Interroll acquires Axmann

Interroll acquires Axmann
Analysts' Presentation
27 th January 2003
Paul Zumbühl, CEO Interroll Group
Norbert Axmann, Dipl. Ing.

Contents
Analysts' presentation
Interroll strategy and Axmann 3
Axmann business and products 10
Axmann acquisition 22
Interroll 2002 27
27 th January 03 2

Interroll strategy and Axmann
Paul Zumbühl
CEO Interroll Group
27 th January 03 3

Products:
Interroll business: components
CHF 158 million sales in 2001
Drives & Rollers Bulk Handling
Rollers, Belt Drives, RollerDrives, DriveControls for unit handling
(boxes, pallets,etc.) and bulk handling (sand, gravel, etc.)
Applications: conveyors in airport luggage, freight distribution, X-ray security,
postal services, food processing, production, assembly, etc.
Specifications:
Output:
voltage, speed, load, noise, intelligence, maintenance-free, etc.
approx. 6.4 million rollers sold in 2001
27 th January 03 4

Interroll business: subsystems
CHF 67 million sales in 2001
Dynamic Storage
- compact warehousing
- highly economical (ROI < 2 years) using
gravity force
- for fast moving products (first in first out)
- up to 250 products / 9’000 pallet places
- ca. 400 systems with 120’000 pallet places
sold in 2001
Automation
- modular system of conveyors and
automation lines
- pre-assembled standard modules with
common interface
- state-of-the-art 24 V technology
- 1 st level intelligence / software
- easy installation ("plug & play")
27 th January 03 5

Interroll existing product portfolio
4 product units with different critical mass and market potential
high
Market
attractivity
low
Automation
Subsystems
CHF 67 Mio
30 %
Dynamic
Storage
Components
CHF 158 Mio
70 %
Bulk
Handling
Drives &
Rollers
bad Market position
good
27 th January 03 6

high
Market
attractivity
low
With Axmann, Interroll substantially increases
its automation business
Automation
Subsystems
ca 40 %
Dynamic
Storage
Components
ca 60 %
Automation
Bulk
Handling
Drives &
Rollers
bad Market position
good
27 th January 03 7

Axmann is a fine company
� Leading, profitable and fast growing manufacturer of conveyor
modules and subsystems
� Many specialty modules with worldwide patents (ex. belt curves,
merges, proportional friction drives, etc)
� Strong presence in postal and distribution, baggage handling, plastics
industry
� Sales of CHF 30 million in 2002
� Approx. 130 employees
� 2 sites: Sinsheim (Heidelberg / Germany) and Jeffersonville
(Indiana / USA)
� EBIT 2002 of approx. 10 %
� Founded by Norbert Axmann in 1974
27 th January 03 8

Axmann brings
Axmann is a strategic fit for Interroll
� A full portfolio of innovative modules and subsystems
� A superior technology with own inventions
� Opportunity to leverage Interroll sales network and sell Axmann
products worldwide
� Opportunity to increase sales and margins
Limited financial risks
acquisition primarily financed with own Cash Flow 02
Limited business risks
same target industries and customers
27 th January 03 9

Axmann business and products
Norbert Axmann, Dipl. Ing.
Founder of the Axmann Group
27 th January 03 10

Axmann Group
Axmann Fördertechnik GmbH,
Sinsheim, Germany
Founded 1974
~ 100 people
Sales p.a. € 17.5 Million
EBIT approx. 10 %
Axmann Conveying Systems Inc.
Jeffersonville, Indiana, US
Founded in 1996
~ 30 people
Sales p.a. USD 5.5 Million
27 th January 03 11

20
15
10
5
A story of growth
Axmann Group
0
1990 1992 1994 1996 1998 2000 2002
Sales (€ Mio)
� Growth based on innovation
� New standards in conveying technology
� Niche products such as curves, sorters, etc.
27 th January 03 12

Curves 20 %
Axmann specialty products
Sorting
20 %
Conveying 25 %
Belts
20 %
Cleaning 15 %
27 th January 03 13

Axmann Belt Curves and Merges
� Own product invention (patented 1996)
� Technically superior
(speed, maintenance, noise, etc.)
� World market share of ~10 %
� Door opener for OEMs/system integrators
� 20 % of Axmann sales in 2002
700
600
500
400
300
200
100
0
1996 1998 2000 2002
Number of
curves
sold
27 th January 03 14

Axmann Sorting products
� Own product invention (patented 1999)
� Cross belt sorter, Horizontal loop
� For sorting boxes, parcels, letters, etc
� Sorting capacity up to 12’000 units/hour
� 20 % of Axmann sales in 2002
27 th January 03 15

Axmann Conveying Subsystems
� Standard modules and subsystems
� Various models and specifications
� 24 V roller technology
� Applications for nearly every industry
� Light/heavy unit handling
(parcels, boxes, pallets

Axmann Cleaning Equipment products
� Specialty conveyor for the metal and
automotive industry
� Conveyor modules for cleaning metal
parts (motor blocks, gear boxes, etc.)
� Approx 80 % market share
� 15 % of Axmann sales in 2002
� Long-standing customers
27 th January 03 17

Axmann Belt Conveyors
� Standard products and modules
� 10 different types of belt conveyors
� Angle conveyors
� Broad range of models and specifications
for many industries
� 20 % of Axmann sales in 2002
27 th January 03 18

Products % sales Markets Competitors
Sorting
(“Quergurtsorter” etc.)
Curves
(“Transfer-Technik u.
Kurven”)
Conveying
(Förder-subsysteme)
Cleaning
(“Subsysteme für die
Reinigungstechnik”)
Belts
(“Förderbänder”)
Axmann product mix
20% • Postal service
• Parcels delivery
• Distribution centers
20% • Distribution
• Postal service
• Airports, etc.
Very few
competitors
2 major competitors
Transnorm (D)
PORTEC (USA)
25% • All markets Many local competitors
15% • Metal and Automotive
industry
20% • Injection moulding
• Distribution
• Airports, etc.
None or little
Many local competitors
27 th January 03 19

Axmann customers
� Over 3‘000 customers
� Customers: OEMs, system-integrators, distributors and end-users
� Geographical mix
� Customers (sample)
50%
30%
Siemens, German Post, US Postal Service, DHL, BMW, Lockheed
Martin, BASF, Eduscho, Ford, Grundig, Krone, Mannesmann, Otto-
Versand, Opel, Philips, Ciba Vision, etc.
5%
15%
Germany
Europe
US/Canada
Rest of the
world
27 th January 03 20

Axmann new products in development
� Cross belt sorter – horizontal loop
– open for sales beginning 2003
� Letter sorting machine
– sorts up to 40‘000 letters per hour by size and thickness
– piles up small and large letters for easy handling
– devalues stamps of large letters automatically
– development costs of € 2 million so far
– prototype to be installed at German Post in March 2003
27 th January 03 21

Axmann acquisition
Paul Zumbühl
CEO Interroll Group
27 th January 03 22

Axmann acquisition: financing
� paid in cash, effective January 1, 2003
� financed primarily through Cash Flow generated in 2002
� Equity rate of Interroll
– end of 2002: prior to acquisition: 40%
incl. acquisition: 35%
27 th January 03 23

Axmann financial impact on Interroll
� Goodwill of CHF 12 million
– Amortization over 10 years
– CHF 1.2 million p.a. charge on EBIT
– Total goodwill Interroll group after acquisition of Axmann
as of Jan. 03: CHF 21 million (< 33% of equity)
� Acquisition benefits expected in 2004
27 th January 03 24

Axmann integration process
� Axmann Sinsheim: new HQ of Interroll Automation business unit
� Interroll Automation sales teams (UK, Spain and Germany)
to be integrated within Axmann
� Interroll Automation R&D in Sant’Antonino to be relocated to
Axmann Sinsheim
� Axmann modules to be marketed worldwide through Interroll sales
organisation
� Integration process to be completed by December 31, 2003
� Norbert Axmann becoming major shareholder
27 th January 03 25

Rationale for acquisition
� Strategically expand the subsystems business
– increase market share more rapidly
– participate in consolidation trend in the logistic market
– become recognised partner of OEMs and system integrators
� Leverage Interroll sales network
– exploit market potential for Axmann products worldwide
� Get key products and technology
– patented key products for fast growing markets
– curves and sorters as door openers
� Increase sales and profitability
– Axmann: same industry, same sectors
– Axmann: profitable, well managed company
27 th January 03 26

Interroll 2002
Paul Zumbühl
CEO Interroll Group
27 th January 03 27

Achievements in 2001-02
Corporate structure
– Restructured into 4 stand alone business units
– Head office restructured, lean
Production
– Production centres reduced from 10 to 7
– Economy of scale by fully dedicated business units
– 18 % labour force reduction (headcount 130)
– Product portfolio reduced by 22 %
27 th January 03 28

Achievements in 2001-02
Marketing & sales
– 6 sales subsidiaries closed in Europe
– New sales offices in Poland, Japan and China
– E-Commerce platform launched Sept. 2001
External acquisition
– Acquisition and integration of SIPA France 2000
– Acquisition of Axmann 2002-3
27 th January 03 29

Group strategy 2002-05
� Strengthen leadership position of Drives & Rollers
- become preferred supplier of large system integrators
- improve US position,
- expand in East Europe, Japan and China
- reduce costs further
� Increase critical mass of Automation
- grow organically and/or via acquisition
- complete product range
� Consolidate and expand Dynamic Storage
- improve penetration in Europe
- maintain strong growth in US
� Sell Bulk Handling
ongoing
done
ongoing
pending
27 th January 03 30

Group Strategy 2002-05
Financial objectives
Sales growth > 10 % p.a.
Sales split 50 % components, 50 % subsystems
EBITDA margin ca. 13 %
EBIT margin ca. 8 %
Net income ca. 4 - 5 %
27 th January 03 31

Financial Information as of June 30, 2002
Mio. CHF 1H2002 1H2001 2001 2000
Net Sales 100.6 117.8 224.3 229.4
EBITDA 12.6 12.9 22.0 21.3
in % of NS 12.5% 11.0% 9.8% 9.3%
EBIT 5.9 7.2 11.2 13.1
in % of NS 5.9% 6.1% 5.0% 5.7%
Net Profit 2.5 3.3 5.2 2.3
in % of NS 2.5% 2.8% 2.3% 1.0%
Operating Cash Flow 13.1 9.7 15.2 21.5
Free Cash Flow 9.3 5.2 7.4 1.2
27 th January 03 32

Preliminary 2002
� Sales CHF 200-205 million
� Higher profitability margins vs. previous year
� Profitability on previous year’s level despite lower turnover
� Investor communications calendar
– Preliminary figures 02 March 7, 2003
– Annual Report 2002 and press conference May 9, 2003
– General Assembly June 6, 2003
27 th January 03 33

Questions and answers
27 th January 03 34