NKT Holding. Den Danske Finansanalytikerforening Virksomhedsdag 2012

Transcription

1 NKT Holding Den Danske Finansanalytikerforening Virksomhedsdag 2012

2 Agenda 2 Facts about NKT (5 min) SWOT Analysis (15 min) Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)

3 The history erne Diversification ,6 bn. DKK revenue + 30 companies employees - 75% in DK - 25% abroad + 70% of revenue in DK ,5 bn. DKK revenue 4 divisions employees - 18% in DK - 82% abroad 6% of revenue in DK Market cap 7,1 bn. DKK EPS 11 DKK App. 20 bn. DKK revenue 7-8% organic growth Operational EBITDA-margin 14-15% ROI 20% EPS 50 DKK

4 Group structure June NKT Cables North, Central and Eastern Europe, China, Australia NKT Holding Nilfisk-Advance Photonics Group NKT Flexibles 51% Global presence NKT Photonics Lios Technology Vytran Ownership: NKT Holding: 51% Subsea 7: 49% In February 2012 agreement was signed concerning sale of NKT Flexibles to National Oilwell Varco. Transaction closed in April

5 62 Manufacturing PMI USA EURO zone Expectation indicator Above the line indicates positive expectations for the manufacturing sector and below the line indicates declining expectations for the manufacturing sector Below the line indicates expectations of recession

6 Strategy Powered by NKT Revenue, market prices (bndkk) 14,5 ap. 20 Revenue, std. prices (bndkk) 11,5 ap. 16 Average organic growth (CAGR) 12% 7-8% Goal Goal 2015 Gearing (NIBD/Equity) 100% <100% Operational EBITDA margin, std. prices 8,6% 14-15% NIBD/Operational EBITDA 4,2x <2,5x Solvency ratio 33% >30% Return on Capital Employed (RoCE) 7,5% 20% Earnings per share, EPS (DKK) 11,3 50 Strategic goals based on current levels for commodity prices, interest rates and currencies, etc. Expected growth of 1-3% in developed markets and 5-10% in emerging markets Unchanged view on optimal capital structure Continued best owner philosophy Appreciation of powering capabilities Structure, i.e. current number of business units and their exact scope not set in stone for the full strategy period but expected to remain unchanged during first half of the period

7 Megatrends 7

8 NKT Cables 8 VISION NKT Cables is creating value for its customers by providing solutions with cables

9 Energy flow with NKT Cables product range 9 Submarine cables VALCAP Monitoring OPGW- /OPPC- Accessoires HV accessoires up to 500 kv 30 kv 500 kv OPGW /OPPC HV cables up to 500 kv 110 kv- 500 kv 500 kv Superconducting cables 10 kv 30 kv 1 kv MV cables 10 kv - 30 kv Accessoires 10 kv - 36 kv 1 kv-cables Cabinets and Boxes Installation cables

10 Product Scope for Sea Cables Cluster cables Complete scope of three core cables (Offshore)* Medium voltage wind farm connections Single core cables up to m (36 kv) (Offshore)* Three core cables up to m (36 kv) (Offshore)* High voltage wind farm connections Single core cables up to m (145 kv) (Offshore)* High voltage wind connections (Onshore) Three core cables (170 kv) Single core cables (420 kv) Accessories Appropriate accessories are available for all the cables mentioned (On and Offshore) Fibre Optic based monitoring with Real Time Thermal Rating system (RTTR) NKT own System for cables systems (On and Offshore) All cable types are available with integrated optical fibres (On and Offshore) From 2009 onwards longer cables lengths will be available

11 NKT Cables Sales by Customers Industry 30% Utilities 41% Wholesales 29% Sales by Markets Other 27% Asia 13% Railway 7% Denmark 9% Eastern Europe 26% Other 6% Germany 25% Sales by Fields of Applications (Products) Automotive 5% Construction 19% Electricity Infrastructure 63% 63% HV+offshore 33% MV 18% Other 12% Manufacturing and Sales Companies Sales Entities Sales by Customers and Fields of Applications are based on std. prices for FY Sales by Markets is based on market prices for FY 2011.

12 Nilfisk-Advance MISSION We enable sustainable cleaning worldwide to improve quality of life

13 Nilfisk-Advance Sales by Customers Domestic 12% Industrial 36% Commercial 52% Sales by Markets APAC 12% Americas 24% EMEA 64% Sales by Products Service 8% Other sales 7% Sales Entities Manufacturing Companies High pressure washers 19% Vacuum cleaners 25% Floor-care 41% All data based on FY 2011

14 Nilfisk-Advance - Industry trends Growth in emerging markets Sustainability Customer WC reduction Consolidation Continued cleaning outsourcing Emerging markets are gradually adapting cleaning standards of developed countries, driven in particular by entrance of supermarket chains (requiring modern cleaning standards) Requirements for reduction of power, water and detergents Increasing demands for suppliers being green throughout entire business system Customers focusing on cash and predictability and asking for innovative solutions Large customers are demanding that suppliers take over the responsibility for entire fleets of machines, including servicing and proposals for refurbishments/replacements Consolidation in the industry is expected to continue in order to gain scale advantages and broaden product range and geographical reach Contract cleaners taking increasing share of cleaning/facility management across all customer segments Increasing professionalisation of contract cleaners central purchasing

15 Photonics Group 15 15

16 Photonics Group Sales by entities Vytran 30% Lios Technology 22% NKT Photonics 48% HQ NKT Photonics HQ Lios Technology HQ Vytran All data based on FY 2011

17 Photonics Group Ultra Precise Lasers KOHERAS High Power Fiber Lasers Crystal Fibre Super Continuum (White Light) KOHERAS & Crystal Fibre Distributed Temperature Sensing LIOS Technology Security (Perimeter) Wind measurements Oil exploration and exploitation Large displays Cutting and welding Semiconductor and solar cell production Anti missile defence Marking Biotech/microscopy Measurement/test equipm. Semiconductor inspection Surface topography Fire detection Power cable monitoring Oil exploitation LNG terminals and tankers High temp. ovens Market growing from low base New functionality drives application market Potential market of 1 bn. DKK Global market size: ~ 1,1 bn. DKK 9% of total laser market 30-40% annual growth rate Substitution from conventional lasers Market growing from low base New functionality drives application market Potential to substitute conventional laser market of estimated 1 bn. DKK Global market size: ~ 0,5 bn. DKK Market for power cable monitoring and oil exploitation expects to show strong growth

18 Agenda Facts about NKT (5 min) SWOT Analysis (15 min) Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)

19 19 19 SWOT Analysis Healthy Balance Sheet Clear strategy supported by compelling mega trends Global mindset and footprint Further improvement potential Diversity in business portfolio yields balanced risk Good Corporate Governance and CSR in place Long term industrial approach minded at superior value creation Active ownership

20 20 20 SWOT Analysis Cable division underperforming - Deployed assets yet underutilised - Offshore segment immature - Exposure to large projects - Exposure to delays on customer side Photonics remains to develop into industrial division Nilfisk-Advance lacks service offerings in US due to indirect distribution model

21 21 21 SWOT Analysis EU energy policy Renewable energy Emerging markets Continued polarisation in professional cleaning equipment sector China infrastructure Continued urbanisation Consolidation in industries

22 22 22 SWOT Analysis Adverse macro economic development Euro collapse Political exposure in China Consolidation in industries

23 Agenda Facts about NKT (5 min) SWOT Analysis (15 min) Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)

24 Value creation in a 25 year perspective Value ,2 bn. DKK Value ,0 bn. DKK Dividend pay-out 6,3 bn. DKK Shareholder return: > 9% annual return = 9,4 times pay back of investment 1,2 11,3

25 Cash generation mdkk Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q Cash flow - operations LTM Free cash flow LTM Cash flow - investments LTM (excl. acquisitions) Operationelt EBITDA LTM

26 Ambitions Return on invested capital Working Capital management Tax management Capital structure Target: Increase 10% points Target: Reduce 2-3% points Target: 20-25% of EBT Target: NIBD/EBITDA < 2,5x Capex management Maintenance Capex: 250 mdkk Product dev. etc: 150 mdkk Cash Conversion (EBITDA to CFFO) : 70-80% (EBIT to FCF) : 70-80% FCF Yield of current Market Cap: 10 20% p.a.

27 Return on invested capital RoCE determines capital allocation - Capacity expansions - Acquisitions - Product development Leavers to increase return: - Customer Satisfaction - People & Performance - Risk Management - Growth combined with operational gearing - Product portfolio management (high value added) - Capacity utilisation (existing markets / new markets) - Price management ( Return on Customers ) - Cost competitive products (Mgt. footprint, sourcing) - Reduce complexity - Strict overhead cost control - Reduce Working Capital - Capex management / Positioning in the value chain

28 Return on invested capital Heavy pruning What do we do Analyse all cost related to specific product variants Work to correct prices or eliminate variants Modularity What do we do Define a vision of 100% modularity Include modularity principles in new product development Barnacles What do we do Define healthy business policies and processes around customer profitability Support implementation of these processes in small and medium-sized sales companies

29 Return on invested capital Delivery performance on par with or above industry average Service sustained at 95%/98% Global Operations Global Operations structure Reduce future inventory levels Next wave of improvements defined Rethink our structure and service levels

30 Return on invested capital China HV Market What do we do Acquired Chinese factory with HV capabilities Factory upgrade to our standards Qualification of HV products (220 kv and above) Energy policy in EU What do we do Build a new HV factory with subsea cable capabilities Establish a project organisation Step-up on mgt. capacity and risk management High Speed Rail in China What do we do Waiting for re-activation by Ministry of Railway Factories in ramp-up mode Technology development Expand offering to rail segment (MV cables, Signal cables) 25% of total Capital Employed / 40% of Tangible Fixed Assets are structurally well positioned, but yet underutilised

31 Return on invested capital 31 31

32 Working Capital management ,0 Inventory NET in Days, excluding POC element 350, WC in % of MP 30,0% Inventory in COGS Days 120,0 100,0 80,0 60,0 40,0 20, ,0 250,0 200,0 150,0 100,0 50,0 Inventory in m Working Capital in m LTM ,0% 20,0% 15,0% 10,0% 5,0% 0,0% 0,0 0,0 WC monthly in m LE I BU 12 WC in %of Net Sales LTM WC in %of Net Sales 3 mth Inventory in m Inventory days 3 months Inventory days 12 months of 3 months Trade account receivables in Days Trade accounts receivables Days ,0 200,0 150,0 100,0 50,0 Trade accounts receivables in m Trade Accounts Payables in Days Trade Accounts Payables in Days Trade accounts payables in m 0 0,0 0 0 BU 12 LE I Trade receivables in m Trade receivables days 3 months Trade receivables days 12 months of 3 months BU 12 LE I Trade Paybles in m Trade Payables days 3 months Trade payable days 12 months of 3 months

33 Working Capital management 33 33

34 Capex management Gross CAPEX in Q is 89 mdkk vs. Q1 2011: 99 mdkk mdkk CAPEX ex. Cologne and Cangzhou Cologne and Cangzhou % of revenue (LTM) 0,1 0,09 0,08 0,07 0,06 0,05 0,04 0,03 0,02 Other 2% Nilfisk- Advance 28% NKT Cables 70% Investments in intangible assets in Q are 36 mdkk vs. Q1 2011: 29 mdkk jan jan jan-09 jan jan-11 jan-12 0,01 0 NKT Cables Other 5% 17% Nilfisk- Advance 78%

35 Capital structure mdkk Net interest bearing debt, mdkk Q ,0x 4.821mDKK Net interest bearing debt relative to operational EBITDA Q ,3x mdkk 6,0x 5,0x 4,0x NIBD of mdkk as per 31 March 2012 vs mdkk as per 31 December 2011 End net interest bearing debt amounts to 4,3x operational EBITDA (end 2011: 4,3x). Max. NIBD of 2,5x operational EBITDA remains the internal target. Proforma (incl. the sale of NKT Flexibles) 2,4x Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Profo 3,0x 2,0x 1,0x 0,0x Gearing of 109% (Q1 2011: 121%). Max. ratio of 100% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 46% Solvency ratio of 30% (Q1 2011: 29%). Ratio >30% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 41%