Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (November 2016)
50 slides from Aspo's investor day presentation, Nov 24, 2016
Slide 1: Investing in competitiveness and profitability
Investing in competitiveness and profitability ESL Shipping Investor Event, November 24, 2016
Slide 2: Agenda
Agenda 1. Aspo Group: An active developer of businesses 2. ESL Shipping: The leading carrier of dry bulk cargoes in the Baltic Sea region 3. The investment: Improving competitiveness and profitability 4. Success despite challenging markets 5. Financial impact: Targeting growth and EBIT improvement 6
Slide 3: Aspo’s value is created by its strong brands
Aspo’s value is created by its strong brands ASPO ESL Shipping Leipurin Telko Kauko Aspo´s Investor Event November 24, 2016 3 3
Slide 4: Aspo – an active developer of businesses
Aspo – an active developer of businesses • Net sales 2015 446 M€ • Operating profit 2015 20.6 M€ • Return on equity 2015 19.1% • Personnel 31.12.2015 857 • Market Cap 22.11.2016 222 M€ Our expertise is focused on the Baltic Sea region and on the eastern growth markets. Aspo´s Investor Event November
Slide 5: We represent a balanced entity, where risks are diversified
We represent a balanced entity, where risks are diversified Net sales by segment 2015 Net sales by market area 2015 8% Finland 147.7 M€ 11% Telko 215.3 M€ 17% Russia, Ukraine, other 12% 33% Leipurin 117.8 M€ CIS 128.3 M€ Other countries 67.6 M€ 48% ESL Shipping 76.2 M€ Scandinavia 51.8 M€ 15% Kauko
Slide 6: Distribution of GDP in Russia by region in 2014
Distribution of GDP in Russia by region in 2014 Including Krim to show its economic position Aspo´s Investor Event November 24, 2016 6 Source: East Office
Slide 7: Strong market position in the eastern growth markets
Strong market position in the eastern growth markets Vietnam Norway China Denmark Azerbaijan Kazakhstan Czech Republic Poland Belarus Ukraine Estonia Sweden Latvia Lithuania Russia 1995 1996 1997 2003 2004 2007 2008 2010 2013 2015 Aspo´s Investor Event November 24, 2016 7
Slide 8: Profitable growth in the challenging Russian markets
Profitable growth in the challenging Russian markets Net sales in Russia MRUB MEUR 1,800 25 1,600 1,400 20 1,200 15 1,000 800 10 600 400 5 200 0 0 Net sales, MRUB Net sales, MEUR Aspo´s Investor Event November 24, 2016 8
Slide 9: Aspo maintains higher growth rates than the market on average
Aspo maintains higher growth rates than the market on average 2007 Net sales in Russia of Finnish listed companies (EUR) • Aspo Kesko Aspo vs average/median, index 2007=100 600 • Oriola-KD * Atria • Tikkurila Yleiselektroniikka 500 CAGR: 16.6% • Nokian Renkaat SRV • Stockmann Fortum * 400 • YIT 300
Slide 10: As a conglomerate Aspo is able to make larger investments
As a conglomerate Aspo is able to make larger investments 2018 ESL SHIPPING TWO NEW LNG˗POWERED SHIPS START OPERATING Aspo´s Investor Event November 24, 2016 10
Slide 11: Aspo’s objective is to create value for its shareholders
Aspo’s objective is to create value for its shareholders by developing businesses.
Slide 12: Major shareholders, October 31, 2016
Major shareholders, October 31, 2016 Number of % of Number of % of shares shares shares shares 1 Oy Havsudden Ab 3,142,941 10.15 16 Laakkonen Mikko 297,143 0.96 2 Varma Mutual Pension Insurance Company 1,438,412 4.64 17 Hollming Ltd 273,969 0.88 3 Vehmas Tapio 1,375,827 4.44 18 Aminoff Maria 262,223
Slide 13: Aspo is committed to achieving its financial targets
Aspo is committed to achieving its financial targets Operating profit (EBIT) Average return on equity Gearing with current structure (ROE) of over of up to 7% 20% 100% 2015: EBIT 4.6% 2015: ROE 19.1% 2015: Gearing 101.4% Aspo´s Investor Event November 24, 2016 13
Slide 14: Significant improvement in profitability since 2012
Significant improvement in profitability since 2012 Net sales and operating profit MEUR % Aspo’s structure enables 500 7% even larger investments. 450 6% 400 350 5% 300 4% 250 200 3% 150 2% Net sales in 1–9/2016 100 1% increased by 3% compared 50 0 0% to the corresponding 2012 2013 2014 2015 period
Slide 15: Investments increase long-term shareholder value
Investments increase long-term shareholder value Generous dividends throughout history EUR % 0.60 12 Aspo dividend yield, average 2006–2015 0.50 10 6.4% 0.40 8 0.30 6 0.20 4 Helsinki Stock Exchange dividend yield, 0.10 2 average 2005–2015 0.00 0 3.7% 2006 2007 2008 2009 2010 2011* 2012 2013 2014 201
Slide 16: ESL Shipping – Profitable growth
VÄRILLISIÄ KUVIA ALUKSISTA. ESL Shipping – Profitable growth Matti-Mikael Koskinen, Managing Director, ESL Shipping 16
Slide 17: Our value proposition
Our value proposition Reliable, safe and flexible deliveries regardless weather and ice conditions as sustainable as possible 17
Slide 18: The leading carrier of dry bulk cargoes in the Baltic Sea region
The leading carrier of dry bulk cargoes in the Baltic Sea region Founded Vessels Cargo volume 2015 1949 14 11.1 MT Vessel capacity Net sales 2015 EBIT-% 2015 2016: 266,000 DWT / 340,000 m3 76 M€ 19% 2018: 317,000 DWT / 407,000 m3 18
Slide 19: Our values enable efficient and profitable operations
Our values enable efficient and profitable operations Safety Respect for the Environment Customer first Respect of Colleagues Profitability 19
Slide 20: ESL Shipping succeeds despite challenging markets
ESL Shipping succeeds despite challenging markets Strong niche player Deep knowledge of Northern know-how Integrated offering with deep selected clients, and special expertise including inhouse understanding of the routes and materials in the Baltic Sea and knowhow in design flow of goods the Arctic
Slide 21: Customer distribution
Customer distribution Distribution of cargo volume in tons 2015 Distribution of net sales in 2015 20% 17% Energy coal Steel Industry 37% Coking coal 43% Energy 17% Limestone Other Iron ore Other 38% 8% 20% 21
Slide 22: Focus on the Baltic Sea routes
Focus on the Baltic Sea routes 22
Slide 23: Superior fleet
— Superior fleet =v . . 23 BY] ESL Shipping RASPO
Slide 24: Tailored fleet for safe and reliable operations
Tailored fleet for safe and reliable operations Supramax-class Eira-class 2 x 56.000 dwt 3 x 20.000 dwt Iceclass 1A Iceclass 1A Super Kuva Pasila-class Two pusher vessels 2 x 13.000 dwt and barges Iceclass 1A Super 5 x 9.000 -14.000 dwt Kuva Iceclass 1A Super Kuva 24
Slide 25: Competent experts with northern know-how are our key strength
Harri Höckert (on the right), Captain of M/S Pasila Competent experts with northern know-how are our key strength 25
Slide 26: Arctic trade lanes 2014 - 2016
Arctic trade lanes 2014 - 2016 26
Slide 27: Ship-to-ship operations at sea
Ship-to-ship operations at sea 27
Slide 28: Dry bulk cargo markets
ARKADIA HELSINKI ‘mo 9500787 Dry bulk cargo markets wv . . 28 B®. @ ESL Shipping K ASPO
Slide 29: Deliveries and orderbook
Deliveries and orderbook Dry bulk deliveries are decreasing. With present low newbuilding activity, supply and demand are expected to be more balanced. Source: banchero costa 29
Slide 30: Newbuilding orders
Newbuilding orders Number of newbuilding orders has decreased significantly During 10 first month of 2016 just 6 Handysizes, 2 Ultramaxes, 2 Panamaxes, 1 Capesize and 23 Very Large Ore Carriers have been ordered 30 Source: banchero costa
Slide 31: Demolitions
Demolitions Strong scrapping encouraged by low freights started in 2015 and has continued this year Source: banchero costa 31
Slide 32: Key figures and future prospects
Key figures and future prospects New investments lead the way for future growth and excellent profitability. 32
Slide 33: Profitable despite challenging market situation
Profitable despite challenging market situation ESL SHIPPING’S EBIT MEUR 18 16 14 12 10 8 6 4 2 0 2010 2011 2012 2013 2014 2015 33
Slide 34: Internal efficiency improved through active measures
Internal efficiency improved through active measures Developing organization and decision making Investing in technology Focusing on leadership and knowhow Improving internal operations Improving fuel efficiency, route optimization and utilization rates 34
Slide 35: Measurable savings from decreased emissions
Measurable savings from decreased emissions tn EUR 120 000 4 000 000 3 500 000 100 000 3 000 000 80 000 2 500 000 60 000 2 000 000 1 500 000 40 000 1 000 000 20 000 500 000 0 0 2013 2014 2015 CO2 emissions CO2 reduction Annual savings, EUR 35
Slide 36: Seeking growth from new clients, services and industries
Seeking growth from new clients, services and industries Deep understanding of customers’ value chain Broader customer base New operational areas New Cargo types • Infrastructure and mining projects in the • Biofuels arctic areas • Fertilizers • Other ice areas • Timber • Marine loading and unloadin
Slide 37: Transition from coal to biofuels increases the need for transportation
Transition from coal to biofuels increases the need for transportation significantly Energy content vs shipping volume requirement Woodchips 0.8 MWh / m3 Coal 5.6 MWh / m3 37
Slide 38: Increased capacity expected to increase net sales 2018 onwards
Increased capacity expected to increase net sales 2018 onwards MEUR DWT 120 400 000 350 000 100 300 000 80 250 000 60 200 000 150 000 40 100 000 20 50 000 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total cargo capacity ESL Shipping's net sales 38
Slide 39: New investment – Growth, competitiveness and profitability
Värikuva New investment – Growth, competitiveness and profitability 39
Slide 40: Investing in superior competitiveness
Investing in superior competitiveness Long-term agreement for The world's first natural Designed in Finland in raw material sea transport gas fueled large dry bulk close cooperation with with SSAB carriers Deltamarin More than 50% lower CO2 60 M€ investment value 2 x 25,600 DWT vessel emissions carr
Slide 41: Bothnia Bulk promotes more energy-efficient raw material transportation
Bothnia Bulk promotes more energy-efficient raw material transportation in the Baltic Sea • The EU supports environmental • Environmental upgrade of an investments in vessels. ESL existing maritime link. More Shipping receives a maximum energy efficient, sustainable amount of EUR 5.9 million from an
Slide 42: Towards greener shipping of commodities
Towards greener shipping of commodities Reducing harmful air Minimizing shipboard Compiling with all emissions at sea and in waste and eliminating ballast water regulations ports dry bulk cargo residues and guidelines into sea LNG fueled engines and Implementing adequate way Streamlining the ballast
Slide 43: Targeting profitable growth by 2020
Targeting profitable growth by 2020 % ESL SHIPPING’S EBIT-% 24 ESL Shipping is targeting 22 growth in net sales and an 20 EBIT margin of 20-24% 18 16 14 12 10 8 Average EBIT-% 2010-2015 6 13% 4 2 0 2010 2011 2012 2013 2014 2015 2010 - 2016 2017 2018 2019 2020 2015, average 43
Slide 44: Financing the investment
Vaihdetaan kuva Financing the investment 44
Slide 45: Interest-bearing liabilities and new financing
Interest-bearing liabilities and new financing Loan agreements worth 50 M€ Loan maturity 7 years Grace period of 3 years and 39% payback profile of 12 years 61% Average interest rate in Q3/2016: 1.7% Investment agreements lower Aspo Group’s average interest rate ESL Shipping Rest of Aspo Group 45
Slide 46: Maturity of Aspo Group’s significant loan agreements
Maturity of Aspo Group’s significant loan agreements MEUR 40 Average maturity in 35 Q3/2016 was 3.9 years 30 25 1.4 20 26.4 1.4 37.5 11 15 4.2 16.4 New investment 10 19.3 4.2 agreements lengthen the 4.2 12.6 5 1.4 7.7 average of maturity 4.6 3.7 3.7 0 2017 2018 2019 2020 2021 2022 2023 Loan agreemen
Slide 47: ESL Shipping’s financial targets by 2020
ESL Shipping’s financial targets by 2020 Growth in net sales EBIT margin of 20-24% Larger tonnage enables increase in net New energy efficient vessels sales Decreasing fuel costs Optimal usage of capacity 47
Slide 48: Targeting EBIT margin improvement by 2020
Targeting EBIT margin improvement by 2020 Aspo’s guidance for 2016 Aspo’s financial targets ESL Shipping is looking for (specified in Q3 interim remain unchanged, but the an increase in net sales and report) will remain company specifies that the operating profit: unchanged: goal is to achieve follo
Slide 49: LEWaSy LE}
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Slide 50: Thank you!
Thank you!