Kongsberg Gruppen Asa · OSL:KOG
Kongsberg Gruppen Asa — Investor Day (September 2019)
29 slides from Kongsberg Gruppen Asa's investor day presentation, Sep 24, 2019
Slide 1: Ambitions
AMBITIONS 24/09/2019 Gyrid Skalleberg Ingerø, Group CFO KONGSBERG GRUPPEN ASA KONGSBERG PROPRIETARY: This document contains KONGSBERG information which is proprietary and confidential. Any disclosure, copying, distribution or use is prohibited if not otherwise explicitly agreed with KONGSBERG in wri
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, estimates and projections of the Company or assumptions based on information currently available to the Company. Such forward-looking in
Slide 3: Key drivers for value creation
Key drivers for value creation ONE KONGSBERG CAPITAL SUSTAINABLE IMPROVE TECHNOLOGY ALLOCATION GROWTH PROFITABILITY POWER HOUSE HARVEST TECHNOLOGY SOLID BALANCE SHEET. GROW AT OR ABOVE INCREASED SYNERGIES ACROSS INVEST FOR ORGANIC MARKET PROFITABILITY GROUP GROWTH EBITDA-MARGIN SHAREHOLDER RETURN BN
Slide 4: Improving revenue trend
Improving revenue trend Revenues (MNOK) ▪ 2012-2014 Growth excl. CM* ‒ Strong growth from overheated offshore market -11% +5% ‒ Declining defence revenues due to falling CROWS volumes 17 032 17 171 16 613 15 601 16 323 15 845 2 029 ▪ 2015-2018 722 14 490 14 380 754 ‒ Stop in offshore contracting led
Slide 5: Commercial Marine weighing on improving margins
Commercial Marine weighing on improving margins EBITDA-Margin* ▪ 2012-2014 ‒ Hot offshore market founding strong profitability 18% ‒ Drop in defence margins due to decline in Remote 16% Weapon Station (CROWS) volumes 14% 14,0 % ▪ 2015-2018 12% ‒ KM margins challenged by declining volumes and price 1
Slide 6: Steady EPS-contribution from KDA, KM fluctuates
Steady EPS-contribution from KDA, KM fluctuates Earnings Per Share (NOK)* ▪ KDA proving a stable foundation ▪ KM market more cyclical 14 ▪ Equity rights issue in 2018 diluting EPS until Commercial Marine turn-around materialize 9 4 EPS -1 2012 2013 2014 2015 2016 2017 2018 LTM Q2 2019 -6 Kongsberg M
Slide 7: Key drivers for value creation
Key drivers for value creation ONE KONGSBERG CAPITAL SUSTAINABLE IMPROVE TECHNOLOGY ALLOCATION GROWTH PROFITABILITY POWER HOUSE HARVEST TECHNOLOGY SOLID BALANCE SHEET. GROW AT OR ABOVE INCREASED SYNERGIES ACROSS INVEST FOR ORGANIC MARKET PROFITABILITY GROUP GROWTH EBITDA-MARGIN SHAREHOLDER RETURN BN
Slide 8: Our capital allocation priorities
Our capital allocation priorities 1. Solid balance sheet CAPITAL 2. Invest for organic growth ALLOCATION 3. Shareholder remuneration SOLID BALANCE SHEET. INVEST FOR ORGANIC GROWTH 4. Portfolio management SHAREHOLDER RETURN WORLD CLASS – Through people, technology and dedication KONGSBERG PROPRIETARY
Slide 9: Rationale for having a solid balance sheet
1. Solid balance sheet Rationale for having a solid balance sheet Leverage ratio* 2,8 1,8 ▪ Medium term target of Net debt/EBITDA of 1.0x +/- 1.0x 1. Access to ▪ Securing investment grade credit rating equivalent and access to debt capital markets 0,8 1,8 funding ▪ Committed credit facility acting a
Slide 10: Technology development securing our positions
2. Invest for organic growth Technology development securing our positions Self-funded R&D R&D spending (MNOK)* ▪ R&D - investing to secure #1 positions KM (in % of Rev.)* R&D in % of Rev.* ‒ Self-funded R&D 5-6% of revenues KDA (in % of Rev.)* ‒ In addition we benefit from customer 7% funded R&D 1
Slide 11: Investments
2. Invest for organic growth Investments Capital expenditures 2012-2018 Capital expenditures (MNOK) ▪ Investments ex. R&D averaging 2.6% of 700 5% revenues 4,0 % 4% ‒ Few production facilities requiring high 600 investments 3,4 % 4% ‒ Low level of machinery and equipment 500 related to operations 3%
Slide 12: Fluctuating working capital
2. Invest for organic growth Fluctuating working capital Net Working Capital – Kongsberg Maritime (MNOK) ▪ Net working capital has fluctuated significantly ‒ KDA: Mainly related to payment structure and 2 500 22,2 % 25% 19,4 % 19,2 % 19,5 % project timeline within large projects 2 000 17,4 % 20% 16,
Slide 13: Healthy shareholder remuneration
3. Shareholder remuneration Healthy shareholder remuneration Dividends 1 600 126% 120% ▪ Dividend policy of 40-50% of net income 1 400 1 320 1 225 1 200 100% ‒ Actual pay-outs from 2013 above interval 1 110 81% ‒ Evaluate special dividends or share 1 000 80% buybacks as a supplement on a case-by- 88
Slide 14: Active management of business portfolio
4. Portfolio management Active management of business portfolio - Investments of 8 billion last 4 years KONGSBERG ▪ Support & COMMERCIAL MARINE AVIATION MAINTENANCE develop Patria SERVICES ▪ Integrate Commercial Marine ▪ Integrate Kongsberg PATRIA Aviation Maintenance Services WORLD CLASS – Through
Slide 15: Key drivers for value creation
Key drivers for value creation ONE KONGSBERG CAPITAL SUSTAINABLE IMPROVE TECHNOLOGY ALLOCATION GROWTH PROFITABILITY POWER HOUSE HARVEST TECHNOLOGY SOLID BALANCE SHEET. GROW AT OR ABOVE INCREASED SYNERGIES ACROSS INVEST FOR ORGANIC MARKET PROFITABILITY GROUP GROWTH EBITDA-MARGIN SHAREHOLDER RETURN BN
Slide 16: Recent pick up in order intake founds growth
Recent pick up in order intake founds growth Order intake and Revenues (MNOK) Order backlog 33.095 30.000 27.807 30.000 25.000 25.000 35% 2021-> 22.097 20.000 16.574 20.000 (2020) 15.043 15.238 16.805 14.605 14.319 13.430 15.000 15.000 2020 29% 2020-> 36% 16.613 17.032 18.238 (2019) 10.000 15.601 16
Slide 17: Short- and long-term backlog improved in KM
Short- and long-term backlog improved in KM Order intake and Revenues - KM (MNOK) Order backlog (KM) 13.168 15% 2021-> 15.000 42% 2020 12.786*) 5.395 11.140 14% 2020-> 9.441 9.804 40% 10.000 8.455 8.884 43% 2019 8.438 7.940 2.827 7.336 2019 46% 2018 JULY 2019 JULY 2018 9.568 10.197 5.000 8.264 8.597
Slide 18: KDA: Solid pick up in order intake, major improvement in backlog
KDA: Solid pick up in order intake, major improvement in backlog Order intake and Revenues - KDA (MNOK) Order backlog (KDA) 19.078 50% 2021-> 15.000 14.110 10.664 36% 2020-> 32% 2020 37% 2019 10.000 9.018 18% 2019 27% 2018 6.885 5.426 5.376 JULY 2019 JULY 2018 4.754 5.000 3.232 Average distribution
Slide 19: Top line growth
Top line growth KONGSBERG 2022 REVENUES Our journey towards 2022 >BNOK 30 Revenues (BNOK) ▪ Positioned and ready for growth 30+ ‒ The «New» Kongsberg Maritime ‒ Well positioned for underlying growth within defence Revenue split by business area 2022 Other 8 2018 Other 3% KDA 14 28% 33% KM KDA 2018 C
Slide 20: Key drivers for value creation
Key drivers for value creation ONE KONGSBERG CAPITAL SUSTAINABLE IMPROVE TECHNOLOGY ALLOCATION GROWTH PROFITABILITY POWER HOUSE HARVEST TECHNOLOGY SOLID BALANCE SHEET. GROW AT OR ABOVE INCREASED SYNERGIES ACROSS INVEST FOR ORGANIC MARKET PROFITABILITY GROUP GROWTH EBITDA-MARGIN SHAREHOLDER RETURN BN
Slide 21: Increased profitability
Increased profitability KONGSBERG 2022 EBITDA-margin Our journey towards 2022 >12%* KONGSBERG KONGSBERG KONGSBERG MARITIME DEFENCE & AEROSPACE DIGITAL Capitalise on Deliver Kongsberg Aviation & Maintenance Capitalise on 1. Deliver Commercial Marine Services and Patria in the cross business synergies
Slide 22: Profitability ambitions (excluding IFRS16)
Profitability ambitions (excluding IFRS16) Our journey towards 2022 KONGSBERG 2022 EBITDA-margin KONGSBERG >12% MARITIME EBITDA-margin >11% KONGSBERG DEFENCE & AEROSPACE KONGSBERG EBITDA-margin EBITDA-margin >14% KONGSBERG DIGITAL & OTHER >12% EBITDA-margin >12% WORLD CLASS – Through people, technol
Slide 23: IFRS16 adjustments
IFRS16 adjustments Est. full year effects from IFRS16 adjustments (MNOK) ▪ EBITDA -and depreciation effects estimated to be ~equal in the period towards 2022 ▪ Effects from interest leasing will gradually ~450 decrease in the period, hence long term effect on EBT will be ~0 towards 2022 ~350 ~100 ~1
Slide 24: IFRS16 adjustments continue
IFRS16 adjustments continue Depreciation per business area Est. full year effects from IFRS16 adjustments (MNOK) ~450 ~270 ~120 ~100 ~40 EBITDA effect Depreciation KM Depreciation KDA Other/Eliminations EBIT *Other includes Group, KDI, property and eliminations WORLD CLASS – Through people, technolo
Slide 25: Estimated tax impact
Estimated tax impact Effective and payable tax rate until 2022 Tax ▪ Increased profits → Increased taxes → Accelerated use of tax positions ▪ KONGSBERG carries approx. BNOK 3.5 of losses carry forward positions ▪ Offshore taxes will not be impacted Payable ▪ Improved cash flow as deferred tax assets
Slide 26: Approaching turning point on ROACE
Approaching turning point on ROACE Average Capital Employed (MNOK) and ROACE (%) ▪ Patria investment and Commercial Marine (CM) acquisition 39,2 % increasing capital employed. 10 000 40% 9 240 ‒ The turnaround of CM is in the early stages 9 000 33,6 % 8 565 35% 32,4 % 7 821 8 000 7 567 30% 7 000 23,
Slide 27: Roadmap 2019-2022
Roadmap 2019-2022 Improved ROACE Solid growth Improved profitability 45% 39,2 % Manage the current & 40% invest for the future 35% 33,6 % 32,4 % 30% 25% 23,5 % 20% 15% 12,5 % 11,0 % 8,8 % 9,0 % 10% 1. Solid 2. Invest for 3. Shareholder 4. Portfolio balance sheet organic growth remuneration managemen
Slide 28: KONGSBERG 2022
KONGSBERG 2022 >BNOK 30 revenues with solid improvement in profitability KONGSBERG 2022 KONGSBERG has a solid basis for growth Revenues going forward REVENUES >BNOK 30 Scale, synergies and improved efficiency KONGSBERG 2022 Profitability ➔ improved profitability EBITDA-margin >12%* Shareholder Divid
Slide 29: KONGSBERG PROPRIETARY - See Statement of Proprietary information
KONGSBERG PROPRIETARY - See Statement of Proprietary information