Shape & Share Capital Markets Day, February 2017 Leif - - PowerPoint PPT Presentation

NEW GROUP STRATEGY 2020:

Shape & Share

Capital Markets Day, February 2017

Leif Gustafsson President and CEO

1

12.00-12.05 Welcome & Introduction Mattias Rådström, SVP Communication, Marketing and IR 12.05-12.45 New group strategy Shape & Share Leif Gustafsson, President and CEO 12.45-13.15 Financial performance & targets Aku Rumpunen, CFO 13.15-14.00 Modular Space Strategy and growth ambitions Petri Moksén, SVP Modular Space 14.00-14.30 Enable people to perform Petra Schedin Stergel, SVP HR 14.30-15.00 Coffee break 15.00-15.30 Improved fleet efficiency Martin Holmgren, SVP Fleet Management 15.30-16.00 Cramo Customer Centric program and Digital concept Jonas Pärssinen, Director Business Development Elina Aalto, eChannel Manager 16.00-16.45 Equipment Rental Panel interview: Central Europe, Eastern Europe and Scandinavia Dirk Schlitzkus, EVP Central Europe Tatu Hauhio, EVP Eastern Europe Peter Bäckström, EVP Scandinavia 16.45-17.00 Closing and summary Leif Gustafsson, President and CEO 17.00-18.00 Closing drinks and snacks

Agenda

WWW.CRAMOGROUP.COM

2

Cramo Group today

1

Strategy 2020 – Shape & Share

3

Agenda

2

Megatrends & growth drivers

3

#1

in the Nordics (MS)

Cramo is in a strong position

14

countries

324

depots

15

countries

230,000

rental units

150 000

#2

in Europe

150,000

customers Cramo Fortrent

4

Sales, MEUR

712.3

6.6% Comparable EBITA, MEUR

111.1

27.9% Comparable EPS, EUR

1.70

ROE, %

14.9

Sales per geographical split

Profitable growth – and a mix with large potential

50% 18% 9% 4% 11% 7%

Sweden Finland Norway Denmark CE EE

5

Two stand-alone divisions

Modular Space Equipment Rental

6

7

The Cramo Rental Concept

A wide range of rental-related SERVICES ranging from different site services, such as proactive site monitoring, construction site logistics, dust-control and weather-sheltering, to safety-related services, equipment and training. INDUSTRIAL PROJECTS including infrastructure, offshore and mining. Tailor-made total RENTAL SOLUTIONS for more efficient, safe and environmentally sound construction projects. MODULAR SPACE SOLUTIONS matching the standards

• f permanent structures

from classrooms and daycare facilities to high-tech offices and accommodation. SITE HUTS adaptable for various purposes and capacity needs. COMPREHENSIVE RANGE OF TOOLS and complete package solutions in building equipment. Modern, comprehensive fleet of CONSTRUCTION EQUIPMENT for any type of assignments, from major road projects to small-scale jobs. ACCESS EQUIPMENT with comprehensive safety solutions for working at heights. Growth in new services and solutions Growth of rental and modular space in new sectors Increasing rental penetration, outsourcing Internet of things, intelligent life-cycle follow-up Multichannel connectivity with customers

7

Cramo Group today

1

Strategy 2020 – Shape & Share

3

Agenda

2

Megatrends & growth drivers

8

What is going on in the world?

9

50

billion

600

cities

70% 33%

1.2

billion

Generation Connected

Urbanisation Sustainability Digitalisation

10

Business Environment

CSR and sustainability are becoming core values Competitors are more active, new

• nes will come and

existing ones will develop Will increasing demands close the gap between permant and temporary buildings? Digitalisation: Creates both

• pportunities and

challenges Transparency - Customers more aware of cost/value If you are not a shaper you are a follower and you have to rely on others to shape your tomorrow

11

Underlying drivers support propensity to rent

Outsourcing - Increasing rental penetration Growth in rental- related services Switch from manpower to machine Growth in renovation construction in mature construction markets

MEGATRENDS

Migration Urbanisation Ageing Globalisation Digitalisation Sustainability Environmental and climate awareness Increased energy efficiency requirements

Accelerating technological development Global and local demographic changes More stringent environmental laws and international agreements to mitigate climate change

SOCIETY PUBLIC SECTOR CONSTRUCTION OTHER INDUSTRIES

Growth in new services and solutions Growth of rental and modular space in new sectors Increasing rental penetration, outsourcing Internet of things, intelligent life-cycle follow-up Multichannel connectivity with customers

EQUIPMENT RENTAL DRIVERS MODULAR SPACE GROWTH DRIVERS

Economic benefits, change in mindset Greater preference for total solutions Need to improve productivity Quality problems (mold and moisture) in construction Ageing of buildings Dynamic, changing environment creates demand Site-specific space needs during renovation periods Fluctuating space needs: daycares, schools, accommodation End users increasingly require permanent-like quality Need for energy-efficient solutions

12

Cramo Group today

1

Strategy 2020 – Shape & Share

3

Agenda

2

Megatrends & growth drivers

13

Do you want to be a shaper or a follower? Do you want to share?

14

Purpose

Why do we exist?

Vision

What do we want to be?

Mission

What do we want to accomplish?

Strategy

Our plan to reach vision, mission and purpose

Focus areas

How we drive our strategy

Values

Our common platform and foundation

Strategy: Shape & Share

15

We will capture the potential in our markets

• We enable Cramo people to achieve top

performance

• We significantly stretch our core business

models

• We rapidly grow Modular Space in chosen

European markets

• We establish game changing offerings in

sharing resources

Strategy: Shape & Share

We shape our We share

• Industry
• Offerings
• Organisation
• Attitudes
• Resources
• Best Practices
• Ideas
• Values

16

The roadmap is clear

Align

Implementing common processes and tools Living the Cramo Story Operational efficiency

Optimise

Shaping the business structure and model Enhancing the performance culture Creating a digital concept

Growth

Building a new footprint in chosen markets Targeting organic growth Evaluating potential acquisitions target companies

17

Key focus areas

Enable People to Perform

Stretch business models Game-changing

• fferings

Secure resources in Modular Space & capture potential in Germany

18

We enable Cramo people to achieve top performance

The Cramo future starts with the development of our culture and people. We strive to have a culture build on pride in performance and passion for improvements. We have a clear understanding of roles and responsibilities throughout the organisation. We work in teams and focus on customer satisfaction. We use digital tools in our daily work and understand the value

• f ecommerce, mobility, internet of things.

By 2020 Cramo will attract the best people. We hire for attitude and train for skills. We share best practises and grow our people by job rotation and continuous competence development.

Develop People’s Core Competences Root Performance Culture Drive Cramo Story Roll-out Cramo Care CSR program

1

19

We significantly stretch our core business models

We will look for opportunities both in the borderland to our current offerings and business model, as well as totally new ways

• f creating value with our organisation and customers.

We nurture a truly innovative culture in our organisation. – Create an independent organisation to drive the innovations and new business development, – Enhance the innovation harvesting in our current

• rganisation, searching for and gathering good ideas and

possibilities from our staff. – Test and possibly implement the innovations in a fast trial and error method utilising an established Proof of Concept process. By 2020 we have created new business models and concepts which can and will shape the future of construction machine rental business.

2

Establish Cramo Innovation Lab Beat Cramo Business Model

20

We establish game changing

• fferings in sharing resources

By differentiating our offerings and pricing to different customer segments and behaviour we will sharpen our go to market activities and deliver more spot-on offers based on customers’ needs. We will restructure our logistic network based on the segmentation and customer offerings to enable precision and efficiency in ordering and delivering processes. We focus on value creating items that our customers perceive, using our depots, digital and sales channels to strengthen and clarify our offers to the market. By 2020 Cramo has a new structure that is based on efficient internal processes and set up as well as being customer oriented; “the right products and solutions for the right customers at the right time and to the right price”.

3

Differentiate Segment Offerings Roll out new Order & Delivery Platform Shape Cramo Brand

21

In order to pursue strong organic growth Cramo Modular Space needs to increase its resources – both personnel, product and network. We change the game plan: our delivery channels are easy to understand and simple to use. Our process and

• rganisation supports our customer operations and allows

us to deliver projects fast and with high quality – we even aim to exceed our customers’ expectations. We will better be able to predict and estimate our near future need for different resources. Our systems are supporting us in our actions and decisions. We can adjust

• ur production capacity quickly and cost efficiently

according to the market demands. By 2020 we have harmonised our sourcing and purchasing

• perations which allow us to increase our efficiency and

improve our timing of the needed capital.

We break new grounds in Modular Space…

4

Enable people to perform Simplify delivery platform Shape scalable production capacity

22

Central Europe, and Germany especially, is the main

• rganic growth area for Modular Space.

We will expand our offering both geographically as well as with all products and segments in the region. We will build a strong network of our own sales

• ffices, hubs and warehouses, supported by well

working sub-contractors. We harmonise our processes, systems and operations to get scale benefits. In order to even boost our growth plans, we will carry through few acquisitions. We will integrate the new

• rganisations systematically to Cramo Adapteo.

…and capture the potential in Germany

Expand in line with

• ur current
• ffering

Execute additional growth through M&A

5

Invest to a comprehensive network

23

Way forward to capture potential Align,

• ptimise,

grow

Leading position

2

divisions

Enable people to perform Innovation

24

Conclusion

• New strategy ”Shape & Share”
• Two stand alone divisions
• Align, optimise, grow
• New financial and non-financial targets

25

Financial performance & targets

Capital Markets Day, February 2017

Aku Rumpunen CFO

26

Financial performance 2013-2016

1 3

Agenda

2

Financial targets 2017-2020 Segment structure and market outlook

27

Sales growth and profitability improvement

Sweden ER: #1 MS: #1

103 104 111 124 19 20 22 28 18,8% 19,6% 20,2% 22,0% 15% 16% 17% 18% 19% 20% 21% 22% 23% 50 100 150 200 250 300 350 400

Finland ER: #2 MS: #1

317 313 331 356 55 56 62 74 17,5% 17,8% 18,6% 20,7% 15% 16% 17% 18% 19% 20% 21% 22% 23% 50 100 150 200 250 300 350 400

2013 2014 2015 2016

Sales, EBITA & EBITA margin

mEUR

Note: Numbers presented as comparable EBITA and EBITA margin

28

In Norway solid profitability with sliding sales, in Denmark profitability improvement

29 30 28 32 0,3

• 1

2 4 0,1%

• 4,0%

6,6% 12,6%

• 5%

0% 5% 10% 15%

• 20

20 40 60 80 100

2013 2014 2015 2016

Norway: ER: #3 MS: #4

Denmark ER: #5 MS: #1

91 83 70 67 7 4 5 5 7,3% 5,4% 7,7% 7,7% 0% 5% 10% 15% 20 40 60 80 100

Sales, EBITA & EBITA margin

mEUR

Note: Numbers presented as comparable EBITA and EBITA margin

29

Central Europe turned profitable, while stable development in Eastern Europe

75 78 77 79

• 1
• 6
• 2

4

• 1,4%
• 7,7%
• 3,2%

5,0%

• 10%
• 5%

0% 5% 10% 15% 20%

• 20

20 40 60 80 100

2013 2014 2015 2016

Central Europe DE: #4 AU: #2 Eastern Europe

#2 in Baltics, and

• ne of the leading

rental companies in Poland, Czech Republic and Slovakia

53 50 51 50 8 6 6 6 15,5% 12,3% 12,3% 12,2% 0% 5% 10% 15% 20% 20 40 60 80 100

Sales, EBITA & EBITA margin

mEUR

Note: Numbers presented as comparable EBITA and EBITA margin

30

578 560 568 595 83 53 66 90 14% 9% 12% 15% 0% 5% 10% 15% 20% 25% 30% 35% 100 200 300 400 500 600 700 81 93 100 118 26 27 30 31 32% 29% 30% 26% 0% 5% 10% 15% 20% 25% 30% 35% 100 200 300 400 500 600 700

Equipment Rental Modular Space

Financial performance by business divisions

2013 2014 2015 2016 mEUR

Sales, EBITA & EBITA margin

Note: Numbers presented as comparable EBITA and EBITA margin

31

1,01 0,91 1,13 1,54 0,60 0,55 0,65 0,75

13 14 15 16

72,9 % 84,7 % 75,1 % 74,5 %

13 14 15 16

8,3 % 8,3 % 10,9 % 14,9 %

13 14 15 16

Financial targets from previous strategy period achieved

Profitability

EBITA-% > 15 % of sales over a business cycle

Gearing

Gearing maximum 100 %

Sales

Sales growth faster than the market

Return on equity

ROE > 12 % over a business cycle

Profit distribution

Profit distribution policy: stability, with

• appr. 40 % of EPS

EPS DPS

Target Level Target Level Target Level

Note: EBITA margin and ROE presented before items affecting comparability. * ERA market report 2015-2016 with constant 2012 FX rates in markets in question.

12,2 % 11,2 % 13,0 % 15,6 %

13 14 15 16

Target Level

2,9 % 3,1 %

Rental market* Cramo comparable sales growth

CAGRs 13-16 32

Financial performance 2013-2016

1 3

Agenda

2

Financial targets 2017-2020 New segment structure and market outlook

33

Net sales (mEUR) EBITA (margin-%)

379 65 (17%)

New segment structure and financials 2016

ER Scandinavia ER Finland and Eastern Europe Modular Space ER Central Europe

ROCE %

17%

Net sales (mEUR) Net sales (mEUR) Net sales (mEUR) EBITA (margin-%)

22 (16%)

ROCE % EBITA (margin-%)

4 (5%)

ROCE % EBITA (margin-%)

31 (26%)

ROCE %

139 79 118 12% 4% 11%

FORTRENT

Numbers presented as comparable EBITA, EBITA margin and comparable ROCE %

34

FINLAND SWEDEN GERMANY NORWAY

ER FINLAND MS FINLAND

Sales disclosed from largest countries by business division

ER SWEDEN MS SWEDEN ER GERMANY MS GERMANY ER NORWAY MS NORWAY

98 31 299 58 62 9 60 7

2016 sales (mEUR)

35

Rental penetration (%) Construction market (BEUR) Rental Market (BEUR)

2.9

Economical indicators and market outlook

ER Scandinavia ER Finland and Eastern Europe Modular Space ER Central Europe

Construction market (BEUR) 110 Rental penetration (%)

0.7 90

Rental penetration (%)

Market position

Construction market (BEUR) 370

#3-5 1.2 #1 Nordics

Construction market growth (%), Euroconstruct Dec 2016 Rental market growth (%), ERA June 2016

3,6 % 2,2 % 2,5 % 2,7 % 1,6 % 3,1 % 4,8 % 4,4 % 5,3 % 2,1 % 2,5 % 2,3 % 2,0 % 1,2 % 0,6 % 3,7 % 1,7 % 2,5 %

2.6

Rental market (BEUR)

0.6

Rental market (BEUR)

4.5

2016E 2017F 2018F 2016E 2017F 2018F 2016E 2017F 2018F

Share of sales from public sector

Urbanisation rate in EU*

>60%

6,9 % 8,0 % Organic rental

• rderbook growth

Organic rental sales growth

GAGR 14-16

1990 2014 2050E 70% 73% 82%

*) World urbanisation prospects 2014, United Nations

36

Financial performance 2013-2016

1 3

Agenda

2

Financial targets 2017-2020 Segment structure and market outlook

37

Fleet efficiency

People perfor- mance

Innovation

More out of engine

• Enable people to

Perform

• Capturing operational

excellence

• Simplifying customer
• fferings
• Shaping the future

38

• Enable people to

Perform

• Secure resources
• Capture potential in

Germany

• Shaping the future

Equipment Rental Modular Space

38

Specific financial targets for two business divisions to better drive growth & returns

Profitability

EBITA-% > 15 % of sales over a business cycle

Debt leverage

Gearing maximum 100 %

Sales

ROE > 12 % over a business cycle

Profit distribution

Stability, with appr. 40 % of EPS Sales growth faster than the market

STRATEGY 2013-2016 SHAPE & SHARE 2017-20

Individual ROCE targets for ER and MS GROUP ROE target NET DEBT / EBITDA Different sales targets for ER and MS Pay-out ratio

Two individual business models ROCE better target measure for capital intensive businesses Leverage strong balance sheet, net debt / EBITDA better measures the debt paying capacity

39

Organic sales growth > market

ROCE > 14.5%

Financial targets for Cramo Group 2017-2020

Equipment Rental Modular Space

Net Debt / EBITDA < 3x ROE > 15% Dividend payout ratio ~40%

GROUP

Double digit organic rental sales growth

ROCE > 12.5%

* Financial targets: on average during 2017- 2020 * ROCE = EBIT / capital employed (average)

40

14,0 % 12,7 % 12,4 % 11,1 % 12,5 % 2013 2014 2015 2016 2017-20 MS ROCE Target

• Avg. 2013-16

7,3 % 6,5 % 9,2 % 13,6 % 14,5 % 9,1 % 2013 2014 2015 2016 2017-20 ER ROCE Target

• Avg. 2013-16

ROCE targets to drive efficient capital allocation to capture return and growth potential

Equipment Rental Modular Space

41

8,3 % 8,3 % 10,9 % 14,9 % 15,0 % 12,0 % 2013 2014 2015 2016 2017-20 Comparable ROE Target 2017-20 Target 2013-16

Return on equity target increased to 15 %

• ROE target increased by

300 basis points from previous target

• Target increased based
• n higher targeted ROCE

by two business divisions ER / MS

42

Strong balance sheet enables to grow when returns available

• Debt capacity for growth and M&A when returns

are available

• Financial headroom > EUR 250m

NET DEBT / EBITDA

• Complementing services, capabilities, products

and know-how

• Entry to new attractive markets
• Integration and cultural assessment

Strategic fit

• Fulfilling financial targets i.e. return on capital

employed

• Shareholder value creative

Valuation and returns Capacity to grow

2,10 2,30 1,98 1,77 3,00 2013 2014 2015 2016 2017-20 Net debt / EBITDA Group Net debt / EBITDA Target 43

Debt maturity structure and available facilities

• Undrawn committed credit

facilities EUR 206.1m

• EUR 250m revolving credit

facility

• EUR 150m senior bond

maturing in February 2018

• EUR 375 unsecured syndicated

facilities maturing in January 2020 and 2021, consisting of EUR 125m term loan and EUR 250m revolving credit facility

• EUR 200m commercial paper

program

Current debt financing arrangements

Liquidity position

• 50

50 150 250 350 450 550 650 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021 12/2022 EUR million Bond 2022 Bond 2018 Syndicated Term Loan & RCF Commercial Papers Other Debt Undrawn Committed Facilities

44

Targeted higher returns will generate higher operative and free cash flow, however leaving room for growth investments when returns are available

Flexibility in cash flows

Investment cash flow largely subject to Cramo’s discretion

45 104 139 121 77 68 138 146 160 118 175 172

• 96
• 175
• 217
• 11
• 41
• 194
• 84
• 110
• 125
• 139
• 165

8

• 37
• 96

65 27

• 55

62 50

• 6

36 7

• 300
• 200
• 100

100 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR million Cash flow from operations Cash flow from investments Free cash flow 45

Summary: Group financial targets – Vision 2020

Align

Align operations within two individual business divisions to create operational excellence and realise group synergies

Optimise

Optimise capital allocation to generate higher returns and capture growth potential in chosen markets

Growth

Grow organically supported by acquisitions Perform to achieve higher returns that satisfies stakeholders while Shaping the whole industry with Sharing Economy

MS + ER

46

Conclusion

• Growth and performance

improvement targeted for 2017-2020

• Financial targets set separately for

two business divisions

• More focus on capital efficiency
• New reporting segments to reflect

strategy execution

47

Petri Moksén SVP, Modular Space

Modular Space

48

Overview of Modular Space Complete package Central Europe

#1

Nordic market leader

Full life-cycle

4

Solutions

Driving customer advantages

49

How it works

Analysis & design Assembly Maintenance & service Disassembly & removal

50

51

To whom

Schools Offices Accommodation Daycare

52

Services in addition to the rental offering During delivery

Customisation of the units Transport to project site Assembly of the units Other services

During rental period

Maintenance

During return

Disassembly of the units Transport off-site Reset of customisation of the units Other services

53

Number of modules returned & delivered

• Units delivered

– 2016: 5572 – 2015: 3530

• Units returned

– 2016: 3938 – 2015: 2428

54

55

Cramo Adapteo Temporary space needs

Schools Daycare Office space Accommodation

• Cramo rebranded its high

quality modular space

• perations as Cramo Adapteo

in early 2014

• Adapteo’s main customer

group is the public sector. Industrial companies and large projects also important Temporary need Site-specific Initial need often for 2-3 years, but contracts typically extended up to 5 years Competitive solutions especially for site-specific space need (e.g. schools)

The Cramo Modular space concept

Flexible solutions for wide array of temporary space needs

55

56

Cramo Modular Space Temporary space needs

Modular space provides stability and visibility

Flexible solutions for a wide array of temporary space needs

Schools & Daycare Offices Accommodation

Share of group 2016

• Steady cash flow with a

significant contribution to group profitability

• Key focus segment in

investments and an important growth area for the group

Highlights

• The fact that the main customer group is the public sector provides diversification

benefits

EBITA Sales EBITDA Capital employed

16% 21% 26% 32 %

56

Cramo Story and Adapteo Proofs of Promise

Always responsive A perfect delivery Uptime is key

57

• Sales growth + 18,6 %
• Strengthened position in Germany
• Product and solution development
• New innovative solutions

Highlights of 2016

58

Slush event, Helsinki, Finland 2016

59

Bauma 2016 in Munich, Germany

60

61

Organisational and operational model

• Best-in-Class, business excellence model built-

in to the organisation and to the way of working

• Fully operating cross-border model
• Target improvement

– Price management and price increases – Cost control – Efficiency in all operations – Securing maximised profit

• Decentralised organisation and operational

responsibility

• Organisational model supporting our expansion

in current countries as well as to new countries

62

Growth drivers – constant demand for new space

Increased flexibility Rapid changes in dynamics

Increasing urbanisation

Shorter lifecycles

Increased sustainability awareness

Faster speed of delivery

Improved and transparent cost capital efficiency

Matching quality

Business model, operational model drivers Market and customer growth drivers

63

Actions to pursue growth opportunities

ORGANIC + ACQUISITIVE GROWTH

• Utilising brand
• Leveraging the large and versatile fleet
• Technical expertise
• Differentiation opportunities
• Best-in-Class
• Proactive sales work
• Cost competitive, flexible and scalable
• Synergies from Cramo Group
• Energy efficient - new fleet
• Consolidation opportunities in selected

markets

64

Shaping the future Resources People

Germany

Strategy focus points

65

Conclusion

• Strong sales growth
• Capturing potential in Germany
• New strategy focus areas about people,

resources, Germany and shaping the future

66

Enable people to perform

Petra Schedin Stergel SVP Human Resources

67

“Always treat your employees exactly as you want them to treat your best customers.” – Stephen R. Covey

68

People Vision 2020 – a part of Shape & Share

• We recruit
• We develop
• We learn and share
• We are role models

69

70

We live in a changing world…

• Shift in global economic power
• Demographic and social change
• Resource scarcity
• Technological break-throughs

…with a changing talent market

Differentiate

Distinct

Relationships

Leaders Collaborate

71

Our People-work is clearly linked to the

• verall business strategy, vision and goals.

Align

Implementing common processes and tools Living the Cramo story

Optimise

Shaping the business structure and model Enhancing the performance culture Creating a digital concept

• Enhancing the pe

Growth

Building a new footprint in chosen markets Targeting organic growth Evaluating potential acquisitions target companies in new markets

72

Develop our People Business

Vision What

Business strategy

How

People strategy Marketing Sales Product - development Employer Branding Recruitment Employee Engagement Our People-work is clearly linked to the

• verall business

strategy, vision and goals.

73

What makes us great: professional experience

CUSTOMER JOURNEY EMPLOYEE JOURNEY Determines whether potential and existing customers will buy and recommend our products and services Determines whether potential and existing employees will choose us, feel the engagement and recommend us as an employer

74

Focus area: Enable people to perform

Develop

People to Perform

Roll-out

Cramo Care

Drive

Cramo Story

Root

Performance Culture

1 2 4 3

75

Next step: create a People strategy

• PURPOSE. Describe…
• … and explain expected behaviors and Cramos values
• … which activities we will prioritise in order to attract and retain the

right employees

• … what and how to communicate regarding our employee value

proposition

• CONTENT. Define and describe…
• … our common people processes.
• … our common people KPI’s.
• … managers responsibilities visavi their employees.
• … HR responsibilities.

76

Employee lifecycle: the people business

Define common processes within every area to make sure we follow

• ur strategy and deliver quality.

Employee lifecycle

Exit Attract Develop & Motivate Introduce Recruit Customer

77

Cramo Story

• Differentiate from

competitors

• Strengthen brand
• Passion to meet

expectations

• Contribute to customers’

success

78

Cramo Story – next step

Package all HR-tools and communicate great internal stories Your performance: How should I create a great day at work Consequence Create a clear People perspective How: My great day at work Link Strategy Cramo Story Values and Behaviors Employee lifecycle: Systems and tools

Happy people Happy customers

Define leadership Be a role model Own Cramo Story from the top See the individuals and build the team spirit One Cramo also on the inside

79

Sustainability

• Growth
• Risk

management

• Return on

capital

CUSTOMER CARE

• Customer

satisfaction

• Safe solutions
• Energy-efficient

solutions

• Anti-corruption

and high business ethics

EMPLOYEE CARE

• Diversity and equality
• Safety
• Recruitment and

competence development

• Dialogue,

empowerment and satisfaction

ENVIRONMENTAL CARE

• Energy efficiency
• Resource efficiency
• Waste management
• Low emissions

SOCIAL CARE

• Local engagement
• Compliance with laws,

regulations

• Waste management
• Low emissions

COMMITMENT AND PRINCIPLES Code of Conduct and Business Ethics Supplier Code of Conduct UN Global Compact ISO

Cramo Care – our strategic approach on sustainability

80

Conclusion

• We will enable people to perform
• We will root performance culture
• We will drive Cramo Story
• We will roll-out Cramo Care

81

Fleet optimisation and the digital journey

Martin Holmgren SVP Fleet Management

82

Introduction to Fleet Management

Mission: Optimise assets and drive digitalisation Objective: focus on ROCE

Fleet size: 230,000 New digital strategy

83

Key success factors

• Harmonised and digital fleet

processes

• Strict control of investment

releases

• Fleet efficiency focus and

common fleet KPI’s

• Professional purchasing
• rganisation
• Internet of Things innovations

84

Next level of fleet optimisation to meet new financial targets

Continuous development

Cramo Field

TMS

C- Buy

85

Digitalisation trends and drivers

Sustainability

IoT

Digital development for a sustainable business

New governance model

86

Harmonised processes and It-systems

• 2013

Performance management and digitalisation of processes

2014-2016

IoT and new business solutions

2017-2020

The future

• f IoT in

rental

2020-

Cramo’s digital development path

87

OEM systems

Cramo - Generic connection box and user interface

Data exchange standards

IoT value chain development and obstacles

Rental companies and multiple fleet owners have invested in generic systems disconnected to the OEM systems OEM ’s have invested in their own application software systems, mostly used by small fleet owners and themselves Associations develops towards standardisation (ERA, VDBUM, ISO, AEMP/AEM) OEM takes part in this development

Propriety system A major success factor is further standardisation of data collection and data communication to connect OEM’s data sources with rental companies application systems 88

We have track units on 10,000 machines

TODAY FUTURE NEEDS

• Identifying where the equipment is in

case of theft

• Engine hours are updated with

information of running hours to trigger preventive service orders and alert us that it is time for service.

• Invoice customers
• Included in equipment insurance model
• Access control, meaning if you

don’t have the right training, you can’t use the equipment.

• Reception of machine failure codes

so we can use them for our needs.

• Automated return control process

solutions

89

Value proposition

Machine health Run time data Customer Sell data Machine Control Positioning Remote error Firmware

90

Conclusion

• Well positioned to capture the potential

in digital

• Next level of fleet management will

support financial target

• Moved towards fully connected fleet
• We are shaping the way of doing

business

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Cramo Customer Centric Program

Jonas Pärssinen Director Business Development

92

New types of companies are taking over

93

Before Now

94

We are in the Age of the Customer

Age of Manufacturing Mass manufacturing makes industrial powerhouses successful

• Ford
• General Electric
• Boeing

Age of Distribution Global connections and transportation systems make distribution key

• Grocery Chains

(Wal-mart, Target)

• Toyota
• IKEA
• UPS

Age of Information Internet connects information, supply chains and value.

• Google Search
• Amazon
• Comcast

Age of the Customer Empowered buyers with full mobile access demand a new level of customer obsession.

• Uber
• AirBnB
• Sunfleet
• Google Now

1900 1960 1990 2010

Evolution of Value Creation

95

Rethink how we create value for our customers

96

97

Arenas of Development & Transformation

Digital Business Production

Cramo Customer Centric Initiatives

98

Digital

Home pages and social media presence Digital platform with tools and near endless possibilities to serve

• ur Customers

Business

Depot roles, market presence and Customer Service Customer Offerings, Pricing & smart Segmentation

Production

Efficient Supply Chain & Fleet optimisation

Enhanced network and structure

Cramo Customer Centric Initiatives

99

Conclusion

• We rethink what creates value
• Cramo will enter the age of the

customer

• We focus on clear initiatives:

Digital, Business, Production

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Elina Aalto eChannel Manager

DIGITAL CRAMO

101

Digital at Cramo

New website

2017: Breaking year

eCommerce tool:

Cramo eCRent New digital strategy

102

Digital vision & mission

Vision: Digital change leaders Shapers, not followers!

Mission: Easy accessible, always

• pen channels that adds

value

103

eCommerce solution Cramo eCRent supports the customer throughout the customer journey

Efficient portal for account and rental management Easy to find products Detailed product data Accurate availability information Easy to make transactions Easy access 104

Cramo eCRent eCommerce value proposition

A GREAT DAY AT WORK

Quick and easy to use Ordering and returning one click away Next day delivery with wished time slot All order information and history in one source Enhanced and accurate product information always available All jobsites in

• ne portal

Always open

105

Collecting customer data has never been easier

Improve Analytics

Customer behavior

Big Data

106

Prioritisation

Digital channel development is a journey that should never end

Digital channels 1.0

Analytics Testing Backlog Innovations

Optimised digital channels & engaged customers

107

Conclusion

• 2017 is a breaking year for Digital

Cramo

• We want to be digital change leaders
• We are shapers, not followers!
• New websites and Cramo eCRent

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New segment structure

17% 12% 4% 11%

FORTRENT

ER Scandinavia ER Finland and Eastern Europe Modular Space ER Central Europe

Net sales (mEUR) EBITA (margin-%)

379 65 (17%)

ROCE % Net sales (mEUR) Net sales (mEUR) Net sales (mEUR) EBITA (margin-%)

22 (16%)

ROCE % EBITA (margin-%)

4 (5%)

ROCE % EBITA (margin-%)

31 (26%)

ROCE %

139 79 118 17% 12% 4% 11%

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Highlights from 2016 Footprint

XX% YY%

Equipment Rental in Scandinavia

Scandinavia Eastern Europe Central Europe

Focus going forward

Net sales (mEUR) EBITA (margin-%)

379 65 (17%)

ROCE %

17%

• Increased revenue and EBITA at the same time
• Performance management
• Customer centric improvement
• Shape and Share attitude
• Right leadership - retain and attract talent
• Digitalisation

110

Focus going forward Footprint

XX% YY%

Equipment rental Finland and Eastern Europe

Scandinavia Eastern Europe Central Europe

Highlights from 2016

Net sales (mEUR) EBITA (margin-%)

22 (16%)

ROCE %

139 12%

• Strong sales growth and improved profitability in

Finland

• Successful implementation of Cramo Story
• Good results from Performance management
• Differentiation through customer experiences
• Leverage possibilities in digitalisation –

e-commerce and Internet of Things

• Drive performance management

FORTRENT

111

Footprint

XX% YY%

Equipment rental in Central Europe

Scandinavia Eastern Europe Central Europe

Highlights from 2016 Focus going forward

Net sales (mEUR) EBITA (margin-%)

4 (5%)

ROCE %

79 4%

• Long and tough journey last 4 years –

Turnaround done!

• Major change program regarding business

model, peoples mind set, processes and supporting systems

• Rolling out new order and delivery platform >

Simplify customers Life

• Excel in price management

112

FOR A GREAT DAY AT WORK

CRAMO

Capital Markets Day SUMMARY AND Q&A

Leif Gustafsson, President and CEO 16 February 2017

113

Cramo Strategy 2020: Shape and Share

3

Focus on further profitable growth

• Existing and new markets
• Organic growth + M&A
• Customer centric and innovation

Focus on further alignment and optimisation

• Leverage group synergies
• Unified processes and tools
• Further digitalisation

Focus on people performance

• Talent management
• Enhance performance culture
• Living the Cramo Story

2020

Align Optimisation Growth

114

Conclusion

• New strategy to shape the future
• New financial targets

115

Appendix

116

Equipment Rental Strategy

Enable People to Perform Shape the Future Capture Operational Excellence Simplify Customer Offerings

1 2 4 3

2.1 Differentiate Segment Offerings 2.2 Roll out new Order & Delivery Platform 2.3 Shape Cramo Brand 4.1 Cramo Innovation Lab 4.2 Beat Cramo 3.1 Develop Sales Performance 3.2 Excel in Price Management 3.3 Improve Fleet Efficiency 1.1 Develop People’s Core Competences 1.2 Root Performance Culture 1.3 Drive Cramo Story 1.4 Roll-out Cramo Care

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Modular Space Strategy

Enable People to Perform

1.1 Living Individual Performance Culture 1.2 Drive Cramo Story 1.3 Attract & Develop Strategic Competences

Secure Resources

2.1 Recruit and integrate people 2.2 Simplify Delivery Platform 2.3 Shape scalable production capacity

Shape the Future

4.1 Create digitalized concepts

4.2 Increase sustainability

in business 4.3 Commercialise new

Adapteo Business Units

Capture the Potential in Central Europe

3.1 Expand in line with

• ur current offering

3.2 Invest to a comprehensive network 3.3 Execute additional growth through M&As

1 2 4 3

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Videos shown during the Capital Markets Day can be found at:

https://www.youtube.com/playlist?list=PL9mLcx7rpIPfBcwNNMiowr92hz6WsC7HO

119