Nkt A/s · OMXCOP:NKT
Nkt A/s — Non-Deal Roadshow (March 2016)
54 slides from Nkt A/s's roadshow presentation, Mar 7, 2016
Slide 1: March Roadshow - Danske Bank
NKT I March Roadshow - Danske Bank 07 March 2016 I 1 6 March Roadshow - Danske Bank 07 March 2016
Slide 2: Forward looking statements
NKT I March Roadshow - Danske Bank 07 March 2016 I 2 Forward looking statements This presentation and related comments contain forward- looking statements Such statements are subject to many uncertainties and risks, as various factors of which several are beyond NKT Group’s control, may cause tha
Slide 3: Agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 3 Agenda Introduction to NKT Highlights 2015 Business units • Nilfisk • NKT Cables • Photonics Group Outlook 2016 Questions & Answers
Slide 4: Industrial conglomerate with global presence...
NKT I March Roadshow - Danske Bank 07 March 2016 I 4 Industrial conglomerate with global presence... NKT Holding A/S Business area Key Products Geographic coverage Revenue Employees • Low & medium voltage North, Central and • High voltage cables EUR 1,212m NKT Cables • Submarine cables Eastern Europ
Slide 5: ... and a strong European position
NKT I March Roadshow - Danske Bank 07 March 2016 I 5 ... and a strong European position Sales and manufacturing facilities Nilfisk NKT Cables NKT Photonics 2% 10% 13% EUR EUR 44% 2,224m 54% 2,224m 77% Sales by business unit Sales by geography Nilfisk EMEA NKT Cables Americas NKT Photonics APAC FY 20
Slide 6: Unique governance model with hands-on involvement by the Board of Directors
NKT I March Roadshow - Danske Bank 07 March 2016 I 6 Unique governance model with hands-on involvement by the Board of Directors NKT Holding Board committees NKT Holding Board of Directors Photonics Nilfisk NKT Cables Audit Remuneration Nomination Group Committee Committee Committee Committee Commi
Slide 7: Clear strategic themes defined for each business unit
NKT I March Roadshow - Danske Bank 07 March 2016 I 7 Clear strategic themes defined for each business unit Strategic themes ROCE 2013-15 Long-term target 17.5 17.6 12.9 • Front-end investments • Commercial Excellence 18-19%* 2013 2014 2015 • Consolidation through M&A 8.2 • Focus on profitable ma
Slide 8: Agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 8 Agenda Introduction to NKT Highlights 2015 Business units • Nilfisk • NKT Cables • Photonics Group Outlook 2016 Questions & Answers
Slide 9: Highlights 2015
NKT I March Roadshow - Danske Bank 07 March 2016 I 9 Highlights 2015 Performance in line with expectations • Organic growth as expected (3%) • RoCE improved by 0.7% (to 10.1%) • Proposed dividend per share of DKK 4 • Operational EBITDA margin in line with • NIBD decreased securing strong financial
Slide 10: 2015 financial performance in line with expectations
NKT I March Roadshow - Danske Bank 07 March 2016 I 10 2015 financial performance in line with expectations 2015 Original Update Q2 Update Q3 Realised NKT - Organic growth Up to 3% ~3% ~3% 3% Increase of ~1.0%-point Increase of ~0.5%-point 9.2% 9.4% - Operational EBITDA, %* (from 9.6%) (from 9.6%)
Slide 11: Financial highlights
NKT I March Roadshow - Danske Bank 07 March 2016 I 11 Financial highlights Q4 Revenue EUR 541.1m (Q4 2014: EUR 540.3m) Impairment APAC EUR 48.6m incl. tax and divestment of Fiber Processing EUR 2.6m, adjusted in operational EBIT 2015 Revenue EUR 2,223.6m (2014: EUR 2,129.4m) Profit after tax EUR 1.2
Slide 12: Operational EBITDA increased by 3% to EUR 175m
NKT I March Roadshow - Danske Bank 07 March 2016 I 12 Operational EBITDA increased by 3% to EUR 175m Operational EBITDA, LTM EURm 9.4% 200 12% 9.6% 180 8.4% 8.6% 160 10% 140 120 Oper. EBITDA, LTM, of 100 8% EUR 175m (2014: EUR 171m) 80 60 Oper. EBITDA margin, LTM, 6% 40 9.4% (2014: 9.6%) 123 129 13
Slide 13: Changes 2015 vs. 2014
NKT I March Roadshow - Danske Bank 07 March 2016 I 13 Changes 2015 vs. 2014 EURm 2015 2014 Change 01 EURm Revenue increased by 94.2 Revenue 2,223.6 2,129.4 94.2 *01 Metal prices -5.8 Revenue, std. metal prices 1,869.2 1,769.2 100.0 FX changes 54.3 Acquisitions 4.6 3% organic growth 41.1 Operational
Slide 14: Strong free cash flow driven by working capital change
NKT I March Roadshow - Danske Bank 07 March 2016 I 14 Strong free cash flow driven by working capital change EURm Q4 2015 Q4 2014 FY 2015 FY 2014 Earnings, EBITDA 32.5 42.6 152.0 142.6 Financial items, net -2.0 -3.1 -6.1 -13.1 Change in working capital 85.3 108.8 31.4 76.8 Other 3.6 5.5 -4.1 6.1 Cas
Slide 15: Working capital improvement continues and reaches new low level
NKT I March Roadshow - Danske Bank 07 March 2016 I 15 Working capital improvement continues and reaches new low level Working capital development % of revenue , LTM End-2014 End-2015 NKT Group working capital ratio 18.1% 15.9% improved to 15.9% (End-2014: 18.1%) EUR 300.6m EUR 269.2m NKT Cables w
Slide 16: High historical Capex spending enabling low maintenance levels
NKT I March Roadshow - Danske Bank 07 March 2016 I 16 High historical Capex spending enabling low maintenance levels Investments in Property, Plant & Equipment (gross, LTM) Investments, PPE 2015 EUR 39.1m EURm (2014: EUR 32.7m) 160 10% 2% Investments 1.8% 9% 140 of revenue, LTM 56% 8% 120 7% 100 6%
Slide 17: Financial strength to fully support strategic agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 17 Financial strength to fully support strategic agenda Net interest-bearing debt EURm End-2014 End-2015 700 0.9x 0.5x 5.0x Financial strength to drive strategic agenda with cash resources of EUR 600 EUR 152.4m EUR 88.9m 604m 4.0x 500 3.0x 400 Capi
Slide 18: Proposed distribution of EUR 87m to shareholders in 2016
NKT I March Roadshow - Danske Bank 07 March 2016 I 18 Proposed distribution of EUR 87m to shareholders in 2016 Distribution to shareholders EURm 87 Initiation of share buyback programme, EUR 74m 74 Proposed dividend of DKK 4 per share, EUR 13m, ~34% payout ratio 25 17 11 13 6 6 Dividend policy of 33
Slide 19: Agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 19 Agenda Introduction to NKT Highlights 2015 Business units • Nilfisk • NKT Cables • Photonics Group Outlook 2016 Questions & Answers
Slide 20: Nilfisk
NKT I March Roadshow - Danske Bank 07 March 2016 I 20 Nilfisk
Slide 21: Nilfisk overview on geographies and segments
NKT I March Roadshow - Danske Bank 07 March 2016 I 21 Nilfisk overview on geographies and segments Sales entities Manufacturing companies 11% 10% EUR EUR 63% 972m 972m 26% 90% Sales by geography Sales by customers EMEA Professional Americas Consumer APAC FY 2015 data
Slide 22: Floorcare and vacuums are strongholds in the industry's widest product range
NKT I March Roadshow - Danske Bank 07 March 2016 I 22 Floorcare and vacuums are strongholds in the industry's widest product range Floorcare incl. Outdoor Vacuum cleaners Pressure cleaners Other • Scrubbers and sweepers • Commercial • Professional • Service and maintenance • Outdoor • Industrial • C
Slide 23: Asset-light production setup through assembly-only
NKT I March Roadshow - Danske Bank 07 March 2016 I 23 Asset-light production setup through assembly-only Hungary (2 sites) ~30% of global production US ~10% of global production China (2 sites) Mexico ~30% of global production ~10% of global production Italy (2 sites) ~10% of global production Note:
Slide 24: Growth targets defined as 2-3% above GDP growth
NKT I March Roadshow - Danske Bank 07 March 2016 I 24 Growth targets defined as 2-3% above GDP growth Nilfisk, Historical annual growth Nilfisk, Expected annual growth Growth 2007-2014, %, Growth target 2015-2018, % 2-3% 6-8% • Nilfisk's annual total growth has historically been 2-3% around 3% 1.9%
Slide 25: Accelerate strategy rolled out in 2015
NKT I March Roadshow - Danske Bank 07 March 2016 I 25 Accelerate strategy rolled out in 2015 Grow • Five acquisitions improving high-end position market share • Viper introduced 200 new dealers globally to grow mid-market Strengthen • Commercial Excellence launched in 10 countries (60% of revenue) f
Slide 26: Nilfisk realised flat organic growth for 2015
NKT I March Roadshow - Danske Bank 07 March 2016 I 26 Nilfisk realised flat organic growth for 2015 Positive growth in EMEA offset by APAC Organic growth 2012 2013 2014 2015* - Quarterly (Y/Y) 4% 1% -4% 1% 1% 4% 7% 1% 9% 4% 0% 9% 0% 0% 4% -2% - Annually 0% 3% 6% 0% Americas* EMEA APAC Q4 2015 -2% Q4
Slide 27: Operational EBITDA margin diluted by delayed impact from sales investments
NKT I March Roadshow - Danske Bank 07 March 2016 I 27 Operational EBITDA margin diluted by delayed impact from sales investments Operational EBITDA EURm 120 14% 115 Oper. EBITDA margin, LTM, 11.7% 11.9% 13% 11.9% 110 reduced to 10.1% due to lower 12% organic growth, investment in 10.1% 105 sales, a
Slide 28: Product mix and inflation on sourcing and salary decreased gross margin
NKT I March Roadshow - Danske Bank 07 March 2016 I 28 Product mix and inflation on sourcing and salary decreased gross margin Gross margin development 2015 main effects Gross margin, LTM, % 42.0 • Price increases • Procurement initiatives 41.1 40.9 • Product mix 40.4 • Sourcing and salary inflatio
Slide 29: Distribution cost ratio temporarily increased due to delivery issues
NKT I March Roadshow - Danske Bank 07 March 2016 I 29 Distribution cost ratio temporarily increased due to delivery issues Overhead cost ratio development* Index = 100 114 110 Distribution cost ratio Selling cost ratio 105 Distribution cost increased in 2015 due to delivery issues 101 100 Total ove
Slide 30: 2016 Management agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 30 2016 Management agenda ACCELERATE PRIORITY ACTIONS • Strengthen high-end position and grow mid-market share Grow market share • Drive consolidation proactively • Finalise ComEx roll-out and leverage increased sales force RESTORE GROWTH Strengthen
Slide 31: Accelerate strategy launched in 2015 and execution to continue in 2016
NKT I March Roadshow - Danske Bank 07 March 2016 I 31 Accelerate strategy launched in 2015 and execution to continue in 2016 Financials Highlights and summary Q4 FY EURm 2015 2014 2015 2014 • Accelerate - growth strategy launched in Q1 Revenue 246.8 238.5 971.5 917.6 • Nilfisk - new company name an
Slide 32: NKT Cables
NKT I March Roadshow - Danske Bank 07 March 2016 I 32 NKT Cables
Slide 33: NKT Cables overview on divisions and geographies
NKT I March Roadshow - Danske Bank 07 March 2016 I 33 NKT Cables overview on divisions and geographies Sales entities Manufacturing companies and sales companies 8% 23% 19% 27% EUR EUR 1,212m 1,212m 23% 27% 65% 8% Sales by Business segment Sales by geography Projects Nordic Products Germany APAC APA
Slide 34: Transformation started in 2013 EXCELLENCE 2020 covers next two phases
NKT I March Roadshow - Danske Bank 07 March 2016 I 34 Transformation started in 2013 EXCELLENCE 2020 covers next two phases 2016/17+ 2015/16+ 3 2014/15+ 2 1 ‘Accelerate profitable growth' 'Be excellent' ‘Get fit’ • Focused portfolio • Revitalised product development • Project DRIVE to reduce cost •
Slide 35: EXCELLENCE 2020 strategy has a strong foundation
NKT I March Roadshow - Danske Bank 07 March 2016 I 35 EXCELLENCE 2020 strategy has a strong foundation NKT Cables Power House Strategy elements ROCE • "By driving 'excellence' we will be the best power cable 2020: >15% company by 2020 in the eyes of our customers and Vision our people” • Develop and
Slide 36: 4% growth driven by strong performance in Projects and Products
NKT I March Roadshow - Danske Bank 07 March 2016 I 36 4% growth driven by strong performance in Projects and Products APAC with focus on profitability Organic growth 2012 2013 2014 2015 - Quarterly (Y/Y) -13% -4% 0% 0% 4% 10% -2% 4% 6% -11% 1% -12% 16% 13% -12% 2% - Annually -4% 4% -5% 4% Projects P
Slide 37: Highlights: Offshore outlook is promising, growth potential for Products continues
NKT I March Roadshow - Danske Bank 07 March 2016 I 37 Highlights: Offshore outlook is promising Growth potential for Products continues Projects Products APAC • Two major offshore orders in 2015 • Central Europe delivered strong • Decreasing revenue in APAC due to • Stable onshore market organic gro
Slide 38: Operational EBITDA positively impacted by DRIVE and Products
NKT I March Roadshow - Danske Bank 07 March 2016 I 38 Operational EBITDA positively impacted by DRIVE and Products Operational EBITDA EURm Before DRIVE After DRIVE 100 12% Oper. EBITDA, LTM, 9.0% 90 10% EUR 77m, increase of EUR 12m 8.0% 80 70 (2014: EUR 65m) driven by 8% Products and DRIVE 5.6% 5.3%
Slide 39: Products' improved profitability expected to offset decline in Projects in 2016
NKT I March Roadshow - Danske Bank 07 March 2016 I 39 Products' improved profitability expected to offset decline in Projects in 2016 Business unit profitability development* Index = 100 Products showed strong improvement in 2014 and 2015 and is expected to improve profitability further in 2016 Proj
Slide 40: DRIVE run-rate of EUR 60m successfully achieved
NKT I March Roadshow - Danske Bank 07 March 2016 I 40 DRIVE run-rate of EUR 60m successfully achieved Cost improvements FTE reduction One-off costs Capex Q4 2015 realised EUR 12.8m 36 FTE EUR 9.8m EUR 0.1m Full-year 2015 EUR 54.2m 110 FTE EUR 23.2m EUR 0.9m EUR 60.5m Project to date 381 FTE EUR 50.1
Slide 41: 2016 Management agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 41 2016 Management agenda EXCELLENCE 2020 PRIORITY ACTIONS • Secure new offshore projects Develop & grow • Accelerate in-house DC development • Execute on newly gained railway orders • Secure key frame contacts in medium-voltage segment SEGMENT INIT
Slide 42: Transformation of NKT Cables continues with EXCELLENCE 2020
NKT I March Roadshow - Danske Bank 07 March 2016 I 42 Transformation of NKT Cables continues with EXCELLENCE 2020 Financials Highlights and summary Q4 FY • Launch of EXCELLENCE 2020 strategy EURm 2015 2014 2015 2014 • DRIVE efficiency improvement programme reached EUR 60m annual savings target (run
Slide 43: NKT Photonics
NKT I March Roadshow - Danske Bank 07 March 2016 I 43 NKT Photonics
Slide 44: NKT Photonics operates as one management entity with world-wide reach
NKT I March Roadshow - Danske Bank 07 March 2016 I 44 NKT Photonics operates as one management entity with world-wide reach Integration across sales, marketing and engineering. Further synergies in 2016 Annual EUR 400k cost synergies expected with possible upside Americas EMEA APAC 38% 46% 16% Manuf
Slide 45: Financial aspirations 2015-2018
NKT I March Roadshow - Danske Bank 07 March 2016 I 45 Financial aspirations 2015-2018 Growth EBIT % RoCE % >10% annual organic growth ~15% in 2018 ~6%-points per year realising + Acquisitive growth ~20% in 2018 ~ 20% ~ 13% ~7% 2016 2017 2018
Slide 46: NKT Photonics' products focus on 3 distinct segments
NKT I March Roadshow - Danske Bank 07 March 2016 I 46 NKT Photonics' products focus on 3 distinct segments Imaging & Metrology Sensing & Energy Material Processing Focus growth area Established area New growth area SuperK Lios LHD aeroPULSE White light laser Linear Heat Detection Ultrafast pulsed la
Slide 47: Growth expected across all segments
NKT I March Roadshow - Danske Bank 07 March 2016 I 47 Growth expected across all segments Imaging & Metrology Sensing & Energy Material Processing Focus growth area Established area New growth area • Strong 2015 revenue growth, flat Q4 • Robust Q4 pipeline security market • Fibers and modules for ul
Slide 48: Operational EBITDA margin increased to 9.6%
NKT I March Roadshow - Danske Bank 07 March 2016 I 48 Operational EBITDA margin increased to 9.6% Operational EBITDA EURm 9.6% 4 12% 7.2% 10% 3 Oper. EBITDA margin, LTM, 8% 9.6%, increase of 2.4%-points 2 6% continuing NKT Photonics' strong trend 3.7% 2.3% 4% 1 Oper. EBITDA of EUR 3.7m, a 2% increa
Slide 49: 2016 Management agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 49 2016 Management agenda DRIVER PRIORITY ACTIONS • Integrate Lios Technology business into NKT Photonics Focus on core business • Realise sales and R&D synergies • Increase number of long-term customer contracts GAIN Secure profitable growth • Acti
Slide 50: Significant organic growth in Q4 of 22% driving operational EBITDA increase
NKT I March Roadshow - Danske Bank 07 March 2016 I 50 Significant organic growth in Q4 of 22% driving operational EBITDA increase Financials Highlights Q4 FY • Good growth in all segments (11% on continuing EURm 2015 2014 2015 2014 business) Revenue 12.7* 12.6 40.6 39.1 - Org. growth (Y/Y) 22%* 5%
Slide 51: Agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 51 Agenda Introduction to NKT Highlights 2015 Business units • Nilfisk • NKT Cables • Photonics Group Outlook 2016 Questions & Answers
Slide 52: Outlook 2016
NKT I March Roadshow - Danske Bank 07 March 2016 I 52 Outlook 2016 Consolidated flat Operational EBITDA margin * organic growth on par with 2015 (9.4%) Nilfisk 0 - 5% Nilfisk 10 - 11% NKT Cables ~ neg. 5% NKT Cables 8 - 9%* NKT Photonics ~ 10% NKT Photonics 12 - 14% NKT Cables • Potential effects of
Slide 53: Agenda
NKT I March Roadshow - Danske Bank 07 March 2016 I 53 Agenda Introduction to NKT Highlights 2015 Business units • Nilfisk • NKT Cables • Photonics Group Outlook 2016 Questions & Answers
Slide 54: Financial calendar
NKT I March Roadshow - Danske Bank 07 March 2016 I 54 Financial calendar 2016 31 March Annual General Meeting 12 May Interim Report, Q1 18 August Interim Report, Q2 11 November Interim Report, Q3 2017 1 March 2016 Annual Report For list of Investor Relations events, go to www.nkt.dk