analyst & media conference callww3.tecan.com/platform/content/element/8014/110818... · analyst...

Half Year Results 2011Analyst & Media Conference Call

Zürich, August 18th 2011

Thomas Bachmann, CEODr. Rudolf Eugster, CFO

Speakers

Tecan Half Year Results 2011 / August 18th 2011 / p3

Agenda

• Introduction & Summary Thomas Bachmann

• Financial Results Dr. Rudolf Eugster

• Strategy & Outlook Thomas Bachmann

• Questions & Answers


H1 2011: Substantial Sales Growth in Local Currencies

020406080

100120140160180200

2010 2011

Rest of WorldAsiaEuropeNorth America

Sales

CH

F (m

io)

CH

F (m

io)

0

5

10

15

20

25

2010 2011

EBITNet Profit

Profitability

• Sales growth of 12.3% in local currencies• Sales increased by 2.2% in CHF • Europe: 11.5% above prior year in local currencies• North America: up 20.6% in local currencies• Asia: 6.2% below prior-year level in local

currencies; Japan down, strong growth in China

• Net Added Value Index (NAVI) = (EBIT + personnel expenses)/personnel expenses• Results from continuing operations only

• Solid profitability with EBIT margin of 11.5%• Corresponding to EBIT margin of 13.7% at

H1 2010 constant currencies (negative FX impact)• Increased investments in R&D by 2.5% of sales

• Significantly increased Net Profit margin of 12.8%

• Productivity (NAVI) remaining on high level


• Sales growth was broad-based, encompassing both business segments• Life Sciences Business (end-customer business): up 18.1% in LC• Partnering Business (OEM business): 5.7% above prior-year level in LC

• Good performance in Services and Consumables (in LC: Services & Consumables: +13.7%; Consumables only: +19.7%); 32% of total sales

• Order Entry increased by 12.0% in local currencies; H1 2011 Order Entry significantly above H1 2011 sales

• Order Backlog at record level

• Achieved above-average price increases and further material cost savings

• Solid cash flow from operating activities

• Balance sheet further strengthened

H1 2011 – Strong Business Performance


Agenda






H1 2011 Sales Performance

• Sales H1 2011 vs. H1 2010

• +2.2% in Swiss Francs

• +12.3% in local currencies

• Order Entry H1 2011 vs. H1 2010

• +1.3% in Swiss Francs, to CHF 196.0m (H1 2010: CHF 193.4m)

• +12.0% in local currencies

181.9178.0

0

20

40

60

80

100

120

140

160

180

200

2010 2011

•H1 2010 results from continuing operations only

200.4

178.0

0

20

40

60

80

100

120

140

160

180

200

220

2010 2011

Sales (as reported)

Sales H1 2011 in constant currencies

CH

F (m

io)

CH

F (m

io)

Average exchange ratesCHF H1 2010 H1 2011EUR 1.44 1.27USD 1.08 0.90


H1 2011 Gross Profit

• Gross profit increased to CHF 90.8m

• CHF 2.0m or 2.2% above H1 2010

• Gross profit margin was stable at 49.9%

• -1.0% exchange rate impact

• -0.8% due to increase of OEM engineering income with low GP

• Net effect of +1.8% due to • product mix impact (+) • raw material cost savings (+) • price increases (+)

88.8 90.8

0

10

20

30

40

50

60

70

80

90

100

2010 2011

49.9

%

CH

F (m

io)

49.9

%

88.8

102.0

0

20

40

60

80

100

2010 2011

50.9

%

CH

F (m

io)

49.9

%

Gross Profit (% = as a % of sales)

Gross Profit H1 2011 in constant currencies



28.329.8

18.3 23.2

17.918.5

0

20

40

60

80

2010 2011

H1 2011 Cost Structure• Costs increased by CHF 4.0m (+6.0%)

• Selling & Marketing decreased by 5.3% • Positive FX effect from cost in Market Units• Increased investments in Market Units in local

currencies

• Net R&D expenses increased by 27.3%• R&D expenses increased from 10.3% of sales to

12.8% of sales• Gross R&D investments of CHF 42.4m

(H1 2010: CHF 22.3m), including CHF 1.8m capitalized R&D costs and CHF 18.4m for OEM partners

• G&A increased by 2.9%• Mainly due to higher costs for China and Life

Sciences Business strategy projects• In constant currencies G&A expenses decreased

as a percentage of sales

• In H1 2010 exchange rates, operating expenses as a percentage of sales stayed stable

66.0m 70.0m

(15.5%)

(12.8%)(10.3%)

(16.7%)

(10.2%)(10.1%)

CH

F (m

io)

(38.5%)(37.1%)

Operating Expenses (% = as a % of sales)

Expenses H1 2011 in constant currencies

31.129.8

18.324.5

17.9

19.1

0

20

40

60

80

2010 2011

66.0m

(15.5%)

(12.2%)(10.3%)

(16.7%)

(9.5%)

(10.1%)

CH

F (m

io)

(37.2%)(37.1%)

74.6m

G&A

R&D

S&M

G&A

R&D

S&M



H1 2011 EBIT

23.1

20.8

0

5

10

15

20

25

2010 2011

CH

F (m

io)

• EBIT reached CHF 20.8m• CHF 2.3m below H1 2010:

• Negative exchange rate effect of CHF 6.6m• Positive net effect of CHF 4.3m due to

– increased volume (+) – product mix (+) – Price increases and material cost savings (+)

• EBIT margin was at 11.5% (H1 2010: 13.0%) despite:

• Increased R&D of 2.5 percentage points• Negative FX effect of 2.2 percentage points

• In H1 2010 exchange rates• EBIT increased by 18.6% to CHF 27.4m • EBIT margin increased to 13.7%; • Increased R&D efforts more than compensated

13.0

%

11.5

%

EBIT (% = as a % of sales)

EBIT H1 2011 in constant currencies

23.1

27.4

0

5

10

15

20

25

30

2010 2011

CH

F (m

io)

13.0

%

13.7

%



23.3

15.6

0

5

10

15

20

25

2010 2011

Net Profit

H1 2011 Net ProfitC

HF

(mio

)

% = Net Profit as a % of sales8.

8%

12.8

%

• Net profit increased by 49.4% to CHF 23.3m

• Due to better financial result of CHF 6.2m (H1 2010: loss of CHF 4.0m) and a lower tax rate

• Tax rate decreased to 13.6% (H1 2010: 18.4%)

• Tax audits closed; tax assets from former losses capitalized

• Projection of effective tax rate for FY 2011 between 17-18%

• Net profit margin increased to 12.8% (H1 2010: 8.8%)



H1 2011 Basic Earnings per Share

• Earnings per share increased by 44.7% to CHF 2.17

• Highest value for first half year in Tecan’s history

• Increased along with increased Net Profit

• Average number of shares at 10.7m (H1 2010: 10.4m)

1.50

2.17

0

0.5

1

1.5

2

2.5

2010 2011

Basic earnings per share

CH

F / s

hare



H1 2011 Cash Flow

• Solid cash flow from operations of CHF 18.0m (H1 2010: CHF 20.8m)• Figure includes additional CHF 12.6m for the development of a dedicated OEM

instrument currently capitalized in inventories

• Stable net working capital even including pre-financing of OEM development • Days Sales Outstanding again at stable low level of 51 days

• Investments of CHF 4.8m (H1 2010: CHF 5.2m), compared to CHF 4.4m for amortization & depreciation (H1 2010: CHF 4.6m)

• Cash flow from financing activities includes dividend payments of CHF 10.8m

• Net liquidity4 increased to CHF 137.4m (Dec. 31, 2010: CHF 135.4m)

020000400006000080000

100000120000140000160000

Cash at January 11

from Investments2 from

Financing

fromOperations

Cash at end of H1 2011

137.1m 138.5m+18.0m

-4.6m-12.0m3

3 Includes translation differences of CHF -1.9m4 Net Liquidity = cash and cash equivalents minus bank liabilities and loans

1 Includes time deposits of CHF 50.2m2 Excludes changes in time deposits


H1 2011 Segment Sales

78.8

99.2

79.5

102.3

0.0

20.0

40.0

60.0

80.0

100.0

120.0

20102011

Sales (in CHF millions)

Sales in local currency (change in %)

+18.1%

+5.7%

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

2011

Life Sciences Business

Partnering Business

• Life Sciences Business:• Sales 3.1% up in CHF and 18.1% in local

currencies• Considerable increase in demand for liquid

handling platforms in Biopharma and Forensics in the US and Europe

• Double-digit growth of Order Entry • Order Backlog further increased; highest

level ever

• Partnering Business:• Sales up by 1.0% in CHF and 5.7% in local

currencies• Despite high baseline resulting from special

orders in H1 2010• Growth mainly driven by increased sales

from spare parts; instrument sales slightly down

• Double-digit growth of Order Entry; H1 2011 Order Entry above level of sales


H1 2011 Segment Profitability

• Life Sciences Business:• EBIT and EBIT margin below prior year due to:

• Negative FX effect of 4.4 percentage points; EBIT margin at constant currencies of 6.5%

• Increased investments in R&D by 6.9 percentage points

• End-customer business generates majority of EBIT in second half year; FY 2010 EBIT margin of 10.9%

• Partnering Business:• EBIT and EBIT margin at stable high level

• Exchange rate effect is limited

• FY 2010 EBIT margin of 25.3%

23.3

3.7

23.4

2.4

0.0

5.0

10.0

15.0

20.0

25.0

20102011

EBIT (in CHF millions)

EBIT Margin as a % of sales

3.5%

28.8%

2.1%

28.6%

0

5

10

15

20

25

30

20102011

Life Sciences Business

Partnering Business

At constant FX6.5%


H1 2011 Regional Sales Development

3%

9%

37%

• Europe: significant negative exchange rate impact; substantial growth of end-user sales of liquid handling platforms; performance stays mixed across countries

• North America: also significantly impacted by exchange rate; increased end-user sales across all customer segments

• Asia: double-digit sales growth in China; Japan below prior year, partly due to the Earthquake

• Others: sales slightly up in LC; low basis

Europe

North America

Asia

Others

YoY %

+0.4% in LC

- 9.7% in CHF YoY %

+20.6% in LC

+3.3% in CHF

YoY %- 6.2% in LC

- 15.2% in CHF

YoY %

+11.5% in LC

+6.0% in CHF

51%

•Compared to continuing operations in H1 2010


H1 2011 Key Figures

Net Liquidity = cash and cash equivalents minus bank liabilities and loansNet Added Value Index (NAVI) = (EBIT + personnel expenses)/personnel expenses•H1 2010 figures from Income Statement and ratios are from continuing operations only

CHF m 2010 2011 Δ 10/11 Sales 178.0 181.9 2.2%

Gross Profit 88.8 90.8 2.2%in % of sales 49.9% 49.9%

R&D 18.3 23.2 27.3%in % of sales 10.3% 12.8%

OPEX 66.0 70.0 6.0%in % of sales 37.1% 38.5%

Operating profit / EBIT 23.1 20.8 -9.8%in % of sales 13.0% 11.5%

Net profit 15.6 23.3 49.4%in % of sales 8.8% 12.8%

EPS 1.5 2.17 44.7%

Return on net assets (RONA) 57% 49% -14.0%Net Added Value Index* 1.36 1.32 -2.9%Net liquidity (1) 135.4 137.4 1.5%Net working capital (1) 23.3 26.8 15.0%Equity (1) 228.0 239.1 4.9%Cash Flow (operating) 20.8 18.0 -13.5%(1) 2010 balance sheet figures are as of Dec. 31, 2010


Agenda






Key Priorities 2011

• Important milestones are scheduled to be achieved during 2011

• Various key programs ongoing in End-user and OEM business

• Continued implementation of INSPIRE project to further improve the Group-wide innovation management process

Drive Innovation

• Regain momentum lost over past years; partly as result of economic crisis

• Better tap the full potential of products and sales organization

• Strengthen sales activities, particularly in emerging markets

• Enhance broad product portfolio with new, innovative, third party products to benefit customers and leverage cost synergies

RegainMomentum in End-customerBusiness

As shown on March 10, 2011 Update August 18, 2011• Important milestones reached in all

major R&D programs; more are scheduled during rest of the year

• Several new product launches ahead in Q4/2011 & Q1/2012

• Improved resource & skill planning tool; strengthened project management and implemented portfolio planning & management

• Significant growth in H1 2011 of 18% in LC; highest Order Backlog

• Sales management team across regions strengthened; organization gaining momentum

• Project to refine the China strategy almost complete

• Product launches as part of distribution agreements with Hewlett-Packard and Attana


Key Priorities 2011

• Further reduce net currency exposure in Euro and US Dollar

• Move higher share of supply chain into Euro and US Dollar countries

• Consider new infrastructure expansion abroad

• Conclude OEM and distributor agreements in Swiss Francs

ReduceExchange Rate Exposure

• New Tecan Group organization to support execution of growth strategy

• Strong market orientation with two distinct businesses

• Accelerate innovation

Benefit fromnew Group Organization

As shown on March 10, 2011 Update August 18, 2011

• Programs started at all production sites

• Sourcing programs in the Asian & US regions ongoing; current focus on Detection instruments, OEM instruments and components

• Established R&D program with lab space in San Jose, USA

• Two major OEM agreements concluded in Swiss Francs

• New organization established; management and skills strengthened; transition went very well

• Gaining momentum and positive impacts in markets

• Positive perception among investors due to better visibility


Outlook for Full Year 2011

Mid-single-digit sales growth in local currencies

Sales FY 2011 Profitability FY 2011As of March 10, 2011

EBIT Margin of 12-13%Based on average FX rates of:1.30 EUR/CHF and 1.00 USD/CHF

Sales forecast increasedSales growth in local currencies inthe high single digits

Updated guidance as of August 18, 2011

Profitability target confirmedEBIT Margin of 12-13%Based on average FX rates of:1.20 EUR/CHF and 0.85 USD/CHF


Agenda






Next Events2011:December 1: Analyst & Investor Day

2012:March 8: Full Year 2011 financial resultsApril 18: Annual Shareholder Meeting

ContactMartin Braendle

Head of Corporate Communications & Investor Relations

Phone: +41 (0) 44 922 84 30

[email protected]

www.tecan.com

Safe Harbor StatementAll statements in this presentation not referring to historical facts are predictions of the future and constitute no guarantee whatsoever of future performances. They are subject to risks and uncertainties including, but not limited to, future global economic conditions, exchange rates, legal regulations, market conditions, activities of competitors and other factors outside the Company’s control.

Tecan Group AG is making all efforts to include accurate and up-to-date information into this presentation. Yet, it cannot be ruled out that omissions or errors might have occurred. Therefore, Tecan Group AG cannot make any representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this presentation. Changes in this presentation can be made any time without notice. All mentioned trademarks are protected by law. © Tecan Group AG, Tecan Trading AG, Switzerland, all rights reserved.

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