CRAMO H1 2019 PRESENTATION 15 th August 2019 Leif Gustafsson, CEO - - PowerPoint PPT Presentation

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CRAMO H1 2019 PRESENTATION 15 th August 2019 Leif Gustafsson, CEO - - PowerPoint PPT Presentation

Mar 19, 2024 640 likes •872 views

CRAMO H1 2019 PRESENTATION 15 th August 2019 Leif Gustafsson, CEO Aku Rumpunen, CFO FULL FOCUS ON EQUIPMENT RENTAL GOING FORWARD 30 June Capture the full potential of the focused Adapteo demerger successfully completed equipment rental

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SLIDE 1

15th August 2019

CRAMO

H1 2019 PRESENTATION

Leif Gustafsson, CEO Aku Rumpunen, CFO

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FULL FOCUS ON EQUIPMENT RENTAL GOING FORWARD

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30 June

Adapteo demerger successfully completed Capture the full potential of the focused equipment rental business

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SLIDE 3

BENEFITS OF THE PARTIAL DEMERGER FOR CONTINUING BUSINESS

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Clear business structure and solid financial position Management focus on ample opportunities to improve

  • perational efficiency, competitiveness and value creation

Increased opportunities and attention to optimise profitability and cash generation Solid customer base and European platform empowering continued investments into development of the ER business Stand-alone company with growth ambition providing a clarified investment case with different risk and growth profile

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SLIDE 4

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▪ Net sales: 153.1 (156.1) MEUR ▪ -1.9% in reported currencies ▪ -0.4% in local currencies ▪ -0.4% organic sales growth ▪ Comparable EBITA*: 15.3 (22.4) MEUR or 10.0% (14.3%) of sales ▪ EBITA*: 14.4 (22.4) MEUR or 9.4% (14.3%) of sales ▪ Gross capex: 30.0 (55.5) MEUR ▪ Operative cash flow: 36.0 (37.8) MEUR ▪ Cash flow after investments: 23.7 (8.3) MEUR

Q2/2019

KEY FIGURES

*Cramo’s continuing operations. 2018 EBITA including IFRS16 impact

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INITIATION OF PERFORMANCE IMPROVEMENT ACTIONS

▪ In order to right-size the Group’s cost structure upon demerger of Adapteo and to ensure the Group’s profitability in the short-term, various performance improvement actions are initiated and carried out. These include: ▪ Group structure optimisation ▪ Specific sales efforts ▪ Cost reductions ▪ Capital efficiency measures in all countries ▪ In addition, investments in growth will continue to increase

  • ur market share and optimise our profitability and cash

generation ▪ The new strategy finalized to ensure Cramo’s competitiveness in the long-term ▪ More information about the new strategy, group-wide performance enhancement programme and the new financial targets will be presented during our Capital Markets Day on 12 September 2019.

Targeted run-rate cost savings

€10-12m

Estimated timeline for full effect Year 2020 Estimated restructuring costs in 2019

€3-5m

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2019E 2020E Sweden

  • 3.2 %
  • 2.9 %

Finland

  • 1.9 %
  • 2.6 %

Norway 4.7 % 1.9 % Central Europe 0.6 %

  • 0.3 %

Eastern Europe 7.8 % 3.9 %

90 95 100 105 110 115 120 125 130 135 140 2015 2016 2017 2018 2019 2020 2021 Index, 2015=100

Construction output outlook

Sweden Finland Norway Central Europe Eastern Europe

CONSTRUCTION MARKET GROWTH STILL EXPECTED IN NORWAY AND EASTERN EUROPE

Sources: Euroconstruct and Forecon

▪ According to Euroconstruct estimates the construction market growth is seen to be levelling out in Sweden, Finland and Germany ▪ Growth in Norway is still seen to be strong – main driver civil engineering ▪ Growth in Eastern Europe is also seen to continue strong – Estonia growth levelling out whereas Poland and Lithuania growth continues strong

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143.8 156.1 159.6 172.4 148.4 153.1 4.4 % 3.0 % 3.1 % 6.5 % 3.2 %

  • 1.9 %
  • 4%
  • 2%

0% 2% 4% 6% 8% 120 130 140 150 160 170 180 Mar Jun Sep Dec Mar Jun 2018 2019 Total sales Sales growth q-o-q 14.9 22.4 31.7 25.8 11.8 15.3 10.4 % 14.3 % 19.9 % 15.0 % 8.0 % 10.0 % 0% 5% 10% 15% 20% 25% 5 10 15 20 25 30 35 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Comparable EBITA Comparable EBITA margin-% EUR million EUR million

Q2 SALES AND COMPARABLE EBITA

COMPARABLE EBITA* BELOW LAST YEAR’S LEVEL

7

  • 0.4%**

* Comparison period including IFRS16 impact ** in local currencies

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SLIDE 8

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BUSINESS SEGMENTS

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92.2 91.2 86.9 100.1 89.4 84.1 75 80 85 90 95 100 105 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Sales EUR million 17.1 17.4 19.4 20.9 15.4 12.0 16.8 % 17.2 % 17.2 % 16.9 % 16.4 % 15.3 % 14% 15% 16% 17% 18% 5 10 15 20 25 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Comparable EBITA Comparable ROCE EUR million

  • Postponed large industrial projects into H2 in Sweden,

unfavorable SEK fx-rates and fewer business days in Q2 vs 2018 impacted negatively on sales performance against last

  • year. Second quarter sales in Norway were on a good level

supported by improved utilisation and increased investments

  • In Sweden various performance improvement actions, like

cost base optimisation, fleet and operational efficiency improvements and sales measures are on-going to secure profitability going forward.

  • According to Forecon, equipment rental market is expected to

decrease by 1% in 2019 in Sweden and and increase by 2% in Norway.

  • In Sweden market growth is levelling out. The decline in new

building construction (residential and non-residential) is expected to continue, but in the industrial segment good potential is seen. In Norway main market growth drivers are civil engineering and hospitals (public spending).

SCANDINAVIA

TIMING OF PROJECTS IN SWEDEN AFFECTED NEGATIVELY ON PROFITABILITY, GOOD PERFORMANCE CONTINUED IN NORWAY

Scandinavia has operations in Sweden and Norway with capital employed of MEUR 417 at the end of Q2 2019. All figures exclude IACs and are presented as comparable key figures including IFRS 16 impact * Organic growth reported in local currencies

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  • 7.8%

Organic growth

  • 5.4%* vs LY
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SLIDE 10

32.7 35.6 38.9 39.8 33.5 35.7 10 20 30 40 50 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Sales EUR million 2.7 4.7 8.7 7.5 2.0 4.2 11.8 % 11.3 % 10.1 % 10.1 % 9.8 % 9.5 % 0% 4% 8% 12% 16% 2 4 6 8 10 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Comparable EBITA Comparable ROCE EUR million

  • Q2 sales growth was modest and were supported by
  • perations in Estonia and Lithuania. Organic sales growth

for the second quarter was flat and came to 0.2%.

  • Q2 comparable EBITA 0.5 MEUR below last year’s level.

Higher direct costs in Finland diluting segments profitability.

  • In Finland cost base optimisation, fleet and operational

efficiency measures and sales actions are ongoing. The business transformation project in Finland has been concluded and results should be visible from H2 2019

  • nwards.
  • Forecon estimates Finland rental market to decline in H2

2019, whereas in other countries in the segment market growth is still estimated

FINLAND AND EASTERN EUROPE

STRONG PERFORMANCE IN EASTERN EUROPE, IN FINLAND PROFITABILITY BELOW EXPECTATIONS

Organic growth +0.2%* vs LY +0.1%

Finland and Eastern Europe has operations in four countries with capital employed of MEUR 223 at the end of Q2 2019. All figures exclude IACs and are presented as comparable key figures including IFRS16 impact * Organic growth reported in local currencies

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18.8 29.3 33.7 32.5 25.5 33.4 10 20 30 40 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Sales EUR million

  • 1.7

2.8 5.7 2.6

  • 2.1

1.9 4.5 % 4.2 % 5.1 % 5.2 % 4.6 % 3.9 % 0% 2% 4% 6%

  • 3

3 6 9 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Comparable EBITA Comparable ROCE EUR million

  • The second quarter sales growth was mainly attributable to

KBS Infra

  • Q2 comparable EBITA was EUR 1.9 (2.8) million with a

5.6% (9.6%) margin. Main reason for declined profitability was change in sales mix and extraordinary costs related to the organisational transformation of KBS Infra decreased the segment’s profitability by EUR 0.7 million

  • The underlying performance in Germany has not reached
  • ur targets. Various focused performance improvement

actions such as cost base optimisation, fleet and

  • perational efficiency measures and sales actions are
  • ngoing to increase the profitability of business.
  • Euroconstruct estimates that total construction output

growth in Germany and Austria will slow down

CENTRAL EUROPE

SALES GROWTH DRIVEN BY INDUSTRIAL PROJECTS

Organic growth +14.0%* vs LY

Central Europe has operations in five countries with capital employed of MEUR 185 at the end of Q2 2019. All figures exclude IACs and are presented as comparable key figures including IFRS 16 impact * Organic growth reported in local currencies

+14.0%

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SLIDE 12

GROUP PERFORMANCE Q2 2019

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SLIDE 13

156.1 153.1

  • 0.7
  • 2.3

25 50 75 100 125 150 175 Q2/2018 Acquisitions Organic growth FX impact Q2/2019 Group Sales drivers Group 299.9 301.5 6.3 1.2

  • 5.9

50 100 150 200 250 300 350 H1/2018 Acquisitions Organic growth FX impact H1/2019 Group Sales drivers Group EUR million EUR million

GROUP Q2 AND H1 SALES GROWTH VS LY

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  • 1.9%
  • 0.4%*
  • 0.4%**

+0.5%, +2.6%* +0.4%**

* in local currencies ** organic growth

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SLIDE 14

22.4 15.3

  • 5.4
  • 0.5
  • 1.0
  • 0.2

5 10 15 20 25 Q2 2018 Scandinavia Finland and Eastern Europe Central Non-allocated and elim Q2 2019 Group Business segments Group Comparable EBITA EUR million

COMPARABLE EBITA Q2 VS LY

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TIMING OF LARGE INDUSTRIAL PROJECTS IN SWEDEN HAD MATERIAL IMPACT ON EBITA

* Comparison period including IFRS16 impact

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59.3 65.5 29.6 32.6 19.8 % 21.7 % 18.9 % 21.3 % 50 100 150 200 250 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2018 2019 2018 2019 Jan-Jun Q2

Depreciations (right axis) Depreciation of sales (left axis)

114.6 118.2 59.2 59.6 38.2 % 39.2 % 37.9 % 38.9 % 50 100 150 200 250 300 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2018 2019 2018 2019 Jan-Jun Q2

Indirect costs (right axis) Indirect cost ratio (left axis) EUR million

97.9 98.5 49.9 49.8 32.7 % 32.7 % 32.0 % 32.5 % 20 40 60 80 100 120 140 160 180 200 2018 2019 2018 2019 Jan-Jun Q2 0% 5% 10% 15% 20% 25% 30% 35% 40%

Direct costs (right axis) Direct cost ratio (left axis) EUR million EUR million 59.3 65.5 29.6 32.6 19.8 % 21.7 % 18.9 % 21.3 % 50 100 150 200 250 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2018 2019 2018 2019 Jan-Jun Q2 Depreciations (right axis) Depreciation of sales (left axis) 114.6 118.2 59.2 59.6 38.2 % 39.2 % 37.9 % 38.9 % 50 100 150 200 250 300 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2018 2019 2018 2019 Jan-Jun Q2 Indirect costs (right axis) Indirect cost ratio (left axis) EUR million 97.9 98.5 49.9 49.8 32.7 % 32.7 % 32.0 % 32.5 % 20 40 60 80 100 120 140 160 180 200 2018 2019 2018 2019 Jan-Jun Q2 0% 5% 10% 15% 20% 25% 30% 35% 40% Direct costs (right axis) Direct cost ratio (left axis) EUR million EUR million

COST BASE DEVELOPMENT

DIRECT COST 1 INDIRECT COST 2

* Comparison before IACs 1 Direct cost refers to income statement line ”Materials and services” 2 Indirect cost refers to income statement lines ”Employee benefit expenses” and ”Other operating expenses”

DEPRECIATIONS

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0.20 0.33 0.54 0.32 0.13 0.20 0.00 0.10 0.20 0.30 0.40 0.50 0.60 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 EUR

COMPARABLE EPS DEVELOPMENT

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LEVERAGE AND COMPARABLE ROE%

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*The impact of receivables (EUR 29.5 million) from demerged Adapteo Plc excluded from net debt. Will be settled during Q3/2019 **) Historical net debt / EBITDA Q1-Q4/2018 illustrative for continuing operations

417.8 443.8 447.4 428.5 418.8 458.1

2.01 1.92 2.05 2.08 1.99 1.92 2.15

1.70 1.80 1.90 2.00 2.10 2.20 375 400 425 450 475 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Net debt / EBITDA Net debt (EUR million) Net debt Comparable net debt* / EBITDA Net debt / EBITDA

LEVERAGE ROE %

15.3 % 15.8 % 14.0 % 10% 12% 14% 16% 18% Q4 Q1 Q2 2018 2019 Comparable ROE%

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8.8 37.8 18.9 36.0

  • 38.7
  • 29.4
  • 12.7
  • 12.4
  • 50
  • 40
  • 30
  • 20
  • 10

10 20 30 40 50 Q1 Q2 Q1 Q2 2018 2019 Cash flow from operations Cash flow from investing activities Cash flow after investments EUR million

QUARTERLY CASH FLOW

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* *

  • 29.8

8.3 6.1 23.7

*Cash flow from continuing operations (2018 excluding IFRS16 impact)

CASH FLOW AFTER INVESTMENTS AHEAD OF LAST YEAR

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CONCLUSION AND OUTLOOK 2019

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MARKET OUTLOOK

Scandinavia

  • Forecon estimates that the rental market in 2019 will

decrease 1% in Sweden and grow 2% in Norway

  • The construction market in 2019 is estimated to decrease by

3.2% in Sweden and increase by 4.7% in Norway

Finland and Eastern Europe

  • The rental market in Finland and Estonia is estimated to

remain at 2018 level in 2019 while a 6% growth is expected in Lithuania

  • The construction market in 2019 is expected to decrease by

1.9% in Finland and by 2% in Estonia. Lithuania rental market is estimated to grow by 2% in 2019

Central Europe

  • The rental market growth estimates in Central Europe

countries vary between 4 and 6%

  • Construction market growth estimate for 2019 is 0.2-1.8% in

Germany and Austria and more rapid in other Central Europe countries 20

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CONCLUSIONS

  • In order to right-size the Group’s cost structure upon

demerger of Adapteo and to ensure the Group’s profitability in the short-term, various performance improvement actions are initiated and carried out, including: ▪ Group structure optimisation, ▪ Specific sales efforts, ▪ Cost reductions, ▪ Capital efficiency measures in all countries

  • The targeted run-rate of cost savings is EUR 10-12 million

with full effect for 2020

  • Cramo Capital Markets Day to be held on 12 September

2019, where new information regarding the new strategy, group-wide performance enhancement program and new financial targets are presented 21