Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (November 2018)
72 slides from Aspo's investor day presentation, Nov 21, 2018
Slide 1: Responsibility as part of value creation
Responsibility as part of value creation Aspo Capital Markets Day November 21, 2018 Mr. Aki Ojanen, CEO
Slide 2: Owner of leading brands in their sectors
Owner of leading brands in their sectors Total net sales in 2017: 502.4 M€ 16% 52% Finland 160.8 M€ 13% 79.3 M€ 262.2 M€ 32% Russia, Ukraine, other CIS 10% 164.9 M€ Baltic countries 58.8 M€ 12% Scandinavia 50.6 M€ 24% 8% 33% Other countries 67.3 M€ 122.3 M€ 38.6 M€ Aspo Capital Markets Day, November
Slide 3: Increasing profitability in the three main business segments
Increasing profitability in the three main business segments, comparable figures Jan-Sep 2018 ESL Shipping Telko Leipurin EBIT*: 11.8 M€ (+25.5%) EBIT: 8.7 M€ (+11.5%) EBIT: 2.5 M€ (+25%**) EBIT-%*: 16.0% EBIT-%: 4.4% EBIT-%: 2.8% 12 12 12 10 10 10 8 8 8 6 6 6 4 4 4 2 2 2 0 0 0 1-9/2017 1-9/2018 1-9
Slide 4: Group net sales and EBIT
Group net sales and EBIT Net Sales, EBIT, M€ M€ 800 40 700 35 600 30 500 25 400 20 300 15 200 10 100 5 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e* 3,9% 4,6% 4,5% 4,5% 2,2% 2,3% 4,8% 4,6% 4,5% 4,6% Net sales EBIT EBIT-% *) Consensus estimates for 2018 Aspo Capital Markets Day, Novemb
Slide 5: Group net sales - steady growth over the cycle
Group net sales - steady growth over the cycle Net Sales, GDP growth M€ rate, % 800 6% 700 4% 600 2% 500 0% 400 -2% 300 -4% 200 -6% 100 -8% 0 -10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e* *) Consensus estimates for 2018 **) SOURCE: European comission ** *** ** Net sales Finland GDP R
Slide 6: Aspo's key objective is to expand and internationalize medium-sized companies
Aspo’s key objective is to expand and internationalize medium-sized companies specializing in demanding B-to-B customers
Slide 7: An active owner of businesses
An active owner of businesses ESL The objective of each business owned by Aspo enables larger investments and provides Aspo is to be the best company in their competitively priced financing: making specific business field and to grow faster possible the acquisition of AtoB@C and two than the market
Slide 8: Creating value through restructuring and investments
Creating value through restructuring and investments ASPO’S SHARE PRICE* 11,0 € 9,0 € 7,0 € 5,0 € 2010 2011 2012 2013 2014 2015 2016 2017 2018 ESL SHIPPING: LEIPURIN: ESL SHIPPING: ASPO: ASPO: ESL SHIPPING: LEIPURIN: ESL SHIPPING: ESL SHIPPING: ORDER PLACED ACQUISITION ACCEPTANCE REVIEW OF CANCELLAT
Slide 9: Enabling geographical expansion of businesses
Enabling geographical expansion of businesses Uzbekistan Norway Romania China Iran Czech Azerbaijan Denmark Republic Kazakhstan Poland Belarus Estonia Ukraine Sweden Latvia Lithuania Russia Finland 1929 1995 1996 1997 2003 2004 2007 2008 2010 2013 2015 2017 2018 Aspo Capital Markets Day, November 21
Slide 10: ROE and gearing development
ROE and gearing development Return on Equity, % Gearing, % 35% 160% 30% 140% 25% 120% 20% 100% 15% 80% 10% 60% 5% 40% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1-9/ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1-9/ 2018 2018 ROE currently (Q3/2018): 15.6% Gearing currently (Q3/2018): 15
Slide 11: Investments and leverage crucial for long-term growth and profitability
Investments and leverage crucial for long-term growth and profitability Capital structure weakened due to delivery Investments targeted to very profitable of new vessels and the completion of the business with existing customers AtoB@C acquisition Aspo’s cash flow and debt servicing Being a conglome
Slide 12: Maturity of Aspo Group's significant loan agreements
Maturity of Aspo Group’s significant loan agreements M€ 90,0 The amount of interest- 80,0 1,4 bearing liabilities grew and 70,0 was 198 M€ (137) 25,0 60,0 The average rate of interest- 50,0 bearing liabilities after Q3: 40,0 1,4 20,0 1.5% 30,0 20,0 20,0 1,4 1,4 41,0 Early redemption option for 33,5
Slide 13: Net sales in rubles for Aspo's companies in Russia grew on average
Net sales in rubles for Aspo’s companies in Russia grew 2009–2017 on average 14%
Slide 14: Stable growth in the east despite weakening currency rates
Stable growth in the east despite weakening currency rates Net sales 2009–2017 for Aspo’s companies in Russia MRUB MEUR 8 000 100 The eastern 7 000 90 markets’ relative 6 000 80 share of Group 5 000 70 4 000 60 total net sales 3 000 50 decreased after the 2 000 40 AtoB@C 1 000 30 acquisition 0 20 20
Slide 15: Aspo's principles for business in Russia and the east
Aspo’s principles for business in Russia and the east Aspo has strong and vast experience in 1. Total control of the businesses' value conducting business in the eastern chains – partnerships and mutual markets development with local industrial customers 2. No capital investments made or M&A 3. The
Slide 16: Ensuring responsibility is of primary importance
Ensuring responsibility is of primary importance for securing the long-term development of the company
Slide 17: Aspo invests in sustainable profitability
Aspo invests in sustainable profitability Aspo believes that responsible companies Aspo always aims to address and invest in are more profitable in the long run critical environmental issues beyond the minimum requirements of laws and Only responsible companies can have regulations – short-term cost
Slide 18: New dividend policy
New dividend policy Aspo aims to pay an annually growing dividend
Slide 19: A reliable and stable dividend payer – twice a year
A reliable and stable dividend payer – twice a year Starting from 2017, Aspo has adopted a twice-a-year distribution policy € % Aspo dividend yield 0,50 12 2006‒2017, average 0,40 10 6,1 % 0,30 8 0,20 6 Helsinki Stock Exchange dividend yield 0,10 4 2006–2017, average 0,00 2006* 2007* 2008* 2009* 201
Slide 20: Aspo's main objective is to produce value for the shareholders
Aspo’s main objective is to produce value for the shareholders % 10 year share price and total returns 300 250 Total return 200 +268,8% 150 100 Share price 50 +112,9% 0 -50 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Share return, % Total return (share price + dividend), % Aspo Capital Markets
Slide 21: Aspo is committed to achieving its 2020 financial targets
Aspo is committed to achieving its 2020 financial targets EBIT margin Average return on equity Gearing of up to (ROE) of over 7% 20% 100% EBIT-margin ROE Gearing 2018 Consensus estimates: 5.1% 2018 Consensus estimate: 16.3% 2018 Consensus estimate: 126% Aspo Capital Markets Day, November 21, 2018 21
Slide 22: Guidance
Guidance Aspo EBIT 2018 25–31 M€ Thank you! (23.1)
Slide 23: Leipurin
Leipurin Mikko Laavainen, Managing Director Aspo Capital Markets Day, November 21, 2018 23
Slide 24: Leipurin – a unique provider of solutions for the bakery and foodservice sectors
Leipurin – a unique provider of solutions for the bakery and foodservice sectors Leipurin at a glance 6% Headquarters in Vantaa, 4% Sales to two main customer Finland segments: Finland Net sales 39% by market 25% 97% 3% area 2017 Baltics 26% Bakeries Foodservice Employees 9/2018: 330 Russia 4% Net s
Slide 25: Leipurin creates value for both principals and customers
Leipurin creates value for both principals and customers Over 500 excellent Over 3000 principals customers and suppliers Leipurin core capabilities: Knowledge on bakery and food products, International presence, Product development, Sourcing, Purchasing, Logistics, Quality Aspo Capital Markets Day,
Slide 26: Profitability driven by the East
Profitability driven by the East Current offering for the Bakery sector EBIT* (11+ B€** market size in Leipurin geographical areas) • Raw materials • Machinery • Services such recipes, training and maintenance 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Finland Russia Baltics Machinery Aspo Ca
Slide 27: The traditional bakery market is in strong transition
The traditional bakery market is in strong transition The market for industrial packed The popularity of bread is decreasing in all key flour confectionary (pastries) and geographic areas in-store-bakeries is growing Last year’s change in Russian retail Strong trends in out of home eating wastage pr
Slide 28: In order to ramp up profitability to a new level, Leipurin is transforming
In order to ramp up profitability to a new level, Leipurin is transforming What we are now What we are aiming to be For the A specialized wholesaler of raw A one-stop-solutions provider Bakery sector materials and machines with bread expertise For the Niche player in Finland offering A well-establis
Slide 29: Leipurin growth and profitability drivers
Leipurin growth and profitability drivers Aspo Capital Markets Day, November 21, 2018 29
Slide 30: Russia and other eastern markets
Russia and other eastern markets Key Trends Key Actions • The eastern economies have been • Gain market share in flour strengthening: inflation has stayed on a low confectionary for which in Russia the level while the purchasing power has been market is as large as for breads rising • Focus on In-st
Slide 31: Case example from Russia: From idea to shelf
Case example from Russia: From idea to shelf A comprehensive solution concept for Leipurin customers, including • Full product concept and recipe based on market analysis and current trends • Raw materials deliveries • Technological service and consultation on the customer’s production site Value fo
Slide 32: The Foodservice market is a significant growth area for Leipurin
The Foodservice market is a significant growth area for Leipurin Opportunities Key Actions • Out of home eating is growing in all key • Utilization of Leipurin core capabilities markets and fastest in the bakery related to gain market share segments • Continuous development of Food service offering
Slide 33: Leipurin is focusing on developing and widening its Foodservice offering
Leipurin is focusing on developing and widening its Foodservice offering Leipurin current supply chain PROBLEM solutions services • Assortment development • Logistics • Procurement • Warehousing • Order portal • Quality and sustainability solutions 33
Slide 34: Leipurin supply chain solutions provide value for customers
Leipurin supply chain solutions provide value for customers SOLUTION Value for customers: Cost savings, improved chain management, differentiation with a customer specific assortment 34
Slide 35: Ongoing growth and profitability programs
Ongoing growth and profitability programs Growth actions Profitability actions • Focused efforts towards retail in-store • Internal efficiency programs to build bakeries & flour confectionary customers operational excellence • Utilization of sourcing opportunities within • E.g. improved pricing mode
Slide 36: Leipurin is committed to reaching its 2022 financial targets
Leipurin is committed to reaching its 2022 financial targets 1. Growth from Russia and the rest of the East Estimated contribution of each business • Flour confectionary and Retail in-store unit to the 2022 EBIT growth target bakeries 2. Growth from Foodservice business • Scale-up new business model
Slide 37: TELKO
TELKO Kalle Kettunen, Managing Director Aspo Capital Markets Day, November 21, 2018 37
Slide 38: Telko's success story began 110 years ago
Telko’s success story began 110 years ago (established 25.11.1908) Aspo Capital Markets Day, November 21, 2018 38
Slide 39: Telko – a leading expert and supplier of plastic raw materials and industrial chemicals
Telko – a leading expert and supplier of plastic raw materials and industrial chemicals Telko at a glance 12% 20% Finland Strong presence in eastern Headquarters in Espoo, Finland Net sales growth markets Subsidiaries in by market 25% Scandinavia 16 countries area 2017 13% 50% of net sales from Russ
Slide 40: Unique ability to establish new business in emerging markets without significant risks
Unique ability to establish new business in emerging markets without significant risks Leader in the Nordic-Baltic region and strong presence in emerging eastern growth markets; ahead of competition in the CIS expansion. As part of the growth strategy, Telko has started new business in Uzbekistan an
Slide 41: Bridging over 400 principals and 7,000 customers in a sustainable way
Bridging over 400 principals and 7,000 customers in a sustainable way PLASTICS PLASTICS • Packaging industry, E & E (electronics and equipment) and automotive industries • Companies manufacturing consumer goods Strong demand for value-added services CHEMICALS & LIFE • Telko’s solution based SCIENCE
Slide 42: Balanced business mix with both chemicals and plastics in 2017
Balanced business mix with both chemicals and plastics in 2017 Split of net sales Split of EBIT* Split of personnel 262.2 M€ 10.8 M€ 288 employees Chemicals Chemicals Chemicals 33 % 43 % 56 % Plastics Plastics Plastics 44 % 57 % 67 % Aspo Capital Markets Day, November 21, 2018 42 *The figures are no
Slide 43: Third-party chemical distribution market growth driven by eastern economies
Third-party chemical distribution market growth driven by eastern economies Third-party distribution market growth • Growing chemicals consumption estimates, CAGR 2015-2020* driven by continuous increases in GDP growth, especially in the eastern 8,3 % markets 6,9 % • An increasing share of the globa
Slide 44: Telko's growth and profitability drivers
Telko’s growth and profitability drivers Aspo Capital Markets Day, November 21, 2018 44
Slide 45: Telko to reach 2020 growth targets despite slower 1-9/2018 net sales growth
Telko to reach 2020 growth targets despite slower 1-9/2018 net sales growth Growth constraints during 2018 Acquisitions in 2018 • The decision to discontinue a few high-volume Danish Lubricant distributor but low-margin customer accounts in Russia Square Oil during 2017 Annual net sales impact: • Av
Slide 46: Internal profitability improvement projects
Internal profitability improvement projects Despite slow net sales growth, Telko’s EBIT has increased 11.5% during January- September due to successful internal cost control programs. EBIT-margin at the end of September at 4.4% (4.0% 9/2017) Telko main profit margin drivers 1. Improving of pricing p
Slide 47: Telko Green Portfolio
Telko Green Portfolio Telko is expanding its Green Portfolio and looking for and evaluating new principals in this area PLASTICS CHEMICALS Biobased, For environmental protection Biodegradable & Best-in-class technology, i.e. Recycled plastics • GHG-emission-free raw materials extinguishing foams Res
Slide 48: Attractive financial profile and asset-light business model generate high cash flow
Attractive financial profile and asset-light business model generate high cash flow Telko capex and capex as % of net sales (2009–2020E) Low maintenance capex and M€ Capex as % of net sales efficient working capital 3,0 1,9% 2,0% management ensure high 2,5 2,6 cash flow 2,5 2,3 1,5% 2,0 Strong cash
Slide 49: Telko is committed to reaching its 2020 financial targets
Telko is committed to reaching its 2020 financial targets Topline growth Increasing EBIT-% • Telko on-going concrete growth projects • Unifying the operating model • Third party distribution market expected • Full leverage of current organization to continue growing 6-7 % annually • Successful effic
Slide 50: Market
Market Aspo Capital Markets Day, November 21, 2018 50
Slide 51: ESL Shipping
ESL Shipping Mikki Koskinen, Managing Director
Slide 52: A new ESL Shipping
A new ESL Shipping Founded Vessels ESL-AtoB@C combined cargo volume in 2017 1949 50 16.5 MT Vessel capacity in 2018 ESL-AtoB@C pro forma ESL-AtoB@C pro forma EBIT- combined net sales in 2017 % in 2017 468,000 DWT 160 M€* 11%* Aspo Capital Makets Day, November 21, 2018 52 *Figures are not IFRS-compli
Slide 53: Our values enable efficient and profitable operations
Our values enable efficient and profitable operations PROFITABILITY RESPECT FOR SAFETY THE ENVIRONMENT CUSTOMER FIRST RESPECT FOR COLLEAGUES Aspo Capital Makets Day, November 21, 2018 53
Slide 54: Our value proposition
Our value proposition Reliable, safe and flexible deliveries regardless of weather and ice conditions as sustainable as possible Aspo Capital Makets Day, November 21, 2018 54
Slide 55: Our strengths - we succeed despite challenging markets
Our strengths - we succeed despite challenging markets Strong niche player with deep Long-term customer agreements built on understanding of the flow of goods trust, historic benefits and performances Deep knowledge of selected clients, Vessels tailored for customers’ ports routes and materials Nort
Slide 56: Transportation volumes to remain high in the main cargo classes
Transportation volumes to remain high in the main cargo classes Transportation demand outlook Steel industry Wood raw material Loading and unloading at sea Energy industry Coal Biofuels Aspo Capital Makets Day, November 21, 2018 56
Slide 57: ESL's vessel class deliveries and order book to remain on a low level
ESL’s vessel class deliveries and order book to remain on a low level SOURCE: Banchero Costa Research Aspo Capital Makets Day, November 21, 2018 57
Slide 58: ESL's strengths ensure higher than average returns over the cycle
ESL’s strengths ensure higher than average returns over the cycle Where we currently are in the freight rate cycle* Peer group average ROCE, 2017 3%** ESL Shipping ROCE, 2017 Panamax, Capesize Handysize, Handymax 12% *Source: Danish Ship Finance, 2018 Aspo Capital Makets Day, November 21, 2018 58 **
Slide 59: ESL aims to be the best marine logistics solutions provider in ice areas
ESL aims to be the best marine logistics solutions provider in ice areas Aspo Capital Makets Day, November 21, 2018 59
Slide 60: ESL is executing its strategy
ESL is executing its strategy Increased capacity Lower operational costs, A more diversified partly through the new customer portfolio investments 1949 50 New vessel and cargo Environmental Continuous development types responsibility and higher and management of long- energy efficiency term customer
Slide 61: Investing in superior competitiveness: environmentally friendly LNG-fuelled vessels
Investing in superior competitiveness: environmentally friendly LNG-fuelled vessels Value of investment 2 x 25,600 DWT vessel Designed 60 M€ carrying capacity, with Finnish Deltamarin M/S Viikki & Haaga 60% of vessel systems by European suppliers Built in China Long-term agreement for The LNG vessel
Slide 62: Innovative newbuildings
INNOVATIVE NEWBUILDINGS ESL Shipping’s newbuildings are full of innovations that decrease the environmen- tal footprint of the vessels and result more efficient operations. Vessels have been de- land, and European equipment rs account for roughly 60 percent of all vessel systems. High efficiency Pro
Slide 63: An industrial partnership for more sustainable Baltic sea transports
An industrial partnership for more sustainable Baltic sea transports The goal is to make the Baltic sea routes more A partnership between eco-friendly industrial customers, ports and shipping companies to increase Partly funded by the EU the sustainability of the whole supply chain - ESL shipping’s
Slide 64: Acquisition of AtoB@C
Acquisition of AtoB@C Aspo Capital Makets Day, November 21, 2018 64
Slide 65: The AtoB@C acquisition – in line with ESL's growth strategy
The AtoB@C acquisition – in line with ESL’s growth strategy 30 dry cargo vessels in size New customer and cargo Acquisition value 30 M€ of 4,000-5,000 tons types for ESL including finished products 7 fully owned Forest industry raw 2017 net sales: 2 partially owned materials and products, 79.3 M€* 2
Slide 66: The expanded ESL is a more balanced and diversified shipping company
The expanded ESL is a more balanced and diversified shipping company Strengthened position in the Total cargo volume increased from smaller vessel category 11-12 to 16-17 million tonnes, net sales roughly doubled Expanded service range for EBIT higher but margin lower due existing and new customers
Slide 67: Growth and profitability drivers
Growth and profitability drivers Aspo Capital Makets Day, November 21, 2018 67
Slide 68: Organically growing net sales and profits in 2018
Organically growing net sales and profits in 2018 ESL Shipping’s net sales increased Net sales 1-9/2018 not considering significantly as a result of higher the effect of the acquisition (~7M€) transportation volumes 66.7 M€ (+18% vs. 1-9/2017) Rising fuel prices also had an EBIT 1-9/2018 not includi
Slide 69: The investment and acquisition greatly increase the capacity and revenue
The investment and acquisition greatly increase the capacity and revenue M€ DWT 200 500 000 The position of ESL has 180 450 000 improved significantly 160 400 000 140 350 000 120 300 000 100 250 000 80 200 000 The increase in capacity 60 150 000 enables ESL to improve its 40 100 000 operational effi
Slide 70: Decreasing demand for energy coal transports
Decreasing demand for energy coal transports Mtons Share of coal Coal used to be an 16 45,0 % important profitability driver 14 40,0 % for ESL. 12 35,0 % 10 30,0 % 8 25,0 % 6 20,0 % The decrease in coal 4 15,0 % transport demand has not 2 10,0 % negatively impacted ESL’s profitability. 0 5,0 % 2008
Slide 71: Strong trend in transition from coal to biofuels
Strong trend in transition from coal to biofuels: Transportation needs to increase significantly Woodchips 0.8 MWh / m3 Coal 5.6 MWh / m3 Aspo Capital Makets Day, November 21, 2018 71
Slide 72: ESL's financial targets 2020
ESL’S FINANCIAL TARGETS 2020 Net sales EBIT-% 200 M€ 12–15% Thank you! Aspo Capital Makets Day, November 21, 2018 72