Nobia Ab · OMXSTO:NOBI
Nobia Ab — Q3 2002 Earnings Presentation
47 slides from Nobia Ab's earnings presentation, October 2002
Slide 1: January - September 2002
January - September 2002 1
Slide 2: Content
Content Summary Strategic initiatives Financial review – Nordic operations – Continental European operations – UK operations – Group 2
Slide 3: Summary
Summary 3
Slide 4: Europe's leading kitchen interiors company
Europe’s leading kitchen interiors company Europe’s largest kitchen interiors company Annual pro forma sales of approximately SEK 10 billion Decentralised organisation, three regions – Nordic – Continental Europe – United Kingdom Strong brand portfolio, focus on upper-middle segment 4
Slide 5: Summary
Summary Net sales up 24 per cent to SEK 7,251 million (5,840). Operating margin increased to 7.4 per cent (6.6). Income after financial items up 45 per cent to SEK 434 million (299). Earnings per share after full dilution up 34 per cent to SEK 5.43 (4.05). Continued profit improvement and
Slide 6: Track-record of improving financial performance
Track-record of improving financial performance 8,283 7,251 6.6% 7.1% 8.0% 3,977 4,049 4,102 3,412 3,316 3.4% 2.4% 2.7% 1996 1997 1998 1999 2000 2001 Jan-Sept 2002 -4.1% Sales (audited) SEK million EBITA margin 6
Slide 7: Strategic Initiatives
Strategic Initiatives 7
Slide 8: Scalable business model
Scalable business model Market Business units Group synergies Bench- Production and Channel/ Purchasing marking/ IT product brand and best development strategy logistics practice 8
Slide 9: Cost savings programme year 2002-2004
Cost savings programme year 2002-2004 Savings goal for 2002-2004: SEK 400m Mainly targeting: – material costs – personnel costs Expected savings by end 2002 approx. 1/3 9
Slide 10: Cost reduction, direct material and transports
Cost reduction, direct material and transports Pooling volumes by chosen suppliers Reduced number of suppliers Economies of scale Effect in P&L after 6 months Further savings expected 10
Slide 11: Actions in practice
Actions in practice Structure information into a database Products are the strategic platform for decisions Classification into 11 main product groups Each product has a cross border responsible person Regional buy European platform 1,450 suppliers Approximately 50% less suppliers 11
Slide 12: Reduction of total variety of components whilst expanding choice
Reduction of total variety of components whilst expanding choice for each business unit Decentralised sourcing Co-ordinated sourcing Component X Component X - Available choice - - Available choice - Reduction of total Business unit A variety of components – Increased volume per variety – Reduction
Slide 13: Cost reduction, personnel
Cost reduction, personnel Achieved Announced Sum Change Nordic 48 2% Cont. Europe -37 -104 -10% UK -178 -40 -10% Total reduction -167 -144 -311 -5% Divestment -256 Additional business 81 Net reduction -136 -2% 13
Slide 14: Other initiatives
Other initiatives Standardised carcass platform, K-20 » Norema in August 2002 » Invita in January 2003 » Myresjökök in 2004 Store network, January-September: » 40 new stores opened » 10 stores closed » 96 renovated and/or changed location » 135 Homebase stores opened 14
Slide 15: The Nordic operation
The Nordic operation 15
Slide 16: Trends for the Nordic kitchen interiors market
Nordic Trends for the Nordic kitchen interiors market Sweden, up • growth in new build segment • flat in renovation segment • slow down in third quarter Denmark, up • growth in renovation segment Norway, flat • slow down in third quarter also within new build segment Finland, decline • mainl
Slide 17: Net sales and operating income
Nordic Net sales and operating income Jan–Sept Jan–Sept Oct-Sept SEK, million 2002 2001 Change 2001/02 Net sales 2,582 2,422 7% 3,471 Net sales (Comp units curr adj.) 5% Jan–Sept Jan-Sept Oct-Sept 2002 2001 Change 2001/02 Operating profit 315 255 24% 415 Operating margin 12.2% 10.5% 12% July-Sept Ju
Slide 18: The Continental European operation
The Continental European operation 18
Slide 19: Trends for the Continental European kitchen interiors market
Trends for the Continental Europe Continental European kitchen interiors market Germany, decline – estimated 9 per cent (Jan-July) – third quarter decline less than first half Netherlands, decline – estimated 12 per cent in 2002 – increased decline in third quarter 19
Slide 20: Net sales and operating income
Continental Net sales and operating income Europe Jan–Sept Jan–Sept Oct-Sept SEK, million 2002 2001 Change 2001/02 Net sales 1,575 1,859 -15% 2,175 Net sales (Comp units curr adj.) -10% Excl. net effects from Star-Beka closing Jan–Sept Jan-Sept Oct-Sept 2002 2001 Change 2001/02 Operating profit 38 5
Slide 21: Personnel development
Continental Personnel development Europe 2001 reduction of 188 people (12%) 2002 reduction YTD of 37 people (3%) » Additional Q4 reduction 104 people (8%) Since acquisition totalling 329 people (20%) 21
Slide 22: The UK operation
The UK operation 22
Slide 23: The UK Kitchen market
UK The UK Kitchen market Estimated increase 4% YTD Stable growth in third quarter Highest growth for vertically integrated companies No growth in new build segment 23
Slide 24: Net sales and operating income
UK Net sales and operating income* Jan–Sept Jan–Sept Oct-Sept SEK, million 2002 2001 Change 2001/02 Net sales 3,128 1,570 4,085 Net sales (Comp units curr adj.) 5% Jan–Sept Jan-Sept Oct-Sept 2002 2001 Change 2001/02 Operating profit 295 132 382 Operating margin 9.4% 8.4% 9% July-Sept July-Sept 2002
Slide 25: Personnel development
UK Personnel development 2001 Reduction of 98 people (4%) » mainly administration and manufacturing 2002 Reduction of 178 people » divestment of Joinery operations -256 » increase due to Homebase +40 » insourcing of production +17 » sales and manufacturing +45 » administration -24 Further reduct
Slide 26: Financial review Group
Financial review Group 26
Slide 27: Net sales - Group
Net sales - Group Jan–Sept Jan–Sept Oct–Sept SEK, million 2002 2001 Change 2001/02 Net sales 7,251 5,840 24% 9,694 Net sales, Comparable Units curr.adj.* -2% *Excl. Net effects from Star-Beka closing Overall growth from Magnet acquisition Organic growth in Nordic operation and UK operation Con
Slide 28: Operating income - Group
Operating income - Group Jan–Sept Jan–Sept Oct–Sept SEK, million 2002 2001 Change 2001/02 Operating income 534 383 39% 688 Operating margin 7.4% 6.6% 7.1% July-Sept July-Sept 2002 2001 Change Operating income 171 161 6% Operating margin 7.4% 7.0% 28
Slide 29: Main reasons for improved operating income Jan-Sept 2002
Main reasons for improved operating income Jan-Sept 2002 – Gross margin: • increase by 2.4% points (excl Magnet effect) • main drivers: – increased average order value – savings material cost – S&A costs: • additional personnel and costs in the sales network (Nordic, UK) • additional business (UK) •
Slide 30: Net financial items
Net financial items Jan–Sept Jan–Sept SEK, million 2002 2001 Change Net financial items -100 -84 -16 Increase is the effect from the acquisition of Magnet in May 2001 Effects from new share issue as of June resulting in a reduction of net debt and a reduction of interest rate Net financial ite
Slide 31: Earnings
Earnings Jan-Sept Jan-Sept Full year Oct-Sept 2002 2001 2001 2001/02 EPS after full dilution, SEK 5.43 4.05 5.15 6.56 Return on capital employed, per cent 15.5% 17.0% Return on shareholders´ equity, per cent 16.2% 16.5% Increased EPS from Nordic operations and the Magnet acquisition 31
Slide 32: Cash flow
Cash flow Jan–Sept Jan–Sept Full year SEK, million 2002 2001 2001 Current activities Operating profit 534 383 537 Depreciation 235 200 284 Adjustment for items not included in cash flow -82 -75 -214 Interest, dividend and tax -144 -116 -193 Change in working capital -218 -47 137 Cash flow from curre
Slide 33: Capital employed and working capital
Capital employed and working capital Sept Dec 2002 2001 Capital Employed 4,020 4,237 Turnover, LTM 2.4 2.3 Working capital 334 156 in % of LTM 3.4% 1.6% The divestment of operations in Penrith and Flint caused a reduction of capital employed by SEK 102m Working capital higher than at previous ye
Slide 34: Restructuring provisions
Restructuring provisions Dec Dec Q2 Q3 SEK, million C/B 2000 2001 2002 2002 Poggenpohl / Norema 252 91 75 49 Magnet 154 125 106 Total 252 245 200 155 Jan-Sept 2002 Utilisation* 82 Currency effect 9 * Of which Poggenpohl / Norema: SEK 42m, Magnet: SEK 40m 34
Slide 35: Financial position
Financial position Net debt Fusk Year-end 2001 2,078 New issue -516 Currency effects -66 Divestment of Penrith & Flint -116 Operations -166 Sept 2002 1,214 Available credits and non-utilised credit overdraft facilities by end of September SEK 945 million Available cash amounted to SEK 278 millio
Slide 36: Balance Sheet Ratios
Balance Sheet Ratios Sep Dec 2002 2001 Equity/Assets ratio 41.1% 27.8% Net debt/Equity ratio 49% 117% Ratios strengthened due to proceeds from the IPO and net income from operations 36
Slide 37: Thank you for listening
Thank you for listening 37
Slide 38: Additional slides
Additional slides 38
Slide 39: Becoming a focused kitchen interiors company
Becoming a focused kitchen interiors company Acquisition of Acquisition of Nobia formed by Acquisition of Acquisition of the Poggenpohl Norema (N) and Industri Kapital Novart (SF) Magnet (UK) group (D, S) Invita (DK) 1996 1997 1998 1999 2000 2001 2002 Strategic decision Divestment of Divestment Dive
Slide 40: Attractive industry fundamentals
Attractive industry fundamentals Market size 8% Euro11.4 billion 7% 7% (SEK110 billion) 6% Nobia has a strong 5% 4% 4% position 4% 3% 3% 3% Fragmented market 2% 2% 2% 2% 1% High barriers to entry 1% 0% Highly customised products Source: Csil, Prognoscentret and Nobia Estimates. Note: IKEA
Slide 41: Acquisition criteria
Acquisition criteria Strong brands Participation in distribution to end Synergistic customers acquisitions Synergy potential in applying Nobia’s business model Acquisition price 41
Slide 42: Comments to net sales and operating income
Nordic Comments to net sales and operating income Organic growth Jan-Sept 5%, in third quarter 1% Continued operating margin improvements Operating profit improvements driven by: – increased average order values – reductions in material costs Increased resources in: – store network – marketi
Slide 43: Comments to net sales and operating income
Nordic Comments to net sales and operating income Sweden – sales increase mainly new build segment Denmark – sales increase clearly ahead of market – both fitted and DIY kitchens – showroom openings Norway – sales increase mainly new build segment, slower in third quarter – increased sales thr
Slide 44: Comments to net sales and operating income
Continental Comments to net sales and operating income Europe Operating margin 2.4% (2.9%) despite sales decline of 10% Margin improvement in third quarter Sales decline due to market decline – mainly Germany, Netherlands and the US – increased sales to Asia Reduced sales volumes compensated
Slide 45: Comments to net sales and operating income
Continental Comments to net sales and operating income Europe Pronorm – launch of the Designo shop concept delayed due to market conditions – 15 stores opened to date Optifit – new listings in Germany, Austria and France Poggenpohl – updated product program 45
Slide 46: Comments to net sales and operating income
UK Comments to net sales and operating income Organic growth 6% (pro forma) • kitchen and bedrooms up 9% • joinery products up 4% • bathroom products down 5% YTD sales to Homebase GBP 3m Sales increase accelerated in third quarter, mainly driven by kitchen and bathroom Margin increase mainly
Slide 47: Taxes
Taxes Tax rates Jan–Sept 2002 In percent of profit after financial items 33.6% Less goodwill amortisations 30.4% Nobia has unutilised tax-losses in UK, Germany and Sweden of SEK 200 million as of December 31, 2001 During 2002 no income tax expected to be paid in these countries 47