Ferronordic Ab · OMXSTO:FNM
Ferronordic Ab — Q3 2022 Earnings Presentation
38 slides from Ferronordic Ab's earnings presentation, Nov 14, 2022
Slide 1: Company Presentation
IN FERRONORDIC Company Presentation November 2022
Slide 2: Introduction to Ferronordic
Russia/CIS Introduction to Ferronordic • Ferronordic’s main partners have suspended sales and deliveries to Russia • Part of Ferronordic’s products are now restricted from sales in Russia • We take all measures to ensure that our Group operations in Russia comply with applicable laws • Founded in 20
Slide 3: Introduction to Ferronordic
Introduction to Ferronordic Development 1 Employees Revenue (SEKm) Outlets 2010 (Start) ~160 1,184 6 1 Employees Revenue (SEKm) Outlets Q3 2022 1,840 6,610 109 Revenue by Activity (Q3 2022) Revenue by Industry - Russia/CIS (Q3 2022) Other Transporation Oil & Gas Revenue 2% 0% 2% Forestry 8% Quarries
Slide 4: Value pyramid
Value pyramid Vision • Being the leading service and sales company in our markets Mission • Support the growth and leadership of our customers Values & • Quality • Excellence Operating Principles • Respect • Diversified experience • Innovative solutions Our Offer • Complex approach • Superior servic
Slide 5: Germany: Europe's largest truck market
Germany Europe’s largest truck market Heavy truck registrations in Germany (units) 80 000 120 70 264 70 000 67 797 65 280 66 441 68 450 115 60 218 61 940 60 000 58 574 110 55 167 55 215 55 386 55 186 48 827 50 427 105 50 000 40 322 100 40 000 95 30 000 90 20 000 85 10 000 80 0 75 2008 2009 2010 2011
Slide 6: Strategic objectives
Strategic objectives Leadership in the market Aftermarket absorption Expansion into related for construction rate of at least 1.0 x business areas equipment and trucks Expansion and Industry leading digital development of Geographic expansion service and sales platforms contracting services 6
Slide 7: Strategic cornerstones
Strategic cornerstones Customer Orientation Build on Strong Brand - Volvo Customer centricity World leading manufacturer of trucks and construction equipment Leading service and product availability Strong brand position (leading in Russia) Tailored customer solutions (including contractin
Slide 8: UN Sustainable Development Goals
UN Sustainable Development Goals 7 12 13 14 15 3 4 5 10 Minimum emissions and waste Injury-free objective High-quality, long-life, fuel- efficient and safe machines 4,282 hours invested in Health & Safety trainings Maximising uptime for efficient production 50,000 hours of training and d
Slide 9: Strategic development
Strategic development 2010-2013: Phase I 2014-2016: Phase II 2017 and onwards: Phase III establishing platform streamlining to handle market decline leveraging market recovery and company maturity 12 75 75 73 74 109 outlets outlets outlets outlets outlets outlets 326 731 767 782 847 1,840 FTEs FTEs
Slide 10: Product offering
Product offering Volvo CE Volvo & Volvo & Ferronordic Dressta Rottne Mecalac Sandvik Renault Trucks Renault Trucks Since Since Since Since Since Since Since Since 2010 Russia 2017 Russia 2020 2012 2014 2016 2016 2021 2019 Kazakhstan 2019 Kazakhstan Product Range Product Range Product Range Product o
Slide 11: Russia & Kazakhstan coverage
Russia & Kazakhstan Coverage Murmansk Kirovsk Kaliningrad Petrozavodsk St.Petesburg Arkhangelsk Belaya Gora Velikiy Novgorod Cherepovets Tver’ Vologda Karpogory Norilsk Smolensk Velsk Vorkuta Yaroslavl Alexandrov Koryazhma Nezhdaninskoe Kaluga Labytnangi Gurovo Moscow Sharia Syktyvkar Tula Noviy Ure
Slide 12: Germany coverage
Germany Coverage • Ferronordic expanded to become dealer for Volvo and Renault Trucks in Germany in January 2020 Hannover Barleben • Germany is Europe’s largest trucks market Coswig with 50,500 registrations in 2020 and 55,400 Dessau Nordhausen in 2021 Leipzig Kassel Görschen Bautzen • Ferronordic’s
Slide 13: Complexity of Customer Demand
Moving torward further customer integration Complexity of Customer Demand Business Consultancy Business Services Open Platform Total Cost of Ownership Customised Upcycling Solutions Part Sales Services Rental Segment Experience Grow in new Machine/Truck Sales Finance Segment Ferronordic’s Offering 1
Slide 14: Aftermarket focus
Aftermarket Sales Aftermarket focus • Proactive customer coverage based on real- time data from the existing machine population Share of sales Share of sales (LTM) Russia/CIS (LTM) Germany • Proprietary system transforms machine telematic signals (e.g. VCE’s CareTrack) into Other Other 1% 7% sales l
Slide 15: Connectivity & Digitalisation
Connectivity & Digitalisation Focus on growing sales Telematics System Rules Engine Customer Proposals Sales Action Follow Up • Telematics systems, e.g. • Signals from the telematics • Sales leads and concrete • Responsible sales • Customer proposals Volvo CE’s CareTrack, systems flow through the cu
Slide 16: Contracting services
Contracting services Integrating with our customers Contracting services Traditional method Contracting services • Part of strategy to become increasingly integrated in the business of our customers • In addition to supplying and maintaining machines, we Machines provide customers with operators to
Slide 17: Contracting services
Contracting services Client: GV Gold, leading gold mining company in Russia Location: Vysochaishy Mine and Ugakhan Mine Project staff: 217 people (as of September 2022) Fleet size: Vysochaishy Mine: 56 units (38 haulers, 2 graders, 9 excavators and 7 dozers) Ugakhan Mine: 21 units (17 haulers, 3 exc
Slide 18: Volvo & Renault Trucks
Volvo & Renault Trucks Germany Authorised aftermarket dealer for Volvo and Renault Trucks in parts of Germany • Ferronordic services and sells Volvo and Renault trucks, trades and restores used trucks and manages a trucks rental business • Ferronordic will invest to grow and improve network in area
Slide 19: Development of revenue & operating profit
Development of revenue & operating profit Revenue Operating Profit & Operating Margin1 (Adjusted2) 6 610 6 750 550 20% 6 212 497 483 6 000 500 1 600 1368 450 5 250 4 635 15% 400 358 4 500 328 3 747 350 983 3 750 300 274 9,5% SEKm SEKm 3 241 8,4% 10% 3 000 2 567 250 7,9% 7,8% 7,6% 7,3% 7,1% 187 4 844
Slide 20: Cash flow & capital allocation
Cash flow & capital allocation Working Capital Development Net debt/(cash) Development 1 300 1184 23% 800 712 1 100 917 18% 579 900 600 18% 13% SEKm 700 SEKm 400 255 14% 198 500 8% 200 225 300 137 3% 0 100 -26 2% 3% -100 -2% -200 -75 0% Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q3 2021 Q4 2021 Q1 2022
Slide 21: Third quarter 2022
IN FERRONORDIC Third quarter 2022 November 2022
Slide 22: Refocusing resources
Refocusing resources Group • Revenue decrease of 11% to SEK 1,479m partly offset by currency effects • One-off SEK 321m payment from Volvo CE related to termination of dealership in Russia • Russia effectively isolated from rest of Group Germany: • Trucks sales in units decreased by 5%, partly due t
Slide 23: Refocusing resources
Q3 2022 The conditions for our business in Russia Refocusing resources have continued to • Conditions for our business in Russia continue to deteriorate deteriorate • We take all measures to ensure that our operations in Russia comply with applicable laws. As a result, our business is limited in sco
Slide 24: Q3 2022 Group summary financials
Q3 2022 Group summary financials SEK 1,479m Group revenue -11% to SEK 1,479m (-11%) revenue • Russia/CIS revenue -44% in local currency and -16% in SEK 1,119m • Equipment sales -67% (-78% in RUB), aftermarket sales +15% (-24%) and contracting services +117% (+44%) • German revenue +10% to SEK 359m (
Slide 25: Q3 2022 Russia/CIS operational highlights
Q3 2022 -67% Russia/CIS operational highlights in equipment sales (-78% in RUB) • According to aebrus.ru, which does not include all brands, the Russian market declined 43% in Q3 2022 • Ferronordic’s assessment is that the total market has indeed declined but that Western brands are being replaced b
Slide 26: Q3 2022 Germany operational highlights
Q3 2022 German trucks Germany operational highlights market increased 6% Y-o-Y • Based on registrations of new trucks, the total German market for heavy trucks increased by 6% in Q3 20221 • Rigids declined by 11% while tractors grew by 24% • The market remains strong and supply constraints currently
Slide 27: Business development
Business development Russia Working towards a sale of • Working towards a sale of the business to free up and reallocate resources the Russian business to Group and new business areas • Complex market for corporate control • International capital flows are restricted and subject to certain approvals
Slide 28: German network expansion
German network expansion • Fulda - Transaction closed in January 2021 • Limburg - Transaction closed in April 2021 • Nordhausen - Transaction closed in June 2021 Hannover • Service and sales hub in Hannover Barleben Coswig • Greenfield Dessau Nordhausen • Investments in 2021 and 2022 Kassel Leipzig
Slide 29: Economic development
Economic development Germany’s economy • Germany • +1.1% GDP in Q3 20226 +1.1% in Q3 2022 • +1.5% GDP expected in 20222 • -0.3% GDP expected in 20232 • Inflation reached 10.4% and energy prices were +43% Y-o-Y in October Kazakhstan’s economy • Kazakhstan • +3.5% GDP in 9m 20224 +3.5% in 9m 2022 • +2
Slide 30: Q3 2022 Income statement (adjusted)
Q3 2022 Income statement (adjusted) Q3 2021 Q3 2021 Q3 2021 Q3 2022 Q3 2022 Q3 2022 % change Q3 2022 SEK MM • FX important factor Y-o-Y Russia / Russia / Group Germany Group Germany Group Group CIS CIS (adjusted) • Total revenue of SEK 1,479m FX (SEK/RUB, 8.50 10.20 5.63 10.62 EUR/SEK) o 76% Russia/
Slide 31: Q3 2022 Cash flows
Q3 2022 Cash flows Q3 2022 • In Q3 2022, Group cash flows were Q3 2021 Q3 2022 Q3 2022 Q3 2022 impacted by the SEK 321 compensation SEK MM Group Group Russia/CIS Germany Group payment from Volvo CE to the parent (adjusted) company Cash flow from: • Adjusted for this inflow, cash flow from Cash flows
Slide 32: Q3 2022 Balance sheet
Q3 2022 Balance sheet SEK MM Q3 2021 Q2 2022 Q3 2022 • Y-o-Y changes in the balance sheet were significantly driven by the stronger RUB FX (SEK/RUB, EUR/SEK) 8.82, 10.14 5.04, 10.68 5.07, 10.92 • PP&E increased Y-o-Y mainly due to the appreciation of the RUB Property, plant and equipment 850 1,301 1
Slide 33: Russia standalone financial statements
Russia standalone financial statements Q1, Q2 and Q3 2022 and preliminary October 2022 sales SEK MM 31 Mar 2022 30 Jun 2022 30 Sep 2022 SEK MM Oct 2022 FX (SEK / RUB) 5,04 5,04 5,07 FX (SEK / RUB) 5.47 ASSETS Non-current New units 5 PPE 529 829 757 Used units 3 Current: Inventories 861 977 803 Total
Slide 34: NAV Russia 30 September 2022
SEKm 0 1 000 2 000 3 000 4 000 Cash and equivalents 375 Trade and other 872 receivables EBIT Q4 19 New (76m) and used (47m) machine inventory 123 Parts (579m) and other 680 (101m) inventory Contracting Services PPE 445 Other PPE 312 Other assets 761 Trade and other payables 833 Contracting Services
Slide 35: Financial objectives and dividend policy
Financial objectives and dividend policy Subject to review KPI Objective Last Twelve months (LTM) Double the 2020 revenue in its 1.5 x Revenue 1 current markets by 2025 (in SEK) 2020 revenue Operating margin Above 7% 7.6% Below 3 times (over a business Net debt / EBITDA 0.5 x cycle) The ambition is
Slide 36: Outlook
Outlook The prospects for our operations in Russia continue to deteriorate and we are currently working towards divesting our Russian business. Our operations in Kazakhstan continue to develop positively and we actively seek opportunities to grow our product and business portfolio. In Germany, we co
Slide 37: Refocusing resources
Refocusing resources Group • Revenue decrease of 11% to SEK 1,479m partly offset by currency effects • One-off SEK 321m payment from Volvo CE related to termination of dealership in Russia • Russia effectively isolated from rest of Group Germany: • Trucks sales in units decreased by 5%, partly due t
Slide 38: Ferronordic
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