august 2013 dr. hans brändle, ceo segment coating. hans brändle, ceo segment coating page 2...

05/08/2013

Oerlikon Segment Coating

August 2013

Dr. Hans Brändle, CEO Segment Coating

07/08/2013

Key investment highlights

Geographical expansion and operational excellence as key success factors 3

Undisputed technology leader: Innovation at the core of the Balzers’ DNA 4

Sustainable growth and profitability for more than a decade 5

2 Undisputed global market leader with non-replicable coating service network

1 Attractive growth market – megatrend towards advanced surface engineering

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CVD(b)

PVD(a)

Hardening Thermal Diffusion

(a) PVD = Physical Vapor Deposition (b) CVD = Chemical Vapor Deposition

Wear resistance

Friction

Hardness

Toughness

Bulk properties Surface properties

Hard

Chroming

Thermal

Spray

Technologies for engineering material properties of metals

Technology trends

PVD substitutes CVD

PPDTM replaces hard chroming

1 Megatrend towards advanced surface engineering

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50 x + - + -

Plasma

Plasma-assisted deposition of thin-films under high vacuum

Common technology

thin-film

0.001 mm

- 0.005 mm

Human hair 0.05 mm

1 Thin film technology: fastest growing advanced surface solution

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Limited number of high-end suppliers

Few service providers with global footprint

Sustainable market growth: > 2 times GDP growth; CAGR ~7%

Megatrend towards advanced surface engineering

Clean surface technologies as the market standard of tomorrow

R&D as key entry barrier in high-end applications

Customer proximity - and thus high density network – as success critical for tool coating services

Meeting particular requirements of highly diverse industrial applications

Dynamic growth of applications

Increase productivity

Reduce friction and wear

Change to clean surface solutions

Entry barriers

Competition

Needs Market characteristics

1 Thin film technology as an attractive growth market

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Benefit on COMPONENTS for the automotive and mechanical engineering market Reduced friction

- enables better fuel efficiency Increased wear resistance

- enables higher load capacity - extends life time - improves reliability

Benefit on TOOLS for metal processing Increased wear resistance

- enables higher productivity and leads to lower cost per piece

- improves life time

1 Unique benefits of thin film coatings

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save space

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92

13 12 05 03 04 11

56

09 10 07 08 06

Emerging Markets

Established Markets

# of coating centres

per July 2013

2 Non-replicable network of 92 coating centres in 33 countries – close to our customers

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Fundamentals Adding value to the customer’s product:

1. Receive parts 2. Coat parts 3. Send parts back to same

customer Key success factors Delivery time Constant quality in

product and service Goal Just in time < 48h service

(requires customer proximity < 200km)

Coating

~0.5 to 3 days

~1 day Pickup or parcel service

Customers

Automotive Tooling

~1 day Pickup or parcel service

Oerlikon Coating JGC Presentation, June 23, 2009

2 48h service as a standard: the coating service cycle of Oerlikon Balzers

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Production

Recoating Regrinding

Logistics

One-stop-shop for tool reconditioning

Example: a drill can be reconditioned up to 10 times

2 One-stop-shop for reconditioning as natural expansion of existing business model

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49%

20%

31%

Early mover: Expansion into emerging countries

Accelerated shift to Asia Extraordinary growth of China operations

Sales: Emerging markets drive growth

1995 2000 2005 2010

India Korea

Singapore

Brazil

Mexico

Poland

China

Argentina Thailand

Czech Rep.

Turkey Romania

Indonesia

Russia

60%21%

19%

Total Sales per Region

Europe Americas Asia

2008 2012

12-m

-tra

iling

; M

arc

h 0

8 =

10

0

0

50

100

150

200

13

Emerging Countries

Established Countries

10 12 11 08 09

Hungary

2004 2006 2008 2010 2012

Chengdu

Chongqing Jinan

Suzhou Tianjin DongGuan Xi’An

Wuhan Changchun

HanZhong

Malaysia

3 Strong footprint in emerging markets Emerging markets as growth drivers

WenLing

* Size of Germany as comparison

*

save space

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Ranking Gross Profit per Coating Centre 2006 & 2012 (adjusted by depreciation)

50 top centres > + 600 bps

Next 25 centres > + 1’700 bps

GPDA 2012

GPDA 2006

3 Operational excellence: Internal benchmarking as key success factor

Δ +~800 bps

Ø 2012

Ø 2006

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Geographical expansion, operational excellence as key success factors 3





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1979: Oerlikon Balzers accomplishes breakthrough for hard, wear

resistant thin films, deposited at temperatures below 500 °C.

Advantage: exact replication of surface (e.g. sharp edges); homogenous thin film with defined texturing ; lower deposition temperature than CVD

Technology used: reactive PVD (also called Ion-Plating)

High edge definition Thin and

homogeneous film

4µ

m

Oerlikon Balzers as pioneer for tribological thin films

4

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Cathodic Arc 1995

Sputtering 1994

PECVD 2000

2012

2011

IONITRON 1979

2005

2006

Innovation at the core of Oerlikon Balzers’ DNA

4

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i.e. Front Grills: Chrome effects (gloss, mat) Back lightning Radar transparent Dark chrome

i.e. Mirror Housings: Translux (hidden turn light)

i.e. Door Handles: RF-transparent for key-less go Back lightning

i.e. Bumper panels: Straight production process > allows usage of

flexible parts which can be bent to final curvature during assembly

i.e. Door panels: Highly resistant regarding

corrosion (Russian mud)

ePD for automotive exterior: unlimited corrosion resistance & exiting new features

4

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Thin film technology about to enter the aerospace market

4

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S3p™ as the unique solution

Smooth coatings: a brilliant idea industrialized S3p™ as the solution

Rough coatings: a long lasting problem

Over more than a decade the industry has made attempts to deposit hard and smooth coatings State of the art: arc evaporated coatings

chip flute, drill

microdrill <1mm

end mill

surface roughness

end mill chip flute, drill

The smooth revolution: S3p™ as the holy grail of thin film technology?

4

surface roughness

competition

microdrill <1mm

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Innovation at the core of the Balzers’ DNA 4




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Sustainable CAGR combined with high profitability for more than a decade

Sales development

5

0

100

200

300

400

500

600

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Sales actual

Sales in LC

mCHF

CAGR

> 7%

Profit development

Market leadership Constant and high service quality

Continuously following our customers (present in 33 countries to date)

Technology excellence Continuously setting new industrial standards

Standardized technology and business processes / Constant and high product quality

Performance driven management of a widely spread multi-cultural organization

-10%

0%

10%

20%

30%

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

HY

1

EBIT%

EBITDA%

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Responsible for: Global strategy, technology, standardized business processes, leadership pipeline

Advantage

Distributed leadership stabilizes the overall performance

Distributed leadership and standardized business processes leverage best of global and local

Global

management team

23 local management teams Responsible for: Local market, local P&L, local strategy

92 coating centres in 33 countries

~ 3’200 employees

Oerlikon Coating JGC Presentation, June 23, 2009

Our leadership philosophy: think global – act local

6

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Managing a high-performing decentralized & multi-cultural organization as key challenge

5

balzers.experience 2011: multi-cultural key event employees from worldwide locations visited Balzers for the first time

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Unique DNA enabling further expansion

Multi-cultural mindset

Innovation

5

Service orientation

Operational excellence

Balzers’ DNA sequences Balzers’ key success factors

Established pioneer with ability to industrialize own and adapted innovations and technologies

Service-minded company culture nurtured by daily feedback of key customers

Ability to develop and manage a high-performing decentralized & multi-cultural organization

Ability to standardize and validate processes and continuously improve the operational performance by benchmarking all sites/coating centers

Balzers continuously sets industrial standards

Coating Services as sustainable and profitable business model

Unique footprint in fast growing emerging markets

Consistent quality at high performance level in all coating centers worldwide

07/08/2013

Successfully integrated acquired pearls String-of-Pearls Acquiring (small) companies fitting into the strategy

Sequoia Implementing organic growth strategy

Focus Components

Focus Asia / China

Driving Innovation

Samputensili 05 Gear cutting IT Market share

Goldstar 06 Gear cutting US Market share

VST Keller 07 Forming tools

PPD™ DE Technology

Technopoli 07 Polishing BR Technology

Suomen Plasmapinta 08 Local market FI Market share

Hartec 10 ePD™ on plastics DE Technology

Rox 13 Regrinding AT Technology

Current strategy focus on sustainable and profitable growth

5

07/08/2013

Key take away






august 2013 dr. hans brändle, ceo segment coating. hans brändle, ceo segment coating page 2...

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