Consti Oyj · OMXHEX:CONSTI
Consti Oyj — Carnegie Construction Seminar 2018
31 slides from Consti Oyj's conference presentation, Aug 24, 2018
Slide 1: Consti Group Plc - Carnegie Construction Seminar
CONSTI GROUP PLC CARNEGIE CONSTRUCTION SEMINAR 24 AUGUST 2018 CEO Esa Korkeela Building renovation specialist | www.consti.fi
Slide 2: Contents
Contents Consti in brief H1/2018 highlights in brief Market environment and competitive landscape Consti’s strategy and development activities Building renovation specialist | www.consti.fi
Slide 3: Consti is the leading building renovation company in Finland
Consti is the leading building renovation company in Finland Consti in brief Net sales development in 2008 – 2017 Established in 2008 Net sales (EURm) 350 300 Comprehensive service offering 300 256 262 covering technical building services, 250 building facades, renovation 216 contracting and mai
Slide 4: Consti Group consists of three complementary operating segments based in Finland
Consti Group consists of three complementary operating segments based in Finland Building Technical Building Services Renovation Contracting Facades (“TBS”) (“RC”) (“BF”) 28% Share of 39% net sales 37% 37% in 2017 33% 26% Pipeline renovations of Renovation of building Renovation contracting of
Slide 5: Diverse customer mix protects against market fluctuations, presence in the Finnish growth centres
Diverse customer mix protects against market fluctuations, presence in the Finnish growth centres Net sales by customer groups in 2017 Net sales by geographical area in 2017 Individual housing corporations and their property managers 10% Helsinki & Corporations 11% Uusimaa 15% Tampere & Housing 2017
Slide 6: Consti Group's project business – Versatile project base
Consti Group’s project business – Versatile project 84% base consisting of various project types and sizes Development of median project size and # of projects Project types: payment basis / performance obligation Median project size (LHS) # of projects (RHS) Fixed Target Cost + fee 350 895 1 000 80
Slide 7: Consti Group's service business
16% Consti Group’s service business – Service, repairs and installations across business areas Service business net sales & share of total net sales Service business & contract types Net sales (EURm) Consti Consti Consti Share of total net sales TBS BF RC 50 35,0 % 47 Service Fixed-term service co
Slide 8: Contents
Contents Consti in brief H1/2018 highlights in brief Market environment and competitive landscape Consti’s strategy and development activities Building renovation specialist | www.consti.fi
Slide 9: Quarterly performance overview
Quarterly performance overview Net sales, order intake and order backlog improved in H1 2018 Quarterly net sales (EUR m) Quarterly order intake (EUR m) Quarterly order backlog (EUR m) H1/17: H1/18: H1/17: H1/18: +2.9% +13.3% 136.1 140.0 142.5 161.4 86,3 286,2 104,9 78,8 77,8 77,8 250,2 74,8 88,7 70,
Slide 10: Quarterly EBIT development
Quarterly EBIT development Profitability recovering after weak H2 2017 Quarterly EBIT development Q1/2016 – Q2/2018 (EUR m) Comments 8 8% ■ Q2/18 EBIT amounted to EUR 1.7 (2.7) million, or 2.1% (3.4%) of net sales 5,9 % – EBIT improved clearly compared to 6 6% Quarterly EBIT margin (line graph) 5,3
Slide 11: Actions to improve profitability progressing
Actions to improve profitability progressing ACTIONS INITIATED IN Q4/2017 AND IMPLEMENTED FURTHER ACTIONS IN DURING H1/2018 H2/2018 ■ Reorganization of Technical Building Services business area Renewal of the management model in Service business ■ Implementation of main contracting processes i
Slide 12: Quarterly net working capital development
Quarterly net working capital development Net working capital at EUR -8.0 million at the end of Q2/2018 Quarterly net working capital1) Q1/2016 – Q2/2018 (EUR m) Comments Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 ■ Net working capital EUR -8.0m (-7.9m) 0 at the end of Q2/2018 Net w
Slide 13: Quarterly balance sheet structure
Quarterly balance sheet structure Balance sheet strengthened from the previous quarter Quarterly net debt, equity ratio and gearing Q1/2016 – Q2/2018 Comments 25 100% ■ Balance sheet strengthened thanks to positive cash flow in the second quarter 90% 80,5 % ■ Q2/2018 net debt at EUR 18.5m 20 76,1 %
Slide 14: Contents
Contents Consti in brief H1/2018 highlights in brief Market environment and competitive landscape Consti’s strategy and development activities Building renovation specialist | www.consti.fi
Slide 15: Lead indicators for the Finnish economy and construction remain good
Lead indicators for the Finnish economy and construction continue to remain on a good level Economic Sentiment and Construction Confidence / Finland (2007 – 6/2018) Comments 150 Economic Sentiment Indicator ■ During the past few years 140 Economic sentiment and ESI and CCI for Finland (Jan 2007 - Ju
Slide 16: Stable growth in renovation to continue
Stable growth in renovation to continue Finnish new building and renovation market development 2011 – 2020O Comments ■ The peak of the economic cycle in EURb Renovation volume (real) New building volume (real) construction sector currently on- 30 going 28,1 27,8 27,0 27,0 27,3 – Challenges in availa
Slide 17: Demand-driven renovation market growth supported by structural growth drivers
Demand-driven renovation market growth supported by a number of key structural growth drivers Ageing building stock Energy efficiency Million m2 Finnish building stock by construction year Buildings achieve age of 50 years (approx): 100 Urbanisation and concentration of ~2017 ~2025-2035 ~2045 90 88,
Slide 18: Finnish renovation market of EUR 13bn concentrated in growth centres and residential properties
Finnish renovation market of EUR 13bn is concentrated in growth centres and residential properties… 1 2 Renovation by geography Renovation by customer group Not in Not in Consti’s Consti’s scope scope Housing companies 24% Helsinki 30% Households and other Rest of Finland 50% 42% Rental apartment bu
Slide 19: Renovation market highly fragmented with small projects
… and is highly fragmented consisting of relatively small projects and specific building sections 3 4 Renovation by project size Renovation by building section Construction Facades site 23% 10% < EUR 50k 38% Electricity 10% Roofing 3% EUR 50-300k HVAC 43% Interiors 22% 21% Consti’s median project si
Slide 20: Finnish renovation market highly fragmented – Consti clear #1 in 2017
Finnish renovation market highly fragmented with plenty of consolidation potential – Consti was clear #1 in 2017 Operators in the Finnish renovation market (based on revenue in 2017) Overall renovation market (excl. households) 300 8 ~7.3 BEUR 250 7 6 200 Renovation sales, MEUR (2017) 5 150 84 % < 4
Slide 21: Consti's renovation market observations compared to new building
Consti’s renovation market observations - a number of differences compared to new building 3 1 2 3 Renovation market is In renovation, work is Renovation projects are more versatile than the being performed close to typically relatively small stable renovation growth customer in size graph indicates
Slide 22: Contents
Contents Consti in brief H1/2018 highlights in brief Market environment and competitive landscape Consti’s strategy and development activities Building renovation specialist | www.consti.fi
Slide 23: Building renovation specialist
22 23/08/2018 Building renovation specialist | www.consti.fi
Slide 24: Consti's strategic initiatives aim at achieving long-term goals
Consti’s strategic initiatives aim at achieving the Group’s 16% long-term goals – giving also short-term benefits Strategic initiative Objectives Key projects / activities 1 • • Best-in-class lead time and productivity Harmonized project management process • Profitable and • Efficient and agile orga
Slide 25: Development efforts and long-term trends (1/2)
16% Consti’s development efforts go hand-in-hand with the long-term trends of renovation market environment (1/2) 1 2 PREFABRICATION FLOW PRODUCTION / LEAN PRINCIPLES New technical solutions developed with partners • Flow production and takt-time are taking renovation closer to industrial production
Slide 26: Development efforts and long-term trends (2/2)
16% Consti’s development efforts go hand-in-hand with the long-term trends of renovation market environment (2/2) 3 4 GROWTH IN ADVANCED METHODS OF CUSTOMER-DRIVEN PRODUCTISATION & PROJECT DELIVERY CONCEPTUALISATION OF SERVICES • Renovation projects are becoming more and more complex e.g. CONSTI KOD
Slide 27: Incentive schemes to foster high-level performance
16% Consti’s incentive schemes set to foster high-level performance and achievement of strategic goals CONSTI’S LINE ORGANISATION PERSONNEL INCENTIVE SCHEMES AND CHANGES (WHITE COLLAR) SHAREHOLDING IMPLEMENTED AS OF FY2018 GROUP • • At the end Q2, All white collar workers are part of the short-term
Slide 28: Consti's long-term financial targets
Consti’s long-term financial targets Growth Profitability Cash flow Capital structure Dividends Net debt to adjusted The Company’s aim EBITDA ratio of less is to distribute as Average annual Adjusted EBIT- Cash conversion than 2.5x while dividends at least 50 growth in net sales margin exceeding 5 r
Slide 29: Appendix
Appendix Building renovation specialist | www.consti.fi
Slide 30: Examples of new orders received in H1/2018
Examples of new orders received in H1/2018 TECHNICAL BUILDING RENOVATION BUILDING SERVICES CONTRACTING FACADES H1/18 order intake: H1/18 order intake: H1/18 order intake: EUR 42.6m (-16.2% yoy) EUR 39.1m (+21.9 % yoy) EUR 87.1 m (+34.6% yoy) ■ Vatialan koulu, Kangasala ■ Keilaranta 4, Espoo ■ Helsin
Slide 31: Thank you
CONSTI GROUP PLC 24 AUGUST 2018 THANK YOU CONSTI GROUP PLC HOPEATIE 2 FI-00440, HELSINKI BUSINESS ID 2203605-05 30 WWW.CONSTI.FI23/08/2018 Building renovation specialist | www.consti.fi