Financial synergies and new financial targets. Hans Biörck, CFO and Executive Vice President

Transcription

1 Financial synergies and new financial targets Hans Biörck, CFO and Executive Vice President 1

2 GDP Growth, Skanska footprint % 8 6 constant prices current prices years CAGR 4.8% 7 years CAGR 2.2% 5 years CAGR 4.9% 5 years CAGR 2.6% Sources: Bloomberg, Citi Handlowy, EIU, HSBC, Norges Bank, Santander, SFS Research & Analysis & national statistical agencies 2

3 % Construction investment growth, by home market* current prices Sweden Sweden Norway Norway Finland Finland Poland Poland Czech Republic Czech Republic UK UK US US Sources: Euroconstruct, FMI, Prognoscentret, SFS Research & Analysis & national statistical agencies * excluding Latin America 3

4 % Construction investment growth* Skanska footprint constant prices current prices years CAGR 5.0% 7 years CAGR 1.2% 5 years CAGR 5.0% 5 years CAGR 2.4% Sources: Bloomberg, Citi Handlowy, EIU, Euroconstruct, FMI, HSBC, Norges Bank, Santander, Prognoscentret, SFS Research & Analysis & national statistical agencies * excluding Latin America 4

5 % Construction investment* and GDP growth, Skanska footprint Construction construction investments, current prices GDP, GDPcurrent prices years CAGR 5.0% 5 years CAGR 5.0% -5 7 years CAGR 4.8% 5 years CAGR 4.9% Sources: Bloomberg, Citi Handlowy, EIU, Euroconstruct, FMI, HSBC, Norges Bank, Santander, Prognoscentret, SFS Research & Analysis & national statistical agencies * excluding Latin America 5

6 % Skanska Construction revenue growth vs. market growth*, Skanska footprint construction Construction investments Skanska construction revenue Skanska construction revenues years CAGR 5.0% 7 years CAGR 1.5%** Sources: Euroconstruct, FMI, Prognoscentret, SFS Research & Analysis & national statistical agencies * excluding Latin America ** adjusted for currency effects, disposals & acquisitions 6

7 Residential market Number of starts Units, countries 50,000 45,000 40,000 35,000 30,000 25,000 Units, total market 160, , , ,000 80,000 20,000 15,000 10,000 5,000 0 Sweden Norway Finland Czech Republic Total market size (RH-axis) 60,000 40,000 20, Sources: Prognoscentret, REAS, National Statistical Agencies, SFS Research & Analysis 7

8 Units Skanska RD, number of starts by country and total market share* 5, % 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, % 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% All markets Czech Republic Finland Norway Sweden Market share (RH-axis) Sources: CZSO, Euroconstruct, Prognoscentret, REAS, SFS Research & Analysis * excluding Poland & UK 8

9 Construction Business plan: Construction revenue growth by growing faster than the market within selected areas of operational strength 9

10 Construction Average R-12 Q % SEK bn % SEK bn External revenue Revenue generated by the development streams Residential development Commercial development Infrastructure development Total Business plan: Market growth + Acquisitions + Market share growth in selected areas Revenue growth from increased development investments Operating income from development streams SEK 350 M Approx. SEK 500 M Increase 10

11 Construction Operating margin % R12 Q

12 Margin phasing in a large construction project (example) Assumption: Bid gross margin 9%, S&A 5%, expected operating margin 4% 4 year project Margin, % 12% 10% 9.0% 10.5% 8% 7.5% 6% 4% 2.5% 4.0% 5.5% 2% 0% Year

13 Construction Operating margin % Business plan: The operating margin target is percent, based on being in line with bestin-class among Skanska's competitors in relevant market sectors and geographic areas over a business cycle R12 Q

14 Construction Working capital SEK bn % Business plan -25 Q1 05 Q2 05 Q3 05 Q4 05 Q1 Q Q3 06 Q4 06 Q1 07 Q2 Q Q4 07 Q1 08 Q2 08 Q3 08 Q4 Q Q2 09 Q3 09 Q4 09 Q1 10 Q2 Q Working capital Closing Q1-3 Working capital Closing Q4 Ratio on R5Q average Working capital Ratio on closing Working capital 14

15 Investments in development streams Investments p.a. Average Q3 YTD 2010 grossed up Residential development Commercial development Infrastructure development Total development Business plan: Significant increase in investment in the development stream, while maintaining a high rate of turnover in the portfolio Net investments p.a. Residential development Commercial development Infrastructure development Total development

16 ROCE in development streams Average Capital employed Annual ROCE, % Add ROCE from Construction revenue, % Group ROCE, % Residential development 6.5 6% 1.5% 7.5% Commercial development % 0.5% 13.5% Infrastructure development % 10% 50% Higher Same Lower Total development % 2% 15% Business plan: Target ROCE 10 15% per annum for the three development streams 16

17 Summary Financial synergies (I/II) Annual average return Return on Commercial paper 1.4% Return on Swedish OMX % Return on CE in development streams (SEK 17.3 bn) 13.0% Excess return vs. Commercial paper Excess return vs. Swedish OMX 30 SEK 2,000 M p.a. SEK 100 M p.a. 17

18 Summary Financial synergies (II/II) SEK M Excess return on CE in development streams 100 2,000 Additional operating income in Construction 350 Grand total p.a ,350 of which unrealized development gain

19 Investment capacity Construction stream Working capital Revenue growth WC ratio Profit for the period Unutilized gearing capacity Dividend Investment capacity Development streams Acquisitions 19

20 Unutilized gearing capacity Business plan Target to have a net cash position that shall never be below zero 1) excluding net pension liabilities and construction credits in residential development co-ops Q3 2010: SEK bn Net cash 4.4 Net pension liabilities 2.6 Construction credits ) Rolling 12 months 20

21 Return on equity Average ROE approx. 20% p.a. Business plan target ROE 18 20% p.a. 21

22 Dividend pay-out rate Average pay-out ratio : Regular dividend 57% Extra dividend 17% 74% Business plan dividend pay-out target 40 70% 22