NSG Group Announces Strategic Management Plan covering FY2012 to FY2014
The NSG Group announces a Strategic Management Plan (SMP), covering FY2012 to FY2014, setting out the main points of Group strategy to realise the vision of the company ‘Making a difference to our world through glass technology’ and achieve profitable growth.
The announcement follows a major strategic review carried out across the Group over the past few months led by the new President and CEO, Craig Naylor.
Craig Naylor commented ‘our Strategic Management Plan sets the course for the NSG Group over the next three years. It replaces the Group's Medium-term Plan issued in November 2006, which is now coming to the end of its term. The new Plan covers FY2012 to FY2014, but we are beginning implementation immediately.
My aim is to create a thriving, innovative global enterprise. The NSG Group has made good progress moving from integration and consolidation to geographical expansion and value-added growth. Now we are transitioning to a dynamic strategic management plan to drive the next stage of our development.
The NSG Group is particularly well placed to leverage its global footprint, reduced cost base, technology and brands to meet growing demand for environmental and other value added products.
We regard the Strategic Management Plan as a ‘dynamic document’ and we will update our shareholders annually on progress'.
Strategic Review
Since his appointment, Craig Naylor has been working with the senior team on a major strategic review, intended to sharpen the Group’s operational focus and ensure that full advantage is taken of the synergies offered by an international Group headquartered in Japan.
The Review focused on important growth opportunities, particularly in emerging markets and value-added products addressing climate change.
Early investment opportunities were identified in a number of key projects with 12 to 24 month development timescales. The Group took quick action to secure funding for these through the recent Share Offering. Funding from the share issuance will allow the Group to seize these important investment opportunities, leverage its competitive position and strengthen its balance sheet.
Objective
The objective of the SMP is to take the NSG Group to the next level in its development, by:
- Maximizing profitable growth while reducing our net debt/earnings (EBITDA) ratio
- Ensuring highest standards of ethics, safety, environmental responsibility and Sustainability in all our activities
- Being innovative in everything we do
SMP Financial Targets
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Change FY11 → FY14
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Sales
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5% Compound Annual Growth Rate
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Operating profit*
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Double, as a minimum
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EBITA margin
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5% → >10%
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EBITDA
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50% increase, as minimum
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Net debt/EBITDA
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4.5x → <3x
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Return on equity
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Nil → Low double digit %
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* pre-amortization
Progress in Phase 1
As the term of the Group's 2006 Medium-term plan comes to an end, the Group is able to report progress on Phase 1 of its 3-phase strategy. The objective was to create a new entity focused on differentiating the Company from competitors and maximizing productivity and operational quality while re-establishing the Group's financial foundations.
Good progress was made with the creation of an integrated global business, with all of the operations of the former Pilkington and NSG now integrated into three global business lines. The restructuring announced in 2009 is completed, corporate governance has been strengthened with the creation of an international board and the adoption of the ‘Company with Committees’ governance structure. Net debt has been managed down to target levels.
The recent share issuance has allowed the Group to strengthen its balance sheet, further reducing net debt levels and partially redeeming preferred shares.
SMP Investment Priorities
Building Products - expansion in Solar Energy, low-e and South America
Automotive - expansion in South America, Eastern Europe & Mexico.
Specialty Glass – Ultra fine float (UFF) for displays, SLA® lens arrays for office machinery and advanced Battery Separator technology
SMP Focus Areas
1. Growth
Geographical, particularly into emerging markets and in product range, to meet the increasing demand for ‘environmental’ glass products.
2. Financial
Strengthen the Group’s financial ratios.
3. Operational focus
Operate in sectors in which we can add the most value to our customers and the markets they serve.
4. Competitiveness
Building on recent restructuring actions, which have better aligned the Group’s operations to changed market conditions, reduced overheads and increased operational efficiency.
5. Globalization
Develop diverse international management capability.
6. Sustainability
Make a positive environmental contribution in the key value chains in which we participate.
Resource allocation
The Group expects Capital Expenditure in the period covered by the SMP to be approximately 120 percent of depreciation.
New developments from a 20 percent increase in R&D productivity will support delivery of the SMP, with the Group's R&D effort increasingly focused on energy saving and generation.
The Group recognizes that the proposed expansion into emerging markets will require changes in Human Resources planning and allocation and is developing plans to address this important opportunity. The aim is to maximize the management of talent throughout the Group, regardless of nationality or country of operation.