1. business and industrial
2. company
3. annual report

22 OCTOBER 2014
1. NET SALES AND EARNINGS
2. MARKET DEVELOPMENT
3. M&A, ORDERS AND PRODUCT
RELEASES
4. SUMMARY
2
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Net sales and earnings
Overview Q3 2014
Organic growth of 8 per cent
•
Geosystems – Organic growth slowed down despite
strong development in North America due to
continued weakness in China and tough comparison
numbers
•
Metrology – Broad-based double-digit organic growth
primarily driven by strong demand from electronics
•
PP&M – 9 per cent organic growth driven by Asia and
Americas. Shift to rentals continues
•
SG&I – Reported slight growth as defence in North
America improved
•
NovAtel – Reported a weak quarter due to the UAV
(Unmanned Aerial Vehicle) market
Strong profitability
•
4
Group gross margin of 58 per cent and EBIT margin
of 22 per cent
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Seasonality in profit
Seasonal pattern changed: Q1 weakest, Q3 second weakest, Q2 & Q4 strong
700
25%
EBIT Margin %
600
20%
500
400
15%
Net Sales
300
10%
200
5%
100
EBIT1
EBIT1
0
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014
5
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Key figures Q3 2014
MEUR
Q3 2014
Q3 2013
Change %
Net sales 2)
648.6
576.6
81)
Operating earnings (EBIT1) 2)
140.7
118.4
19
21.7
20.5
1.2
Earnings before taxes, excl. non-recurring items
132.0
109.9
20
Non-recurring items 3)
-18.6
-14.9
-25
Earnings before taxes
113.4
95.0
19
90.4
76.4
18
105.7
89.0
19
Earnings per share, EUR
0.25
0.21
19
Earnings per share, excl. non-recurring items
0.29
0.25
16
Operating margin, %
Net earnings
Net earnings, excl. non-recurring items
1) Adjusted to fixed exchange rates and a comparable group structure
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from deferred revenues (revenue
haircut) related to the acquisitions of Vero and Mintec
3) The non-recurring items relate to Vero and Mintec
6
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Key figures first nine months 2014
MEUR
Q1-Q3
2014
Q1-Q3
2013
Change %
Net sales 2)
1,879.0
1,798.0
61)
403.7
371.0
9
21.5
20.6
0.9
Earnings before taxes, excl. non-recurring items
378.7
344.4
10
Non-recurring items 3)
-36.0
-14.9
-142
Earnings before taxes
342.7
329.5
4
Net earnings
273.6
266.3
3
Net earnings, excl. non-recurring items
303.0
278.9
9
Earnings per share, EUR
0.76
0.75
1
Earnings per share, excl. non-recurring items
0.84
0.78
8
Operating earnings (EBIT1) 2)
Operating margin, %
1) Adjusted to fixed exchange rates and a comparable group structure
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from deferred revenues (revenue
haircut) related to the acquisitions of Vero and Mintec
3) The non-recurring items relate to Veripos, Vero, Mintec and Other Operations
7
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Cash flow
MEUR
Q3
2014
Q3
2013
Q1-Q3
2014
Q1-Q3
2013
FY
2013
Cash flow from operations before
changes in working capital excluding
taxes and interest
176.7
146.8
514.0
461.3
628.9
Taxes paid
-19.2
-20.0
-63.3
-51.9
-62.3
-6.3
-7.1
-19.5
-22.6
-28.6
Cash flow from operations before
changes in working capital
151.2
119.7
431.2
386.8
538.0
Change in working capital
-12.0
28.7
-61.7
-31.6
-31.2
Cash flow from operations
139.2
148.4
369.5
355.2
506.8
Ordinary investing activities
-56.2*
-54.1
-169.8
-149.2
-216.3
83.0
94.3
199.7
206.0
290.5
Interest received and paid, net
Operating cash flow
* -7 MEUR related to the construction of new Intergraph facilities in Huntsville, Alabama, USA
•
Operating cash flow impacted by the strong organic growth in Metrology and the
construction of new Intergraph facilities
8
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Working capital to sales (rolling)
35%
Consolidation
of Intergraph
30%
Full impact from
recurring revenue
25%
20%
15%
10%
5%
0%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2009
2010
2011
2012
2013
2014
9
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
New EUR2bn RCF financing in place as of Q3 2014
% of gross
debt
Interest rate %
Maturity
RCF
62
≈1
2021
Commercial Paper
25
≈1
2015
Medium Term Notes
0
≈1
2017
Bond*
10
≈3
2014
Other
3
≈3
2015
Total
100
≈Below 2
Avg. 2019
Facility
•
10
* Bond to be replaced in Q4 2014
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Borrowings
EUR
USD
84%
Capital
market
Other
15%
35%
65%
Bank
loans
1%
Currency effects as compared to EUR, Q3 and Q1-Q3 2014
Currency
Movement
Income-cost
CHF
Strengthened
Negative
USD
Weakened
Positive
CNY
Weakened
Positive
EBIT, Q3 2014
Profit impact
-3.2
Sales, Q3 2014
EBIT, Q1-Q3 2014
Sales, Q1-Q3 2014
•
Sales impact
-1.4
-24.2
-50.6
Additionally, in Q3 2014 significant movements in Canadian Dollar had negative F/X effect
on net sales and profit
11
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Currency & haircut impact on group profitability
MEUR
Q3 2014 as
reported
Haircut
impact
FX
impact
Q3 14 excl.
haircut & FX
Q1-Q3
2014 as
reported
Net sales
648.6
-1.8
-1.4
651.8
1,879.0
-52.4
1,931.4
Operating earnings
(EBIT1)
140.7
-1.8
-3.2
145.7
403.7
-26.0
429.7
Operating margin,
%
21.7
-0.2
-0.5
22.4
21.5
-0.7
22.2
•
12
Negative currency effects have reduced the operating margin with
approximately one percentage point in Q1-Q3 2014. In H2 2014 revenue
haircuts in connection to the Vero and Mintec acquisitions is affecting earnings
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
FX &
haircut
impact
Q1-Q3
14 excl.
FX &
haircut
Sales mix Hexagon MT Q3 2014 (Q3 2013)
41 per cent of sales outside Western Europe and North America
NORTH AMERICA
30%
EMEA EXCL. WESTERN EUROPE
9%
(28)
(9)
NORTH AMERICA
28%
(29)
WESTERN EUROPE
CHINA
29%
15%
(30)
SOUTH
AMERICA
5%
(5)
13
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
(15)
ASIA EXCL.
CHINA
12%
(13)
Analysis of organic growth1) per geographic region (MT)
Contributors to growth (descending order)
566.1
Q3 2013
North America
China
South America
Middle East and Africa
South East Asia
Western Europe
Russia
UAV market
Australia
648.6
Q3 2014
1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)
Negative
14
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
0 to 8%
>8%
Analysis of organic growth1) per geographic region (MT)
Share
of sales
1)
Surveying
23%
Power & Energy
18%
Infrastructure & Construction
13%
Public Safety & Security
11%
Automotive
10%
Manufacturing
10%
Aerospace & Defence
9%
Other
6%
W EU
29%
MEA
9%
NA
30%
SA
5%
CN
15%
ASIA 2)
12%
**
*
TOTAL
1) Sales per customer segment as of 31 December 2013 and sales by region as of Q3 2014
2) Asia, excluding China
* UAVs
** Mining Australia
Negative
x
15
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
0 to 8%
>8%
= Shift in trend since previous quarter
EMEA market trends, Q3
• Western Europe recorded low single digit
growth. Italy and Spain saw double digit
growth rates
• Demand in Western Europe was driven by
automotive and aerospace. Infrastructurerelated activities slowed down, partly due
to the strong development seen in Q3
2013
• Russia weakened significantly while
Eastern Europe and the Middle East
continued to see increased activity levels
• Africa recorded strong growth in the
quarter, partly due to a large project order
16
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Q3 Share of sales, %
38
Q3 Organic growth, %
7
Asia market trends, Q3
• 12 per cent organic growth in China as
automotive, electronics and power &
energy saw favourable development.
Surveying recorded another weak quarter
due to the slowdown in construction
• South East Asia recorded solid growth,
primarily driven by Indonesia, Singapore
and Vietnam
• Growth was held back by Australia, which
saw another weak quarter due to poor
demand in mining
17
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Q3 Share of sales, %
27
Q3 Organic growth, %
5
Americas market trends, Q3
• Growth driven by continued strength in
construction in North America, and strong
demand in automotive and aerospace
• Activity has increased in the defence
segment apart from the UAV related
business (NovAtel)
• South America reported another strong
quarter with double-digit growth
18
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Q3 Share of sales, %
35
Q3 Organic growth, %
11
Organic growth1) per geographic region (MT)
Index Q3 2008 = 100
Share of sales Q3 2014
180
160
Asia
140
Total
Americas
120
EMEA
100
80
EMEA
38%
60
Asia
27%
40
20
Americas
35%
0
Q3 2008
Q3 2009
Q3 2010
Q3 2011
Q3 2012
Q3 2013
Q3 2014
1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)
19
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Organic growth1) by application area
%
Share of sales Q3 2014
60
50
40
30
20
Technology
33%
10
Geosystems
34%
Total
0
Metrology
33%
-10
-20
-30
-40
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2008
2009
2010
2011
2012
2013
2014
1) Adjusted to fixed exchange rates and a comparable group structure (organic growth)
20
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HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Gross margin (MT) – annual data
%
Q1-Q3 2014 58% (57)
60
Trend %
GM %
55
50
45
21
2009
2010
2011
2012
2013
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
Q1-Q3 2014
Operating margin (MT) – R12M quarterly data
2016 Target
%
R12M 23% (22)
25
EBIT1, %
20
15
10
2008
22
2009
2010
2011
2012
Confidential
HEXAGON INTERIM REPORT 1 JANUARY – 30 SEPTEMBER
2014
2013
2014
M&A, orders and product releases
Hexagon safeguarding London’s new Paddington Station
Hexagon supporting the construction of the new
Paddington Station – a part of the Crossrail,
London’s 15 billion pound railway, which is Europe’s
largest infrastructure project.
•
Largest automated monitoring network in the world
•
A 24-hour monitoring system, using more than 50 Leica
Geosystems robotic total stations
•
Continuously measuring changes in ground movement
and the impact on buildings caused by deep excavation
works
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interim report 1INTERIM
January – 30
September
24 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon maintains GNSS positioning in challenging locations
Antofagasta Esperanza (copper/gold mine) in Chile and
Oz Minerals Prominent Hill (copper mine) in Australia
expanded use of Hexagon Mining’s Jigsaw products
•
In partnership with Locata Corporation, Hexagon offers radiolocation
technology which replicates a completely accurate positioning
network system without any reliance on GNSS signals
•
Ideal in GNSS-denied environments such as deep pits and against
high walls
25
interim report 1INTERIM
January – 30
September
25 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
First bathymetry/underwater solution sold in China
Airborne Hydrography AB (AHAB), a Hexagon company
acquired in 2013, sell first bathymetry/underwater solution
in China
•
PLA University of Science and Technology implemented the trial
flight of CHIROPTERA II, the next-generation multispectral
LiDAR solution from AHAB
•
Obtained point cloud data and land and underwater imaging in
Fujian province
26
interim report 1INTERIM
January – 30
September
26 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon helps Georgia to expand road network
The $840m Northwest Corridor project is the largest in the
history of the Georgia Department of Transportation (USA)
•
Involves building a network of toll lanes along 30 miles of
interstate
•
Northwest Express Roadbuilders and Archer Western
Contractors of Atlanta, Ga. purchased Leica iCon machine
control and site positioning solutions to develop the initial phase
of the project
27
interim report 1INTERIM
January – 30
September
27 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Supporting Brazil’s infrastructure
Hexagon is supporting the São Paulo Metro with hightechnology monitoring and imaging sensors
•
Distributed over five lines, the São Paulo Metro stretches more
than 78 km, serving 65 stations and four million passengers
per day
Chesf acquired high-technology sensors for the monitoring
of the Paulo Afonso dam in the state of Bahia
•
28
Chesf is one of the largest generation and transmission
companies in Brazil, with 20,000 km of high-voltage
transmission lines
interim report 1INTERIM
January – 30
September
28 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon supports tectonic monitoring project in Southern Italy
National Institute for Geophysics and Volcanology purchased
Leica receivers and antennas for the VULCAMED project,
designed to create a new infrastructure for tectonic monitoring
in Southern Italy
•
A network of GNSS receivers will measure and monitor the
movements of the ground in the event of earthquakes or volcanic
activity
•
Data will be used to create alerts for civil protection in case of any
movements, allowing evacuation of affected areas if necessary
•
The system is actively integrated into the Leica SmartNet RTK
network
29
interim report 1INTERIM
January – 30
September
29 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon’s airborne cameras flying high
Leica RCD30 camera to be used in conjunction with the
Dragon 50 UAV from SwissDrones
The camera/UAV solution will be used by:
•
Jupem Malaysia for mapping and emergency response
•
Government of Trinidad and Tobago for mapping and special
projects
30
interim report 1INTERIM
January – 30
September
30 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
SmartPlant gives further competitive edge to EPC in China
China Chengda Engineering, the leading engineering,
procurement and construction (EPC) company in China,
has renewed its strategic alliance agreement with
Intergraph
•
Relationship further validates Intergraph’s leading position in
China’s petrochemical industry
•
Extension allows Chengda access to Intergraph SmartPlant
Enterprise solutions, as well as consulting and ongoing
technical support
31
interim report 1INTERIM
January – 30
September
31 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
ST Topografia to implement Smart Modular Assembly
•
ST Topografia is a Brazil-based company that offers
services and consulting in the infrastructure, shipbuilding
and offshore industries
•
Provides consulting to shipyards that outfit the Petrobras
P-74, an FPSO that is part of the Brazilian pre-salt
exploration project
•
Smart Modular Assembly to enable accurate verification
of dimensional deviations during the manufacturing and
assembly process and provide immediate feedback to
design and planning for optimised corrective actions
32
interim report 1INTERIM
January – 30
September
32 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
New solution to analyze traffic accidents
New Zealand Transport Agency (NZTA) works to create
transport solutions for all New Zealanders
•
Intergraph to provide a crash analysis system (CAS) – a tool
used to manage, map and analyse traffic crashes and related
data
Mississippi Department of Transportation (MDOT)
manages a 100,000-mile road network averaging 125+
accidents per day
•
33
With Intergraph’s Crash Data web-based application, MDOT
can accurately meet federal reporting requirements
interim report 1INTERIM
January – 30
September
33 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Evonik looks to Hexagon for industrial security solution
Evonik, a world leader in specialty chemicals based in
Essen, Germany, is active in more than 100 countries
•
Evonik recently chose Intergraph’s command-and-control
solution for networked, physical security at its facilities in
Darmstadt, Weiterstadt, and Worms, Germany
•
The solution brings together all physical security, building
technology, cameras, communications and alert and
notification systems into one unified platform
34
interim report 1INTERIM
January – 30
September
34 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon helps Lesotho prepare for 2016 census
Hexagon Geospatial partners with GeoSpace
International – a specialist GIS company based in
Pretoria, South Africa – to deliver census mapping
needs
•
35
GeoMedia Smart Client selected to support census mapping
needs for the Lesotho Bureau of Statistics as the country
prepares for its 2016 census
interim report 1INTERIM
January – 30
September
35 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Hexagon Metrology advances knee replacement technology
With the goal of scanning and measuring knee replacement
joints, Zimmer Orthopaedics-Ireland looked to Hexagon
Metrology
•
Adding four coordinate measuring machines, Zimmer uses the
DEA Global Advantage solutions in their manufacturing and
supply of orthopaedic replacement joints
•
Manufacturing for only five years, Zimmer is now a key account
with Hexagon Metrology, with an installed base of 15 machines
36
interim report 1INTERIM
January – 30
September
36 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Stakeout and survey operations with wearable technologies
GeoMax XPAD for Google Glass provides a new way of
working for surveyors:
•
Stakeout and survey operations can be completed via handsfree voice commands
•
Information directly visible on screen, including interactive 3D
survey maps
37
interim report 1INTERIM
January – 30
September
37 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
New sensor series leverages satellite positioning from
Terrastar
•
New Leica Viva GNSS Unlimited Series
•
Utilises all useful GNSS signals – GPS, Glonass, Galileo and
BeiDou
•
Leveraging on the Veripos acquisition to provide SmartLink: a
correction service delivered via satellite for uninterrupted
centimeter positioning in areas where real time kinematic
(RTK) communication links are unstable
38
interim report 1INTERIM
January – 30
September
38 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Update on Hexagon’s Smart Content Program (CaaS)
•
Strong interest from customers to participate in data
capturing process – a partner network with 20 airplanes is
currently involved and is expected to grow
•
Received award from a non disclosed client in the
consumer space to collect aerial images from countries in
Europe and the entire US – invoicing started in Q3
•
US-based governmental organization awarded Hexagon
with multi-year subscription contract to utilise data for their
decision making processes
•
On track to complete more than 3 million square kilometer
data capture by end of 2014 (7 x the size of Sweden)
•
Unlike satellite programs, the data has high quality (no
cloud cover or shadows), high consistency and high
accuracy which is mandatory for professional use
39
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January – 30
September
39 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
CaaS
360º SIMS – Successful market entry
Successful deployment with Volkswagen Group
• Solution implemented at one Volkswagen Group factory
replacing a competitor’s system
• In-line measurement of a recently launched new car model
• Inspects all produced car bodies
• Success has resulted in additional prospects within Volkswagen
Group
Multi-cell win in North America with additional OEM
• Major new project win at an innovative automotive OEM
• Will support new vehicle launches and accelerate production of
current models
• Will be implemented at multiple parts of the production lines to
support vehicle assembly, fit and finish
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September
40 Hexagon HEXAGON
REPORT
1 2014
JANUARY – 30 SEPTEMBER 2014
Summary
Summary Q3 2014
Hexagon reports another strong quarter:
• 8 per cent organic growth
• Metrology and Intergraph PP&M showing strong
development
• Group gross margin of 58 per cent and 22 per cent
EBIT margin
• Strong cash flow generation enables pursuit of
attractive acquisition targets
42
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2014
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.
43
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2014