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Fourth quarter and full year 2017Investor presentation
14 February 20181
Content
2
§ Highlights- Morten Holum, CEO
§ Results and financials- Svein Vestermo, CFO
§ The road ahead- Morten Holum, CEO
Highlights Q4 2017 – Strong revenue growth
3
§ Underlying revenue growth of 16%
§ Strong sales and high project execution in Road Infrastructure Europe
§ Expected margin contraction in Road Safety Europe and Road Infrastructure Nordic
§ Underlying EBITDA in line with last year
§ Good cash flow
1 537 904
1 626 1 710 1 787
-
500
1 000
1 500
2 000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
152
(56)
153 192 152
-100 -50 - 50
100 150 200 250
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Underlying revenue, NOK mill.
Underlying EBITDA, NOK mill.
Q4 2017: Stable Group earnings as Road Infrastructure Europe performs well
4
Underlying EBITDA – change quarter-on-quarter Underlying EBITDA margin, rolling 12 months
152 152
-
20
40
60
80
100
120
140
160
180
Q4 16 RS Nordic RS Europe RI Nordic RI Europe Other & elim.
Q4 17
NOK million
9,3 % 9,5 % 9,5 % 9,0 %
8,3 % 8,0 % 7,3 %
6,7 %6,0 %
7,0 %
0%
2%
4%
6%
8%
10%
12%
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
NOK million
Road Safety Road Infrastructure Road Safety Road Infrastructure
(8)(19)
351
(9)
Key developments in the quarter
5
§ High sales volume in most areas§ Signs and work zone protection in Sweden and
Norway in positive development§ Growth in road restraint systems in Norway§ The restructuring of the RRS segment in
Sweden is on track§ High activity across product areas in Poland
§ Water & sewage divestment executed§ Lower demand for technical products in Sweden§ Very high activity and strong project execution in
Poland§ Continued good traction in export sales § An overall positive market sentiment in
continental Europe
Road Safety Road Infrastructure
Highlights full year 2017 – Good organic revenue growth, but unsatisfactory earnings
6
5 506 5 764 6 028
-
2 000
4 000
6 000
2015 2016 2017
414 478 441
7,5 % 8,3 % 7,3 %
0%
2%
4%
6%
8%
10%
2015 2016 20170
200
400
600
Underlying revenue, NOK mill.
Underlying EBITDA, NOK mill.
§ Organic revenue growth of 6%- Reported growth of 5%
§ Operating margin contraction- Both internal and external explanations
§ Improvement measures and portfolio changes carried out
§ Solid financial position, sufficient capacity to execute projects and initiatives
§ The Board proposes a dividend of NOK 0.90 per share for 2017§ This corresponds to a pay-out-ratio slightly above 50% of underlying net income
7
Introducing dividends in our first year as a listed company
Our dividend policy
Saferoad targets dividend payments corresponding to ~50% of underlying net income, with a potential to increase this ratio over time.
Saferoad envisages to pay out dividends in the third quarter in light of seasonal swings of the business.
The dividends should be carefully considered in relation to liquidity position, future cash flow, investment needs as well as strategic opportunities.
Results and financialsSvein Vestermo, CFO
Overview – Group and business areas
9
Amounts in NOK million
Fourth quarter 2017 Fourth quarter 2016 2017 2016
Operating revenues* EBITDA* Margin* Operating
revenues* EBITDA* Margin* Operating revenues* EBITDA* Margin* Operating
revenues* EBITDA* Margin*
Road Safety Nordic 799 55 6.9% 695 53 7.7% 2 780 223 8.0% 2 648 237 8.9%
Road Safety Europe 441 47 10.6% 436 66 15.1% 1 423 123 8.6% 1 438 137 9.5%
Total Road Safety 1 226 102 8.3% 1 107 119 10.7% 4 150 346 8.3% 4 015 374 9.3%
Road Infrastructure Nordic 140 (3) (2.3% 174 5 3.0% 743 25 3.4% 851 51 6.0%
Road Infrastructure Europe 436 68 15.5% 273 33 12.1% 1 224 109 8.9% 1 001 91 9.1%
Total Road Infrastructure 569 64 11.3% 438 38 8.7% 1 917 134 7.0% 1 787 142 8.0%
Other and Eliminations (7) (14) - (8) (5) - (39) (39) - (38) (38) -
Total Group 1 787 152 8.5% 1 537 152 9.9% 6 028 441 7.3% 5 764 478 8.3%
* Underlying figures
Road Safety Nordic – Growth offset by higher cost
10
§ 15% revenue growth- Signs and work zone protection up 22%- Road restraint systems in Norway up 9%
§ Underlying EBITDA on par with last year
§ Margin decrease- Higher raw material prices and additional - but
temporary - cost in the quarter
§ Restructuring program in Sweden on track
NOK million Q4 2017 Q4 2016 2017 2016
Underlying operating revenue 799 695 2 780 2 648
Underlying EBITDA 55 53 223 237
Underlying EBITA 34 32 139 155
Reported EBITDA 47 55 202 233
Underlying EBITDA margin 6.9 % 7.7 % 8.0 % 8.9 %
53
(19)
86 101 55
- 40 - 20 - 20 40 60 80
100 120
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Underlying EBITDA, NOK million
Road Safety Europe – High level of activity in competitive markets
11
§ Stable revenue- 9% revenue growth when adjusting for
M&A- High activity in the Poland
§ Lower earnings- Competition in RRS in Germany - Higher costs on maintenance contracts- Divestments
NOK million Q4 2017 Q4 2016 2017 2016
Underlying operating revenue 441 436 1 423 1 438
Underlying EBITDA 47 66 123 137
Underlying EBITA 41 58 98 104
Reported EBITDA 46 61 136 132
Underlying EBITDA margin 10.6 % 15.1 % 8.6 % 9.5 %
66
1
38 37 47
-
10
20
30
40
50
60
70
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Underlying EBITDA, NOK million
Road Infrastructure Nordic – Lower activity and earnings
12
§ Revenue decline- Lower demand for technical products in Sweden- Divestment of water & sewage business in 2017
§ Reduced earnings - A more competitive market in Finland - Lower capacity utilisation in Sweden
§ Strengthening the technical sales organisation across the region
NOK million Q4 2017 Q4 2016 2017 2016
Underlying operating revenue 140 174 743 851
Underlying EBITDA (3) 5 25 51
Underlying EBITA (4) 5 22 48
Reported EBITDA 1 5 29 51
Underlying EBITDA margin (2.3 %) 3.0 % 3.4 % 6.0 %
5
(9)
18 19
(3)
-10
-5
-
5
10
15
20
25
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Underlying EBITDA, NOK million
Road Infrastructure Europe – The positive development continues
13
§ 60% revenue growth – high execution of orders and projects- High sales in Poland- High export sales- 12% increase from acquisition of Elikopol
§ A doubling of Underlying EBITDA drove margins up- High volume of large span bridges - Good leverage of the cost base
§ An exit of the water and sewage segment in Lithuania initiated
NOK million Q4 2017 Q4 2016 2017 2016
Underlying operating revenue 436 273 1 224 1 001
Underlying EBITDA 68 33 109 91
Underlying EBITA 61 30 84 68
Reported EBITDA 65 33 106 91
Underlying EBITDA margin 15.5 % 12.1 % 8.9 % 9.1 %
33
(18)
19 40
68
-40
-20
-
20
40
60
80
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Underlying EBITDA, NOK million
Profit and loss statement
14
NOK million Q4 2017 Q4 2016 2017 2016
Operating revenue 1 792 1 537 6 051 5 764
Total operating cost (1 643) (1 400) (5 675) (5 317)
EBITDA 149 137 375 447
Depreciation and impairment (38) (48) (151) (167)
EBITA 110 89 224 280
Amortisation and impairment (21) (330) (70) (390)
EBIT 89 (241) 154 (110)
Net financial income/expense 31 (79) 59 (330)
Income (loss) before tax 120 (320) 213 (440)
Income taxes 17 7 21 1
Net income (loss) 137 (312) 234 (439)
Of which non-controlling interests 2 (2) 1 21
Earnings per share (NOK) 2.03 (4.66) 3.50 (6.90)
EBITDA reported 149 137 375 447
Items excluded from underlying EBITDA 4 15 65 31
EBITDA underlying 152 152 441 478
§ Only minor adjustments made to reported EBITDA to align with underlying earnings in the quarter
§ Q4 2016 significantly influenced by non-recurring items
§ Net financials for the quarter are significantly lower than last year due to lower net interest-bearing debt and FX effects related to internal and external debt positions
§ Interest expenses decreased by NOK 37 million compared to Q4 2016. Total interest expenses for the quarter were NOK 13 million
§ The Group reported a net tax income of NOK 17 million in Q4 2017, which is affected by recognition of deferred tax assets for tax losses carried forward
187
351
152
295
3 46
325
7
-
100
200
300
400
500
600
700
800
Cash per 30.09.17 EBITDA underlying Changes in working capital
Other items Net CF from investment activities
Net repayment of borrowings
Other financing activities and fx
Cash per 31.12.17
NO
K m
illion
Development in cash flow during Q4 2017
15
Cash flow from operations Cash flow from financing activities
Balance sheet
16
NOK million 31.12.2017 30.09.2017 31.12.2016
Total intangible assets 1 601 1 562 1 524
Total fixed assets 986 947 934
Other non-current assets 98 55 57
Total non-current assets 2 684 2 565 2 515
Inventories 934 1 157 910
Trade receivables 996 1 122 844
Other receivables 327 385 220
Cash and cash equivalents 351 187 329
Total current assets 2 609 2 851 2 302
Total assets 5 293 5 416 4 818
Share capital 7 7 2
Other equity 2 817 2 643 968
Non-controlling interests 33 32 252
Total equity 2 856 2 681 1 222
Provisions 64 52 56
Non-current liabilities 1 264 1 499 1 950
Total non-current liabilities 1 328 1 551 2 006
Accounts payables 568 660 496
Other current liabilities 540 523 1 093
Total current liabilities 1 108 1 183 1 589
Total shareholders' equity and liabilities 5 293 5 416 4 818
§ Equity ratio at the end of the yearat a solid 54 %, up from 25% a year ago and 50% last quarter
§ Net interest bearing debt at NOK 0.9 billion compared to NOK 1.3 billion last quarter. Net interest bearing debt to underlying EBITDA ratio of 2.0x at end of quarter
§ The Group’s financial position is good, with sufficient financial capacity to execute the current projects and initiatives
The road aheadMorten Holum, CEO
Status mid-term financial targets
18
Organic growth
Capital structure
Dividends
EBITDA margin
~5% annual revenue growth
TARGETS
Net debt / EBITDA<2.5x
~50% of underlying net income
10%
~6%
2.0x
56%
7.3%
ü
ü
ü
•
2017 PERFORMANCE
Short-term outlook
19
Characteristics of Q1 Outlook for Q1
§ The first quarter is the quarter with the lowest activity during the year
§ Preparations for high season, maintaining equipment and building inventories
§ The activity level in the quarter and the seasonal start-up is weather dependent
§ The performance in the first quarter has limited bearing for the full year performance
§ The quarter is expected to be weaker than last year, driven by the following factors:- Shifts in project phasing in the UK and in Poland
compared to last year
- Strong raw material-driven comparables in Road Safety Europe
- No significant changes expected in Road Infrastructure
- TrafikkDirigering, acquired in Q4 2017, has seasonally negative earnings in Q1 (NOK 7 million in 2017)
Outlook for the full year 2018
20
Expected key developments Margin improvement measures
§ Market demand expected to continue to grow in the majority of the product and business segments
§ Continued expansion of work zone protection
§ Retain and expand focus on export opportunities and building the project pipeline
§ Limited improvement expected in Road Infrastructure Nordic
§ Strong focus on raising profitability
§ The restructuring of the RRS business in Sweden is expected to have a positive impact in 2018
§ Program to reduce the fixed cost base in Norway initiated
§ A series of operational improvement projects in motion
§ A structured exit of the water & sewage segment in Lithuania initiated
§ Portfolio measures executed in 2017 will have full year effect in 2018
Summing up
21
§ Strong finish to the year with high sales in Q4
§ Good cash flow and financial position
§ Several measures taken to raise profitability
§ Well positioned for continued growth and higher profitability in 2018