Eltel AB Investor presentation March 2020 Eltel in brief Founded - - PowerPoint PPT Presentation

Eltel AB

Investor presentation

March 2020

Eltel in brief

Founded in 2001 Northern European market leader Operations throughout the Nordics, Poland and Germany Net sales EUR 1.1 billion, 6,700 employees UN Global Compact signatory since 2014

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Listed on Nasdaq Stockholm since 2015

Focus on segments

Power and Communication Grow in line with market, capitalise on trends, improve operational processes, make selective acquisitions, increase efficiency

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The Nordics, Poland and Germany Net sales Q4 2019

27 % 25 % 22 % 10 % 8 % 7 % 1 % Sweden Finland Norway Denmark Poland Germany Other countries

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Eltel’s business

– driven by stable customers with long term investment needs

• Regulatory demands
• Outsourcing
• Ageing infrastructure
• Increasing end-customer demands
• Technical shift

Segments Power Communication Drivers

Eltel AB Q4 2019 Presentation

14 February 2019

Today’s presenters

Petter Traaholt CFO Casimir Lindholm President and CEO

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Highlights

• Strong operational cash flow and reduced

net debt

• Improved quality and deliveries towards our

customers

• Result mainly impacted by lower net sales

and restructuring costs in Communication Sweden as well as project revisions in High Voltage and Communication Sweden

• Large parts of Eltel performs better than

previous year

• Signed agreement to divest German

Communication business

• Signed amendment to bank agreement

Total Group

• Net sales -15.7% to EUR 278.9 million (330.9)
• Organic growth in Power and Communication* -12.9%
• Operative EBITA EUR -14.9 million (2.9)
• Operative EBITA margin -5.3% (0.9)
• Cash flow from operating activities** EUR 59.5 million (70.0)
• Net debt ended at EUR 123.8 million down from EUR 191.4

million previous quarter

Total Group: Q4 2019

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*Adjusted for divested operations and currency effects **Before IFRS 16 impact

Net sales segments: Q4 2019

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• Net sales -19.2% to EUR 93.0 million
• Reduced customer orders and project write-downs in High Voltage
• Lower volumes in Smart Grids
• Loss of contracts, ramp down and project write-downs in Sweden
• The decrease was partly offset by Finland, due to wind power projects
• Organic net sales* -19.0%

Power

• Net sales -11.7% to EUR 182.9 million
• 25% volume drop in customer investments in Sweden, in addition to write-downs
• Lower volumes in Finland
• EUR 7.1 million relates to divestment of Communication Poland, Q3 2019
• Increased volumes in Norway, Denmark and Germany
• Organic net sales** -6.3%

Communication Other

• Net sales -10.9% to EUR 3.2 million
• Relates mostly to Power Transmission International
• In line with the strategy of divestments and discontinuations of operations

*Adjusted for currency effects ** Adjusted for divested operations and currency effects

Operative EBITA segments: Q4 2019

• Operative EBITA EUR -12.0 million (-1.9)
• Operative EBITA margin -12.9% (-1.6)
• Write-downs in a handful Polish and one Norwegian High Voltage projects, due to outage delays,

increased cost to complete including overcapacity. Updated strategy in High Voltage Poland

• Costs related to finalising unprofitable projects and ramp down in Sweden
• Lower net sales in Smart Grids lead to reduced operative EBITA of EUR -2.4 million
• Finland’s volume growth, improved performance and selective tendering improved the result

Power

• Operative EBITA EUR 2.0 million (9.7)
• Operative EBITA margin 1.1% (4.7)
• Approx. EUR 6 million relates to drastically reduced net sales, subsequent overcapacity and

restructuring costs in Sweden, in addition to write-downs and provisions in Sweden

• Reduced volumes and restructuring costs in Finland
• Norway continued to deliver strong results for the quarter

Communication Other

• Operative EBITA EUR -0.6 million (-1.1)
• Operative EBITA margin -20.4% (-30.4)
• Result in line with the planned ramp down

Total Group

• Net sales -8.5% to EUR 1,087.6 million (1,188.9)
• Organic growth in Power and Communication* -6.4%
• Operative EBITA EUR -11.3 million (-2.2)
• Operative EBITA margin -1.0% (-0.2)
• Cash flow from operating activities** EUR 25.7 million (3.2)

Full year 2019

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*Adjusted for divested operations and currency effects **Before IFRS 16 impact

Focus in 2020

Operational focus

• Tender
• Right people
• Implementation & execution
• Production planning
• Training
• No. 1 Nordic player
• High customer satisfaction
• Engaged employees
• Lower risk and fewer capital

intensive projects

• Cash generation
• Lower net debt

Strategic focus

• Continuous evaluation of the existing portfolio,

including the intended divestment of Aviation & Security in Q1 2020

• Restructure Polish High Voltage business
• Strengthen the balance sheet
• Operational Excellence

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Our long-term plan

• Continued focus on
• perational excellence
• Pursue structural M&As in

the Nordics when financial situation improves

• Innovation and new market

development

• Prioritise core operational

improvements (operational excellence)

• Restructure non-performing

business

• Strengthen the financial

situation of the company

• Reorganisation to strengthen

focus on local markets

• Increased focus on
• perational KPIs to foster

continuous improvements and sharing of best practices

• Initiatives to control project

business risk

2017−18 “House in order” 2019−2021 “Operational excellence” >2022 “Investing in sustainable profitable growth”

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Q&A

Appendices

Our services – in business segments

Power

The only regional stakeholder active in all the Nordic countries Markets

The Nordics, Poland, Germany

Services

• Electricity distribution and transmission

maintenance and upgrades

• Electricity distribution upgrades
• Projects in High Voltage
• Smart Grids

Communication

Includes non-core business activities that are being divested or ramped down Markets

Outside Europe

Services

• Power transmission projects outside

Europe

Other

Market leader in the Nordic region Markets

The Nordics, Germany, Lithuania

Services

• Mobile and fixed networks

maintenance and upgrades

• Fibre to the home (FTTH)
• Aviation and Security

35% 64% 1%

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Our core markets with a foreseen market growth of almost 3%

Source: Company information, management estimates

27 % 25 % 22 % 10 % 8 % 7 % 1 % Sweden Finland Norway Denmark Poland Germany Other countries

Sales split 2019

Core markets

• f Eltel

Market size (2019E): EUR 11.6bn

CAGR 2022f +3%

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Eltel’s segments

– built on core competences with solid market position

• Maintenance
• Upgrades
• Projects incl. roll-outs

Power Communication

Services split (2019A)

Maintenance 23% Upgrades 56% Projects incl. roll-outs 23%

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Market size and outlook - Power

• Investments by major grid owners

expected to increase

• Network modernisation and reliability

together with transition to smart electricity meters important market drivers

• Increased build out of renewable energy

production drives significant investments into grid network

• Growing market with tough competition

creates price pressure

Eltel markets

7.2 7.9 2019 2022 +3% BNEUR

Source: Company information, management estimates

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Market size and outlook - Communication

• Strong growth in data traffic within both

fixed and mobile communication

• Stable markets with tough competition

between telecom operator which puts some price pressure on technical Infranet services

• Telecom operators are expected to

continue invest in 4G/LTE

• Low fibre penetration in Germany implies

strong growth potential within fixed communication

Source: Company information, management estimates

Stable markets

4.4 4.6 2019 2022 +2% BNEUR