Kreate Group Plc · OMXHEX:KREATE
Kreate — Q3 2023 Earnings Presentation
21 slides from Kreate's earnings presentation, Oct 25, 2023
Slide 1: Revenue increased by 20% – strong cash flow
REVENUE INCREASED BY 20% – STRONG CASH FLOW MIKKO LAINE, CFO 25 OCTOBER 2023 K R E AT E G R O U P P L C / I N T E R I M R E P O RT 1 - 9 / 2 0 2 3
Slide 2: A strong performance in a challenging market
A STRONG PERFORMANCE IN A CHALLENGING MARKET • The strategy proceeds ahead of time • Revenue record high • Q3: +20%, EUR 88.3 (73.3) million • Q1-Q3: +26%, EUR 239.8 (190.8) million • EBITA impacted by inflation and ongoing non-index-hedged projects: • Q3: EUR 2.9 (3.0) million or 3.3% (4.1%) of rev
Slide 3: Major projects have progressed with planned pace
MAJOR PROJECTS HAVE PROGRESSED WITH PLANNED PACE The massive steel girders of the cable-stayed In Hyvinkää, the casting of pile slabs for the At the Kirjalansalmi bridge, the work in progress in section of the Kruunuvuori bridge were lifted logistics centre reached the halfway mark in September incl
Slide 4: Successes in a challenging market
SUCCESSES IN A CHALLENGING MARKET ▪ New orders of ~EUR 28 million were added to the order backlog in July-September ▪ Includes orders of nearly EUR 18 million: ▪ Nihti: Preparation of the area of the old port facility for residential use ▪ Kaarina: new bridge to replace the old Kuusistonsalmi bridge
Slide 5: Specialisation helps in tougher competition
SPECIALISATION HELPS IN TOUGHER COMPETITION BUSINESS FUNCTIONS MARKET DEVELOPMENT 12-MONTH SHARE OF KREATE’S Q3/2023 vs Q2/2023 OUTLOOK* REVENUE STRUCTURAL ENGINEERING Bridge construction Foundation and engineering construction Special foundation construction 79% Weaker prospects Circular economy Un
Slide 6: Interest rates postpone private investments – public infrastructure projects executed counter to the cycle
INTEREST RATES POSTPONE PRIVATE INVESTMENTS – PUBLIC INFRASTRUCTURE PROJECTS EXECUTED COUNTER TO THE CYCLE INFLATION AND INTEREST INDUSTRIAL INVESTMENTS TRANSPORT INVESTMENTS RATES Industrial companies have a The government has a transport Inflation and consumer willingness to invest. Projects are i
Slide 7: Positive long-term outlook in infrastructure construction
POSITIVE LONG-TERM OUTLOOK IN INFRASTRUCTURE CONSTRUCTION MILITARY MOBILITY URBANISATION GREEN TRANSITION Finland is doubling the EU’s CEF Urbanisation means even Investment plans funding for military mobility (railway, denser and more challenging amounting to road, port and airport infrastructure).
Slide 8: Personnel
PERSONNEL ON AVERAGE E M P L O Y E E S A T I S FA C T I O N 449 S U RV E Y R E S U LT S 3.80–3.99 416 407 392 ON A SCALE OF 1–5 L O S T- T I M E I N J U R Y “I am pleased that we have managed to maintain FREQUENCY 12 MO employee satisfaction at a high level despite challenging times. The results sho
Slide 9: Order backlog still at a high level
ORDER BACKLOG STILL AT A HIGH LEVEL Order backlog Q3/21 – Q3/23, EUR million • At the end of September 2023, the order backlog amounted to EUR 221.8 million ◦ Change from the end of the previous quarter -16.3% ◦ Change year-on-year -22.0% • The comparison period includes Kirjalansalmi and Hessundins
Slide 10: Revenue increased by 26% in January-September
REVENUE INCREASED BY 26% IN JANUARY-SEPTEMBER Revenue, EUR million Revenue distribution 1-9/2023 20.4% 3.9% change from the same quarter in the previous year 10
Slide 11: EBITA close to comparison period's level
EBITA CLOSE TO COMPARISON PERIOD'S LEVEL EBITA, EUR million • In July - September 2023, EBITA decreased slightly year-on-year, amounting to EUR 2.9 (3.0) million • In line with guidance, profitability was impacted by inflation and ongoing non-index-hedged projects • In January - September 2023, EBIT
Slide 12: Key figures
KEY FIGURES EUR million 7-9/2023 7-9/2022 1-9/2023 1-9/2022 1-12/2022 Order backlog 221.8 284.2 306.9 Revenue 88.3 73.3 239.8 190.8 273.9 EBITDA 4.0 4.2 9.1 9.8 13.6 EBITDA, % 4.6 % 5.7 % 3.8 % 5.2 % 5.0 % EBITA 2.9 3.0 5.1 6.5 8.8 EBITA, % 3.3 % 4.1 % 2.1 % 3.4 % 3.2 % Operating profit 2.8 2.9 4.9
Slide 13: Strong cash flow in the third quarter
STRONG CASH FLOW IN THE THIRD QUARTER Free cash flow from operating activities, EUR million • Strong cash flow demonstrates the effectiveness of our active actions ◦ July - September: EUR 8.0 (-10.1) million ◦ January - September: EUR 6.4 (-11.7) million ◦ Net investments have decreased from the beg
Slide 14: Interest-bearing net debt and equity ratio
INTEREST-BEARING NET DEBT AND EQUITY RATIO • Kreate’s interest-bearing net debt on 30 September 2023 Interest-bearing net debt (EUR million) and equity ratio (%) was EUR 32.9 (30 September 2022: 46.8) million • Net debt/EBITDA was 2.6 (3.4) • Interest-bearing debt amounted to EUR 43.2 million on 30
Slide 15: Interest-bearing debt – maturity and average interest
INTEREST-BEARING DEBT – MATURITY AND AVERAGE INTEREST Loan portfolio on 30 September 2023, EUR million Repayment schedule for interest-bearing debt on 30 September 2023, EUR million Average interest of interest- bearing debt, excluding lease liabilities recognised in the balance sheet 5.3 % 15
Slide 16: Guidance for 2023 unchanged
GUIDANCE FOR 2023 UNCHANGED Kreate estimates that its revenue (2022: EUR 273.9 million) will be EUR 300–325 million. EBITA (2022: EUR 8.8 million) is estimated to be at the level of EUR 7.0 –8.5 million. Publis hed on 6 J uly 2023 16
Slide 17: The future is built today
THE FUTURE IS BUILT TODAY
Slide 18: A clear strategy with a view to continued profitable growth
A CLEAR STRATEGY WITH A VIEW TO CONTINUED PROFITABLE GROWTH A PROFITABLE GROWTH COMPANY WITH AN ENTREPRENEURIAL MINDSET EXECUTES THE MOST DEMANDING INFRASTRUCTURE PROJECTS AND OFFERS THE MOST INTERESTING WORKING COMMUNITY IN THE BUSINESS AS WELL AS OPPORTUNITIES FOR DEVELOPMENT. EXPANDING AND SUPPOR
Slide 19: Driving forces in the construction industry's operating environment
DRIVING FORCES IN THE CONSTRUCTION INDUSTRY’S OPERATING ENVIRONMENT AND KREATE’S STRONGER ABILITY TO OPERATE IN A CHANGING ENVIRONMENT § € SOCIETY LEGISLATION POLITICS ECONOMY THE TECHNOLOGY ENVIRONMENT ▪ Labour shortage ▪ Zoning and construction ▪ Public sector’s ▪ Growing government ▪ Production m
Slide 20: Kreate's long-term goals
KREATE’S LONG-TERM GOALS G R O WT H PR O F ITA BILIT Y D EB T TO EQ U IT Y R AT IO Growing the revenue EBITA margin Net debt/EBITDA to EUR 300 million > 5% < 2.0 by 2024 in the medium term through a balanced combination of organic growth and selected acquisitions K R EAT E’S The aim is to distribute
Slide 21: Kreate's shareholders
KREATE’S SHAREHOLDERS ON 30 SEPTEMBER 2023 SHAREHOLDERS BY SECTOR 13 % 44 % 42 % 1% Companies Fin. Instit. and Households insurance instit. Household services, International Public org. NGOs total 21