Gunnebo Industries March 2018 Agenda Company overview Market - - PowerPoint PPT Presentation

Gunnebo Industries

March 2018

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Agenda

Market description Company overview Financials

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Note: Figures represent Gunnebo Industries pro forma EBITA and EBITDA are excluding non recurring items Source: Company information

• Gunnebo Industries is a manufacturer of high quality products, primarily used in

lifting systems

• The Gunnebo brand is synonymous with quality and innovation
• Gunnebo Industries designs and manufactures all parts of the lifting sling,

creating system optimization which leads to operational efficiency, weight saving and flexibility for customers

• Gunnebo Industries has a leading position in markets where safety, quality and
• perational efficiency is a key priority, with particular strongholds in

Scandinavia, North America, Europe and Australia

• For Gunnebo Industries’ clients the cost of lifting systems is low, whereas the

damages and lost profit resulting from a failure in lifting systems can be detrimental

• Primarily indirect sales through sling shops1) to industries such as construction,

industrials, oil & gas and mining

• Direct sales of selected products to e.g. mobile crane OEMs and oil & gas rig

builders

• Gunnebo Industries has outstanding customer relationships, many with a

history spanning more than 40 years

• Global footprint with own sales companies in 10 countries supported by

distribution partners in more than 50 countries

• Gunnebo Industries has some 500 FTEs
• Headquartered in Västerås and majority owned by private equity fund Segulah

Gunnebo Industries – Innovative and high quality lifting solutions

Key financials At a glance

Customers by industry Customers by geography

Sales breakdown (2017)

MSEK 2014 2015 2016 2017 Sales 997 909 796 862 % growth 7%

• 9%
• 12%

8% EBITDA 127 102 96 95 % margin 13% 11% 12% 11% EBITA 102 75 71 74 % margin 10% 8% 9% 9%

Note: Customer by industry is an estimate of the customers end industry exposure; Source: Company information Note 1): Sling shop definition: Value-add distributor/ assemblers

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Components, Chain & Shackles

2017 Sales: MSEK 722 (84% of total sales)

Two product lines offering premium products with outstanding quality

Blocks & Sheaves

2017 Sales: MSEK 140 (16% of total sales)

• Gunnebo Industries produces world leading components, chain and shackles
• Gunnebo Industries’ value proposition lies in its strength through innovation,

with a brand that has been associated with quality since 1764

• Gunnebo Industries’ system is known for adding operational efficiency to the

user through time and weight savings, flexibility and innovative solutions

• Unique production process, manufacturing in accordance with major standards

with most products proof loaded and marked for full traceability all the way back to the raw material

• Exposure to broad range of industry segments such as manufacturing,

construction, offshore, mining, aquaculture, fishing and transportation

• Total market size estimated at ~ BSEK 14, of which the medium and high end

market accounts for about 50%

• Johnson is the brand of the product line for crane blocks, sheaves, snatch

blocks and overhaul balls

• Johnson products are recognized by the North American rigging industry as a

lifting equipment accessory of uncompromising quality

• With a 50-year track record, it is one of the leading brands in the North

American lifting industry, primarily within mobile cranes and the O&G industry

• Mobile crane and energy industries are the main market drivers, with the

medium and high end market estimated at ~BSEK 2

System design creates operational efficiency for the customers

Source: Company information Source: Company information

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Quality and innovation since 1764

Q1’17 2015 2012 2008

1764 2017

Gunnebo Industries going forward as a lifting and related applications company Q1-2017 1952 G-Coupler 1965 BK-Hook 1990s Johnson Quick Reeve Crane Blocks 2000 GrabiQ system – grade 10 2015 The ROV retrieve Shackle 2005 Gunnebo Industrier AB separated from Gunnebo AB and both companies listed on the stock exchange New strategy to focus on lifting and related applications, separation of other

• perations into

distinct business units with full P&L accountability Fastening and Telesteps business units sold off in Q1-2017 Segulah new principal owner after taking the company private through a buy-out Traction business unit sold off as a step in the direction of streamlining Gunnebo 1764 Gunnebo starts manufacturing

• f nails, bolts

and belts for ships 1950 Manufacturing

• f shackles

started in Norway Manufacturing

• f blocks started

in Tulsa, OK, USA 1955 1970s Developed the unique ForgeFab sheave process in Tulsa, OK, USA 1975 UKN–Hook 2008 BKD 2010 MFH and the Arctic master link

Source: Company information

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New strategy Focus on lifting and related applications Downturn in key markets O&G, mobile cranes, mining New production site opened in Växjö Operational and process improvements Manufacturing restructuring initiated Closure of Ireland subsidiary New growth strategy launched

MSEK

Note: Numbers represent Gunnebo Industries proforma. EBITDA before non-recurring items Source: Company information

Financial development

Pro forma financials

8% 10% 13% 11% 12% 11%

7 Customer Tenure Customer 1 More than 40 years Customer 2 More than 40 years Customer 3 More than 15 years Customer 4 More than 15 years Customer 5 More than 20 years Customer 6 More than 20 years Customer 7 More than 30 years Customer 8 More than 15 years Customer 9 More than 15 years Customer 10 More than 30 years

• Strong brand loyalty among sling shops, end users and OEMs
• All top ten customers have been established customers for 15 years or more

Diversified customer base across industries, products and geographies

With long-standing customer relationships

A diversified customer base Long standing customer relationships2) (top 10 customers)

Top 10 customers Customer split by geography Customer split by industry1)

Comments

Note: Split based on 2017 revenue of MSEK 862. 1) Customer by industry is an estimate of the customers end industry exposure. 2) Customer tenure is used as proxy for brand loyalty Source: Company information

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Global manufacturing capabilities, sales and distribution

Lonevåg Växjö Tulsa

Processes: Forging, machining, heat treatment, assembly, testing, painting and packaging Main product: Components R&D: Components and Chains Processes: Forging, machining, heat treatment, assembly, testing, packaging, painting and galvanising Main products: Shackles Processes: Forging, machining, heat treatment, assembly, testing, packaging and painting Main products: Blocks and Sheaves R&D: Blocks and Sheaves

Gunnebo

Processes: Chain manufacturing, heat treatment, testing, painting and galvanising Main product: Chains

Note: Flags represent local sales offices, manufacturing sites pictured

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World-class manufacturing process and production know-how

Testing Assembly Painting Forging

1

Machining

2

Heat treatment

3 6 5 4

Comments

• Fully integrated manufacturing

process with all critical processes in-house

• Full traceability from finished

product to raw material

• 100% of the products are proof

loaded to 200-250% of the working load limit

Source: Company information

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Gunnebo Industries’ success lies in its quality, technology and innovation

Outstanding quality level

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• All relevant certification standards incl. DNV, ISO and

NS9415,

• Unique practice consisting of 100% testing and full traceability
• Products are tested for 200-250% of rated capacity

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World-class manufacturing process and production know-how

• State-of-the-art production
• Fully integrated production flow

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Long heritage of innovation and technical expertise

• Many of the products that are today’s industry standard have

been developed by Gunnebo Industries, with innovation since 1764

• System design creating operational efficiency through time

and weight savings as well as increased flexibility

• Design expertise and outstanding customer service
• ~20 engineers in technical department
• Promising product pipeline

Gunnebo Industries has equipped Asian Hercules III, one of the world’s largest heavy-lift sheerlegs

Asian Hercules III

Heritage products Patented products New products

Strong brand

• High brand loyalty1) with strong and long-standing relationships

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Note: 1) Customer tenure is used as a proxy for brand loyalty Source: Company information

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Agenda

Market description Company overview Financials

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Top 3 Top 3 Top 3 #1

Market leader in Scandinavia and top 3 globally

Australia & South America Europe North America Scandinavia

Components Chains Shackles

#1 Top 3 #1 #1 #2 #1 Top 3 #1 n.a

Components Chains Shackles

Top 3 Top 3 Top 3

Components Chains Shackles

Top 3 Top 3 Top 6

Components Chains Shackles

Top 3 Top 3 Top 3

Crane blocks Sheaves Other

Top 3 #2 Top 3

Market shares Source: Management estimates

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Gunnebo Industries’ core markets are positioned for growth

Total estimated targeted market size

BSEK ~9

Source: Company information and management estimates

Components, Chain & Shackle products Blocks & Sheaves products

• Growth of industrial and construction market

segments

• Continuous growth of aquaculture industry
• Offshore oil & gas market recovery
• Growth of mining industries
• Expected growth of mobile crane sales, emerging

from low levels

• Positive underlying market fundamentals
• Increasing fleet utilisation will trigger

investments in new cranes

• Increasing activity in oil & gas
• Positive active rig count trend

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5 000 10 000 15 000 20 000 25 000 30 000 35 000 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E MNOK EBITDA 100 200 300 400 500 600 700 800 100 200 300 400 500 600 700 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E BUSD BUSD Opex Capex (RHS) 107 105 90 95 100 105 110 2012 2013 2014 2015 2016 2017E 2018E Index Industrial production index Eurozone US 116 153 90 100 110 120 130 140 150 160 2013 2014 2015 2016 2017 2018E 2019E 2020E Index Construction index Europe US

Note: 1) Numbers for MHG, LSG, GSF, BAKKA, NRS, SALM, SSC Source: Norwegian Directorate of Fisheries, Pareto Securities Equity research

Strong market sentiment across targeted industries for Components, Chain & Shackle products

O&G – strong growth expected Aquaculture – strong growth ahead Industrial – strong consensus going forward Construction – continuous positive trend

Source: Rystad Energy Source: Euroconstruct, FMI’s 2018 Overview Source: Consensus Economics Forecast (June 2017)

6%

Capex

CAGR 17-20E 10%

Opex

17%

EBITDA

CAGR 17-20E

Increase in active rigs in North America

Active rigs

2012 2013 2014 2015

Source: Baker Hughes

2016 2017 2018

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Agenda

Market description Company overview Financials

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Strong growth in 2017

Financial Summary (MSEK) Sales Operating profit1) Order intake

Source: Company information Note: 1) Operating profit including non-recurring items

MSEK

8% 20% 10%

MSEK MSEK

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Strong order intake for Components, Chain & Shackles

Components, Chain & Shackles Blocks & Sheaves

MSEK MSEK

Note: LTM order intake Source: Company information

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Strong revenue and operating profit development for Components, Chain & Shackles

Sales Operating profit1)

MSEK MSEK

Source: Company information Note: 1) Operating profit including non-recurring items

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Today 2019

 Positive market outlook  Realisation of operating leverage  Multiple activities to support continued market share gains  Manufacturing cost reduction  Procurement improvements  Additional savings potential through automation

• Product pipeline
• Participate in industry

consolidation

• Adjacent product

categories Market growth

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Organic growth initiatives

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Cost savings and efficiency improvements Long term growth

• pportunities

3 main pillars for profitable growth

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Clear roadmap for continued profitable growth