Nobia Ab · OMXSTO:NOBI
Nobia Ab — FY2002 Earnings Presentation
49 slides from Nobia Ab's earnings presentation, Feb 5, 2003
Slide 1: Year-end Report 2002
January - December 2002 1 Year-end Report 2002 2003-02-05
Slide 2: Content
Content • Summary • Strategic initiatives • Financial review – Nordic operation – Continental European operation – UK operation – Group • Market outlook 2 Year-end Report 2002 2003-02-05
Slide 3: Summary
Summary 3 Year-end Report 2002 2003-02-05
Slide 4: Europe's leading kitchen interiors company
Europe’s leading kitchen interiors company • Europe’s largest kitchen interiors company • Sales in 2002 • SEK 9,6 billion • Decentralised organisation, three regions – Nordic – Continental Europe – United Kingdom • Strong brand portfolio, focus on upper-middle segment 4 Year-end Report 2002 2003-02-
Slide 5: Sales by country
Sales by country The Netherlands Other 5% 6% Finland 6% United Sweden Kingdom 8% 43% Germany 10% Denmark 10% Norway 12% 5 Year-end Report 2002 2003-02-05
Slide 6: Summary 2002
Summary 2002 • Net sales up 16 per cent to SEK 9,594 million (8,283). • Operating margin increased to 7.6 per cent (6.5). • Income after financial items up 46 per cent to SEK 606 million (414). • Earnings per share after full dilution up 46 per cent to SEK 7.53 (5.15). • Continued profit improvement
Slide 7: Summary quarter 4, 2002
Summary quarter 4, 2002 • Operating income SEK 191 million (154) • Operating margin 8.2 per cent (6.3) • Margin improvements within all regions • Profit drivers in q4 – organic growth – lower material costs – personnel cost reductions 7 Year-end Report 2002 2003-02-05
Slide 8: Financial performance
Financial performance 8,283 9,594 6.6% 7.1% 8.2% 3,977 4,049 4,102 3,412 3,316 3.4% 2.4% 2.7% 1996 1997 1998 1999 2000 2001 2002 -4.1% Sales SEK million EBITA margin 8 Year-end Report 2002 2003-02-05
Slide 9: Strategic initiatives
Strategic initiatives 9 Year-end Report 2002 2003-02-05
Slide 10: Cost savings programme year 2002-2004
Cost savings programme year 2002-2004 • Savings goal for 2002-2004: SEK 400 m • Mainly targeting: – direct material costs – personnel reductions • Achieved during 2002 • Material cost savings 3,4% of DM SEK 110 m • Personnel cost savings (annualised effect) SEK 70 m • Most of personnel cost savings
Slide 11: Personnel reductions
Personnel reductions Achieved Announced Total Change by Region Empl. % Empl. Sum Change Nordic 24 1% Continental Europe -150 -11% UK -218 -10% Total reduction -234 -4% -110 -344 -6% Whereof Divestment -242 -4% Homebase 41 1% Sales operation 70 1% Reduction, net -213 -3% whereof restructuring -237 -4
Slide 12: Major market initiatives
Major market initiatives • 150 Homebase stores opened in 2002 • Magnet Trade concept developed. Trial stores spring 2003 • Magnet has developed a new store concept. - First store opened in Chester in January 2003 - Applies new display techniques and working kitchens - Roll-out of 5 stores planned in
Slide 13: Magnet - Chester
Magnet - Chester 13 Year-end Report 2002 2003-02-05
Slide 14: Poggenpohl – Studio Concept
Poggenpohl – Studio Concept 14 Year-end Report 2002 2003-02-05
Slide 15: Store network
Store network • Store network development in 2002: - 24 new stores opened - 31 stores closed - 150 renovated and/or changed location • Number of owned or franchise stores by end of 2002: 534 • In addition - 150 Homebase stores opened in 2002 - 22 Designo stores opened in Germany - 90 Poggenpohl conc
Slide 16: Production initiatives
Production initiatives • Standardised carcass platform, K-20 » Norema in August 2002 » Invita in January 2003 • Norema site transformed into assembly only • The main purpose of standardisation to K 20 is increased potential for material cost reduction through concentration of externally sourced volu
Slide 17: The Nordic operation
The Nordic operation 17 Year-end Report 2002 2003-02-05
Slide 18: Estimated development for the Nordic kitchen interiors market in 2002
Nordic Estimated development for the Nordic kitchen interiors market in 2002 • Nordic market, flat • Sweden, increase by 5% • growth in new build segment • renovation segment flat • slow down in second half • Denmark, flat • growth in renovation segment • Norway, decline by 2% • decline in renovatio
Slide 19: Nordic: Net sales and operating income
Nordic Net sales and operating income Jan–Dec Jan–Dec SEK, million 2002 2001 Change Net sales 3,498 3,311 6% Organic growth (Comp units curr adj.) 4% Jan–Dec Jan-Dec 2002 2001 Change Operating profit 425 355 20% Operating margin, % 12.1 10.7 Oct-Dec Oct-Dec 2002 2001 Change Operating profit 110 100
Slide 20: Nordic: Comments to net sales and operating income
Nordic Comments to net sales and operating income • Sales Growth – Increased of market shares in all Nordic countries – Lower growth rate in second half compared with H1 in Norway • Drivers of – Organic growth – Increased contribution margins from operating income • material cost savings (full year)
Slide 21: Nordic: Comments to net sales and operating income
Nordic Comments to net sales and operating income • Sweden – sales increase mainly new build segment – increased sales of rigid and DIY kitchens • Denmark – sales increase clearly ahead of market – sales increase to renovation and new build market – increased sales of rigid and DIY kitchens – growth
Slide 22: The Continental European operation
The Continental European operation 22 Year-end Report 2002 2003-02-05
Slide 23: Trends for the Continental European kitchen interiors market
Continental Europe Trends for the Continental European kitchen interiors market • Germany, decline – estimated decline by 10 per cent in 2002 – decline in second half less than in first half – market decline since 1999 approximately 20 per cent • Netherlands, decline – estimated decline 9 per cent i
Slide 24: Continental Europe: Net sales and operating income
Continental Europe Net sales and operating income Jan–Dec Jan–Dec SEK, million 2002 2001 Change Net sales 2,083 2,459 -15% Organic growth (Comp units curr adj.) -10% Excl. net effects from Star-Beka closing Jan–Dec Jan-Dec 2002 2001 Change Operating profit 68 70 -3% Operating margin, % 3.3 2.8 Oct-D
Slide 25: Continental Europe: Comments to net sales and operating income
Continental Europe Comments to net sales and operating income • Sales decline in line with market decline – mainly Germany, Netherlands and the US – increased sales to Asia • Operating margin 3.3% (2.8%) despite sales decline of 10% • Margin improvement in third and fourth quarters • Reduced sales v
Slide 26: Continental Europe: Comments to net sales and operating income
Continental Europe Comments to net sales and operating income • Pronorm – launch of the Designo shop concept delayed due to market conditions – 22 stores opened in 2002 – roll-out continues in 2003 • Optifit – new listings in Germany (mail order company Otto), Austria and France • Poggenpohl – roll-
Slide 27: Changes in net sales and operating income 2001-2002
Continental Europe Changes in net sales and operating income 2001-2002 Change 2001 2002 Amount Net Sales 2,459 2,083 -376 Gross profit 912 840 -72 S&A expenses 842 772 70 Operating Income 70 68 -2 Gross Profit% 37.1 40.3 S&A% 34.2 37.1 Operating margin, % 2.8 3.3 Loss of gross profit fully compensat
Slide 28: Personnel development
Continental Europe Personnel development • 2001 reduction of 250 persons (16%), whereof Star Beka 170 • 2002 reduction of 60 persons (4%) • 2003 reduction of 90 persons (6%), who were noticed in 2002 Since acquisition totalling 400 persons (25%) 28 Year-end Report 2002 2003-02-05
Slide 29: The UK operation
The UK operation 29 Year-end Report 2002 2003-02-05
Slide 30: The UK Kitchen market
UK The UK Kitchen market • Estimated increase by 4% in 2002 • Stable demand in the fourth quarter • Kitchen market stimulated by activity in housing market • Highest growth for vertically integrated companies in 2002 (incl. Magnet) • Independent retail stores seem to loose market share 30 Year-end R
Slide 31: UK: Net sales and operating income
UK Net sales and operating income* Jan–Dec Jan–Dec SEK, million 2002 2001 Change Net sales 4,075 2,527 Net sales (Comp units curr adj.) 8% Jan–Dec Jan-Dec 2002 2001 Change Operating profit 396 219 Operating margin, % 9.7 8.7 Oct-Dec Oct-Dec 2002 2001 Change Operating profit 101 87 16% Operating marg
Slide 32: UK: Comments to net sales and operating income
UK Comments to net sales and operating income • Organic growth 8% (pro forma)* • kitchen and bedrooms up 9% • joinery products up 4% • bathroom products down 5% • Sales to Homebase GBP 5 m • Sales increase accelerated in second half, mainly driven by kitchen and bathroom • Margin increase mainly dri
Slide 33: UK: Personnel development
UK Personnel development • 2001 Reduction of 98 people (4%) » mainly administration and manufacturing • 2002 Reduction of 198 people (9%) » divestment of Joinery operations -242 » increase due to Homebase +41 » manufacturing +10 » sales operations +70 » restructuring -78 In 2001 and 2002 a major shi
Slide 34: Financial review Group
Financial review Group 34 Year-end Report 2002 2003-02-05
Slide 35: Net sales - Group
Net sales - Group Jan–Dec Jan–Dec SEK, million 2002 2001 Change Net sales 9,594 8,283 16% Net sales, comparable units curr.adj.* -2% Net sales , pro forma comp units curr.adj* 2% • Net sales (pro forma) in 2002 (comparable units curr. adj.) 2% • Organic growth in Nordic operation and UK operation •
Slide 36: Operating income - Group
Operating income - Group Jan–Dec Jan–Dec SEK, million 2002 2001 Change Operating income 725 537 35% Operating margin, % 7.6 6.5 Oct-Dec Oct-Dec 2002 2001 Change Operating income 191 154 24% Operating margin, % 8.2 6.3 36 Year-end Report 2002 2003-02-05
Slide 37: Main reasons for improved operating income Jan-Dec 2002
Main reasons for improved operating income Jan-Dec 2002 – Gross margin: • increase by 2.8% points (excl Magnet effect) • main drivers: – increased average order value – savings material cost – reduction in personnel – S&A costs: • additional personnel and costs in the sales network (Nordic, UK) • ad
Slide 38: Net financial items
Net financial items Jan–Dec Jan–Dec SEK, million 2002 2001 Net financial items -119 -123 • Effects from new share issue as of June resulting in a reduction of net debt and a reduction of interest rate • Net financial items in second half SEK -44 m (-78) 38 Year-end Report 2002 2003-02-05
Slide 39: Earnings and Dividend
Earnings and Dividend Jan-Dec Jan-Dec 2002 2001 EPS after full dilution, SEK 7.53 5.15 Return on capital employed, % 17.9 15.5 Return on shareholders´ equity, % 18.7 16.2 • Increased EPS from Nordic operations and the Magnet acquisition • Proposed dividend 2.25 per share in total SEK 130 m 39 Year-e
Slide 40: Cash flow
Cash flow Jan–Dec Jan-Dec SEK, million 2002 2001 Current activities Operating profit 725 537 Depreciation 311 284 Adjustment for items not included in cash flow -147 -214 Interest, dividend and tax -204 -193 Change in working capital -172 137 Cash flow from current activities 513 551 • Cash flow fro
Slide 41: Capital employed and working capital
Capital employed and working capital Dec Dec 2002 2001 Capital Employed 4,001 4,237 Turnover, LTM 2.3 2.3 Working capital 685 623 Working capital of LTM, % 7.1 6.4 • Capital turnover unchanged • The divestment of operations in Penrith and Flint caused a reduction of capital employed by SEK 120 m • W
Slide 42: Restructuring provisions
Restructuring provisions Dec Dec Dec SEK, million C/B 2000 2001 2002 Poggenpohl / Norema 252 91 7 Magnet 154 17 Total 252 245 24 Jan-Dec 2002 Pp/Nor Magnet Total Dissolvement 67 67 Utilisation 83 61 144 Currency effect 1 9 10 Total 84 137 221 42 Year-end Report 2002 2003-02-05
Slide 43: Utilisation of restructuring provisions in 2002
Utilisation of restructuring provisions in 2002 Poggenpohl/Norema: • Personnel reductions SEK 64 m • Transfer to K 20 and assembly plant in Norema SEK 14 m • Other SEK 5 m Magnet: • Personnel reductions SEK 28 m • Discontinued operations SEK 21 m • Logistic systems SEK 12 m 43 Year-end Report 2002 2
Slide 44: Financial position
Financial position Year-end 2001 2,078 New issue -513 Currency effects -87 Divestment of Penrith & Flint -117 Operations -274 Acquisition adjustment 11 Dec 2002 1,098 • Available credits and non-utilised credit overdraft facilities by end of December SEK 960 m • Available cash amounted to SEK 293 m
Slide 45: Balance Sheet Ratios
Balance Sheet Ratios Dec Dec 2002 2001 Equity/Assets ratio 45% 28% Net debt/Equity ratio 42% 117% • Key financial ratios were strengthened due to proceeds from the IPO, net income from operations and divestments 45 Year-end Report 2002 2003-02-05
Slide 46: Market outlook
Market outlook 46 Year-end Report 2002 2003-02-05
Slide 47: Market outlook
Market outlook The market outlook for 2003 is currently difficult to assess. Based on order growth at the beginning of the year and the market information available, Nobia estimates that the overall market conditions in the first quarter of 2003 will be essentially the same as in the fourth quarter
Slide 48: Internal actions in 2003
Internal actions in 2003 • Nobia will in 2003 continue its programs aiming for improved internal cost efficiency – Material cost saving program continues with increased emphasis on component reduction – Further transfers to the K 20 standard measurement system – Review of production capacity includi
Slide 49: Thank you for listening
Thank you for listening 49 Year-end Report 2002 2003-02-05