Norma Group Ag Name Akt

Ladies and gentlemen, welcome to Norma Group's Analyst Conference 2022. Last year, March Analyst Conference, we mentioned that an exceptional crisis here is behind us. With 2021, we had another crisis here. And I'm, of course, very happy to welcome you all to our today's conference, not in person, unfortunately, not in person, but remotely. What was Norma Group's development in I refer to page two of our presentation that we distributed in terms of key figures. Our sales in 2021 were at roughly 1.1 billion. This is an organic growth of 16.2%. And based on this 1.1 billion of sales, we increased our adjusted EBIT significantly versus last year, 2020, to €113.8 million. These €113.8 million reflect an EBIT margin of 10.4%. And out of that EBIT, we generated an adjusted earnings per share of €2.27 per share and reported earnings per share of €1.76. Our normal value added increased to $16 million, while the normal value added in 2020 was at minus $46 million. On the next page, page three, we have a couple of key figures relating balance sheet and finance structure. So equity, based on that profit development, increased to 44.6%. versus 41.7 the year before. And based on a strict cash flow, cash focus, and cash collection, we decreased our net debt to 318.5 million, nearly minus 20 million versus 2020. Based on that cash development, leverage is at 1.9 times EBITDA. which is far better than any covenant level that we currently have. And this is based on an increased net operating cash flow of 100 million in 2021 versus 78 million in 2020. We will have a dividend proposal of 0.75 euro for the fiscal year 2021, which we will propose to the annual general meeting on May 17th, these 75 cents per share in relation to 70 cents per share in the year 2020. Key figure as well, based on our ESG focus and ESG criteria, we reduced our CO2 emission in 2021 by 12.8%. Besides these key figures, some business environment aspects on page four. In 2020, 2021, we had scarcity of raw materials and severe cuts in light vehicle production. You all know all of these developments, which then resulted overall in global supply chain disruptions and lowered production rates, which led to a price inflation, especially in higher logistic and energy costs and overall in a material cost inflation. We saw a delayed economic recovery with a strong H1 2021 with good recovery, but a challenging environment in the second half of 2021. Unfortunately, from our point of view, We still have an ongoing corona challenge, ongoing corona related costs in production and health, and even more important, a high sick leave of staff and quarantine development in 2021. A few details on the top line starting on page six of our presentation. Looking into the top line, we increased our sales in 2021 versus 2020 by 14.7% with a very strong Q1 in 2021. And this increase by 14.7% to 1.1 billion of sales is mainly due to the economic recovery in the last year. Organic growth, as mentioned, 16.2% with a good recovery in all regions, especially in EMEA and Americas, so that EJT sales increased to 620 million, showing an organic growth of 13.2 percent. And we had, in the standard joining technology, a strong organic growth of nearly 20 percent in 2021, which is mainly driven by EMEA and Americas, with a very strong water management. Looking on page seven, segments in terms of regions. If you look into the America sales, these America sales increased by 18.5% to 457 million. We also increased in EMEA sales from 410 to 462 million in 2021. And in APEC, we increased nearly 10%, 9.9%, so that we ended up at 173 million in 2021. So that's a split based on this sales development. It's 42% of our sales is generated in EMEA and Americas, each 42%, and 16% in the APEC regions. If you have a look into the regions on page eight, we saw a high single digit growth in EMEA EJT business based on this very good recovery, especially in the first half of 2021, and a strong double digit organic growth of the SJT business of 20% due to a good business development and even a restocking effect in 2021. Americas, as mentioned, a good rebound in the first half year, which led to a double-digit recovery, EJT plus 22.3% in fiscal year 2021, and standard joining technology with a strong double-digit organic growth, 22.6%, driven mainly by the water management business, showing another really record organic growth of more than 20% in 2021. APEC region, a double-digit organic growth 10.6% for EJT and 6.7% for the standard joining technology. If you look on the long-term perspective on page 9, we see that In a 10 years perspective, we have a sales CAGR of around 7% and a sales CAGR of around 3% in average organic development over 10 years. With the 1,092,000 sales in 2021, we are nearly at the 2019 level, but could not completely reached that 2019 level. On page 10, we see the sales mix that we have. We have a balanced sales mix with focus on water management and industry business in terms of industry applications and industrial suppliers. So that water management, meanwhile, has a share in our sales of 24%. Industry applications of 19% and industrial suppliers of 24%. We have light vehicle business of 23% and heavy vehicle OEM business with 10%. So this shows a balanced sales mix with the focus for Norma Group on water management and industry business. And coming from sales to the margin development, On page 11, it generated an EBIT of 10.4% in the fiscal year 2021. It shows a very good increase versus 2020, although we did not reach our targets in 2021 in terms of margin, but a double-digit EBIT margin, 10.4%, and 11.2% in terms of EBIT A. With that overview, I hand over to my colleague, Annette Stieve, our CFO. Annette, it's yours.

Thank you. Hello, all together, first of all. Well, let's have a look together to the profit and loss development, all in all, looking to our material cost. Material cost increased by 19.8%, and the material cost ratio increased by 200 basic points, mainly due to higher costs related to global supply shortages all over. Our gross profit ratio only decreased by 30 basic points, mainly due to increase in inventory. Always keep in mind we are in the total cost or total expenditure method here. Personal expenses, there we have a strong improvement we could improve from 31.3% to 26.1%. This is even better than our comparable year 2019, where we had a level of 27.5%. Our OPEX, we had higher OPEX, which are absolutely in line with our sales increase, mainly due to the increase of temp workers and the economic recovery in this case related to business recovery leading to a stable OPEX and to a stable OPEX ratio, which is equal in this moment. We could achieve an adjusted EBITDA of 11.2% and an adjusted EBIT by 10.4%. This is mainly due to sales recovery and lower get-on-track costs, which we do not adjust. Referring to the next page, our operational adjustments and the outlook to the outer years 22 and 23. You can see in our P&L scheme here that on operational level, on ABDA level, we have no adjustments anymore, get on track. We do not adjust as our major recovery program. Our adjustments here are mostly dedicated to prior acquisitions and only related to prior PPAs. So if we look to the earning per share, it's 1.76. Our adjustment for that in 2021 was 51 cents. and we come to an adjusted EPS of €2.27. Looking then to the outer years, you can see really a linear development that remains under these conditions by €0.51 or €0.50 in this month. Seeing our EPS and dividend development, we can see here again our €2.27 and our reported EPS of €1.76. Our net income in 2021 of €72.3 million and reported of €56.1 million. Our dividend per share, as Michael already mentioned, we will propose a dividend of 75 euro cents to the AGM, which is a ratio of 33% of our adjusted group net profit of the fiscal year 21. Referring to the profit and loss statements, I think we already had a look to sales gross profit EBITDA. What is new here is that our financial result could improve significantly from 14.8 million in 20 to 12.4 million in 21. We have a tax rate of 28.6%. Coming now to the balance sheet and referring there to our working capital development, we can see that our working capital ratio slightly increased by 50 basic points due to higher inventories mainly, which we only partly compensated by higher payables. Our factoring programs increased by 10 million towards 2020 to 62 million euro in order to optimize our financial flexibility. Equity ratio, net debt, and debt ratio on the next slide. In this moment, we can see that our net debt decreased by 20 million or by 5.9% due to a strict cash collection and cash management. We show a strong improvement in our leverage, which amounts now to 1.9%. We could further improve our equity ratio to 44.6, which increased to 669 million euro. Looking to our maturity profile, you can see that we have a very strong maturity profile here, solid, no potential cross default risk anymore. With long-term financing strategy, which is established, our next larger refinancing is due in 26. So I think we have a strong balance sheet and a strong maturity profile in this case. Balance sheet wise, you can see that we increased our assets, equities, and liabilities. This is major on the asset side due to our increase in inventories and the recovery of the business. And on the other side, our equity gained by 79.1 million to 669 million euros. New now, we have a look to the cash flow, the normal value added, and then we have a new page which leads us to the EU taxonomy. So cash-wise, we still provide a very strong net cash flow. We could increase our net cash flow to 100 million euro. Our working capital outflow of 20.4 million euro is mainly due to higher business activity and growth. We increased our capex due to investments in our actual and future business growth and our cash is amounting to 100 and could increase from 78.3 last year, which means We finance future business recovery. Normal value added, our normal value added increased from minus 46.4 to plus 16 million euro. And our ROC, our adjusted ROC increased from 4.6% to 11.9%. Let's come now to the EU taxonomy and this new reporting. So I think everybody in all these companies took a lot of time in order to develop together with the European Commission these, I would say, hot-needle printed legislation. And we all did our best in order to really solidly show that in our figures. So it's the first time adoption of EU taxonomy in the fiscal year 21 required by the EU Commission. The preliminary step in this moment is that the EU taxonomy reporting of 21 covers the so-called eligibility reporting. And from 22 onwards, we need to come to eligible economic activities which fulfill, finally, technical criteria in order to get classified from eligible to aligned. So, the EU tax runway focuses mainly on three performance indicators, which is revenue, capex, and opex. And in these two boxes under it, you can see that normal groups, eligible economic activities, out of the EU taxonomy refer on the one hand to our water management products. They are referring to the economic activity 5.1, construction, extension and operation of water collection and treatments and supplying systems. And on the other hand, on the pure e-mobility products, this refers to economic activity 3.6. There we refer to the manufacturing of other low-carbon technologies. In the right box, you can see what we achieved there. So normal groups, eligible revenue, CAPEX and OPEX. Our revenue amounts to 24%, our CAPEX to 5%, and our OPEX to 7%. Having said that, I give back to Michael to have a look to the Get on Track status.

Yeah, thanks, Annette. Get on Track. We described our scope for the Get on Track program in the last years. We defined this Get on Track program end of 2019. And also in the year 2021, this Get on Track program developed excellently. We saw, and I'm on page 27 of the presentation, we saw a net effect out of Get on Track of 25.9 million. in the EBIT-A. So we expected to have 25 million net effect. It's 25.9 million. So Get on Track program comes as expected, helping us and further improve in 2021 and even in the future. And the future means also that in 2022, we will expect a net impact then of 30 million based on around 40 million of benefits accumulated and 10 million of costs of one-time costs. Coming to the outlook and to the guidance 2022, we of course have to mention that this forecast is made under the assumptions that no significant negative impacts in connection with the pandemic situation and even additional impacts coming out of the Russia-Ukraine war is done. We expect organic sales growth medium to high single digit in 2022, also for the EJT business and for the standard joining technology. Region-wise, we expect medium single digit organic sales growth in EMEA, while we expect Americas and APIC in the medium to high single-digit development. Overall, we expect an EBIT margin of around 11 percent, a normal value added between 20 and 40 million, and a net operating cash flow of around 100 million. We, of course, have additional guidance components. I think we do not read through everything, You see it on that page, the most important ones. I mentioned medium to high single-digit organic growth, EBIT margin around 11%, 100 million in net operating cash flow. And this also fits into our strategy, and I'm on page 30 of that presentation. We expect in 2022 growth, medium to high single-digit. We expect that global growth in water management and industry applications. and even selective expansion in mobility and new energy. We continue with the dialogue in M&A activities, focusing on water and industry business in 2022. Especially for our standardized joining technology business, we will further expand and strengthen the e-commerce channel. And of course, we will go on with the execution of the different measures in the Get on Track program so that the Get on Track projects also will contribute for further profitable growth of Norma Group. And of course, it's more important than ever, we have to see the volatile market environment. Of course, we have a handling of that market environment with a close monitoring of the market dynamics and even from the geopolitical conditions and tensions. So a clear growth strategy 2022 in a very volatile economy and volatile geopolitical situation. Thank you so much for listening. And of course, we are happy to take your questions.