introduced in edgebanding machines to perform Batch-one operations both simply and effectively.
WOOD 3 -Year Business Plan
Increase Group efficiency to strengthen our R&D focus on innovative solutions
Continue to innovate our product offering to meet Customers needs for more flexibility and easy-use machines (Batch-One, Stream B MDS).
Enlarge our offering of Full Liner products and machines integrated with our handling and storage solutions
Wood products sales estimated CAGR 2019-2022
Market estimated CAGR 2019-2021
0.8%
-7.7%
Market estimated
Market estimated CAGR 2020 - 2022 decrease 2020 vs 2019
+5.4%
Guidelines of the Action Plan
3 -Year Business Plan
Glass & Stone products sales Estimated CAGR 2019-2022
Glass & Stone products sales Estimated CAGR 2020-2022
3-Year Business Plan
STRONG FOCUS ON INDUSTRY 4.0 ORIENTED SOLUTIONS
Technological innovations developed to create automated and interconnected production.
AUTOMACTION – Automation for large Industries Thanks to the alliance of robotisation and the digital factory, production becomes interconnected and completely automated. This concept guides the creation of the digitised factory in large industrialised plants and represents the key to strengthening and increasing the production performance for large industry.
SMARTACTION – Automation for small and medium companies It is aimed at companies intending to look at digitalisation for the first time: it makes it possible to create a compact, connected and accessible factory, offering this opportunity to small and medium-sized companies that want to become more competitive in the market.
Systems target incidence on machines Net Sales in 2022
15.0%
Systems estimated CAGR 2019-2022
We will continue to innovate our product offering to expand our presence in new materials processing
Ceramics materials are innovative materials, created artificially using specific innovative technology.
3 -Year Business Plan
PRODUCT INNOVATION Guidelines of the Action Plan:
Continue product development on current portfolio and ideation of new processing techniques
Foster the development of new models to complete the current product range and expand towards new sectors
Encourage innovation, through new technologies, processes and applications to anticipate and reinvent more performing production solutions
In 2018 Biesse Group made its debut in the Ceramics sector.
The Group approached this new segment through
3 -Year Business Plan
NEW SEGMENTS MARKET 2019
2.6
We entered in new market segments, we want to continue to increase our market penetration.
Our competitors are mainly located in Germany and in Italy. The most important are Hundegger (market leader), HOMAG and Weinmann.
Our main competitors are KESSLER, IBAG, GMN, WEISS (Siemens), FISHER and STEPTEC.
Highly fragmented market, our main competitors are Geiss, Belotti CMS Industrie, Breton, Mecanumeric, and Multicam.
Guidelines of the Action Plan
Introduce our new products both in the high–end and the mid segment: RC, CLT and BM series
Structural Wood products sales Estimated CAGR 2019-2022
15%
3 -Year Business Plan
Leverage on Group Sales Network (Subsidiary and Trade) to boost sales in Key Markets
18 mln/€
2022 target in Structural Wood sector
Guidelines of the Action Plan
3 -Year Business Plan
Metal products sales estimated CAGR 2019-2022
Expand abroad in the Metal Working Machines market, especially in Asia and Western Europe markets
Strong focus on rotary tables (new product), that allows a more effective metal working process
Complete product portfolio for metal working machines
metal sector
Brand Awareness
3 -Year Business Plan
Guidelines of the Action Plan: Elegance
Lifestyle
Movement
Ideas
Protection
Increase brand visibility among large companies belonging to the aerospace, automotive and wind energy sectors
Reinforce the role of marketing in order to increase brand
Development of a new communication plan focused on
Advanced Materials application industries instead of its products
awareness in the Advanced Materials segment
Global Distribution Guidelines of the Action Plan:
Invest in commercial development, empowering our sales organization worldwide with special focus on Advanced Materials Key Markets
Adoption of dedicated go-to-market strategies for each market. Market attractiveness and Biesse penetration capacity will be evaluated, for each geographical area, in terms of product portfolio suitability, market needs and market value
3 -Year Business Plan
Advanced Materials products sales Estimated CAGR 2019-2022
mln/€ 2022 target in Advanced Materials
2.7 ONE COMPANY
A GLOBAL VISION
3 -Year Business Plan
We are securing the Group growth by a solid implementation of the One Company concept. The process is aimed at creating a culture in which employee self-interest and corporate self-interest intersect. The transformation is fostered by a global management model, based on structured and shared processes, supported by a matrix organizational model and guided by a cohesive and independent Management Team.
Global strategy, processes and tools unified worldwide
Share corporate values, processes, organization, tools
New global organization to optimize the work of our employees and strengthen the relation with our customers (common guidelines, PDP, …)
Deployment – One Service & One HR - step already achieved Global system to manage and support the main processes to standardize procedures among Headquarters and Subsidiaries.
3.1 OUR FUTURE IN FIGURES 3.2 OTHER FIGURES 3.3 THE SHARE
3
3.1 OUR FUTURE IN FIGURES 3.2 OTHER FIGURES
3.3 THE SHARE
2019e: Group orders intake -17% (vs. 2018)
3 -Year Business Plan
2019e: Group backlog -12.8% (vs. 2018)
| Net Sales | 3.2 Net sales % CAGR 2019e-2022 |
|
|---|---|---|
| EBITDA Margin >13 % 2022 Target |
Cost of good sold | 40 Target COGS % incidence on Net Sales |
| EBITDA 103 2022 Target |
Labour & Overhead cost |
<47 Target labour & Overhead % Cost incidence on Net Sales |
| €/mln | 70 |
Positive net cash flow (after dividends payment) EBIT
3 -Year Business Plan
*Before Non Recurring in 2019e and 2022
2019e results are expected to be impacted negatively by 9.5 €/mln of non recurring items 2022 results are expected to be impacted positively by Chinese plant divestment
€/mln - % 13 21 30 42 44 13 17 44 3,1% 4,1% 4,8% 6,1% 5,9% 1,8% 2,6% 3,8% 5,7% 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e Net Result Net Result % < 51.5% CAGR 2019e-2022e
2019e results are expected to be impacted negatively by 9.5 €/mln of non recurring items 2022 results are expected to be impacted positively by Chinese plant divestment
| €/mln | 2014 | 2015 | 2016 | 2017 | 2018 | 2019e | 2022e | ||
|---|---|---|---|---|---|---|---|---|---|
| Net sales year -1 |
427 +12.9% |
519 +21.5% |
618 +19.1% |
690 +11.6% |
740 +7.2% |
706 -4.6% |
CAGR 2014-2019 10.6% |
776 | |
| Cost of goods sold |
171 40.1% |
206 39.7% |
245 39.6% |
270 39.1% |
295 39.9% |
287 40,6% |
316 40.7% |
||
| Labour & Overhead cost |
219 51.3% |
253 48.7% |
301 48.7% |
335 48.6% |
359 48.5% |
350 49.6% |
364 46.9% |
<47.0% incidence on Net Sales |
|
| EBITDA % |
40 9.3% |
64 12.4% |
76 12.3% |
89 12.9% |
93 12.5% |
77 10.9% |
103 13.2% |
||
| EBIT % |
25 5.8% |
44 8.4% |
55 8.9% |
64 9.2% |
64 8.6% |
30* 4.2% |
70 9.1% |
*after non recurring items
before € 39.5 (5.6%) 2019e results are expected to be impacted negatively by 9.5 €/mln of non recurring items 2022 results are expected to be impacted positively by Chinese plant divestment
| €/mln | 2014 | 2015 | 2016 | 2017 | 2018 | 2019e | 2022e |
|---|---|---|---|---|---|---|---|
| Gross Cashflow | 38 | 46 | 47 | 74 | 53 | 42 | 68 |
| % net sales | 9.0% | 8.9% | 7.4% | 10.9% | 7.1% | 5.9% | 8.8% |
| Investments | -21 | -25 | -32 | -39 | -45 | -71* | -31** |
| % net sales | 4.9% | 4.9% | 5.2% | 5.7% | 6.1% | 10.1% | 4.0% |
| Net Cashflow | 17 | 21 | 15 | 35 | 8 | -29 | 38 |
| % net sales | 4.1% | 4.1% | 2.2% | 5.2% | 1.1% | -4.2% | 4.8% |
| Dividends | -4.8 0.18 per share |
-9.8 0.36 per share |
-9.8 0.36 per share |
-9.9 0.36 per share |
-13.1 0.48 per share |
-13.1 0.48 per share |
|
| * 34 €/mln IFRS 16 effect | IFRS 16 effect |
** Included Chinese plant divestment
IAS 17 effect
3 -Year Business Plan
3 -Year Business Plan
total capex value total capex % on sales
Main investments items in the plan period 2020-2022:
Components Cosmec (mechanical components) new plant and working centers
India – expansion of the manufacturing plant
Subsidiary Biesse America campus
Supply chain – investments in the logistics network
R&D capitalized
Divestment of the Chinese plant
| FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | |
|---|---|---|---|---|---|---|---|---|
| ITALY % of total people |
1,646 59% |
1,547 57% |
1,605 56% |
1,780 56% |
2,009 70% |
2,176 57% |
2,483 59% |
2,417 62% |
| OUTSIDE ITALY % of total people |
1,136 41% |
1,148 43% |
1,276 44% |
1,396 44% |
1,609 44% |
1,670 43% |
1,744 41% |
1,509 38% |
| TOTAL | 2,782 | 2,695 | 2,881 | 3,176 | 3,618 | 3,846 | 4,227 | 3,926 |
interim people at the end of Dec. 2019: nr 207 4,133
3.1 OUR FUTURE IN FIGURES 3.2 OTHER FIGURES 3.3 THE SHARE
MACROECONOMIC CONTEXT
3.2
Source: Bloomberg, IMF, WEO, January 2020, Biesse
Source: Bloomberg, IMF, CSIL, Biesse, Sector Experts January 2020
Furniture demand by countries
Furniture consumption. Countries grouped by geographical region, 2020. Forecast of yearly changes in real terms.
Source: CSIL 2019
3 -Year Business Plan
Building Investments comparing China, Italy, World
Source: CRESME 2019
Main furniture exporting countries 2015-2019
World trade of furniture and annual percentage changes.
China – Main furniture trading partners
| Origin of furniture imports | Destination of furniture exports |
||||
|---|---|---|---|---|---|
| Italy | 21,1% | USA | 38,4% | ||
| Germany | 13,2% | Japan | 5,5% | ||
| Vietnam | 8,1% | UK | 4,7% | ||
| Poland | 7,0% | Australia | 3,9% | ||
| Japan | 6,3% | Germany | 3,6% | ||
| USA | 5,9% | South Korea | 3,2% | ||
| South Korea |
3,8% | Canada | 3,2% | ||
| Taiwan | 3,0% | France | 2,5% | ||
| France | 2,7% | Hong Kong | 2,4% | ||
| Malaysia | 2,5% | Singapore | 2,0% |
3.1 OUR FUTURE IN FIGURES 3.2 OTHER FIGURES 3.3 THE SHARE
3 -Year Business Plan
3 -Year Business Plan
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