Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (December 2020)
75 slides from Aspo's investor day presentation, Dec 1, 2020
Slide 1: Capital Markets Day
Capital Markets Day December 1, 2020
Slide 2: Agenda
2 Capital Markets Day 2020 Agenda Confidently towards capturing our full earnings potential Aki Ojanen, CEO of Aspo Group Well positioned for market recovery and sustainable growth Mikki Koskinen, Managing Director of ESL Shipping Leipurin - Building on a solid base Heli Arantola, Managing Director
Slide 3: Aki Ojanen: Confidently towards capturing our full earnings potential
3 Capital Markets Day 2020 Aki Ojanen CEO, Aspo Group Chief Executive Officer since 2009 Confidently towards capturing our full earnings potential
Slide 4: Aspo's key objective is to expand and internationalize medium-sized companies
4 Capital Markets Day 2020 Aspo’s key objective is to expand and internationalize medium-sized companies specializing in demanding B-to-B customers
Slide 5: Developing and internationalizing businesses
5 Capital Markets Day 2020 Developing and internationalizing businesses EUR 588 million EUR 21.1million Net sales in 2019 Operating profit in 2019 EUR 175 million Net sales in 2019 Net sales by region (Q3 2020) EUR 116 million Net sales in 2019 11 % Finland 34 % Scandinavia EUR 297 million 30 % Balt
Slide 6: Creating value through restructuring and investments
Creating value through restructuring and 6 Capital Markets Day 2020 investments Long-term Supramax contract with vessels SSAB for ESL delivered Shipping New 2012 2015 LNG vessels delivered 2008 2014 2017 2018 2021 Kauko-Telko Planned Aspo net New acquired listing of sales reach AtoB@C CEO to Leipuri
Slide 7: Aspo's strengths as a conglomerate
7 Capital Markets Day 2020 Aspo’s strengths as a conglomerate Diversified business Effective use of Strategic guidance Long-term portfolio and cash capital markets and structural development from flows enabling larger arrangements generation to investments generation
Slide 8: Group net sales and operating profit development
8 Capital Markets Day 2020 Group net sales and operating profit development EUR EUR million Net sales million Operating profit & margin % 700 25 6 • Lower operating rates of customers across all 600 business segments due to 5 20 Covid-19 affected 500 4 negatively on net sales 400 15 and operating pr
Slide 9: Free cash flow strengthened due to improved working capital and low investments
Free cash flow strengthened due to improved 9 Capital Markets Day 2020 working capital and low investments 70 60 • Net cash from operating 50 activities boosted by improved working capital 40 management 30 • No major investments expected in the near 20 future supporting free cash flow generation as
Slide 10: Investments and pandemic decreased ROE, good debt servicing capacity
10 Capital Markets Day 2020 Investments and pandemic decreased ROE, good debt servicing capacity due to strong free cash flow ROE, % Gearing, % 20 180 • Major investments 160 executed in 2017-18 not yet visible in ROE 140 15 120 • Gearing is turning towards 100 target level as a result of 10 strong
Slide 11: Organic growth in the Eastern markets remains a strategic cornerstone
Organic growth in the Eastern markets 11 Capital Markets Day 2020 remains a strategic cornerstone Net sales of Russia, other CIS countries and Ukraine, EUR million 200 100 • Aspo has vast experience 180 90 in doing business in the Eastern markets 160 80 140 70 • Only organically growing 120 60 busin
Slide 12: The Nordics increasing its importance
12 Capital Markets Day 2020 The Nordics increasing its importance Several acquisitions and footprint strengthening Q3 2020 net sales by region in Scandinavia during the recent years • AtoB@C acquisition in 2018 11 % Finland 34 % • LNG vessel (Viikki & Haaga) investments in connection to Scandinavia
Slide 13: Prompt Covid-19 mitigation procedures implemented during the year
Prompt Covid-19 mitigation procedures 13 Capital Markets Day 2020 implemented during the year Defend Stabilize Engage • Ensuring the safety of • Continuous monitoring of • Preparation for market employees and customers business performance and recovery • Agile & fast-tracked macro environment • Focu
Slide 14: Group-wide focus areas for the coming quarters
Group-wide focus areas for the 14 Capital Markets Day 2020 coming quarters Reach EBIT Maintain strong Gain market Intensify potential cash flow share sustainability efforts
Slide 15: Sustainability is a key to long-term value creation
15 Aspo Capital Markets Day 2020 Sustainability is a key to long-term value creation
Slide 16: Our businesses are forerunners in sustainability in their industries
16 Capital Markets Day 2020 Aspo Group’s long-term ESG target: Our businesses are forerunners in sustainability in their industries ESG = Environmental, Social and Governance factors that are used as determinants for business development and investment decisions
Slide 17: Towards a more sustainable Aspo Group
17 Capital Markets Day 2020 Towards a more sustainable Aspo Group • From a good corporate citizen to a sustainability forerunner - acceleration of current sustainability work in all businesses • Increased ESG ambition from both internal and external stakeholders • Sustainability seen as a competitiv
Slide 18: Mikki Koskinen: Well positioned for market recovery and sustainable growth
18 Capital Markets Day 2020 Mikki Koskinen Managing Director, ESL Shipping Managing Director since 2013 Well positioned for market recovery and sustainable growth
Slide 19: ESL Shipping
ESL SHIPPING Well positioned for market recovery and sustainable growth Aspo Capital Markets Day December 1, 2020
Slide 20: The leading carrier of dry bulk cargoes in the Baltic Sea region
The leading carrier of dry bulk cargoes in the Baltic Sea region Main clients: Net sales: EUR 175m (2019) Nordic steel industry, forest EBIT: EUR 14.6m (2019) industry, food chain and energy 49 vessels Investments made in 15.9 million tons of cargo environmental-friendliest shipped in 2019 technolog
Slide 21: Dramatic market downturn sparked by the Covid-19 pandemic
Dramatic market downturn sparked by the Covid-19 pandemic Lay-ups during summer 2020 due to significantly weakened cargo volumes We are now seeing signs of market Lay-ups during summer ’20 due to recovery, and full capacity has been in Covid-19 use since late October
Slide 22: Demand currently recovering towards normal levels
Demand currently recovering towards normal levels 5 4,5 Outlook more upbeat 4 3,5 Transportation volumes in larger 3 vessel categories started to increase towards the end of Q3 2020 2,5 2 1,5 AtoB@C displayed resilience to market disruption 1 0,5 0 Demand for AtoB@C smaller vessels Q1 Q2 Q3 Q4 Q1 Q2
Slide 23: Net sales, EBITDA and EBIT development in 2010-2020
Net sales, EBITDA and EBIT development in 2010-2020 EUR million EUR million 180 40,0 160 35,0 Net sales doubled after the 140 acquisition of AtoB@C in 2018 30,0 120 25,0 100 20,0 80 15,0 60 10,0 40 5,0 Solid cash flow generation 20 over the cycle - EUR 237 million 0 2010 2011 2012 2013 2014 2015 201
Slide 24: Our value proposition
OUR VALUE PROPOSITION The most sustainable option for reliable, safe and flexible deliveries regardless of weather and ice conditions.
Slide 25: Strengths of ESL Shipping
Strengths of ESL Shipping Long-term customer Sustainability leadership agreements Industry forerunner in Built on trust and performance environmental, safety and governance issues Strong niche player Operational excellence Northern know-how and deep Highly competent staff & efficient understanding o
Slide 26: Competitive and energy efficient fleet
Competitive and energy efficient fleet Class No of vessels 56,000 DWT Supramax equals > x ~ 3,000* 2 26,000 DWT LNG Handysize equals > x ~ 1,400* 2 20,000 DWT Handysize equals > x ~ 1,100* 3 13,000 DWT equals > x ~ 700* 10** Smaller vessels equals > x ~ 250* 32 Total equals > x ~ 6,700* 49 * Assumpt
Slide 27: AtoB@C successfully integrated
AtoB@C successfully integrated Accelerated entry to a market Strategically important with larger portfolio of cargo platform for future growth types and customers Synergies larger than Resilient operation and solid expected, the full impact on financial performance in a sales and profitability tough
Slide 28: We are the most sustainable marine logistics partner for selected industries
OUR VISION We are the most sustainable marine logistics partner for selected industries in Northern Europe and Arctic areas. We provide safe, reliable, flexible and sustainable year around logistics services. We believe that sustainable solutions are the best way to create long term customer and sha
Slide 29: Strategic market drivers – Sustainability and new technologies
Strategic market drivers – Sustainability and new technologies Fossil free society Carbon free steelmaking Wood based products Circular economy Biofuels Fossil free energy production
Slide 30: Transportation volume estimates
Transportation volume estimates* Next 12 months Long-term Steel raw materials Steel products Scrap metals for steel industry Forest industry excluding paper Dry biomass Energy Coal Loading and unloading at sea Food chain Arctic area freight operations (incl. Russia) * Management estimates for main c
Slide 31: Our emissions reduction path
Our emissions reduction path ESL fleet emissions reduction path AtoB@C fleet emissions reduction path 2019 average CO2 emitted per transport work, grams of CO2 per tonnes*nautical miles 40,00 35,00 30,00 25,00 20,00 15,00 10,00 5,00 0,00 Pusherbarge 20K Fuel Oil 25K LNG 25K with AtoB@C present Futur
Slide 32: Roadmap to fossil free transports
Strategic market drivers – Sustainability and new technologies Our vision is to offer an option of up to 100% fossil free transports to selected clients Roadmap to fossil free transports 1. State-of-the-art ship designs and power train technologies 2. Alternative fuels and energy solutions 3. Growin
Slide 33: Well positioned for sustainable growth and improving profitability
Well positioned for sustainable growth and improving profitability • ESL Shipping is well positioned for supporting the transition towards fossil free shipping • Transportation volumes are already recovering from the historical drop caused by Covid-19 • Investments in LNG vessels and AtoB@C acquisit
Slide 34: Heli Arantola: Building on a solid base
19 Capital Markets Day 2020 Heli Arantola Managing Director, Leipurin Managing Director since 2020 Building on a solid base: Strategic focusing & growth initiatives
Slide 35: Leipurin: Building on a solid base
LEIPURIN BUILDING ON A SOLID BASE: STRATEGIC FOCUSING & GROWTH INITIATIVES December 1, 2020
Slide 36: Leipurin serves food industries in two regions: East and West
LEIPURIN SERVES FOOD INDUSTRIES IN TWO REGIONS: EAST AND WEST 2019 net sales 2019 operating profit Personnel Nov 2020 115.7 M€ 3.0 M€ 262 Offices | Countries | East | West Net Sales Customer satisfaction Regions 38M€ | 78M€ NPS 35 21 | 8 | 13 NASTOLA ST.PETERSBURG VANTAA TALLINN MOSCOW N.NOVGOROD KA
Slide 37: Stable net sales over business cycles
STABLE NET SALES OVER BUSINESS CYCLES PANDEMIC WEIGHING DOWN DEMAND AND PROFITABILITY IN 2020 140 6 4,5 4 120 5 3,5 100 4 3 80 2,5 3 60 2 2 1,5 40 1 1 20 0,5 0 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Net sales, EUR million EBIT,
Slide 38: Leipurin fulfills a key function in the food value chain
LEIPURIN FULFILLS A KEY FUNCTION IN THE FOOD VALUE CHAIN Machine Bakery, building industrial Modern Raw trade Bakery, material artesanal Primary production Bakery production shop Food Packaging industry production In-store baking Hotel, café, Ingredient restaurant production Principals & suppliers C
Slide 39: Market development: Demand & Covid-19
Market development: DEMAND & COVID-19
Slide 40: The demand trend for grain in our main markets is similar to Finland
THE DEMAND TREND FOR GRAIN IN OUR MAIN MARKETS IS SIMILAR TO FINLAND Consumption in Finland, kg/year per person 120 100 80 60 40 20 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Grain Meat Vegetables Source: TIKE & MTT Taloustutkimus
Slide 41: Bread remains a staple food and shifts in demand are slow
BREAD REMAINS A STAPLE FOOD AND SHIFTS IN DEMAND ARE SLOW • Packed fresh bread volumes are stable in Leipurin home Bread market Finland markets Imported bread 35% Example Finland: € 1 Bn • The demand for wheat has been in decades-long decline 65% but is stable at 45 kg/person/p.a. for some years Dom
Slide 42: Unforeseen, fast changes in shopping behavior in H1/2020
UNFORESEEN, FAST CHANGES IN SHOPPING BEHAVIOR IN H1/2020 • March showed a strong stocking up in anticipation of lock-downs in the Baltic Sea area • Massive boost in online sales of groceries • Still at 2-4% share despite the sudden boost • Click & Collect gets an upgrade • June shows the return to c
Slide 43: Price points have wavered in all Leipurin markets
PRICE POINTS HAVE WAVERED IN ALL LEIPURIN MARKETS • Lock-down & eCommerce winners are long-shelf life and plastic-wrapped product types • Russian cities long trend of trading up: more premium product types. H12020 we saw trading down. • No deliveries to restaurants and cafes • bakery sector producti
Slide 44: Key trends shaping the food industry in the mid-term unchanged
KEY TRENDS SHAPING THE FOOD INDUSTRY IN THE MID-TERM UNCHANGED MACRO TRENDS INDUSTRY TRENDS CONSUMER TRENDS Sustainability Oats Health & Wellness DIGITAL COVID-19 Local production Convenience
Slide 45: Sustainability roadmap for Leipurin
SUSTAINABILITY ROADMAP FOR LEIPURIN Leipurin is a forerunner in its industry • Ambition defined • Proof points of • KPIs success • Targets & milestones • Materiality analysis TODAY • Stakeholder analysis • First Leipurin Annual reporting of KPIs Sustainability Report Health Food Planet • People “Lei
Slide 46: Development of Leipurin business
DEVELOPMENT OF LEIPURIN BUSINESS
Slide 47: We have a clear customer segment focus
WE HAVE A CLEAR CUSTOMER SEGMENT FOCUS Share of sales Artisan Bakeries Industrial Bakeries Food Industry Foodservice Retail Non-core Core Growing Non-core Stable Core Growing Growing Stable Growing Core Growing Local Core
Slide 48: Leipurin products have a key role in many food industry applications
LEIPURIN PRODUCTS HAVE A KEY ROLE IN MANY FOOD INDUSTRY APPLICATIONS • Technical products include enzymes, blends, mixes that can be tailor-made Taste Color Texture • Deep understanding of the food industry process is required to create a solution together with the customer’s product Special develop
Slide 49: We are strong in digital
WE ARE STRONG IN DIGITAL LEIPURINSTORE.COM – WEBINARS – EMAIL MARKETING
Slide 50: Operational focus has improved
OPERATIONAL FOCUS HAS IMPROVED 2019-2020 • Machinery trading business • Digital sales & marketing now focuses on Finland and the • Pivoting from the Bakers’ Story Baltics shop concept to digital channels • Machine building business now • Ramping up production in St. focuses on chilling & freezing Pe
Slide 51: Leipurin market strengths
LEIPURIN MARKET STRENGTHS ACTIVE SIZE AND MACHINERY INDUSTRY ROLE SCALE BUSINESS Close to the Supports the core Leading player customer: local raw material with international business – strong and footprint: 3000 expertise in food knowledgeable customers and industry player in the food processes 500
Slide 52: Building on a solid base, work continues with strategic focusing and growth initiatives
BUILDING ON A SOLID BASE, WORK CONTINUES WITH STRATEGIC FOCUSING AND GROWTH INITIATIVES
Slide 53: Mikko Pasanen: From increased efficiency to focused growth
20 Capital Markets Day 2020 Mikko Pasanen Managing Director, Telko Managing Director since 2019 From increased efficiency to focused growth
Slide 54: Telko: From increased efficiency to focused growth
Telko From increased efficiency to focused growth Mikko Pasanen December 1, 2020
Slide 55: What is Telko
What is Telko We bridge industrial customers and principals in a sustainable way Telko is primarily an expert Telko’s business is based on Telko is the link in material and organization, which has the ability to sustainable partnerships by creating information flow between customers create additiona
Slide 56: Telko at a glance
Telko at a glance Sales to over Net sales (2019) Personnel Local networks 30 270 300 50 countries mEUR employees warehouses FINNISH COMPANY HAVING 24 LOCAL OFFICES IN 16 COUNTRIES FINLAND | SWEDEN | NORWAY | DENMARK | ESTONIA | LITHUANIA | LATVIA | RUSSIA | UKRAINE BELARUS | POLAND | CHINA | KAZAKHS
Slide 57: We bridge industrial customers and principals in a sustainable way
We bridge industrial customers and principals in a sustainable way PRINCIPALS CUSTOMERS 400 suppliers 7000 customers
Slide 58: Telko's journey to create value
Telko’s journey to create value EXPANSION • Continuous profitable organic growth in core businesses FOCUSED GROWTH • Expansion to carefully selected new geographies and business areas • Further improvement and • Updated strategy automatization of processes • Defined competitive edge on all • Unified
Slide 59: Improved efficiency
Improved efficiency EXPANSION • Continuous profitable organic growth in core businesses FOCUSED GROWTH • Expansion to carefully selected new geographies and business areas • Further improvement and • Updated strategy automatization of processes • Defined competitive edge on all • Unified Telko: unif
Slide 60: Focus areas of efficiency phase
Focus areas of efficiency phase CAPITAL ACTIVE PRICING AND COST REDUCTION EFFICIENCY MARGIN CONTROL AND CONTROL HEALTHY NEW HEALTHY INVENTORIES MANAGEMENT MODEL GROWTH
Slide 61: Clear improvement in profitability
Clear improvement in profitability 2019-2020 Net Sales (MEUR) EBIT (MEUR) Cash Conversion Cycle Q1-Q3/2020 Q1-Q3/2020 Rolling 3 month in days 167.1 MEUR 9.4 MEUR 57 days 20% Net sales growth 7% EBIT % development CCC development 85 2019 2020 2019 2020 2019 2020 10% 6% 80 5% 75 0% 4% 70 -10% 3% 65 -2
Slide 62: Telko has reached the level of the main benchmark competitors
Telko has reached the level of the main benchmark competitors
Slide 63: Focused growth
Focused growth EXPANSION • Continuous profitable organic growth in core businesses • Expansion to carefully selected new FOCUSED GROWTH geographies and business areas • Further improvement and • Updated strategy automatization of processes • Defined competitive edge on all • Unified Telko: unified s
Slide 64: New focus areas
New focus areas Maintaining Passionate and Skilled Focused and Profitable HIGH EFFICIENCY PERSONNEL GROWTH Enabling Success for The most capable partner for One Common and CUSTOMERS PRINCIPALS UNIFIED TELKO
Slide 65: Focus on more demanding products and solutions
Focus on more demanding products and solutions Demanding Demanding Tailored offering, Commodity standardized products and value R&D, long products products adding services projects SPECIALIZED PRODUCTS & SERVICES VOLUME PRODUCTS Not Stable growth Balanced growth strategic growth area Immediate profi
Slide 66: Sustainable impacts on the whole value chain
Sustainable impacts on the whole value chain To customers To principals Our offering and partnership with suppliers enables Our principals can rely that cooperation with Telko our customers to make more environmentally friendly always meets all legal requirements and enables them to decisions and im
Slide 67: Key takeaways
Key takeaways We bridge industrial customers and principals in a sustainable way TELKO TELKO’S TELKO’S TELKO is now more strategy: strategy: aims to become a efficient and Stronger role in Focused growth forerunner in profitable than value chain supporting sustainability in ever before through ambit
Slide 68: Aki Ojanen: Long-term financial targets & dividend policy
21 Capital Markets Day 2020 Aki Ojanen CEO, Aspo Group Chief Executive Officer since 2009 Long-term financial targets & dividend policy
Slide 69: Creating shareholder value remains the basis of all operations
22 Aspo Capital Markets Day 2020 Creating shareholder value remains the basis of all operations
Slide 70: Financial targets 2023 unchanged
23 Capital Markets Day 2020 Financial targets 2023 unchanged over 6% 130% 20% at most on average Operating Return on Gearing profit rate equity
Slide 71: Current structure has significant earnings potential
Current structure has significant 24 Capital Markets Day 2020 earnings potential Operating profit rate target 6.0% 6 Telko 6% Leipurin 5% 5 Improved sales mix Redefining the market ESL Shipping 12% Focused growth 4 Operational excellence 3.6% 3 2023 Market recovery 2 Delivery of earnings 2019 potent
Slide 72: Dividend policy unchanged: goal to annually increase dividends
25 Capital Markets Day 2020 Dividend policy unchanged: Aspo’s goal is to annually increase the amount of dividends 0,70 8 Aspo Group’s dividend policy 0,60 7 Aspo's goal is to return to pre- 6 pandemic dividend level and 0,50 annually increase the amount of 5 dividends 0,40 4 0,30 3 EUR 130 million
Slide 73: Q&A
26 Capital Markets Day 2020 Q&A tel. +358 9 8171 0310 PIN: 29047413#
Slide 74: Confidently towards the future
27 Capital Markets Day 2020 Confidently towards the future • Our current Group structure has significant earnings potential • Diversified business portfolio with strong cash flow provides stability and defensiveness during exceptional times • Generous dividend plays a major role in value creation •
Slide 75: Thank you!
28 Capital Markets Day 2020 Thank you! www.aspo.com