Jost Werke Se

Thank you very much and a warm welcome from Neu-Isenburg and welcome to our JOST Financial Year 2022 Investors and Analysts Conference. You will see on the slide JOST Werke SE. We now are a Societat Européenne, but of course the numbers that you will be seeing are from the JOST Werke AG under which we operated last year. So you will see that the numbers are in line with the prelims that we have announced mid of February. I'm very happy to report that we have met all our financial targets for 2022. We've achieved a double digit growth year over year in sales with 21% sales increase to a total sales of 1.265 million euros. We've also exceeded our adjusted EBIT targets. We had targeted for a high single digit growth. We achieved a growth of 18% to 124 million euros in adjusted EBIT for the year 2022. That compares to 105 million euros adjusted EBIT for the year 2021. We're not completely happy with our working However, we did achieve our target to stay below 20% of sales and ended up with 19.2%. Our capex ratio has been 2.6% in line with the guidance of approximately 2.5%. Main investments were in our production facility that we will inaugurate this year in India for our agricultural business. Our target to reduce the leverage below 1.45 was also achieved with a total of 1.28 multiplier for the leverage. Let's go to the next slide, please. The highlights for last year was that we've increased sales both in the transport business line with 19% and in the agricultural business line with a very nice growth of 25%. The adjusted EBIT margin only slightly decreased, declined to 9.8%, despite the very strong inflationary effects that we are having, the sharply rising cost and the supply chain inefficiencies that we had to deal with throughout the years. Our global footprint and our wide application mix were the key success factors to offset that volatility and to offset the shifts that we have seen in regional demands in the respective markets. And I will come to that a bit later. We had significant improvements to our energy efficiency and carbon footprint that we achieved during the course of 2022. And we're very happy with that because it helped us overachieve our ESG targets that we have set, but it also helped us to reduce costs in the rising energy costs that we have seen last year. Our earnings per share increased by 37% to €4.02 per share, reaching a new record level. And we're very glad to announce a dividend proposal of €1.40 per share for the financial year 2022. And we will make that proposal to the annual general meetings that we celebrate on the 11th of May. Yeah, looking a bit deeper into the markets of last year, it's a bit looking into history, but you can see that the truck markets in Europe had a slight growth, trailer markets and tractor markets, a slight decline. We ended up with 13% increase in sales, mainly driven by price adjustments that we introduced to offset the rising cost. And that was the main driver for the growth in sales of 13%. North America, you can see that the truck markets had increased equally. The trailer markets, only the tractor markets had a slight decrease. We ended up with 53% increase in sales. That's in euros. So there's an FX effect included. And Christian will explain that with a little more detail. So the growth in dollars has been lower than that. This is also due to the strong demand growth that we've seen with our customers, price increases, but also some market share gains that we have achieved in North America. If you look at the numbers, the official numbers for Asia Pacific and Africa, the minus 37%, China plays a bigger role in those numbers than it actually plays for our business. That's why the minus 37 in trucks and the minus 15 in the trailer market did not have the full effect on our numbers. Our numbers are plus 1%. So we had a decline in China, but we could compensate that with other strong markets, namely India, Far East and Australia and New Zealand. So quite good developments beyond the markets, driven by market share gains, but also obviously by high inflationary effects and price adjustments due to those inflationary effects that we have introduced into the markets. With that, let's come to more details presented by Christian. Christian.

Yes. Good morning, ladies and gentlemen, and also a very warm welcome from my side to the full year 2022 Investors and Analysts Conference. So, as always, let's start with the different regions. We typically start with Europe and here in Europe you can see that our sales in the full year 2022 grew by about 14.4% organically and they amounted to a total of close to 700 million, exactly 696 million. So that is an improvement, as I mentioned, of about 14.4% organically and 12.5% reported. Other than that, I would like to mention that in Q4, we saw a much, much smaller improvement compared to the prior year. Here you can actually see a 3.3% growth year on year, and that is mainly coming from the transport side. The agricultural sales were somewhat higher declining compared to the year before. We are seeing, and that is something we already mentioned in previous meetings, especially also during conference calls, currently the situation on the ag side is, well, the farmers are somewhat concerned, especially about rising energy costs, and therefore we are seeing a slightly lower order intake on the ag side, especially in Europe. FX headwinds amounted to 1.9 percentage points and they are mainly coming from the Swedish Krona. I will come to that Swedish Krona devaluation effect a little bit later when we speak about the group results, but here we're also seeing an impact of the weaker Swedish Krona. If we look at the profitability, you will see year on year a decline from 7.3% to 6% EBIT margin. Overall, we achieved 41.8%. but 41.8 million but here you also see that we suffered tremendous FX devaluation effects of the Swedish krona all in all they were they amounted to roughly 8.1 million in the full year and if you simply add the 8.1 million you would see that we had achieved probably not only a higher margin but basically a 10% EBIT growth. But unfortunately, due to this devaluation effect of the Swedish krona, we didn't achieve that and therefore our adjusted EBIT slightly declined by 7.9% for the full year. If we just simply look at Q4, you see a strong improvement over last year, 4.1 million versus 4.9 million. And here also the positive side is the devaluation foreign exchange rate effects have increased very much lessened and they are now only 0.1 million in Q4 and therefore you do see a growth there also higher than the sales growth and that also means that we have been, especially in the last quarter, we have been able to pass on some of those inflationary effects that we had seen on the material prices, energy prices and logistics costs and they had been passed on. Maybe a few words also on the market development here. We are seeing a slightly higher growth in the aftermarket that increased from 28% last year to 29% in 2022. And therefore, the OE business was at 71% for the region Europe. With that, I would like to come to North America. North America, the story continued that we had seen already in the first three quarters. We have achieved an overall organic growth of 36.5%. And that is, of course, much, much higher than the 53 reported. But there we had a very positive effect of the US dollar appreciation compared to the euro. And the 36.5 is basically in line with what we've seen also year to date Q3. So basically the story continues and that is also visible on the Q4 numbers, very strong development of the market. I would say that we have gained further market share, not only on the truck side, but interestingly on the already very, very strong trailer side, where we typically had around 80%, that number has probably increased by quite a bit. So overall, very positive development, but again, in Euro, very much influenced by foreign exchange rate effects. If you look at the profitability, you see a 50.8% growth year on year from 23.7 million to 35.8%. 7 million and that while the profitability basically remained the same, a very significant growth in overall profits and therefore we are quite happy with what has been achieved. So very positive here. Also here, the similar trend, slightly higher aftermarket portion growing from 26 to 27% and therefore a slightly lower OE portion. And that is also one of the contributors to the overall growth in profit. Now let's go to Asia Pacific and Africa. This has been an interesting region last year, so to speak. You probably remember that beginning of the year, we were quite optimistic that the Chinese market would recover from its weakness in the second half of 2021. Unfortunately, that never really materialized. But I can say that going out of Q4, going into Q1, we are seeing more and more positive signs. And also, if you compare that to the Q3 numbers, you see currently you see a reported growth of 0.8%. Organically, that's actually declined by 4%. But that is much, much better than what we had seen in Q3, where we had still reported a minus 10% organic growth. So we are seeing improvements. That is good. But obviously, the main growth driver is not China. It's currently still the other countries in that region, predominantly India, the Southeast Asian region, the Pacific region with Australia and New Zealand, and last but not least, also South Africa. We're not unhappy with that development, but overall we need China to come back. That is a clear message. And as I mentioned, we are seeing first positive signs in the market for heavy commercial vehicles in China, but we're not there yet. And obviously we're still into Q1 and we will report more once we have the Q1 numbers finalized and then we will also show it to you. In terms of profitability, Asia Pacific Africa is a very, very successful region. You've seen it in the first three quarters of 2022. We are now finally reporting a year end profitability of 21.7%. And you know where that is coming from. It's mainly due to the different product mix in that region with much more heavy duty and off-road couplings being sold to our customers. Overall, a growth in profitability by 24.7% from 30 million to 37.4 million. And that is also very much visible in the Q4 numbers where we grew from 6.8 million in 21 to 10.6 million in 22. So overall, a very positive development that we're happy to have. And once again, it underscores the importance of our global footprint, our global markets. Without North America and Asia Pacific, Africa just wouldn't be where it is. And we're quite happy to have our colleagues around the world. But once again, in this regard, it really proves that not only is just a global company but we're also benefiting and we're supporting each other while we had challenges in europe this year with without any doubt uh the other two regions with north america and asia pacific africa were supporting the overall company and that's that's a positive sign so if we look at it globally from from the final numbers and Joachim already mentioned that. And the positive news, first of all, is there are no changes compared to our preliminary numbers that we announced three weeks ago. So nothing has changed. We are reporting the exact same numbers and that also means we finalized our year-end audit. That's an absolutely clean audit opinion and overall a positive year, actually the best year in the history. We've now achieved sales level of close to 1.3 billion, 1.265 overall, to be precise. That is 20.6% higher than it was in the year before, where we first time achieved the 1 billion mark. So now you are seeing a growth in the ag business of 25%, a growth in the transport business of 19% for the full year. We are satisfied with that overall top line development. What needs to be mentioned, of course, is that This is predominantly price driven. So due to the high inflationary tendencies that we've seen on the material side, energy side, but also the logistics cost, we've passed on those price increases to our customers. And therefore, we were able to more or less keep the margin, and that is what you see below, flat on a level of 9.8%. Now, last year we achieved 10%. Yes, there's a slight decline, but what I've already mentioned when we spoke about Europe, in this year we suffered from tremendous negative foreign exchange rate effects and that are visible in the adjusted EBIT number. So, once again, if we were to add the roughly 8 million negative effects coming out of the devaluation of the Swedish kronor to this number of 124, we would not only have surpassed the 10%, not only been back on the 10% level, but we would have actually surpassed that level. And therefore, I think that yes, foreign exchange rates is something that we worry about and that we try to hedge as much as possible, but overall, I think we, and so should you as our owners and investors should be satisfied with the overall result that we have achieved in 2022. So 124 million in profit, highest number ever in the history of the group. And we're very happy that we will also share that with our owners, our investors with a much, much higher dividend. I would also like to mention one aspect, and that is something you see here on the very bottom. A very significant contribution to our profit was coming from Brazil, where our joint venture performed extraordinarily. You only see that in the bottom line. You don't see it in the top line because it's a minority joint venture from the standpoint of JOST. And therefore, you only see 49% of the profits here. But it was a very, very successful year also in South America. Now let's come to our well-known net income adjusted EPS walk. You see here, we've achieved the highest ever net income in the history of the group with 60 million. That is comparing to 44 million a year before. And then you see the typical walk. We add taxes, finance result come to a reported EBIT of 89 million. then you have the typical purchase price allocation adjustments of 27 million and a few exceptionals much much less than we had last year last year we had 13 million this year it's 8 million most of the exceptionals are related to restructuring or optimization projects uh especially here in germany where where we relocated uh our global logistics center from one city to another city. Last year, we had extraordinary write-offs due to the sale of JOST UK and therefore the exceptional items were much, much higher. Overall, the already well-known number of adjusted EBIT of 124. Then we subtract the finance result and here I would also like to mention that the higher finance result of minus nine versus the minus six that we had the year before are predominantly driven by the foreign exchange losses that we suffered. There is a small portion of higher interest, obviously, especially in Q4. The interest rates increased. The variable portion of our loans were more expensive than they were a year ago. But we will not see the full effect has not been seen yet. And you know that we have refinanced the group with a new promissory loan. with an ESG link at the end of last year and unfortunately they are also priced higher. So we will see higher interest payments and interest rates going forward. We subtract the performer tax rate now 34 million and end up with an adjusted net income of 81 million and that compares to the 69 a year before. So overall, our reported earnings per share rose from €2.94 per share to €4.02. And the adjusted earnings per share were even better from €4.63 to €5.41. So now let's go to the ROSI equity ratio and leverage development also here. ROSI now at 18.3%, a constant growth throughout the year and obviously also year on year with 18.3% return on capital employed. I think that's a good result. That's a very positive achievement. In line with that, the equity ratio is now close to 36%. I think that gives us a lot of confidence also in discussions with financial institutions. And last but not least, our leverage is down from 1.45 to 1.28 times EBITDA. And also there, we are now approaching the regions in terms of leverage where we were before the ALO acquisition. So also here a good development. Now let's move over to one of the weaker spots in development of last year. If we talk about cash flow and working capital development. Cash conversion rate is at 0.3 and that is not in line with our expectations so this is one of the weaker spots and we have to be critical enough that this needs to be improved and will be improved throughout this year but the 0.3 or an overall cash free cash flow of 23.7 million is not what we expect from this country company and what you probably as our shareholders expect from this company So that is certainly one of the weakest aspects in the overall quite good result. But the majority of the rather weak cash conversion is coming from working capital. And I know you've heard me say that over and over and it hasn't changed, but we are seeing first positive signs. And before I talk about capex, let me quickly talk about net working capital, which you see at the bottom of the screen. We are now seeing overall trade receivables of 167 million. They are down from the high point in Q2, 204 million and 199 in Q3. So you do see that we collected a lot of our receivables. The receivables are all very current. There is no major risk of an aging receivable. So that is in line with our expectations. And if you see the increase from last year, 153 to 167, that is less than what we saw as a sales growth. So I would say receivables are okay. The weakest spot is certainly inventory, where we have now 214 million in inventory, and that is coming from 224 million at the end of Q3. And you know why that is. Well, first of all, I would like to point out that we have taken on tremendous efforts to bring down our inventory, and we are seeing first positive signs. That is 10 million now lower than what we reported in Q3. And I can assure you this story will continue. But we had to have an elevated inventory level. If we didn't have that elevated inventory level in 2022, we would not have been able to deliver to our customers. Our customers were running at full strength. And we had to deliver and we wanted to deliver. And that came at the expense of working capital. And therefore, we needed to have elevated inventory levels because the supply chains were not yet under control. The supply chains were not where they were before the war in the Ukraine, before COVID. and this has been the cause for an elevated inventory level i'm quite optimistic that the supply chains are easing now people are finding ways to work around the war finding ways to work with covet infections and we we are going to lower the inventory level significantly throughout this year and then last but not least the payables they have declined as well um Also here, we are seeing basically the counter effect to the inventory levels. We had the highest inventory level in Q3, and since then we've really stayed away from increasing inventory further. You see the 10 million reduction here from 224 to 214, quarter three to quarter four, and the payables, declined as well and the the main reason for the decline in payables is simply because we didn't order much more inventory at the end of the year but we had to pay what was ordered let's say in q3 and therefore you also see a decline there because we were trying to honor our payment commitments so overall Those are the financials for the year 2022. I hope you agree with our assessment that overall the best year in the history with still some work to be done and that is mainly on the cash side. But measures are in place and you will see positive results going forward. I would also like to to speak a little bit about our ESG efforts and especially on the energy and CO2 reduction side. You see here a 6% on the top graph. You see a 6% reduction in energy consumption. That is, in my opinion, very, very positive because we had a 7% increase in production hours. So we produced more and more parts. And despite that, we were able to reduce our overall consumption and not only what you see below the CO2 emissions, but we reduced our overall consumptions from 115 million kilowatt hours to 108 million kilowatt hours, all scope one and scope two. When it comes to CO2 emissions, the development is even more positive. We reduced our CO2 emissions per production hour by 15% from 4.8 kilograms CO2 per production hour to 4.1. kilogram CO2 per production hour. And aside from the fact that we were able to lower our overall consumption, we also saw a shift in the energy mix and that added additional positive effects to our scope one and scope two emissions. So I believe that what we have done and already introduced the year before in 2021 when we decided to, for instance, take on our own production of energy with solar panels in our plants and also to reduce energy consumptions by additional insulation. This has been a positive effect not only on our financials, but it's also seen a positive effect on our sustainability figures that you're seeing here. So last but not least, I would like to take the opportunity to also speak very briefly about the fact that I'll be leaving the company. You saw the announcement. The reason why I'm leaving is purely personal and professional, but it is It's not that I don't have any trust in the company. The company is doing well, and I'm very much looking forward to speaking to you again at the end of Q1 when we have another investors call. And those of you who will be attending the annual general meeting, I'm looking forward to meet in person there. And with that, I would like to hand it back over to Joachim for the final words on 23. Okay.

Thank you very much, Christian. Yeah, let's come to 2023, but before we go there, no, let's go directly to 2023. Go ahead. Next slide, please. The markets that we are expecting are more or less stable, you could say. You can see here for truck, we see in North America, in Europe, a slight growth. In APA, a rather strong growth that's driven by the hopeful positive developments that we see in the Chinese market. Trailers in Europe a little bit weaker to more or less stable. North America stable slight increase and APA also a considerable increase driven by the Chinese market and tractors also more or less stable. That's the expectation that we have for the full year 2023. I'm happy to inform you, and Christian already mentioned it a little bit, that the year has started quite well for us. So the first quarter, especially in the European truck industry, has been a very strong volume. So our customers in truck worldwide, but especially in Europe, have been able to fulfill their production demands. You could say for the first time in almost three years, because in the year 2000, they were hit by COVID. In the year 2021, there was the big issue with the chips that they didn't get from Taiwan and other countries. So semiconductors were the main topic there. And last year, especially in Europe, due to the Ukraine crisis, They were missing wiring harnesses. So this has been the first quarter where they were really able to fulfill what they had promised to their customers in truck production. So the year has started quite well. Nevertheless, this is the outlook for the full year that we work with. Next slide, please. The strategic focus for 2023 for JOST will be to seize our growth opportunities in India in our agricultural business and also to start to establish a footprint in South America organically or through M&A, namely in Brazil, which is a very strong agricultural market that we want to get our foot in the door. In transport, we would like to further increase our penetration of our new products, the products that we have introduced at the IAA fair that we call hashtag future now products with sensors, with cameras integrated into our products. So that's the strategic focus for 2023 for transport. And with that, we would like to further strengthen our market position, especially when it comes to those new generation products. We already mentioned both the reduction in working capital and the improving cash flow generation is on the agenda. And I think we have the opportunity to do that because the supply chain issues that we've had and that drove us to increase our inventories to secure our supply and our deliveries with the easing of those supply chains, we see an opportunity to reduce our working capital and generate thereby more cash this year than we have been able to do last year. We want to identify and implement further measures to reduce our CO2 footprint. Christian already mentioned that we have a very good history there. We're very happy with the development, but we certainly want to continue with the efforts and continue finding new ideas and implement new ideas to further optimize our CO2 emissions. We want to improve the further improve the profitability we have to sharpen the cost focus and we will analyze and adapt our product portfolio to reflect the changes in input costs so where we have big changes due to change structures in our supply chain for example we will make those adopt adoptions to our product portfolio next slide please So the outlook for 2023 on sales, we expect that on the back of the market that I've introduced with a little ease in the material prices, we will achieve a low single digit growth year over year so that we will be slightly higher than 2022. Also, our adjusted EBIT will grow compared to the 124 million that we've just introduced to you. And with that, our margin should increase slightly beyond the 9.8% that we've seen this year. CapEx will remain about 2.5% of sales and our working capital, we will further reduce. And our new target is not to be below 20%, but to be below 19% of sales. And as we both mentioned, that has a very big focus in our organization. So let me come to the total summary. We have had the strongest year in the 70 years of JOST history in 2022. We've had record sales and record profits that we have achieved, growing 21% in sales to 1.27 billion and growing 17% in adjusted earnings per share to 5 euros and 41 per share. And with that, we're also happy to have a big increase in the dividends that we propose to the annual general meeting. Both business lines, transport and agriculture, they were strong growth drivers in 2022 and they document again the robust fundamentals of that industry that we work with and we are able to provide those good results despite the fact that we had a very challenging market environment. A strong order book and the good market expectations for 2023. Our order books and our customers' order books, they highlight the sustainable demand that we see across all regions, despite the ongoing macroeconomic concerns that we have due to conflicts in the world and high and increasing interest rates. The ease in the supply chain constraints and the decline in raw material costs will give us some relief, but it will be partially offset by higher inflation, higher energy costs and the tighter labor markets in most countries that we operate in. But it's also the opportunity to reduce our working capital. We see ourselves well positioned to deal with the challenges ahead of us. and to reach the guidance and growth targets that we have to increase our sales and our profitability in 2023. With that, I would like to thank Christian again in the name of the management team and also in the name of the supervisory board for the great work that he's done. I'm also happy to announce that the supervisory board has appointed Oliver Gansert as the new CFO starting 1st of September 2023. And with that, I'm very sure that we will be able to have a very smooth handover We will be with you to explain the Q1 numbers as Christian already announced and then we can say the final goodbye. So thank you very much for your attention and we're looking forward to your questions.