Investor Presentation • Mar 10, 2023
Investor Presentation
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| Vision | Mission | Value proposition | Strategy |
|---|---|---|---|
| To be a technological in a changing partner world |
To operate in the market of for the infrastructure transport of energy, data and material (oil and derivatives, gas, water). |
To supply added-value integrated solutions for our customers |
Innovation Integration Internationalization |
Set and integrate ESG criteria in the business plan 10th March 2023 7
Calculate the environmental impact 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
Making every department accountable to sustainability
| PRIORITY TOPICS | TASKS (in progress or delivered) |
|---|---|
| Ethic and sustainable governance |
The corporate risk management activity represents a key element of the decision-making process, including also ESG aspects 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. Disclosure of the proportion of turnover, capital expenditures (capex) and operational expenditures (opex) that are aligned for the Taxonomy. Priority to sustainable innovation, green and safe technologies |
| Climate Change and environmental protection |
Sharing with the supply chain the commitment in the field of ESG 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 |
Several initiatives in the field of the WHP Project (Workplace Health Promotion) Charity initiatives for local communities and non-profit organizations Continuous training program for the development of skills and competences and professional growth of employees |
In 2022 the reported aligned KPI must respect the NEW screening criteria:
2022 is the first year of application of the alignment requirement of the European Taxonomy Regulation. For this reason, the findings are based on currently available information, which may be subject to future revisions also based on the evolution of the legislation.
The share of "taxonomy-aligned" Revenues, Capex and Opex in line with the provisions of Regulation (EU) 2020/852 is out of scope of the limited assurance engagement on the Consolidated Non-Financial Statements of the engaged auditor.
Confirmed the priority to green & digital innovation: products range electrification, low emissions solutions, diagnostic for safe infrastructures
Construction of the new photovoltaic plant in the headquarter in Grassobbio (Italy). It will grant ca. 300 TOE/years savings (ton of oil equivalent)
Code of Conduct for Supplier to share the ESG commitment with the supply chain. Human Rights Policy considered a key element in pursuing sustainable development
Launch of corporate volunteer initiatives among the Italian companies of the Group: 10 projects in 2022 for a total amount of 526 hours
Strengthened and rebound of the business in USA, with new opportunities and focus on fiber optic sector.
The first full electric Sidecut prototype was introduced at Bauma 2022. This is an important step by Tesmec toward the electrification of its products and the energy transition.
Tesmec continued to face a huge increase in energy, raw materials and transport costs, mitigated by price list increases and carefully planned transports.
Strengthened the local presence in Middle East with Tesmec Saudi and Tesmec Peninsula, formerly as associated companies and now part of the group.
Stable economic growth as a result of the improved productmarket mix and pushing on standard solutions.
New structure to reinforce the industrialization approach in Product Development.
Projects with a strong innovative focus sustained by new specialized personnel on innovative development streams.
Leading host of an Open House event to consolidate our network and share latest market trends and new technologies.
Successful growth strategy in the substation automation market with consequent increase of market share.
Push on observability and controllability of renewable sources through our new product developments (CCI).
Significant industrial cost increases balanced by pricing and design review strategy plus financial support with strategic suppliers.
Internal processes slimmed down to rethink how we develop and commercialize products and solutions.
Tesmec speeds up its growth on the international market
Technological Product Development: > First sustainable vehicles (bimodal & full electric) with zero environmental impacts > Artificial Intelligence applied to integrated diagnostic solutions for safety of rail infrastructures
xxxx o Italy - Notice of the final award from FER, Ferrovie Emilia-Romagna, for the supply of a multipurpose vehicle suitable both for the catenary maintenance and the diagnostic of the railway infrastructure.
o Egypt - Tesmec Rail has successfully passed the suppliers evaluation phase as qualified supplier of Siemens for the supply of catenary maintenance vehicles for the High-Speed Project in Egypt.
| GROUP (€ mln) | 2022 | 2021 | Delta vs.21 |
|---|---|---|---|
| REVENUES (1) | 245,2 | 194,3 | 26,2% |
| EBITDA (2) | 35,2 | 28,1 | 25,4% |
| % on Revenues (3) | 14,4% | 14,5% | |
| EBIT | 13,1 | 5,7 | |
| % on Revenues | 5,3% | 2,9% | |
| Differences in Exchange (4) | 4,2 | 3,2 | |
| % on Revenues | 1,7% | 1,7% | |
| PROFIT (LOSS) BEFORE TAX | 11,6 | 2,7 | |
| % on Revenues | 4,7% | 1,4% | |
| NET INCOME/(LOSS) | 7,9 | 1,2 | |
| % on Revenues | 3,2% | 0,6% | |
| GROUP (€ mln) | 2022 | 2021 | Delta vs.21 |
| NFP ante IFRS 16 (5) | 104,3 | 96,5 | -8,1% |
| NFP post IFRS 16 (5) | 128,4 | 121,0 | -6,1% |
Memo: Net interest: from 6,2 € Mln of 2021 to 5,7 € Mln of 2022
(5) NFP increasing by 7,4 € Mln against a 4,1 € Mln increase in NWC (higher inventories to face the worldwide criticalities in the supplying and shipment activities and supporting the continuous growth)
Revenues growing by 13,8% compared to 2021, amid difficulties in the supply chain, within perspective of solid Energy industry growth trend
EBITDA: highly impacted by utilities, raw material and freight cost increase, with higher effect on the Stringing segment. Process of price revision ongoing
> Backlog at Euro 100,6 million, of which Euro 81,9 million for Energy Automation
> Revenues growing by 21,6% compared to 2021, thanks to the rebound of the US and Arabic Peninsula market
EBITDA: in line with 2021 in absolute terms but decreasing in relative terms, due to variable cost inflation not yet offset by selling price increase, higher commercial costs (travels, fairs), business organization strengthening, as well as non recurring
> Backlog reached Euro 82,2 million
Revenues growing by 61,2% compared to 2021 thanks to higher medium-long term contracts/ progressive internationalization
EBITDA: more than doubled in absolute terms, with strong increase in relevant terms due to better mix (products' range shifting towards higher marginality/value added solutions, e.g. diagnostic) and to price revision
> Backlog hugely increased at Euro 223,4 million
BACKLOG
* Memo: Backlog as at 31 December 2021 equal to 284 €M
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 | 2021 |
|---|---|---|
| Net Working Capital | 80,6 | 76,5 |
| Non Current assets | 89,7 | 79,6 |
| Right of use - IFRS 16/IAS 17 | 21,9 | 23,4 |
| Other Long Term assets/liabilities | 19,5 | 14,2 |
| Net Invested Capital | 211,7 | 193,7 |
| Net Financial Indebtness | 104,2 | 96,6 |
| Lease liability - IFRS 16/IAS 17 | 24,1 | 24,5 |
| Equity | 83,4 | 72,6 |
| 2021 | Improvement of key financial indicators: • D/EBITDA at 3.0 excl. IFRS16 (from 3.4) • D/E at 1.2 excl. IFRS16 (from 1.7) |
2022 |
|---|---|---|
| ------ | ------------------------------------------------------------------------------------------------------------------------------------- | ------ |
The increase of NWC is mainly due to the increase of inventory (to back forecasted sales/growing backlog and to set up a strategic stock vis-à-vis supply chain/logistic volatility)
| 2019pf | 2020pf | 2021 | 2022 | 2023 | ||
|---|---|---|---|---|---|---|
| TURNOVER | 199,6 M€ |
172,8 M€ |
194,3 M€ |
245,2 M€ |
>> Significant performance of the Rail segment; >> Focus on recurring revenues (rental & services) >> Growth in each business line >> Continuous price lists variation and review of the medium-long term contracts (actual context) |
280 ~ 290 M€ |
| EBITDA | 30,0 M€ |
22,9 M€ |
28,1 M€ |
35,2 M€ |
>> 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 >> 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 |
45 ~ 50 M€ 16.0%~17.0% |
| NFP | 130,0 M€ |
104,4 M€ |
121,0 M€ |
128,4 M€ |
>> Net working capital improvement and efficiency actions on inventory >> Optimization of credit management policies >> 2020-2023: Cumulated Capex 70/90M€ (including 2021 variation) |
Improvement |
Electrification and sustainability focus
TUSA: Developing business opportunities in the US market, especially in fiber optic and mining industries, expecting a significant business volume increase.
Focus on developing the mining sector in Africa, expecting a business volume increase.
Focus on the development of sustainable trenching solutions, such as the E-Sidecut (fully electrical trencher) and the Greenpose, to reach the zero-emission in urban works.
Mindset fit to the actual customers needs, designing the value chain starting from clearly identified touch points.
Significant orders acquisition with supply chain reinforcement and balanced mix between new products and equipments.
Shift to a digital approach using technologies to pursue a clear and agile relationship market oriented.
Cross collaboration between branches, with local sales network integration and a stronger service department.
Market consolidation with Italian utilities, thanks to new technological and future-proof products.
Significant opportunities for smart grid solutions with business development in foreign countries.
Portfolio completion with new development for foreign countries, new product functionalities and transformer protection applications.
Medium-long term forecast planning and supply chain management: increase flexibility with a review purchasing model focused on efficiency.
> RAIL, THE BACKBONE OF SUSTAINABLE MOBILITY WORLDWIDE: European Green Deal will have beneficial effect on the demand for rail battery/electrical powered vehicles and to support modernization projects in the rail sector (electrification, high speed rail network, advanced safety and signaling systems).
> DIGITALIZATION as a key enabler in the rail industry: through the digitalization of operations, systems and infrastructure, rail operators are pursuing several major goals, including SAFETY INCREASE for railway network, especially cross EU project ERTMS, European Rail Traffic Management System.
DRIVERS
| Profit & Loss Account (Euro mln) | 2022 | 2021 | Delta vs 2021 | Delta % |
|---|---|---|---|---|
| Net Revenues | 245,2 | 194,3 | 50,9 | 26,2% |
| Raw materials costs (-) | (97,4) | (78,6) | (18,8) | 23,9% |
| Cost for services (-) | (53,8) | (37,8) | (16,0) | 42,3% |
| Personnel Costs (-) | (60,7) | (56,0) | (4,7) | 8,4% |
| Other operating revenues/costs (+/-) | (8,1) | (3,3) | (4,8) | 145,5% |
| Portion of gain/(losses) from equity investments evaluated using the equity method |
(0,8) | 1,4 | (2,2) | -157,1% |
| Capitalized R&D expenses | 10,8 | 8,1 | 2,7 | 33,3% |
| Total operating costs | (210,0) | (166,2) | (43,8) | 26,4% |
| % on Net Revenues | (85,6%) | (85,5%) | ||
| EBITDA | 35,2 | 28,1 | 7,2 | 25,3% |
| % on Net Revenues | 14,4% | 14,5% | ||
| Depreciation, amortization (-) | (22,1) | (22,4) | 0,3 | -1,3% |
| EBIT | 13,1 | 5,7 | 7,5 | 131,6% |
| % on Net Revenues | 5,3% | 2,9% | ||
| Net Financial Income/Expenses (+/-) | (1,5) | (3,0) | 1,5 | -49,8% |
| Taxes (-) | (3,7) | (1,5) | (2,2) | 150,0% |
| Minorities | 0,0 | 0,0 | (0,0) | |
| Group Net Income (Loss) | 7,9 | 1,2 | 6,8 | n/a |
| % on Net Revenues | 3,2% | 0,6% |
| Balance Sheet (€ mln) |
2022 | 2021 |
|---|---|---|
| Inventory | 101,4 | 81,3 |
| Work in progress contracts | 25,0 | 15,7 |
| Accounts receivable | 56,2 | 54,4 |
| Accounts payable (-) | (74,2) | (56,0) |
| Op. working capital | 108,4 | 95,4 |
| Other current assets (liabilities) | (27,8) | (18,9) |
| Net working capital | 80,6 | 76,5 |
| Tangible assets | 51,8 | 47,6 |
| Right of use - IFRS 16/IAS 17 | 21,9 | 23,4 |
| Intangible assets | 32,3 | 23,9 |
| Financial assets | 5,6 | 8,1 |
| Fixed assets | 111,6 | 102,9 |
| Net long term assets (liabilities) | 19,5 | 14,2 |
| Net invested capital | 211,7 | 193,7 |
| Cash & near cash items (-) | (51,0) | (50,2) |
| Short term financial assets (-) | (17,2) | (16,8) |
| Lease liability - IFRS 16/IAS 17 | 24,1 | 24,5 |
| Short term borrowing | 80,1 | 59,3 |
| Medium-long term borrowing | 92,3 | 104,2 |
| Net financial position | 128,3 | 121,0 |
| Equity | 83,4 | 72,6 |
| Funds | 211,7 | 193,7 |
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