CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY 30 JUNE 2018

Transcription

1 CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY 30 JUNE 2018 CEO Esa Korkeela CFO Joni Sorsanen

2 Contents Highlights and Group performance Cash flow and financial position Market outlook, guidance and summary Appendix

3 Highlights of the second quarter of 2018 Highlights of 4-6/2018 (y-o-y comparison in brackets) Number of personnel at the end of June 2018: 1,153 (1,165) Net sales EUR 77.8 (78.8) million, change -1.3% EBITDA EUR 2.1 (3.2) million, EBITDA margin 2.7% (4.1%) EBIT EUR 1.7 (2.7) million, EBIT margin 2.1% (3.4%) Free cash flow EUR 2.2 (4.0) million Earnings per share EUR 0.16 (0.26) Tampere Turku Oulu Hämeenlinna Lahti Highlights of 1-6/2018 (y-o-y comparison in brackets) Net sales EUR (136.1) million, growth 2.9% EBITDA EUR 2.3 (4.0) million, EBITDA margin 1.7% (2.9%) EBIT EUR 1.5 (3.0) million, EBIT margin 1.0% (2.2%) Order backlog EUR (227.9) million, growth 25.6% compared to previous year and +26.8% compared to year-end 2017 Free cash flow EUR -5.6 (3.5) million Gearing 69.7% (55.0%) Net debt EUR 18.5 (15.5) million Earnings per share EUR 0.12 (0.26) Helsinki 2 25/07/2018

4 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 30,3 30,7 51,2 51,4 59,5 57,3 66,1 191,7 185,6 190,8 75,6 72,7 212,6 212,9 198,8 64,8 62,3 70,6 83,0 227,9 225,7 74,8 88,7 78,8 77,8 77,8 250,2 86,3 104,9 286,2 Quarterly performance overview Order intake and order backlog continued to grow year-on-year Quarterly net sales (EUR m) Quarterly order intake (EUR m) Quarterly order backlog (EUR m) 3 25/07/2018

5 Quarterly Net sales (EUR million) Quarterly net sales development Q2 net sales EUR 77.8m, decreasing 1.3% year-on-year Quarterly net sales development Q1/2016 Q2/2018 (EUR m) ,4 64,8 27,6 34,1 29,1 57,3 27,0 20,7 16,9 11,8 20,7 22,8 51,4 70,6 74,8 86,3 78,8 77,8 77,8 62,3 21,7 17,2 19,6 21, ,4 16,0 18,1 16,8 33,2 21, ,8 28,0 31,5 23,7 25,7 26,5 26,0 25,8 25,0 28,0-1,0-1,1-1,7-2,1-1,6-2,3-3,5-3,3-2,5-4,5-5 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Technical Building Services (TBS) Building Facades (BF) Renovation Contracting (RC) Eliminations Comments Q2/2018 net sales EUR 77.8m (78.8 m) Year-on-year change -1.3% Organic growth -4.4% Acquisition growth +3.1% Building Facades net sales grew by 20.5 percent mainly thanks to good order backlog in housing repair business Renovation Contracting net sales slightly above comparison period level with a change of +1.4 percent Technical Building Services net sales decreased by 14.6 percent due to the business areas reorganising which was started towards the end of 2017; as well as taking new operating models into use, and the more disciplined bidding activity applied to pipeline renovation services H1/2018 net sales EUR 140.0m (136.1 m) Year-on-year growth +2.9% Organic growth -0.7% Acquisition growth +3.6% 4 25/07/2018

6 Quarterly EBIT (EUR million, bar graph) Quarterly EBIT development Profitability improved compared to previous quarter Quarterly EBIT development Q1/2016 Q2/2018 (EUR m) 8 8% Comments Q2/18 EBIT amounted to EUR 1.7 (2.7) million, or 2.1% (3.4%) of net sales ,4 % 0,2 4,0 % 2,6 5,3 % 3,7 5,9 % 4,4 0,5 % 0,3 3,4 % 2,7-0,8-1,0 % -2,6-0,2-0,3 % 2,1 % 1,7 6% 4% 2% 0% -2% Quarterly EBIT margin (line graph) EBIT improved clearly compared to previous quarter Actions to improve profitability gradually starting to have a positive impact on result Profitability was still weakened by certain previously identified low-margin projects Operating result was also affected by carrying out final performance obligations in one Renovation Contracting project H1/2018 EBIT amounted to EUR 1.5 (3.0) million, or 1.0% (2.2%) of net sales -4-3,0 % Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 EBIT EBIT margin -4% 5 25/07/2018

7 Actions to improve profitability progressing ACTIONS INITIATED IN Q4/2017 AND IMPLEMENTED DURING H1/2018 Reorganization of Technical Building Services business area Implementation of main contracting processes in pipeline renovations Implementation of disciplined tendering in pipeline renovations Implementation of common operating models to improve project steering and monitoring Clarification of financial reporting responsibilities for projects Actions initiated in Q gradually starting to bear fruit even though profitability still affected by low-margin projects However, overall performance not yet on required level FURTHER ACTIONS IN H2/2018 Renewal of the management model in Service business - Clarification of responsibilities between line organization and Group functions - Target to drive net sales growth in Service business Recruitment of new HR Director - Target to enhance HR management throughout the Group in order to retain and attract renovation talents Continued implementation of harmonized project management processes Implementation of performance management principles on all organization levels Savings in discretionary costs 6 25/07/2018

8 Quarterly Order intake (EUR million) Quarterly order intake development Q2 order intake up by 6.9 % y-o-y Quarterly order intake development Q1/2016 Q2/2018 (EUR m) 104,9 16, , ,2 25,3 14,5 35 9,9 34, ,7 83,0 75,6 30,3 66,1 59,5 34,3 33,2 21,0 13,4 13,3 12,2 11,0 31,5 51,2 58,2 35,9 30,7 88,7 72,7 19,6 19,5 7,6 3,5 32,3 32,0 19,9 18,6 21,0 21,6 14,2 14,3 Comments Q2/2018 order intake EUR 88.7 million (83.0m), up by 6.9% y-o-y Order intake increased in Building Facades +62.3% y-o-y Order intake decreased in Technical Building Services (-33.0% y-o-y) and in Renovation Contracting (-7.4% y-o-y) H1/2018 order intake EUR million (142.5m), up by 13.3% y-o-y Order intake increased in Building Facades (+34.6% y-o-y) and in Renovation Contracting (+21.9% y-o-y) Order intake decreased in Technical Building Services (-16.2% y-o-y) -5-1,7-0,6-0,8-0,4-3,3-1,8-4,7-1,9-3,9-3,6 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Technical Building Services (TBS) Renovation Contracting (RC) Building Facades (BF) Eliminations 7 25/07/2018

9 Examples of new orders received in Q2/2018 TECHNICAL BUILDING SERVICES RENOVATION CONTRACTING BUILDING FACADES Q2/18 order intake: EUR 21.6m (-33.0% yoy) Q2/18 order intake: EUR 19.5m (-7.4 % yoy) Q2/18 order intake: EUR 51.2 m (+62.3% yoy) EXAMPLES OF NEW ORDERS: Vatialan koulu, Kangasala Installation of technical building systems through Design & Build contract As Oy Albertinkatu 16, Helsinki Pipeline renovation for a housing company As Oy Saaristonkatu 27, Oulu Pipeline renovation for a housing company EXAMPLES OF NEW ORDERS: Keilaranta 4, Espoo Comprehensive renovation including facades and office modification work through project management contract Svenska gården, Lahti Comprehensive renovation Koy Vantaan Antaksentie 4 Lidl, Vantaa Modification work EXAMPLES OF NEW ORDERS: Helsingin kaupungin asunnot, Pihlajisto, Liusketie 3, Helsinki Complete renovation of a rental apartment building Helsingin medialukio, Helsinki Renewal of facades and roof as well as ventilation modification work Kansallisarkisto, Helsinki Repair of facades and roof 8 25/07/2018

10 Quarterly Order backlog (EUR million) Quarterly order backlog development Strong order backlog growth continued, up by 25.6 % y-o-y Quarterly order backlog development Q1/2016 Q2/2018 (EUR m) Comments ,9 225,7 212,6 212,9 191,7 185,6 190,8 198,8 286,2 250,2 91,3 75,0 115,1 79,1 105,9 97,6 69,5 68,9 76,6 91,4 93,7 83,6 78,2 57,2 44,3 54,7 46,1 43,5 41,3 36,9 Q2/2018 order backlog at EUR million (227.9m) Year-on-year growth 25.6% Up by 26.8% from year-end 2017 Order backlog grew particularly in Renovation Contracting (+111.4% year-on-year) as a result of strong order intake during H1 as well as due to major new orders received during Q4/2017 Order backlog in Building Facades grew +8.7% y-oy due to strong order intake during Q ,5 76,3 70,6 70,7 74,0 77,7 70,5 72,5 75,2 77,5 In Technical Building Services, order backlog was close to comparison period s level with change of -0.3% y- o-y 0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Technical Building Services (TBS) Renovation Contracting (RC) Building Facades (BF) Eliminations 9 25/07/2018

11 Cash flow and financial position 10 25/07/2018

12 Free cash flow and EBITDA (EUR million) Quarterly free cash flow development Q2 free cash flow EUR 2.2m, clear improvement q-o-q Quarterly free cash flow and EBITDA Q1/2016 Q2/2018 (EUR m) Comments ,4 0,6 3,1 0,4 6,6 4,5 4,9 0,8 0,5-0,5 Average cash conversion 1) 83% 4,0 3,2 2,9 2,6-0,2-2,1 0,2 2,2 2,1 Q2/2018 free cash flow improved clearly from compared to previous quarter and amounted to EUR 2.2m (4.0m) Cash conversion in the second quarter was 107.0% (124.1%) Average cash conversion ratio of 83% in the period of Q1/2016 Q2/2018 Consti s long-term target to achieve cash conversion ratio in excess of 90 percent ,8-10 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 EBITDA Free cash flow 1) The cash conversion is the amount of free cash flow divided by EBITDA. Free cash flow means net cash flow from operating activities before financial items and taxes, less capital used for purchase of intangible assets and property, plant and equipment 11 25/07/2018

13 Net working capital at period-end (EUR million) Quarterly net working capital development Net working capital at EUR -8.0 million at the end of Q2/2018 Quarterly net working capital 1) Q1/2016 Q2/2018 (EUR m) Comments 0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Net working capital EUR -8.0m (-7.9m) at the end of Q2/ NWC tied up during H1/2018 amounted to EUR 8.0m ,4-7,9-7,0-7,9-7,8-8,0 Exceptionally low NWC level at year-end 2017 One specific project in Renovation Contracting tied up capital in the first half of ,0-11,2-11,3 However, NWC at end of Q2/2018 slightly better than in comparison period ,1-18 1) Net working capital calculated as follows: Inventories + Trade and other receivables + Deferred tax receivables Trade and other payables Advances received Provisions 12 25/07/2018

14 Quarterly balance sheet structure Balance sheet strengthened from the previous quarter Quarterly net debt, equity ratio and gearing Q1/2016 Q2/2018 Comments ,4 % 76,1 % 44,6 % 40,8 % 49,7 % 55,0 % 48,6 % 47,7 % 80,5 % 69,7 % 100% 90% 80% 70% 60% 50% 40% Balance sheet strengthened thanks to positive cash flow in the second quarter Q2/2018 net debt at EUR 18.5m (15.5m) Q2/2018 equity ratio at 29.3% (32.9%) Q2/2018 gearing at 69.7% (55.0%) Cash and cash equivalents at the end of Q2/2018 amounted to EUR 4.7m (5.8m) 33,4 % 31,5 % 32,5 % 34,5 % 37,2 % 32,9 % 31,9 % 28,6 % 30,9 % 29,3 % 30% ,0 17,8 11,7 12,1 15,0 15,5 13,4 12,1 20,3 18,5 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 20% 10% 0% Net debt (EURm, LHS) Equity ratio (%, RHS) Gearing (%, RHS) 13 25/07/2018

15 Market outlook, guidance and summary 14 25/07/2018

16 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 ESI and CCI for Finland (Jan Jun 2018) Lead indicators for the Finnish economy and construction continue to remain on a good level Economic Sentiment and Construction Confidence / Finland (2007 6/2018) Comments Long-term average Economic Sentiment Indicator Construction Confidence Indicator During the past few years Economic sentiment and Construction confidence in Finland have steadily remained above the long-term average Both lead indicators stayed at a good level in the first half of Note: Mean-adjusted figures Source: European Commission, June /07/2018

17 Stable growth in renovation to continue Finnish new building and renovation market development O EURb ,0 15,5 25,8 14,0 Renovation volume (real) 24,6 12,7 23,9 23,9 11,7 11,2 25,8 13,0 27,0 13,9 28,1 27,8 14,9 14,4 27,3 13,6 11,5 11,8 11,9 12,3 12,6 12,8 13,1 13,3 13,5 13,7 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018F 2019F 2020O Source: Euroconstruct, June 2018 CFCI = The Confederation of Finnish Construction Industries, March 2018 New building volume (real) CAGR : -0.8% CAGR : +1.6% Comments The peak of the economic cycle in construction sector currently ongoing Challenges in availability of building technology and renovation professionals However, recent statistics show that although the volume of building production is still growing, the number of issued building permits during the spring 2018 have declined compared to previous year. Total building market forecast for 2018: Euroconstruct +4.3% and CFCI +2.4% New building forecast for 2018: Euroconstruct +6.9% and CFCI +2.8% Renovation forecast for 2018: Euroconstruct +1.5% and CFCI +2.0% 16 25/07/2018

18 Demand-driven renovation market growth supported by a number of key structural growth drivers Ageing building stock Energy efficiency Million m Finnish building stock by construction year Buildings achieve age of 50 years (approx): ~2017 ~ ,4 ~ ,2 Urbanisation and concentration of renovation in growth centers ,4 19,4 7,1 6,5 11,3 12, ,7 51,2 15,8 19,2 35,9 32, ,8 35,4 53,3 53, ,7 21,9 61,0 24,2 35,8 36, ,5 13,8 22,6 6,7 4,2 2, Others 16 Modifications of the use of buildings Increased need for building technology and automation Source: Statistics Finland Construction year 17 25/07/2018

19 Guidance for financial year 2018 The Company estimates that its operating result for 2018 will grow compared to /07/2018

20 Summary 1. Profitability improved clearly compared to previous quarter 2. Although profitability improved, it was still affected by certain previously identified low-margin projects and a project in Renovation Contracting business area 3. Actions to improve profitability gradually starting to bear fruit. However, overall performance not yet on required level 4. Order intake and order backlog continued to increase year-on-year 5. Positive demand for renovation and technical building services as well as strong order backlog to support performance in FY2018 operating result to grow compared to /07/2018

21 Appendix 20 25/07/2018

22 21 25/07/2018

23 HALF-YEAR FINANCIAL REPORT 1-6/2018 CONSTI GROUP PLC H1 CONSTI GROUP PLC HOPEATIE 2 FI-00440, HELSINKI BUSINESS ID /07/2018