Huber+Suhner AG

Good morning, ladies and gentlemen, and welcome to Hoover Sooners Media and Analyst Conference 2021. We will follow for today's session our proof and screenplay of previous years, and I'm going to give you first an overview of our performance during the business year 2020. Our CFO, Ivo Wetzler, will then do a deep dive into the financial results, and I will close the session with an outlook and an analysis of our key markets you will then have at the end a chance to ask questions i will start with the overview and to be very precise and clear and to start with We rate 2020 as a difficult year, but many companies would use the same attribute for 2020, and difficult means in some cases minus 50%, and in others it means minus 5%. On our top line orders and sales, we had to accept a decline of business volume by about 10%. This was mainly due to two main drivers in two of our key markets. In the mobile communication market, the network expansion was slowed down by COVID. And the same reason is also the basis for lower volume in our second wave. largest market which is the railway market where it was difficult for our customers to commission and deliver their rolling stock to their customers which has slowed down the dynamics in the railway market considerably. The order increase was evenly spread. F4 decreased just slightly, and there we had some inorganic effect due to the acquisition of Beacontel, but also the data center basis performed above 2019 levels, which supported the F4 basis on the top line. The other two technology segments, RF and LF, were clearly behind. There was also a shift in net sales when it comes to our regional distribution with EMEA up and almost on previous year's levels where we had to accept considerable decline of our sales in Asia and the Americas. The three strategic growth initiatives overall contributed again positively, and we were able to grow. For those that are not so familiar with HuberSUNO, our three growth initiatives are aerospace and defense, data center, and electric vehicle automotive. The reason why we consider 2020 as a solid year is that we achieved still an EBIT margin in our mid-term range of 8% to 10%. And the year turned out to be at 8.3%. It didn't look like this when we presented the half-year figures in August, when we stood at 6.7% on EBIT. So we needed really a very strong second semester with a 10% EBIT for the last six months of last year, which brought us up back into our mid-term target range. The improved margin was due to a better business mix and also was attributable to a very tight and stringent cost management throughout the year. We also implemented quite early and quite severely temporary and structural measures which have cushioned the economic effects of the COVID crisis. In August, our free operating cash flow was not very strong. That has changed completely in the second half, so that now we can say also during 2020, Hooper Sooner was able to generate cash and increase the net cash position again. When we have a very brief look at the markets, we can say that the markets, they have stabilized on a lower level after the first lockdown. But we have at some point in May, June, still hoped for a V-shaped recovery which didn't materialize. So we have seen a return of the market, but not to the level which we were used to before COVID. And when I will share the outlook, I'm going to explain to you that the recovery of the market will not be fast, but more of a step-type nature. The communication and the transportation market showed significant improvements towards the end of the year, but we were not able to compensate for the shortfall of the first six months. The automotive market has seen two different patterns on the conventional driven cars with combustion engine. We have seen a difficult year throughout 2020. while the demand for electric vehicles have sharply picked up, which has driven our growth initiative in EV automotive. The industrial market suffered broadly, and we have seen a decline in order intake and net sales across all key applications that we serve in this main market. And as if COVID year was not enough, we had at the end of last year, in the middle of December, when we were about to close the year and we were in the final spurt, we were hit by a successful cyber attack. And there were several things which came together which made this attack successful in the beginning. Luckily, we could rely on our crisis management, on a data recovery process, and on very actual data, so we were able to restore all our servers within days. with the latest data so that we were up and running and basically helped ourselves out of this difficult moment. Nevertheless, some working days were lost in December, which have had a minor impact on our top line. When we look at the figures at a glance, we can see that orders were down 6.6% to now $748 million, while sales declined by 11.2% to $738 million. We still managed to achieve a result in the 8% to 10% midterm target range at 8.3%, which wasn't a surprise this morning because we already announced that when we disclosed the top line figures end of January. that 8.3% represents 61 million EBIT. A positive surprise and some hard work from our financial staff is seen on the net income line where we have basically just lost 50 basis points. And we declined only by half a percent to 7.1%, which is a span to the EBIT of just 120 basis points. When we look at the EBIT performance of Ubersuner over the last five years, you can see that with the exception of 2017, we have been in this 8% to 10% range and also following two strong years with EBIT above the $80 million in absolute terms. And in the 9% range, we had a year with a decline of 1.4%, now to the 8.3%, which under the circumstances we consider solid. And of course, it's not what we wanted, but still at six months, it looked good. Differently, and thanks to a strong recovery and also due to the fact that our measures have shown effect, we could save the year towards the end and still make it to the 8.3%. When we look at the three technology segments, we start with RF. The RF business has been our strongest contributor to the bottom line in the past years and also has seen nice growth year on year over the last three to four years. We had to accept a steep decline of our top line in the RF business with minus 14% on sales. Nevertheless, we managed to keep the operating profit in the double-digit percentage range. The decline in business is broad, as we have in the RF business, the dominant markets are coming from the industrial sector. In the past, our growth initiative A&D has been a strong contributor. This last year, we were not able to grow the A&D business anew. On the other side, we have some positive news which do not contribute to our business performance yet, which were significant investments, but which result now in nominations in the area of automotive sensors, or to be precise, in the area of distance radars for autonomous driving. where we have been able to secure, after two to three years of investment, our first nominations from key customers and for key platforms. There were also other areas that performed comparably well. One is in the communication field with RF over fiber solutions, so analog optical signals over fiber. And in general, despite the decline in top line and profitability, I'm not worried about the outlook in this segment as we are well positioned here and particularly in the markets that we are present with the RF technology. There is a structurally sound and solid business environment. And we will also see this technology growing again in future years. Then the positive surprise last year was the fiber optic technology segment. If I say surprise, many people asked me in the past what the plan is with fiber and when we will be back to the double-digit EBIT margins in this technology segment. I was always quite positive and clearly stated that I see the potential for this technology segment to return to WGD bit margins, and I think we made a good step towards that objective. Nevertheless, we also had a decline in the top line despite the acquisition of BKTel towards the end of 2019. And the fact also, despite the fact that the data center business, which is one of the three growth initiatives, has contributed with growth. Nevertheless, we believe that the slowdown in top line is of temporary nature and that we are ideally positioned to benefit from the two main trends in the communication market, which is the investments in the mobile infrastructure towards 5G, and also the investments into the backbones to be able to cope with the higher data rates in the fixed net infrastructure. The LF technology segment, which is our technology segment with the highest fixed cost, is usually a hotspot when volumes decline. And also here, we see similar patterns as in RF, and the decline is of a similar magnitude with 14%. Nevertheless, despite the high fixed cost structure in this segment, thanks to operational agility and very tight cost management, we were able to limit the damage on the bottom line, and we ended the year at 6.7%, which we consider under those circumstances as a bit more than acceptable. I already mentioned that the railway market suffered somewhat as our customers were not able to deliver their rolling stock to the railway operators. In the automotive sub-markets, we have seen, as I mentioned, two different patterns as our exposure to the conventionally driven cars is not so big. we could basically compensate the decline in this business with a steep growth in the EV automotive area. And last but not least, our initiative in the area of high power charging for those electric vehicles has also contributed nicely and we were able to defend our very strong market position in this rapidly growing field. When we have a look at the other dimension of our business and we look at the main markets, we see that we had to accept the decline across the three main market segments with communication holding up against the previous year best with minus 8.8%. However, the PKTel acquisition has supported here the volume, while in transportation and industry there was a double-digit decline. Just to remind you, as of half-year 2021, we will discontinue to report in the technology segments. and we will provide you the detailed P&L figures in those three market segments. The third and last main dimension of our business is the regional split and what sticks out here is that Our business in EMEA, including Switzerland, has suffered least during last year. And if we take into account that there was a disfavorable currency situation here, you could say that we have been organically almost flat in EMEA and we were able to keep stable. the level of business. We suffered more in the Americas with minus 20% and in Asia with minus 18%. And with that, I conclude the first part of our presentation and I would like to hand over to our CFO, Ivo Wexler, who will share with you the details of our financial results.

Thank you also, ladies and gentlemen, also a warm welcome from my side. I would like to share some more financial information with respect to the business year 2020 with you. And I start with the order intake. You can see from this slide that we had an equal amount of organic decline And also, compared also to the currency in copper, both are down 42 million. This is in the magnitude of minus 5%.

On the other side, we had the portfolio effect.