Q3 2018 PRESENTATION 26 th October 2018 Leif Gustafsson, CEO Aku - - PowerPoint PPT Presentation

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Q3 2018 PRESENTATION 26 th October 2018 Leif Gustafsson, CEO Aku - - PowerPoint PPT Presentation

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Q3 2018 PRESENTATION 26 th October 2018 Leif Gustafsson, CEO Aku Rumpunen, CFO Q3 2018 Highlights Organic sales growth of 6.3% was supported by both business divisions Comparable EBITA improved by 3.5% to EUR 41.6 (40.2) million

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26th October 2018

Q3 2018 PRESENTATION

Leif Gustafsson, CEO Aku Rumpunen, CFO

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SLIDE 2

Q3 2018 Highlights

  • Organic sales growth of 6.3% was supported by both

business divisions

  • Comparable EBITA improved by 3.5% to EUR 41.6 (40.2)

million with a margin of 21.0% (20.9%) driven by Modular Space, ER Scandinavia and ER Central Europe segments

  • Modular Space organic rental sales grew by 13.8% and

EBITA improved by 16.6%

  • On 4 October 2018, the Swedish Competition Authority

approved Cramo’s acquisition of the Nordic Modular Group

  • An outcome of the previously announced strategic

assessment of Modular Space is likely to result in a separation of the Equipment Rental and Modular Space business divisions, which may include a demerger and separate listing of Cramo Adapteo during 2019

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12.1 % 14.9 % 14.7 % 14.5 % 0% 5% 10% 15% 20% Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE

Comparable ROCE Target 2017-20 3.0 % 3.5 % 4.0 % 10.2 % 7.8 % 6.1 % 3.7 % 3.2 % 0% 5% 10% 15% Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Organic** sales growth (y-o-y)

Organic sales growth (YTD) Market 2017* Market 2018* 7.0 % 9.5 % 9.3 % 14.2 % 15.7 % 15.0 % 10.0 % 0% 5% 10% 15% 20% Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Organic** rental sales growth (y-o-y)

Organic rental sales growth (YTD) Target 2017-20 12.8 % 11.8 % 9.7 % 10.1 % 12.5 % 0% 5% 10% 15% 20% Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE

Comparable ROCE Target 2017-20

FINANCIAL TARGET REALISATION

EQUIPMENT RENTAL MODULAR SPACE

* Target to grow faster than market. Market growth according to ERA (European Rental Association) in the markets where Cramo is present ** Organic sales growth excludes the impact of acquisitions, divestments and exchange rate changes and IFRS changes

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SLIDE 4

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BUSINESS SEGMENTS

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93.2 86.9 0.0

  • 3.6

3.9

  • 6.5

0.0 20 40 60 80 100

Q3/17 Acquisitions Divestments Organic growth FX-changes IFRS 15 impact Q3/18

EUR million

Sales Q3/17 vs Q3/18

92.3 93.2 86.9 20 40 60 80 100 120 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Sales (EUR million)

Sales

18.9 19.0 19.0 15.3 % 18.0 % 19.3 %

10% 12% 14% 16% 18% 20% 22% 24%

5 10 15 20 25 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE Comparable EBITA (EUR million)

Comparable EBITA and ROCE

Comparable EBITA Comparable ROCE

  • The slowdown of residential construction growth in the

Stockholm area had no material impact on third quarter sales in Sweden, which increased by 3.2% in local currency

  • In Norway, sales developed positively driven by good demand,

increased utilisation rates and large projects

  • Profitability improved due to increased organic sales and good

cost control

  • According to Forecon, equipment rental market is expected to

grow by 1% in 2019 in Sweden

EQUIPMENT RENTAL: SCANDINAVIA

GOOD PERFORMANCE WITH ALL-TIME-HIGH RETURN ON CAPITAL EMPLOYED

  • 0.4%

Organic growth +4.6%* vs LY

ER Scandinavia has operations in Sweden and Norway with capital employed of MEUR 381 at the end of Q3 2018.

  • 6.7%

All figures exclude IACs and are presented as comparable key figures * Organic growth reported in local currencies

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39.0 38.3 0.0

  • 0.5
  • 0.2

0.0 0.0 5 10 15 20 25 30 35 40 45

Q3/17 AcquisitionsDivestments Organic growth FX-changes IFRS 15 impact Q3/18

EUR million

Sales Q3/17 vs Q3/18

38.6 39.0 38.3 5 10 15 20 25 30 35 40 45 50 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Sales (EUR million)

Sales

10.6 10.6 8.4 9.9 % 13.3 % 11.2 % 0% 5% 10% 15% 20% 2 4 6 8 10 12 14 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE Comparable EBITA (EUR million)

Comparable EBITA and ROCE

Comparable EBITA Comparable ROCE

EQUIPMENT RENTAL: FINLAND AND EASTERN EUROPE

PROFITABILITY NEGATIVELY IMPACTED BY LOWER SALES IN FINLAND

  • 21.0%

Organic growth

  • 0.6%* vs LY
  • 2.0%
  • Organic sales decreased by 0.6% in Q3 driven by

Finland, where sales declined by 5.3% mainly followed by lower price levels, fierce competition and large projects included in comparison period

  • Profitability increased strongly in Poland and Lithuania

due to higher sales and good cost control. In Estonia, profitability was also strong during the third quarter.

  • Market situation continues to be positive

ER Finland and Eastern Europe has operations in four countries with capital employed of MEUR 193 at the end of Q3 2018. All figures exclude IACs and are presented as comparable key figures * Organic growth reported in local currencies

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21.9 33.7 11.1 0.0 0.6 0.0 0.0 5 10 15 20 25 30 35 40

Q3/17 Acquisitions Divestments Organic growth FX-changes IFRS 15 impact Q3/18

EUR million

Sales Q3/17 vs Q3/18

23.7 21.9 33.7 5 10 15 20 25 30 35 40 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Sales (EUR million)

Sales

3.8 3.3 5.6 2.8 % 5.0 % 5.7 %

  • 3%
  • 1%

1% 3% 5% 7%

  • 3
  • 2
  • 1

1 2 3 4 5 6 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE Comparable EBITA (EUR million)

Comparable EBITA and ROCE

Comparable EBITA Comparable ROCE

EQUIPMENT RENTAL: CENTRAL EUROPE

POSITIVE ORGANIC SALES DEVELOPMENT IN THE THIRD QUARTER – PROFITABILITY INCREASED IN ALL COUNTRIES

Organic growth +2.5%* vs LY

ER Central Europe has operations in five countries with capital employed of MEUR 151 at the end of Q3 2018.

  • Strong sales growth supported by KBS Infra acquisition (EUR 11.1

million impact) as well strong rental sales in all other countries apart from Germany, where rental sales decreased.

  • Segments organic sales increased by 2.5% mainly driven by the Czech

Republic.

  • In Q3, profitability increased in all countries, including Germany. KBS

Infra contributed positively to segment’s profit and profitability. The performance of Germany has still not reached targets – actions to improve profitability will be continued.

All figures exclude IACs and are presented as comparable key figures * Organic growth reported in local currencies

+67.6% +53.5%

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Organic rental growth +0.7%* vs LY

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38.0 39.4 0.0 0.0 7.3

  • 1.3
  • 4.5

5 10 15 20 25 30 35 40 45 50

Q3/17 Acquisitions Divestments Organic growth FX-changes IFRS 15 impact Q3/18

EUR million

Sales Q3/17 vs Q3/18

7.5 8.4 9.8 11.8 % 9.7 % 10.1 % 5% 7% 9% 11% 13% 15% 17% 19% 2 4 6 8 10 12 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Comparable ROCE Comparable EBITA (EUR million)

Comparable EBITA and ROCE

Comparable EBITA Comparable ROCE 18.8 21.4 23.3 11.5 16.5 16.1 30.3 38.0 39.4 5 10 15 20 25 30 35 40 45 50 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Sales (EUR million)

Sales

Other sales Rental sales Sales

  • Third quarter sales increased by 3.9% compared to last year

(7.7% in local currencies). Organic rental sales growth was 13.8% and organic total sales growth 20.2%.

  • The adoption of the IFRS 15 standard and due to earlier

revenue recognition decreased third quarter sales by EUR 4.5 million compared to previous year.

  • Third quarter EBITA increased by 16.6%. Sweden, Denmark

and Germany contributed the most of EBITA growth compared to LY.

MODULAR SPACE

GOOD PERFORMANCE IMPROVEMENT CONTINUED

Modular Space has operations in seven countries with capital employed over MEUR 348 at the end of Q3 2018.

+16.6% Organic growth +20.2%** vs LY +13.8%* +3.9%

All figures exclude IACs and are presented as comparable key figures * Organic rental sales growth (y-o-y) in local currencies ** Organic growth reported in local currencies

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NORDIC MODULAR GROUP ACQUISITION RATIONALE

STRENGHTENING OUR POSITION IN THE NORDIC MODULAR SPACE INDUSTRY

NewCo presence

Strengthen our modular space market position in the Nordics with adequate size and cost efficiency to attract top-tier investors Penetrate the short-term/long-term rental business with optimised and differentiated solutions towards targeted customer segments Establish a strong platform with capacity to grow the rental and sales business in Central Europe, both organically and through acquisitions Form a versatile modular space group with inhouse R&D, design and manufacturing to expand the semi-permanent sales business Increase modular space concept awareness and business transparency driving long-term value creation – Be a true shaper of the industry

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NORDIC MODULAR GROUP IN BRIEF

BUSINESS OVERVIEW

CUSTOMER SEGMENTS OFFICE NETWORK PERSONNEL 7 sales offices in 4 countries 230 people KEY FINANCIALS 2017 Net sales (M€) EBITA (M€)

81 17 (20.5%)

93% 4% 1% 3%

46% Module prod. 36% Other 1% Contract assignm. 18% Rental

External sales by offering External sales by customer segment

Companies &

  • ther

Municipalities >75% <25%

KEY FACTS

Operates through three main subsidiaries – Flexator, Temporent, and Nordic Modular Leasing Rental modules ~6000 Founded in 1956, NMG conducts development, manufacture, sale and rental

  • f relocatable buildings for professional

customers in the Nordic countries

Daycare School Office Accommodation

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COMBINED COMPANY IN BRIEF

BUSINESS OVERVIEW (CRAMO ADAPTEO + NMG) 2017

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Day care Accommodation Office School Events/ Exhibitions

CUSTOMER SEGMENTS

16 sales offices in 7 countries

OFFICE NETWORK

150 people

PERSONNEL Daycare Accommodation Office School Events 23 sales offices in 7 countries 392 people KEY FINANCIALS 2017 Net sales (M€) EBITA (M€)

207 45 (21.9%)

150 people

RENTAL MODULES ~31.000

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*Cramo Adapteo figures are based on the modular space segment reporting

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TRANSACTION PARAMETERS AND IMPACT TO CRAMO

ENTERPRISE VALUE OF SEK 2.725 BILLION ▪ Acquisition was approved by the Swedish Competition Authority on 4 October 2018. Acquisition is expected to be closed at the end of October 2018. ▪ NMG will be consolidated as part of Cramo’s Modular Space segment ▪ Transaction is financed with bank financing and convertible note amounting to SEK 550 million. Convertible note may be used by the sellers to reinvest in Cramo’s modular space business at later stage under certain conditions. ▪ Acquisition is expected to bring 3–4 MEUR operational cost synergies p.a. We expect the full synergistic run-rate to be reached within 2 years. ▪ Acquisition is expected to have a positive impact on Cramo Group comparable EPS in 2019

SALES R12 Q2/2018 (MEUR) EBITA R12 Q2/2018 (MEUR)

1 R12/2018 EUR/SEK conversion rate 9.90 2 Adapteo figures are based on modular space segment reporting

**

New Adapteo New Group

**

140 87 226 50 100 150 200 250 Adapteo NMG 753 87 840 200 400 600 800 1000 NMG Cramo group

New Group

33 17 50 10 20 30 40 50 60 Adapteo NMG 129 17 146 50 100 150 NMG Cramo group

New Adapteo

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GROUP PERFORMANCE Q3 2018

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172 187 155 179 185 193 163 178 192 197 175 189 198

  • 2%

0% 2% 4% 6% 8% 10% 12% 50 100 150 200 250 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Sales growth (%, y-o-y) Sales (EUR million)

661 668 676 694 707 712 720 719 726 730 742 753 759

0% 1% 2% 3% 4% 5% 6% 7% 8% 600 620 640 660 680 700 720 740 760 780 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

R12M sales growth (%, y-o-y) R12M sales (EUR million)

SALES DEVELOPMENT

ORGANIC SALES GROWTH OF 6.3% IN Q3

* in local currencies ** organic sales growth in local currencies

Quarters Rolling 12 months

R12M Q3/18 vs. R12M Q3/17: +4.6% Q3/18 vs. Q3/17: +3.1% (+7.5%*) (+6.3%**)

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191.9 197.9 11.2

  • 4.1

11.3

  • 7.8
  • 4.5

50 100 150 200 250 Q3/17 Acquisitions Divestments Organic growth FX-changes IFRS15 impact Q3/18

EUR million

Sales Q3/17 vs Q3/18

GROUP Q3 SALES GROWTH VS LY

ORGANIC SALES GROWTH 6.3% VS REPORTED SALES GROWTH 3.1%

Organic sales growth +6.3% vs LY

▪ Equipment Rental +2.9%

▪ Scandinavia +4.6% ▪ Finland and Eastern Europe

  • 0.6%

▪ Central Europe +2.5%

▪ Modular Space +20.2%

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31.4 27.0 13.0 26.6 38.9 32.6 19.7 27.8 40.2 32.4 23.1 31.0 41.6 18.2 % 21.1 % 20.9 % 21.0 %

5% 7% 9% 11% 13% 15% 17% 19% 21% 23% 5 10 15 20 25 30 35 40 45 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

EBITA margin (%, line graph) EBITA (EUR million)

86 87 90 98 105 111 118 119 120 120 123 127 128 13.0 % 14.9 % 16.6 % 16.9 %

5% 7% 9% 11% 13% 15% 17% 19% 20 40 60 80 100 120 140 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

R12M EBITA margin (%, line graph) R12M EBITA (EUR million)

COMPARABLE EBITA DEVELOPMENT

IMPROVEMENT DRIVEN BY MODULAR SPACE AND ER CENTRAL

Quarters Rolling 12 months

Q3/18 vs. Q3/17: +3.5% R12M Q3/18 vs. R12M Q3/17: +6.5%

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239.4 108.2 121.1 65.5 67.9 59.8 64.2 65.7 59.3 56.9 62.0 54.8 51.4 59.1 33.6 % 31.7 % 33.2 % 34.0 % 34.5 % 32.3 % 33.5 % 33.2 % 33.1 % 31.9 % 32.8 % 35.3 % 31.5 % 33.7 % 50 100 150 200 250 300 0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 % 30.0 % 35.0 % 40.0 % 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 Jan-Sep Q4 Q3 Q2 Q1

Direct cost (EUR million) Direct cost ratio

Direct costs (right axis) Direct cost ratio (left axis) 272.9 139.9 141.4 73.8 72.8 63.6 63.6 65.3 70.4 70.7 72.1 65.1 69.2 69.3 38.3 % 41.0 % 38.8 % 38.2 % 37.0 % 34.4 % 33.1 % 33.0 % 39.3 % 39.7 % 38.1 % 41.9 % 42.5 % 39.5 % 50 100 150 200 250 300 350 400 0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 % 30.0 % 35.0 % 40.0 % 45.0 % 50.0 % 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 Jan-Sep Q4 Q3 Q2 Q1

Indirect cost (EUR million) Indirect cost ratio

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

108.2 121.1 64.2 65.7 56.9 62.0 51.4 59.1 31.7 % 33.2 % 33.5 % 33.2 % 31.9 % 32.8 % 31.5 % 33.7 % 20 40 60 80 100 120 140 160 0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 % 30.0 % 35.0 % 40.0 % 2017 2018 2017 2018 2017 2018 2017 2018 Jan-Sep Q3 Q2 Q1 Direct cost (EUR million) Direct cost ratio Direct costs (right axis) Direct cost ratio (left axis) 139.9 141.4 63.6 65.3 70.7 72.1 69.2 69.3 41.0 % 38.8 % 33.1 % 33.0 % 39.7 % 38.1 % 42.5 % 39.5 % 50 100 150 200 250 300 350 400 0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 % 30.0 % 35.0 % 40.0 % 45.0 % 50.0 % 2017 2018 2017 2018 2017 2018 2017 2018 Jan-Sep Q3 Q2 Q1 Indirect cost (EUR million) Indirect cost ratio Indirect costs (right axis) Indirect cost ratio (left axis)

* 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”

QUARTERLY INDIRECT COST 2 QUARTERLY DIRECT COST 1

DEVELOPMENT IN COST BASE*

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Direct costs ratio improved slightly Indirect cost ratio remained at last year level

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40.2 41.6 40.2

  • 0.1
  • 2.2

2.3 1.4 0.0 0.1 1.4

  • 0.1

5 10 15 20 25 30 35 40 45 Q3/2017 ER Scandinavia ER Eastern Europe ER Central Europe MS Non-allocated Q3/2018 ER MS Non-allocated Q3/2017 Development against LY Development against LY Comparable EBITA (EUR million)

COMPARABLE EBITA BRIDGE Q3/18 VS Q3/17

20.9% of sales 21.0% of sales

18

20.9% of sales

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87.7 95.7 87.7 1.6

  • 3.0

3.3 5.8 0.4 1.8 5.8 0.4 20 40 60 80 100 120 Q1-Q3/2017 ER Scandinavia ER Eastern Europe ER Central Europe MS Non-allocated Q1-Q3/2018 ER MS Non-allocated Q1-Q3/2017 Development against LY Development against LY Comparable EBITA (EUR million)

COMPARABLE EBITA BRIDGE Q1-Q3/18 VS Q1-Q3/17

16.5% of sales 17.0% of sales

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16.5% of sales

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0.46 0.40 0.16 0.41 0.64 0.51 0.28 0.42 0.66 0.51 0.35 0.48 0.71 0.00 0.50 1.00 1.50 2.00 2.50 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

EPS R12M (EUR, line graph) Quarterly EPS (EUR, bar graph)

COMPARABLE EPS PERFORMANCE

1.87 2.06 1.60 20

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53.0 73.5 23.6 39.3 51.2 58.2 42.3 27.1 47.5 69.7 20.8 53.2 49.9

  • 40
  • 20

20 40 60 80

  • 40
  • 20

20 40 60 80 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Cash flow after investments(EUR million, line graph) Operating cash flow (EUR million, bar graph)

OPERATING CASH FLOW AND CASH FLOW AFTER INVESTMENTS

OPERATING CASH FLOW AT LAST YEAR LEVEL IN Q3

22.3 0.0

  • 5.5

Acquisition of shares

  • f Just Pavillion

(-8.1 MEUR)

21 10.9

KBS acquisition 17.8 MEUR Positive impact of divestments (28 MEUR)

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SLIDE 22

14.6 % 15.9 % 16.4 % 15.0 % 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Comparable ROE Target >15.0% 2017-20 1.93 1.73 1.94 3.00 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18

Net debt / EBITDA

Net debt / EBITDA Target < 3.00 2017-20

COMPARABLE ROE AND NET DEBT TO EBITDA

22

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SLIDE 23

CONCLUSION AND OUTLOOK 2018

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SLIDE 24

CONCLUSIONS

SHAPE AND SHARE

  • Q3 organic sales growth of 6.3% supported by both

business divisions

  • Comparable EBITA grew by 3.5% driven by Modular Space,

ER Scandinavia and ER Central Europe performance

  • Performance improvement actions in Modular Space are

showing results – EBITA grew by 16.6% in the third quarter

  • ER Germany and Finland did not meet our targets and

performance actions will continue

  • On 4 October 2018, the Swedish Competition Authority

approved Cramo’s acquisition of Nordic Modular Group

  • An outcome of the previously announced strategic

assessment of Modular Space is likely to result in a separation of the Equipment Rental and Modular Space business divisions, which may include a demerger and separate listing of Cramo Adapteo during 2019 24

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SLIDE 25

OUTLOOK

Equipment Rental

  • Rental market is expected to grow in 2018, but at a

slower pace than in 2017

  • We expect stabilising growth for the last quarter of the

year

  • Slowing growth is expected in Sweden and Finland,

whereas growth in Poland, the Czech Republic and Slovakia is expected to remain strong Modular Space

  • Market outlook for 2018 is positive: over 10% growth is

expected for Finland and 5–10% for other segment countries

  • The assessment of strategic alternatives continue,

including the demerger complemented by the NMG acquisition

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