Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (May 2024)
81 slides from Aspo's investor day presentation, May 14, 2024
Slide 1: CMD 2024
CMD 2024 |
Slide 2: Today’s program
Today’s program Time Topic and presenter Time Topic and presenter 09:30 Welcome & practicalities 10:50 Telko: Accelerated Growth Mikko Heikkilä, VP, Corporate Development Mikko Pasanen, Telko MD Aspo Group Strategy Telko Q&A Session Rolf Jansson, Aspo Group CEO Leipurin: Towards full potential Aspo
Slide 3: Strategy
Strategy Rolf Jansson, Aspo CEO Note: Because the future estimates described in this presentation are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimate. |
Slide 4: Aspo Capital Markets Day key messages
Aspo Capital Markets Day key messages 1 2 3 Strategy. Aspo’s Financial ambition. Aspo Sustainability. Aspo and businesses have clear financial ambition is to reach its businesses will commit and attractive business EUR 1 bn of net sales and to Science Based Targets strategies 8% EBITA in year 2028 b
Slide 5: Aspo today – Sustainable value creation since 1929
Aspo today – Sustainable value creation since 1929 Aspo creates value by owning and developing businesses sustainably and long-term. • Three business segments Our companies aim to be market • ~750 committed employees leaders in their sectors. They are in 16 countries responsible for their own operat
Slide 6: Aspo’s share has yet not recovered since Russia’s attack against Ukraine
Aspo’s share has yet not recovered since Russia’s attack against Ukraine Aspo’s adjusted share price development vs. OMXH25 160 Aspo Oyj 150 OMXH25 140 130 120 114% 110 100 88% 90 80 70 60 50 1.1.2019 1.7.2019 1.1.2020 1.7.2020 1.1.2021 1.7.2021 1.1.2022 1.7.2022 1.1.2023 1.7.2023 1.1.2024 1.7.2024
Slide 7: Aspo way of creating value
Aspo way of creating value Portfolio Growth Ownership • Maximize value of current • Long-term growth by re- • Focus on active portfolio business portfolio investing earnings management and long-term • Ambitious growth and strategic development of • Growth to improve profitability profitability targe
Slide 8: Since the CMD in 2021, Aspo has focused its portfolio
Since the CMD in 2021, Aspo has focused its portfolio, repositioned westwards and invested into the green transition Sources Uses • Renewal of debt • Investment allocations to the businesses • Hybrid loan • Sale of Kauko • Dividends • Investment pool for next generation electric hybrid vessels • Inv
Slide 9: Aspo grew annually by 6% during 2021-2023
Aspo grew annually by 6% during 2021-2023, driven by Leipurin and Telko Net sales EUR million (continued business, comparable figures) +6.0% CAGR 2021-23: 561 536 477 -0.6% +3.1% +25.2% 245 191 189 199 209 211 136 87 106 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 14.5.2024 | 9
Slide 10: Aspo’s EBITA reached target in 2022, with a decline in 2023
Aspo’s EBITA reached target in 2022, with a decline in 2023 due to softening in especially ESL Shipping’s market EBITA-% (continued business, comparable figures) 15.3% 14.1% 14% 9.7% 7.8% 8% 7.5% 8.0% 8% 5.5% 5.1% 4.6% 5% 3.3% 1.1% 1.2% 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 14.
Slide 11: Aspo’s ROE-% target was surpassed in 2021 and 2022
Aspo’s ROE-% target was surpassed in 2021 and 2022, decline in 2023 due to the negative profitability trend ROCE-% and ROE-% (continued business, comparable figures) 31.7% 29.4% 23.8% 19.3% 20% 18.3% 14.8% 14.2% 13.7% 21.1% 11.9% 8.8% 8.0% 8.1% 1.6% 2.4% 2021 2022 2023 2021 2022 2023 2021 2022 2023
Slide 12: Aspo’s targets remain unchanged, but adjusted
Aspo’s targets remain unchanged, but adjusted to consider the compounder strategy, achieve resilience and manage growth financing Aspo’s long-term targets EBITA 8%* Net sales Return on Net debt / growth Telko 8% equity of EBITDA Leipurin 5% 5–10% per over 20% < 3.0*** ELS 14% year** Key changes: *)
Slide 13: Clear strategies set for Aspo’s businesses
Clear strategies set for Aspo’s businesses to drive growth and profitability improvement going forward • Effective and skilled gateway of • Creating infra to enable the green • Leading European specialty products Vision bakery and food ingredients to transition of Nordic industrials expert and distr
Slide 14: Aspo’s ambition is to reach EUR 1 bn of sales and 8% EBITA by 2028
Aspo’s ambition is to reach EUR 1 bn (2023: EUR 536 m) of sales and 8% (2023: 5.1%) of EBITA by 2028 Net Sales EUR m EBITA-% 8% >150 >500 14% 60-80 60-70 >300 5% New 4.3% 70 9.7% 50-60 20-40 >200 4-5% 3.3% New2 211 per 20-30 189 annum 10 YTD 2024 136 New Current1 >3% run-rate3 YTD 2024 per run-rate4
Slide 15: Aspo’s businesses have different business models
Aspo’s businesses have different business models – more similarities between Leipurin and Telko vs. ESL Shipping • Bridging principals and customers • Bridging principals and customers Business logic • Long term industrial partnerships • Bringing local access and capability to global • Local presenc
Slide 16: Sustainability continues to shape Aspo’s business strategies
Sustainability continues to shape Aspo’s business strategies, tailored agendas required for the different business models • Gradual shifting product mix and • Providing access to a leading • Creating infra to enable the green transition of Narrative Nordic industrials improving supply chain to lead
Slide 17: Aspo’s vision is to form two separate companies
Aspo’s vision is to form two separate companies considering the differences in business model “before Aspo turns 100 years in 2029” ASPO active ownership ASPO Infra ASPO Compounder Current ASPO segments • Green transition and capex investments • Organic growth supported with acquisitions • Industria
Slide 18: Key building blocks of the transformation
Key building blocks of the transformation Why now? What, when and how? • The business models between Aspo Compounder and • Approach and timing not predetermined, in order to Aspo Infra differ across multiple dimensions and will maximise value to the shareholders further diverge when implementing the
Slide 19: Aspo’s new leadership model
Aspo’s new leadership model is focused on business reviews and governed by Aspo’s board to drive the transformation efficiently Aspo Board of Directors Rolf Jansson Aspo CEO ESL Board of Directors Matti-Mikael Koskinen Mikko Pasanen Miska Kuusela Erkka Repo Taru Uotila Mikko Heikkilä ESL MD Telko MD
Slide 20: Aspo’s dividend policy is adjusted
To support strategy execution, Aspo’s dividend policy is adjusted, better reflecting the strategy and underlying business models Revised dividend policy: Current dividend policy: • Aspo’s dividend growth is based on positive profitability development with aim to • Aspo's goal is to annually pay-out
Slide 21: Executive summary: Aspo Capital Markets Day key messages
Executive summary: Aspo Capital Markets Day key messages Strategy. Aspo’s businesses have Financial ambition. Aspo’s financial Leadership model. Aspo Group to lead the 1 clear and attractive business strategies: • ESL Shipping: ESG driven 2 ambition is to reach EUR 1 bn of net sales and 8% EBITA in
Slide 22: Thank you!
Thank you! |
Slide 23: Finance
Finance Erkka Repo, Aspo CFO Note: Because the future estimates described in this presentation are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimate. |
Slide 24: Ambition for growth and profitability going forward
Ambition for growth and profitability going forward Aspo Group continued businesses ~ 1 000 m We aim to Net sales (EUR) double our business by end 536 m of the strategy period 2024-2028 8.0 % EBITA (%) 5.1 % Profitability to reach and sustain 8% 2023 Ambition for 2028 14.5.2024 | 24
Slide 25: Full profit potential to be reached with improvement actions
Full profit potential to be reached with systematic implementation of improvement actions together with synergies from growth and M&A Levers for comparable EBITA improvement • Growth impact delivered by ~3 p.p. scale benefits of organic 8.0 % growth, M&A synergies and cost-efficiency of new fleet •
Slide 26: Significant earnings growth from Green coaster investment in ESL
Significant earnings growth from current Green coaster investment in ESL to fully materialize only in 2027 Construction Commercial Expected phase ramp-up EBITDA impact • Green Coaster pool of Full year average: • EUR 15 m / year 12 vessels • 2024: 15% • Once fully • ESL investment of EUR 70 • 2025:
Slide 27: Telko profitability run-rate after Swed Handling closing
Telko profitability run-rate will be significantly higher after the planned closing of Swed Handling M&A items affecting Telko’s profitability, EUR million Quarterly run rate Q1 2024 after closing Telko run-rate profitability 3.1 • Profit improvement actions before M&A impact M&A process costs -0.7
Slide 28: Potential capex for 2024-28 is EUR 350-400 m
Potential capex for 2024-28 is in the magnitude of EUR 350-400 m Capex allocation 2024-28 (EUR million) • Capex allocation based on maximising value creation in each business and delivering highest return for Aspo • Return threshold for each 350 investment of reaching 20% Uncommitted - ROE 400 • Cap
Slide 29: Updated dividend policy to reflect growth ambition
Updated dividend policy to reflect growth ambition 10-year annualized shareholder value Ambition for shareholder value creation creation (April 5, 2024) 0.86 % 5.75% 4.89 % Dividend Share price TSR Dividend Share price TSR • Aspo’s dividend growth is based on positive profitability development with
Slide 30: Strong balance sheet with Net Debt / Comparable EBITDA below 3x
Aspo is committed in maintaining a strong balance sheet with Net Debt / Comparable EBITDA below 3x Net Debt, EUR million and Net Debt / Comp. EBITDA Equity ratio % Covenant threshold 4.5x 38.6 4.0 34.7 34.4 32 3.5 Target < 3x 30.1 30.1 2.7 Covenant threshold 25% 2.3 2.3 1.8 198 169 170 156 165 132 2
Slide 31: 2/3 of planned growth investments financed by operative cash flow
Approximately 2/3 of the planned growth investments to be financed by operative cash flow Maintain strong balance sheet, Net debt / comp. EBITDA <3x Cash Sources Cash Uses Strong cashflow Updated dividend from performance policy improvement Growth based on profit improvement Debt Growth investments
Slide 32: Key performance metric to be changed from EBIT to EBITA
Key performance metric to be changed from EBIT to EBITA to better reflect the compounder business profitability No significant difference between EBIT Guidance for year 2024 unchanged. and EBITA on the past reported results Guidance updated to the new performance metric EBITA • Amortizations for yea
Slide 33: Thank you!
Thank you! |
Slide 34: Creating infra for Nordic industries
Creating infra for Nordic industries Mikki Koskinen, ESL MD Note: Because the future estimates described in this presentation are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimate. |
Slide 35: ESL strategy
ESL strategy 1 2 3 ESL is the leading dry-bulk We have a track-record of Our strategy is to shipping company in long-term value creation respond to growing Northern Baltic Sea demand and customer • Grown 2.5x in scale with needs • Highly contractual business improved profitability and strategic posi
Slide 36: ESL is the leading dry-bulk player in Northern Baltic Sea
ESL is the leading dry-bulk player in Northern Baltic Sea with a well protected business set-up #1 dry-bulk shipping company in Northern Baltic Sea • Leader position both in Coasters and Handies Well-equipped, high quality vessel fleet for core markets • 40+ ice-class 1A or 1A Super vessels • Contin
Slide 37: ESL is the leading dry-bulk player in Northern Baltic Sea
ESL is the leading dry-bulk player in Northern Baltic Sea with a well protected business set-up Long-term customer base – Nordic industrials as core • 80% of business contractual with decades long relationships • High customer satisfaction (NPS=42) Industry leading environmental performance • >60% o
Slide 38: Cornerstones of ESL Shippings business model
Cornerstones of ESL Shippings business model Business logic and • Long term industrial partnerships value creation • Solutions for local conditions Market resilience and • High resilience in typically volatile market. Improved through long-term contracts, improvement levers customer diversification,
Slide 39: ESL has a strong track record of value creation
ESL has a strong track record of value creation with a crystallized strategy Early 2010s Early 2020s Continued • EUR 80 m revenue • EUR 200 m revenue dividend Financial • Solid profitability and payments • Strong, industry leading profitability performance return on capital employed incl. improved c
Slide 40: Industrial players investing heavily in Green transition
Industrial players investing heavily in Green transition within our home market – logistical service demand for products and raw materials Greenfield steel plant Conversion to Green Steel +2.5 MT (2025) +2.5 MT (2028) Boden Kemi Luleå Skellefteå Oulu Raahe Pulp mill Board expansion Board conversion
Slide 41: Bothnia Bay ice-classed capacity projected to decline by 20%
Simultaneously ice-classed Bothnia Bay capacity projected to decline by 20% in our core segments Bothnia Bay IA(S) dry bulk fleet, 2 500 – 40 000 DWT Current active fleet aging across segments -20% • 20-40% of fleet reaching 25 years within next 5 years, age profile most challenging in Coasters Know
Slide 42: Industrial players committing to sustainability targets and regulation tightening
Industrial players are committing towards ambitious sustainability targets and green regulation is tightening Tightening regulation Environmental targets of select clients EU Emission Trading System (ETS) • Commitment to 1.5 degrees global warming target • Encourage the suppliers to set targets for
Slide 43: Our strategy is to be front runner in green shipping
Our strategy is to strengthen our position by being front runner in green shipping Shipping Investment Energy Sourcing Transport Demand Best available ship design and Access to low emission and Customer commitment and power train capable of shifting future no emission fuels building common future vi
Slide 44: We will enhance our business model towards Green leadership
We will enhance our business model as we progress towards Green leadership Broader Enhanced Committed to variety of customer Science Based commodities portfolio Targets (net zero by 2040) Stronger 50% reduction Higher energy contractual risk in CO2 and fuel sharing emissions efficiency by 2030 14.5.
Slide 45: EUR 300+ million business with strengthened profitability by 2028
We are on track to pursue an EUR 300+ million business with strengthened profitability by 2028 Cornerstones of ESL strategy 2023-2028 Protected business model • Strong customer relationships • Leadership positions • Leading environmental performance Invest to reinforce strategic position in fast gro
Slide 46: Thank you!
® @ ESL Shipping
Slide 47: Accelerated Growth
Accelerated Growth Mikko Pasanen, Telko MD Note: Because the future estimates described in this presentation are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimate. |
Slide 48: We operate in three business segments
We operate in three business segments Plastics Chemicals Lubricants Wide range of plastic Broad portfolio of Industrial, marine and raw materials and chemicals for different automotive lubricants, additives for various industry segments, such own production of car applications and as paints and coat
Slide 49: Bridge between industrial customers and principals
We act as a bridge between thousands of industrial customers and hundreds of principals Principals Customers • 400 suppliers • 7000 customers 14.5.2024 | 49
Slide 50: The Telko Effect
The Telko Effect: As a leading expert serving multiple industries, we’re also in a unique position to improve our customers’ Sustainability Productivity Operational quality • Our wide range of • Our long-standing and • We are the bridge on products and in-depth close relationships with between suppl
Slide 51: Telko’s business is future-proof
Telko’s business is future-proof 1 2 3 Chemical market Specialties will Distributors will grow grow faster grow faster than faster than demand than GDP commodities (change of channel) 4 5 Small and medium size Regional and focused distributors will grow distributors will grow faster than large ones
Slide 52: Clear strategy to drive growth and profitability
Clear strategy to drive growth and profitability Vision • Leading European specialty products expert and distributor Strategic agenda • Organic growth supported by M&A and scalability Growth • Strong organic growth in specialty products and by widening service offering drivers • Continued M&A growth
Slide 53: Cornerstones of Telko’s business model
Cornerstones of Telko’s business model Business logic and • Bridging principals and customers value creation • Bringing local access and capability to global principals Market resilience and • High resilience that can be improved by focused growth, incl. specialty products, bolt on improvement lever
Slide 54: Committed to Science Based targets by end of 2024
Our ESG approach: Committed to Science Based targets by end of 2024 While we nurture a We aim to be a culture that values and sustainability forerunner promotes sustainable and Our sustainability vision is by addressing critical ethical operations, we to make our industry better issues beyond the de
Slide 55: Telko’s strategy execution is progressing
Telko’s strategy execution is progressing • In 2021 at Aspo CMD Telko presented its then updated strategy • The direction and cornerstones of Telko´s strategy remain unchanged • Expansion phase is full in speed • War in Ukraine and following exit from Russia slowed down progress by 1-2 years 14.5.20
Slide 56: Years 2021-2023: Exit from Russia and first acquisitions
Years 2021-2023: Exit from Russia and first acquisitions • Exit from Russia and Belarus significantly • Telko started to grow inorganically. Several reduced the size and profitability of the company acquisitions were carried out during the period: • ILS & Autolubes • Management resources were tied t
Slide 57: Telko’s geography
Telko’s geography ”Old” countries New countries in 2024 Strengthened position 2021-24 Poland as an example: • First Plastics • Then Chemicals (Eltrex) • Now Lubricants (organic) • Further development of all businesses FINLAND | SWEDEN | NORWAY | DENMARK | ESTONIA | LITHUANIA | LATVIA | POLAND | FRAN
Slide 58: Optimol & Greenfluid
Optimol & Greenfluid • In March 2024 Telko expanded its lubricants business to Western Europe through acquisition in France, Belgium, Luxembourg, and Netherlands, making Telko one of the strongest industrial lubricants distributors in Europe • The transaction strengthened the weight of the lubricant
Slide 59: Swed Handling
Swed Handling • April 29 2024, Aspo informed that Telko expands its chemicals business in Sweden by acquiring Swed Handling AB, a leading Swedish chemical distributor. Closing of the transaction is expected during the third quarter of 2024 • Another significant step in Telko’s compounder strategy ex
Slide 60: Telko after announced acquisitions
Telko after announced After completing the acquisition acquisitions of Swed Handling, Telko will be bigger than before exit from Russia. • Net sales > EUR 280 million And the journey continues… • Comparable EBITA ~EUR 18 million • Clear actions to improve profitability and efficiency • 16 countries
Slide 61: Focused acquisitions create significant value
Focused acquisitions create significant value • Currently very fragmented industry is facing • Telko as an owner: preferred buyer over rapid consolidation driven by good growth big multinationals, stronger opportunity to opportunities, tightening regulation and family- develop operations than previo
Slide 62: Continuous improvement of EBITA performance over cycles
Continuous improvement of EBITA performance over cycles Cycle top Cycle top Cycle bottom Cycle bottom 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q1 Current business portfolio of Telko 14.5.2024 | 62
Slide 63: Full profit potential to be reached with improvement actions
Full profit potential to be reached with systematic implementation of improvement actions together with synergies from growth and M&A Levers for comparable EBITA improvement • We continue to develop our segment ~2,5 p.p. and product portfolio to support shift in 8.0 % portfolio profitability • We de
Slide 64: Telko’s ambition for 2028
Telko’s ambition for 2028 • By the end of 2028 Telko has repositioned itself on European distribution market and is recognized as all-European player • Net sales > EUR 500 million • Plastics EUR 200-300 million • Chemicals EUR 200-300 million • Comparable EBITA > EUR 40 million • Lubricants EUR 100-
Slide 65: Thank you!
od @ TELKO Thank you!
Slide 66: Towards full potential
Towards full potential Miska Kuusela, Leipurin MD Note: Because the future estimates described in this presentation are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimate. |
Slide 67: Resilient market offering growth opportunities going forwards
Resilient market offering growth opportunities going forwards Bakery segment provides a large, resilient The food industry is ~20x the size of 1 2 core for Leipurin bakeries and creates new opportunities • Ingredient sales to bakeries is Leipurin’s core market • Leipurin is already active in this se
Slide 68: Leipurin today
Leipurin today • Leading B2B ingredients supply to bakeries, the food industry and food service customers Finnish bakery market position #1 • 157 Committed employees Swedish across six countries bakery market Vantaa position #2 • Net sales EUR 136 million Stockholm Tallinn Gothenburg • Comparable op
Slide 69: Gateway to the Northern Europe
Gateway to the Northern Europe: Leipurin connects a broad range of suppliers to local customers Suppliers Customers • Direct access to a broad • Managing the long product tail (with customer spectrum through hundreds or thousands SKUs) relationshops that have been • Ensuring availability and logisti
Slide 70: Cornerstones of Leipurin’s business model
Cornerstones of Leipurin’s business model Business logic and • Bridging principals and customers value creation • Local presence with wide service offering Market resilience and improvement levers • High resilience, very stable demand and market development • Focused growth within sub-segments, incl
Slide 71: Successful turnaround taking shape since 2021
Successful turnaround taking shape since 2021 EBITA improvement 2021-2023 Key milestones ~2.3 p.p. 3.3% 1. Clarity and cost efficiency through country-based operating model 2. Focus on efficient processes, capability development and operative performance 3. Divestment of non-performing 1.1% 1.2% bus
Slide 72: Vision to become the leading partner for R&D and ingredient supply
Our vision is to become the leading partner for R&D and ingredient supply for the broader food industry in Northern Europe Best partner for R&D and ingredient supply for food industry in Vision Northern Europe Net sales Current core 1. Strengthen the position as the preferred partner for Bakeries >
Slide 73: Our core strengths supporting our strong position within the Bakery segment
1. Our core strengths supporting our strong position within the Bakery segment Trusted and well-known brand Sales and customer service Assortment & Category mgmt R&D capability • Great customer experience based on • Competitive offering to meet our • Trusted partner for product technical competence
Slide 74: We want to expand our geographic coverage and market footprint
2a. We want to expand our geographic coverage and market footprint What we do How we do it • We are preparing for growth throughout 1. We actively look for organic and Northern Europe, geographically and inorganic growth opportunities through expansion towards higher margin throughout Northern Europ
Slide 75: Our most recent acquisition Kebelco
2b. Our most recent acquisition Kebelco Net Sales (SEK millions) • Kebelco is a distributor of ingredients to the CAGR 15% food and beverage industry • The company is situated in Gothenburg, Sweden 94 80 • Product focus is on ingredients for dairy, 71 confectionary and sports nutrition segments – su
Slide 76: Growth within the food industry is a strategic priority
3. Growth within the food industry is a strategic priority Profitable growth opportunity What we have done • Leipurin has during its over 100-year 1. We have developed new talent and history operated in the bakery niche, capabilities in-house to serve the which we estimate to be an EUR 0.5 bn food i
Slide 77: We want to enable our customers’ sustainability journey
4. We want to enable our customers’ sustainability journey What we target How we do it • We are committing to the Science Based Targets (SBTi) initiative • Our Scope 1 and 2 emissions are low. We are in the process of compiling our GHG inventory Sustainable and responsible and defining priorities fo
Slide 78: Leipurin is on track to reaching target of 5% EBITA
Leipurin is on track to reaching target of 5% EBITA EBITDA improvement going forwards Key success factors ~2 p.p. • We continue to deliver improvements to run 5.0% efficient operations – special focus on the Swedish supply chain, where we see significant opportunities • We develop new commercial opp
Slide 79: Thank you!
Thank you! |
Slide 80: Executive summary: Aspo Capital Markets Day key messages
Executive summary: Aspo Capital Markets Day key messages Strategy. Aspo’s businesses have Financial ambition. Aspo’s financial Leadership model. Aspo Group to lead the 1 clear and attractive business strategies: • ESL Shipping: ESG driven 2 ambition is to reach EUR 1 bn of net sales and 8% EBITA in
Slide 81: Thank you!
Thank you! |