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Cherry AG Investor Presentation 2024
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Investor Presentation
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CHERRY ENTER EXCELLENCE
CHERRY SE
Q3/9M 2024
PRELIMINARY
FINANCIALS
MUNICH, 24 OCTOBER 2024
LEGAL DISCLAIMER
This presentation contains forward-looking statements.
These statements are based on the current views, expectations and assumptions of the management of Cherry SE and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those described herein due to factors affecting Cherry SE such as, among other things, changes in the general economic and competitive environment, capital market risks, currency exchange rate fluctuations and competition from other companies, and changes in international and national laws and regulations, in particular with respect to tax laws and regulations. Cherry SE does not assume any obligation to update any forward-looking statements.
The information contained in this presentation is for background purposes only and does not purport to be full or complete. No reliance may be placed, for any purpose, on the information contained herein or its accuracy or completeness. The information in this presentation is subject to change.
MARKET & INDUSTRY DATA
This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to the Company's industry, the Company's business and the market for the Company's products and its future growth. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of the Company's future performance and the future performance of the market for its products are necessarily subject to a high degree of uncertainty and risk.
GENERAL REMARK
Figures may not add up due to rounding.
Q3/9M 2024 OVERVIEW
CEO OLIVER KALTNER
CHERRY ENTER EXCELLENCE
OVERVIEW
IN Q3 WE MISSED OUR OWN EXPECTATIONS
- GOP too dependent on Germany
- Lackluster corporates and consumer spending
- Inadequate market assessment and insufficient channel management
- Components hit by weak notebook market
-
Order delays in Components
-
EUR 13 m revenue shortfall
- Adj. EBITDA margin negative instead of 5-6%
- EUR 6 m cash burnt in the quarter
Q3/9M 2024 FINANCIALS
EVP FINANCE & IT VOLKER CHRIST
CHERRY ENTER EXCELLENCE
Q3/9M 2024 FINANCIALS
Q3 P&L HIT BY MARKET UNCERTAINTIES
9M REVENUE
(IN EUR M)
- 9M revenue at EUR 84m
- Q3 revenue miss from GOP and Components
- Resulting EUR 6m gross profit hit led to impaired fixed cost coverage
- 9M adj. EBITDA at EUR -0.7m
- Q3 adj. EBITDA at EUR -3.1m instead on EUR 2m targeted
9M ADJ. EBITDA
(IN EUR M; MGN. IN %)
CHERRY ENTER EXCELLENCE
Q3/9M 2024 FINANCIALS
Q3 REVENUE AND ADJ. EBITDA SPLIT
REVENUE SPLIT (IN EUR M)
ADJ. EBITDA SPLIT (IN EUR M)
Rounding errors may occur
CHERRY ENTER EXCELLENCE
Q3/9M 2024 FINANCIALS
INVENTORY MANAGEMENT
INVENTORIES (in EUR m)
TRADE WORKING CAPITAL* (in EUR m)
- Inventories + Trade Receivables ./. Trade Payables
DIVISIONAL UPDATE
COO DR. UDO STRELLER
CHERRY ENTER EXCELLENCE
DIVISIONAL UPDATE: GAMING & OFFICE PERIPHERALS
10
GOP - STREAMLINING OF DISTRIBUTION VIA CLEAN-UP AND RAMP-UP
| WEAK Q3 REVENUE: | RESTRICTURING OF THE DIVISION: | GOP TASK FORCE TO EXECUTE ACTION PLAN: |
|---|---|---|
| > Germany in recession | ||
| > Negative consumer sentiment leads to reluctance to buy peripherals | ||
| > Sell-in at reasonable margin hardly possible | > GOP head left company; successor to follow as of Jan 2025 | |
| > Europe sales team reorganized | ||
| > Stronger focus on B2C | ||
| > New deal-term and margin model | ||
| > New electronic retailer partners | > Relationship scorecard | |
| > Synchronization of channels | ||
| > Revision of tender list | ||
| > Product shift from distributors to retailers and system-houses | ||
| DRYING UP OF THE GREY MARKET: | CLOSE COOPERATION WITH DISTRIBUTORS ON CEO AND OP. LEVEL: | ACCELERATE DISTRIBUTION TO NON-DACH MARKETS: |
| > Supported by Tier 1 distributors | ||
| > Buy back product from the gray market | ||
| > Reduction of price dumping and volatility | ||
| > Sell-in at list price with higher average margin | > Joint workshops | |
| > Clear channels by end of November to foster new orders | ||
| > Selective discussions on exclusive products | ||
| > Push business in core European countries | > European core markets France, UK, Italy Spain, Portugal, Nordics | |
| > Deemphasize Germany |
CHERRY ENTER EXCELLENCE
DIVISIONAL UPDATE: COMPONENTS
11
COMPONENTS - COST REDUCTION IN FULL EXECUTION
| China Operation update
- Samples already at major KB manufacturers
- Production at full capacity
- New MX2A toolings and plastic released for production in China since Sep
- Tooling and design improvements increased quality further and reduced manufacturing costs | R&D Pipeline
- Designs for new key switch technologies finished and filed for patent |
| --- | --- |
| Delayed order prepayment
- 50% received
- goods shipped at beginning of October
- Remainder to be collected and shipped in November | Major Q3 events with CHERRY participation
- China Joy, Shanghai
- Gamescom, Cologne |
CHERRY ENTER EXCELLENCE
DIVISIONAL UPDATE: DH&S
12
DH&S - CERTIFICATION MILESTONES
| MILESTONE SMARTLINK OFFERING: ➢ "Cardlink" product and provider certification started in Q3 ➢ Product certification obtained on Oct 14th ➢ provider certification expected early November | MILESTONE TI-M OFFERING: ➢ TI Messenger product and provider certification started in Q3 with partner Awesome Technologies ➢ Product certification obtained Oct 10th ➢ Provider certification expected early November | TERMINAL SALES: ➢ Continued high market share of >70% ➢ Market demand lower than Q1/Q2 as ePrescription driven demand largely addressed ➢ Rising new demand from new TI care provider groups |
|---|---|---|
| HYGIENE KEYBOARDS AND MICE: ➢ Solid demand sell-out in Q3 as expected in Europe ➢ First larger orders received in North America | EMBEDDED SOLUTIONS: ➢ ISO 9001:2015 passed: no major or minor non-conformities (NCs) ➢ Development of inductive key switch (IKS) ➢ Capra Robotics (DK) field tests with Cherry single board computer | STRUCTURAL SIMPLIFICATION: ➢ Upstream merger of Active Key GmbH into Cherry Digital Health GmbH completed |
OUTLOOK
CEO OLIVER KALTNER
CHERRY ENTER EXCELLENCE
OUTLOOK: MACRO ENVIRONMENT
TOUGH MARKET ENVIRONMENT
GERMAN GDP* EXPECTED TO SHRINK IN 2024 (in %)
INCREASING SAVINGS RATIO (in %)
CONSUMER CONFIDENCE** IMPACTED BY OVERALL MARKET UNCERTAINTY
- Statista on 27 Sep 2024: Average forecast of leading economic research institutes; ** GfK in Sep 2024
CHERRY ENTER EXCELLENCE
OUTLOOK: GAMING & OFFICE PERIPHERALS
GAMING PRODUCT LAUNCHES AT GAMESCOM
CHERRY ENTER EXCELLENCE
OUTLOOK: GAMING & OFFICE PERIPHERALS
NEW RETAIL PRESENCE AS OF Q4 2024
CURRYS UK
CHERRY ENTER EXCELLENCE
OUTLOOK: GAMING & OFFICE PERIPHERALS
RED BULL GAMING GARDEN SPONSORSHIP
NEW E-SPORTS HOTSPOT AT SAP GARDEN IN MUNICH TO BE EQUIPPED WITH XTRFY PERIPHERALS ... LOCATED UNDER CHERRY BLOSSOM TREES
CHERRY ENTER EXCELLENCE
OUTLOOK: COMPONENTS
18
ANALOG KEYSWITCH ENTERING THE MARKET
- Global Notebook market not yet recovering, thus limiting demand for ULP Notebook switches
- Analog keyswitch solutions increasingly gaining market share. MX-Multipoint announced at Computex in June 2024 and entered the market in Q3 2024. Further analog CHERRY solutions available in H1 25
- Mechanical keyswitch market still challenging with Chinese competition fighting over 0.1 cent cost differences
- Low Profile switches gaining more and more traction in the desktop market. MX LP 2.0 production just started
CHERRY ENTER EXCELLENCE
OUTLOOK: DH&S
DIGITAL HEALTHCARE SOLUTIONS GLOBALLY ON THE RISE
GLOBAL DIGITAL HEALTH MARKET
(in EUR bn)
Digital Fitness & Wellbeing
Digital Treatment & Care
Online Doctor Consultations
98% of German medical practices connected to TI
6 – 8 Digital medical consultations p.a. per average German
Source: KPMG, M&A sector expertise: Digital Health Market Update, H1 2024
CHERRY ENTER EXCELLENCE
OUTLOOK: DH&S
20
DIGITAL HEALTH MARKET TO GROW C. 10% P.A. UNTIL THE END OF THE DECADE
DIGITAL HEALTH MARKET REVENUE
EUROPE AND GERMANY (in EUR bn)
Source: KPMG, M&A sector expertise: Digital Health Market Update, H1 2024
CHERRY ENTER EXCELLENCE
OUTLOOK: DH&S
21
DIGITAL HEALTH - ROLL-OUT OF NEW SERVICES
FROM MARKET LEADING POSITION IN EHEALTH TERMINALS TO COMPLEMENTING NEW SW & SERVICE OFFERINGS
CURRENT PRODUCTS
Terminal Management System
Additional services
SmartLink
CHERRY ENTER EXCELLENCE
OUTLOOK: COST CUTTING
22
EUR 3.5M COST CUTTING PROGRAM INITIATED
| C. EUR 3.5 M TO
BE SAVED SEP
TO DEC 2024 | MARKETING | SERVICES |
| --- | --- | --- |
| IT PROJECTS | HR WORKSHOPS | HIRING FREEZE |
CHERRY ENTER EXCELLENCE
OUTLOOK: FY 2024
FY 2024 FORECAST
2024 REVENUES* C. EUR 120M
2024 ADJ. EBITDA* MGN. OF C. 3%
- Revised from a revenue range of EUR 140 – 150 m and an adj. EBITDA margin range of 7 – 8% previously
IR CONTACT
NICOLE SCHILLINGER
SVP INVESTOR RELATIONS
EMAIL: [email protected]
PHONE: +49 9643 2061 848
WEB: HTTPS://IR.CHERRY.DE
CHERRY
ENTER EXCELLENCE