Marine Systems Restructured Focused Profitable Hans Christoph Atzpodien December 7 th, 2011 Capital Markets Day Division Technologies December 7th, 2011 Market Security & Marine Systems - Dr. Hans Christoph Atzpodien 0 Entwurf Developing the future.
Marine Systems: Valuable part of Division Technologies Sales Division Technologies 2010/11 Elevator Plant Sales FY 10/11 1,493 mn Marine Total ~ 18 billion Components 1
Striking turnaround in operating performance and cash generation [ mn] FY 09/10 FY 10/11 Sustainable sales-growth Operating performance Rising performance-margin Solid value-contribution Generating cash Stable capital employed Rising order-book (Sales) (EBIT) (EBIT-Margin) (TKVA) (FCF) (CE average) (Order backlog) 1,211 1,493 72 / 145* 213* 5.9%/12.0%* 14.3%* 39 94 (36) 337 1,174 1,334 5,315 6,532 *EBIT (-Marge) adjusted / reported; for FY10/11 adjusted = reported 2
Marine Systems A sharper focus
Where we are coming from 2007/08: Sales: 2 bn Staff: 8,300 Revenue per employee: 242,100 Naval Shipyards 4
- and where we are today 2010/11: Sales: 1.5 bn Staff: 5,300 Revenue per employee: 282,360 Naval Shipyards We are specialized in naval systems integration! 5
Focused organization after restructuring Business Area Marine Systems Kockums (KAB) Karlskrona / Malmö (SWE) Howaldtswerke - Deutsche Werft (HDW) Kiel Blohm + Voss Naval (BVN) Hamburg Submarines / Naval Surface Vessels Submarines Naval Surface Vessels 6
Submarines: Crucial role in maritime security Acting mainly as Undercover Agent Offshore-Resource protection and environmental protection Stabilizing security, law enforcement Naval conflicts: Reconnaissance and Deterrence Naval assets are strategic assets! 7
Covering the whole of submarine production Key platforms Class 212A Class 214 Industry value chain Components Modules Engineering & Design TKMS Submarine Construction & Installation Services contract stages 8
Able to work as supplier and prime contractor today 25% of the contracted submarines are built on our sites in Germany/Sweden 75% are built as material packages in customer s country Submarine class 214 completely built at HDW/Kiel Submarine class 214 material package built under license in customer s country Other own value-added Other own value-added Value added Construction Engineering Value added Construction Engineering Material / contracted Service Material / contracted Service Capabilities positioned and flexible to meet market demands! 9
Designing and delivering mid-sized naval surface vessels Visby Corvette for the Swedish Navy MEKO A 200 SAN Frigate for the South African Navy F124 - AAW Frigate for the German Navy F125 - Frigate for the German Navy 10
Continuous improvement has spurred performance Order intake / Sales / Order backlog EBIT /-Margin [ bn] [ mn] Order backlog 5.3 6.5 3.0 EBIT-Margin* 12% 14.3% Order intake 213 0.5 145 Sales 1.2 1.5 EBIT* 09/10 10/11 09/10 10/11 Improving order intake Increasing EBIT-margin * EBIT reported 11
Marine Systems Market dynamics
Submarine demand has expanded rapidly New building Material package Procurement/refit of used submarine Germany Norway Sweden > 170 submarines contracted by Marine Systems since 1960 Portugal Greece Italy Korea Venezuela Turkey Singapore Colombia India Ecuador Peru Brazil Israel Indonesia Chile Argentina South-Africa Australia > 25 new submarines expected until 2020 13
Clear market leader in a solidly growing market Market development Market position Submarines 1.3 bn CAGR 6% 1.8 bn 2010 2016 Competitors ~ 40% BA Marine Systems ~ 60% BA Marine Systems: 12 of 20 new built submarines since 2006 14
Naval surface vessel demand has gone global New building Material package Germany Sweden > 70 frigates and corvettes contracted by Marine Systems since 1960 Poland Portugal Greece Turkey Malaysia Colombia Nigeria Singapore Argentina Australia New Zealand South Africa Stable demand for naval surface vessels expected until 2020 15
Niche position in mid-sized surface vessels Market development Market position Naval Surface Vessels CAGR 2% 2.9 bn BA Marine >10 Competitors Systems 2.6 bn ~ 85% ~ 15% 2010 2016 BA Marine Systems: 5 of 40 new built surface vessels since 2006 16
Marine Systems Technology as a competitive edge
High value, highly engineered product Physical and functional integration of 300 main components 3,000 small electric/electronic components 25 km piping 60 km cables in total ~350,000 parts A structure of 60 m length 1,000,000 engineering and 750,000 construction hours 40,000 construction documents From scratch to delivery in ~6 years We are systems integrator 18
Propulsion solutions: A competitive edge Range submerged Battery + AIP Battery only Air-independent propulsion (AIP) made by Marine Systems Fuel cell (HDW) Stirling engine (Kockums) Speed submerged increasing range increasing indiscretion rate increasing effectiveness Unique selling point of BA Marine Systems: > 40 sold submarines with AIP world-wide 19
Solving the energy storage challenge Lithium-ion polymer batteries High energy storage systems extend energy efficiency Methanol reformer Power generation system to produce pure hydrogen gas and carbon dioxide out of a fuel-mixture Leading-edge technology: Increasing efficiency of air-independent propulsion 20
Rising and stable book of projects Submarine construction at HDW-shipyard 21
Rising and stable book of projects work program for the coming years Submarine construction 2011 2015 at HDW-shipyard 2020 Submarines 2x Class 212A 2x Class DOLPHIN 6x Class 214 material packages 6x Class 214 material packages Naval surface vessels 4x frigate Class F125 5x corvette Class K130 1x logistic support vessel Class 702 22
Marine Systems Strategy for solid performance
Looking to expand product range Smaller and bigger sized conventional submarines More modular naval surface vessels Design/ Building Modularity displacement < 1,200 tn displacement > 2,500 tn Class 210mod Class 216 1,800 7,000 tn displacement Configuration Modularity Mission Modularity Portfolio comprises innovative products capacities are now right-sized to enlarge our market share! 24
Marine Systems: Consistent growth, solidly focused, delivering cash Systems House Systems integrator High-end technology Cash provider High cash-flow from prepayments High EBIT Engineering excellence Highly flexible engineering & construction partner for conventional submarines worldwide Overall good strategy fit within ThyssenKrupp 25
Disclaimer ThyssenKrupp AG The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or sale of a security and is intended for informational purposes only. This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as plan, believe, expect, anticipate, intend, estimate, may or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from those indicated. These factors include, but are not limited to, the following: (i) market risks: principally economic price and volume developments, (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks; (iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures, (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection, (vi) volatility of steel prices and dependence on the automotive industry, (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition. Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. 26