Eltel Ab · OMXSTO:ELTEL
Eltel Ab — Q2 2016 Earnings Presentation
26 slides from Eltel Ab's earnings presentation, August 2016
Slide 1: Eltel AB Road show presentation Q2 2016
Eltel AB Road show presentation Q2 2016 August 2016 © Eltel 2016 Shaping Future Infranets 1
Slide 2: Today's presenters
Today’s presenters Axel Hjärne Gert Sköld Chief Executive Officer Chief Financial Officer © Eltel 2016 Shaping Future Infranets 2
Slide 3: Eltel in brief; Q2 business performance; Q2 financials
Eltel in brief Q2 business performance Q2 financials Operating environment and summary © Eltel 2016 Shaping Future Infranets 3
Slide 4: Eltel in brief
Eltel in brief European market leader Operations in 10 countries Net sales EUR 1.25 billion Industry with long term 9,600 employees structural growth Scalable platform for growth and M&A Solid customer base and recurring revenues Good financial profile with strong cash generation © Eltel 2016 Shapin
Slide 5: Q2 business performance
Eltel in brief Q2 business performance Q2 financials Operating environment and summary © Eltel 2016 Shaping Future Infranets 5
Slide 6: Q2 Highlights
Q2 Highlights Strong net sales growth driven by acquisitions and fibre New orders booked, resulting in maintained high level committed order backlog Operative EBITA affected by isolated Norwegian rail project - Corrective actions taken - In parallel, focus on initiatives for operational effici
Slide 7: Q2 2016 Net sales
Q2 2016 Net sales Q2 2016: EUR 369.0 m Q2 net sales EUR 369.0 million +22.9% FX adj. (307.8) +3.5% organic growth - +22.9% FX adjusted EURm - Driven by acquisitions (Eltel Sönnico, 450 Vete, U-SERV) 400 +3.5% organic growth 350 Committed order backlog 300 - EUR 953 million (Dec 2015: 920) at 2
Slide 8: Q2 2016 Operative EBITA
Q2 2016 Operative EBITA Q2 2016 Operative EBITA Q2 2016: - EUR 5.7 million (13.9) EUR 5.7 m (13.9) - 1.6% of net sales (4.5) 1.6% margin (4.5) EURm - 4.5% of net sales adjusted for 30,0 5,5% EUR 10 million provision and Eltel Sønnico effect 25,0 5,0% Q2 2016 EBITA 20,0 – EUR 5.7 (14.0) 4,5% 15,0
Slide 9: Power
Power - Mixed geographical market conditions Net sales: • Impacted by low order intake in the transmission business in previous quarters • Good growth in Germany • Lower volumes in African electrification projects Operative EBITA: Q2 Net sales EUR 148.1 m (152.6) • Weaker profitability in certain Af
Slide 10: Good order intake in power transmission in August
Good order intake in power transmission in August - Large orders from Statnett and National Grid Statnett - New contract for building of a 420 kV transmission line for Statnett in Finnmark in Norway, to be built 2017-2020 - The second major contract for Eltel in Norway this year - Order value appr
Slide 11: Eltel M&A and business development
Eltel M&A and business development Strong presence Present New Not Present Actions 2015 Nordics Actions 2016 Sweden Finland Norway Denmark Baltics Poland UK Germany Fixed BT/Carillion Comm. EltelSønnico Huawei/EE/ Mobile EltelSønnico Vodafone Comm. Power National Grid Edi.Son Transmission Statnett P
Slide 12: Communication
Communication - Growth driven by Eltel Sönnico and fibre Net sales: • Strong growth mainly result of the consolidation of the Norwegian JV Eltel Sønnico AS • Organic growth driven by fibre roll-outs and upgrade services, especially in Sweden Operative EBITA • Profitability supported by the strong fi
Slide 13: Market leader in fibre roll-outs
Market leader in fibre roll-outs Eltel has more than 10 years of experience from large scale roll-out and field services within fibre Market leading position with ~10 million homes passed in Northern Europe Projects ranging in size from small pilots to ~200,000 homes passed Eltel ‘Fibre Force’
Slide 14: Large share of the market still to explore
Large share of the market still to explore Fibre penetration in Europe 2014 100,0% 90,0% • Mobile data increases dramatically 80,0% • 5G will demand 20x more fibre than today • Europe built out next 15-20 years 70,0% • Eltel’s wanted position in all our countries #1 60,0% 50,0% 40,0% 30,0% 20,0% 10,
Slide 15: Eltel's Fibre Force – further specialisation
Eltel’s Fibre ForceTM – further specialisation ‘Fibre Force’ - specialisation of Eltel’s fibre organisation within Fixed Communication Development and implementation of unified process for massive fibre roll-outs Methods and tools for the implementation of best practise technologies for maximi
Slide 16: Transport & Security
Transport & Security - Hit by isolated performance issues Net sales • Positive effect from acquisition of Finnish signalling services company Celer Oy • Offset by negative impact of the terminated Rakel contract in Sweden Operative EBITA: • The very unsatisfactory result was mainly caused by provisi
Slide 17: Poor performance in Norwegian rail
Poor performance in Norwegian rail - multiple actions and mitigations taken The situation Actions taken In 2016, communicated challenges in two rail Several managerial changes to the projects in Norway project during the past months Bad project execution from too fast ramp-up as Project mana
Slide 18: Solid track record of project management over time
Solid track record of project management over time - on average 2% margin improvement from order to finalisation Order margin compared to realised margin 2011-2016 5,0% 3,0% 1,0% -1,0% -3,0% -5,0% 2011 2016 Rolling ten latest projects > EUR 10 million 75% of the projects have improved margins
Slide 19: Q2 financials
Eltel in brief Q2 business performance Q2 financials Operating environment and summary © Eltel 2016 Shaping Future Infranets 19
Slide 20: Financial KPIs and P&L
Financial KPIs and P&L EUR million H1 2016 H1 2015 Q2 2016 Q2 2015 FY 2015 R12 Net sales 656.6 546.8 369.0 307.8 1 254.9 1 364.6 R12 growth through Operative EBITA 8.9 19.2 5.7 13.9 62.2 51.9 acquisitions and organic Items affecting - -2.6 - 0.0 -1.7 0.9 comparability EBITA 8.9 16.7 5.7 14.0 60.5 52
Slide 21: Financial comments and assessments
Financial comments and assessments Asset-light business. Historical annual net capex of slightly more than 1% of net sales. Capex In Q2 2016 the net capex was EUR 4.1 million, 1.1% of net sales. Goodwill of EUR 476.4 million at end of Q2 2016, mainly related to 3i acquisition of Eltel in Goodwill 20
Slide 22: Operating environment and summary
Eltel in brief Q2 business performance Q2 financials Operating environment and summary © Eltel 2016 Shaping Future Infranets 22
Slide 23: Operating environment
Operating environment Long term opportunities Short term challenges Transmission: increasing investments Transmission: previous soft order intake, in Germany and UK postponed investments in Poland and Power Distribution: further smart meter roll- certain challenges in Africa outs in Europe D
Slide 24: Underlying drivers for organic growth
Underlying drivers for organic growth POWER COMMUNICATION TRANSPORT & SECURITY Ageing infrastructure Global connections Increased transport needs Smart networks Mobile evolution Increased security needs Sustainability Data traffic volumes Integrated EU-market © Eltel 2016 Shaping F
Slide 25: European market leader; industry with long term structural growth
European market leader Industry with long term structural growth Scalable platform for growth and M&A Solid customer base and recurring revenues Good financial profile with strong cash generation © Eltel 2016 Shaping Future Infranets 25
Slide 26: Thank you!
Thank you! Eltel to report Q3 2016 on 9 November 2016 For further information: Ingela Ulfves VP – IR and Group Communications ingela.ulfves@eltelnetworks.com Tel: +358 40 311 3009 © Eltel 2016 Shaping Future Infranets 26