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Schouw & Co. Investor Presentation 2021
3383_rns_2021-03-05_b8d498f5-d292-499d-be98-8c61d1363358.pdf
Investor Presentation
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INVESTOR PRESENTATION
5 March 2021
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Annual Report 2020
The conglomerate shows it strength
INTRODUCTION
A portfolio of six strong businesses
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INTRODUCTION
The strength of the conglomerate
Long-term and visionary
Taking risk and investing long-term
Results are created by people
Creating returns in a proper and trustworthy manner
Patient, but demanding
Ownership through and with the management teams
Active ownership enabling long-term and responsible transformation
Making every penny count
Industrial mindset and operational streamlining
A relevant owner
Continually adapt and safeguard reputation and values
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2020 STATUS
Strong earnings and cash flow in 2020
Revenue DKKbn
Growth in unprecedented year
EBITDA DKKm
Strong uplift in profitability
Cash Flow Op. DKKm
Very strong cash flow generation
NWC DKKm
Solid decline in Net Working Capital
ROIC ex GW per cent
Return back above target
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2020 STATUS
2020 was a very unusual year
STARTING POINT
- A portfolio of strong and well-invested businesses with solid prospects
- Solid capital structure with room to seek opportunities and sustain the long-term momentum
- From an overall perspective, well underway to achieve its strategic goals both short and long term
POSITIVE FACTORS IN 2020
- Lower prices of raw materials leading to temporary income flows in the Fibertex businesses
- Lower costs due to less travel activity, reduced marketing, etc.
- Demand for PPEs and hygiene products increasing volume sales, enhancing efficiency at the Fibertex businesses.
A TURBULENT YEAR
- BioMar successfully ran in production at the new factory in Australia, completed building a factory in China and signed agreement to start operations in Vietnam
- Fibertex Personal Care delivered EBITDA of more than DKK 400m and approved investments in Malaysia and the USA
- Fibertex Nonwovens lifted earnings to highest level ever, driven by high capacity utilisation
- GPV had positive effects from large order for ventilators
- HydraSpecma saw negative impact of coronavirus in Sweden, but with offsetting effects from efficiency improvements and growth in wind business.
- Borg Automotive completed acquisition of TMI in Spain and implemented substantial adjustment of workforce in Poland.
CONGLOMERATE STRENGTH
- In a year of unprecedented events the conglomerate model showed its strength
- Schouw & Co.'s strategy unchanged: focus remains on long-term growth and transformation
- Capital resources and management resources in place for sustained growth and development.
NEGATIVE FACTORS IN 2020
- Corona-driven lockdowns have challenged efficiency and limited demand, especially in the automotive segments
- Lower exchange rates to DKK, especially in Norwegian kroner and US dollars, have reduced revenue by more than DKK 600 million.
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2020 STATUS
Strong NWC development in 2020
Schouw & Co. Group NWC DKK million, %
NWC — NWC% of sales
- Net Working Capital decreased by more than DKK 600m in 2020
- Key focus area across all businesses and management teams
- Use of Supply Chain Financing unchanged from 2019 to 2020
- Effect from lower raw material prices in 2020 compared to 2019
- DKK ~60m from extended government payment terms and Y/Y effect from lower FX of DKK ~100m
BioMar
FPC
FIN
Figures in DKK million
GPV
HydraSpecma
Borg
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2020 STATUS
Significant NIBD reduction in 2020
Net Interest-Bearing Debt DKK million
Significant net debt reduction following strong cash generation and low M&A and capex activity
Notes: 1) Adjustments to EBITDA relate to provisions and divestments
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2020 STATUS
Capex set to increase in 2021
Figures in DKK million
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- 2019 marked the end of a major investment program and 2020 capex was lower than recent years
- 2021 capex will pick up on development initiatives and form the basis for new growth
- Major projects are FPC's line 9 expansion in Malaysia (total DKK ~250m in 2020-21) and FIN's two new spunlacing lines in Europe and US (total DKK ~550m in 2021-22)
BioMar
FPC
FIN
GPV
HydraSpecma
Borg
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OUTLOOK
2021 guidance
Profit DKK million
| 2021E | 2020R | |
|---|---|---|
| BioMar | 950-1,020 | 972 |
| Fibertex Personal Care | 320-360 | 406 |
| Fibertex Nonwovens | 220-250 | 270 |
| GPV | 220-250 | 271 |
| HydraSpecma | 210-230 | 211 |
| Borg Automotive | 130-150 | 108 |
| Other | -35 | -29 |
| Total EBITDA | 2,015-2,225 | 2,209 |
| PPA depreciations | -85 | -89 |
| Other depreciations | -775 | -744 |
| Total EBIT | 1,155-1,365 | 1,376 |
| Associates etc. | 40 | -36 |
| Divestments | - | 2 |
| Other financial items | -90 | -133 |
| Profit Before Tax | 1,125-1,315 | 1,209 |
Revenue DKK million
| 2021E | 2020R | |
|---|---|---|
| BioMar | c. 12,000 | 11,649 |
| Fibertex Personal Care | c. 2,200 | 2,118 |
| Fibertex Nonwovens | c. 1,850 | 1,791 |
| GPV | c. 2,700 | 2,887 |
| HydraSpecma | c. 2,100 | 1,977 |
| Borg Automotive | c. 1,050 | 871 |
| Other | - | -19 |
| Total Revenue | c. 21,900 | 21,273 |
Depreciations DKK million
| 2021E | 2020R | |
|---|---|---|
| BioMar | 348 | 335 |
| Fibertex Personal Care | 138 | 137 |
| Fibertex Nonwovens | 103 | 104 |
| GPV | 120 | 120 |
| HydraSpecma | 94 | 88 |
| Borg Automotive | 56 | 48 |
| Other | 1 | 1 |
| Total Depreciations | 860 | 833 |
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PORTFOLIO COMPANIES
BioMar: Solid '20 despite corona uncertainty
A global leader in quality feed for aquaculture focusing on responsible use of sustainable raw materials, food safety and traceability in the entire value chain
Solid 2020 with 5% growth in volumes despite corona
- FY volume growth, especially in salmon (Norway, Chile, Australia)
- Corona uncertainty throughout most of the year
- Q4 profitability declines due to difficult markets in Chile and Ecuador
- Ramping up in Australia and China
- NWC declines DKK +350m following reduced receivables and inventories
- ROIC solid at 18.4%
- Innovative products/concepts and close collaboration with customers
Uncertainty continues in 2021, but strong growth platform
- Some degree of normalisation in HoReCa demand expected
- Volumes expected to increase in '21
- Deal signed for majority ownership of Vietnamese shrimp feed factory
- Investments in IT and technological innovation
- Continue improvements in the salmon markets/Norway
- Significant improvement in associate Salmones Austral expected
Revenue DKK billion
EBITDA DKK million
CAGR
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PORTFOLIO COMPANIES
Salmon prices
Fresh Norwegian Atlantic Salmon gutted (NOK/kg)
Fresh Chilean Atlantic Salmon fillets (USD/kg)
Source: Kontali
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PORTFOLIO COMPANIES
FPC: Volume increase and high efficiency
Market leader in spunbond fabrics used in hygiene applications improving everyday health and well-being for millions of people worldwide
Very strong 2020 with high capacity utilisation
- Nonwovens volumes up +10% leading to full capacity utilisation
- Significant effect of FX in contracts and raw material prices in Q1-Q3
- Print volumes up almost 20% with print being 17% of revenue
- Certified circular PolyPropylene
- Expansion in Malaysia with new nonwovens line
- US print still loss-making but volumes ramping up and second line ordered
- ROIC reaching 18.3%
Current demand pattern expected to in 2021
- Increasing raw materials will have significant negative impact in 2021
- Good demand outlook in both Asia and Europe
- Focus on innovation, speciality products and post-treatment applications
- Increase in revenue solely from higher raw materials which similar has a negative EBITDA impact
Revenue DKK billion
EBITDA DKK million
CAGR
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PORTFOLIO COMPANIES
FIN: New profitability level
Leading manufacturer of lightweight non-woven fabrics used e.g. to reduce $CO_2$ emissions in cars, to improve global infrastructure, in wipes and in filtration to secure clean air
Strong 2020 after strong product mix and efficiency
- FY revenue up 5%, and 28% in Q4
- Surge in sales of filtration materials and nonwovens for disposable wipes
- Sales to automotive below 2019 level
- Both sites in the US performing extremely well
- Break-even in South Africa
- Favourable raw material positions and developments effect DKK ~45m
- Strong NWC management
- ROIC up to 12.2% (from 3.1%)
Negative raw material impact expected in 2021 profitability
- Rationale behind recent years of investments and expansion confirmed
- Very strong outlook in wipes market paves the road for a significant spunlacing investment program
- Raw materials currently in shortage with surging prices – negative profit impact as price increases takes time
- Strong demand for filtration materials
- Potential to increase profit and return medium and long-term
Revenue DKK billion
EBITDA DKK million
CAGR
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PORTFOLIO COMPANIES
Fibertex: Surging raw material prices in 2021
Polypropylene ICIS (EUR/ton)
Viscose PCI China (USD/kg)
Virgin PET PCI China (USD/kg)
14 2021R 2020R 2016-2019R
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PORTFOLIO COMPANIES
GPV: Very strong finish to 2020
European top 10 EMS company serving global industrial and cleantech customers from Asian factories with significant better-than average health & safety and working conditions
Very strong end to a very unusual year
- 1% improvement in FY revenue
- Reduced demand in certain markets and segments since Q2
- Very strong sales to MedTech with ventilator order of DKK +200m
- Tight cost management and FTE reduction
- CCS integration completed
- Inventory management lowers NWC
- ROIC increases to 11%
2021 profitability without effect of ventilator order
- Strong European market coverage in both Scandinavia and DACH
- Factory footprint optimisation
- Expanding big Asian sites in Thailand and Sri Lanka
- Solid customer pipeline management
- General uncertainty to affect customer demand in 2021
- 2021 revenue guidance below 2020
- Component shortage to increase inventories and affect profitability
Revenue DKK billion
EBITDA DKK million
CAGR
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PORTFOLIO COMPANIES
HydraSpecma: High activity in wind segment
Leading Nordic Power & Motion hydraulic component and solutions specialist servicing wind turbine and other cleantech customers globally
Significant corona impact but strong sales to wind segment
- FY revenue down 7%, however Q4 revenue up 1% Y/Y
- Strong sales to wind throughout 2020 with sales ~30% of total revenue
- Vehicles and mobile OEM affected by lockdowns and declining demand
- EBITDA margin increased to 10.7%
- NWC focus reduces inventories
- ROIC declines to 12.9%
Stable outlook despite uncertainty in some segments
- Vehicle segment expected to grow back to pre-corona levels
- Hydraulics market is volatile and dependent on end markets
- Building sites in Sweden and Denmark
- Further focus on product range within electrification
- 2021 profitability better than 2020 level
Revenue DKK billion
EBITDA DKK million
CAGR
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PORTFOLIO COMPANIES
Borg: Solid navigation in turbulent times
European leader in remanufacturing of automotive parts in a business model fundamentally build on circular economy
Corona effect on volume and profitability in 2020
- Significant market slowdown under European lockdowns
- Revenue only 5% down, indicating better-than-market sales
- Very strong adjustment of cost base
- EBITDA much better than feared during the year
- ROIC improves to 17.5%
Progress expected in 2021, however still uncertainty
- Strongest reman platform in Europe
- Acquisition of Spanish turbo charger company TMI strengthens product portfolio
- Further develop production systems and optimise logistics platform
- Improve efficiency and profitability in UK unit
- Increase in revenue and EBITDA expected
Revenue DKK million
EBITDA DKK million
CAGR
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OUTLOOK
2021 priorities: Group and company level
Schouw & Co. (Group level)
| Improve earnings | Investments in growth | Optimisation of capital use | Future-proofing |
|---|---|---|---|
| • Optimize pricing (margins), adjust cost base | |||
| • Close or develop activities that reduce earnings | • Allocate capital for continued transformation | ||
| • Investments/M&A to strengthen long-term competitiveness | • Optimize workflows to reduce NWC | ||
| • Ensure full asset utilization | • Think long-term but seize opportunities as they arise | ||
| • Take responsibility |
Business level
| | • Continue globalising BioMar (incl. Asia)
• Innovate further with technology | | • Internationalise design/engineering
• Develop footprint and operational management
• Improve Mexico |
| --- | --- | --- | --- |
| | • Increase capacity, but ensure utilisation at sites
• Introduce sustainable products, enhance R&D | | • Strengthen electrification, grow in wind, and develop Nordic aftermarket
• Optimise footprint (building in Sweden/Denmark) |
| | • Sustain momentum in wipes and nano/filter
• Build spunlace capacity
• Regain volumes in automotive | | • Ensure scalability and operational excellence
• Integrate TMI and fix underperforming UK |
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Enabling long-term and responsible transformation
Aktieselskabet Schouw & Co.
- Chr. Filtenborgs Plads 1 · 8000 Aarhus C · Denmark
- +45 86 11 22 22
- [email protected]
- www.schouw.dk
- in www.linkedin.com/company/schouw
- Nasdaq Copenhagen ticker SCHO
BioMora
FIBERTEX PERSONAL CARE
Fibertex PERSONAL
GPV
Hydra Specma
BORG INSTRUMENT