nkt holding - finansforeningen...nkt holding a/s / ddf presentation 7 june 2012 page 6 • strategic...
TRANSCRIPT
NKT HoldingDen Danske Finansanalytikerforening
Virksomhedsdag 2012
Presentation 1March 2011
Page 2NKT Holding A/S / DDF presentation 7 June 2012
Page 2
Agenda
Facts about NKT (5 min)
SWOT Analysis (15 min)
Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)
Presentation 1March 2011
Page 3NKT Holding A/S / DDF presentation 7 June 2012
Page 3
The history
1891201580’erne
Diversification 19904,6 bn. DKK revenue+ 30 companies7.000 employees
- 75% in DK- 25% abroad
+ 70% of revenue in DK
201014,5 bn. DKK revenue4 divisions9.200 employees
- 18% in DK- 82% abroad
6% of revenue in DKMarket cap 7,1 bn. DKKEPS 11 DKK
2015App. 20 bn. DKK revenue 7-8% organic growthOperational EBITDA-margin 14-15%ROI 20%EPS 50 DKK
Presentation 1March 2011
Page 4NKT Holding A/S / DDF presentation 7 June 2012
Page 4
Group structure June 2012
Nilfisk-Advance
NKT Flexibles 51%
Photonics Group
NK
T H
oldi
ng
NKT Cables
Global presence
North, Central and Eastern Europe,China, Australia
NKT PhotonicsLios TechnologyVytran
Ownership: NKT Holding: 51%Subsea 7: 49%
In February 2012 agreement was
signed concerning sale of NKT
Flexibles to National Oilwell Varco.
Transaction closedin April
Presentation 1March 2011
Page 5NKT Holding A/S / DDF presentation 7 June 2012
Page 5
Manufacturing PMI
Expectation indicator – Above the line indicates positive expectations for the manufacturingsector and below the line indicates declining expectations for the manufacturing sector
Below the line indicates expectations of recession
32
37
42
47
52
57
62
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
USA EURO zone
Presentation 1March 2011
Page 6NKT Holding A/S / DDF presentation 7 June 2012
Page 6
• Strategic goals based on current levels for commodity prices, interest rates and currencies, etc.• Expected growth of 1-3% in developed markets and 5-10% in emerging markets • Unchanged view on optimal capital structure• Continued best owner philosophy• Appreciation of “powering” capabilities• Structure, i.e. current number of business units and their exact scope not set in stone for the full strategy period
– but expected to remain unchanged during first half of the period
Strategy 2011-2015 ”Powered by NKT”
2010Goal2015 2010
Goal2015
Revenue, market prices (bnDKK) 14,5 ap. 20Revenue, std. prices (bnDKK) 11,5 ap. 16Average organic growth (CAGR) 12% 7-8%
Gearing (NIBD/Equity) 100% <100%Operational EBITDA margin, std. prices 8,6% 14-15% NIBD/Operational EBITDA 4,2x <2,5x
Solvency ratio 33% >30%Return on Capital Employed (RoCE) 7,5% 20%
Earnings per share, EPS (DKK) 11,3 50
Presentation 1March 2011
Page 7NKT Holding A/S / DDF presentation 7 June 2012
Page 7
Megatrends
Presentation 1March 2011
Page 8NKT Holding A/S / DDF presentation 7 June 2012
Page 8
NKT Cables
VISIONNKT Cables is creating value for its customers by providing solutions with cables
Presentation 1March 2011
Page 9NKT Holding A/S / DDF presentation 7 June 2012
Page 9
500 kV
30 kV – 500 kV
110 kV-500 kV
10 kV – 30 kV
1 kV
OPGW /OPPC
OPGW- /OPPC-Accessoires
Submarine cables
HV accessoiresup to 500 kV
HV cablesup to 500 kV
MV cables 10 kV - 30 kV
Cabinets and Boxes1 kV-cables
Installation cables
Accessoires10 kV - 36 kV
VALCAP Monitoring
Superconducting cables
Energy flow with NKT Cables product range
Presentation 1March 2011
Page 10NKT Holding A/S / DDF presentation 7 June 2012
Page 10
Product Scope for Sea Cables
All cable types are available with integrated optical fibres (On and Offshore)
From 2009 onwards longer cables lengths will be available
Medium voltage wind farm connections› Single core cables up to 10.000 m (36 kV) (Offshore)*› Three core cables up to 1.2000 m (36 kV) (Offshore)*
High voltage wind farm connections› Single core cables up to 3.000 m (145 kV) (Offshore)*
High voltage wind connections (Onshore)› Three core cables (170 kV)› Single core cables (420 kV)
Accessories› Appropriate accessories are available for all the cables
mentioned (On and Offshore)
Fibre Optic based monitoring with Real Time Thermal Rating system (RTTR)
› NKT own System for cables systems (On and Offshore)
Cluster cables› Complete scope of three core cables (Offshore)*
Presentation 1March 2011
Page 11NKT Holding A/S / DDF presentation 7 June 2012
Page 11
Utilities
41%
Whole-sales
29%
Industry
30%
Sales by Customers
Denmark
9%
Germany
25%
Eastern Europe
26%
Asia
13%
Other
27%
Sales by Markets
NKT Cables
Sales by Customers and Fields of Applications are based on std. prices for FY 2011. Sales by Markets is based on market prices for FY 2011.
Manufacturing and Sales CompaniesSales Entities
Railway
7%
Other
6%
Sales by Fields of Applications (Products)
Automotive 5%
Construction
19%
ElectricityInfrastructure
63%
63%
HV+offshore 33%
MV 18%
Other 12%
Presentation 1March 2011
Page 12NKT Holding A/S / DDF presentation 7 June 2012
Page 12
Nilfisk-Advance
MISSIONWe enable sustainable cleaning worldwide to improve quality of life
Presentation 1March 2011
Page 13NKT Holding A/S / DDF presentation 7 June 2012
Page 13
Industrial
36%
Domestic
12%
Sales by Customers
Commercial
52%
EMEA
64%
Americas
24%
APAC
12%
Sales by Markets
Nilfisk-Advance
Sales EntitiesManufacturing Companies
All data based on FY 2011
Floor-care
41%
Vacuum cleaners
25%
High pressure washers
19%
Service
8%
Other sales
7%
Sales by Products
Presentation 1March 2011
Page 14NKT Holding A/S / DDF presentation 7 June 2012
Page 14
Sustainability
Consolidation
Continued cleaning
outsourcing
Customer WC reduction
• Emerging markets are gradually adapting cleaning standards ofdeveloped countries, driven in particular by entrance of supermarket chains (requiring modern cleaning standards)
• Requirements for reduction of power, water and detergents
• Increasing demands for suppliers being “green” throughout entirebusiness system
• Customers focusing on cash and predictability and asking forinnovative solutions
• Large customers are demanding that suppliers take over theresponsibility for entire fleets of machines, including servicing andproposals for refurbishments/replacements
• Consolidation in the industry is expected to continue in order to gain scale advantages and broaden product range and geographical reach
• Contract cleaners taking increasing share of cleaning/facility management across all customer segments
• Increasing professionalisation of contract cleaners’ central purchasing
Growth in emerging markets
Nilfisk-Advance - Industry trends
Presentation 1March 2011
Page 15NKT Holding A/S / DDF presentation 7 June 2012
Page 15
Photonics Group
Presentation 1March 2011
Page 16NKT Holding A/S / DDF presentation 7 June 2012
Page 16
Photonics Group
NKT Photonics
48%Lios
Technology
22%
Vytran
30%
Sales by entities
HQ NKT PhotonicsHQ Lios TechnologyHQ Vytran
All data based on FY 2011
Presentation 1March 2011
Page 17NKT Holding A/S / DDF presentation 7 June 2012
Page 17
Photonics Group
Ultra Precise LasersKOHERAS
• Security (Perimeter)
• Wind measurements
• Oil exploration andexploitation
• Large displays
High Power Fiber LasersCrystal Fibre
• Cutting and welding
• Semiconductor and solarcell production
• Anti missile defence
• Marking
Super Continuum(White Light)KOHERAS & Crystal Fibre
• Biotech/microscopy
• Measurement/test equipm.
• Semiconductor inspection
• Surface topography
Distributed Temperature SensingLIOS Technology
• Fire detection
• Power cable monitoring
• Oil exploitation
• LNG terminals andtankers
• High temp. ovens
• Global market size: ~ 1,1 bn. DKK• 9% of total laser market • 30 - 40% annual growth rate• Substitution from conventional lasers
• Market growing from low base• New functionality drives application market• Potential market of 1 bn. DKK
• Market growing from low base• New functionality drives application market• Potential to substitute conventional lasermarket of estimated 1 bn. DKK
• Global market size: ~ 0,5 bn. DKK• Market for power cable monitoring andoil exploitation expects to show stronggrowth
Presentation 1March 2011
Page 18NKT Holding A/S / DDF presentation 7 June 2012
Page 18
Agenda
Facts about NKT (5 min)
SWOT Analysis (15 min)
Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)
Presentation 1March 2011
Page 19NKT Holding A/S / DDF presentation 7 June 2012
Page 19
SWOT Analysis
Healthy Balance Sheet Clear strategy supported by compelling mega trends Global mindset and footprint Further improvement potential Diversity in business portfolio yields balanced risk Good Corporate Governance and CSR in place Long term industrial approach minded at superior value creation Active ownership
Presentation 1March 2011
Page 20NKT Holding A/S / DDF presentation 7 June 2012
Page 20
SWOT Analysis
Cable division underperforming- Deployed assets yet underutilised- Offshore segment immature - Exposure to large projects- Exposure to delays on customer side
Photonics remains to develop into industrial division
Nilfisk-Advance lacks service offerings in US due to indirect distribution model
Presentation 1March 2011
Page 21NKT Holding A/S / DDF presentation 7 June 2012
Page 21
SWOT Analysis
EU energy policy Renewable energy Emerging markets Continued polarisation in professional cleaning equipment sector China infrastructure Continued urbanisation Consolidation in industries
Presentation 1March 2011
Page 22NKT Holding A/S / DDF presentation 7 June 2012
Page 22
SWOT Analysis
Adverse macro economic development Euro collapse Political exposure in China Consolidation in industries
Presentation 1March 2011
Page 23NKT Holding A/S / DDF presentation 7 June 2012
Page 23
Agenda
Facts about NKT (5 min)
SWOT Analysis (15 min)
Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)
Presentation 1March 2011
Page 24NKT Holding A/S / DDF presentation 7 June 2012
Page 24
Value creation in a 25 year perspective
• Value 1987 1,2 bn. DKK • Value 2012 5,0 bn. DKK• Dividend pay-out 6,3 bn. DKK
Shareholder return:• > 9% annual return = 9,4 times pay back
of investment
1,2
11,3
Presentation 1March 2011
Page 25NKT Holding A/S / DDF presentation 7 June 2012
Page 25
Cash generationmDKK
-1.500
-1.300
-1.100
-900
-700
-500
-300
-100
100
300
500
700
900
1.100
1.300
1.500
Q4-07
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Cash flow - operations LTM Cash flow - investments LTM (excl. acquisitions)
Free cash flow LTM Operationelt EBITDA LTM
Presentation 1March 2011
Page 26NKT Holding A/S / DDF presentation 7 June 2012
Page 26
Ambitions
Return on invested capitalWorking Capital management Tax management Capital structure
Capex management
Cash Conversion (EBITDA to CFFO) : 70-80%(EBIT to FCF) : 70-80%
FCF Yield of current Market Cap: 10 – 20% p.a.
Target: Increase 10% pointsTarget: Reduce 2-3% pointsTarget: 20-25% of EBTTarget: NIBD/EBITDA < 2,5x
Maintenance Capex: 250 mDKKProduct dev. etc: 150 mDKK
Presentation 1March 2011
Page 27NKT Holding A/S / DDF presentation 7 June 2012
Page 27
Return on invested capital
RoCE determines capital allocation
- Capacity expansions- Acquisitions- Product development
Leavers to increase return:
- Customer Satisfaction- People & Performance- Risk Management
- Growth combined with operational gearing- Product portfolio management (high value added)
- Capacity utilisation (existing markets / new markets)
- Price management (“Return on Customers”)
- Cost competitive products (Mgt. footprint, sourcing)
- Reduce complexity- Strict overhead cost control
- Reduce Working Capital- Capex management / “Positioning in the value chain”
Presentation 1March 2011
Page 28NKT Holding A/S / DDF presentation 7 June 2012
Page 28
Return on invested capital
What do we do• Analyse all cost related to specific product
variants• Work to correct prices or eliminate variants
Heavy pruning
What do we do• Define a vision of “100% modularity”• Include modularity principles in new product development
Modularity
What do we do• Define healthy business policies and
processes around customer profitability• Support implementation of these processes
in small and medium-sized sales companies
Barnacles
Presentation 1March 2011
Page 29NKT Holding A/S / DDF presentation 7 June 2012
Page 29
Return on invested capital
• Service sustained at 95%/98%
Global Operations
Delivery performance on par with or above industry average
• Global Operations structure
• Next wave of improvements defined
• Rethink our structure and service levels
Reduce future inventory levels
Presentation 1March 2011
Page 30NKT Holding A/S / DDF presentation 7 June 2012
Page 30
Return on invested capital
What do we do• Acquired Chinese factory with HV capabilities• Factory upgrade to our standards• Qualification of HV products (220 kV and above)
China HV Market
What do we do• Build a new HV factory with subsea cable capabilities• Establish a project organisation• Step-up on mgt. capacity and risk management
Energy policy in EU
What do we do• Waiting for re-activation by Ministry of Railway• Factories in ramp-up mode• Technology development• Expand offering to rail segment (MV cables, Signal cables)
High Speed Rail in China
25% of total Capital Employed / 40% of Tangible Fixed Assets are structurally well positioned, but yet underutilised
Presentation 1March 2011
Page 31NKT Holding A/S / DDF presentation 7 June 2012
Page 31
Return on invested capital
Presentation 1March 2011
Page 32NKT Holding A/S / DDF presentation 7 June 2012
Page 32
Working Capital management
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
0
50
100
150
200
250
300
350
400
450
500
Wor
king
Cap
ital
in m
€LT
M
WC in % of Sales @ MP
WC monthly in m€ LE I BU 12 WC in %of Net Sales LTM WC in %of Net Sales 3 mth
131 124 125 117 124 126 131 138 142156 164 169 181 177 181 180 180 191 187 180
201217
235 227213 205 203 204 203 196 186
170 172186
202 206
74
6771
6670 69 71
8591
116
10298
95
87 89
80 81 7973 71
84
98
107
99
87
80 8183
87 87 86 8591
106
113 114
73 76 77 79 81 82 84 85 87 88 89 89 90 88 88 86 87 87 86 85 85 85 86 86 87 89 89 90 90 92
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
Inve
ntor
y in
m€
Inve
ntor
y in
CO
GS
Day
s
Inventory NET in Days, excluding POC element
Inventory in m€ Inventory days 3 months Inventory days 12 months of 3 months
161177 182 176 181 178 175
137 145 148165
175191
209 205 210
235246 240
213 221
246 239257
246236 243
256245 237
253
221 218237
221 228
6569
7371
7371
67
58
64
7471
6967
70 68
64
7067
65
58
65
7876
78
73
6972
7371 70
75
6771
8482 83
68 68 69 69 69 69 69 69 69 68 68 67 67 67 67 68 68 69 69 69 70 70 70 71 72 72 73 73 74 74
0,0
50,0
100,0
150,0
200,0
250,0
0
10
20
30
40
50
60
70
80
90
Trad
e ac
coun
ts r
ecei
vabl
es i
n m
€
Trad
e ac
coun
t re
ceiv
able
s in
Day
s
Trade accounts receivables Days
BU 12 LE I Trade receivables in m€ Trade receivables days 3 months Trade receivables days 12 months of 3 months
67 72 69 7180 84 80 74
87 86 8494
102111 113
125133
151160
146 145161
174
144 139 140
156 160174 167 165
177
143
160
182 18138
43
4041
4446
42 42
49 50
4345
4445
47
50 51 51 5149 49
54 55
5053
58
6264
6866 66
81
69
78 7876
44 43 44 44 43 44 44 44 45 46 46 47 47 48 48 48 49 50 50 51 53 5455 57 58
6062
6466
68
0
20
40
60
80
100
120
140
160
180
200
0
10
20
30
40
50
60
70
80
Trad
e ac
coun
ts p
ayab
les
in m
€
Trad
e A
ccou
nts
Paya
bles
in D
ays
Trade Accounts Payables in Days
BU 12 LE I Trade Paybles in m€ Trade Payables days 3 months Trade payable days 12 months of 3 months
Presentation 1March 2011
Page 33NKT Holding A/S / DDF presentation 7 June 2012
Page 33
Working Capital management
Presentation 1March 2011
Page 34NKT Holding A/S / DDF presentation 7 June 2012
Page 34
Capex management
0
0,01
0,02
0,03
0,04
0,05
0,06
0,07
0,08
0,09
0,1
100
200
300
400
500
600
700
800
900
1.000
jan-
07
jan-
08
jan-
09
jan-
10
jan-
11
jan-
12
CAPEX ex. Cologne and CangzhouCologne and Cangzhou
% of revenue (LTM)
2009 2010 2011 20122008
mDKK
2007
Gross CAPEX in Q1 2012 is 89 mDKKvs. Q1 2011: 99 mDKK
Investments in intangible assets in Q1 2012 are 36 mDKK vs. Q1 2011: 29 mDKK
NKT Cables
70%
Nilfisk-Advance
28%
Other 2%
NKT Cables
17% Nilfisk-Advance
78%Other 5%
Presentation 1March 2011
Page 35NKT Holding A/S / DDF presentation 7 June 2012
Page 35
Capital structure
• NIBD of 4.491 mDKK as per 31 March 2012 vs. 4.429 mDKK as per 31 December 2011
• End March 2011 net interest bearing debt amounts to 4,3x operational EBITDA (end 2011: 4,3x). Max. NIBD of 2,5x operational EBITDA remains the internal target. Proforma (incl. the sale of NKT Flexibles) 2,4x
• Gearing of 109% (Q1 2011: 121%). Max. ratio of 100% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 46%
• Solvency ratio of 30% (Q1 2011: 29%). Ratio >30% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 41%
Q1 2011
5,0x4.821mDKK
Q1 2012
4,3x4.491 mDKK
0,0x
1,0x
2,0x
3,0x
4,0x
5,0x
6,0x
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
Q1-
08
Q2-
08
Q3-
08
Q4-
08
Q1-
09
Q2-
09
Q3-
09
Q4-
09
Q1-
10
Q2-
10
Q3-
10
Q4-
10
Q1-
11
Q2-
11
Q3-
11
Q4-
11
Q1-
12
Prof
o…
mDKK Net interest bearing debt, mDKK
Net interest bearing debt relative to operational EBITDA