interim report q2 2015 - zonebourse.com · meur q2 2015 q2 2014 change % net ... aerospace &...

Interim report Q2 2015

7 August 2015

HEXAGON INTERM REPORT 1 JANUARY – 30 JUNE 2015 2

1. NET SALES AND EARNINGS

2. MARKET DEVELOPMENT

3. REPORTING SEGMENTS

4. ORDERS AND

PRODUCT RELEASES

5. SUMMARY

Net sales and earnings


Overview Q2 2015

Organic growth of 5 per cent & recorded growth of 23 per cent

• Growth was primarily driven by Industrial Enterprise Solutions which

benefited from strong performance in both Metrology and PP&M

• USA continues to expand and Western Europe’s growth is

recovering, but traditional growth markets such as Brazil, Russia and

China are suffering from weak demand and political turmoil

Improved profitability and cash flow

• Gross margin of 61 per cent and EBIT margin of 23 per cent

• Cost savings programme initiated and running according to time

table; 4.5 MEUR of savings in the quarter

• Operating cash flow improved by 16 per cent


0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

600

700

800

Seasonality in profit

Seasonal pattern: Q1 weakest, Q3 second weakest, Q2 & Q4 strong

EBIT Margin %

EBIT1

MEUR

Net Sales


Key figures Q2 2015

1) Adjusted to fixed exchange rates and a comparable group structure

MEUR Q2 2015 Q2 2014 Change %

Net sales 780.7 635.6 51)

Operating earnings (EBITDA) 229.7 178.2 29

Operating margin, (EBITDA) % 29.4 28.0 1.4

Operating earnings (EBIT1) 177.3 139.6 27

Operating margin, % 22.7 22.0 0.7

Earnings before taxes 170.3 131.5 30

Net earnings 136.2 105.1 30

Earnings per share, EUR 0.37 0.29 28


Key figures first six months 2015

1) Adjusted to fixed exchange rates and a comparable group structure

MEUR H1 2015 H1 2014 Change %

Net sales 1,485.8 1,230.4 51)

Operating earnings (EBITDA) 893.6 695.4 29

Operating margin, (EBITDA) % 28.8 27.5 1.3

Operating earnings (EBIT1) 327.1 263.0 24

Operating margin, % 22.0 21.4 0.6

Earnings before taxes, excl. non-recurring items 312.5 246.7 27

Non-recurring items 2) -36.6 -17.4 n.a.

Earnings before taxes 275.9 229.3 20

Net earnings 220.2 183.2 20

Net earnings, excl. non-recurring items 250.0 197.3 27

Earnings per share, EUR 0.61 0.51 20

Earnings per share, excl. non-recurring items 0.69 0.55 25

2) Non-recurring items in H1 2015 relate to the implementation of a cost savings programme


• Operating cash flow in Q2 2015 improved by 16 per cent to 77.0 MEUR (66.5)

• Working capital movement attributed to Geosystems which had a back-end loaded quarter as well as an inventory

build-up due to several product releases

• Investments in intangible assets increasing as a result of FX movements, where R&D centres in USA and Switzerland

are experiencing a cost increase when translated to euro

MEUR Q2 2015 Q2 2014 H1 2015 H1 2014

Cash flow from operations before changes in working capital

excl. taxes and interest

228.6 176.8 420.5 337.3

Taxes paid -29.2 -26.5 -58.1 -44.1

Interest received and paid, net -4.7 -6.7 -9.9 -13.2

Cash flow from operations before changes in working capital 194.7 143.6 352.5 280.0

Change in working capital -48.4 -14.7 -81.4 -49.7

Cash flow from operations 146.3 128.9 271.1 230.3

Investments tangible assets -11.5 -23.7 -19.4 -38.1

Investments intangible assets -48.4 -38.7 -95.7 -75.5

Operating cash flow 86.4 66.5 156.0 116.7

Non-recurring cash flow -9.4 - -13.9 -3.7

Operating cash flow after non-recurring items 77.0 66.5 142.1 113.0

Cash flow


Working capital to sales

0%

5%

10%

15%

20%

25%

30%

35%

Full impact from

recurring revenue

Working

capital

build-up in

Geosystems

Consolidation

of Intergraph


Effects and actions related to FX movements

MEUR

Q2 15 as

reported

Impact

from

savings

Impact

from CHF

Impact from

other FX

movements

Q2 15

adjusted

for FX,

savings

Q2 14 as

reported

Net sales 780.7 - 2.5 79.4 698.8 635.6

Operating

earnings (EBIT1) 177.3 4.5 -8.9 24.4 157.3 139.6

Operating

margin, % 22.7 0.5 -1.2 0.9 22.5 22.0

• Currency had a negative impact on margins in Q2 of -0.3 percentage points

• The strengthening of the Swiss franc had a negative impact of -1.2 percentage points

• Other currency movements had a positive impact of 0.9 percentage points

• Cost programme running according to plan and generated savings of approximately 4.5

MEUR or 0.5 per cent on the operating margin in Q2

Market development


Western Europe

8%

(10)

EMEA (excluding Western Europe)

Sales mix Hexagon Q2 2015 (Q2 2014)

30%

(31)

31%

(27)

North America

South America

Asia Pacific (excluding China)

12%

(12)

15%

(15)

China

4%

(5)


CONTRIBUTORS TO GROWTH1) (descending order)

Q2 2014 635.6

North America

Western Europe

Eastern Europe, Middle East & Africa

Asia ex. China

China

South America

Russia

Q2 2015 780.7

1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)

>8%

0 to 8%

Negative

Analysis of organic growth1) per geographic region


Share

of sales 1)

W EU

30%

EMEA 2)

8%

NA

31%

SA

4%

CN

15%

ASIA 3)

12%

Surveying 23%

Power & Energy 20%

Electronics & Manufacturing 12%

Infrastructure & Construction 11%

Safety & Security 10%

Automotive 10%

Aerospace & Defence 8%

Other 6%

TOTAL

1) Sales per customer segment as of 31 December 2014 and sales by region as of Q2 2015

2) Eastern Europe (including Russia), Middle East and Africa

3) Asia, excluding China

x

Analysis of organic growth1) per geographic region

>8%

0 to 8%

Negative


0

20

40

60

80

100

120

140

160

180

Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

Organic growth1) per geographic region

1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)

Index Q2 2008 = 100

Asia

27% EMEA

38%

Americas

35%

Americas

EMEA

Asia

Total

Share of sales

Q2 2015


• Western Europe recorded 5 per cent

organic growth; the positives were the ‘Big

5’, i.e. UK, Germany, France, Spain and

Italy

• Segments such as automotive,

manufacturing and power & energy

recorded strong performance in Western

Europe

• Middle East, Africa and Eastern Europe all

grew but weakness in Russia (-36 per

cent) continued to hamper overall growth

rates, leaving EMEA growth at 4 per cent Q2 Share of sales, % 38

Q2 Organic growth, % 4

- Organic growth, GES % -1

- Organic growth, IES % 12

EMEA market trends, Q2 2015


• The demand in NAFTA remained strong,

driven by Mexico and USA. Canada

recorded negative growth

• In USA, growth was driven by

infrastructure-related activities and

initiatives such as the Hexagon Imagery

Programme. A large perpetual software

contract boosted organic growth in North

America

• South America recorded 4 per cent organic

growth despite double-digit sales decline in

Brazil. Growth was driven by mining

project orders in Peru

AMERICAS market trends, Q2 2015

Q2 Share of sales, % 35


- Organic growth, GES % 6



• 2 per cent organic growth in China. IES

showed organic growth of 10 per cent

driven primarily by the electronics

segment, while GES saw -24 per cent

organic growth due to weakening market

conditions in construction

• Rest of Asia recorded growth, driven by

markets such as Japan and Vietnam

• Australia reported double-digit growth,

driven by a strong quarter for mining

ASIA market trends, Q2 2015

Q2 Share of sales, % 27


- Organic growth, GES % -3


Reporting segments


35%

25%

25%

15%

Sales per segment

Power &Energy

Automotive

Electronics &Manufacturing

Aerospace &Defence

Industrial Enterprise Solutions – Q2 2015 overview

Software & services Recurring revenues Direct sales Emerging markets

%

CAD CAM Stationary sensors

Portable sensors Asset management Services

Organic growth of 9 per cent

• Metrology – 8 per cent organic growth driven by continued solid demand in Western Europe and China

• PP&M – 10 per cent organic growth. Sales boosted by a large perpetual software order. Adjusting for this, PP&M saw mid-single digit organic growth

EBIT1 growth of 42 per cent

• Sales of 395.1 MEUR (296.9)

• EBIT1 increased by 42 per cent to 109.5 MEUR (77.2). Margin of 27.7 per cent (26.0)

• The operating margin (EBIT1) was positively impacted by the strong performance for PP&M and the changing business model of Metrology

30%

32%

38%

Sales per geography

Americas

EMEA

Asia


Software & services Recurring revenues Direct sales Emerging markets

%

Mapping 3D scanning Public safety

Geospatial Enterprise Solutions – Q2 2015 overview

Organic growth of 1 per cent

• Geosystems – Organic growth of 2 per cent;

surveying saw strength in North America and

Europe, but overall growth hampered by Russia,

China and Brazil

• SG&I – 1 per cent organic growth; order backlog

has improved in recent months and growth rates

will increase in coming quarters

• Positioning – Organic growth of -1 per cent; the

Chinese market weakened for NovAtel

EBIT1 growth of 11 per cent

• Sales of 385.6 MEUR (338.7)

• EBIT1 increased by 11 per cent to 74.6 MEUR

(67.0). Margin of 19.3 per cent (19.8)

• The operating margin saw a negative impact from a

less favourable business mix and FX

45%

20%

12%

11%

7% 5%

Sales per segment Surveying

Infrastructure &ConstructionNatural Resources

Public Safety

Transportion &UtilitiesDefence

40%

43%

17%

Sales per geography

Americas

EMEA

Asia

Surveying Machine control Positioning


Gross margin – R12M quarterly data

%

GM %

Trend %

R12M 59% (56)

30

35

40

45

50

55

60

65

2008 2009 2010 2011 2012 2013 2014 2015


10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015

2016 Target

Operating margin – R12M quarterly data

EBIT1, %

%

R12M 22% (21%)

Orders and product releases


Toyo Engineering Corporation (TOYO), one of Japan's

leading EPCs, added Smart 3D design software to deliver a

large-scale steam cracker complex in Malaysia

• The project is part of the Refinery and Petrochemicals Integrated

Development (RAPID) mega project – a 300,000-barrels-per-day

refinery and petrochemical complex

Yanbu Aramco Sinopec Refining Company Ltd.

(YASREF) is relying on Hexagon’s SmartPlant Enterprise

solutions to optimise a refinery in Saudi Arabia

• This 400,000-barrel-per-day integrated petroleum refinery

involves many EPCs, elevating the importance of maximising

resource utilisation and reducing project costs with Hexagon’s

solutions

Hexagon support downstream investments through SmartPlant


360 SIMS zooms into operation at Fiat Chrysler

Fiat Chrysler Automobiles (FCA) purchased

Hexagon Metrology’s 360° SIMS for its Italian

Mirafiori plant

• The system will perform measurement of new top-

class vehicles

• The Mirafiori installation follows two off-line cells

recently delivered to other FCA plants in Italy


More traction for Hexagon’s portable business

Strong quarter for Hexagon Metrology’s

portable business – the recent launch of the

new laser tracker and arm generation lines

continue to generate market excitement

• Example of customer use:

• Boeing upgraded to the Leica Absolute

Tracker AT930 with Spatial Analyzer software

– a portable sensor capable of taking high-

volume measurements in 3D

• AT930s will be used in multiple buildings

throughout the Boeing Everett facility, home

to the 747, 767, 777 and 787 Dreamliner

production lines


NEC Corporation, a Japanese multinational

provider of information technology services

headquartered in Tokyo, purchased

G-III reference receivers from Hexagon Positioning

• The G-III receivers will be used to monitor the integrity

of satellites and provide continuous, reliable operation

in the Quazi-Zenith Satellite System (QZSS)

• QZSS is a Japanese-deployed, regional three-satellite

GNSS augmentation system

Hexagon technologies to improve Japanese satellite system

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCNu8l-2s8cYCFYaVDQodNkYFVA&url=https://en.wikipedia.org/wiki/Quasi-Zenith_Satellite_System&ei=_eqwVZvKC4arNraMlaAF&bvm=bv.98476267,d.eXY&psig=AFQjCNGS_ChaAdyqYpZgI0TePoVmh28ySQ&ust=1437744224474349


New partnerships combine satellite imagery and earth

observation data with Hexagon’s geospatial software

• BlackSky Global is a “satellite imaging as a service” provider

with plans to deploy a 60-satellite imaging constellation by

2019, offering a near real-time view of the earth

• Airbus Defence and Space has a portfolio that spans the

entire geo-information value chain, covering any point on earth

at least once a day

• The combined solution offers a powerful platform to build and

deliver localised, vertical market applications that improve

customer accessibility to the data they need

Content-sharing partnerships pave way for smart applications


Hexagon supports productivity in safety and utility applications

Optimising command and control operations in Portugal

• I/CAD, a command and control room operations solution from

Hexagon, optimises nationwide emergency call taking in Portugal

Improving highway safety in Mississippi, USA

• The Mississippi Department of Transportation (MDOT), which

manages 75,000 miles of roads across 82 counties, implemented

Hexagon’s safety management system

Improving efficiency for CLP Power Hong Kong Limited

• CLP Power Hong Kong Limited, which also spans across mainland

China, India, Southeast Asia, Taiwan and Australia, acquired

Hexagon’s asset and facilities management system to discover

origins and paths of power outages


Helping mines in South Africa meet regulations

South Africa’s Department of Mineral

Resources is enforcing new regulations

compelling surface mines to enhance safety

• To meet these requirements, mines in South Africa

are using Hexagon Mining’s SAFEmine Collision

Avoidance System (CAS)

• SAFEmine CAS is already at work in more than

9,000 mining vehicles across South Africa

• Five additional large mine sites recently committed

to installing the new, fully compatible, third-

generation SAFEmine CAS into their fleets


Further success for Hexagon’s fleet management systems

Sweden

Boliden Minerals is using Leica JPS, an augmented

positioning system to GNSS, to provide cm-level

positioning to its fleet of drills in the Aitik copper mine

in Northern Sweden

Peru

Toquepala Copper Mine, the world’s fifth-largest

copper mine, purchased Jigsaw Fleet Management

System (FMS) to equip and manage 62 trucks, 11

loaders and nine drills

USA

Barrick Goldstrike purchased Jigsaw FMS to replace

an existing system


Major software launch from Geosystems

The Leica Captivate software enables realistic 3D

renderings through familiar apps and easy-to-use

touch technology

• An industry-revolutionising software that enables

measurement professionals to capture and manage

complex data easily and accurately

• With a simple swipe, users can navigate through

customisable apps containing information for multiple

projects – using 3D renderings for optimal viewing and

manipulation

• Enables the world’s first self-learning total stations and

MultiStations


New RS3 integrated laser scanner offers more detailed

3D point clouds with significant time savings

• Dramatic performance improvements compared to the

previous RS2 model:

• Double the scan rate – enabling users to inspect like-for-

like parts in approximately half the time

• Increase in point cloud density – which means faster, more

detailed scanning without compromising accuracy

Speeding up inspection


MMS Pulse – an innovative part of the smart, connected factory

MMS PULSE is a monitoring system that offers

real-time insights into factors affecting quality

inspection and part of the larger MMS (metrology

management system) suite of software tools and

business practices for managing metrology data

• Taps into the Internet of Things concept, creating a

network of physical objects which communicate and

interact via real-time connectivity

• Provides equipment status alerts, crash notifications

and renders machines aware of their environment

using a network of sensors to record variations in

temperature, vibration and humidity


Shell is working to create an integrated engineering

environment, called ProjectVantage, to deliver safer,

faster, and better management of capital projects:

• ProjectVantage provides an integrated, data-centric platform

to enable data consistency across suppliers and engineering

disciplines

• ProjectVantage is based on Hexagon’s SmartPlant Cloud

solution and application software like Smart Data Validator

(SDV)

• Developed in close cooperation with Shell, SDV manages

data integrity as it moves from one source to another,

significantly reducing the time and costs associated with

engineering data migrations and handover

Hexagon and Shell drive down costs with the release of SDV

“Shell expects key savings to come from the single-source availability of up-to-date design information, semi-automated data

validation and consistency checking across disciplines, locations and contractors.”

Attribution: Ben van Beurden, CEO, Royal Dutch Shell plc, World Gas Conference, Paris, France, June 2, 2015

http://bit.ly/1Im3FLu

Summary


Summary Q2 2015

• 5 per cent organic growth driven by recovery in Western

Europe and continuous strength in North America. Weak

quarter and uncertain outlook for BRICs

• The operating margin was positively impacted by organic

growth, acquisitions and cost reductions but negatively

impacted by currencies

• Savings programme progressing according to plan

• Strong cash flow underlines potential for M&A


Disclaimer

This presentation contains forward-looking statements. These

forward-looking statements reflect the views of Hexagon's

management as of the date of this presentation. The forward

looking statements may involve risks and uncertainties, including

technological advances in the measurement field, product

demand and market acceptance, the effect of economic

conditions, the impact of competitive products and pricing, foreign

currency exchange rates and other risks. Please read our

earnings reports and our most recent annual report for a better

understanding of these risks and uncertainties. All of these

forward-looking statements are based on estimates and

assumptions made by Hexagon's management and are believed

to be reasonable, but are inherently uncertain and difficult to

predict. Actual results or experience could differ materially from

the forward-looking statements. Hexagon disclaims any intention

or obligation to update these forward-looking statements. It should

also be noted that past performance is not a guide to future

performance and that interim results are not necessarily indicative

of the full year results.

THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF

SECURITIES IN THE UNITED STATES OR ANY OTHER

JURISDICTION; SECURITIES MAY NOT BE OFFERED OR

SOLD IN THE UNITED STATES ABSENT REGISTRATION OR

EXEMPTION FROM REGISTRATION, AND ANY PUBLIC

OFFERING OF SECURITIES TO BE MADE IN THE UNITED

STATES OR ANY OTHER JURISDICTION WILL BE MADE BY

MEANS OF FORMALLY DRAWN UP AND APPROVED

PROSPECTUS.

interim report q2 2015 - zonebourse.com · meur q2 2015 q2 2014 change % net ... aerospace &...

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