© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the full year 2017 financial results call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kerstin Heinrich, Head of Investor Relations. Please go ahead.
Thanks a lot. Welcome also from my side. Dr. Till Reuter, CEO of KUKA AG; and Mr. Peter Mohnen, CFO of KUKA AG, will present now the financial results from 2017. Dr. Reuter?
Thank you, Kerstin. And also, ladies and gentlemen, warm welcome from Peter and me to this annual accounts conference for the year 2017 of KUKA. I will first go and present the highlights of the past financial year, along with the outlook for the current year. And then my colleague, Peter, will provide you more details on the financial statement and the results in the past quarter. And then after that, I would like to give you an update on our China strategy and our plans with mainly our partner globally and in China. Let's start with 2017. Sales revenues at record level and further investment into growth in the future. From a business perspective, 2017 was a good year for KUKA, during which we've invested in important areas for the future. We continue to grow and manage to push further ahead with our innovations. Orders received totaled EUR 3.6 billion, a growth of 5.6%. And therefore, KUKA managed to exceed prior year figures for the first time running, setting a new record value in 2017. The EUR 3.5 billion sales revenue reached a new record. This corresponds to an increase of 18% on the previous year and is a nice increase, for sure. We have not been so happy on the EBIT margin. The EBIT margin before purchase price allocation and growth investments before was 4.3%. And the reason was that individual projects in the Systems division and measures for increasing profitability at Systems in Augsburg produced an impact on earnings amounting to around EUR 40 million for the year 2017. Peter Mohnen and I will come back later to give more detail and to give you transparency on this one. We're going to raise -- we raised the earnings after tax slightly to EUR 88.2 million. And therefore, we're also recommending at the Annual General Meeting a dividend of EUR 0.50 per share for the year 2017, a stable development with regard to the previous year, which was also EUR 0.50. And at this point, again, I would like to emphasize that dividend payments are important for us, and we also -- but we're also keen to strengthen our competitiveness in the long term. So it's very like a balance between the dividend payment and the investment into the competitive position. And I think for this reason, we are also continuing to increase our investing into research and development and also expansion of our global market position. Now jumping really in the year of '18 before we go in the details of '17. We have a good visibility for '18. We generated higher order backlog of over EUR 2 billion, and we have a good prospect for growth in demand from our customers across the world. And for '18, we're expecting increasing demand, especially in the North America and Asia. A slight increase in demand, we are anticipating for Europe as a whole. In Europe, KUKA will now be more selective when it comes to accepting new big projects in systems engineering, which may also lead to a decline in some levels of orders in this segment. Driven by the overall volumes and the orders received, the backlog, we're expecting sales revenue of more than EUR 3.5 billion at the group level. For 2018, we are forecasting an EBIT margin of about 5.5% before purchase price allocation and before growth investment and before the organizational expenditure amounting to about EUR 30 million. The investments relate, for example, for group-wide issues such as digitalization, IoT 4.0, mobility general industry in China. And therefore, very important to -- for these growth investments. We are expecting that these investments are opening up additional areas for growth for the company in the coming year, which will be reflected in the higher sales revenue in the future. In the medium term, so in the next -- we talked about 2020, which is like a 3-years plan. We are planning revenues of EUR 4 billion to EUR 4.5 billion, as mentioned in the past; EBIT margin in excess of 7.5%. And currently being -- with 40% Europe being the biggest revenue block and we further expand our activities in Asia, primarily in China and therefore, we expect that more than 30% of revenue will be coming in the next years from China, which is important for us to be more present in China. And we'll also talk about China later. Now talking about highlights because the most important are our customers. Customers trust our technology, and they value our comprehensive expertise in different fields. We -- and I think what's very important, they also appreciate that they have a single-source solution. So a customer wants to have a solution, they want to have a feedback from KUKA. And it's very important that KUKA shows in various fields that we have really -- are working very well with our customers. So we won a substantial contract in Systems for battery production. We received a major order from a drugstores chain called dm worth around EUR 100 million. Robotics posted a major order in the field of electronics and entered a framework contract with Robert Bosch, so a big German player here, which is important for us. We got an order in the health care area from Siemens Healthineers in the single-digit million. But it's important because it's medical and it is going to be used in the modern X-ray imaging solution for Siemens. Systems won a major contract from a U.S. automotive manufacturer, the design and installation of a highly flexible manufacturing system for the production of body components for a range of vehicle variants. It's a high double-digit million euro range. Furthermore, GM has designated KUKA as a Supplier of the Year again for Powertrain & Body Shop Equipment. And I think one more is coming in the year 2018. You see we are busy with our customers, which is most important, customers around the world, in the U.S., in Europe and in Asia. And I think that is what KUKA stands for, global automation and beyond automation. Also, we got a big order in the last days for Swisslog for another well-known logistics service provider in the food segment. We are not allowed to tell you the name. However, the order intake is around EUR 50 million. So another important step to grow the business to the EUR 4 billion, EUR 4.5 billion in the next years. If we talk about the operational topics and other highlights, we have strengthened our leading position in IoT, Germany Industrie 4.0. And also, we're consolidating our technological leadership. And I think clearly the second part, we're expanding further our global platform. There are highlights -- a range of highlights. And what we always start in April is we are particularly proud of the appearance at Hannover Messe. We provided there an overview of our portfolio for the factory of the future. And I think Hannover Messe is a great platform. There is virtually no other platform that is ideally suited for showcasing the KUKA team and our visions and strengths. And I'm also looking forward to the next trade fair in April. And I think this year, you'll also have to join and see what we're doing in Hannover in April.We are happy that Henning Kagermann, the former CEO of SAP, joined us last year in the Supervisory Board. And he is a pioneer thinker and he's clearly one of the experts in the IoT field. And therefore, we are very happy to have him as a sparring partner in our board. Now you can see also on the page, a very innovative project with Fujitsu in Augsburg -- in the Augsburg Innovationspark, where we handle with LBR iiwa the motherboard at the Augsburg plant. And you can see how the man and machine are working together at Fujitsu, and we have certain tasks established here. Very proud on the -- and also to have -- together with Matthias Müller in Volkswagen, we have also shown a new concept, CarLa, the first charging robot for electric cars. I had the chance to be there 2 weeks ago at -- in Geneva to unveil and to show it in the Volkswagen motor show. And then I'm certain that the approach is a future possibility not only for robotics but also for the electromobility because service robotics can help to increase acceptance of mobility by making the charging much more flexible and convenient. And I think with CarLa, we'll show a step forward for big so-called parking systems, but also in the end, for charging the car at home. And I think that shows that robotic goes beyond what we see today, and that's a huge opportunity for more robots coming from Automotive over Industrie, over hospital coming to our home and our garages. And this was a concept which we showed together with Volkswagen. Also last year, we're growing in China, so lots of focus to grow in Asia with the biggest markets. We will show more later. But also, we announced the plans here for our headquarter in Augsburg to increase production development because I think it's very important to continue to invest into innovation, to have the right bases here in Augsburg and at the same time, growing in China and Asia with the speed of the market. Next slide, you see the -- our concept for Augsburg. We are here according to plan. So we changed already in last years, but it's going to be further because we have to attract the right talents here in the Munich-Augsburg region. For this summer, we'll complete another park, a car park. The production shop will be -- is in the tender stage, and I think everything -- what we are doing here is a training center. So we are in the middle of it, and it's going to be shaped in the next years. And it's good to do it in Augsburg but, at the same time, also in China. And in China, even bigger because here, the market is growing very fast. Now next page, Augsburg Valley. My -- our vision is that robotics is going to be in more parts of life not only when you work, but also then once you are home, in the hospital and that you, in the end, have an easier life with robot. And therefore, it's important that this Robot Valley is something where we have a point of contact for other technology company, that they are close to us in that -- what we established like Robot Valley, which motivates start-ups and other companies to settle here and to be close to KUKA to work with new application because robot is only a starting point, but then you need applications, services, solutions. And it's the idea of Robot Valley where we continue to invest further and to get people attracted to Augsburg. Now this fall, you will be able to find out what form this Robot Valley could take. That's when we bring the European Robotic Week community to Augsburg, so renowned robotic institutes and manufacturers will be in Augsburg for the European Robotic Week. So we get people into Augsburg, and I think that's great that here, the Robot Valley is to -- is picking up speed. And we will show more to people internally/externally what robots can do. Peter will now give you more detail on the financial, and then I'll come back on some -- on the future topics in China.
Thank you, Till. I, too, would like to take the opportunity to welcome you to our accounts press conference. I will now guide you through the highlights of the financial results of last year, and then of the results of the -- of our divisions: Robotics, Systems and Swisslog. The development in customer demand over the past financial year was positive. Altogether, KUKA reported a volume of orders received totaling EUR 3.5 billion. This was an increase of 5.6%. The volume of orders received at group level improved to EUR 835 million in the past quarter 2017 and is an increase of 5.1% compared with the previous year's quarter 4. More than 50% of orders received at group level in 2017 were generated in North America and China. The demand for robotic automation in China was above average again in the past financial year. With a growth of 19% to EUR 625 million, China was an important sales market for us. We also intend to continue investing in the country in the future in order to meet the high demand. Till will talk about it later.Sales revenues in the past full year reached a record level of EUR 3.5 billion and were, therefore, approximately EUR 200 million higher than the target of EUR 3.3 billion. This is a gain of 18% organic growth. Comparison of the fourth quarter of 2016 and the fourth quarter last year shows relatively stable revenue development. Due to the interval between winning a contract and then generating later the revenue, something that can vary greatly from one business division to another, there can be delays before a strong level of orders received is reflected in the revenue development.Profitability in 2017 remains behind our expectations. In January of this year, we reduced the target value for the 2017 EBIT margin before PPA and growth investments from more than 5.5% to approximately 4.3%. The reason for this was impacts on earnings expected to total around EUR 40 million for the financial year 2017. These impacts on earnings resulted from individual projects in the Systems division in Augsburg and also from measures for increasing profitability there. On a comparative basis in operational terms, in other words, before PPA and growth investments, the EBIT margin decreased from 4.7% in 2016 to 4.3% last year. In addition, we consciously accepted a lower margin in order to continue investing into our future-oriented topics. Investments in areas of further future growth totaled EUR 32 million. The focus here was on Industrie 4.0, mobile robotics and human robot collaboration as well as on expenditure relating to the restructuring of the overall organization with a consistent customer focus at all KUKA companies, which has been implemented since the start of this year.In keeping with the development of EBIT, EBITDA also declined from EUR 205 million to EUR 180 million in the past financial year. This corresponds to an EBITDA margin of 5.2%. Write-downs totaling EUR 78 million were posted in the period under review. Disregarding the one-off aspects, the growth investments -- effects of the growth investments, EBITDA was EUR 212 million last year, meaning that the EBITDA margin was 6.1%.Nevertheless, earnings after taxes were EUR 88 million last year and thus, slightly higher than the previous year. So until the bottom line, we could catch up and where with the earnings after taxes, then finally a little higher than in 2016. Investments in 2017 totaled around EUR 139 million compared with EUR 100 million in 2016. This is equivalent to an investment ratio of 4% in relation to sales revenues. This increase of 39% reflects the continuing high level of investment in R&D to lay the groundwork for our future growth. The workforce grew by around 8% from 13,200 to 14,200 employees. The workforce was expanded worldwide: 10% more employees we had in North America at the end of the year, 8% more in Europe and 7% more in China. Almost 1,400 people were employed in China last year, corresponding to about 10% of our entire workforce. Robotics increased its workforce by 6% to 5,000 employees, Systems by 5.2% to 5,500 employees and Swisslog by 8.4% to 2,900 employees. The expansion of workforce covered various areas, including production and sales and particularly, R&D.Our free cash flow in 2017 was minus EUR 135 million, and that is compared to the minus EUR 107 million in 2016. And the development primarily is due to the heavy investment activities. Our CapEx increased because of M&A and the CapEx for Augsburg -- investments here in Augsburg into IT and also into R&D. If you look at the operational cash flow, then that increased nearly by EUR 100 million to EUR 92 million. I would now like to take a closer look at our 3 divisions: Robotics, Systems and Swisslog. Let's start with Robotics. Here, we really had a positive development last year. The volume of order received increased by 12.4% to a new record value of EUR 1.2 billion. This outstanding result was driven primarily by the General Industry and customer service segment. The Automotive segment registered a slight decline. Sales revenues at Robotics likewise developed very positively, rising by 20.8%. Overall, revenue improved to EUR 1.2 billion. This means that KUKA Robotics has posted an increase in revenues for 8 successive years. Business development in China continues to ensure high capacity utilization, with the result that we have decided to expand production capacities there. Till will come back to this in greater detail later. As far as the EBIT margin is concerned, Robotics recorded a rise from 10.1% to 11.1% despite heavy investment in the field of R&D.Let's now turn to Systems. With a value of EUR 1.6 billion in the last year, Systems division achieved a 13.2% increase in revenues on the previous year. The Body Structure segment, in particular, contributed to this. Considering that the value for our previous year still includes the sales revenues from our U.S. aero sector, this represents an increase of revenues of about 20%. Orders received were also at a good level, totaling EUR 1.5 billion, even though this represents a 7% decline on the previous year. One reason for this is that orders received in the Systems division fluctuate greatly. They are dependent on the time at which major contracts are awarded. Furthermore, unlike the previous year, no orders were received in the U.S. aero segment, and these business units -- as the business unit had been sold end of 2016. In other regions such as Germany and China, orders received -- were received from leading automotive manufacturers. In particular, the areas of Body Structure, our assembly and test and KUKA Industries developed here positively. The order backlog at the balance sheet date allows a high level of capacity utilization to be anticipated for 2018 as well. EBIT margin decreased from 6.5% to 1.1% in 2017. The reasons for this were impacts on earnings in connection with individual projects in German systems engineering and also measures for increasing profitability at KUKA Systems in Augsburg later on, totaling about EUR 40 million. The measures are currently being implemented and will lead to adequate margins in subsequent years. Swisslog. Sales revenues at the Swisslog division totaled EUR 764 million. This is an increase of 29%. About 2/3 of the revenues were generated in our Warehouse and Distribution Solutions and 1/3 in the Healthcare Solutions. Orders received at Swisslog reached a value of EUR 926 million last year, thus rising for the second year running. This corresponds to an increase of 25%. Warehouse and Distribution Solutions achieved a share of 74%, and Healthcare of 26%. WDS, our Warehouse and Distribution, benefited primarily from the high rate of growth in the e-commerce segment and the relatively low degree of automation in logistics warehouses. The EBIT margin was 1.4% in 2017, including the PPA, and therefore higher than in 2016, where we could achieve 0.8% including the PPA charges. If we are excluding these charges, then Swisslog attained a margin of 2.9%. So here, you see we are going into the direction of 3% and this year, expect to be above that. Summarizing the results of all divisions, it can be stated that Robotics and Swisslog performed particularly positive in 2017. While the Systems division recorded strong revenues, the year was nevertheless there characterized by challenges that we have addressed with appropriate measures, which we will rigorously pursue. Till will give you more details. Finally, I'd like to draw attention to another positive topic. We have negotiated a new syndicated loan with our banks, which gives us a financial leeway over a longer period. And now I'm pleased to hand back to Till.
Thank you, Peter. Coming -- continue on the Systems Augsburg topic. So we talk a lot about this. We talk about the restructuring of Automotive systems in -- at the Augsburg location. We have stabilized, so we are back on plan as regards to the construction side with our customer. And we also, which was -- for me the most important part, we have succeeded in winning new project with our premium customers. So the situation is -- from the customers are stabilized and back on track. We, as a management, are working in Systems to continue to work on the competitiveness and the cost structure. And I think this is very important for '18 and also continue into '19. For this year, we are in the process of headcount adjustment, and socially acceptable measures are in progress to reduce the workforce here in Augsburg in this segment to be clear because the other segments are stable and growing. The restructuring plan for KUKA Systems will continue, however, into 2019. And I think that's something where we focus on and also if you see our target margin of about 5.5%. It's important that we continue with these measures in '18 and into '19 to get Systems back on track also from the profitability. Going on a higher level again on Page 14. Clearly, the global mega trends are in favor of KUKA, and we are -- have lots of product solutions which are exactly driven by these mega trends. So the mega trends are driving the digital transformation and the automation. And we see that our customers are presented with new challenge of being flexible in their production operations with new customer demand, and therefore, our customers require new automation concepts, and therefore, KUKA's complete portfolio from robot over AGV over lines that's perfect for customers. And we are gearing ourselves up for this at KUKA to be the solution for the customer.We are focused on this, to also offer our customers complete solution for years, and customers can buy KUKA robots but they, more importantly, buy it for the time, more like systems solutions that means robots as part of a package, and I think it's also important to have the appropriate IT interfacing risk if decided, so we can offer single products but more important, also one-stop shopping for the customer, customers' 1 point of contact and doesn't have to go to different people within KUKA. And it is very good received by the customers, and we're getting great feedback that -- when the customer sees what we are offering.This is our customer -- more customer-centric solutions, where customer wasn't the focus, isn't the focus and the point that they have 1 key contact and a little bit of an adjustment of the organization.As you can see on Page 15, which is our target organization for customer proximity and efficiency, so you can see from the internal perspective our structure for '18, we are bundling our know-how in divisions and this enabled us to develop solution for our customers better and more efficient. And we will decide the customer division's: automotive, industries, consumer goods and logistics, we are utilizing global platforms to act faster and more cost-effectively and to further expand our knowledge and skills. And I think that is the combination of the domain know-how in the divisions and the platforms, which is a strong basis for KUKA to further grow and to go beyond the EUR 3.5 billion and EUR 4.5 billion because this, we have to do now to -- to get the next stage.The automotive division has a responsibility for the key account, for the product, for the systems engineering, for solutions for better resource, everything, which is around the car companies. The automotive industry is located -- is placed in the automotive division. The industries development and I think that's something where Peter mentioned at the beginning that we have 50% business in the nonautomotive. We want to be #1 in automotive, please understand me right, it's most important customer.But the industry is growing much faster. And with the industries division, we can be even more -- even more focused on developing markets all around automation solution for customers in the industrial segment and to have more focus on this growth segment while -- when people are focusing on the automotive key accounts and industries can really focus on this growing market.On the consumer goods and logistics automation, clearly, there's a focus on the big accounts here with logistics and robotics requirements and that is the -- of course, our industrial perspective and as you know, with the healthcare division, we are combining the automation function for the hospital logistics and solution for the pharma automation, which is the -- call it, nonindustrial, but very prospering business in the healthcare market.On the platform, we bundled operation, production and R&D activities so everything, which is -- will be used by all divisions. In the old structure, each division had their own R&D, own purchasing. And what you can see that this application of structures will be eliminated, and that's how we can further and better collaborate across divisions and between divisions and platforms and be more efficient in the future and have more product for our customers available. And that's the idea, that all divisions are offering all product solutions for KUKA based on strong platforms. And I think that is, also the R&D and IoT is in the platforms of KUKA, robots will be connected solution, will be connected, and it will be, I'll call it, our target organization to be close to the customer based on a strong platform within KUKA.Next page. From Augsburg, we are driving automation and transformation on a global scale. I believe this structure's also the global -- the more customer-centric organization is clearly to work with customers around the world. And the divisions are architected to work in robotics organization so we want to more collaborate globally across divisions but also across the platform.And for this reason also, our -- to the existing GmbH are the systems like the robotic system industries will be merged into a structure 1 after the other, which is a plan for 2018, which we already started at the end of '17. In Germany, it means we have -- we will form 1 big company, the KUKA Germany GmbH, where all the companies will be merged in, and this shows we are One KUKA. And as ordered in the past and even now more, what's most important is we have one company, One KUKA, which is serving our customers everywhere in the world. And we live and work as One KUKA, which you also can see again at Hannover Messe.Now in this context also allow me to show you that -- your attention on the new block in our group magazine, the o.i. These are new media that conveys our image to the outside world. And you will find the o.i. on the table. So you're sure you would see it, and you will get everything via Internet. And we also have the blog.kuka.com. And I think that shows that we also hear on the communication and getting to our customers, also the people who are interested in the RoboValley, how to connect with our partner divisions, see new ways of showing the possibility of robotic in showing new media.We have strengthened our acceleration through acquisitions. So I think we repeatedly enhanced our own innovative strengths with a very successful partnership. For example, Roboception in the past, a startup which we have had stakes in 2016 and we showed it in Hannover Messe last year. One of this company's successful product is the 3-dimension sensor, which enables flexible and intelligent 3-dimensional object recognition. And I think for this Roboception, just recently, won the Tech Transfer Award from euRobotics. I think that we're very, very proud to be -- have invested in the company and be a partner of this company, which received the Tech Transfer Award.We have entered into a partnership with a Munich-based company, Device Insight, to expand our IoT expertise and strengthen our own portfolio with regard to IoT and Industrie 4.0 focus here as an excellent complement for they have more than 1 million device already connected, so a great partner to have in the KUKA family and to strengthen our IoT offering.Visual Components. You go -- we go in the IT and the IoT world and then we want to more simulate our products installations, simulate our products and solutions. So we're adding software solutions for 3D simulation in factual planning in our portfolio, and it's very important too when it comes to designing the factory of the future and the software Visual Components used worldwide for important planning and decision-making processes, allowing us for complete production process to be visualized as a digital dream. And we can see that we are living in the real world, but also our products can be shown in the digital world, have digital dream for the future to have robots faster in the market and to yes, have then, I'll call them, the faster execution on integrating robots in the plans of our customers.Coming to China. So we talked about innovation, talked about the structure of KUKA to further grow on the platforms. The biggest market, China, is already today the world's largest market for industrial robot and this market continues to grow steadily. The IFR estimated that the number of robot units sold is about 200,000 in 2020. And clearly, KUKA is profiting from this growth trend and also from the governed plans to further advance automation. And this is providing us with a big opportunity to invest in China. And this clearly also perfect -- it fits our strategy that we are -- that we can grow our share in China and Asia and having a cut besides U.S. and Europe, really, a well-balanced portfolio and just really all the market and the topics here are in favor of our growth.2017, and that's also where I want to tell you something about our joint ventures with our partner and big shareholder, Midea. 2017 was the first year with Midea. We used the year to get to know each other much better. We announced, we talked about concept and we're collaborating very intensively, and I think you see together that China offered us this huge potential for growth and we're clearly exploiting this potential, and we are, on the one hand, already did expand our local capacity enormously. But I think we have more plans to really become #1 in China together with Midea and KUKA.We have -- we need sales channels to -- and this is also where Midea is helping us to provide specific infrastructure for having the [indiscernible] work, more infrastructure to grow. And now we have, clearly, some steps defined and also want to communicate this that we have 3 important steps for the future, which I think paves the way for becoming #1 in China.We have a joint venture between Swisslog Healthcare and Midea, which will address the healthcare market, which already has been fully developed in '17. We have benefited from KUKA already with the good customer relationships in China, and we are joining forces here, too, for even better market penetration in the next years.KUKA will have a 50% stake in this joint venture in the healthcare business, and we will appoint the Chairman. And I think this is on the healthcare market, which is more regulated but really in China, has the benefit of having a strong Chinese partner, it's very important that here, this market, is a huge potential on the healthcare side.Secondly, we entered a joint venture on the logistics with Midea subsidiary, Annto, so we put our industrial logistics pieces for WDL into a joint venture. Together, we intend to develop a standardized logistics solution for Annto's customers and for Midea. This will enable us to profit from Annto's customer relationship to grow further into this sector, and that we all will benefit from the strongly growing media market segment and from Midea supplier network in this area of warehouse automation.And thirdly for us, most important figure is the setup of a joint venture in the robotic park together with Midea and Shunde. We are going to build a robotic joint venture with, clearly, the aim to give access to a new market segment and tapping the growth potential in China and once we establish we are going to do, we are -- through the joint venture, we will put to use additional up to 75,000 robots in AGV by the year 2024, and we will get the related support and services. So together with the 75,000 plus 25,000, so we see up to 100,000 robots in China in 2024 and that's a huge potential we talked in the last year.And if you take the numbers from last year, which are above 30,000, you see the potential only for China of up to 100,000 for 2024.Beside the conventional six-axis new robot types, we will bid in China such as SCARA, delta, Cartesian robot systems, which are important to complement our product portfolio. For us, very important. KUKA will have a -- we have a 50% stake in the joint venture and the chair -- the Board of Directors, we will provide the Chairman. And I think it's very important that KUKA at the operation, lead. 3 people from KUKA in the board and 2 from Midea, so 50-50 joint venture but operationally, KUKA to also guarantee that we have the platform and that we can grow globally and use China as a power for us in Germany and across the world.Midea is ensuring this profit organization access to market segment in China, and that is a big plan and this really shows now we're getting closer to our target to become #1, with the planned 100,000 robots. That's really, I think for us, a big milestone and therefore, next week, we have the groundbreaking ceremony in Shunde to start the park, so it's scheduled for March 28. And for us and I think for development of KUKA as a more global company, our success in China to become the #1 in China is now in a good way.And I think we -- now together with Midea, we're going step-by-step to make this region happen and to walk the talk, and make things done and happen and therefore, the groundbreaking is a big signal for us that we are on the right track here.Besides going to -- now come back from China in this young, dynamic industry and where we see the biggest robotic market for the next years. We have to, I'll call it, grab part of the growth and be #1. Also this year is 120 years of innovative strengths of KUKA, though KUKA gets 120 years though it's about time we have a special reason to celebrate this year.And in 1898, Johann Joseph Keller and Jakob Knappich, I think they didn't think about robots. But in the end, they were -- start KUKA here in Augsburg as an acetylene factory for lighting. The object was, at this time, to put use cost-effective domestic and municipal lighting so it was cost-effective from the beginning. And I think as you all know, that you follow us for the last years, a lot has happened and this, we are going to have this year, the 120-year celebration with some events and activities and please visit us on Twitter and the website to be update with what's going on here. And here, you also have the address on the page on the presentation. It's something that happened and we are proud, 120 years. We are proud to be -- have this development in industry and now, I think we're in the right spot with robotic. But also robotic is moving into IoT. So we have to -- we learned in 120 years that we always have to change and to drive change and that's what KUKA stands for also after 120 years.We look forward to you at Hannover Fair in April. Lots of new topics, new products and proud to really show good things in Hannover and hope we see you. And for this, I will say thank you, from Peter and me, and looking forward to your questions or see you in Hannover.
[Operator Instructions] There are no questions from the telephone.
Okay.
Oh, we have one question. We actually have a question from Sebastian Ubert from SocGen.
Yes. Sebastian here from SocGen. I jumped on the call a little bit late but hope you still get me the answer. It's with regards to your announcement yesterday and the sharp ramp-up of robotics capacities in China. Can you shed some light on, say, the timing when you will see, say, the first edition of production coming on stream and how we should think about the further ramp-up then until 2024 and then lastly also what this means in terms of CapEx for KUKA?
Sebastian, I think we have the big target of 100,000 capacity, 25,000 from Shanghai and 75,000 from Shunde for 2024. We do the groundbreaking this week. So we have capacity in last year as well as the use of capacity in China above 10,000. So it's in the range of 15,000. So we have -- we can grow without the capacity, which we are building out, so it's no capacity. I'll call it a bottleneck. I see that the -- we have to do for '18 for ramping up the production in Shunde. And I think the course continues on a high pace, above 25% growth in China for the coming years. And we have to -- we will guide you better in the next quarter. So I think currently, the earliest, we have now announced the first step with the joint venture with Midea, which is also a structure, which is another industry that's proven, that you joined forces, 2 strong partners to gain more market share. It shows a huge potential of 100,000 robots, which is delta, SCARA, six-axis, but we don't have today -- I think it's too early to show you now exactly the ramping plan. But I think we will, maybe in the Q1 call or in the Q1 report, say more about this.
Okay. And maybe one follow-up would be also that you have flagged that the AGVs is also part of the business and I think by nature, it's also Swisslog, which is involved. So it's not just pure industrial robotics but it's also, I think, your push into the Asian market with regards to warehouse logistics, correct?
It will be AGV in all of the -- as mentioned, the warehouse execution is in the joint venture. With Midea also, we have everything is in the joint venture beside the automotive piece in China. So AGV is also -- it's a mobile robotics, it's also the AGV is a basis for mobile robotic because in the end, an AGV plus a robot gets the mobile robotic so it's part of our product offering. And it's, I'll call it, enlarging our product offering compared to other auto completion.
[Operator Instructions] We will now take our next question from Richard Schramm from HSBC.
I have one question concerning the systems business in Augsburg here. I'm a bit puzzled because, let's say, on one hand, that in 2017 you had capacity constraints, which caused these problems, these deliveries and obviously also then the cost side. And at the same time, you say that you will reduce the headcount here. So how does this fit together? I have here trouble to understand this. And also the timeline you mentioned, I have seen that you have further EUR 30 million for restructuring in your accounts for the current year. Is this also then related to systems? And should we see here a payback then from 2019 already onwards? Or will it take longer until profitability gets to a decent level again?
I think we made clear that the restructuring and systems at Augsburg, and we've talked about one part of KUKA, which is less than 10% of all KUKA. We will last until '19 but we will see positive effect in '19 already. So '18 is the time for the change and we, as Peter mentioned, have booked the majority of topics into '17, the EUR 40 million, which Peter mentioned. So I think it is something where we, as prudent business people, try to put as much into '17 to have an '18 already, I'll call it, done. But we have the provisions for the '18 measures. The Systems business is a specific business. It's a project business. It's not a product where you're building out components. In the system integration business, you know it is -- the value-added is more limited because you have lots of partners. And so integrating the project, also third-party suppliers, which is part of design and manufacturing. And they would like the competence changed in systems and what we have seen that the competition gets stronger, and we have seen in '17 that some projects are already late and further delayed through our customers, we have more parallelity. And what we have seen that in some areas, we need competencies. But in some areas, we have to reduce the Midea workforce and to focus more on the, I call it, electrical engineering and less on the mechanical engineering. So in some areas, we have to adjust. In some areas, we have to build up competence. And clearly, we also use our East European network to be more efficient. And this is on the plan, and we see that we will have use '18 to be back on track, and '19, we will see that we are back on the margin for systems for this part of business back on 5%.
Just a clarification, as you said that purposely, some orders are insufficient in respect of margins. Is this picture improving right now? Are you more selective here and...
I told you in the presentation that on the -- we have stabilized the projects, so the project margins are -- this was a topic of '17. In '18, we were getting new contracts, so this is something which we have executed on.
We decided to now be more selective on taking on board -- when we take on board projects, yes. And first, we want to get costs out. We reduced costs and then what Till said already, shift capacities and knowhow to our more Eastern European backbone, to Romania and countries like that. And then we will have on board only projects that we really are sure that we can execute. That means less order intake at the beginning of this year and then higher margins when the costs are out in 2019 again. But your EUR 30 million you mentioned earlier, in 2018, that is mainly growth investment. That is not restructuring. The minor part will be restructuring. That is again -- the biggest part of that is investing into human-robot collaboration, IoT, mobility and such topics.
There are no further questions from the telephone.
Then thanks a lot and wish you a great day.
Yes, thank you. Goodbye.
That does conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.