Roadshow Oslo 5 September 2012

Transcription

1 Lemminkäinen Corporation Roadshow Oslo 5 September 212 CFO Robert Öhman IR Kati Sundström

2 Contents Lemminkäinen in brief and financial development Strategy and strategy update H1/212 result and financial position Market data

3 Lemminkäinen in brief and financial development

4 Lemminkäinen in brief FY 211 / 31 Dec 211 Net sales 2,274.1 million EBIT 53.5 million EBIT-% 2.4% Pre-tax profit 34.6 million Earnings per share 1.77 Dividend per share.5 Personnel on average 8,421 Return on investment 1.8% Equity ratio 3.8% Gearing 114.5% Interest bearing net debt 41.2 million Order book 1,4.4 million Market cap 368 million 4

5 New business sector structure and focuses of operations International Operations Building Construction Infrastructure Construction Technical Building Services Infrastructure construction in Scandinavia Residential development in Russia Increasing the share of development operations Improving the profitability in competitive contracting Underground construction in city centres Mine projects Boosting the efficiency of operations Shifting the focus to maintenance and upkeep services Net sales 81 M EBIT42 M (5.2%) Figures are from the year 211 Net sales 721 M EBIT9.4 M (1.3%) Net sales 596 M EBIT 31 M (5.2%) 5 Net sales 24 M EBIT 2.8 M (1.2%)

6 Lemminkäinen s market position Building construction Infrastructure construction Technical building services #3 in residential construction in Finland (1%) #1 in infrastructure construction in Finland (1-15%) #1-3 in non-residential construction in Finland (5%) #2 in paving in Nordic countries (2-25%) #2 in Technical building services in Finland (5-7%) One of the largest foreign actors in residential construction in St. Petersburg #1 in paving in Baltic countries (15%) 6

7 One third of business volume comes outside Finland Finland 66% Building Construction Infrastructure construction Technical Building Services Other Nordics 23% Baltics 4% Russia 5% 7

8 International operations generated majority of Group net sales and EBIT in 211 Net sales by segment EBIT by segment 1 % 3 % 25 % 34 % 36 % 5 % 31 % 11 % International operations Building construction International operations Building construction Infrastructure construction Technical Building Services Infrastructure construction Technical Building Services 8

9 Major events in past three years 2 28 Time of fast growth New management 1/ Company restructuring Subsidiaries mergers start 1 /21 Acquisitions in Norway and plot acquiries in Russia 4/21-6/211 Sale of roofing business 12/ Focus on profitability Strategy update 1/211 Domestic hybrid bond of EUR 7 million 3/ Cartel sentence 9/29 Global financial crisis 9/28 New strategy is launched 11/29 Share issue and redemption of minority shareholders 3/21 New credit lines 12/21 Domestic bond of EUR 6 million 9/21 Internal support services start 1/211 9 New business sector: International operations 1/212 Efficiency program of EUR 5 million 1/211 Sale of concrete business 6/212

10 Group net sales development: Back on track after the financial crisis Average annual growth rate: 13 % in % in EUR million

11 Group EBIT development: Gradually improving profitability EBIT, M EBIT-%

12 Profitability drivers by business segment International operations Building construction Infrastructure construction Technical Building Services - Maintain the strong position in infrastructure construction (especially in paving) in Nordics and Baltics - Increase the volume of residential development operations in St. Petersburg - Increase the share of development operations - Tightened profitability requirements in contracting - Maintain the #1 position in infrastructure construction - Expand the operations in special contracting - Increase the share of maintenance and upkeep services Exploit the synergies between business segments and business areas 12

13 Group solvency development Equity ratio, % Gearing, % H1/ H1/212 13

14 Strategy and strategy update on

15 Lemminkäinen s strategy Focus areas for strategic period Improvement of financial position Developing business areas One unified Lemminkäinen 15

16 Improvement of financial position: Long term financial targets and actuals Return on investment, % Equity ratio, % 2 15 >18% 4 3 =35% Net sales, y-o-y growth, % Dividend/EPS, % >1% 6 4 >4%

17 Developing business areas: Main acquisitions and divestments during the strategy period Acquisitons Asphalt Remix AS (NOR), 4/21: Cold milling of asphalt pavement Risa Rock AS (NOR), 6/21: Tunnel excavations Divestments 1/211: Roofing business Mesta Industri AS (NOR), 5/211: Paving Q3/212 (est.): Concrete business 17

18 One unified Lemminkäinen: Actions made during the strategy period Internal support services Clarified brand and business structure Centralized purchase operations One Lemminkäinen Synergies between segments Large number of subsidiaries have been merged in parent company Cost savings 18

19 Strategy update on 1/211 Profitability In Finland the focus is in improving profitability and competitiveness Growth Main growth comes from operations outside Finland Increasing the share of residential development in BC > 5% (211: ~3 %) 1, residential unit start-ups in St. Petersburg annually Increasing the share of services in TBS operations 5% (211: ~3 %) Infrastructure construction in Sweden, Norway and Denmark +EUR 1 million EUR 5 million efficiency programme and optimization of net working capital 19

20 Efficiency programme: Objective: Annual cost savings of EUR 5 million after 213 Boosting efficiency in procurements, EUR 3 million Shifting over to a centralised procurement model, harnessing economies of volume Internationalising the supplier base and reducing the number of suppliers Developing own operations, EUR 2 million Infrastructure Construction has adopted a regional model Building Construction and Technical Building Services have boosted their organisational and management structures Employee negotiations 211 The company estimates that it will achieve cost savings of about EUR 2 million in 212 2

21 Optimization of working capital: The objective is to free up EUR 1 million in net working capital by the end of 213 The working capital project that was launched as part of the efficiency programme has proceeded according to plans. The turnover times of sales receivables have been shortened and the payment terms of procurement agreements have been improved EUR million Net working capital *) on 3 June 212 (3 June 211) 476 M (565) 178 M (177) 396 M (35) M (456) 49 M (494) Inventories Financial assets Provisions and advance payments Accounts payable Net working capital *) Working capital items were calculated before Lemminkäinen Rakennustuotteet Oy was classified as held for sale. 21

22 Interim Report 1-6/212 Improvement in comparable earnings for the review period. Strong performance in infrastructure construction in Finland. 22

23 H1/212 highlights Improvement in comparable earnings for the review period. Infrastructure Construction racks up a good result in Finland. Profitability in Building Construction and Technical Building Services is improving. In Norway, result was weak: Paving contracts focused on northern Norway. Brisk contracting in Russian building construction. Order book is at an all-time high, and its margins are better than last year. The Group s solvency has improved (hybrid loan, working capital project). 23

24 Sale of the concrete business (After the review period: 3 July 212) Buyer: Rudus Oy (CRH Plc). Purchase price: 55 M. In 211, net sales of the concrete business amounted to 84 M and it had about 4 employees. Final approval for the transaction is expected to be granted in Q3/212. Lemminkäinen will recognise capital gain of about 2 M ; equity ratio will improve and gearing decline. 24

25 Operating environment Finland: Housing sales remained steady in H1. Construction of business premises has focused on the Helsinki Metropolitan Area. Good performance in Infrastructure Construction. Good demand for both contracting and maintenance and upkeep services in Technical Building Services. Other countries: High level of infrastructure construction activity in the other Nordic countries. The authorities processing times delayed the start up of new housing projects in Russia. Demand for new residences remains high. Infrastructure construction is recovering in the Baltic countries. 25

26 Key figures EUR million (IFRS) 1-6/ /211 Q2/212 Q2/ /211 Net sales ,269 EBIT ) ) ) EBIT-% Pre-tax profit ) ) 35. 2) Earnings from discontinued operations Net profit ,3) ) ,3) EPS, EUR ,3) ) ,3) Cash flow from operations Order book (at the end of period) 1, , ,4 Personnel (average) 7,95 7,989 8,421 1) Includes EUR 8.1 million in negative goodwill recognised from an acquisition. Impact on EPS: EUR.41 per share. 2) Includes EUR 11. million in negative goodwill recognised from an acquisition. Impact on EPS: EUR.56 per share. 3) Includes capital gain from the divestment of the roofing business EUR 15.3 million. Impact on EPS: EUR.64 per share. 26

27 Order book is at an all-time high, and its margins are better than last year Lemminkäinen s order book at the end of the review period was EUR 1,931 million (1,735) Finland: EUR 1,251 million (1,172) International Operations: EUR 68 million (563) Year-on-year changes: In Finland: Infrastructure Construction (+), Building Construction (+), Technical Building Services (+) International Operations: Scandinavian Infrastructure construction (-), Building construction in Russia and Sweden (+), Infrastructure construction in Russia and the Baltic countries (+) EUR million +14% +21% +11% 27

28 Net sales up in H1 volume of international operations grew by a third compared with 211 EUR million 28

29 Business operations grew most in strategically important market areas H1/212 Net sales by business segment H1/212 Net sales by country Technical Building Services 117M (18) +9% 12 % International Operations 343M (26) +32% Russia 49M (26) +88% Other countries 59M (45) +31% 6 % Finland 5 % 58M (613) -5% Infrastructure Construction 224M (216) +4% 23 % 29 % 36 % Building Construction 283M (322) -12% Sweden, Norway, Denmark 227M (181) +25% 25 % 64 % 29

30 Lemminkäinen s residential development and construction in Finland Residential start-ups, units sold and units completed 7 units 7 Under construction at end of period 15 units Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 3 started (contracting projects) started (development projects) sold completed Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 unsold units sold units completed for sale 3

31 Lemminkäinen s landbank Total amount of landbank is approximately EUR 12 million ( ) Sweden St. Petersburg 31

32 Working capital project and financial arrangements in Q1/212 strenghtened company s capital structure Balance sheet indicators 3 Jul, Jul, 211 change 31 Dec, 211 Balance sheet total, EUR million 1, , % 1,242.8 Net working capital, EUR million % Liquid funds, EUR million % 3.4 Interest-bearing net debt, EUR million % 41.2 Return on investment rolling 12 mths, % Equity ratio, % Gearing, %

33 Interest-bearing debt decreased by EUR 15 million As of 3 June 212: Bonds 6 M (6) Project loans 59 M (36) 16 % 15 % 2 % Commercial papers 77 M (177) Interest-bearing debt was EUR 382 million (521) - Short-term 26 M - Long-term 176 M. Financial lease liabilities 55 M (52) 14 % 15 % Pension loans 56 M (78) 2 % Loans from financial institutions 76 M (12) Financial expenses for all interest-bearing debt, on average: 3.42 %. 33

34 Maturity profile of long-term IB debt *) As of 3 June 212, the company had unused committed credit limits in the amount of EUR 14 million. Loans from financial institutions Finance lease liabilities Pension loans Bonds *) Debt with maturity of one year or more at the time the loan was drawn 34

35 Market outlook Finland Building construction volume is estimated to decline by 2 % this year. Cautiousness in starting up new residential projects. Total volume of infrastructure construction is estimated to decline by 4 % this year. Good market for specialised contracting. Municipal finances will tighten. Good availability of contracts for technical building services. More agreements for maintenance and upkeep services will be signed. 35

36 Market outlook Other countries Infrastructure construction is expected to grow in Sweden, Norway and Denmark: Driven by road and railway projects, growth in the energy supply sector, and mining. Competition is tightening. Good market for building construction in Russia. Need for new dwellings remains at high level. Infrastructure construction activity will increase gradually in the Baltic countries. 36

37 Profit guidance for 212: Lemminkäinen estimates, that its net sales in 212 will remain at the same level as in 211, and pre-tax profit will improve on 211. The estimate is based on good performance during the first half of the year, as well as a larger order book and order book margin than in

38 Major shareholders (3 August, 212) Ownership distribution Largest shareholders Non-profit organisations Companies 22 % 3 % Financial and insurance institutions Foreign owners and nomineeregistered 14 % 4 % 8 % Public bodies 49 % Finnish private investors 38 Number of shares % of all shares Pnt Group Oy 3,673, % Forstén Noora 1,966,73 1. % Estate of Heikki Pentti 1,96, % Pentti Olavi 1,79, % Varma 823, % Pentti-von Walzel Kristina 635, % Pentti-Kortman Eva 635, % Pentti Timo 635, % Ilmarinen 432, % Mandatum Life 283, % Maa- ja vesitekniikan tuki ry 25, 1.3 % Etera 27, % Nordea funds 256, % Alfred Berg funds 171,171.9 % Mariatorp Oy 1,.5 % 5 largest total 14,92, % Nominee registered total 2,648, % Other owners 2,81, % All shares total 19,65, %

39 Business segments Q2/ September 212 Roadshow Oslo

40 International Operations 1-6/212 Net sales grew by a third. Volume was increased by building construction in Russia and infrastructure construction in Norway and Sweden. Weak earnings in the Norwegian paving business; projects focused on northern Norway, where the work season starts later. The order book grew thanks to building construction in Russia and infrastructure construction in the Baltic countries and Russia. Many building construction contracts are ongoing in Russia (Technopolis, Nokian Tyres, Paroc, an apartment block for Fort Group). Lemminkäinen has won many paving contracts in the Scandinavian and Baltic countries and Russia. 4

41 International Operations Net sales EBIT 35 EUR million 3 EUR million % Q2/11 Q3/11 Q4/11 Q1/12 Q2/12-2 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12-2 Q2/11 includes negative godwill of EUR 8,1 million Q3/11includes negative godwill of EUR 3, million 41

42 Building Construction 1-6/212 Volume of competitive contracting declined during the review period. The company has tightened its profitability requirements in contracting. Construction of commercial premises was brisk in the Helsinki Metropolitan Area. Residential development projects are largely completed and recognised as income towards the end of the year. Order book grew thanks to a large-scale lifecycle project in Oulu. 42

43 Building Construction Net sales EBIT 25 EUR million 9. EUR million % Q2/11 Q3/11 Q4/11 Q1/12 Q2/ Q2/11 Q3/11 Q4/11 Q1/12 Q2/

44 Infrastructure Construction 1-6/212 Net sales remained on a par with the previous year. Strong earnings improvement. The new regional operating model boosted the profitability of the business sector. Brisk paving operations. The order book grew thanks to the mineral aggregates business and special contracting operations. Lemminkäinen was selected as an alliance partner for the VT12 tunnel in Tampere. The concrete business was sold to Rudus Oy for EUR 55 million. 44

45 Infrastructure Construction Net sales EBIT 25 EUR million 25 EUR million % Q2/11 Q3/11 Q4/11 Q1/12 Q2/ Q2/11 Q3/11 Q4/11 Q1/12 Q2/

46 Technical Building Services 1-6/212 Net sales grew slightly. Steady improvement in earnings. Many new maintenance and upkeep agreements were signed during the present year. In competitive contracting, margins have improved and the size of the contracts has grown. 46

47 Technical Building Services Net sales EBIT EUR million 2.5 EUR million % Q2/11 Q3/11 Q4/11 Q1/12 Q2/ Q2/11 Q3/11 Q4/11 Q1/12 Q2/ Roadshow Oslo 5 September

48 Market data

49 Restrained growth in construction in Finland during the next few years Y-o-y growth in construction and GDP in Finland, % GDP Non-residential construction Residential construction Infrastructure construction

50 Growth in total infrastructure construction in Euroconstruct countries Infrastructure construction output in Western, Southern and Eastern Europe Growth in total infrastructure construction Euroconstruct Countries (%) Source: Euroconstruct June 212 5

51 Growth in infrastructure construction in Nordic countries 2 Finland Sweden Norway Denmark

52 Development of mortgage market in Russia (St.Petersburg) supports demand for new housing Mortgage market in St Petersburg Volume of residential sales (mill m 2 ) in St Petersburg, Primary market 7, Contracts, pcs Contracts, billion RUB Million m , 5, 4, , , 1, In 211 the prices of new and old residential units rose by 8% Q1/8 Q2/8 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11 Q2/11 Q3/ e 12e 13e 52

53 The best way to build Roadshow Oslo 5 September