Bewi Asa · OSL:BEWI
Bewi Asa — Investor Day (September 2021)
85 slides from Bewi Asa's investor day presentation, Sep 30, 2021
Slide 1: Capital Markets Update
Capital Markets Update 30 September 2021
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation, prepared by BEWI ASA (the "Company"), may contain statements about future events and expectations that are forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, with
Slide 3: Presenters
Presenters Continuing our growth CEO Christian Bekken Efficient operations COO Jonas Siljeskär Becoming circular Director of Sustainability Camilla Bjerkli Innovation across the value chain R&D Director Ville Nurminen Financial perspectives CFO Marie Danielsson
Slide 4: Continuing our growth
Continuing our growth Christian Bekken CEO
Slide 5: Protecting people and goods for a better everyday
PAPER Protecting people and goods for a better everyday As a European provider of insulation and packaging & components solutions we are dedicated to creating value to customers, the society and our owners EPS w/flame
Slide 6: Sustainable solutions in circular value chains
Sustainable solutions in circular value chains Our products add value to the society Insulation Durable Shock absorbing of buildings and infrastructure Versatile Thermal efficiency Pitched roof Lightweight Odorless and non-toxic Customized components Cost effective Mold and moisture resistant soluti
Slide 7: Strong growth journey driven by M&A
Strong growth journey driven by M&A 599 Revenue 463 EUR million 430 381 ~30% 195 CAGR 170 170 2014 – Q2’21 102 2014 2015 2016 2017 2018 2019 2020 LTM Q2’21 Investment in M-Plast (FI), insulation extruding Por-Pac (SE), 1980 technology packaging operator BEWI founded 1973 1999 2011 2016 Drift Holding
Slide 8: Broad European foothold – local presence
Broad European foothold – local presence Diversified across geographies and end-markets 40+ years of growth and M&A Net sales LTM Q2’21 Strong market positions and attractive expansion opportunities Norway Other 20 % 25 % First mover advantages and high barriers to entry Portugal & Spain 6% Netherla
Slide 9: Integrated business model enable robust earnings
Integrated business model enable robust earnings Extensive industry knowledge throughout the value chain Net sales LTM1) Adj. EBITDA LTM1) • Model enable stable earnings in volatile markets 29% 26% 29% • Enhance innovation through knowledge 39% sharing across segments, regions and end-markets • Sour
Slide 10: Creating high value in specialised end-markets
Creating high value in specialised end-markets Joint product development with customers locally Downstream revenue split LTM Q2’21 EUR million Packaging & Components Insulation Manufacturing of standard and Manufacturing of an customised packaging solutions extensive range of insulation and technica
Slide 11: Established as a leading European provider
Established as a leading European provider Multiple #1 positions in European markets Packaging Insulation & Components Market position Market share Market position Market share 25- 30% 60 - 65% Denmark 2 1 40 – 45% 40 – 45% Netherlands 1 1 20 – 25% 70 – 75% Sweden 3 1 5 – 10% 20 – 25% Norway 5 1 15
Slide 12: The opportunity
Continuing our growth The opportunity
Slide 13: Operating in growth markets
Operating in growth markets 25% volume growth expected the next five years Forecasted volume growth EPS & EPP, kt +25% 2,314 5% CAGR • • ~80% of the EPS end-user market in Europe EPS holds superior qualities over insulation substitutes 1,851 CONSTRUCTION • Demand rebound expected post-pandemic 1 641
Slide 14: Market leader in the Netherlands through M&A
CONSTRUCTION Market leader in the Netherlands through M&A 40% - 45% market share in a high growth market Insulation segment LTM Q2’21 Sales and Volume EUR 174m 48kt Advanced market in the Netherlands, with a high Netherlands degree of value-added products ~40% • Less competition on specialised solut
Slide 15: Further strengthening the position in Benelux
CONSTRUCTION Further strengthening the position in Benelux Progressing to final negotiations for acquisition of insulation company • The Benelux region make up more than 50% of total sales for insulation segment, including a high- degree of value-added products • Acquisition target is a well-establi
Slide 16: Light vehicles driving use of EPP
AUTOMOTIVE Light vehicles driving use of EPP Electrical vehicles set to strengthen growth trend European production of light vehicles1 • Automotive production currently affected by Million units +6% semiconductor shortage CAGR • Increasing use of EPP foam reduces weight, increases fuel efficiency an
Slide 17: European market leader through IZOBLOK
AUTOMOTIVE European market leader through IZOBLOK >20% market share for automotive EPP components in Europe • Expansion to increase presence in the automotive components industry • Adds upstream capabilities to produce EPP beads Safety Interiors Seats • Geographical expansion into Germany and Poland
Slide 18: P&C driven by customisation and recycling
PACKAGING P&C driven by customisation and recycling BEWI increasingly becoming a circular packaging solutions provider • Increasing demand for consumer goods and European EPS packaging forecast +4% EPS volume in kt e-commerce sales driving demand for CAGR packaging solutions 365 • Growth at GDP+ 338
Slide 19: Attracting and retaining market shares
PACKAGING Attracting and retaining market shares Complementary solutions meeting demand characteristics • A ‘one-stop-shop’ for customers, creating high value through a collection of solutions • Strong local presence enhancing collaboration and reducing transportation cost • Long standing customer r
Slide 20: Committed to close the loop and become circular
Committed to close the loop and become circular Annual recycling target equivalent to production of high turnover products Products with lifetime <1 year ~200 BEWI Buildings and • Continuously working to increase Circular other long life collection capacity through uses investments and collaboration
Slide 21: Firm principles of inorganic growth
Firm principles of inorganic growth 40+ years of well executed M&A and integration Geographical expansion Strengthening market position Broadening product offering Leading recycling consolidator Synergy realisation Strong market position Attractive markets to explore or further expand into 21
Slide 22: Continuous screening of attractive opportunities
Continuous screening of attractive opportunities Combination of add-on and transformational M&A 14 acquisitions since Synbra merger in 2018 Well-established M&A processes Thorough due diligence 8-10 companies under evaluation always Add-on acquisitions are typically well-run companies with potential
Slide 23: Our ambitions
Continuing our growth Our ambitions
Slide 24: Robust platform for continued expansion
Robust platform for continued expansion Targeting ROCE1 increase from ~15% to 20% Adj. EBITDA ambition EUR million >170 • Continued organic growth and M&A going forward • Building on current strengths while expanding 83 into new areas • Current operational and financial framework facilitates profita
Slide 25: Efficient operations
Efficient operations Jonas Siljeskär COO New picture? As this person does not work here anymore
Slide 26: Integrated business model enable circularity
Integrated business model enable circularity Raw materials and procurement Recycling • Collection of used material/ • Sourcing of virgin and products recycled raw materials • Setting up collection-hubs • Beads production • Compression • Sales and distribution • Extrusion • Research and development •
Slide 27: RAW - Efficient production of raw materials
RAW - Efficient production of raw materials Sourcing of virgin and recycled raw material – both externally and internally Strong market position • Strategically located raw material production ensure European RAW facilities coverage • Close to petrochemical hubs • Investing in increasing capacity to
Slide 28: Improving margins delivering value-added solutions
Improving margins delivering value-added solutions Always strive to be an integrated part of the customers’ operations Commodity products Specialised products Integrated solutions Selling commodity products, competing on Joint development with customers to Dedicated people assisting customers on-sit
Slide 29: Specialisation and customer integration vary
Specialisation and customer integration vary Experience differences in core insulation markets 1 4 The Netherlands Nordics ~50% of Insulation revenue Competitors ~50% of Insulation revenue Competitors • Specialised market • Commodity market enabling upselling of characteristics with many standard pr
Slide 30: Insulation - Setting market standards
Insulation - Setting market standards Developing value added products for our customers • Developing new solutions with a customer centric approach • Increasing focus on high value- • Specialized products enabling up- added products selling of standard products • Enabling upselling of commodity prod
Slide 31: P&C – Jointly developing products with customers
P&C – Jointly developing products with customers Tailormade design and production to meet customers' need Design Prototyping Production Innovation idea New product line Specialised need Collaboration Material Moulding Delivery Innovation teams development Experienced, flexible Delivery of products l
Slide 32: A large variety of products with different lifetimes
A large variety of products with different lifetimes ~700,000 Volvo cars was produced in ~50,000 tanks produced annually (by e.g. BEWI produces more than 100,000 filling More than 10 million fish boxes produced 2019, a large share of which contained Nibe, Bosch and Enertech) contain BEWI’s and shock
Slide 33: Developing components with car manufacturers
Developing components with car manufacturers Critical components in the automotive production lines • Long development processes to develop long lifetime product lines • 3-5 years design for 5-7 years production • Continuous work to increase • High importance collaboration with existing customers •
Slide 34: Offering specialised packaging solutions
Offering specialised packaging solutions A large range of different materials • Specialised solutions • Development of tailored add-on meeting customers' needs solutions beyond packaging • Product specialisation result in • Specialising materials for different longer product lifetimes customer appli
Slide 35: Food packaging - customer integrated operations
Food packaging - customer integrated operations Working in tandem with customers locally Designed to Dedicated sales and service people BEWI working integrated in the carry and transport fish assisting the customer on-site customers value chain BEWI Box Facility at Frøya in close Continuous and deve
Slide 36: How the integrated business model enable circularity
How the integrated business model enable circularity A closed loop for BEWI's fish boxes 1 • Fish boxes produced at a foam conversion plant at Frøya, Norway and delivered to salmon farmers/ slaughters • Salmon is shipped to Poland for processing 1 • Morpol receives ~5 million fish boxes annually, th
Slide 37: Recycling capabilities are our license to grow
Recycling capabilities are our license to grow Efficient collection, handling and logistics of used materials Continuous focus on Reducing use of raw materials Increasing lifetime of products Making sure products are recyclable Innovation Transformation Collaboration Digitalized waste handling On-pl
Slide 38: We operate where our customers are located
We operate where our customers are located Strong local presence creating long-standing customer relationships Average customer relationship 2x Upstream facilities 34x Downstream facilities 8x Circular facilities 16x Jointly owned downstream facilities >10 Years >20 Years >10 Years Customer examples
Slide 39: Key strategic priorities
Key strategic priorities Innovation A circular economy Profitable growth Innovation in search for more sustainable A circular economy aiming at being the most Profitable growth through organic initiatives materials, products, solutions and sustainable provider of packaging, components and and M&A op
Slide 40: Becoming circular
Becoming circular Camilla Louise Bjerkli Director of Sustainability
Slide 41: Key strategic priorities
Key strategic priorities Innovation A circular economy Profitable growth Innovation in search for more sustainable A circular economy aiming at being the most Profitable growth through organic initiatives materials, products, solutions and sustainable provider of packaging, components and and M&A op
Slide 42: Our strategic sustainability approach
Our strategic sustainability approach Based on three pillars Becoming Becoming circular circular To be a circular business built on renewable energy Actively engage in partnerships Being an active and responsible partner so that we together with our stakeholders can achieve a circular economy, opera
Slide 43: The global circularity gap is growing
The global circularity gap is growing Only 8.6% of the global economy is circular1 • A massive circularity gap needs to be closed • Circular economy holds the promise for systemic transformation of our society • Closing the circularity gap is needed to reach the Paris agreement target Source: 1) : C
Slide 44: EPS waste generation is mainly from packaging
EPS waste generation is mainly from packaging ~1/3 is of EPS packaging waste is recycled Waste handling ~1,8mt Annual EPS production ~75% Packaging ~1/3 waste Annual EPS Recycled Incinerated waste1 Landfilled ~25% Construction waste Source: BCG, Mordor intelligence, EUMEPS 44 1) Based on 2017 waste
Slide 45: BEWI is an industry leading recycler
BEWI is an industry leading recycler Ambitious commitment to recycling Key future Circular targets 2018 – BEWI 2020 – Expansion and ramp-up 2024 – target recycling Circular established Recycling acquisition in the Netherlands collection 45kt ~EUR 10 million invested Establishment of recycling compan
Slide 46: Becoming circular
Becoming circular By 2030, our ambition is to be a circular business built on renewable energy. To achieve our goals, we must succeed with three processes: Lean Keep Close
Slide 47: Lean – Increased efficiency throughout our value chain
Lean – Increased efficiency throughout our value chain Making more of less using renewable energy Energy efficiency and transition to Material reduction and Transition to non-fossil non-fossil energy sources increased recycled content transportation Energy sources Recycled content in production Tran
Slide 48: Keep - Increasing the lifetime of our products
Keep - Increasing the lifetime of our products Long-lasting products and reuse of raw materials New 100% recyclable Reuse business models products • Delivering rental solutions to secure • Eliminating non-recyclable contents • Reshaping used materials to fit circularity from production new designs e
Slide 49: Close – Enabling efficient recycling processes
Close – Enabling efficient recycling processes Developing solutions and designs that ensure products are recycled Collection Mechanical Dissolution and recycling chemical recycling • Investments in collection hubs to secure • Green Line 100% recycled EPS • To ensure circularity of used materials eff
Slide 50: Circular development supported by regulators
Circular development supported by regulators EU directives regulating the use of plastics in different applications Energy Performance • Member states required to implement renovation strategies, and and Buildings Directive roadmaps for transformation of building stock to near net-zero, with CONSTRU
Slide 51: Strategic sustainability approach
Strategic sustainability approach Becoming circular Sustainability Mission By partnering with likeminded customers, suppliers and other stakeholders we are committed to creating innovative technologies and solutions to become circular Actively Contribute engage in to an inclusive partnership society
Slide 52: Innovation across the value chain
Innovation across the value chain Ville Nurminen R&D Director
Slide 53: No thanks! We are too busy
No thanks! We are too busy 53
Slide 54: Key strategic priorities
Key strategic priorities Innovation A circular economy Profitable growth Innovation in search for more sustainable A circular economy aiming at being the most Profitable growth through organic initiatives materials, products, solutions and sustainable provider of packaging, components and and M&A op
Slide 55: Integrated R&D resources across Europe
Integrated R&D resources across Europe Employees are our most valuable asset • R&D in Etten-Leur in the Netherlands and Porvoo in Finland • EPP development both in Germany and Poland • Design and development in all business units • Strong departments in the Netherlands and Denmark • Insulation devel
Slide 56: BEWI is Europe's largest vertically integrated player
BEWI is Europe’s largest vertically integrated player Comprehensive R&D resources • Involved in all parts of the value chain #1 integrated player in Europe Capacity, kt/year1 • Idea generation and specialised solutions reflecting combined upstream and downstream Synthos 515 knowledge BASF 460 Ravago
Slide 57: Improving products and solutions for our customers
Improving products and solutions for our customers Working to become the preferred supplier across segments Enhancing Developing Innovating commodity products specialised products integrated solutions Utilising decades of industry experience and In collaboration with our customers in end Developing
Slide 58: Development of advanced materials
Development of advanced materials Enhancing commodity products EPS XPS EPP BioFoam • Recyclability • Increase use of recycled content • Only company to do cost- • Polylactic acid based • Insulation value • Enhancing mechanical efficient extrusion foaming biodegradable polymer foam • Fire behaviour p
Slide 59: Broadening offering across P&C and Insulation
Broadening offering across P&C and Insulation Developing specialized products Packaging Insulation & Components XIRE Slimfort Add picture Add picture Fish Boxes Automotive parts Window frames XIRE SlimFort GreenLine From standard to Customized components UV protected & EPS-based Non-burnable EPS Spe
Slide 60: A variety of solutions for efficient recycling
A variety of solutions for efficient recycling Innovating integrated solutions Extruder ppt Direct Mechanical Dissolution Chemical Utilizing cut off production Extrusion of recycled Dissolving polystyrene to Depolymerization back to waste material back to EPS solvent and separate monomer and crackin
Slide 61: Working towards a carbon neutral ecosystem
Working towards a carbon neutral ecosystem BEWI working on development of several solutions Renewable styrene and pentane Raw EPS/XPS materials for PS production Styrene or PS Pentane Insulation or Chemical Dissolution Recycling EPS packaging recycling process extrusion production Use & collection 6
Slide 62: Well established mechanical recycling process
Well established mechanical recycling process Joint effort with Circular, upstream and downstream Mechanical recycling process • Introduced first partially recycled grey EPS in 2017 • 25% of recycled content achieved in Porvoo Separate collection of EPS waste extrusion in 2021 Collection Sorting Was
Slide 63: Dissolution allows more contaminated feedstock
Dissolution allows more contaminated feedstock Investigating new recycling solutions to increase reuse of raw materials Dissolution: Removing impurities in material • A separation process removing impurities and other plastics from EPS • Invested in Polystyvert in Canada in June, 2021 Purification/r
Slide 64: Chemical recycling brakes down EPS
Chemical recycling brakes down EPS Looking for partners to develop advanced recycling solutions Depolymerization: Polymer back to monomer • Investigations of suitable partner Fuel value: 20-40 MMBTU/Ton for depolimerization started in Waste 2019 Plastic Recipe- Based Feedstock Product • Test volumes
Slide 65: Ongoing depolymerization of PS initiatives
Ongoing depolymerization of PS initiatives Agilyx/Amsty (Regenyx) Demo plant 1 Michelin / Pyrowave 5 Ineos Plant 6 Oregon US Southern France Wingles, France • 3kt PS feed capacity into rStyrene • 10kt PS feed capacity into rStyrene • 15kt PS feed capacity into rStyrene • Semi-industrial type of asse
Slide 66: We innovate sustainable solutions
We innovate sustainable solutions Strong focus on innovation and collaboration Smart and ambitious people Sustainable R&D strategy Integrated development through the value chain Strategical R&D acquisitions 66
Slide 67: Financial perspectives
Financial perspectives Marie Danielsson CFO
Slide 68: Scaling and capturing market positions
Scaling and capturing market positions Revenue up 38% p.a. past 3.5 years, combining M&A and organic growth • Created a robust platform for continued Revenue & Adj. EBITDA margin development EUR million expansion Adj. EBITDA(%) Sales • Step change with the Synbra acquisition in 2018 Drift Holding 59
Slide 69: Strong growth in EBITDA
Strong growth in EBITDA Scale advantages – stronger markets - operational leverage Revenue Adjusted EBITDA EUR million EUR million 599 20% 83 CAGR 48% 463 CAGR • Higher volumes and 430 65 increased end-user prices in 381 52 most segments and regions • Significant contribution from acquired companies
Slide 70: Aiming to roughly double revenue through 2026
Aiming to roughly double revenue through 2026 ~1/3 organic and ~2/3 through M&A Revenue last 12 months to Q2’21 Pursuing clear growth opportunities across products, technologies and 2% geographies: 0% 24% • Insulation in the Benelux region External 32% • Food packaging in Norway EUR Building on curr
Slide 71: Aiming to more than double EBITDA through 2026
Aiming to more than double EBITDA through 2026 Broader profit base - overall stable margins - higher capital efficiency 2026 Adj. EBITDA ambition EUR million >170 Margin improvement potential in existing assets • Growth in high-margin segments in Insulation • Margin recovery potential in Automotive
Slide 72: Broadening the profit base
Broadening the profit base Enabling stable margins and higher capital efficiency RAW EBITDA split LTM Q2’21 EBITDA split 2026 ambition • Increased integration following acquisition activities 2% • Expanding extrusion capacity to increase 7-10% recycling capacity 0% 15-10% 29% 7-10% Circular • Increa
Slide 73: EPS price GAP well above normal range
EPS price GAP well above normal range Business plan based on stable raw material prices EPS price GAP ~55% above normal range Revenue & Adj. EBITDA EUR/t EURm, % RAW P&C Insulation BEWI 650 599 600 550 500 450 16% 14% 14% 400 261 233 350 10% 174 300 250 200 Q2’18 Q2’19 Q2’20 Q2’21 2018 2019 2020 LTM
Slide 74: Expanding to new markets and products
Expanding to new markets and products Opportunities for both add-on acquisitions and larger M&A Strong market position Attractive markets to explore Geographical expansion or further expand into Strengthening market position Broadening product offering Leading recycling consolidator Synergy realisat
Slide 75: Proven ability to lift margins in M&A targets
Proven ability to lift margins in M&A targets Extracting significant synergy potential over time Adj. EBITDA margin and M&A examples EBITDA% • Well-run companies with clear 18% synergy potential, and healthy 16% long-term outlook 14% • BEWI has overall improved margins since 2018, despite 12% taking
Slide 76: Growth plans require continued CAPEX
Growth plans require continued CAPEX Normalised level of ~2.5% of revenue CAPEX development EUR million, % 35 Normalized capex level of ~2.5% of revenue excluding M&A-related and greenfield 27 Identified greenfield projects lifting accumulated capex by ~EUR 40-50 million in 2022-24 14 14 5.8% 5.9% •
Slide 77: Increasing return on capital employed
Increasing return on capital employed Targeting ROCE increase towards 20% by 2026 ROCE1 development 409 365 Investing in high-return projects • Investments in upstream production capacity to 285 ~20% further increase robustness of operations 259 • R&D investments securing development of innovative h
Slide 78: Fully funded business plan
Fully funded business plan Strong balance sheet - ample liquidity - declining leverage • Strong cash flow from operation Balance sheet Q2’21, EUR million and solid cash balance 603 603 EUR 42m EUR 32m • Continued high cash conversion Cash Cash holding CFFO • Increasing scale and profitability Q2’21
Slide 79: Leverage target unchanged despite growth ambitions
Leverage target unchanged despite growth ambitions Retaining leverage target of <2.5x EBITDA (excl. IFRS 16) Leverage NIBD / Adj. EBITDA • Leverage lower as EBITDA has 3.1 3.0 3.0 improved 2.8 2.8 2.9 2.9 2.7 2.7 2.7 2.6 2.6 2.6 • EBITDA increase set to 2.4 2.4 <2.5x continue 2.2 2.2 1.8 • Strong ca
Slide 80: Remaining in position to pay attractive dividends
Remaining in position to pay attractive dividends High and stable Maintaining dividend capacity cash flows while executing on organic growth opportunities and pursuing M&A opportunities Solid financial High Target dividend payout ratio of 30-50% position, dividend of underlying net profit remains in
Slide 81: Concluding remarks
Concluding remarks Christian Bekken CEO
Slide 82: A strong foundation for further growth
A strong foundation for further growth Operating in a large and BEWI set to be the leading fragmented market consolidator in Europe Solid underlying growth in Growing organically with a several business segments strong focus on innovation Sustainability challenges Moving towards an 100% throughout t
Slide 83: Set to continue growth journey next five years
Set to continue growth journey next five years >2x ~20% <2.5x 30-50% Adj. EBITDA ROCE1 NIBD/Adj. EBITDA Dividend Through organic growth Increase towards 20% Leverage target Of underlying net profit and acquisitions by 2026 unchanged going forward 1) 12-months rolling EBITA / (Average NIBD + average
Slide 84: Capital Markets Update Q&A
Capital Markets Update Q&A
Slide 85: Bcow/
Bcow/ for a better everyday