Oerlikon Conference Call Notes (II) – Polymer Recycling, Mechanical Recycling, Chemical Recycling, Textile Recycling, Organic Growth, Inorganic Growth, Electrical Vehicles, e-mobility, Europe and US Auto Manufacturers Production Not Back To Normal

Speakers: Dr. Roland Fischer, CEO Oerlikon Group and Philipp Müller, CFO

Oerlikon operates its business in two Divisions – Surface Solutions and Polymer Processing Solutions – and has a global footprint of more than 10 600 employees at 179 locations in 37 countries. In 2020, Oerlikon generated CHF 2.3 billion in sales and invested CHF 118 million in R&D.

Growth – Organic vs Inorganic (M&A), Polymer Processing

Good morning. Thank you very much, congratulations ffor those results.

My first question would be concerning the diversification on polymer processing and the target of 50-50. When, do you have an idea, when you wish to achieve those 50-50 repartion. And second thing, do you expect to go there on inorganic way, through M&A or through organic growth of flow control?

CEO: Both, Actually, we do not have a fixed state over the course of the next years. You know where we are coming from? I told you where we are right now. [...] Filament is growing. This is a nice, also nice part of the story, but non filament is growing stronger and the InGlass acquisition and this polymer processing part is a focus area, and it will be done organically and inorganically. And that means, we have to see when another target is available. That is not predictable.

Understand. Thank you very much. And so should we expect more money acquisition in direction of flow control or do you want to widen your diversification base in other potential sub segment of polymer processing?

CEO: No, there are more elements on the table today. We just talked about the business we do.But there is a topic like polymer recycling. Elements which are not contributing substantially to the business as of today. But we do have technology for recycling mechanical recycling of PET equipment or bottles and and stuff like that. Then you know, textile topic is coming over the course of the next few years, recycling of clothes. And here we talk about chemical recycling here are engaged in start ups in the UK for instance. This is a company where we are now going, you know from from a lab application into a bigger prototype. But this is to come, not today and not tomorrow over the course of the next few years. And this is a typical non filament growth area.

Surface Solution, Automotive Business

Questions from Vontobel:

I have a few questions around your surface solutions, automotive business. I was wondering if you can detail a little bit where the recovery comes from. […] which sub segments and automotive which processes. And if you can comment on the progress of your EP.D coating business there as well. So that’s around automotive.

And also if you can give us, um, as a, as a second point, some nformation on the impact that you’re seeing from the accelerated shift to electric vehicles in the next 6 to 12 months on your surface solutions business.

CEO: So let's start with the OSS automotive business. Here we do see a certain certain regional pattern. I think China is up to speed across the entire portfolio. Here in europe we see a mixed picture On the one hand side. Markets are developing, have developed obviously. But you all know and we know that big OEMs in Munich are extending the summer break by one week. Or when we talk about Audi they have since weeks and months deleted shifts due to this shortage topic. And this has an indirect impact for us as well. What we also see in the US on the one hand side. Yes the economy is is getting hotter, but the automotive market in the US is somehow still behind our expectation. So, that means it's not so much a topic or discussion about different elements of our portfolio because if you know we can talk about the number of cars being produced. And from that perspective I think we are moving in the right direction. We see a substantial growth, but we are clearly below the pre crisis level.
CEO: When we talk about EPD I think it's the nature of the beast. This is a topic for premium cars. And we do make a certain progress, Munich based OEM has acquired equipment, batch equipment. And this technology is in the process of being implemented. I think it's, I'm not sure whether we are actually entitled to to make such an announcement, but it's a big, it's a big model of this Munich based OEM has decided to go for this technology, for his big ones.
CEO: [...] And thee-mobility topic: This is something that we do not yet see in our current figures. This is something that's going to come. Yes, from are sheer volume point of view we talk about a few 100,000 cars, compared to the entire community of worldwide car production. This is still a minor change, but we are preparing ourselves here with different elements of our product portfolio for. And you also have to keep in mind. For at least, for the next few years, 3, 4, 5 years, we talk primarily about hybrid applications. So, pure electrical vehicles are still on a lower level. What we expect, what the whole world expects is a strong increase in hybrid applications. That means the combustion part of this type of cars is not going to disappear. But the new electrical tries are, are contributing here.

Using Python to transcribe Conf Calls, Webcasts

The above audio was uploaded to an S3 Amazon Bucket, then was fed via a Python script to Amazon Transcribe service which resulted in a raw transcript. That raw transcript was then used for the quotes above. By default Amazon Transcribe does not seperate speakers, has difficulty with abbreviations or names like “InGlass”, which was transcribed incorrectly as “England”.

For more on transcription see this article: Link

Questions or feedback?

Feel free to write me at contact@zuberbuehler-associates.ch or add a comment.

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