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Grupo Antolin-Irausa S.A. FY2014 results and acquisition of Magna Interiors
April 2015
1
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2
Today’s participants
Ernesto Antolín, Chairman
José Manuel Temiño, CEO
Jesús Pascual, COO (appointed CEO)
Luis Vega, CFO
Carlos García-Mendoza, Capital Markets and IR
3
Agenda
Update on FY2014 results
Acquisition of Magna Interiors
Investment rationale
Q&A
1
2
3
4
Grupo Antolin
Section 1
Update on FY2014 results
4
Revenue of €2,225m, up 6.8% from 2013(a) and versus industry production growth of 2.3%(b)
EBITDA of €267m, up 18.7% from 2013(a) with EBITDA margin of 12.0%
EBIT of €175m up 38.0% from 2013(a) with EBIT margin of 7.9%
Cash available of €154m
Syndicated revolving long-term credit facility of €200m undrawn and fully available, along with €14m other credit lines on hand
Net debt to EBITDA of 2.2x
FY2014 highlights
5
(a) For comparability purposes, 2013 results have been restated to reflect the effects of IFRS 11, which entered into force on 1st January, 2014
(b) As per LMC Automotive Global Automotive Production Forecast Quarter 4, 2014
1,170 1,210
598 644
186205130165
2,0852,225
2013PF 2014
€m
Overheads Doors Seating Lighting
Overheads performance linked to Europe and Asia. Doors sales are a
result of strong European performance. Both partially offset by Mercosur
underperformance and a stronger Euro
Excluding Euro appreciation in the year, Overheads sales would have
increased 4.8% (€16m impact) and Doors 11.2% (€24m impact)
Seating reflects the strong performance across PSA “Picasso” and
Daimler “Vito/Viano” and Renault “Master” projects
Lighting business unit benefited from new projects and geographic
exposure to Europe and China
Continued strong performance in Europe and Asia
Western Europe has driven European performance
NAFTA reflects impact of product lifecycles (ramp ups in 2015) and
stronger Euro (c €5m)
Mercosur underperformance is a combination of overall production decline
in Brazil (down 16% in 2014(b)) as well as a stronger Euro
Excluding Euro appreciation in the year, Grupo Antolin sales would have
increased by 8.6%
6
Strong performance across all divisions and Europe
+6.8%
+27%
+11%
+8%
+3%
(35%)
+27%
+1%
+12%
Sales evolution(a) (€m)
(a) For comparability purposes, 2013 results have been restated to reflect the effects of IFRS 11, which entered into force on 1st January, 2014
(b) As per LMC Automotive Global Automotive Production Forecast Quarter 4, 2014
1,178 1,315
663671
13016511475
2,0852,225
2013PF 2014
€m
Europe NAFTA APAC Mercosur
130164
76
7921
24
(4) (3)
2
4
2013PF 2014
€m
Europe NAFTA APAC Mercosur Others
108 116
7792
202821
29
(1)
2225
267
2013PF 2014
€m
Overheads Doors Seating Lighting Others
7
Significant growth in profitability
EBITDA margin of 12.0% reflecting improved fixed and variable costs
Steady Overheads margins (34bps margin increase) despite
underperformance in the USA, Russia and Brazil
Doors margins improvement of 144bps reflects increased sales and
new product launches
Seating (+298bps in margin) has benefited from ramp up in production
of new models, helping to improve fixed cost coverage
Lighting (+153bps in margin) continues to benefit from new
product launches in Europe and China
Excluding Euro appreciation in the year, Grupo Antolin EBITDA would
have increased by an additional €5m approximately
Continued strong performance in Europe helped by Seating, Doors
and Lighting
Asian outperformance on the back of new product launches in Lighting
and Overheads
NAFTA reflects stable sales
Mercosur reflects declining market - Brazil represents under 4% of
Grupo Antolin sales
EBITDA evolution(a) (€m)
+18.7%
+39%
+42%
+20%
+7%
+18%
+4%
+25%
(18%)
+62%
10.8% 12.0% Margin
(a) For comparability purposes, 2013 results have been restated to reflect the effects of IFRS 11, which entered into force on 1st January, 2014
8
2014 Capex, taxes and WC
Capex deployed principally in the Doors (35% overall capex) and
Overheads (31%) Business Units
Breakdown of Tangible and Intangible stable over time c 60/40%
Europe received c 76% of Capex, followed by NAFTA with c 12%
Cash taxes stable
Working capital increase of €70m in 2014 which can be broken down into:
€35m increase from operations (given +7% sales increase) linked to
the launch of significant new production sites this year (Missouri and
Valencia), increased weight of Lighting sales (with higher working
capital requirements) and the USD impact
€35m from increased tooling investments that support future sales
growth
Capex evolution(a) (€m)
Capex by product 2014 Capex by geography 2014
As %
of sales 5.5% 6.4%
Doors35%
Overheads31%
Other34%
Europe 76%
NAFTA 12%
RoW 12%
7286
43
58116
143
2013PF 2014
Tangible Intangible
(€m) FCF(b) EBITDA Capex Taxes ΔWC
Quarter 1 (32) 68 (25) (4) (71)
Quarter 2 37 76 (36) (8) 5
Quarter 3 (17) 53 (50) (8) (12)
Quarter 4 33 70 (32) (14) 9
Total 21 267 (143) (34) (70)
(a) For comparability purposes, 2013 results have been restated to reflect the effects of IFRS 11, which entered into force on 1st January, 2014
(b) FCF calculated as EBITDA – Capex – Taxes +/- Changes in Working Capital. FCF excludes the impact of receivables factoring.
Name Location Pending investment(a) Product Clients Opening dates
Man
ufa
ctu
rin
g facil
itie
s
Missouri Kansas (USA) US$2.8m Overhead systems Ford + GM May-2014
Valplast Sollana-Valencia (Spain) €4.7m Doors Ford + Nissan Sep-2014
Sibiu Sibiu (Romania) €0.1m Lighting Renault + Nissan +
PSA + Divers Sep-2014
Gujarat Sanand (India) €1.9m Overhead systems & Doors Ford Nov-2014
Wuhan Hubei (China) €1.7m (51% JV) Overhead systems &
Doors
Dongfeng Renault + Dongfeng PSA
+ Dongfeng Nissan + Dongfeng
Honda
Jan-2015
Wuhan Hubei (China) €2.4m (49% JV) Overhead systems &
Doors
Dongfeng Renault + Dongfeng PSA
+ Dongfeng Honda Jan-2015
Tlaxcala Tlaxcala (Mexico) US$32.5m Doors/Pillars/Headliners
sequence Audi Q1-2016
Tangier Tangier (Morocco) €2.8m Lighting Renault + VW + PSA Q1-2017
JIT
facil
itie
s
Hangzhou Zhejiang(China) €240k JIT Overhead systems Ford May-2014
Dalian Liaoning (China) €31k JIT Overhead systems Dongfeng Nissan Oct-2014
Changshu Jiangsu (China) €322K JIT Overhead systems Chery Jaguar Land Rover Oct-2014
Nizhny Novgorod Náberezhnye Chelny (Russia) €0.5m JIT Overhead systems Ford Jan-2015
Nanchang Jiangxi (China) €491k JIT Overhead systems Ford Feb-2015
Fuzhou Fujian(China) €124k JIT Overhead systems FBAC Q3-2015
Bangalore Bangalore (India) €300k JIT Overhead systems Toyota Q1-2016
Louisville Kentucky (USA) US$1.1m JIT Overhead systems Ford Q1-2016
Status of the plants under construction/development
9 (a) Indicates the remaining investments in the project, including ramp-up investments post facility opening
10
Debt maturity profile, as of 31 December 2014
Gross debt 31 December 2014
€751m
Net debt 31 December 2014
€597m
€400m senior secured notes
€200 senior financing
€70m ADE facility
€6m soft loans with cost; €39m soft loans with no cost
€28m other facilities, of which €15m are credit lines
€7m accrued interests
Cash available of €154m
For covenant purposes, Net debt totalled €557m (excludes soft loans with no financial
cost)
€200m undrawn syndicated revolving credit facility, and €14m of local credit lines
2015 2016 2017 2018 2019 2020 2021 2022
Term Loan ADE loan Soft loans Leasings Senior Secured Notes Other loans ST Credit & Interests
Covenants
2.1x Net Debt/EBITDA 6.5x EBITDA/Financial expenses
Covenant: under 3.5x
Covenant: over 4.0x
41 34 46 71
104
14
414
14
(a) Indicates the remaining investments in the project, including ramp-up investments post facility opening
Sales
2015 global market growth forecast at 3.7%(a)
Looking to outperform the market forecast
EBITDA margin expected to be in line with 2014 performance
Capex estimated at c. 6.5% of sales
2015 outlook for current business
11
(a) As per LMC Automotive Global Automotive Production Forecast Quarter 1, 2015
Grupo Antolin
Section 2
Acquisition of Magna Interiors
12
Grupo Antolin has signed the purchase agreement to acquire the interiors business of Magna International
Agreed purchase price is US$525 million, which is on a cash and debt free basis
The bulk of the acquisition closing is expected on or around end of July, subject to customary closing conditions; Chinese business acquisition expected to close in the second half of the year
Grupo Antolin has carried out a comprehensive due diligence process, visiting all 27 reporting divisions
Transaction was unanimously approved by the Grupo Antolin board and General Shareholders’ Meeting
Grupo Antolin will retain key senior managers of the Magna Interiors business
Positive initial feedback from key OEM customers who prefer dealing with bigger suppliers with wider product offering
Grupo Antolin has obtained long-term funding to pay the purchase price and fund incremental cash requirements
Syndicated lenders on our €400m facility have unanimously agreed to reset maturities for additional five years and have increased their commitments by €200m; at the same time margin will decrease by 50bps
6-year bridge funding to pay the purchase price expected to be taken out in the bond market
The existing €200m RCF will remain undrawn at closing
Grupo Antolin board does not rule out accessing the equity market in the future
Transaction overview
13
This is a strategic acquisition for Grupo Antolin
We estimate the combination creates the 3rd largest global player in automotive interiors and doubles Grupo Antolin’s current size
The combined business will have approximately 12% global market share in automotive interiors
Further diversification makes Grupo Antolin more resilient and affirms Grupo Antolin as a long term strategic automotive player:
Complementary technology and products with limited overlaps allowing Grupo Antolin to offer full interiors product range to
OEMs
Increased customer diversification expanding Grupo Antolin’s presence in the premium/luxury segment
Enhanced global footprint with increased presence in key automotive markets such as Germany and North America
We believe there are significant synergies to be achieved in this acquisition and significant potential for operational improvement of
the target under Grupo Antolin’s management
14
Strategic rationale
€m
Purchase price of Target(a) 460
Operational cash for Target 40
Funding for tooling(b) 60
Cash overfunding 20
Transaction costs 20
Total uses 600
15
Sources & Uses and Capital Structure
Sources Uses
€m
New long term financing 600
Total sources 600
Pro forma capital structure – December 2014 (€m)
(€m) Current (€m) x EBITDA ’14A Adjustments Pro forma (€m) x EBITDA ‘14 adjusted
Cash (154) (0.6x) (120) (274) (0.7x)
Term loan A 200 0.7x – 200 0.5x
ADE facility 70 0.3x – 70 0.2x
Soft loans 45 0.2x – 45 0.1x
Other facilities 35 0.1x – 35 0.1x
Senior secured notes 400 1.5x – 400 1.0x
New long term financing – – 600 600 1.5x
Total Net Debt 596 2.2x 480 1,076 2.8x
Undrawn syndicated RCF 200 – 200
EBITDA ‘14 267 390
(a) $525m purchase price at 1.14 EUR/USD exchange rate
(b) Vendor obtains tooling receivables as clients pay, €60m is Antolin’s estimate to replenish tooling working capital over 2 years
Source: Company information
Structuring EBITDA
Structuring EBITDA
(€m) 2014 Comments
Grupo Antolin
Grupo Antolin 2014 EBITDA 267
Magna Interiors
EBITDA pre management fee and central costs 36
Estimated IFRS adjustment 28 Grupo Antolin estimated development cost capitalised under IFRS, estimated at 1.5% of revenues
Estimated central costs (32) Grupo Antolin central cost estimates
EBITDA pre normalisations 32
Total one-off items 35 One-off costs primarily related to defective manufacturing of tools by Chinese supplier affecting
Redditch, with lesser impact for Spartanburg obsolete inventory and Toluca & Saltillo plant relocation
Launch cost overruns 35 Primarily related to tooling errors in Redditch, new products at Toluca & Saltillo plant and Spartanburg
capacity issues
Magna Interiors normalised EBITDA 103
Expected synergies 20 Estimated synergies expected to be achieved within 24 months
Total adjusted PF EBITDA 390
16
Financial data for Magna Interiors are unaudited, the management of Grupo Antolin has carried out adjustments and normalisations based on current information and estimates
Note: USD/EUR exchange rate of 1.33 (2014 average exchange rate)
Source: Company information
19%
15%
14%
13%
12%
7%
2%
Other 18%
17
Magna Interiors is a global supplier of interior products and systems
and is currently wholly owned by Magna International
It constitutes a global platform spanning over 27 reporting
divisions(a) across North America, Europe and Asia. Strong
geographical diversification allows Magna Interiors to take
advantage of global growth opportunities
As an interior supplier, Magna Interiors focuses on innovation,
offering a wide array of products including sidewall and trim
systems, cockpit systems, cargo management systems and
overhead systems
Split by market (2014) Sales split by client (2014) Sales split by product (2014)
Business overview Magna Interiors business profile
(a) Reporting divisions may include more than one facility
Country Reporting
divisions
Slovakia 1
Country Reporting
divisions
Germany 1
Country Reporting
divisions
US 5
Country Reporting
divisions
UK 3
Country Reporting
divisions
Czech Republic 1
Country Reporting
divisions
Austria 2
Country Reporting
divisions
India 1
Country Reporting
divisions
South Korea 1
Country Reporting
divisions
Mexico 2
Country Reporting
divisions
Hungary 2
Country Reporting
divisions
China 4
Door Panels 32%
Cockpit/JIT 21%
Carpets & Acoustics
14%
IP/Floor Consoles
12%
Garnish/ Hard Trim
11%
Overhead Systems
9%
Exteriors and Other
1%
Europe 54%
NAFTA 39%
APAC 7%
5.1%
6.5%
7.9%
8.3%
22.4%
24.0%
25.8%
18
Complementary product portfolio
Complementary product portfolios of combined entity would place
Grupo Antolin into a top 5 global market share position across four new
product lines: doors/door panels, instrument panels/floor consoles, and
garnish/hard trim
Leading position in door panels would be further strengthened by
the combination
State-of- the art technologies in automotive interiors
Further diversification of product line mix would reduce operational risk
and allow Grupo Antolin to service new and existing customers with
enhanced offerings
Note: Products lines presented as a % of entities total standalone sales
(a) Based on Magna 2013 estimates; includes financial results of plants to be excluded from sale
Market
position(a)
Cockpit/JIT
Door panels
Instrument panels/
floor consoles
Carpets and acoustics
Garnish/hard trim
Package trays/load floors Overhead systems
#3
#5
#5
#4
Cockpit &
instrument panels
Door panels Soft trim Garnish/
hard trim
Overhead systems Other interiors
products
EBITDA(b) Capex
Revenues(a) EBITDA margin(b)
19
Solid performance of Magna Interiors – unaudited management accounts
+4.8%
% CAGR 11-14
+10.8%
Note: Financial data are unaudited, presented according to US GAAP
(a) Aggregate production sales, excluding tooling sales. Joint ventures included as % held
(b) EBITDA normalised for non-recurring items (-US$5m, -US$8m, US$2m and US$94m in 2011, 2012, 2013 and 2014 respectively) and including estimated central costs of US$42m
Source: Deloitte, Grupo Antolin analysis
Adjusted EBITDA Estimated IFRS adjustment
103 102 101 100
32 34 37 36
135 136 138 136
0
50
100
150
2011 2012 2013 2014
(US
$m
)
62 67 7592
3234
37
3694101
112
128
0
50
100
150
2011 2012 2013 2014
(US
$m
)
6.4%6.0% 5.7%
5.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2011 2012 2013 2014
2,115
2,277
2,4722,433
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2011 2012 2013 2014
(US
$m
)
Grupo Antolin and Magna are jointly committed to ensure a smooth transaction that will not affect the day-to-day running of operations,
and will result in a more comprehensive supplier for customers with greater capabilities
Joint integration teams established
Clear roadmap with milestones
Magna will continue to support the business through transition
Senior leadership commitment to ensuring a success
Deloitte assisting in integration as an advisors
It is envisioned that Magna Interiors will be run as a separate Grupo Antolin Business Unit, retaining existing management team
Integration plans based on comprehensive due diligence, including site visits to all 27 reporting divisions
Acquisition across geographies well-known to Grupo Antolin
Committed to successful integration
20
Grupo Antolin
Section 3
Investment rationale
21
22
Investment rationale
Strengthen leading market positions 1
Further diversification provides improved resilience to combined group 2
Strengthen and enhance long-standing and strategic customer relationships 3
Synergy potential and margin improvement to further drive profitability 5
Attractive market fundamentals for scale operators 4
32%
54%
6%
36%
Company estimates of market shares and ranking for several products in Grupo Antolin markets 2014
23
Strengthen leading market positions… 1
Note: The number within each graph represents the expected position of Grupo Antolin in the ranking based on existing 2014 data. Darker colored countries represent Grupo Antolin Production/JIT presence. Market shares
are based on number of vehicles equipped
(a) Front overhead consoles
Source: Vehicle volumes based on LMC Automotive Q4 2014. Market shares based on company estimates
Overhead systems Lighting(a) Doors Sunvisors
1
1 1
1
1
NAFTA Market size: 16.9m vehicles
4
1
4
Ranking as main supplier
Worldwide Market size: 86.5m vehicles
Mercosur Market size: 3.8m vehicles
Europe Market size: 20.0m vehicles
India Market size: 3.5m vehicles
35%
9%
1
28%
67%
25%
2
21%
3%4%
10%
12%
13%
15%
0%
10%
20%
30%
40%
50%
60%
2013 pro forma
Ranking pre-acquisition(a) Ranking post-acquisition(a)
24
…by creating the world’s third largest interiors group post acquisition 1
(a) Based on market share estimate from 2014 Yanfengpress release. Based on Magna 2013 estimates; includes financial results of plants to be excluded from transaction
3%4%
6%
6%
10%
13%
15%
0%
10%
20%
30%
40%
50%
60%
2013
#1
#2
#3
#4
#5
#1
#2
#3
Combined global footprint
Source: Grupo Antolin’s footprint throughout document: Corporate Presentation 2014
Magna Interiors Grupo Antolin Magna Interiors – Grupo Antolin Plant overlap
2014 Pro forma combined
geographic revenue breakdown
Europe 56%
NAFTA 34%
South America
2%
Asia 7%
Other 1%
Combined entity deeply penetrates European market
Highly complementary businesses with revenue from all top 10 OEMs in Europe
Magna Interiors has a high proportion of business with premium/luxury OEM’s
such as BMW, Daimler and JLR
Grupo Antolin has a high proportion business with OEM’s such as VW Group, Ford
or Renault
Combined business will have full range of interiors products, demanded by OEMs
Leader across customer segments Well-positioned with OEM's in Europe
25
Combined business strengthens and enhances market leadership
Top 10 OEM’s in Europe
Company
Market
share(a) % of GA sales(b)
% of Magna
sales(c) Combined
VW Group 25% 18% 13% 16%
PSA Group 11% 11% na 6%
Renault Group 9% 15% na 8%
GM 8% 3% 14% 8%
Ford 7% 19% 2% 11%
Fiat Group 6% 12% 15% 13%
BMW Group 6% 3% 19% 10%
Daimler 6% 5% 12% 8%
Toyota Group 4% na 2% 1%
Hyundai 3% 4% na 2%
Broader diversification (a) Source: Statiska. Market share in the passenger car market in Europe in 2013, based on new registrations
(b) % of Grupo Antolin’s sales on a whole company basis (2014)
(c) % of Magna Interiors sales on a whole company basis (2014)
0% – 5% of sales 5% – 15% of sales >15 of sales
1
Business combination creating a leading global
player with complementary customer relationships
and growth in premium OEM segment
2014 (standalone) PF 2014 (combined)(b)
Geography
Client
Product
26
Further diversification provides improved resilience to combined group 2
(a) Excluding Spain
(b) Using exchange rate EUR/USD of 1.33. Magna Interiors breakdown based on Grupo Antolin estimates from information provided by Magna Interiors
2014 revenues: €2,225m 2014 revenues: €4,062m
Europe: 58%
Overheads52%
Doors31%
Seating9%
Lighting8%
Europe 56%
NAFTA 34%
South America
2%
Asia 7%
Other 1%
Overheads 33%
Doors 32% Cockpits/JIT
10%
Carpets and acoustics
6%
Instrument panels/Floor
consoles 5%
Seating 5%
Garnish/ Hard trim
5%
Lighting 4% Exteriors and
others 1%
Spain16%
Eastern Europe
12%
Western Europe (a)
31%
NAFTA30%
Asia-Pacific7%
Mercosur4%
Other1%
19%
18%
15%12%
11%
5%
4%
3%
3%3%
Others7%
Group
16%
13%
11%
10%5%8%
9%
8%
6%
2%1%
Others11%
Group
2000
7%3%4%5%
7%
13%
17%
17%
27%
2007
Strengthen long-standing and strategic customer relationships 3
27
Other
Group
€2,225m
Change in sales
importance
€627m
€1,685m
Group
Other Other
30%
(a) Using exchange rate EUR/USD of 1.33. Magna Interiors breakdown based on Grupo Antolin estimates from information provided by Magna Interiors
Other
Group
PF combined
revenue(a)
€4,062m
High revenue visibility given the long-term
nature of customer contracts
Group
7%
3%3%3%4%
5%
11%
12%
15%
18%
19%
2014
11%
1%2%
5%
6%
8%
8%
8%
10%
11%
13%
16%
2014 PF combined
28
Attractive market fundamentals will benefit scale operators 4
Comfort and affordable price
Sustainability and safety
Globalizations of platforms
Consolidation of supplier base
Technological partnerships
with OEMs
Growth outside traditional
markets
Vehicle production continues to grow globally with 4.4% CAGR expected through 2018
NAFTA 1
2
3
4
5
6
Key drivers/trends
Source: LMC Automotive world light vehicle assembly. Quarter 1, 2015. Vehicle production in millions
2014A 2015E 2016E 2017E 2018E
CAGR 14 – 18
2.6%
2014A 2015E 2016E 2017E 2018E
CAGR 14 – 18
Europe
3.3%
2014A 2015E 2016E 2017E 2018E
Asia Pacific
CAGR 14 – 18
5.2%
2014A 2015E 2016E 2017E 2018E
CAGR 14 – 18
South America
3.9%
2014A 2015E 2016E 2017E 2018E
CAGR 14 – 18
Total
4.3%
Overview of synergy opportunities for Magna Interiors and Grupo Antolin
Other potential synergies have been identified but not quantified and hence have not been included in the business plan,
providing additional upside potential
29
Synergy potential and margin improvement to further drive profitability 5
Synergy Description
SG
&A
Overhead reduction Removal of shared corporate services
Engineering/tooling advantages Reduced headcount
Lower cost tooling production
Technical/commercial centers R&D facilities: combine and rationalize
Likely significant because of overlap
CO
GS
Capacity rationalization Combinations due to excess capacity
Likely significant because of overlap
Sourcing advantages Discount on raw materials
“Best price”
Infusion of Magna Interiors’ “DNA” Magna Interiors employs best-in-class operators with expertise in operational
efficiency and supply chain efficiency
Rev
en
ue
Sharing of technology/IP Apply leading technologies to product portfolio
Apply best-in-class processes to reduce manufacturing cost
Customer relationships Cross-selling products to existing customer relationship to enhance growth profile
Up to US$26m (€20m) annual recurring synergies identified with upside
Expect to enhance EBITDA margins for the combined business going forward
Grupo Antolin
Q&A
30