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STRATEGY
25
Financial overview
CAPITAL MARKET DAY 2012 Jonas Söderkvist, CFO, Ramirent Plc
Helsinki centre, Finland
STRATEGY
All current long-term financial targets were met in Q3/12
26
ROI >18% p.a. over a business cycle
Gearing ≤120% at end of each fiscal year EPS growth >15% p.a. over a business cycle
*76%
-200%
-100%
0%
100%
200%
300%
2005 2006 2007 2008 2009 2010 2011 Q32012EPS Target
*R12 Q3 2012 vs. Q3 2011
19%
0%5%
10%15%20%25%30%35%
2005 2006 2007 2008 2009 2010 2011 Q32012ROI Target
73%
0%20%40%60%80%
100%120%140%
2005 2006 2007 2008 2009 2010 2011 Q32012Gearing Target
0,15
0,30
0,50
0,00
0,15 0,25 0,28
0%50%100%150%200%250%300%350%400%
0,000,100,200,300,400,500,60
2005 2006 2007 2008 2009 2010 2011DPS Dividend pay-out ratio Target
Dividend pay-out ratio > 40%
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Net sales grew 3.7% in Q3/2012, like-for-like growth* 1.3%
Net sales grew 12.3% in 1-9/2012, like-for-like growth 5.7%
27
Change in net sales YoY, %
* Excluding acquisitions in Sweden and Norway
19% 19% 13%
-4%
-25% -31% -31%
-27%
-9%
3% 9%
19% 20% 16%
27% 24% 22%
14%
4%
Q12008
Q2 Q3 Q4 Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY 28
4%
-1%
17%
4% 1%
9%
-17%
0%
-1%
8%
-2%
1%
7%
-16%
EUR Comparable exchange rates
Change in Q3 net sales YoY, %
Net sales grew in Sweden, Denmark and Europe East both in EUR and comparable exchange rates
EUR Comparable exchange rates
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Share of ancillary income continued to grow
Q3/2012 compared to Q3/2011: • Rental income increased 3.5 % • Ancillary income increased 5.2 % • Income from sold equipment decreased 5.0 %
29
68% 68%
29% 29%
3% 3%
0 %
20 %
40 %
60 %
80 %
100 %
Q3/2011 Q3/2012
Income from sold equipment
Ancillary income
Rental income
Breakdown of net sales
121.3 125.5
51.9 54.6 6.0 5.7
0
50
100
150
200
Q3/2011 Q3/2012
Income from sold equipment
Ancillary income
Rental income
MEUR
-5.0 %
+5.2 %
+3.5 %
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Top-line recovery and cost discipline have driven margin expansion
30
492 496 507 531 554 575 613
650 680 700 707
3% 2%
3%
6% 7%
8%
10%
11% 12%
13% 13%
Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Net sales R12 EBIT-% R12
Group Net sales (MEUR) and EBIT margin (%)
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Gross margin decreased slightly in Q3/2012 compared to previous year
31
Gross margin by quarter
71%
70%
68%
65%
69%
65%
67%
68%
66%
67% 67% 68%
69%
66%
68%
66%
68% 69%
Q1 Q2 Q3 Q4 FY
2009 2010 2011 2012
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Stable fixed cost development
The fixed cost level increased year-on-year due to • Acquisitions • Expenses related to development work on Ramirent’s common platform
32
Fixed costs by quarter (MEUR)
35 30 33 33 33 33 32 38 37 37 41 42 42 40 42
23 22 19 23 22 23 22
24 27 25 25 28 25 25 26
57 52 52
57 56 56 54
62 63 62 66
70 68 65 68
Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Employee benefit expenses Other operating expenses
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
EBIT-margin January-September 2012: 12.5% (10.5%)
Q3 EBIT margin at 16.0%
33
EBIT margin by quarter
18.2% 19.6%
18.4%
-11.4%
5.9%
10.8% 9.0%
-2.9% -5.0%
5.8%
11.8%
7.5%
2.0%
10.3%
17.0%
13.6%
7.5%
13.4% 16.0%
Q12008
Q2 Q3 Q4 Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Q3 EBIT margin improved in Finland and Norway
34
17.0%
23.2%
18.0%
9.9%
7.5%
24.6%
16.3% 16.0%
24.2%
16.4% 15.6%
6.8%
23.4%
2.0%
Group Finland Sweden Norway Denmark East Central
Q3/11 Q3/12
EBIT-margin by segments
Q3/11 Q3/12
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Capital expenditure below last year
Due to acquisitions capital expenditure was high in 2011 in Sweden and Norway, Sweden has also acquired TLM (Tannefors Lift och Maskinuthyrning) in early 2012
35
196
29
61 83
5 10 12
87
15 39
20 1 7 5
1-9/2011 1-9/2012
Capital Expenditure by segments (MEUR)
1-9/2011 1-9/2012
Meilahti Hospital, Helsinki, Finland
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Working capital at 6% of net sales
Q3/2012 credit losses and net change in the allowance for bad debt totalled EUR −2.4 (−0.9) million
36
16 15 15 15 15 14 14 16 16 17 17 17 18 18 20
86
88
90
80
83
90
99
97
95
10
9
12
4
12
0
11
4
13
1
14
1
-66
-68
-70
-67
-69
-86
-86
-89
-82
-84
-10
7
-10
9
-13
9
-11
2
-12
2
-6%
-4%
-2%
0%
2%
4%
6%
8%
-120
-80
-40
0
40
80
120
160
Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Trade payables and other liabilitiesTrade and other receivablesInventoriesWorking capital/Net sales Rolling 12 month basis
Working capital by quarter (MEUR)
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
After a heavy M&A period, focus has been on regaining a strong financial position
37
Group Net debt, by quarter (MEUR) Group Capex, by quarter (MEUR)
13 22
10 18
32 45
120
46 36
24 28
Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
212 209 197
177 191
238
280 263 258
281
256
Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
-54.8
-29.9
25.2
66.5
17.9 27.8 22.4 19.5
-4.0
13.4 14.4 24.2
-10.7 -20.4
-36.8
15.9 6.4 7.3
23.7
Q12008
Q2 Q3 Q4 Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Cash flow after investments Rolling 12 months
Q3/2012 cash flow after investments 23.7 MEUR
38
Cash flow after investments (MEUR)
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
96%
84%
70%
69%
81%
113% 106% 108%
99%
86%
74% 68% 68%
71% 64%
56% 60%
80%
92% 81% 84%
87%
73%
0%
20%
40%
60%
80%
100%
120%
0
50
100
150
200
250
300
350
400
FY04
FY05
FY06
FY07
Q12008
Q2 Q3 Q4 Q12009
Q2 Q3 Q4 Q12010
Q2 Q3 Q4 Q12011
Q2 Q3 Q4 Q12012
Q2 Q3
Net debt Gearing (%)
Net debt decreased by 24.7 MEUR in Q3 2012; gearing was at 73.2%
Equity ratio was 41.9% (38.2%) Net debt amounted to EUR 256.0 (279.8) million
39
Net debt and gearing
MEUR
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Funding sources at end of Q3 2012
40
Fixed 62%, Average
interest rate 3,84 %
Floating 38%, Average
interest rate 0,95 %
Fixed / Floating
Banks 68%
Insurance Companies
8%
Commercial Papers
29% Leasing 30%
Debt portfolio
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
At end of Q3/12, Ramirent had unused committed back-up facilities of 134.2 MEUR
In addition to bank facilities, Ramirent is utilising a domestic commercial paper program of up to EUR 150 million
41
150
240
2012 2013 2014 2015 2016 2017
Repayment schedule of interest-bearing liabilities (MEUR)
390 MEUR in committed credit facilities
256.0 MEUR in net debt
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Our key strategic initiatives are about value creation
42
1. Develop customer portfolio
2. Develop product and service offering
3. Develop market portfolio
Key initiative Value creation drivers
4. Operational excellence
External
Internal
Growth with the markets (flat market share)
Gross margin
Improved prices
Acquisitions and outsourcing
Reduced variable and fixed costs
Divestments
5. Ramirent platform
Impact several value creation drivers
Increased market share
+
Financial impact EBIT margin ROI
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
All available levers are used to drive profit
43
Total fleet Rental income Other income Net sales Operativecosts
EBITDA Depreciation EBIT
• Increase prices • Improve price
realization • Improve utilization
• Balance fleet structure • Reduce unavailable fleet
through efficient logistics and maintenance
• Charge for ancillary services
• Develop solution offering
• Drive internal efficiency
• Trade/scrap equipment based on TCO
• Manage sourcing
• Preventive maintenance to ensure economic life
• Keep flexibility in cost base to manage fluctuations in demand
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Both sales activities and continued cost discipline are required
44
13%
1,4% 1,1%
0,5% 0,3%
16%
EBIT 1209 R12 Price +2% Utilization +2% Personnel costs-2%
Operationalcosts -2%
With actions
Illustrative
EBIT margin 1209 R12 (%) + illustrative effects from different actions
+13% +8% +3% +2% +27% Improvement effect:
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
Multiple levers also exist to drive capital efficiency
45
Total fleet Book value Goodwill Other fixed assets Fixed assets Net workingcapital
Other non-interestbearing liabilities
Invested capital
• Balanced M&A
• Alternative financing options
• Preventive maintenance to ensure economic life
• Efficient receivables management
• Customer segmentation
• Inventory management
• Procurement management
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY 46
Company’s strengths
Leading equipment rental company in Northern, Central and Eastern Europe More than 50 years industry experience Diversified portfolios of customers, products and markets Stable profitability and steady cash flow Flexibility to maneuver: capex and cost flexibility, strong balance sheet Strong financial position and funding
Senat's square, Helsinki, Finland
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
47
NEW LONG−TERM FINANCIAL TARGETS
New long-term financial targets have been set to further emphasize value creation
48
EPS growth (over a business
cycle)
ROI (over a business
cycle)
Gearing (at the end of
each fiscal year)
Dividend pay-out ratio
(% of EPS)
Leverage and risk
Profit generation
Dividend
Element Current target New targets
ROE (over a business
cycle)
Net Debt / EBITDA
(at the end of each fiscal year)
Dividend pay-out ratio
(% of EPS)
• EPS growth is a volatile metric
• ROE target captures shareholder value creation
• Better considers company’s ability to service its debt
• More aligned with the operational steering model
• Keep existing measure
= new target = Deleted target Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
Comments to the target level
New long-term financial targets
The new target levels are in line with long-term historical performance and current financial targets
49
ROE
Net Debt / EBITDA
Historic performance
• New Net debt / EBITDA target of < 1.6x is comparable to current Gearing target of < 120%
• Long-term average Net debt / EBITDA has been debt level of 1.4x-1.7x
0%5%
10%15%20%25%30%35%40%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q32012
• New ROE target of 18% is comparable to current ROI target of 18%
• Long-term historical ROE has been 18%
0,00,51,01,52,02,53,03,54,04,5
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q32012
18%
Historical average
Historical average
1.7x
Target = 18%
Target = < 1.6x
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE
STRATEGY
New long-term financial targets
50
Leverage and risk
Profit generation
Dividend
Element Target level
ROE
Net Debt / EBITDA
Dividend pay-out
ratio
18% p.a. over a business cycle
Below 1.6x at the end of each fiscal year
At least 40% of EPS
Measure Q3 2012
18.6%
1.2x
68% of 2011 net profit
Capital Market Day 2012 l 27 November 2012 l Jonas Söderkvist
FINANCE