september, 2016 · o maintpartner, bis production partner (bilfinger industrial services), empower...
TRANSCRIPT
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September, 2016
Sakari Toikkanen, Interim President and CEOAntti Heinola, CFOMilena Hæggström, Head of IR
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° Business and strategy
° Market overview
° Financials
° Appendix
Contents
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Business and strategy
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Caverion
Caverion in brief
4
EBIT
61EUR million
2.2%of revenue
Germany 22%
Sweden 22%
Denmark-Norway 21%
Industrial Solutions 15%
Finland 12%
Austria 6%
Eastern Europe 3%
Revenue by division in 2015
EBIT
61EUR million
2.2%of revenue
Caverion designs,builds, operates andmaintainsuser-friendly andenergy-efficientsolutions for buildings,infrastructure andindustrial plants.
Company Presentation September 2016
Key figures in 2015Revenue
2,443 EUR million
Personnel 17,321(average)
Order backlog1,461 EUR million
EBITDA91.5 EUR million
(3.7% of revenue)
Free cash flow53.9 EUR million
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Caverion
Megatrends supporting demand for our business
Increasingtechnology
° Technology in buildingscurrently account for40−60% of buildingcosts.
° Integrated technologiesrequire multi-disciplineexpertise.
° Maintenance isincreasingly based onpreventive measuresas well as on actualneeds and conditions.
Improving energyefficiency
° Tightening legislationrelating to energyefficiency
° Integrated technologiesrequire multi-disciplineexpertise.
° Increasing demand forenergy-efficient solutionsalso for existingbuildings
Growingdigitalisation
º All technologies inbuildings have an IPaddress.
º Demand for remotemonitoring isincreasing.
º 10,000 buildingscurrently underCaverions’ remotecontrol.
Urbanisationcontinues
° Needs for necessaryinfrastructure (water,sanitation, energy,information,transportation)increase.
° Urban developmentmanagementimportant (manage ofland, housing,working environment,transportation)
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Caverion
We area leading European
provider of advanced and sustainablelife cycle solutions for buildings and industries.
Profitability(EBITDA) over 6% of
revenue
Average annualrevenue growth > 10%
Negativeworking capital
Increasingprofits
Stronggrowth
Innovativeand advancedsolutions
We design, build, operate and maintain user-friendly and energy-efficientsolutions for buildings, infrastructure and industrial plants.
Step ahead + Cooperation + Responsibility + High performance
Vision
FinancialTargets
Strategicfocusareas
Mission
Values
Operationalexcellence
Strongcompanyimage
Excellentleadership
Strategy to addressmegatrends
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Caverion
Business areas
º At its widest form delivered asManaged Life CycleSolutions.
º Services can be executedeither by Caverion or thirdparties.
º In total some 100 contracts inthis area.
º Small and mid size projectsand maintenance agreements
º Single and multipletechnologies
º Over 30,000 contracts in thisarea
º Contract volume > EUR 5mº Integrated solutionsº Customisationº Life Cycle focusº Caverion is running some 50
projects of this type.
Technical Installation &Maintenance Managed ServicesLarge Projects
Pie charts: Estimated share of Group revenue in 2015.Company Presentation September 2016
Number of competitorsBarriers of entry, complexity, margin potential, risk level
7
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Caverion
Lorem IpsumIs simply dummytext of the printingand typesettingindustry.
Lorem IpsumIs simply dummytext of the printingand typesettingindustry.
Lorem IpsumIs simply dummytext of the printingand typesettingindustry.
Lorem IpsumIs simply dummytext of the printingand typesettingindustry.
Business mix supporting growth
Life Cycle Solutions° Includes design,
installation of buildingsystems, operation,maintenance as well asrenovation throughout thecontract period.
° Maintenance period of 20-25 years against a fixedmonthly fee in PPPprojects.
° Investment phase typicallyrun in a consortia.
8 Company Presentation September 2016
Large Projects
° Proactively sold, Large Projectswith total technical solutions.
° Typically includes advisoryservices, design & engineering,project management andexecution.
° Caverion is responsible formanaging project fulfilment.
Managed Services
° Medium term contracts to operate,develop and maintaintechnology/systems and relatedprocesses in commercial,industrial and residential buildings.
° Including both hard services andsometimes some contracted softservices
Technical Installations
° Renovations and new buildings,can include one or severaldisciplines.
° Technical design is done by theclient, or his representative.
° Caverion is responsible forproject execution of TechnicalInstallations.
Technical Maintenance
° Fixed price preventivemaintenance contract
° Corrective maintenanceperformed on time and material(“ad-hoc”).
° Small improvement projects(“service projects”)
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Caverion
A fully industrialised and unique market offeringA fundament for development of the business mix
9 Company Presentation September 2016
AdvisoryServices
Design &Engineering
Services
ProjectManagement
ProjectExecution
TechnicalMaintenance
ManagedServices
Public
Industry
Real estateowners anddevelopers
Real estateusers
Generalcontractors
Commercial view for eachservice area
Valuepropositionfor eachclientsegment
Life Cycle Solutions
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Caverion 10 Company Presentation September 2016
1. Megatrendsdrive our strategy.
Reaching our strategic targets
2. Operational model& EnterpriseArchitecture in placeto enable profitablegrowth
3. Our business mixis being developedto drive profitablegrowth.
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Market overview
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Caverion
We have strong growth potential in the fragmented market
Technical Installation andand Maintenance 66%
Large Projects21%
Managed Services13%
Revenue breakdown1-6/2016
12
Strong marketposition in allkey operatingcountries
Main competitors by country/division
Finlando Are, Imtech Nordic , ConstiSwedeno Bravida, Imtech Nordic, Midroc Electro ABNorwayo Gunnar Karlsen, Bravida, OrasDenmarko Kemp & Lauritzen, Wicotec Kirkebjerk,
BravidaGermanyo Bilfinger Facility Services, ROM Technik,
Strabag PFSAustriao Ortner, EQOS Energie, CofelyIndustryo Maintpartner, BIS Production Partner
(Bilfinger Industrial Services), Empower
Company Presentation September 2016
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Caverion
Market outlook for Caverion’s business in 2016
13 Company Presentation September 2016
Large Projectso Positive signs both in received
orders and tendering activity.o Demand for design & build of
Total Technical Solutionsexpected to develop favourably.
o Uncertainty in economicalsituation has affected newprojects resulting in pricepressure and further projectpostponements or cancellations.
Technical Installationand Maintenanceo Market is expected to remain
stable and price competition tightin Technical Installation.
o Requirements for increasedenergy efficiency, better indoorconditions and tighteningenvironmental legislation supportmarket development.
o In Norway general economyimpacted by slowdown in the oilindustry.
Managed Serviceso Need for new services and the
demand for life cycle solutions areexpected to increase.
o Clients’ focus on their coreoperations opens opportunities inoutsourced operation andmaintenance mainly for publicauthorities, industries and utilities.
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Financials
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Caverion
Outlook for 2016 and strategic financial targets
15
2015 (actual)
º Revenue growth: 2%º EBITDA margin: 3.7%º Working capital: EUR
-13.6m
Outlook 2016*º Revenue: estimated to
remain at the previous year'slevel (2015: EUR 2,443million).
º EBITDA excl. restructuringcosts: estimated to decreaseclearly from the previousyear's EBITDA level (2015:EUR 91.5 million)
Strategic financialtargetsº Revenue growth: average
annual growth > 10%º EBITDA margin: > 6%º Working capital: negative
New timeline for the reachingthe targets will be given laterthis year.
Company Presentation June 2016
Revenueº Strong focus on Managed
Services with a highergrowth profile and LargeProjects with total technicalsolutions and a higherdesign content
Profitabilityº Restructuring actionsº Strong focus in business mix
towards growth areas(Managed Services andLarge Projects) with highermargin potential
º Increasing procurement andadministrative efficiency
Working capitalº Focus on efficient invoicing
and working capitalmanagement
º Provides flexibility to managethe other two financialtargets
Key actions supporting achievement of our strategic financial targets
*Revised June 20, 2016.
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Caverion
Restructuring status update
° Profitability problems due to resource overcapacity during2016.
° Cost reductions initiated through temporary layoffs andpersonnel reductions, estimated to affect up to 700employees.
° Main focus in divisions Sweden, Denmark-Norway andGroup Services.
° By the end of June 292 employees have beenpermanently laid off and there were 62 people ontemporary leave in division Norway.
° Total restructuring costs for 2016 are estimated to be in theregion of EUR 22-26 million.
° During H1 restructuring costs amounted to EUR 9.5million.
16
292
408
H1 Est. H2
Personnel ReductionFY2016E: 700
9,5
H1 Est. H2
Restructuring CostsFY2016E: EUR 22-26m
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Caverion
Status update on division Sweden
Challenges° Resource overcapacity° Organisation structure and management
° Organisation layers, region management changed,roles and responsibilities
° Challenges in executing and managing projects° A more detailed project review was conducted in
Sweden for more than a hundred of ongoing projects.° Lack of project management competence
Immediate actions° Personnel reductions affecting Sweden° Stabilise and review the organisation structures° Project management office (PMO) to be supported by
the Projects Group function.° More control, audit and follow-up in the project
business° More internal training to be carried out.
17
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Caverion
Strong order backlog development in Q2
18
° Order backlog grew by 12%compared to the previousyear (by 13% at comparableexchange rates).
° The order backlogcontinued to increasereflecting the growth targetsin Large Projects andManaged Services.
1 554
Order backlogEUR million
Company Presentation September 2016
Q1 Q2 Q3 Q4
Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013).,
+12%
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Caverion
Revenue development
19
242270 267
177137
72 36
257 247 229182 156
7136
Germany Sweden Denmark-Norway IndustrialSolutions
Finland Austria Eastern Europe
1−6/15 1−6/16
Revenue breakdown by divisionEUR million
° Revenue was EUR 1,176.1million in January−June.
° The revenue growth waslargest in Finland, Germanyand Industrial Solutionscompared to the previousyear.
° In Denmark-Norway, therevenue is impacted by thegeneral economicenvironment in Norway.
° In Sweden Caverion has notbeen able to capitalise onthe current marketenvironment.
(-9%)
(13%)
(6%) (-14%)
(-2%) (1%)
Company Presentation September 2016
(3%)
591 588 567
660
563
638574
668
561616
1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 1−3/16 4−6/16
Group revenueEUR million
1−12/14: 2,407 1−12/15: 2,443
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Caverion
Operating environment by business area (H1/2016)
20 Company Presentation September 2016
Technical Installation andMaintenance
o The market was weaker thanexpected.
o The price competition was tight inTechnical Installations projects.
o In Norway, the business was stillimpacted by slowdown in the oilindustry.
o Still lower than expectedutilisation rate in Sweden.
Large Projectso Positive signs in tendering
activity, especially in the publicand industrial sectors.
o Recent uncertainty ineconomical situation hasaffected new projects resultingin price pressure and furtherproject postponements orcancellations.
Managed Services
o Demand remained strong.o Interest in PPP’s and other Life
Cycle Solutions increasing inthe Nordic countries while theystill represent only a marginalpart of the entire market.
Large Projects(21%)
ManagedServices (13%)
TechnicalInstallation andMaintenance(66%)
Revenue by business area1−6/2016
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Caverion
Profitability affected by restructuring actions
21
9,6 2,1
21,5
34,3
14,2
22,0 21,3
34,0
11.5
-14,4
1,6
0,4
3,8
5,2
2,5
3,4 3,7
5,1
2.0
-2,3
1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 1−3/16 4−6/16
EBITDA, EUR million
EBITDA margin, %o EBITDA negatively affected
by restructuring costs (EUR7.5 million for Q2).
o EBITDA excl. restructuringcosts for Q2 was EUR -6.8million.
o Project portfolio reviewed inSweden − Cost estimates andprovisions revised with anegative impact of EUR 15million for April–June.
o Investments in severaldevelopment projects andcommon processes alsoreflected in operationalexpenses.
Company Presentation September 2016
1−12/14: 67.5 (2.8%) 1−12/15: 91.5 (3.7%)
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Caverion
Working capital hasdeteriorated in 2016 dueto weak development inGermany and Swedendriven by delayed finalpayments in projects andlow invoicing.
Financial target: negative working capital
22
100
120
46
64
49 49
-19 -13
8
36
-14
1717
4%5%
2%
3%
2%2%
-1% -1%
0%
1%
-1%
1% 1%
Working capital,EUR millionWorking capital tosales, % (LTM)
Working capital
Company Presentation September 2016
6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16
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Caverion
Cash flow and investments
23
-15,8 -7,1
14,4
87,6
0,8
-6,3 -14,2
73,6
-28,8 -32,61−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 1−3/16 4−6/16
Free cash flowEUR million
o Cash flow has deteriorated in2016 due to low profitability,high level of investments andweak development inGermany and Sweden drivenby delayed final payments inprojects and low invoicing.
o Capex investments (incl.acquisitions) totalled EUR24.4 million in January-June.o IT investments: EUR 16.0
million.o Other investments, incl.
acquisitions: EUR 8.5million.
o Free cash flow = Operating cashflow before financial and tax items– Taxes paid – Net cash usedin investing activities (net,including acquisitions anddisposals).
Company Presentation September 2016
-11,1
4,1 20,5
100,0
9,8 1,8
-8,9
83,1
-18,8 -12,3
3,1 5,2 4,3 10,87,3 5,5 5,0 9,0 7,1
17,3
Operating cash flow before financial and tax items, EUR millionCapex, EUR million
1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 1−3/16 4−6/16
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Caverion
75
24 22 2010
2016 2017 2018 2019 2020+
Debt structure
24
o Loan portfolio total:EUR 150.9 million
o Average interest rateafter hedges: 0.91%
Loan portfolio Interest rate type(after hedges)
Debt maturityEUR million
Interim Report 1-6/2015
Lisää kuva tähän
Fixedinterest58%Floatinginterest42%
* Interest rates are hedged against interest rate rise.
*Banks 54%
Commercialpapers 42%
Insurancecompanies 3%
Others 1%
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Caverion
Liquidity
25
Gross debt to net debtEUR million
Liquidity reserve EUR 140 millionEUR million
Net debt, EUR million
Interim Report 1-6/2015
65
8620
131
Long-term borrowings Short-termborrowings
Cash and cashequivalents
Net debt 20
119
Unused creditfacilities
Cash and cashequivalents
o Net debt remains in Q42014 level
o Strong cash positionenabled voluntaryrepayment of gross debtby EUR 20 million
104
143132
50 50
85102
30
59
131
1,5x
2,4x 2,3x
0,7x 0,7x 0,9x 1,1x0,3x 0,7x
2,5x
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16
Net debt/EBITDA, Rolling 12 Months
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Guidance
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Caverion
Guidance for 2016 (revised on June 20)
27
Revenue
Caverion estimates thatthe Group’s revenue for2016 will remain at theprevious year's level(2015: EUR 2,443million).
EBITDA excludingrestructuring costsCaverion estimates that theGroup’s EBITDA excludingrestructuring costs for 2016will decrease clearly from theprevious year's EBITDA level(2015: EUR 91.5 million).
Company Presentation June 2016
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Caverion
Dividend policy
28
A dividend of EUR0.28 per share waspaid on April 4,representing 75% ofthe Group’s net profitfor 2015.
0,22 0,22 0,28
78%100% 75%
2013 2014 2015
Dividend per share, EURDividend pay-out ratio, %
Dividend pay-outat least 50%of the net profitfor the period.
Company Presentation September 2016
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Additional slides
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Appendix
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Caverion
Key figures
EUR million 4−6/16 4−6/15 Change 1−6/16 1−6/15 Change 1−12/15
Order backlog 1,554.2 1,393.1 12% 1,554.2 1,393.1 12% 1,461.4
Revenue 615.5 638.1 -4% 1,176.1 1,201.5 -2% 2,443.0EBITDA excluding restructuringcosts -6.8 - - 6.6 - - -
EBITDA margin excludingrestructuring costs, % -1.1 - - 0.6 - - -
EBITDA -14.4 22.0 -2.9 36.2 91.5
EBITDA margin, % -2.3 3.4 -0.2 3.0 3.7
Operating profit -21.5 15.5 -16.7 23.4 65.0
Operating profit margin, % -3.5 2.4 -1.4 1.9 2.7
Earnings per share, basic, EUR -0.13 0.08 -0.10 0.13 0.37
Working capital 17.1 7.7 123% 17.1 7.7 123% -13.6
Free cash flow -32.6 -6.3 -61.3 -5.5 53.9
Interest-bearing net debt 130.6 84.9 54% 130.6 84.9 54% 29.8
Personnel, average for the period 17,577 17,032 3% 17,541 17,018 3% 17,321
31 Company Presentation September 2016
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Caverion
17,664 employees at the end of June
32 Company Presentation September 2016
Germany 14%Sweden 20%Denmark-Norway 20%Industrial Solutions 16%Finland 14%Austria 5%Eastern Europe 10%Group Services 1%
Group-wide effort todevelop a Caverion wayof working and mindset:° Work safety and well-being of
all employees as a constantpriority
° Code of conduct to guidebehaviors of all employees inevery day collaboration
The planned personnelreductions are estimated toaffect up to 700 employees.
The main focus will be indivisions Sweden andDenmark-Norway as well asin Group Services
Employees by divisionat the end ofJune 2016
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Caverion
Changes in the Group organisation
° New Projects and ServicesGroup functions to beestablished.
° Implementation, audit andfollow up
° Support to divisions withchallenges
° Fixed costs will be reduced° Prioritisation of internal
development programmes° Less Group employees
33
* Martti Ala-Härkönen as of Sep. 19, 2016
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Caverion 34
M&A as a growth driver
M&A criteriao Good strategic fit
• Geographicalcoverage
• Business portfolio
• Customer sectors
o Complementary skills &resources
o Business culture
o Value creation potential
o Profitability turn-around
o Strong local marketposition
Valuation criteriao Internal valuation always
prepared
o Key indicators:
o EV/Sales
o EV/EBITDA
o EV/EBIT
o P/E and P/B
o DCF/Payback time
o Target values depend onthe target company’sprofile as well as marketsituation.
Company Presentation September 2016
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Caverion
Acquisitions have contributed to revenue growththrough the cycle
35
2002-2009 figures based on official segment reporting, i.e. sum of building systems and industrial services related revenue figures of YIT, including also internal sales.2010-2012 figures are external revenue figures based on Caverion’s carve-out segment reporting.2013 figures: 1-6/2013 carve-out + 7-12/2013 actual.
Revenue, EUR million
6781,021
1,680 1,797 1,8922,140
2,3962,125
2,353
2,876 2,8032,544 2 407 2 443
1 176
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1/2016
Calor AB ABB BuildingSystems
MCE AG caverion GmbH
Acquisitionperiod
Integration anddevelopment
Integration and developmentAcquisitionperiod
Group revenueEUR million
Company Presentation September 2016
EscoNorway
ArnegKühlmöbel
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Caverion
32,188 shareholders on August 31, 2016
36
Major shareholders on June 28,2013
Largest shareholdersShares,
pcs
% ofshare
Capital
Change afterJuly 2016,
pcs
Change afterJuly 2016, %
1Structor S.A. 17,840,000 14.20 0 0.00
2Herlin Antti 15,495,180 12.34 0 0.00
3 Ilmarinen Mutual Pension Insurance Company 5,013,946 3.99 0 0.00
4Fondita funds 3,552,000 2.83 0 0.00
5Nordea funds 3,532,503 2.81 -1,245,498 -26.07
6OP funds 2,871,094 2.29 124,334 4.53
7Aktia funds 1,888,970 1.50 0 0.00
8Varma Mutual Pension Insurance Company 1,864,393 1.48 0 0.00
9The State Pension Fund 1,850,000 1.47 0 0.00
10Elo Pension Company 1,611,089 1.28 0 0.00
11Säästöpankki funds 1,378,746 1.10 20,000 1.47
12SEB Investment Funds 1,211,516 0.96 -64,792 -5.08
13Brotherus Ilkka 1,048,265 0.83 0 0.00
14Odin funds 969,797 0.77 0 0.00
15Evli funds 713,571 0.57 -5,857 -0.81
16Föreningen Konstsamfundet rf 644,002 0.51 -175,000 -21.37
17Caverion Oyj 512,328 0.41 0 0.00
18Försäkringsaktiebolaget Pensions-Alandia 420,739 0.33 0 0.00
19Foundation of Brita Maria Renlunds minne 412,000 0.33 0 0.00
20OP Life Assurance Company Ltd 391,116 0.31 -7,543 -1.8920 largest, total 63,221,255 50.34
All shares 125,596,092 100
Nominee registered and non-Finnishholders 32.7% (Jun. 30, 2016:31.3%)Households20.8% (20.8%)
General government9.4% (9.3%)
Financial and insurance corporations12.4% (13.7%)
Non-profit institutions5.9% (6.2%)
Non-financial corporations andhousing corporations18.6% (18.7%)
Owners by category byshares owned
32,188 owners(July 31, 2016:
32,237)
Company Presentation September 2016