Nkt A/s · OMXCOP:NKT
Nkt A/s — Investor Day (May 2005)
65 slides from Nkt A/s's investor day presentation, May 31, 2005
Slide 1: Capital Market Day Nilfisk-Advance
NKT Holding Tuesday, May 31st, 2005 Capital Market Day Nilfisk-Advance
Slide 2: Capital Market Day Agenda
Capital Market Day 10.00 Welcome and introduction 10.20 Trends and dynamics of the cleaning equipment industry 10.50 Strategy for Nilfisk-Advance / ALTO 11.30 Demonstration of products 12.30 Lunch 13.15 Supply chain management 14.00 Wrap up Agenda
Slide 3: NKT Holding A/S: NKT Group
NKT Holding NKT Holding A/S Nilfisk- NKT NKT Advance Cables Photonics Group Group Group • Europe • Central Europe • Crystal Fibre • North America • Eastern Europe • KOHERAS • Asia • Northern Europe • LIOS Technology • Oceania • China • NKT Research & Innovation • Nanon Revenue 2005 ~5 bnDKK ~3 bnDKK
Slide 4: Brief overview
NKT Holding Brief overview Listed on the Copenhagen Stock Exchange – since 1898 Present market cap approximately 5,4 bnDKK (share price 220) Expected turnover 2005 ~8 bnDKK Three main business areas Nilfisk-Advance (professional cleaning equipment - global) NKT Cables (energy cables – primarily Euro
Slide 5: Strategy "Upgrade to next level"
NKT Holding NKT is a growth and development oriented industrial group with three main business areas : Nilfisk-Advance Group NKT Cables Group NKT Photonics Group Strategy 2004-2008: Upgrade to next level Prioritized Exit life science Vision 2005 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 6 bn
Slide 6: Strategy "Upgrade to next level" rationale and main elements
NKT Holding Rationale and main elements: NKT Holding is the best owner of the three main activities Key words are Stability Controlled expansion Value creation Target is a growth in the annual turnover of 8 – 12 % in the strategy period (on average) Organic growth Acquisitive growth (primarily in Ni
Slide 7: Status strategy "Upgrade to Next Level"
NKT Holding Financial targets within strategy period for three core activities ` Nilfisk-Advance Group – 6 % organic growth p.a. over an economical cycle – EBIT-margin 10 % . ` NKT Cables – 3 % organic growth p.a. over an economical cycle (minimum) – EBIT-margin 5 % ` NKT Photonics Group – EBITDA br
Slide 8: Revenue development 2003 - 2004 (mDKK)
NKT Holding Revenue 2003 5.824 Acquisitions etc. Nilfisk-Advance 1.222 Metal prices etc. NKT Cables 421 4% organic growth 251 Nilfisk-Advance Asia/ Total USA Europe Pacific 2004 7% 10% 5% 10% 2003 5% 10% 2% 9% NKT Cables Energy Trolly Tele- Energy Total Europe Wire cables China Other 7% 10% 10% Neg.
Slide 9: Operating profit (mDKK)
NKT Holding DANISH GAAP IFRS Actual Actual Actual Consensus 2002 2003 2004 2005 Nilfisk-Advance 214 276 371 475 *) NKT Cables 109 166 201 190 NKT Photonics Group -81 -76 -74 -10 Øvrige -78 -15 -44 -20 Comparable EBITDA 164 351 454 635 One-offs 4 35 162 0 Reported EBITDA 168 386 616 635 Depreciation
Slide 10: EBITDA – Nilfisk-Advance
NKT Holding Incl. ALTO 10,2% 10,4% 9,9% 9,6% 9,7% 9,5% 12,0% 9,0% 9,0% 8,6% 90 EBITDA (mDKK) 7,8% 10,0% EBITDA% 70 8,0% 6,0% 50 4,0% 30 60 70 72 59 75 77 100 93 101 101 2,0% 10 0,0% Q1-04 Q2-04 Q3-04 Q3-03 Q4-03 Q4-02 Q1-03 Q2-03 Q4-04 Q1-05 EBITDA – Nilfisk-Advance
Slide 11: Share price development
NKT Holding 240 230 Share price since 1/1/2005 +41 % 220 KFX index since 1/1/2005 +14 % 210 Daily turnover since 1/1/2005 17,8 mDKK 200 - same period last year 6,4 mDKK 190 180 170 160 NKT Holding KFX rebased 150 140 130 120 110 100 03 04 04 04 4 4 4 4 4 4 4 4 4 5 5 5 5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0
Slide 12: What drives valuation?
NKT Holding A/S EV / EBITDA at a share price of 200 EBITDA (industrial) (industrial activities) 600 (end Q1) 550 9,0x 500 450 8,0x 400 7,0x 350 6,0x 300 250 5,0x 200 4,0x Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- 01 02 02 02 02 03 03 03 03 04 04 04 04 05 What drives valuation?
Slide 13: Expectations 2005
NKT Holding ` Turnover slightly under 5 bnDKK ` Organic growth 3 % ` EBIT ~7 % excl. 35 mDKK restructuring Åmål plant ` Turnover ~ 3 bnDKK ` Organic growth 3 % ` EBIT ~ 4% ` Turnover ~100 mDKK ` EBITDA ~(10) mDKK, incl. 5 mDKK one-off ` Net result (NKT share 51%) ~(15) mDKK ` Turnover ~8 bnDKK ` Gro
Slide 14: Capital Market Day Agenda
Capital Market Day 10.00 Welcome and introduction 10.20 Trends and dynamics of the cleaning equipment industry 10.50 Strategy for Nilfisk-Advance / ALTO 11.30 Demonstration of products 12.30 Lunch 13.15 Supply chain management 14.00 Wrap up Agenda
Slide 15: Nilfisk-Advance Group Investor presentation
Nilfisk-Advance Group ¨Investor presentation¨ 31 May 2005 1
Slide 16: Nilfisk-Advance in brief
Nilfisk-Advance in brief • Strong brand - The NO1 global supplier of professional cleaning equipment • Complete product portfolio for industrial and commercial cleaning • Niche strategy on consumer vacs and HPW for DIY • Global presence, 52 companies in 31 countries and importers in other markets •
Slide 17: Our business
Our business Our businesses are: • Industrial and commercial Niche businesses are: cleaning equipment • Consumer vacuum cleaning • Professional high-pressure equipment cleaning equipment • DIY high-pressure cleaning • Services and accessories equipment Within the areas of: • Industrial & Automotive
Slide 18: History: Milestones
History: Milestones 1906: Fisker & Nielsen founded 1910: Fisker & Nielsen launched the first vacuum cleaner, called C1 1925: Advance Machine Company is founded 1932: New Nilfisk vacuum cleaner was launched - ”The silent Dane” 1954: More than one million Nilfisk vacuum cleaners had been sold. Worlds
Slide 19: Industry trends
Industry trends • Consolidation ongoing - many small companies • Historically low entry barriers • High inefficiency compensated through relative high margins • Market growth through mechanisation • Contract cleaners fastest growing due to outsourcing of cleaning • Immature service market • Large cu
Slide 20: Key success factors
Key success factors • Continuous innovation and cost leadership • Strong market coverage through a balanced approach of indirect and direct channels FOTO • Develop more presence in the contract cleaner segment • Industry, CC and Retail strategic customers • Full service coverage • Focus on own produ
Slide 21: Financial performance, EUR million
Financial performance, EUR million Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 % (Growth) 27 15 7 9 9 25 13 -3 -5 -1 52 21 M EUR 195 224 240 261 284 354 401 387 368 363 552 670 Sales 800 700 600 500 400 300 200 Target: 6% annual growth 100 0 7
Slide 22: Net sales by product category - 2004
Net sales by product category - 2004 Floor care machines Service Vacuum cleaners Nilfisk-Advance 44% Nilfisk-Advance 8% Nilfisk-ALTO 13% Nilfisk-ALTO 5% High pressure cleaners Other sales Nilfisk-Advance 36% Nilfisk-ALTO 24% Nilfisk-Advance 3% Nilfisk-Advance 9% Nilfisk-ALTO 56% Nilfisk-ALTO 2% 8
Slide 23: Geographic distribution of net sales
Geographic distribution of net sales - 200504(2001) Denmark 6(4)% America Other Europe 29(34)% 58(52)% Asia/Pacific 7(10)% 9
Slide 24: Directions for growth applications/segments
Directions for growth applications/segments Commercial Consumer Nilfisk-Advance Industry Outdoor 10
Slide 25: Major players in the cleaning industry
Major players in the cleaning industry • Nilfisk-Advance, 1st • Kärcher (D) Estim< 40% division • Tennant (US) market • Interpump (I) • HAKO/Minuteman (D/US) share • Bucher (CH) 2nd • Taski (CH) division • Windsor (US) • Numatic (UK) • Schmidt (D) • 4 European and 1 US company • Comac/Fimap (I) domi
Slide 26: Financial performance, EUR million
Financial performance, EUR million Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 M EUR 5 -5 4 10 4 21 -9 9 21 29 36 % of sales 2.6 -2.2 1.7 3.8 1.4 5.9 -2.2 2.3 5.7 8.0 6.5 7 8 Operating result - EBIT 6 4 2 Target: 10% EBIT 0 -2 -4 12
Slide 27: Financial performance, EUR million
Financial performance, EUR million Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 M EUR -1 13 2 4 6 10 2 25 36 31 45 50 Cash flow from 40 operation 30 20 10 0 -10 13
Slide 28: Vision
Vision • To develop a No. 1 position and become the global leader of the professional cleaning equipment market • To provide our customers with best value and innovative products • To offer an attractive company to our employees 14
Slide 29: Strategy: Product driven with Customer focus
Strategy: Product driven with Customer focus Customer focus We focus at meeting and exceeding our customers’ expectations with our products and offerings Product driven We believe that the product is the driving force of our business and we will develop products which are innovative and cost efficie
Slide 30: Values
Values Total customer satisfaction developed through long term commitment and close relationship with the customers is key to the Nilfisk-Advance strategy Top quality products and services that meet customer needs are core to maximise the productivity of the customer and drive down the total cost of
Slide 31: Strategic Actions
Strategic Actions The best value offering Exceed customer expectations and provide best value through 1. Product leadership - Innovation - Boost Benefits, BB5 - Cut cost, CC5 - 100% quality 2. Market presence 3. Excellence in logistics and flow 4. After market services Create true and sustainable co
Slide 32: Product leadership: Innovation
Product leadership: Innovation Create true and sustainable advantages • Innovation and design • Builds competitive advantage and customer value Continuous steps 18
Slide 33: Nilfisk-Advance - Main issues – 2005
Nilfisk-Advance - Main issues – 2005 • Growth and Integration of Nilfisk-ALTO • Continued geographical expansion • Strategic expansion into Industry and Service • Innovative new products drives sales within FC • Negative development of consumer due to delay of products and drop of market price level
Slide 34: Nilfisk-Advance - Main issues – 2005
Nilfisk-Advance - Main issues – 2005 • Relocation of production in Åmål – New factory in Hungary • Outsourcing completed in the US • First year of Suzhou, China production • Raw material cost pressure - Price increase compensates • Finalisation of natural hedge 20
Slide 35: Strategic direction Nilfisk-ALTO
Strategic direction Nilfisk-ALTO • Focus on professional equipment including FC • Focus on core segments Agriculture, Automotive, Building & Construction • DIY as niche segment • Integration with Nilfisk as a division • Clarke, US as a separate brand • Shared services, IT and logistics • Move of pro
Slide 36: Nilfisk-ALTO Sales Expansion
Nilfisk-ALTO Sales Expansion • Market share build in existing markets • Develop territory management in present markets • Invest in company name • Expand to new markets primary through Nilfisk structure • One focus per customer group; fx Industry, Automotive • Utilise synergies between DIY and Consu
Slide 37: What can go wrong
What can go wrong • Expansion • Business cycle • Currency • Integration process • Management resources • IT structure 23
Slide 38: Key conclusions
Key conclusions • Global market presence and strong brand position • Great potential for growth in Nilfisk and Nilfisk- ALTO • Synergies and efficiency improvements • Product leadership, innovation CC5, BB5 • Production improvements: lean & purchasing • Efficiency in logistics and back office • Targ
Slide 39: Efficiency in infrastructure
Efficiency in infrastructure 25
Slide 40: Administrative cost in % of sales 2000-2004
Efficiency in infrastructure: Nilfisk-Advance – Administrative cost in % of sales – 2000-2004 16% 15.3% 14.7% 15% 14.1% 14% 12.9% 13% 12.4% 12% 11% 10% 9% 8% 7% 6% 5% 2000 2001 2002 2003 2004 26
Slide 41: Efficiency in infrastructure: Focus areas
Efficiency in infrastructure: Focus areas • Shared services within IT and finance • Business Process Improvement • E-business • Optimization of financial reporting • Integration of ALTO in existing structure 27
Slide 42: Efficiency in infrastructure: Shared service
Efficiency in infrastructure: Shared service America Europe Asia/Pacific •1 Service center for •1 Server site for sales •Regional service Finance and IT companies centers for Finance •1 Server site •1 Service center for IT and IT •Regional finance service centers 28
Slide 43: Shared service: From daughter company to sales company
Shared service: From daughter company to sales company From To • Local purchasing • Highly efficient sales machine • Local warehouse focused only on sales, • Local IT service and sales support • Local product maintenance – Streamlined business model • Local marketing in all aspects – European and US
Slide 44: Business Process Improvement - BPI
Efficiency in infrastructure: Business Process Improvement - BPI • Objective: Optimisation of processes and reduction of costs • Focus: Analysis and redesign of existing business processes • Scope: Implemented in all Nilfisk-Advance companies • Results: Important savings and an efficient back- offic
Slide 45: E-Business – Sales company objectives
E-Business – Sales company objectives • Increase customer satisfaction: – Better and easier information – Less errors – Order input 24x7 • Streamline internal processes and data • Reduce workload – Phone calls/data entry/data maintenance • Bonus effect for management 31
Slide 46: E-Business – Group objectives
E-Business – Group objectives • Reduce cost base • Reduce No. of back office employees • Reduce complexity – Use shared resources and minimize local solutions • Reduce time to market • Improve competitiveness of customers 32
Slide 47: Efficient financial reporting
Efficiency in infrastructure: Efficient financial reporting • Reporting and consolidation for 52 entities on 5th working day • Standardised financial guidelines and reporting • Internal controlling • Standard scorecards and trends used as primary reporting tool • Standardised follow-up: Business boa
Slide 48: Integration of ALTO sales companies
Efficiency in infrastructure: Integration of ALTO sales companies • One legal entity per country • Divisional split of Nilfisk-Advance and Nilfisk-ALTO • Full integration of operation • Management • IT platform • Finance – Function and reporting • Back-office 34
Slide 49: Focus areas 12-36 months
Efficiency in infrastructure: Focus areas 12-36 months • Integration of ALTO • Extension of shared services • Optimize ERP platform • Optimize acquisition tools and ability to integrate 35
Slide 50: Supply Chain
Supply Chain 36 Nilfisk © Advance
Slide 51: Agenda
Agenda • Product Company Structure • Product development portfolio • Production structure • Logistics flow 37
Slide 52: How we are structured in Production Company
How we are structured in Production Company Group Management Product company Sales company needs and satisfaction Product Customer Product specification responsibility responsibility Customer Product marketing Distribution Production Sales and and sourcing Shared Service Business services Product ma
Slide 53: Development process
Development process • Customer needs • Feedback from market • Innovations/technology jumps Pending VOC queues HOC FOC IPDP/NODI process Product PI CP0 CP1 CP2 CP3 launch F.U. 39
Slide 54: Nilfisk-Advance development portfolio
Nilfisk-Advance development portfolio Products under development Focus on: VAC • BB5/Innovation HPW • CC5 Scrubbers • 100% Quality Sweepers • Timing Technology Projects 40
Slide 55: A technology development experience
A technology development experience Why technology development ? 1. Innovation and new benefits to the customer 2. Competitive advantage 3. Growth •• Keep Keepseparate separate •• Clear Cleartargets targets&&follow followup up •• Challenges Challenges 41
Slide 56: Current production set up
Current production set up Europe • Åmål, Sweden • Hadsund, Denmark • Brøndby, Denmark • Bellenberg, Germany • Nagykanisza, Hungary • Guardamiglio, Italy US • Randers, Gerni Asia • Plymouth • Ålborg, Scanio • Suzhou, China • Springdale • Zocca, CFM • Ningbo, China • Bowling Green • Parma, Ecologica •
Slide 57: Activities at the Ningbo site
Activities at the Ningbo site Key conclusions: 1. Challenges 2. Cost reductions 3. High quality products 43
Slide 58: Activities at the Szigetszentmiklos site
Activities at the Sizgetsenmiklos site Key conclusions: 1. Moving out of Åmål 2. Cost reductions 3. Future opportunities 44
Slide 59: Activities at the Suzhou site
Activities at the Suzhou site Key conclusions: 1. China experience 2. Cost reductions 3. Growth 45
Slide 60: Activities at the Guardamiglio site
Activities at the Guardamiglio site Key conclusions: 1. New developments 2. Nilfisk Lean effects 3. Growth 46
Slide 61: Outcome of the process
Outcome of the process • Product cost savings Relocation to low • New set up with suppliers cost countries • Access to new supplier base • Overhead reduction Less complex • Optimisation of flow structure • Production close to growth markets Market growth 47
Slide 62: Focus on Sourcing key to optimisation of product costs
Focus on Sourcing key to optimisation of product costs Central Strategic sourcing US EU 3 China 1. WW work and category management 2. CC5 program 3. Flow optimisation: - Kanban - Quality - Partnership 48
Slide 63: Logistics set up for Europe and Far East
Logistics set up for Europe and Far East P1 Nilfisk-Advance P2 Central Distribution Centre P3 P4 Direct distribution to Europe Local warehouses in A/P 1. One integrated log system for Europe and Far East: - Cost optimisation - Service standardisation and improvement 2. Direct Distribution key to ser
Slide 64: Key focus areas for the Supply Chain next 12-36 months
Key focus areas for the Supply Chain the next 12-36 months 1. Flow optimisation through Nilfisk lean 2. Restructuring of production set up 3. Integration of logistics set up 4. Localisation of parts to low cost countries 50
Slide 65: Key conclusions
Key conclusions • Global market presence and strong brand position • Great potential for growth in Nilfisk and Nilfisk- ALTO • Synergies and efficiency improvements • Product leadership, innovation CC5, BB5 • Production improvements: lean & purchasing • Efficiency in logistics and back office • Targ