Ratos Ab Class A · OMXSTO:RATO_A
Ratos Ab Class A — Q3 2005 Earnings Presentation
14 slides from Ratos Ab Class A's earnings presentation, Nov 11, 2005
Slide 1: Listed Private Equity
Listed Private Equity CEO Arne Karlsson www.ratos.se Q3 conference 11 November 2005
Slide 2: Q3 2005 – full speed ahead!
Q3 2005 – full speed ahead! Strong macroeconomic trend Continued strong development in holdings Increased competition Good deal flow Favourable exit market
Slide 3: Strong macroeconomic trend
Strong macroeconomic trend Flattening out at a high level Some early signs of weakening Not yet visible in portfolio companies Main hypothesis: mild decline (“mid cycle downturn”) However: structural problems = risks!
Slide 4: Strong development in holdings (1)
Strong development in holdings (1) Earnings trend, holdings (%) Total Ratos share Sales +7 +10 EBITA +28 +33 EBT +38 +42
Slide 5: Strong development in holdings (2)
Strong development in holdings (2) Growth gaining signficance as value driver Continued contribution from action programmes … … but more to be done!
Slide 6: IRR = 27% - how?
IRR = 27% - how? 109% Multiple arbitrage 100% Cash flow + capital efficiency 62% Margin improvement Sales growth Industrial Financial Multiple development effects arbitrage (+62%) (+47%) (-9%)
Slide 7: Strong development in holdings (2)
Strong development in holdings (2) Growth gaining significance as value creator Continued contribution from action programmes … … but more to be done! Income statement hard to interpret due to “items affecting comparability” Underlying trend well in line with positive expectations Full-y
Slide 8: Strong development in holdings (3)
Strong development in holdings (3) + 0 - Alimak Hek Arcus BTJ Nordic BAF Infodata Atle Industri HL Display Bluegarden Overseas Telecom Superfos Camfil DIAB Gadelius GS-Hydro Haendig Haglöfs Hägglund Drives Inwido Industri Kapital Lindab LRT/Tornet
Slide 9: Competition (1)
Competition (1) Factor to be reckoned with for first time in 7 years Enormous amounts of money to invest Leads to tougher competition Leads to stretched prices Leads to higher leverage Ratos niche still attractive Continued good deal flow
Slide 10: Competition (2)
Competition (2) Deal flow Competition Prices Leverage Sweden 5 3-4 3-5 3/5 Norway 5 2-3 3-5 3/5 Denmark 2 3 3-4 3/5 Finland 1 3-4 3-4 3/5
Slide 11: Return target (1)
Return target (1) Higher leverage means higher risk Higher risk means higher return target Many deals today demand 13-15% If at the same time the return target is reduced … … it’s time to wave the red flag However: many high-risk deals can become successes
Slide 12: Return target (2)
Return target (2) Ratos IRR target remains at least 20%!!! Limited increase financial risk in portfolio Continued conservative financial strategy Achievable target
Slide 13: Deal flow
Deal flow Continued good deal flow - large - broad - high-quality New acquisitions - BAF Infodata (BTJ Nordic) - Arcus Add-on acquisitions - Inwido - Lindab - Haendig - etc.
Slide 14: Exits
Exits Very good exit market - Dynal - Martinsson - Envac - Atle Industri Why not more? - opportunities exist - holding strategy considerations