Q1 2018 Investor presentation First quarter 2018 8 May 2018 - - PowerPoint PPT Presentation

§ First quarter 2018 § Investor presentation § 8 May 2018

1

Q1 2018

Investor presentation

8 May 2018

Content

2

§ Highlights

Morten Holum, CEO

§ Results and financials

Svein Vestermo, CFO

§ The road ahead

Morten Holum, CEO

Highlights Q1 2018 – Strong winter impacts earnings

3

904 1 626 1 710 1 787 898

• 500

1 000 1 500 2 000 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 (56) 153 192 152 (96)

• 150
• 100
• 50
• 50

100 150 200 250 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Underlying revenue, NOK mill. Underlying EBITDA, NOK mill.

0.7% 0.7% § Revenue decreased by 1% § Earnings NOK 40 million lower § Revenue and earnings impacted by strong winter in the Nordics § Visible effects of strategic portfolio adjustments and margin improvement programs

Key developments in the quarter

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§ Unchanged market situation in the Nordics § Continued good market development in Eastern Europe § Structured exit of water & sewage business in Lithuania on track § Acquisition of Tubosider France to grow, broaden the portfolio and extract synergies § The Nordic markets impacted by strong winter – delayed start-up of main season § Additional growth investments taken in Q1 § Restructuring program in Sweden and cost reductions in Norway ongoing § Market and project mix in Europe as expected, building order stock for later in the year Road Safety Road Infrastructure

Group earnings

5

RSE Q1 2018 40 Q1 17 RSN RIN 4 3 5 RIE

• 96

3 Other/Elim.

• 56

Underlying EBITDA – change quarter-on-quarter Underlying EBITDA margin, rolling 12 months

Road Safety Road Infrastructure

Q4 17 Q1 17 9.5% 6.0% Q3 17 7.3% 9.0% 9.5% 7.5% 6.7% Q2 17 8.3% 7.0% 7.2% Q1 18

Road Infrastructure Road Safety

NOK million

§ First quarter 2018 § Investor presentation § 8 May 2018

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Results and financials

Svein Vestermo, CFO

Road Safety Nordic – Strong winter impacts seasonal start-up

7 NOK million

Q1 2018 Q1 2017 2017 Underlying operating revenue

431 449 2 780

Underlying EBITDA

(59) (19) 223

Underlying EBITA

(81) (40) 139

Reported EBITDA

(60) (19) 202

Underlying EBITDA margin

(13.8%) (4.2%) 8.0%

(19) 86 101 55 (59)

• 80
• 60
• 40
• 20
• 20

40 60 80 100 120 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Underlying EBITDA, NOK million

§ Revenue decreased by 7 % organically

• Lower sales in road restraint systems, partly

compensated by higher sales in signs and work zone protection

§ Significant decrease in Underlying EBITDA

• The strong winter resulted in lower volume and

lower capacity utilisation

• Growth investments in higher capacity gave higher

cost base

§ Additional operational efficiency programs in Norway are initiated

Road Safety Nordic – a closer look

8

EBITDA underlying, NOK million

Q1 17

20

Delayed start-up

13

Growth investments

8

Other

• 59

Q1 18

• 19

Road Safety Europe – Good seasonal activity

9

1 38 37 47 (3)

• 10
• 10

20 30 40 50 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Underlying EBITDA, NOK million

NOK million

Q1 2018 Q1 2017 2017 Underlying operating revenue

256 220 1 423

Underlying EBITDA

(3) 1 123

Underlying EBITA

(9) (4) 98

Reported EBITDA

(3) 18 136

Underlying EBITDA margin

(1.1 %) 0.5 % 8.6 %

§ Revenue increased by 16%

• 8% revenue growth adjusted for

currency effects

• Lower revenue in road restraint systems more

than compensated by higher sales in other product areas

§ Earnings in line with first quarter last year

• Favourable cost position raw materials in 2017

Road Infrastructure Nordic – Earnings in line with Q1 2017

10

(9) 18 19 (3) (6)

• 15
• 10
• 5
• 5

10 15 20 25 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Underlying EBITDA, NOK million

NOK million

Q1 2018 Q1 2017 2017 Underlying operating revenue

75 135 743

Underlying EBITDA

(6) (9) 25

Underlying EBITA

(6) (10) 22

Reported EBITDA

(6) (9) 29

Underlying EBITDA margin

(7.8 %) (6.3 %) 3.4 %

§ Decrease in underlying revenue driven by water & sewage divestment

• Adjusted for the divestment, revenue increased by

10%

§ Earnings in line with first quarter last year

• Positive effect from the divestment of the water &

sewage business

Road Infrastructure Europe – Continued positive development

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(18) 19 40 68 (13)

• 40
• 20
• 20

40 60 80 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Underlying EBITDA, NOK million

NOK million

Q1 2018 Q1 2017 2017 Underlying operating revenue

160 125 1 224

Underlying EBITDA

(13) (18) 109

Underlying EBITA

(20) (24) 84

Reported EBITDA

(13) (18) 106

Underlying EBITDA margin

(8.0 %) (14.4 %) 8.9 %

§ Revenue increased by 28%

• Revenue in line with last year, adjusted for

currency effects and the acquisitions of Elikopol and Tubosider France

• High seasonal activity in Poland

§ Marginally improved earnings

• Higher volume and a shift in product mix

§ Structured exit of water & sewage business in Lithuania on track

Profit and loss statement

12

NOK million

Q1 2018 Q1 2017 2017 Operating revenue

899 921 6 051

Total operating cost

(996) (974) (5 675)

EBITDA

(97) (53) 375

Depreciation and impairment

(40) (37) (151)

EBITA

(138) (90) 224

Amortisation and impairment

(20) (16) (70)

EBIT

(158) (106) 154

Net financial income(/expense)

22 (57) 53

Income (loss) before tax

(136) (162) 207

Income taxes

23 32 21

Net income (loss)

(114) (130) 228

Of which non-controlling interests

(2) (10) 1

Earnings per share (NOK)

(1.67) (6.03) 4.80

EBITDA reported

(97) (53) 375

Items excluded from underlying EBITDA

1 (4) 65

EBITDA underlying

(96) (56) 441

§ Net loss in the quarter was NOK (114 mill), NOK 16 million higher than last year § Lower operating earnings off-set by lower net financials § Interest expense decreased by NOK 19 million compared to Q1 2017 § The Group reported a net tax income of NOK 23 million in Q1 2018, which is in line with Q1 2017 § An adjustment to the net financials

• f NOK 6.7 mill was made in the

annual accounts for 2017 versus the Q4 report. The reason for the adjustment was a change in the assessment of the purchase price for the shares in Elikopol.

Balance sheet

13 NOK million

31.03.2018 31.03.2017 31.12.2017

Total intangible assets 1 573 1 528 1 601 Total fixed assets 996 908 986 Total financial assets 38 48 45 Deferred tax assets 66 41 53 Total non-current assets 2 674 2 524 2 684 Inventories 1 147 1 118 934 Trade receivables 690 640 996 Other receivables 345 312 327 Cash and cash equivalents 179 153 351 Total current assets 2 361 2 223 2 609 Total assets 5 034 4 747 5 293 Share capital 7 2 7 Other equity 2 584 854 2 809 Non-controlling interests 68 245 33 Total equity 2 659 1 101 2 849 Provisions 76 58 64 Non-current liabilities 1 307 1 983 1 264 Total non-current liabilities 1 383 2 041 1 328 Accounts payables 488 508 568 Other current liabilities 505 1 097 547 Total current liabilities 993 1 605 1 116 Total shareholders' equity and liabilities 5 034 4 747 5 293

§ Equity ratio of 53% compared to 54% at year end § The increase in inventories is mainly related to higher raw material prices § Net interest bearing debt at NOK 1.1 billion compared to NOK 0.9 billion last quarter. Leverage at quarter end was 2.6x § The Group’s financial position is good, with sufficient financial capacity to execute the current projects and initiatives

351 179

• 50

100 150 200 250 300 350 400 Cash per 31.12.17 EBITDA underlying Changes in working capital Other items Net CF from investment activities Net proceeds from borrowings Other financing activities and fx Cash per 31.03.18 NOK million

Development in cash flow during Q1 2018

14

Cash flow from operations

Cash flow from financing activities

• 96
• 43
• 24
• 33

49

• 25

§ First quarter 2018 § Investor presentation § 8 May 2018

15

The road ahead

Morten Holum, CEO

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Short-term outlook

§ Second quarter operating earnings expected to be higher than last year § High activity in Road Safety Nordic, despite late

• nset of main season, and positive effect from

restructuring program and growth investments § Stable in Road Safety Europe and Road Infrastructure Nordic § Continued high demand in Road Infrastructure Europe, and positive effect of water & sewage exit in Lithuania and acquisitions § Full-year outlook unchanged – performance expected to be better than last year

Summing up

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§ First quarter performance as expected, but stronger winter impacted earnings in the Nordic region § Continued execution of strategic agenda

• Good traction on initiatives to raise margins
• Additional portfolio enhancement through

acquisition of Tubosider France

§ Positive outlook for Q2 and full year

Appendix 1 – Group and business areas

19 Amounts in NOK million

First quarter 2018 First quarter 2017 2017 Operating revenues* EBITDA* Margin* Operating revenues* EBITDA* Margin* Operating revenues* EBITDA* Margin* Road Safety Nordic 431 (59) (13.8%) 449 (19) (4.2%) 2 780 223 8.0% Road Safety Europe 256 (3) (1.1%) 220 1 0.5% 1 423 123 8.6% Total Road Safety 673 (62) (9.2%) 656 (18) (2.7%) 4 150 346 8.3% Road Infrastructure Nordic 75 (6) (7.8%) 135 (9) (6.3%) 743 25 3.4% Road Infrastructure Europe 160 (13) (8.0%) 125 (18) (14.4%) 1 224 109 8.9% Total Road Infrastructure 228 (19) (8.2%) 252 (27) (10.6%) 1 917 134 7.0% Other and Eliminations (3) (15)

• (4)

(12)

• (39)

(39)

• Total Group

898 (96) (10.7%) 904 (56) (6.2%) 6 028 441 7.3%

* Underlying figures