Saft Groupe SA Full year results 2014 Paris, February 18 th, 2015
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Agenda 1. Group performance 2014 2. Divisional performance 3. Detailed financial review 4. Fostering profitable growth for Saft 5. Outlook 3
1. Group performance 2014 4
2014 highlights Full year performance in line with targets 678.4m sales, up 8.7% Growing sales in all main technologies and regions EBITDA of 104.0m, margin increase of 50bps at 15.3% of sales Li-ion sales confirm growth trend in new markets and applications > 27% overall sales increase in Stationary + Transportation Space & Defense Li-ion sales down by 7% Overall Li-ion sales up 11% Strong cash generation with free cash flow of 46.2m 5
Solid business growth and financial performance m 2014 2013 YoY growth Sales (1) 678.4 624.2 8.7% EBITDA 104.0 92.5 12.4% EBIT 64.4 54.5 18.2% Net income from continuing operations Net profit/(loss) from discontinued operations 48.1 41.7 15.3% - (5.2) n.s Net income 48.1 36.5 31.8% EPS ( per share) 1.83 1.44 27.1% (1) At current exchange rates except for YoY sales growth which is at constant exchange rates. 6
Operational highlights Major breakthroughs in Asia (1) YoY sales growth of 18% Numerous commercial successes on railway market Market share gains in metering vs. low cost local suppliers New gas and water markets Zhuhai plant passed 100 million cells produced 1st ESS container for Japan Continued commercial Li-ion successes for ESS around the world Hybrid power plant in Bolivia 9 ESS containers for 9 MWp PV plant in La Reunion Island Intensium Max containers for Kauai Island 12 MW solar farm Container for extreme temperature capability for Arctic Circle in Canada Robust performance of traditional technologies Large industrial standby wins for Middle East oil & gas customers Strong growth and market share gains in nickel telecom batteries Success for the Philae lander mission highlighting technological leadership in primary lithium A well balanced activity per technology and application, positioned on growing markets (1) China and South East Asia, excluding India 7
2. Divisional performance 8
Industrial Battery Group Strong growth in both nickel and Li-ion batteries Stationary (1) + 10.4 % / 10,2% (2) 243.3m 2014 sales 58% of IBG sales Strong growth in ESS: - grid scale projects - Slow emergence of residential Robust industrial standby sales growth: - Gain of market share - Strong growth in Middle East and India Telecom sales down: - End of large Reliance contract - High growth in sales of nickel batteries in the US 415.9m +13.3% Transportation (1) + 16.0% / 15.4% (2) 158.5m 2014 sales 38% of IBG sales Strong sales growth on all markets. Li-ion drove sales growth in aviation and vehicles. Railway sales increase driven by Asian markets. (1) Excluding 14.1m of sales of electrodes to Arts Energy (2) Growth by segment: Constant exchange rates / Actual rates 9
Specialty Battery Group A return to growth driven by civil electronics markets Civil Electronics 179.3m 2014 sales + 13.0% / 13.1% (1) 68% of SBG sales Strong sales growth driven by metering. Asian & European metering markets growing. Increased market share in China. Space & Defence 83.2m 2014 sales (15.1)% / (15.1)% (1) 32% of SBG sales 262.5m +2.1% Reduced defence sales in all segments. Slight decrease in space sales due to timing of deliveries. (1) Growth by segment: Constant exchange rates / Actual rates 10
EBITDA : Increased profitability in both divisions Industrial Battery Group 47.2m 38.8m 11.3% Specialty Battery Group 62.6m 59.1m 23.8% 23.1% 10.5% 2013 2014 Strong positive impact from volumes Continued improvement in performance of Li-ion operations P&L impacted by YoY increase in product development costs 2013 2014 Good increase in profitability despite limited sales growth Continued focus on cost control 11
3. Detailed financial review 12
Improved operational profitability m 2014 Reported 2013 Reported Sales 678.4 624.2 Gross profit 193.3 170.8 Operating costs (128.9) (116.3) EBIT 64.4 54.5 Depreciation/amortization 39.6 38.0 EBITDA 104.0 92.5 13
Strong increase in EPS of 27.1% m 2014 Reported 2013 Reported EBIT 64.4 54.5 Other operating income / (expenses) (0.6) 6.6 Operating profit/(loss) 63.8 61.1 Net finance costs (2.1) (10.5) Share of profit / (loss) of associates (1) 1.9 1.5 Income tax expense from continuing operations (15.5) (10.4) Net profit/(loss) from continuing operations 48.1 41.7 Net profit/(loss) from discontinued operations - (5.2) Net income 48.1 36.5 EPS ( per share) 1.83 1.44 Saft to propose a 5.1% increase in dividend of 0.82 per share. (1) Saft s 50% share in ASB net income. 14
Solid cash flow generation m 2014 2013 Net cash provided by operating activities 78.9 54.2 Net cash used in investing activities (32.8) (56.9) Net cash generated by/(used in) financing activities (4.0) 1.8 Net cash generated by/(used in) continuing operations Net cash generated by/(used in) discontinued operations 42.1 (0.9) - (8.4) Net increase/ (decrease) in cash 42.1 (9.3) Cash at end of period 150.2 101.4 Free cash flow 46.2 16.6 (1) (1) Before capital transactions, i.e. acquisition for 8.5m of Nersac Li-ion production unit. 15
A strong balance sheet m 2014 2013 Gross financial debt 227.6 213.0 Net financial debt 77.4 111.6 Net debt to EBITDA ratio (1) 0.65 1.18 (1) Calculated as per contractual terms. 16
4. Fostering profitable growth for Saft 17
Improving efficiency Continuously streamlining our operations Cost optimization project in Lithium-ion production facilities Expanding battery assembly capacity in lower cost countries Closure of Precious Plate Florida 18
Fostering future growth Increasing our production capacity to meet growing demand Expanding battery assembly capacity in lower cost countries Cost optimization project in Lithium-ion production facilities Increased production capacity in rail and stationary in France Closure of Precious Plate Florida Factory expansion in China (SOP H1 2016) New MnO2 production line in Valdese (SOP H2 2015) Additional production line in Tadiran (SOP end of 2016) 19
Fostering future growth Expanding our presence in emerging economies Expanding battery assembly capacity in lower cost countries Cost optimization project in Lithium-ion production facilities Increased production capacity in rail and stationary in France Closure of Precious Plate Florida Factory expansion in China (SOP H1 2016) New MnO2 production line in Valdese (SOP H2 2015) Additional production line in Tadiran (SOP end of 2016) Strengthening of sales & marketing teams in Asia Reinforcing our sales & service teams in India 20
Saft s short and mid-term perspectives for Li-ion What we know: production launches First deliveries of Airbus A350 batteries from H2 2015. Launch by Kion of its new electric forklift truck range with Saft batteries. Saft batteries in electric and hybrid buses in scale test in Stockholm and Hamburg for major European manufacturer - SOP H1 2016. 6T military starting battery launch in 2015. What we see: market trends Storage of renewable and grid management: pipe of ESS commercial projects remains good. Slow adoption of residential storage but promising medium-term prospects. Telecom: strong potential in emerging markets. New stationary applications: large UPS, data centers. Growth opportunities in marine and medical markets. Current programmes generating basis for recurring Li-ion sales for Saft 21
5. Outlook 22
2015 and mid-term objectives 2015 Sales growth 5% at constant exchange rates. EBITDA margin 15.8% Mi-term objectives confirmed 23
Appendices 24
2013 & 2014 quarterly sales Q1 Q2 Q3 Q4 In m at actual exchange rates 2013 2014 2013 2014 2013 2014 2013 2014 IBG 74.6 93.2 85.3 112.3 90.5 92.5 117.5 117.9 SBG 58.9 61.0 66.1 63.6 62.7 64.3 68.6 73.6 Total 133.5 154.2 151.4 175.9 153.2 156.8 186.1 191.5 25
2015-2018 Ambitions Positive market trends Focused growth strategy Strong trends supporting long-term battery markets demand 35 % CAGR for demand for Li-ion ESS applications >15 % CAGR for demand for new Li-ion: UPS, telecom, forklifts, medical, residential and grid ESS + Continue to grow sales for traditional technologies in existing markets Create additional growth poles with Li-ion technology Opportunistic approach on add-on acquisitions / partnerships Our mid-term targets 8 to 10 % CAGR in sales at constant exchange rates through organic expansion* over 2015-2018 period EBITDA margin above 17 % * Improved cash generation from improved WC discipline and lower capex Balance value creation allocation between investment for growth and returns to shareholders * Excluding effect of major economic downturn and excluding impact of potential acquisitions 26