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Basics New Focus lindab | we simplify construction Lindab - - PowerPoint PPT Presentation

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lindab | we simplify construction lindab | we simplify construction A redefined direction for the future of Lindab Same Basics New Focus lindab | we simplify construction Lindab Simplified * Sales, markets* Simplifying is our passion.

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lindab | we simplify construction

A redefined direction for the future of Lindab

lindab | we simplify construction

Same

Basics

New

Focus

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lindab | we simplify construction

Lindab Simplified*

Simplifying is our passion. Ultimate comfort is our vision

In 1959 AB Lidhults Plåtindustri was registered as a company. Lindab is represented at 157 locations in 32 countries. The majority of the Group’s sales are made through its 126 branches. At the end of Q3 2014 the Group had 4,677 employees. The Lindab brand is a leading and well-known brand throughout Europe.

Year1959

32 countries 126 branches 4,677employees

3% 46% 24% 27%

Nordic region Western Europe CEE/CIS Other markets

Sales, markets* Sales, operations*

16% 84%

Products and Solutions Building Systems

*2013 figures *2013 figures

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lindab | we simplify construction

Acquisitions

  • Novo Clima, Sweden: in-house production of chilled beams (ICS), improving delivery performance,

service and efficiency

  • Klimasystem AS, Norway: adding competence in ICS and strengthening relations to specifiers in

Norway

  • Bjarnes System, Sweden: unique roofing fasteners, important for the established Nordic market and
  • pens new opportunities in other European markets for “roofers”
  • MP3, Italy: strengthens position as a complete provider of ventilation solutions through key

competence within fire and smoke protection and increase market coverage

Organic

  • New country establishments in Istanbul and Moscow with ventilation and ICS
  • Adding on branches and competence centers in for example France, Switzerland, Sweden, Norway

and Estonia

First year as One Lindab moving in One direction

Some key highlights 2014

Mp3 3

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lindab | we simplify construction

10,000 1,200 4,000 1,400 800 1,000 2,000 8,000 6,000 600 400 200 Sales 12m (SEK m) EBIT 12m (SEK m) 553 6,953 2010 347 6,527 9,840 L12M Sep 2014 2005 550 6,214 2000 342 1,309 1990 169 1,758 1980 1959 4,415 Sales EBIT*

*) EBIT adjusted for larger one-off items

Lindab has shown great evidence of entrepreneurship over the years

Always profitable

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lindab | we simplify construction

However, taking a closer look at the clear trend from the last 6 years

Rethinking the approach and where Lindab was heading

  • The last 11 years can be divided into 2

periods with different characteristics

  • 2003 to 2008 saw consistent “price

driven growth” in Sales and EBIT

  • 2009 to 2013 saw dramatic loss of

sales, however cost measures secured EBIT

  • Moving forward, we prioritize a long-

term profitable and sustainable growth

1.400 1.200 1.000 800 600 400 200 10.000 8.000 6.000 4.000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 EBIT 12m (SEK m) +13% R12 Sep 2014 Sales 12m (SEK m)

  • 6%

2013 EBIT Sales 5

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lindab | we simplify construction lindab | we simplify construction

Building on our basics

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6

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lindab | we simplify construction

The starting point is excellent

We have a strong foundation to build on

Our Basics

People Products Production and Processes Sales and Distributions

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lindab | we simplify construction

A matrix organization making it possible to use the full strengths of Lindab

One Lindab – Preparing the ground for simplified growth

Group functions including Finance, Legal, HR, IR, Sourcing, Market Group Production Division Building Systems Sales Region North Europe Sales Region West Europe Sales Region Mid Europe Sales Region CEE, Russia Ventilations Products Building Products Building Solutions Indoor Climate Solutions

ONE Lindab facilitiates growth options in three dimensions: market coverage, portfolio expansion and penetration 8

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lindab | we simplify construction

Lindab combine two different characteristics in type of business

A combination of growth oriented and project related business

Building Systems Products & Solutions

lindab | we simplify construction

Largest customer/project: 3-10% Share of sales to developed markets: 48% (Western Europe, CEE and US) Share of renovation: 0% Largest customer/project: 2% Share of sales to developed markets: 98% (Western Europe, CEE and US) Share of renovation: 45% 9

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lindab | we simplify construction lindab | we simplify construction

Opportunities and trends

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lindab | we simplify construction

Our 126 branches and sales offices

Added product range Residential Industrial Commercial Marine Public sector Our production facilities Our e-Business, software solutions and distribution centers Core products Optimized logistics Our 126 branches and sales offices

CUSTOMERS THE INFLUENCERS USERS

More than 20 000 customers in Lindabs Ecosystem for simplified construction and energy efficient solutions

Many and close customer relations

Project support Research facilities and knowledge Solutions and systems

STRENGTHEN DISTRIBUTION DEVELOP SOLUTIONS Installers OEM Contractors Distributors ALWAYS CLOSE, ALWAYS AVAILABLE

R&D facilities

Specifiers, architects and consultants Regulatory bodies Property and Facility Management and Owners

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lindab | we simplify construction

Global economy patterns Growing population and urbanization Innovation in materials and processes Intelligent buildings Environment, legislation and energy saving

Five clear trends in the world today impacting Lindabs business

We see global drivers for growth

lindab | we simplify construction

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lindab | we simplify construction lindab | we simplify construction

Environmental aspects

are drivers in all trends Intense pressure for

Innovations

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lindab | we simplify construction lindab | we simplify construction

A strategic shift in our direction

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lindab | we simplify construction

New focus same basics

Transformation into a fully integrated company

lindab | we simplify construction

From selling what we produce … … to capturing trends and fulfilling customers’ needs …

Business Area driven sales units in each country BA driven production unit R&D/Product management connected to factory New flat, matrix

  • rganisation
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Our formula for success

Five clear strategic focus areas

Leveraging local stars to global standards. Optimising the flow from purchase to delivery. Creating offers of complete ventilation solutions. Finding new ways to increase customer value. Having the right team for our business.

  • Strengthen

Marketing and Sales (Solution and Distribution)

  • Geographic

presence

  • Strategic

product management

  • Enhance our
  • ffering in relevant

areas of HVAC and strengthen “technology content”

  • Solutions in Indoor

Climate, Marine, Residential ventilation and Light commercial industry

  • Enhance

inventory management

  • Leverage

purchasing power

  • Improve

distribution

.

  • Create a long-

term, innovative culture in order to generate ideas, both ground- breaking and incremental improvements

  • A strong

employer brand

  • Roll-out

groupwide system to identify competences and make processes more efficient Initiatives for 2015:

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lindab | we simplify construction

5-8%

Annual growth based on

  • rganic growth and

growth from acquisitions

  • ver a business cycle

With the strategy we are refining our long term financial targets

Three financial targets supported by the new strategy

10%

Operating margin over a business cycle

2.5

Long term Net debt / EBITDA adjusted for seasonality

The dividend target is 30% of the company’s profit after tax considering

  • pportunities for

strategic acquisitions, the financial position of the company and long term need for financing

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lindab | we simplify construction

Solutions

Leading European companies within categories “Residential and Light Commercial Ventilation”, “Fire and smoke” and “Indoor Climate Solutions”

Market excellence

Companies that add distribution in new and existing geographies

There are areas we want to strengthen

Potential for acquisitions, primarily in two areas

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lindab | we simplify construction

  • Mp3 – Italian Ventilations Solutions Company adding competence and market coverage
  • Annual turnover approx. SEK 210 m with EBIT approx. SEK 20 million
  • 95 employees
  • Adds in-house competence in certified “Fire & Smoke” range – important part of complete offering

to strengthen competitiveness

  • Strong customer relations and distribution in Southern Europe, as well as other European and new

markets

There are areas we want to strengthen

First significant acquisition in line with the strategy announced on 16 December 2014

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Latest Reported Financials Q3 14

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  • Sales increased by 9% compared to last year, or 5% when adjusted

for currency and structure

─ Products & Solutions: 11% (6% adjusted) ─ Building Systems: -1% (-3% adjusted)

  • EBIT amounted to SEK 210 m in Q3 compared to SEK 195 m last

year (excluding one-off items)

─ EBIT margin amounted to 11.0% (11.1) ─ Product & Solutions: 10.7% (9.7) ─ Building Systems: 12.6% (19.6)

  • Cash flow from operations amounted to SEK 153 m compared to

SEK 136 m in Q3 2013

Lindab Group – Q3 2014 Highlights

An important quarter showing the way

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  • All product areas within Products & Solutions show positive long-term trend
  • Negative growth rate for Building Systems following the unrest in the CIS region and lower demand in

underlying market Products & Solutions

  • 30%
  • 20%
  • 10%

0% 10% 20% 30% Sep 2014 Sep 2013 Sep 2012 Indoor Climate Solutions Building Solutions Building Product Ventilation Products

Sales development by product areas Organic growth, L3M

Building Systems

  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 60% Sep 2014 Sep 2013 Sep 2012 22

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lindab | we simplify construction

Market Development and Business Cycle

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  • The economic recovery in the Euro zone has

slowed down since spring 2014

  • Though, the economic recovery remains fairly

strong in Lindab’s largest and 3rd largest market; Sweden and United Kingdom

  • Increased geopolitical risks in CIS lead to longer

lead times for investment decisions in the region

  • Confidence continue to improve in the European

construction market despite flattening trend in

  • utput
  • Both the European economy and construction

market are still predicted by most institutes to grow in 2015 but market uncertainty has increased with clear downward risk

Market Development

Economic development in Euro zone

Sources: Eurostat & European Comission

Construction output & sentiment in EU

Source: Eurostat & European Comission

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  • Lindab’s exposure to Russia

(L12M):

  • 5% of Group sales
  • 30% of Building Systems sales
  • Effect by rouble fall on Lindab partly
  • ffset by local production and steel

sourcing

  • Falling oil prices leading to GDP

drop

  • EU sanctions
  • Interest hikes to strengthen rouble
  • Expensive / difficult access to

financing

  • Domestic business weakening but

still rather resilient

Worsened conditions in Russia

Russian GDP growth vs oil price development

Sources: Federal State Statistics Service (RU) & ICE Futures Europe

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Characteristics of business cycle for building industry

  • 12
  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Real market growth (%) Business cycles: 1996  2002

European construction market for buildings vs GDP

Real market growth (%)

2002  2009 2009  2012

Source: Euroconstruct (Nov -14) & IMF (Oct -14)

  • The business cycle for the construction

market follows general GDP development but is more volatile

  • An average business cycle is almost 6

years long. Though, the variation is large, from 2 years up to 10 years. 1

  • Construction market generally grow faster

than GDP in developing markets as the need for new and more efficient buildings and infrastructure is high, the opposite is true for developed markets

  • Construction segments closely related to

energy efficiency improvements will grow faster than GDP also in developed markets

1) National Bureau of Economic Research (http://www.nber.org/cycles.html)

Construction GDP

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What does this mean for Lindab?

Products & Solutions

  • Late cyclical, mainly due to ventilation business
  • Sales to renovation market cushion some of market fluctuations
  • Large share of sales to developed markets where energy efficiency trends will be main

demand driver Building Systems

  • Large fluctuations in business and quicker response to economic changes due to

dependency on some larger projects and markets, only new build sales as well as large share of sales to developing markets

  • Though, long-term, good geographic footprint for growth

Lindab Group

  • Increased market risks but also small market share in several markets and more

dependent on own business development than on underlying economic development

– Have gained market shares in last year and managed to significantly grow business in challenging markets like France and Italy 29

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lindab | we simplify construction

We simplify …

… and bring more value to more people

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Lindab Solus Lindab Fans Lindab Residential Lindab Pascal Lindab ADS Lindab AHU Lindab Cassette Lindab Rainline Lindab Fire & Smoke Lindab Airy Lindab IT Solutions Architect Contractor Developer Lindab Lindab Installer

We simplify …

… and bring more value to more people

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lindab | we simplify construction

CMD

20 May 2015

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