Ferronordic Sweden - research.nordea.com

Ferronordic SwedenCapital Goods

Commissioned Equity Research • 17 August 2020

KEY DATA

SwedenStock countryFNM SSBloomberg

FNMA.STReutersSEK 145.0 Share price (close)

84%Free FloatEUR 0.20/SEK 2.10Market cap. (bn)www.ferronordic.ruWebsite

12 Nov 2020Next report date

PERFORMANCE

Oct17 Oct18 Sep19 Aug20

60

90

120

150

180

210

FerronordicSweden OMX Stockholm All-Share (Rebased)

Source: Thomson Reuters

VALUATION APPROACH

100 150 200

Source: Nordea estimates

ESTIMATE CHANGES

2022E2021E2020EYear3%2%11%Sales8%7%25%EBIT (adj)

Source: Nordea estimates

Proving its worth, once againFerronordic continued its solid performance despite the market turmoil. Its unit sales in the Russian/CIS market grew 14% y/y even though the overall market declining 40%. This was mainly achieved because of the company's large and resilient customers prioritizing their long-term performance. The aftermarket grew in line with our estimates, while contracting services beat our expectations by ~40%. We believe the market will recover some of the steep fall during the remainder of 2020 and we remain positive on the longer-term outlook, due to upcoming investments in Russian infrastructure as well as Ferronordic's proven business record.

Several bright spotsFerronordic continued on its resilient track and delivered a Q2 report with sales of SEK 1,203m, which was 20% above our expectations. Adjusted EBIT was 72% better than we had expected, due to cost control and better sales. New unit sales increased 6% y/y despite a tough comparison. Contracting services outperformed in the quarter and we expect ~10% growth in the coming years. On the negative side, are the recently acquired German dealerships, which posted a negative operating profit due to the German heavy truck market declining 54% y/y.

Financial headroom for further expansionWe raise our adjusted EBIT estimates for 2020-22 by 7-25% due to a strong Q2 report with further proof of a resilient business model and good growth within contracting services and unit sales. We expect an operating margin in the upper range of Ferronordic's financial targets of 6-8% for the coming years. It is positive that Ferronordic expanded its market shares and achieved a record operating cash flow of SEK 154m in the quarter, prior to working capital changes of SEK +125m, which we believe will reverse somewhat during H2. Most of this cash went to repaying loans, and the company has repaid a total of SEK ~520m of debt in H1. As of Q2, the net debt/EBITDA ratio now stands at 0.4x which leaves headroom for dividend pay-outs, possible share buybacks and/or continued expansion in Germany.

Strong share price performance after the reportFerronordic's share price jumped almost 14% following the better-than-expected report. The share still trades at EV/EBIT ~5x for 2021E, which represents a valuation discount to peers of ~60% with key peers Barloworld and Finning at EV/EBIT of ~6x and ~12x for 2021E, respectively.

Nordea Markets - AnalystsCarl RagnerstamAnalyst

Victor HansenAnalyst

SUMMARY TABLE - KEY FIGURES2022E2021E2020E2019201820172016SEKm5,9725,6034,8453,7473,2412,5671,658Total revenue

636579512501322214153EBITDA (adj)469422314365274187132EBIT (adj)

7.8%7.5%6.5%9.7%8.4%7.3%7.9%EBIT (adj) margin24.1920.5513.3317.7414.258.065.18EPS (adj, SEK)

17.7%54.2%-24.9%24.5%76.8%55.6%6,590.5%EPS (adj) growth6.005.505.000.003.751.730.00DPS (ord, SEK)0.30.40.50.80.50.5n.a.EV/Sales4.45.37.88.15.67.0n.a.EV/EBIT (adj)6.07.110.99.28.918.7n.a.P/E (adj)1.31.61.92.72.82.6n.a.P/BV

4.1%3.8%3.4%0.0%2.9%1.1%n.a.Dividend yield (ord)12.7%13.1%16.6%-21.6%6.6%8.8%n.a.FCF Yield bef A&D, lease

-43144348593-303-312-173Net debt-0.10.20.71.2-0.9-1.5-1.1Net debt/EBITDA

23.4%21.8%16.7%31.2%61.3%48.6%38.7%ROIC after taxSource: Company data and Nordea estimates

Marketing material commissioned by Ferronordic

Ferronordic17 August 2020

RevisionsFERRONORDIC: ESTIMATE REVISIONS

SEKm 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022ESales, segmentEquipment Sales 3,100 3,763 3,993 2,790 3,765 3,956 0% 1%Aftermarket Sales 1,198 1,342 1,435 1,124 1,271 1,359 7% 6% 6%Other Sales 449 498 543 412 461 482 9% 8% 13%Group 4,747 5,603 5,972 4,326 5,496 5,798 10% 2% 3%

Gross profit 831 992 1,063 766 973 1,032 9% 2% 3%Adj. SG&A -517 -587 -613 -504 -582 -602 3% 1% 2%Adj. EBITDA 501 579 636 455 547 596 10% 6% 7%Adj. EBIT 325 422 469 251 393 433 30% 7% 8%

MarginsGross margin 17.2% 17.7% 17.8% 17.6% 17.7% 17.8% -0.4 pp 0.0 pp 0.0 ppEBITDA margin 10.3% 10.3% 10.6% 10.5% 10.0% 10.3% -0.1 pp 0.4 pp 0.4 ppEBIT margin 6.7% 7.5% 7.8% 5.8% 7.2% 7.5% 1.0 pp 0.4 pp 0.4 ppIncremental margin -3.6% 12.8% 12.6% -18.9% 12.5% 13.2% 15.3 pp 0.3 pp -0.6 pp

GrowthVolumes 17% 5% -9% 26% 4% 20.0 pp -8.2 pp 1.1 ppPrice/mix -8% 1% 1% -2% 1% 1% -6.0 pp -0.8 pp 0.0 ppStructural 30% 0% 0% 32% 0% 0% -2.5 pp 0.0 pp 0.0 ppCurrency -6% 0% 0% -5% 0% 0% -0.8 pp 0.0 pp 0.0 ppOther 0% 0% 0% 0% 0% 0% 0.0 pp 0.0 pp 0.0 pp

KPINew units 1,037 1,245 1,357 832 1,148 1,251 25% 8% 8%Used units 264 322 355 192 232 38% 53% 53%Total units 1,301 1,567 1,711 1,024 1,359 1,484 27% 15% 15%Price per unit, SEKm 1.8 1.8 1.8 2.1 2.2 2.2 -17% -18% -18%Price per unit, RUBm 17.4 17.6 17.1 19.9 20.3 19.5 -13% -13% -12%

DPS, SEK 5.00 5.50 6.00 5.00 5.50 6.00 0% 0% 0%of which ordinary 5.00 5.50 6.00 5.00 5.50 6.00 0% 0% 0%of which extraordinary 0.00 0.00 0.00 0.00 0.00 0.00 n.a n.a n.a

Ferronordic: Estimate revisions

SEKm 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022EEquipment Sales 3,100 3,763 3,993 2,790 3,765 3,956 0% 1%Aftermarket Sales 1,198 1,342 1,435 1,124 1,271 1,359 7% 6% 6%Other Sales 449 498 543 412 461 482 9% 8% 13%Total sales 4,747 5,603 5,972 4,326 5,496 5,798 10% 2% 3%

Old estimates Difference %New estimates

New estimates Old estimates Difference %

Source: Company data and Nordea estimates

Marketing material commissioned by Ferronordic 2


Q2 outcomeFerronordic surprised on the upside for Q2, with 20% stronger sales than we had expected, mainly within new units. At the same time, opex was lower than in Q1 despite increased sales thanks to less discretionary spending such as travelling and marketing, and also lower headcount. The company received a SEK 11m payment from a customs duty recovery, which also helped EBIT. Even adjusting for this one-off, EBIT was 72% better than we had expected.

FERRONORDIC: DEVIATION TABLE

Actual NDA est. Actual Actual

SEKm Q2 2020 Q2 20E Q1 20 q/q Q2 19Sales 1,203 1,000 203 20% 1,118 8% 1,100 9%Adj. EBIT 94 55 39 72% 51 85% 98 -4%Adj. EBIT margin 7.8% 5.5% 2.3pp 4.6% 3pp 8.9% -1.1ppEPS, SEK 5.24 1.98 165% 1.39 276% 5.03 4%

Revenue 1,203 1,000 203 20% 1,118 8% 1,100 9%Cost of sales (996) (826) -170 21% (936) 6% (879) 13%Gross profit 207 174 33 19% 183 13% 221 -6%

0Sales expenses (53) (55) 2 -4% (55) -4% (47) 14%General and admin expenses (60) (63) 3 -5% (74) -19% (65) -8%Other income 13 1 12 n.a 2 581% 1 1971%Other expenses (2) (2) 1 -25% (5) -66% (12) -87%EBIT 105 55 50 92% 51 106% 98 7%Finance income 5 1 4 415% 2 189% 2 187%Finance costs (21) (18) -3 15% (19) (12) 76%Net FX gains/(losses) 3 (1) 4 (5) -169% 4 -24%PTP 93 37 56 152% 29 216% 92 0%Income tax (16) (8) -8 98% (9) 77% (19) -17%Net income 76 29 47 165% 20 276% 73 4%EPS, SEK 5.24 1.98 3 165% 1.39 276% 5.03 4%

EO - n.a - n.a - n.a

Sales per segmentEquipment Sales 775 626 149 24% 701 779 -1%Aftermarket Sales 289 276 12 4% 289 0% 227 27%Other Sales 139 98 41 42% 103 35% 88 58%

KPINew units 442 202 240 119% 229 93% 280 58%Used units 76 30 46 153% 51 49% 39 95%Total units 518 232 286 124% 280 85% 319 62%Price per unit, SEKm 1.50 1.93 0 -22% 1.83 -18% 2.44 -39%

Deviation

vs. actual




ValuationPEER VALUATION TABLE

Mcap.

Stock Rec. SEKm 2020E 2021E 2020E 2021E 2020E 2021E 2020E 2021E 2020E 2021E 2020E 2021E 2020E 2021EBarloworld - 6,564 4.9x 3.6x - - 9.5x 6.4x 20.6x 8.2x 0.0% 4.4% 1.1x 0.8x 2.8% 6.4%Caterpillar - 658,207 16.7x 14.4x - - 25.0x 19.6x 27.3x 18.9x 3.0% 3.2% 1.3x 0.8x 20.0% 28.9%Cervus - 899 8.8x 7.1x - - 14.4x 12.7x 10.3x 9.1x 5.3% 5.5% - - - -Deere & Company - 519,316 23.3x 20.6x - - 42.6x 30.8x 30.8x 21.7x 1.7% 1.8% 4.8x 4.1x 16.1% 20.9%Ferronordic NO RATING 2,103 4.8x 3.9x 7.8x 5.3x 7.8x 5.3x 10.9x 7.1x 3.4% 3.8% 0.7x 0.2x 19.6% 25.0%Finning Int - 21,937 8.2x 7.1x - - 16.7x 12.2x 21.4x 14.7x 4.0% 4.1% 2.3x 1.8x 7.3% 10.3%Hitachi - 279,092 4.0x 5.3x - - 9.4x 3.6x 31.2x 8.9x 2.8% 2.7% 0.4x 0.8x 5.2% 11.3%Komatsu - 178,064 6.7x 11.1x - - - - 10.7x 22.8x 5.5% 1.9% 1.7x 2.1x 9.6% 5.1%Volvo HOLD 323,437 8.9x 6.6x 15.8x 9.3x 16.5x 10.3x 28.2x 16.9x 3.8% 4.1% -1.2x -0.9x 6.9% 13.0%Average 221,069 9.6x 8.9x 11.8x 7.3x 17.7x 12.6x 21.3x 14.2x 3.3% 3.5% 1.4x 1.2x 10.9% 15.1%Median 178,064 8.2x 7.1x 11.8x 7.3x 15.4x 11.2x 21.4x 14.7x 3.4% 3.8% 1.2x 0.8x 8.4% 12.2%

Ferronordic NO RATING 2,103 4.8x 3.9x 7.8x 5.3x 7.8x 5.3x 10.9x 7.1x 3.4% 3.8% 0.7x 0.2x 19.6% 25.0%vs. peer average - - -50% -56% -34% -27% -56% -58% -49% -50% 0.2pp 0.0pp -50% -80% 8.7pp 12.8ppvs. peer median - - -42% -45% -34% -27% -49% -53% -49% -52% 0.0pp 0.0pp -43% -70% 11.2pp 12.8ppSource: Company data, Reuters and Nordea Markets

ROEEV/EBITDA EV/EBITA EV/EBIT P/E Div. yield ND/EBITDA



Detailed estimatesFERRONORDIC: INTERIM ESTIMATES (EPS in SEK)

(SEKm)Revenue 723 1,100 964 960 1,118 1,203 1,248 1,277Cost of sales -577 -879 -758 -758 -936 -996 -1,032 -1,051Gross profit 146 221 206 202 183 207 216 226Sales expenses -39 -47 -38 -39 -55 -53 -65 -63General and administrative expenses -48 -65 -58 -68 -74 -60 -70 -77

2 1 2 4 2 13 1 1Other expenses -7 -12 -3 -4 -5 -2 -4 -5

56 98 109 95 51 105 77 812 2 1 1 2 5 1 1

Finance costs -8 -12 -19 -19 -19 -21 -17 -18Net FX gains/(losses) 8 4 2 -2 -5 3 -1 -1

58 92 93 75 29 92 60 63-12 -19 -19 -18 -9 -16 -13 -1446 73 74 57 20 76 47 503 5 5 4 1 5 3 3

Pre-tax adjustments 0 0 0 7 0 0 0After-tax adjustments 0 0 0 6 0 9 0 0

56 98 109 102 51 116 77 8158 92 93 68 29 81 60 6346 73 74 52 20 68 47 50

3.19 5.03 5.09 3.57 1.39 4.65 3.26 3.43


FERRONORDIC: INTERIM SALES BRIDGE

(SEKm)

450 779 600 589 701 775 800 823Aftermarket Sales 208 227 236 254 289 289 305 316Other Sales 64 88 129 117 103 115 118 113

723 1,100 964 960 1,118 1,203 1,248 1,277

Volumes 23% 25% 20% -3% 22% 15% 4% 5%-3% 10% -6% -6% -22% -2% 0%

Structural 0% 0% 0% 0% 36% 21% 32% 33%Currency -3% 0% 8% 8% 4% -9% -7% -8%Other 0% 0% 0% 0% 0% 0% 0% 0%

-6%

Volumes 144 205 158 -29 155 164 41 52-16 82 -50 -43 -238 -18 0

Structural 0 0 0 0 258 227 304 318Currency -19 -3 66 87 28 -96 -68 -78Other 0 0 0 0 0 0 0 0

109 284 173 -59 399 56 259 292




FERRONORDIC: GROWTH BY SEGMENT QUARTERLY (SEKm)

(%)450 779 600 589 701 775 800 823

Volumes 19% 20% 12% -14% 26% 14% 6% 7%-4% 14% -9% -15% -10% -31% -3% 0%

Structural 0% 0% 0% 0% 42% 20% 38% 41%Currency -3% -2% 8% 8% 4% -8% -7% -8%Other 0% 0% 0% 0% 0% 0% 0% 0%

-22% -1%

208 227 236 254 289 289 305 316Volumes 23% 8% 4% 2% 7% 3% 2%

0% 0% 0% 0% 0% 0% 0% 0%Structural 0% 0% 0% 0% 32% 30% 33% 30%Currency -3% 5% 9% 12% 4% -10% -7% -8%Other 0% 0% 0% 0% 0% 0% 0% 0%

64 88 129 117 103 115 118 113Volumes 77% 317% 216% 98% 56% 43% -1% 5%

0% 0% 0% 0% 0% 0% 0% 0%Structural 0% 0% 0% 0% 0% 0% 0% 0%Currency -4% 5% 9% 8% 4% -12% -7% -8%Other 0% 0% 0% 0% 0% 0% 0% 0%

-8% -3%


FERRONORDIC: QUARTERLY KPI

New units 196 280 242 247 229 296 253 259Change y/y, % 26% 21% 2% -24% 17% 6% 5% 5%

989 1,038 1,042 965 998 1,014 1,025 1,037New units sale/total units (%) 88% 88% 79% 79% 82% 81% 78% 78%

Used units 27 39 63 66 51 68 70 75.24Change y/y, % -18% 80% 61% 89% 74% 14%

138 142 170 195 219 248 255 264Used units/total units (%) 12% 12% 21% 21% 18% 19% 22% 22%

Total units 223 319 305 313 280 364 323 335Change y/y, % 19% 20% 12% -14% 26% 14% 6% 7%

1,127 1,180 1,212 1,160 1,217 1,262 1,280 1,301

2.0 2.4 2.0 1.9 1.8 1.7 1.8 1.7Change y/y, % -6% 10% -1% -9% -10% -31% -3% 0%

14.5 16.7 13.3 12.5 12.6 12.7 13.3 13.0Change y/y, % -3% 5% -9% -18% -13% -24% 1% 5%




FERRONORDIC: ANNUAL ESTIMATES (EPS in SEK)

(SEKm) 2015 2016 2017 2018 2019Revenue 1,469 1,658 2,567 3,241 3,747 4,845 5,603 5,972Cost of sales -1,136 -1,292 -2,079 -2,627 -2,972 -4,014 -4,612 -4,909Gross profit 333 366 488 614 775 831 992 1,063Sales expenses -81 -99 -125 -138 -162 -236 -268 -273General and administrative expenses -175 -137 -165 -190 -238 -281 -319 -340

5 4 5 4 8 16 24 24Other expenses -22 -29 -16 -17 -26 -15 -7 -5

61 104 187 274 358 314 422 46910 10 15 7 6 9 8 8

Finance costs -26 -8 -7 -9 -58 -74 -50 -30Net FX gains/(losses) -8 1 -2 -5 12 -3 -4 -4

37 107 193 267 318 245 376 443-8 -24 -42 -58 -68 -52 -77 -9129 84 151 209 251 194 299 352

-2.12 3.03 8.50 14.25 17.26 13.33 20.55 24.19

Pre-tax adjustments -26 -27 0 0 7 0 0After-tax adjustments -20 -21 0 0 6 9 0 0

87 132 187 274 365 325 422 46963 135 193 267 311 234 376 44349 105 151 209 245 185 299 352

-0.08 5.18 8.50 14.25 16.88 12.73 20.55 24.19


FERRONORDIC: SALES BRIDGE ANNUALLY

(SEKm) 2015 2016 2017 2018 2019

934 1,029 1,765 2,295 2,418 3,100 3,763 3,993Aftermarket Sales 502 566 701 790 925 1,198 1,342 1,435Other Sales 33 64 101 156 398 449 498 543

1,469 1,658 2,567 3,240 3,741 4,747 5,603 5,972

Volumes -32% 4% 24% 22% 15% 17% 5%14% 17% 13% -3% -8% 1% 1%

Structural 0% 0% 0% 0% 0% 30% 0% 0%Currency -19% -8% 19% -6% 4% -6% 0% 0%Other 0% 0% 0% 0% 0% 0% 0% 0%

-37%

Volumes -752 65 390 557 477 411 826 289318 244 209 271 -101 -299 31 79

Structural 0 0 0 0 0 1,107 0 0Currency -432 309 -154 130 -213 0 0Other 0 0 0 0 0 0 0 0

-866 190 909 674 507 1,006 857 368




FERRONORDIC: GROWTH BY SEGMENT ANNUALLY (SEKm)

(%) 2015 2016 2017 2018 2019934 1,029 1,765 2,295 2,418 3,100 3,763 3,993

Volumes -49% -8% 30% 21% 6% 12% 20% 4%18% 26% 20% 15% -4% -12% 1% 2%

Structural 0% 0% 0% 0% 0% 34% 0% 0%Currency -15% -8% 21% -6% 3% -6% 0% 0%Other 0% 0% 0% 0% 0% 0% 0% 0%

-47%

502 566 701 790 925 1,198 1,342 1,435Volumes 24% 22% 9% 19% 4% 12% 7%

0% 0% 0% 0% 0% 0% 0% 0%Structural 0% 0% 0% 0% 0% 31% 0% 0%Currency -28% -9% 15% -6% 6% -6% 0% 0%Other 0% 0% 0% 0% 0% 0% 0% 0%

-4%

33 64 101 156 398 449 498 543Volumes -20% 106% 49% 61% 154% 20% 9%

0% 0% 0% 0% 0% 0% 0% 0%Structural 0% 0% 0% 0% 0% 0% 0% 0%Currency -28% -10% 10% -7% 5% -7% 0% 0%Other 0% 0% 0% 0% 0% 0% 0% 0%

-49% 11%


FERRONORDIC: KPI ANNUALLY

2015 2016 2017 2018 2019New units 523 479 738 948 965 1,037 1,245 1,357Change y/y, % -61% -8% 54% 28% 2% 7% 20% 9%

n.a n.a n.a n.a n.a n.a n.a n.aNew units sale/total units (%) 70% 69% 82% 87% 83% 80% 79% 79%

Used units 226 214 162 144 195 264 322 355Change y/y, % 43% -5% -24% 35% 35% 22% 10%

n.a n.a n.a n.a n.a n.a n.a n.aUsed units/total units (%) 30% 31% 18% 13% 17% 20% 21% 21%

Total units 749 693 900 1,092 1,160 1,301 1,567 1,711Change y/y, % -50% -7% 30% 21% 6% 12% 20% 9%

1.2 1.5 2.0 2.1 2.1 1.8 1.8 1.8Change y/y, % 7% 19% 32% 7% -1% -16% 1% 2%

9.0 11.5 13.4 15.1 15.3 17.4 17.6 17.1Change y/y, %

Number of outlets 64 73 74 77 79 81 83 85Net opening(+)/closing(-) 9 1 3 2 2 2 2

23 23 35 42 47 59 68 70




Reported numbers and forecastsINCOME STATEMENT

2022E2021E2020E20192018201720162015201420132012SEKm5,9725,6034,8453,7473,2412,5671,6581,4692,3352,4822,397Total revenue6.6%15.7%29.3%15.6%26.3%54.8%12.9%-37.1%-5.9%3.5%-1.2%Revenue growthn.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.of which organic

0.0%0.0%-5.7%4.0%-6.0%18.6%-8.1%-18.5%-12.8%0.0%0.0%of which FX636579512494322214153130172153116EBITDA

-167-157-198-136-48-26-34-43-70-101-90Depreciation and impairments PPE00000000000of which leased assets

469422314358274187119871025226EBITA000000-15-26-3300Amortisation and impairments

46942231435827418710461695226EBIT00000000000of which associates00000000000Associates excluded from EBIT

-26-46-69-39-763-24-43-109-87Net financials00000000000of which lease interest00000000000Changes in value, net

4433762453182671931073726-57-61Pre-tax profit-91-77-52-68-58-42-24-8-71310Reported taxes

352299194251209151842919-44-51Net profit from continued operations00000000000Discontinued operations00000000000Minority interests

3522991942512078730-21-31-44-51Net profit to equity24.1920.5513.3317.2614.258.063.03-2.12-3.10-4.44-5.09EPS, SEK6.005.505.000.007.501.730.000.000.000.000.00DPS, SEK6.005.505.000.003.751.730.000.000.000.000.00of which ordinary0.000.000.000.003.750.000.000.000.000.000.00of which extraordinary

Profit margin in percent10.6%10.3%10.6%13.2%9.9%8.3%9.2%8.9%7.4%6.2%4.8%EBITDA7.8%7.5%6.5%9.5%8.4%7.3%7.2%5.9%4.4%2.1%1.1%EBITA7.8%7.5%6.5%9.5%8.4%7.3%6.3%4.2%3.0%2.1%1.1%EBIT

Adjusted earnings636579512501322214153130172153116EBITDA (adj)4694223143652741871461131351426EBITA (adj)469422314365274187132871021426EBIT (adj)

24.1920.5513.3317.7414.258.065.18-0.08-0.51-7.43-5.09EPS (adj, SEK)

Adjusted profit margins in percent10.6%10.3%10.6%13.4%9.9%8.3%9.2%8.9%7.4%6.2%4.8%EBITDA (adj)7.8%7.5%6.5%9.7%8.4%7.3%8.8%7.7%5.8%0.5%1.1%EBITA (adj)7.8%7.5%6.5%9.7%8.4%7.3%7.9%5.9%4.4%0.5%1.1%EBIT (adj)

Performance metricsCAGR last 5 years

18.4%27.6%27.0%9.9%5.5%1.4%-7.3%n.a.n.a.n.a.n.a.Net revenue24.4%30.5%31.5%23.5%16.0%13.0%11.6%n.m.n.m.n.m.n.m.EBITDA20.1%32.3%38.8%39.0%39.6%48.0%27.7%n.a.n.a.n.a.n.a.EBIT24.6%46.6%n.m.n.m.n.m.n.m.n.m.n.a.n.a.n.a.n.a.EPS28.2%n.m.n.m.n.m.n.m.n.m.n.m.n.m.n.m.n.m.n.m.DPS

Average last 5 years7.8%7.8%7.7%7.8%6.2%4.5%3.0%2.1%n.a.n.a.n.a.Average EBIT margin

10.9%10.6%10.5%10.3%8.8%7.8%7.0%5.9%n.a.n.a.n.a.Average EBITDA marginVALUATION RATIOS - ADJUSTED EARNINGS

2022E2021E2020E20192018201720162015201420132012SEKm6.07.110.99.28.918.7n.a.n.a.n.a.n.a.n.a.P/E (adj)3.23.94.85.94.86.1n.a.n.a.n.a.n.a.n.a.EV/EBITDA (adj)4.45.37.88.15.67.0n.a.n.a.n.a.n.a.n.a.EV/EBITA (adj)4.45.37.88.15.67.0n.a.n.a.n.a.n.a.n.a.EV/EBIT (adj)

VALUATION RATIOS - REPORTED EARNINGS2022E2021E2020E20192018201720162015201420132012SEKm

6.07.110.99.48.918.7n.a.n.a.n.a.n.a.n.a.P/E0.350.400.510.790.480.51n.a.n.a.n.a.n.a.n.a.EV/Sales3.23.94.86.04.86.1n.a.n.a.n.a.n.a.n.a.EV/EBITDA4.45.37.88.35.67.0n.a.n.a.n.a.n.a.n.a.EV/EBITA4.45.37.88.35.67.0n.a.n.a.n.a.n.a.n.a.EV/EBIT

4.1%3.8%3.4%0.0%2.9%1.1%n.a.n.a.n.a.n.a.n.a.Dividend yield (ord.)12.7%13.1%7.1%-21.5%6.8%8.9%n.a.n.a.n.a.n.a.n.a.FCF yield12.7%13.1%16.6%-21.6%6.6%8.8%n.a.n.a.n.a.n.a.n.a.FCF Yield bef A&D, lease adj24.8%26.8%37.5%0.0%52.6%21.5%0.0%0.0%0.0%0.0%0.0%Payout ratio




BALANCE SHEET2022E2021E2020E20192018201720162015201420132012SEKm

31252012662154395142Intangible assets1913800000000of which R&D12121212662154395142of which other intangibles00000000000of which goodwill

82584285270026313611683225248235Tangible assets00000000000of which leased assets00000000000Shares associates00000000000Interest bearing assets

5151515141424245362311Deferred tax assets00000000000Other non-IB non-current assets00000000000Other non-current assets

908919922763310184160143303366388Total non-current assets1,9711,7931,5991,290741633467327425584505Inventory

496465402322319243202161265335273Accounts receivable00000000000Short-term leased assets

133125108842341223Other current assets1,059872669519357352199175177163165Cash and bank3,6593,2552,7782,2141,4181,2318726658701,084946Total current assets

n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.000Assets held for sale4,5664,1743,7002,9781,7271,4141,0338081,1731,4501,333Total assets

1,5821,3101,084890656611442322372533130Shareholders equity00000000000Of which preferred stocks00000000000Of which equity part of hybrid debt00000000000Minority interest

1,5821,3101,084890656611442322372533130Total Equity7777110071021Deferred tax

37737737737728221542124452Long term interest bearing debt00000000000Pension provisions00000000000Other long-term provisions00000000000Other long-term liabilities00000000000Non-current lease debt00000000000Convertible debt00000000000Shareholder debt00000000000Hybrid debt

39139139139131231642834476Total non-current liabilities36332922171310491826Short-term provisions

1,7321,6251,405917982737547384492652434Accounts payable00000000000Current lease debt

1871761521171512748154Other current liabilities63963963963926191190265198263Short term interest bearing debt

2,5942,4732,2251,6961,040780575482774883727Total current liabilities00000000000Liabilities for assets held for sale

4,5664,1743,7002,9781,7271,4141,0338081,1731,4501,333Total liabilities and equity

Balance sheet and debt metrics-43144348593-303-312-173-8110959550Net debt

00000000000of which lease debt68058255266064130120101193254342Working capital

1,5881,5011,4741,423374314280244496621730Invested capital2,5982,3262,1001,907710651468416658755845Capital employed

24.3%25.0%19.6%32.4%32.7%16.4%7.9%-6.1%-6.9%-13.4%-33.0%ROE23.4%21.8%16.7%31.2%61.3%48.6%38.7%18.1%14.1%1.5%2.7%ROIC19.4%19.4%16.1%28.4%41.3%36.1%31.9%18.1%14.8%1.8%3.4%ROCE

-0.10.20.71.2-0.9-1.5-1.1-0.60.60.44.7Net debt/EBITDAn.m.n.m.n.m.n.m.n.m.n.m.n.m.n.m.n.m.0.60.3Interest coverage

34.6%31.4%29.3%29.9%38.0%43.2%42.8%39.8%31.7%36.7%9.8%Equity ratio-2.7%11.0%32.1%66.6%-46.2%-51.0%-39.1%-25.3%29.4%11.1%421.7%Net gearing




CASH FLOW STATEMENT2022E2021E2020E20192018201720162015201420132012SEKm

636579512494322214153130172153116EBITDA (adj) for associates-91-77-52-680000000Paid taxes-26-46-69397-6-3244311187Net financials

2575437-5-9-8-3Change in provisions000-6303-9-14-15-6Change in other LT non-IB00000000000Cash flow to/from associates00000000000Dividends paid to minorities000-98-68-44-36-38-42-172-122Other adj to reconcile to cash flow

5214603983672671681231011516972Funds from operations (FFO)-98-30108-698-106-2018133-176-2769Change in NWC

423430506-330161148141234-2542141Cash flow from operations (CFO)-156-153-156-181-38-7-103-36-22-78Capital expenditure267276350-511123141132237-612064Free cash flow before A&D

00023345000Proceeds from sale of assets00-20100000000Acquisitions

267276149-509126144136242-612064Free cash flow267276350-511123141132237-612064Free cash flow bef A&D, lease adj

-80-730-109-30-58-53-50-5000Dividends paid0000000-1010Equity issues / buybacks0001,2760-280109849282781Net change in debt000-32-12-15-30-1-32-29Other financing adjustments000-492-94108-45-272-722-272-761Other non-cash adjustments

187204149163415324-215-355Change in cash

Cash flow metrics93.4%97.7%78.8%n.m.80.1%25.8%20.0%-4.4%35.3%22.1%86.6%Capex/D&A2.6%2.7%3.2%4.8%1.2%0.3%0.6%-0.2%1.6%0.9%3.2%Capex/Sales

Key information145145145163127151n.a.n.a.n.a.n.a.n.a.Share price year end (/current)

2,1072,1072,1072,3691,8491,615n.a.n.a.n.a.n.a.n.a.Market cap.2,0642,2512,4552,9621,5461,303n.a.n.a.n.a.n.a.n.a.Enterprise value14.514.514.514.514.510.710.010.010.010.010.0Diluted no. of shares, year-end (m)




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Market-making obligations and other significant financial interestNordea Markets has no market-making obligations in Ferronordic.

Fair value and sensitivityWe calculate our fair values by weighting DCF, DDM, SOTP, asset-based and other standard valuation methods. Our fair values are sensitive to changes in valuation assumptions, of which growth, margins, tax rates, working capital ratios, investment-to-sales ratios and cost of capital are typically the most sensitive. It should be noted that our fair values would change by a disproportionate factor if changes are made to any or all valuation assumptions, owing to the non-linear nature of the standard valuation models applied (mentioned above). As a consequence of the standard valuation models we apply, changes of 1-2 percentage points in any single valuation assumption can change the derived fair value by as much as 30% or more. All research is produced on an ad hoc basis and will be updated when the circumstances require it.

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Completion Date

17 Aug 2020, 06:32 CET

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