CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY 30 JUNE 2019 - - PowerPoint PPT Presentation
CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY 30 JUNE 2019 CEO Esa Korkeela CFO Joni Sorsanen CONTENTS 1. Highlights and Group performance 2. Cash flow and financial position 3. Market outlook, guidance and summary 4. Appendix 1 26
1 JANUARY – 30 JUNE 2019
CEO Esa Korkeela CFO Joni Sorsanen
26 July 2019 1 Consti Group Plc / H1 Financial Report 2019
Highlights of the second quarter of 2019
Net sales grew, EBIT turned positive
NET SALES:
EBIT:
NET DEBT:
PERSONNEL:
26 July 2019 2 Consti Group Plc / H1 Financial Report 2019
FREE CASH FLOW:
EUR +3.5m y-o-y EUR
y-o-y EUR +0.5m y-o-y EUR +3.6m y-o-y EUR
y-o-y No.
y-o-y
212,9 227,9 198,8 225,7 250,2 286,2 270,1 225,1 237,8 226,8
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
59,5 83,0 30,7 104,9 72,7 88,7 39,3 27,9 73,5 57,4
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
57,3 78,8 77,8 86,3 62,3 77,8 78,9 96,8 73,5 81,2
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
Quarterly performance overview
Net sales grew by 4.4%, order intake and order backlog declined year-on-year
QUARTERLY NET SALES (EUR m) QUARTERLY ORDER INTAKE (EUR m) QUARTERLY ORDER BACKLOG (EUR m)
26 July 2019 3 Consti Group Plc / H1 Financial Report 2019
FY’17 NET SALES:
EUR 300.2m
FY’18 NET SALES:
EUR 315.8m
FY’17 ORD. INTAKE:
EUR 278.1m
FY’18 ORD. INTAKE:
EUR 228.5m
17,9 25,1 28,9 32,4 28,3 27,7 26,0 33,1 33,2 42,0 27,6 31,7 3,0 3,8 4,0 7,2 5,3 8,3 17,9 20,1 16,8 20,4 16,4 18,8
57,3 78,8 77,8 86,3 62,3 77,8 78,9 96,8 73,5 81,2
15 35 55 75 95 115 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Quarterly Net sales (EUR million)
Q2 net sales EUR 81.2m, growth of 4.4% year-on-year
Quarterly net sales development Q1/2017 – Q2/2019 (EUR m) Comments
■ Q2/2019 net sales EUR 81.2m (77.8m)
– Year-on-year growth 4.4% – Housing Companies net sales EUR 27.7m (25.1m) growth was strong particularly in facade renovations in the Greater Helsinki area – Corporations net sales EUR 31.7m (33.1m) net sales generated from non-residential renovation grew strongly but net sales from residential renovation declined due to reorganisation of Housing repair unit initiated in late 2018 – Public Sector net sales EUR 8.3m (3.8m) growth in line with expectations in relation to low comparison period – Building Technology net sales EUR 18.8m (20.1m) decline in line with expectations as a result of new operating models and more disciplined bidding processes adopted earlier
26 July 2019 4 Consti Group Plc / H1 Financial Report 2019
Housing Companies Building Technology Corporations Eliminations Public Sector
0,3 2,7
1,7
0,1
0,5 % 3,4 %
2,1 %
0,1 %
0% 2% 4% 6% 8%
2 4 6 8 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Quarterly EBIT margin (line graph) Quarterly EBIT (EUR million, bar graph)
Q2 2019 EBIT turned positive
Quarterly EBIT development Q1/2017 – Q2/2019 (EUR m) Comments
■ Q2/19 EBIT amounted to EUR 0.1 (1.7) million, or -
0.1% (2.1%) of net sales – EBIT improved from previous quarter and turned positive – During the period, profitability development was mostly positive – However, the operating result was still materially affected by execution of the remaining performance
project related to a high-value property – Excluding the negative impact of the project in question, April-June EBIT would have improved significantly year-on-year
■ H1/19 EBIT amounted to EUR -0.3 (1.5) million, or -
0.2% (1.0%) of net sales
EBIT (left axis) EBIT margin (right axis) 26 July 2019 5 Consti Group Plc / H1 Financial Report 2019 FY 2017 EBIT: EUR -0.4m FY 2018 EBIT: EUR -2.1m
Actions to improve profitability ongoing
The main focus in 2019 is on implementing the new organisation structure
H2 H1 2017 2018 H2 2019
Targeted reorganisations & new organisation structure Disciplined tendering process Implementation of strategic initiatives (esp. Profitable and competitive
beginning of 2020 onwards
changes in Service and HR mgmt
Technical Building Services business area
Housing repair unit
1 2 3
26 July 2019 6 Consti Group Plc / H1 Financial Report 2019
H1 H2
Officer appointed
Targeted annual cost savings of EUR 2 million expected to fully materialize in 2020
26 July 2019 7 Consti Group Plc / H1 Financial Report 2019
CONSTI’S NEW ORGANISATION AND TARGETED BENEFITS
CONSTI GROUP PLC CONSTI RENOVATION HOUSING COMPANIES BUILDING TECHNOLOGY Technical install. Service
1 2 3 4
Enhanced strategy implementation throughout the Group New organisation drives customer-centric, effective and efficient operations Enables centralisation of expertise and flexibility in resourcing Improves risk management and agility of the organisation TARGETED BENEFITS OF THE NEW ORGANISATION AND CHANGE PROGRAM: CORPORA- TIONS PUBLIC SECTOR New
segments COMMON SUPPORT FUNCTIONS
5
Targeted annual cost savings of EUR ~2m, fully effective as of 2020
UPDATE ON THE PROGRESS IN IMPLEMENTATION
■ Implementation work progressing according to
plan – New business areas have developed their
the work sites
– As a total, Consti has already been able to realise year-on-year fixed cost benefits during H1 2019
■ In H2 2019, for instance development of
internal support functions as well as changes in legal structure to be continued
1 029 1 165 1 117 1 079 1 053 1 153 1 104 1 046 1 016 1 097 993 1 108 1 153 1 099 1 061 1 110 1 125 1 075 1 028 1 072 200 400 600 800 1000 1200 1400 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Quarterly number of personnel Personnel at quarter-end Average personnel during the quarter
Total number of personnel at the end of Q2 2019 decreased by 56 year-on-year
Quarterly development in number of personnel Q1/2017 – Q2/2019 Comments
■ Number of personnel at the end of Q2/2019 1,097
(1,153), reduction of 56
■ Average number of personnel during Q2/2019 1,072
(1,110), reduction of 38
■ Average number of personnel during H1/2019 1,050
(1,085), reduction of 35, or 3.2% year-on-year
26 July 2019 8 Consti Group Plc / H1 Financial Report 2019
59,5 83,0 30,7 104,9 72,7 88,7 39,3 27,9 73,5 57,4 20 40 60 80 100 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Quarterly order intake (EUR million)
Total Q2/2019 order intake EUR 57.4 million (88.7m)
Quarterly order intake development Q1/2017 – Q2/2019 (EUR m) Comments
■ Q2/2019 order intake EUR 57.4m (88.7m)
– Year-on-year change -35.2% – Order intake impacted by Group-wide disciplined tendering process adopted during 2018 as well as the fact that large on-going comprehensive renovation projects have tied up resources in 2019 – Examples of new orders received in Q2:
alliance contract in Helsinki (Corporations & Building Technology)
Companies)
in Helsinki (Building Technology)
■ H1/2019 order intake EUR 131.0m (161.4m)
26 July 2019 9 Consti Group Plc / H1 Financial Report 2019
212,9 227,9 198,8 225,7 250,2 286,2 270,1 225,1 237,8 226,8 50 100 150 200 250 300 350 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Quarterly Order backlog (EUR million)
Q2/2019 order backlog at EUR 226.8 million (286.2m), down by 20.8% y-o-y
Quarterly order backlog development Q1/2017 – Q2/2019 (EUR m) Comments
■ Q2/2019 order backlog at EUR 226.8m (286.2m)
– Year-on-year change -20.8% – The quality of the order backlog has gradually improved during H1 2019 as the share of loss- making projects has decreased significantly from the beginning of the year
26 July 2019 10 Consti Group Plc / H1 Financial Report 2019
26 July 2019 11 Consti Group Plc / H1 Financial Report 2019
0,8 3,2
0,2 2,1
0,5 1,0
4,0 2,9 2,6
2,2
1,9
2,7
2 4 6 8 10 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Free cash flow and EBITDA (EUR million)
EBITDA Free cash flow
Q2 cash flow supported by the improvement of operating result and release of working capital
Quarterly free cash flow1) and EBITDA Q1/2017 – Q2/2019 (EUR m) Comments
■ Q2/2019 EBITDA amounted to EUR 1.0m (2.1m)
– Adoption of IFRS 16 had a positive impact of EUR 0.6m on EBITDA in Q2 2019
■ Q2/2019 free cash flow EUR 2.7m (2.2m)
– Cash flow impact from change in working capital was EUR +2.0m (+0.4m) – Cash flow from investments in tangible and intangible assets amounted to EUR -0.2m (-0.2m)
■ H1/2019 free cash flow EUR -0.7m (-5.6m)
– Cash flow impact from change in working capital was EUR -1.8m (-7.4m) – Cash flow from investments in tangible and intangible assets amounted to EUR -0.4m (-0.6m)
FY 2017: EBITDA: EUR 1.7m FCF: EUR 8.9m
26 July 2019 12 Consti Group Plc / H1 Financial Report 2019
FY 2018: EBITDA: EUR -0.5m FCF: EUR -7.1m
1) Free cash flow means net cash flow from operating activities before financial items and taxes, less capital used for purchase of intangible assets and property, plant and equipment
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Net working capital at period-end (EUR million)
Net working capital at EUR -7.8 million at the end of Q2 2019
Quarterly net working capital1) Q1/2017 – Q2/2019 (EUR m) Comments
■ Net working capital EUR -7.8m (-8.0m) at the end of
Q2/2019
– NWC released during Q2 2019 amounted to EUR 2.0m
improvement in financial position of project portfolio
– NWC tied up during H1 2019 amounted to EUR 2.0m
projects where invoicing is not based on typical payment schedules
renovation projects progressing towards the hand-over phase during H1 2019
– Hotel St. George continues to have a negative impact on
net working capital
26 July 2019 13 Consti Group Plc / H1 Financial Report 2019
1) Net working capital calculated as follows: Inventories + Trade and other receivables + Deferred tax receivables – Trade and other payables – Advances received – Provisions
15,0 15,5 13,4 12,1 20,3 18,5 22,5 19,6 20,5 18,5 3,5 3,5
37,2 % 32,9 % 31,9 % 28,6 % 30,9 % 29,3 % 28,3 % 25,4 % 27,7 % 27,2 % 49,7 % 55,0 % 48,6 % 47,7 % 80,5 % 69,7 % 88,9 % 83,6 % 92,0 % 85,2 %
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5 10 15 20 25 30 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
Net debt (excl. IFRS 16 impact) IFRS 16 impact on Net debt Equity ratio (right axis) Gearing (right axis)
Q2 financial position improved compared to Q1 thanks to positive cash flow in April-June
Quarterly net debt, equity ratio and gearing Q1/2017 – Q2/2019 Comments
■ Financial position as per 30 June 2019 improved from
previous quarter-end thanks to positive cash flow in Q2
■ Q2/2019 net debt at EUR 22.0m (18.5m), of which EUR
3.5m is attributable to IFRS 16 related lease liabilities
■ Q2/2019 equity ratio at 27.2% (29.3%)
– Adoption of IFRS 16 decreased Q2 2019 equity ratio by 1.0 percentage points
■ Q2/2019 gearing at 85.2% (69.7%)
– Adoption of IFRS 16 increased Q2 2019 gearing by 13.5 percentage points
■ Excluding IFRS 16, Q2 2019 financial position virtually
comparable to that of Q2 2018
26 July 2019 14 Consti Group Plc / H1 Financial Report 2019
1) Net working capital calculated as follows: Inventories + Trade and other receivables + Deferred tax receivables – Trade and other payables – Advances received – Provisions
26 July 2019 15 Consti Group Plc / H1 Financial Report 2019
Ageing building stock the single most important growth driver
26 July 2019 16 Consti Group Plc / H1 Financial Report 2019
Ageing building stock Energy efficiency Urbanisation and concentration of renovation in growth centers Modifications of the use of buildings Increased need for building technology and automation
Source: Statistics Finland, May 2019
11,6 13,0 36,2 32,2 53,6 53,3 36,1 37,5 29,3 0,6 7,4 6,7 15,9 19,3 29,7 36,1 22,5 25,8 19,5 1,9
19,0 19,7 52,1 51,5 83,3 89,4 58,7 63,4 48,8 2,5 10 20 30 40 50 60 70 80 90 100
1939 1940 - 1959 1960 - 1969 1970 - 1979 1980 - 1989 1990 - 1999 2000 - 2009 2010 - 2018 Others
~2025-2035
~2019 Million m2
Finnish building stock by construction year
Construction year Buildings achieve age of 50 years (approx):
~2045
50 60 70 80 90 100 110 120 130 140 150 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 ESI and CCI for Finland (Jan 2007 - Jun 2019)
Economic Sentiment Indicator Construction Confidence Indicator
Construction confidence still strong in Finland but the recent trend is downwards, economic sentiment fell below long-term avg. during H1 2019
Economic Sentiment and Construction Confidence / Finland (2007 – 06/2019)
■ Since summer 2015, construction confidence in
Finland has strengthened and remained above the long-term average
■ However, after achieving its peak in January
2019 the trend in construction confidence has been downwards
■ According to Confederation of Finnish
Construction Industries (CFCI), construction has acted as an engine for the Finnish economic growth for four consecutive years
■ In March 2019, economic sentiment indicator fell
below the long-term average for the first time in 2.5 years, indicating potential decline in the Finnish economy going forward
■ CFCI estimates in its April 2019 report that
construction is expected to be the first industry in Finland to enter downturn
■ According to Statistics Finland, cubic volume of
granted building permits decreased further year-
Note: Mean-adjusted figures Source: European Commission, June 2019
Comments
26 July 2019 17 Consti Group Plc / H1 Financial Report 2019
Long-term average
11,7 11,9 12,1 12,4 12,8 13,0 12,9 13,0 13,2 13,4 13,6 16,3 14,8 13,3 12,3 11,8 13,5 14,6 15,3 14,8 13,8 13,1 28,0 26,7 25,4 24,7 24,6 26,5 27,5 28,2 28,0 27,2 26,7 5 10 15 20 25 30 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021O
Stable growth in renovation expected to continue
Finnish new building and renovation market development 2011 – 2021
■
The amount of professional renovation has grown nearly continuously for the past 20 years in Finland
■
In 2014-15 the value of renovation surpassed the value of new building
■
According to Euroconstruct, the value of building renovation amounted to approximately EUR 13.0 billion in 2018
■
Euroconstruct estimates that renovation will continue to grow by approximately 1.7 percent in 2019. The Confederation of Finnish Construction Industries RT (CFCI) estimates growth of 1.8 percent
■
In 2019, growth is expected to be seen in both residential (+1.8%) and non-residential (+1.6%) renovation
■
According to the Euroconstruct’s June 2019 report, new building is expected to decline by 3.2% in 2019 while the forecast for 2020 shows decline of 6.4%
■
The growth of professional renovation is expected to gain some speed as the new building starts to slow down going forward
Source: Euroconstruct, June 2019 Confederation of Finnish Construction Industries RT (CFCI), April 2019
Renovation volume (real) EUR b New building volume (real) CAGR 2018-21: +1.6% CAGR 2018-21:
Comments
26 July 2019 18 Consti Group Plc / H1 Financial Report 2019
7 % 3 % 5 % 2 % 83 % 1 2 3 4 5 6 7 8
Total market breakdown (2018 renovation excl. households, BEUR)
50 100 150 200 250 300
Consti YIT Skanska NCC Are* Lujatalo Caverion* Peab Lehto Group Fira Quattro Mikenti*
Renovation sales, MEUR (2018)
Finnish renovation market highly fragmented
Consti continued to be the largest player in Finnish renovation in 2018
Source: Rakennuslehti, Asiakastieto, Consti analysis * Technical building services specialists estimated on the basis of assumed business mix: 25 % renovation / 25% new building / 50% technical maintenance & facility management
EUR 145b EUR 130b EUR 45b EUR 45b EUR 45b EUR 40b
EUR 20b
26 July 2019 19 Consti Group Plc / H1 Financial Report 2019
Operators in the Finnish renovation market (based on revenue in 2018) Overall renovation market (excl. households)
> 100 MEUR, n=4 > 80 MEUR, n=8 > 40 MEUR, n=11 ~7.4 BEUR
Top 2 players Top 5-8 players Top 9-11 players < 40 MEUR sales
> 200 MEUR, n=2
Top 3-4 players
Outlook and guidance for 2019
26 July 2019 20 Consti Group Plc / H1 Financial Report 2019
suggest that construction is likely to slow down after a long upswing as the economic growth starts to wane
a two-fold impact on Consti:
1) As the pressure in the whole construction value chain eases
up, the availability and quality of resources improve contribution to profitability improvement
2) Competition slightly to increase especially in large renovation
projects
(Euroconstruct)
Company estimates that its operating result for 2019 will grow compared to 2018.”
Summary
26 July 2019 21 Consti Group Plc / H1 Financial Report 2019
Profitability development was mostly positive, but EBIT was still negatively impacted by one project Order backlog and order intake down year-on-year, but the quality of order backlog continued to improve in Q2 2019 Implementation of new organisation structure progressing according to plan: new business areas have developed their operations in line with expectations, fixed cost savings achieved in H1 2019 Market environment continued to be predominantly good, outlook positive also for the second half of 2019 Change program and corrective actions to support performance going forward FY2019 operating result to grow compared to 2018 Net sales grew and EBIT turned positive in Q2 2019
3. 2. 1. 4. 5. 6.
26 July 2019 22 Consti Group Plc / H1 Financial Report 2019
March 2019 23 Debt Investor Presentation
26 April 2019 24 Consti Group Plc / Interim Report 1-3/2019
HALF-YEAR FINANCIAL REPORT 1-6/2019 CONSTI GROUP PLC
CONSTI GROUP PLC HOPEATIE 2 FI-00440, HELSINKI BUSINESS ID 2203605-05 WWW.CONSTI.FI