Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (November 2017)
49 slides from Aspo's investor day presentation, Nov 22, 2017
Slide 1: Dedicated to achieving our long-term financial targets
Dedicated to achieving our long-term financial targets Investor Event November 22, 2017 Aki Ojanen, CEO
Slide 2: Agenda of the day
Agenda of the day 1. Aspo Group: an active developer of businesses 2. Telko: targets to double its earnings by the end of 2020 3. Business description, market growth and trends to support Telko’s growth ambitions 4. Success despite challenging markets 5. Financial impact: targeting growth and EBIT i
Slide 3: Aspo's core expertise lies in growing and internationalizing medium-sized companies
Aspo’s core expertise lies in growing and internationalizing medium-sized companies ASPO ESL Shipping Leipurin Telko Kauko 3 3
Slide 4: Aspo - an active developer of businesses
Aspo - an active developer of businesses 2016 • Net sales 457 M€ • Operating profit 20.4 M€ • Return on equity 14.6% • Personnel 895 • Market Cap 20.11.2017 286 M€ Aspo’s Investor Event, November 22, 2017 4
Slide 5: Aspo is a balanced entity, where risks are diversified
Aspo is a balanced entity, where risks are diversified Net sales by segment 2016 Net sales by market area 2016 7% 10 % Finland 149.4 M€ Telko 240.3 M€ 16 % 11 % 33 % Russia, Ukraine, other Leipurin 112.7 M€ CIS 145.6 M€ Other countries 64.5 M€ 52 % ESL Shipping 71.4 M€ 14 % Baltic countries 50.4 M€
Slide 6: Unique footprint including eastern growth markets
Unique footprint including eastern growth markets Norway China Iran Azerbaijan Denmark Kazakhstan Poland Belarus Estonia Ukraine Sweden Latvia Lithuania Russia Finland 1929 1995 1996 1997 2003 2004 2007 2008 2010 2015 2017 6
Slide 7: Profitable growth in the challenging Russian market
Profitable growth in the challenging Russian market Net sales in Russia (EUR and RUB) MRUB MEUR 1 800 25 1 600 20 1 400 1 200 15 1 000 800 10 600 400 5 200 0 0 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q3 2017 MRUB MEUR 7
Slide 8: Aspo maintains higher growth rates than the market on average
Aspo maintains higher growth rates than the market on average Net sales of Finnish listed companies in Russia (EUR) MEUR 2007 2 500 • Aspo Atria • Fortum * Kesko • Nokian Renkaat Oriola-KD * 2 000 CAGR: 16.6% • SRV Stockmann • Tikkurila YIT 1 500 • Yleiselektroniikka 1 000 2016 • Aspo Atria • Fortum
Slide 9: Aspo actively develops the direction for successful business
Aspo actively develops the direction for successful business Fine tuning Stabilized Continuous ESL situation development SHIPPING Situation of the TELKO New vessels analysis and Plastics business assessment of model TELKO the current state Finland LEIPURIN € TELKO Chemicals CIS Raw materials € ? KAU
Slide 10: Aspo capitalizes on the benefits of an industrial conglomerate and a holding company
Aspo capitalizes on the benefits of an industrial conglomerate and a holding company Aspo Industrial conglomerate Holding company Ownership 100% 100% parts, minorities from the same business Operations different, no synergy, few different, wide portfolio areas, few external boards, partially externa
Slide 11: Telko's Board of Directors with valid and vast experience
Telko’s Board of Directors with valid and vast experience supporting the management Chairman of the Board, Aki Ojanen, CEO, Aspo Plc Anders Dahlblom Elina Piispanen Irmeli Rytkönen M.Sc. (Econ.) M.Sc. (Econ.) Master of Laws Member of the Board since 2017 Member of the Board since 2017 Member of the
Slide 12: Continuously investing in and restructuring businesses by Aspo
Continuously investing in and restructuring businesses by Aspo 2010 2011 2012 2013 2014 2015 2016 2017 2018 ESL SHIPPING: ESL SHIPPING: ESL SHIPPING: ASPO: ASPO: ESL SHIPPING: LEIPURIN: ESL SHIPPING: ESL SHIPPING: ORDER PLACED ACCEPTANCE ACCEPTANCE REVIEW OF CANCELLATION LONG-TERM NEW STRATEGY INVES
Slide 13: Major shareholders, October 31, 2017
Major shareholders, October 31, 2017 Number of % of Number of % of shares shares shares shares 1 Havsudden Oy Ab 3,142,941 10.15 16 Ingman Finance Oy Ab 250,000 0.81 2 Vehmas Tatu 2,306,676 7.45 17 Estlander Peter 239,241 0.77 3 Varma Mutual Pension Insurance Company 1,438,412 4.64 18 Aminoff Maria
Slide 14: Aspo has prospered despite challenging market conditions
Aspo has prospered despite challenging market conditions 14 Aspo’s Investor Event, November 22, 2017
Slide 15: Solid improvement in profitability despite challenging markets
Solid improvement in profitability despite challenging markets Net sales and EBIT margin 2013–2017E MEUR Consensus estimates indicate 600 8% a 10% growth of net sales to 500 7% EUR 502 million in 2017 Consensus estimates indicate 400 6% an EBIT margin of 4.8% in 2017 300 5% 200 4% 100 3% 0 2% 2013 2
Slide 16: Reliable dividend payer
Reliable dividend payer Dividends and dividend yield 2006–2016 EUR % Aspo dividend yield, 0,60 12 average 2006–2016 0,50 10 6.3% 0,40 8 0,30 6 Helsinki Stock Exchange 0,20 4 dividend yield, average 2006–2016 0,10 2 3.6% 0,00 0 2006 2007 2008 2009 2010 2011* 2012 2013 2014 2015 2016 Dividend, € Aspo,
Slide 17: ESL Shipping
ESL ESL Shipping Shipping Leading carrier of dry bulk cargoes in the Baltic region 17 Aspo’s Investor Event, November 22, 2017
Slide 18: ESL Shipping - Strong niche player with deep understanding of the flow of goods
ESL Shipping - Strong niche player with deep understanding of the flow of goods • Contract traffic in the Baltic Sea and Northern Europe, as well as loading and unloading ships at sea. Net sales 2016 71.4 M€ • Competitive advantage is based on ability to operate EBIT margin 2016 17.6% efficiently an
Slide 19: Leipurin
Leipurin Unique provider of solutions for bakery and confectionery products, the food industry and the out-of-home market 19 Aspo’s Investor Event, November 22, 2017
Slide 20: Leipurin – innovation solutions
Leipurin – innovation solutions • Solutions offering ranges from product development, recipes, raw materials, training and equipment to designing Net sales 2016 112.7 M€ sales outlets. Leipurin designs, delivers and maintains production lines for the baking industry and other machinery in EBIT margi
Slide 21: Kauko
Kauko 21
Slide 22: Aspo will achieve its financial targets by 2020 with strong commitment of segments
Aspo will achieve its financial targets by 2020 with strong commitment of segments to own financial targets Leipurin • increasing net sales and EBIT Strong commitment Telko targeting • growth of net sales to 300–350 M€ to own • an EBIT margin of 6–7% financial targets ESL Shipping targeting • growth
Slide 23: Aspo is committed to achieving its financial targets by 2020
Aspo is committed to achieving its financial targets by 2020 Operating profit (EBIT) Average return on equity Gearing with current structure (ROE) of over of up to 7% 20% 100% EBIT ROE Gearing 2016: 4.5% 2016: 14.6% 2016: 89.8% 23
Slide 24: TELKO
TELKO Kalle Kettunen, Managing Director Aspo’s Investor Event, November 22, 2017 24
Slide 25: Telko targets to double its earnings by the end of 2020
Telko targets to double its earnings by the end of 2020 Topline growth Increasing EBIT margin • Telko on-going concrete growth projects • Unifying the operating model • Third party distribution expected continued • Full leverage of current organization market growth 6-7 % • Identified efficiency pro
Slide 26: Business description
Business description Aspo’s Investor Event, November 22, 2017 26
Slide 27: Leading plastics and chemicals raw material distributor in Northern Europe and in the CIS
Leading plastics and chemicals raw material distributor in Northern Europe and in the CIS Telko at a glance Strong presence in eastern Headquarters in Helsinki. Net sales split by country 2016 growth markets Subsidiaries in 15 countries 50% of net sales from Russia Other and CIS countries countries
Slide 28: Unique presence in the eastern growth markets
Unique presence in the eastern growth markets Telko presence in 2009 Telko office Leader in the Nordic-Baltic region and strong presence in eastern growth markets; ahead of competition in CIS expansion. Aspo’s Investor Event, November 22, 2017 28
Slide 29: Unique presence in the eastern growth markets
Unique presence in the eastern growth markets Telko, presence in 2009 Telko, presence today Telko office Telko warehouse Leader in the Nordic-Baltic region and strong presence in eastern growth markets; ahead of competition in CIS expansion. Aspo’s Investor Event, November 22, 2017 29
Slide 30: Balanced business mix with both chemicals and plastics in 2016
Balanced business mix with both chemicals and plastics in 2016 Split of net sales: Split of EBIT: Split of personnel: EUR 240 million EUR 10.1 million 280 employees Chemicals Chemicals Chemicals 41 % 33 % 52 % Plastics Plastics Plastics 48 % 59 % 67 % Aspo’s Investor Event, November 22, 2017 30
Slide 31: Telko creates value for both principals and customers
Telko creates value for both principals and customers We Bridge Industrial Principals and Customers in a Sustainable Way PLASTICS Value for principals PLASTICS • Reliable and sustainable • Packaging industry, • Local know-how E & E (electronics and • Full supply chain management equipment) and autom
Slide 32: Telko's value proposition leads to high entry barriers
Telko’s value proposition leads to high entry barriers VALUE PROPOSITION Plastics and +7,000 chemical Filling Vendor- small-to-mid producers Mixing Technical Bundling sized clients Purchase Transport Storage Packing managed Transport Blending support Labelling inventory Traditional distribution Solu
Slide 33: Market growth and trends
Market growth and trends Aspo’s Investor Event, November 22, 2017 33
Slide 34: Market growth and structural changes offer growth opportunities for Telko
Market growth and structural changes offer growth opportunities for Telko Structural Third party distribution is expected to continue gaining market share and support further growth. The third party chemical and plastic changes distribution market is growing at a rate of 6–7%. Market Demand for raw
Slide 35: Chemical distribution market growing especially in the emerging markets
Chemical distribution market growing especially in the emerging markets Central and Eastern Europe Rest of Asia-Pacific North America 6% Western Europe 10% 2% 3% China 10% Middle Eastern Africa Latin America 10% 10% 9% Source: BCG Aspo’s Investor Event, November 22, 2017 35
Slide 36: Growing third party chemical distribution sector supports the growth ambitions of Telko
Growing third party chemical distribution sector supports the growth ambitions of Telko Global third-party chemical distribution market EUR billion Technavio’s market 250 221 research analyst predicts that the global third-party 200 165 168 chemical distribution 150 145 market will grow at a CAGR 13
Slide 37: Telko already in the league of top global players in the world
Telko already in the league of top 50 global players in the world Global chemicals and plastics distributors Rank CompanySales (EUR billion)1) • The chemical distribution market is #1 10.5 highly fragmented with an estimated #2 7,7 3,9 10,000 distributors. #3 #4 3,6 • The market includes well divers
Slide 38: Telko's growth and margin improvement drivers
Telko’s growth and margin improvement drivers Aspo’s Investor Event, November 22, 2017 38
Slide 39: Drivers to improve profitability
Drivers to improve profitability Margin expansion through unifying operating model, leveraging current & up and increasing solution based distribution. Must Win Battles include subprojects e.g. • More professional united sourcing • Logistics cost improvement especially in the eastern market • Pricin
Slide 40: Shift from traditional distribution to solution based distribution improves margins
Shift from traditional distribution to solution based distribution improves margins and supports growth Solution based distribution of specialty products Services based on expertise of the supply chain, technical know-how and digitalization. SD Solution based distribution with high share of specialt
Slide 41: Two cases of Solution-based distribution (SD)
Two cases of Solution-based distribution (SD) Volvo Car Corporation outsourced chemicals, lubricants Global leading packaging company outsourced and metal working fluids supply chain to Telko chemicals and lubricants supply chain to Telko • Telko serves five Swedish plants • 750 SKU items included •
Slide 42: Growth project examples: chemicals and plastics
Growth project examples: chemicals and plastics Globally leading plastics supplier • 2013 decided to simplify Route to market = decrease number of distribution partners • Chose 2014 Telko as Nordic partner • Guarantee volume and price support • Transfer of customers to Telko • Offers new ”green prod
Slide 43: Additional M&A options
Additional M&A options (not included in financial targets) Aspo’s Investor Event, November 22, 2017 43
Slide 44: Highly fragmented market undergoing consolidation offers good acquisition opportunities
Highly fragmented market undergoing consolidation offers good acquisition opportunities Global chemicals deal activity 2009–2015 • Fragmented market offers growth and value EUR billion Number of transactions 140 700 creation opportunities via M&A 120 600 • Global deal volume high with increased deal
Slide 45: Key figures & Financial targets for 2020
Key figures & Financial targets for 2020 Aspo’s Investor Event, November 22, 2017 45
Slide 46: Telko has a proven track record of strong organic growth and solid margins
Telko has a proven track record of strong organic growth and solid margins Net sales and EBIT margin (2009–2016) MEUR EBIT margin Strong long-term organic 350 7% net sales and EBIT growth 300 6% with a CAGR of 9% and 18% 4,8% respectively (2009–2016) 250 3,5% 2,5% 4,2% 5% 4,4% 4,1% 238 240 3,9% 230
Slide 47: 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) MEUR Capex as % of net sales Low maintenance capex 3,0 3,0% 2,6 and efficient working 2,5 2,5 2,3 2,5% capital management ensure high cash flow 2,0 1,9% 1,8 2,0% 1
Slide 48: Achieving 2020 financial targets is based on
Achieving 2020 financial targets is based on • Analytical thorough strategy work in 2017 • Concrete existing growth projects • Identified efficiency improvement potential • Must Win Battles which are being implemented • Targeted organic growth by strategic growth projects • Focused acquisition (not
Slide 49: Telko is dedicated to achieving its financial targets by the end of 2020
TELKO IS DEDICATED TO ACHIEVING ITS FINANCIAL TARGETS BY THE END OF 2020 Net sales 2020 EBIT margin 2020 300–350 M€ 6–7% Thank you! Aspo’s Investor Event, November 22, 2017 49