Introduction to Schouw & Co. Nordea Markets, Aalborg 20 NOVEMBER 2015 VP BUSINESS DEVELOPMENT, STRATEGY & IR KASPER OKKELS
Agenda Nordea Markets Aalborg 20.11.2015 2 Schouw & Co. How we think and manage the conglomerate Our businesses Strategic opportunities/ challenges and 2015 Q3 update Questions and discussions
Schouw & Co. at a glance Nordea Markets Aalborg 20.11.2015 3 140 years of history 125 years in packaging 25 years as a conglomerate 5 big businesses today Since 1954 listed on the Danish stock exchange 2014 revenue DKK 11.8bn EBIT 708m Generates about 15% return on invested capital 4.500 employees in more than 20 countries BIOMAR World s third largest manufacturer of quality feed for industrialised fish farming FIBERTEX PERSONAL CARE World s fifth largest manufacturer of spunbond for hygiene FIBERTEX NONWOVENS A leading European producer of nonwovens for various industrial applications HYDRA-GRENE Nordic leading in hydraulic components and solutions 8.5bn 1.8bn 1.2bn 0.5bn Financially strong debt free Long-term main shareholder (industrial foundation) KRAMP (20%) Europe s by far biggest supplier of parts and accessories for the agricultural sector 4.9bn 2014 revenue in DKK
Nordea Markets Aalborg 20.11.2015 4 We build a portfolio of leading Danish industrial businesses and develop them through valuecreating, active and long-term ownership No divestments of core businesses Even bigger and stronger businesses Further develop the portfolio Open to value-creating ownership structures
Strategic development Nordea Markets Aalborg 20.11.2015 5 Diversification Bigger and stronger portfolio Bigger and stronger businesses Consolidating the conglomerate Revenue DKK billion 11.6 11.7 12.3 7.4 2.2 0.3 1988 2001 2006 2013 2014 2015
Nordea Markets Aalborg 20.11.2015 6 The Schouw agenda Develop big and strong businesses Leading companies do perform better Expand in growth markets A global outlook is key Ongoing capex Balancing profit and growth Maintain focus on innovation Secure #1 positions Think long-term Ensuring high return on capital Attract talent Results are created by people
Nordea Markets Aalborg 20.11.2015 7 2005 Acquisition of BioMar 2007 Acquisition of Provimi 2011 Expansion in Myre 2012 JV in Costa Rica 2014 JV in Turkey 2015 JV in China 10 years of strong growth and profitable development 2002 Acquisition of Fibertex 2003 Green-field in Malaysia 2004 Acquisition in the Czech 2011 Acquisition in France EUR +300m investments in cap. 2011 FPC and FIN demerger 14 years of transformation and expansion 1988 Acquisition of Grene ~1990 Internationalisation ~1995 A strong focus on industry 2009 Grene/Hydra demerger 2010 Hydra in China and India 2013 Grene/Kramp combination 27 years of active and developing ownership
Ownership Nordea Markets Aalborg 20.11.2015 8 Two long-term shareholders Increase in share price and trading volume 450 12.000 Danish (29%) and foreign (15%) institutional and retail investors 45% Givesco+EE 32% Danish active family-owned business fund with activities within bakery, industrial equipment, food/chocolate and hardware. 400 350 10.000 Treasury shares 7.5% Hornsylds Legat 15% Sole purpose is owning shares in Schouw & Co. Administrated by the Board of Directors in Schouw & Co. 300 250 200 2013 +49% 2014 +30% 8.000 6.000 Strong historical yield 150 2012 +61% 4.000 24 180 0 115 81 101 0 154 76 75 75 84 77 77 102 128 153 204 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividends paid (DKK million) Share buy-back (DKK million) 100 50 0 Jan Mar Jun Aug Nov Jan Apr Jul Sep Dec Feb May Aug Nov Jan Apr Jul Sep 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 Trading/day (3M average) Share price 2.000 0
Nordea Markets Aalborg 20.11.2015 9 Total shareholder return yearly IRR, dividends reinvested, local currency, end date 18.11.2015 13:30 Since 1990 (25.9 years) 15.0% SCHO Since 2000 (15.9 years) 17.2% SCHO 13.2% 10.2% 8.4% B.H. GE APMM 7.7% 3.3% -0.7% B.H. APMM GE Since 2010 (5.9 years) 30.8% SCHO Since 2015 (0.9 years) 46.8% 46.6% GE SCHO 22.3% GE 18.6% 9.7% B.H. APMM 0.8% -8.5% B.H. APMM
Strategic goals Nordea Markets Aalborg 20.11.2015 10 Growth Profit Return Leverage Payout Portfolio Substantial growth every year Benchmark level profitability ROIC > 15%, but dependent on level of risk Comfort zone for NIBD is 1-2 times EBITDA Constant/increasing dividends and share buybacks A handful of big and strong businesses
Third quarter of 2015
Nordea Markets Aalborg 20.11.2015 12 2015 Q3 at a glance: Continued progress revenue 3.6bn Same level as 2014 Q3 Impact from FX and raw material prices return on invested capital 17.0% ROIC incl. goodwill 14.0% Only Fibertex Nonwovens below 15% NIBD/EBITDA -0.2x Debt lowered more than DKK 350m Very strong and solid financial position EBIT 269m Same level as 2014 Q3 Positive effect from FX and raw materials cash flow from operations 396m 2014Q3: 43m Significant decrease in NWC in BioMar profit from associates and JVs 29m 2014Q3: 23m Solid development in both Kramp and Xergi
Key figures Nordea Markets Aalborg 20.11.2015 13 Q3 YTD 2015 2014 D 2015 2014 D LTM 2014 Revenue 3,599 3,618-1% 9,487 8,682 9% 12,589 11,784 EBITDA 363 360 1% 856 775 10% 1,151 1,070 EBITDA% 10.1% 9.9% 1% 9.0% 8.9% 1% 9.1% 9.1% EBIT 269 270 0% 572 509 12% 770 708 EBIT% 7.5% 7.5% 0% 6.0% 5.9% 3% 6.1% 6.0% Profit before tax 240 286-16% 589 501 18% 790 701 Cash Flow from operations 396 43 ## 620 286 117% 962 628 Equity 6,410 6,048 6% 6,074 - in % of total assets 61.6% 59.1% 4% 61.5% Inv. Capital (ex goodwill) 4,578 4,487 2% 4,528 - ROIC 17.0% 18.7% -9% 16.9% Net Working Capital 1,872 1.889-1% 1,775 - in % of LTM revenue 14.9% 16.2% -8% 15.1% NIBD -217 142 n.a. 44 - x LTM EBIDTA -0.2x 0.1x n.a. 0.0x
Our businesses Strategic highlights and 2015 Q3 update
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040 2044 2048 Nordea Markets Aalborg 20.11.2015 15 BioMar grows by mega-trend driven demand GLOBAL POPULATION GROWTH 10 8 6 4 2 0 Population, billion GROWTH IN AQUACULTURE 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 wild catch aquaculture Source: FAO, 2013, farmed and wild salmonids Asia Africa AQUACULTURE BENEFITS Salmon is healthy Effective growth Stable supply High content of vitamins and healthy fatty acids (Omega 3) Low feed conversion ratio 1 kg feed gives almost 1 kg fish Fish adapt to temperature High yield (few bones and fins) Multiple slaughtering periods and good forecasting systems FOCUSED FISH FEED PRODUCER BioMar EWOS Skretting Marine Harvest Austevoll/Lerøy Multiple farmers The only sustainable way to increase the supply of fish is by fish farming It is not possible to increase the wild catch without environmental consequences Aquaculture is the blue revolution
BioMar geography Nordea Markets Aalborg 20.11.2015 16 NORTH SEA AMERICAS CONTINENTAL EUROPE ASIA Atlantic salmon, trout Market size ~2.0m t Market growth* 5-6% Market share 20-25% Atlantic salmon, coho, trout, tilapia Market size ~1.4m t Market growth* 5-6% Market share 25-30% Sea bass, sea bream, portion trout, eel, a.o. Market size ~0.7m t Market growth 0-1% Market share 25-30% Shrimp, tilapia, catfish, pangasius, etc. Market size +10m t Market growth 4-5% Market share - 2014 revenue DKK 4.1bn 2014 revenue DKK 2.6bn 2014 revenue DKK 1.8bn 2014 revenue N/A *Long-term market growth over the salmon cycle ; flat/negative volume development in 2015 Karmøy, Norway Grangemouth, UK Pargua, Chile Guanacaste, Costa Rica Volos, Greece Nersac, France BioMar has in 2015 established a Joint Venture with Chinese Tongwei. First step is to build a 100.000 ton factory in China. Myre, Norway Castro, Chile Pargua, Chile Brande, Denmark Dueñas, Spain
BioMar 2015 Q3 FINANCIAL HIGHLIGHTS Flat revenue but decrease in volume Total volume down 7% - only in salmon markets Effect from sea lice in Norway Lower volume in Chile due to financial distress in the farming sector Positive development in Greece EBIT below 2014 level Effect from lower volume Competition is tough as expected Increased focus on value added products and margin management Strong cash flow generation due to lower NWC Development in Chile is challenging Very low salmon prices Focus on receivables and debtor risk BioMar s 13.6% stake in Salmones Austral written down DKK 43m Business development and outlook JV with Tongwei in China signed and building of new factory initiated Revenue guidance lowered to DKK 8.75bn and EBIT narrowed/increased to 390-420m Higher than normal uncertainty a.o. due to Chile 2015 Q3 UPDATE Nordea Markets Aalborg 20.11.2015 17 Q3 last-twelve-months 2015 2014 D 2015 2014 D Revenue 2,698 2,788-3.2% 9,071 8,559 6.0% EBITDA 215 223-3.4% 585 595-1.7% - margin 8.0% 8.0% 0.0pp 6.4% 7.0% -0.5pp EBIT 179 187-4.1% 441 454-2.7% - margin 6.6% 6.7% -0.1pp 4.9% 5.3% -0.4pp Profit before tax 123 180-31.7% 360 429-16.0% CF operations 294-80 n.a. 455 346 31.6% Equity 1,991 1,922 3.6% - in % of assets 40.1% 39.3% 0.7pp Inv. Capital (ex gw) 2,041 2,133-4.3% - ROIC 21.8% 24.6% -2.8pp Working Capital 1,116 1,128-1.1% - in % of revenue 12.3% 13.2% -0.9pp NIBD 421 680-38.0% - x LTM EBIDTA 0.7x 1.1x -36.9%
Fibertex Personal Care Spunbond for hygiene Rolls of fabrics used in baby diapers, femcare and adult incontinence Global #5 with ~15% market share Stabile European market Almost 100% penetration Growth from product innovation Differentiation important Innowo Print (leading in direct nonwoven print) 100% owned Internationalisation of print technology Investment in softer and lighter products Ears Nordea Markets Aalborg 20.11.2015 18 Core wrap Top sheet Significant growth in Asia Middle class is growing Increased penetration/use of hygiene products Asian market is volatile and market dynamics not as established Europe Leg cuff Leakage barrier Back sheet Print
Fibertex Personal Care 2015 Q3 Nordea Markets Aalborg 20.11.2015 19 FINANCIAL HIGHLIGHTS Revenue flat Small volume decline YTD but increase in Q3 Volume YTD Malaysia down but Q3 above 2014 Effect from FX Innowo Print consolidated EBIT up by 20% to DKK 57m Significant effect from USD/MYR development Positive effect from raw material escalation clauses Good product mix, low waste, high efficiency ROIC increased to 16.8% Strong plan for long-term profitable growth Focus on product development and innovation Investing in print facilities in Malaysia EBIT guidance raised by DKK 50m One-off effect from raw material and FX Solid order pipeline in Q4 2015 FY revenue DKK 1.8bn and EBIT 220-230m 2015 Q3 UPDATE Q3 last-twelve-months 2015 2014 D 2015 2014 D Revenue 465 455 2.1% 1,782 1,677 6.3% EBITDA 91 81 12.9% 351 288 21.8% - margin 19.7% 17.8% 1.9pp 19.7% 17.2% 2.5pp EBIT 57 48 20.3% 206 160 28.8% - margin 12.3% 10.5% 1.9pp 11.6% 9.5% 2.0pp Profit before tax 59 45 30.4% 212 149 42.9% CF operations 22 96-76.7% 272 190 42.8% Equity 691 697-0.8% - in % of assets 41.3% 38.8% 2.5pp Inv. Capital (ex gw) 1,149 1,201-4.3% - ROIC 16.8% 13.5% 3.3pp Working Capital 264 261 1.3% - in % of revenue 14.8% 15.6% -0.7pp NIBD 512 575-11.0% - x LTM EBIDTA 1.5x 2.0x -26.9%
Fibertex Nonwovens Nordea Markets Aalborg 20.11.2015 20 Hood insulation Trunk carpets Parcel trays Wheel housing Building Composites Geotextiles Concrete Bedding Flooring Leading in Europe in industrial nonwovens Many product applications Needle punching and spunlacing technology State-of-the-art technology Customer groups Auto; part of the construction and as a cheap fabric Construction; e.g. for infrastructure and composites Industry; e.g. furniture, bedding and other cyclical businesses Executing turnaround and growth plans Technological and market driven profitable growth Not yet at profitability target Growth and consolidation remains high on the agenda Revenue LTM EBIT LTM 2011 2004 2015 2014 Furniture Acoustics 2015 majority
Fibertex Nonwovens 2015 Q3 Nordea Markets Aalborg 20.11.2015 21 FINANCIAL HIGHLIGHTS Revenue up by 19% Effect from acquisitions in USA and consolidation of South Africa Solid growth in auto and high-value segments Soft demand for geotextiles EBIT below 2014 Continued positive development in Europe 2015 is a transition year with line upgrades and capacity constraints One-off profits of about DKK 3m in 2014 South Africa very soft, mining significant setback Focus on profitable growth New production line in the Czech gives 4,000t capacity Acquisition of Turkish Ribatek Full spunlacing capacity utilization but still demand Interesting market potential in Middle East and Asia Outlook maintained Revenue DKK 1.2bn and EBIT 75-85m South Africa has negative EBIT No effect in 2015 from acquisition in Turkey 2015 Q3 UPDATE Q3 last-twelve-months 2015 2014 D 2015 2014 D Revenue 295 247 19.3% 1,191 1,004 18.6% EBITDA 35 36-3.8% 152 124 22.6% - margin 11.8% 14.6% -2.8pp 12.7% 12.3% 0.4pp EBIT 15 20-24.2% 76 60 26.5% - margin 5.2% 8.2% -3.0pp 6.4% 6.0% 0.4pp Profit before tax 11 19-42.4% 61 48 27.5% CF operations 51 19 176.2% 115 81 40.7% Equity 454 340 33.4% - in % of assets 32.4% 34.1% -1.7pp Inv. Capital (ex gw) 1,013 731 38.6% - ROIC 8.3% 8.5% -0.2pp Working Capital 317 294 7.5% - in % of revenue 26.6% 29.3% -2.7pp NIBD 581 397 46.1% - x LTM EBIDTA 3.8x 3.2x 19.2%
Hydra-Grene Nordea Markets Aalborg 20.11.2015 22 Hydraulic components and solutions Wind turbine manufacturers largest customer group OEM and aftermarket in Denmark Offshore oil and gas small but growing Increase in sales to wind turbine industry Sub-supplier margins are under pressure Lower visibility in wind turbine industry Hydra-Grene supplies many wind customers Strategic outlook Wish to reduce high exposure to wind turbine industry Ambition of DKK 1bn revenue requires M&A
Hydra-Grene 2015 Q3 FINANCIAL HIGHLIGHTS Q3 revenue at 2014 level, LTM 7% growth Wind turbine segment growing, almost 45% of revenue Danish OEM and industry stable EBIT up by 12% in Q3, LTM up by 17% High efficiency from scale to wind turbine industry Competition remains intense Developing offshore as new segment Investing in market access despite negative sentiment in offshore oil/gas Investment in resources and systems required Guidance raised significantly Revenue DKK 575m and EBIT 65-75m (prev. 50-60m) Effect from strong sales to wind 2015 Q3 UPDATE Nordea Markets Aalborg 20.11.2015 23 Q3 last-twelve-months 2015 2014 D 2015 2014 D Revenue 148 147 0.5% 585 545 7.3% EBITDA 24 23 4.7% 81 78 3.7% - margin 16.0% 15.3% 0.6pp 13.8% 14.3% -0.5pp EBIT 20 18 11.9% 66 56 17.2% - margin 13.7% 12.3% 1.4pp 11.3% 10.3% 1.0pp Profit before tax 19 20-4.1% 66 56 17.6% CF operations 28 9 197.7% 107 40 169.5% Equity 191 180 6.2% - in % of assets 48.7% 42.1% 6.6pp Inv. Capital (ex gw) 283 322-12.3% - ROIC 25.2% 22.4% 2.8pp Working Capital 184 211-12.8% - in % of revenue 31.4% 38.6% -7.2pp NIBD 76 138-45.4% - x LTM EBIDTA 0.9x 1.8x -47.3%
Hydra-Grene acquires Specma Nordea Markets Aalborg 20.11.2015 24 Specma at a glance A leading Nordic hydraulics and fluid conveyance application provider with strong geographical presence Two business areas Global and Nordic Global Division, about ¾ of sales, serves primarily large OEMs on the global market Nordic Division, about ¼ of sales, targets smaller OEMs and aftermarket customers in the Nordic region A very good match Combining Hydra-Grene and Specma fulfills the year-long strategy of Nordic consolidation in both businesses Synergies primarily within procurement/ sourcing and cross sales opportunities Hydra sites Deal multiples (2015 FY outlook) 0.6x sales (expected minimum SEK 1,350m) 8.2x EBITDA (expected about SEK 100m) 10.2x EBIT (expected about SEK 80m) Specma sites
Nordea Markets Aalborg 20.11.2015 25 Strong strategic rationale in acquiring Specma Nordic Global Strategic rationale Specma Hydra Sweden Finland Denmark Total Material Vehicles handling Engineering Agriculture Other Wind Total Unique match between products and competences Highly complementing customer segments Broad geographical presence Reduction of Hydra s exposure to the wind turbine industry Strong platform for future growth Economies of scale and synergies Limited risks National customers Small series Significant aftermarket Global customers Large series and customization Limited aftermarket
Kramp Nordea Markets Aalborg 20.11.2015 26 Leading European supplier of spare parts and accessories for the agricultural sector #1 in BeNeLux, Germany, Poland and Nordic countries 9 central warehouses covering 22 European countries 20% ownership in Kramp from Grene merger in 2013 Strategic agenda Continue integration and harvesting synergies Expanding product ranges and growth through partnerships Margin improvement and best practices Optimizing working capital (stockturn)
Kramp 2015 Q3 FINANCIAL HIGHLIGHTS Revenue up by 5% The established and big markets drives growth Solid effect from partnerships with OEMs EBIT increases by 10% Effect from very solid market positions Strong operations and high efficiency Ongoing harvest of synergies from Grene merger Investing in growth and development Upgrading and uniforming IT structure and systems Increased focus on e-commerce Efficiency in warehouses and distribution centers 2015 guicance raised Revenue DKK ~5.25bn, EBIT increased to DKK 450m Schouw & Co. expects to recognize DKK 70m in Profit after Tax from Associates 2015 Q3 UPDATE Nordea Markets Aalborg 20.11.2015 27 Q3 last-twelve-months 2015 2014 D 2015 2014 D Revenue 1,359 1,300 4.6% 5,082 4,817 5.5% EBITDA 183 165 10.5% 594 531 11.9% - margin 13.5% 12.7% 0.7pp 11.7% 11.0% 0.7pp EBIT 151 137 10.0% 459 417 10.0% - margin 11.1% 10.6% 0.6pp 9.0% 8.7% 0.4pp Profit before tax 133 127 4.7% 401 372 7.9% Equity 1,348 1,320 2.1% - in % of assets 44.3% 44.8% -0.5pp Inv. Capital (ex gw) 2,592 2,534 2.3% - ROIC 17.8% 17.4% 0.4pp Working Capital 1,560 1,536 1.6% - in % of revenue 38.5% 39.6% -1.1pp NIBD 1,244 1,213 2.5% - x LTM EBIDTA 2.1x 2.3x -8.7%
Xergi Nordea Markets Aalborg 20.11.2015 28 STRATEGIC UPDATE Turnkey biogas plants European leading manufacturer of large-scale turn-key biogas plants Leading in technology Main markets in Denmark, UK and France 50/50 joint venture with Danish nature/environment company Hedeselskabet Renewable energy Global demand for energy continues to increase Biogas created from manure and waste is among the most promising sources of renewable energy FINANCIALS Revenue Operating profit 06 07 08 09 10 11 12 13 14 06 07 08 09 10 11 12 13 14 BIOGAS PLANT FLOWCHART Current trading Significant progress in 2015 with high level of activity Effect from many years of investing in technology and markets as well as strong Danish market Unchanged good long-term prospects for biogas Focus on entering international markets
2015 outlook Nordea Markets Aalborg 20.11.2015 29 REVENUE DKK million 2015 F after Q3 2015 F original 2014 actual BioMar c. 8,750 c. 8,500 8,451 Fibertex Personal Care c. 1,800 c. 1,700 1,787 Fibertex Nonwovens c. 1,200 c. 1,200 1,048 Hydra-Grene c. 575 above 500 566 Other/eliminations - - -68 Total revenue c. 12.3bn c. 12bn 11,784 Kramp (100%) c. 5,250 c. 5,250 4,905 EBIT DKK million 2015 F after Q3 2015 F original 2014 actual BioMar 390-420 360-410 434 Fibertex Personal Care 220-230 160-180 171 Fibertex Nonwovens 75-85 65-75 62 Hydra-Grene 65-70 45-55 60 Other c. -20 c. -20-20 Total EBIT 730-785 610-700 708 Associates etc. c. 80 60-70 28 Financial items, net c. -65 c. -35-35 Profit before tax 745-800 635-735 701 Upwards adjusted after Q1 Upwards adjusted after Q2 Down/upwards adjusted after Q3 Kramp EBIT (100%) c. 450 425-450 405
Summing up STRATEGIC GOALS A STRONG PORTFOLIO Nordea Markets Aalborg 20.11.2015 30 Growth Profit Return Leverage Payout Portfolio Substantial growth every year Benchmark level profitability ROIC > 15%, but dependent on level of risk Comfort zone for NIBD is 1-2 times EBITDA Constant/increasing dividends and share buybacks A handful of big and strong businesses BioMar blue revolution non-gdp cyclical growth in existing/new markets Fibertex Personal Care demand for hygiene double-digit growth in Asia Fibertex Nonwovens emerging markets infrastructure automotive growth Hydra-Grene strong Nordic base growth in Global accounts Specma gives scale Kramp absolute #1 in Europe agro grows in Eastern Europe strong in mature markets
Contact Investor Relations CEO/President Kasper Okkels Jens Bjerg Sørensen ir.@.schouw.dk schouw @ schouw.dk +45 87 34 58 24 +45 86 11 22 22