Aspo Plc · OMXHEX:ASPO
Aspo — Investor Day (November 2019)
59 slides from Aspo's investor day presentation, Nov 26, 2019
Slide 1: Foundation laid for sustainable growth
Foundation laid for sustainable growth Capital Markets Day 2019
Slide 2: Aki Ojanen, CEO
Aki Ojanen CEO Aki Ojanen Aspo Plc CEO since 2009 CEO Aspo holdings: 47,377 shares
Slide 3: Guidance for 2019 – operating profit higher than in 2018
3 Capital Markets Day 26 November 2019 Guidance for 2019 – Aspo’s operating profit will be higher than in 2018 (20.6 M€) Based on estimated results for Q4 The guidance was altered on • Significantly lower than estimated November 20, 2019 transportation volumes in the steel industry impacting the shi
Slide 4: Profitability development in the three main reporting segments
4 Capital Markets Day 26 November 2019 Profitability development in the three main reporting segments, comparable figures Jan–Sep 2019 ESL Shipping Telko Leipurin Operating profit: 10.2 M€ (-6.4%) Operating profit: 7.1 M€ (-15.5%) Operating profit: 1.9 M€ (-24.0%) Operating profit rate: 7.9% Operati
Slide 5: Group net sales growth over the cycle
5 Capital Markets Day 26 November 2019 Group net sales growth over the cycle Net Sales, GDP growth M€ rate, % 600 6% 500 4% 400 2% 300 0% 200 -2% 100 -4% 0 -6% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e* ** ** ** Net sales Finland GDP Russia GDP Euro area GDP * Consensus estimate for 20
Slide 6: Group net sales and operating profit development
6 Capital Markets Day 26 November 2019 Group net sales and operating profit development Net Sales, Operating profit M€ M€ 600 25 500 20 400 15 300 10 200 5 100 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e* 4.6% 4.5% 4.5% 2.2% 2.3% 4.8% 4.6% 4.5% 4.6% 3.8% Net sales EBIT EBIT-% * Conse
Slide 7: Advantages of a conglomerate: Diversified revenue streams
7 Capital Markets Day 26 November 2019 Advantages of a conglomerate: Diversified revenue streams Net sales per reporting segment, 1–9/2019 Net sales per market area, 1–9/2019 Baltic countries Russia, other ESL Shipping 42.8 M€ CIS countries 129.7 M€ (45.8) and Ukraine (73.7) 128.4 M€ Scandinavia (12
Slide 8: Net cash from operating activities
8 Capital Markets Day 26 November 2019 Net cash from operating activities M€ Net cash from operating 40 activities was EUR 33.6 33.6 (7.6) million in 2019 30 20.3 20 17.4 10 Adoption of IFRS 16 increased the Group’s net cash from operating activities by 0 approximately EUR 11 million 2017 2018 1–9/2
Slide 9: The largest economies by PPP-adjusted GDP in USD
9 Capital Markets Day 26 November 2019 The largest economies by purchasing power parity-adjusted GDP in USD USD trillion Russia’s purchasing 25,0 27,3 trillion power parity-adjusted 22,5 21,4 trillion GDP in USD is one of 20,0 the world’s largest and 17,5 15,0 nearly as large as 12,5 Germany’s. 10,0
Slide 10: Improving conditions to do successful business in emerging markets
10 Capital Markets Day 26 November 2019 Improving conditions to do successful business in emerging markets 100 Russia has improved its 80 ranking the most when 60 comparing the 40 conditions for doing 20 business in countries 0 PHL KEN SRB PAK ZAF SAU TUR THA COL QAT POL VNM MYS MEX ROU KAZ BGR NGA
Slide 11: Controlled growth in Russia, other CIS countries and Ukraine
11 Capital Markets Day 26 November 2019 Controlled growth in Russia, other CIS countries and Ukraine M€ Aspo’s net sales in the eastern markets 2009–2018 Euro-denominated net sales have grown in the 180 eastern markets since 150 2015 – 4% Growth during 2018 120 The economies in 90 Russia and the eas
Slide 12: Ensuring responsible business operations within the group
12 Capital Markets Day 26 November 2019 Ensuring responsible business operations within the group – actions in 2018 Formal commitment to 100% of the personnel Development of the the UN Global Compact completed the Code of Group level sustainability and its reporting Conduct training reporting requir
Slide 13: Socially, financially and environmentally responsible operations
13 Capital Markets Day 26 November 2019 Socially, financially and environmentally responsible operations are a prerequisite for value creation. Environmental Social Anti-corruption sustainability responsibility
Slide 14: Aspo's key objective is to expand and internationalize medium-sized companies
14 Capital Markets Day 26 November 2019 Aspo’s key objective is to expand and internationalize medium-sized companies specializing in demanding B-to-B customers Enabling Enabling larger Strategic structural investments guidance arrangements
Slide 15: Aspo's goal is to annually increase dividends
15 Capital Markets Day 26 November 2019 Aspo's goal is to annually increase the amount of dividends – paid out twice a year 10,150 96% 53% Shareholders Domestic Of shares held by in total shareholdings private investors
Slide 16: Aspo dividend yield during 2014–2018 was on average 5.5%
16 Capital Markets Day 26 November 2019 Aspo dividend yield during 2014–2018 was on average 5.5% Helsinki Stock Exchange dividend yield 2014–2018 on average 3.6%
Slide 17: Best performing Finnish stocks during last 20 years
17 Capital Markets Day 26 November 2019 Best performing Finnish stocks during last 20 years 20-year total Corresponding return*, % annual return, % 1. Kone B 8 874.3 25.2 2. Marimekko 5 523.5 22.3 3. Olvi A 3 145.1 19.0 4. Aspo 2 997.8 18.7 5. Cramo 2 109.7 16.7 6. Ponsse 2 037.6 16.5 7. Kesko B 1 9
Slide 18: Telko
18 Capital Markets Day 26 November 2019 Telko Raw material solutions for the industry Aspo has changed its segment reporting so that Kauko is reported as part of the Telko segment starting from January 1, 2019.
Slide 19: Telko 1–9/2019
19 Capital Markets Day 26 November 2019 Telko 1–9/2019 Net sales 1–9/2019 In January–September, net sales of plastic business increased by 6% and net sales of 227.2 M€ chemical business by 4% (221.2 M€) Telko is a distributor holding inventory – 1–9/2019 changes in raw material prices and exchange r
Slide 20: Market
20 Capital Markets Day 26 November 2019 Market
Slide 21: Bridging over 400 principals and 7,000 customers
21 Capital Markets Day 21 Bridging over 400 principals and 26 November 2019 Capital Markets Day 26 November 2019 7,000 customers in a sustainable way PLASTICS PLASTICS GREEN • Packaging, E & E PRODUCT (Electronics & PORTFOLIO Equipment) and Bio-based and Strong demand for value-added automotive indu
Slide 22: Growth despite challenging market conditions – profitability being addressed
22 Capital Markets Day 26 November 2019 Growth despite challenging market conditions – profitability being addressed Market outlook West and east development • Sales of chemicals and other • Large share of lower margin distribution business in the East, technical raw materials especially in Russia &
Slide 23: Following through the Telko strategy – key issues going forward
23 Capital Markets Day 26 November 2019 Following through the Telko strategy – key issues going forward Accelerating overall growth and Improving profitability especially on the profitability by increasing the share of eastern markets – sales focus shift from solutions-based distribution (SD) sales
Slide 24: Telko aims to reach net sales 300 M€ and 6% operating profit rate
24 Capital Markets Day 26 November 2019 Telko aims to reach Net sales 300 M€ Operating profit rate 6% in 2023
Slide 25: Leipurin
25 Capital Markets Day 26 November 2019 Leipurin From bread and recipes to a comprehensive selection
Slide 26: Leipurin 1–9/2019
26 Capital Markets Day 26 November 2019 Leipurin 1–9/2019 Net sales 1–9/2019 Postponed project deliveries and changes in the principal base will negatively affect the volumes, 83.8 M€ net sales and operating profit development of the (89.4 M€) machinery business in the medium-term Operations in Pola
Slide 27: Leipurin business segments – Machinery and Raw materials
27 Capital Markets Day 26 November 2019 Leipurin business segments – Machinery and Raw materials Machinery Raw materials Complete production lines and Product range development, accompanying services for the recipes, raw materials and training baking and food industries • Strong cyclical nature typi
Slide 28: Leipurin focuses on expanding its Foodservice business
28 Capital Markets Day 26 November 2019 Leipurin focuses on expanding and developing its Foodservice business Leipurin franchising model for cafe chain customers Value for Growing demand for cafeteria customers: chains and bakery cafés Differentiation with a especially in the West customer specific
Slide 29: Capital Markets Day 26 November 2019
29 Capital Markets Day 26 November 2019
Slide 30: Leipurin aims to reach net sales 140 M€ and 5% operating profit rate
30 Capital Markets Day 26 November 2019 Leipurin aims to reach Net sales 140 M€ Operating profit rate 5% In 2023
Slide 31: Shipping business
31 Capital Markets Day 26 November 2019 Shipping business 29% of Aspo’s sales 1–9/2019 65% of Aspo’s operating profit 1–9/19 Investments approx. 100 M€ in last 4 years including acquisition of M/S Alppila (2019) and AtoB@C plus two LNG vessels (2018)
Slide 32: ESL Shipping
ESL SHIPPING Aspo Capital Markets Day 26 November 2019
Slide 33: Matti-Mikael Koskinen, Managing Director
Matti-Mikael Koskinen Managing Director Managing Director since 2013 Matti-Mikael Koskinen Aspo holdings: 32,957 shares Managing Director ESL Shipping Ltd
Slide 34: Where we are today
WHERE WE ARE TODAY ESL – The leading carrier of dry bulk cargoes in the Baltic Sea region Net sales grew 76% to 129.7 M€ in 1–9/19 Cargo volumes carried 1–9/19 Shipping routes Growth mainly from AtoB@C 11.8 million tons, 29.7% increase from Mostly in the Baltic and North Sea region and LNG vessels c
Slide 35: Steel industry transportation volumes
STEEL INDUSTRY TRANSPORTATION VOLUMES Demand in ESL’s freight classes currently at lower than expected level Transportation volumes significantly lower than earlier forecasted in Q4 Production curtailment in steel industry Decreased efficiency By the resulting suboptimal capacity utilization
Slide 36: Effects of strikes on ESL
EFFECTS OF STRIKES ON ESL Finnish shipping industry not a party in current labour conflict, but is indirectly involved due to support strikes Actions to alleviate Stevedore strikes to begin Strike scope limits currently strike effect 28 November Raw material shipments to one of ESL’s Vessel traffic
Slide 37: ESL profitability development
ESL PROFITABILITY DEVELOPMENT M€ % 20 18.9* 20 18 17.6 18 16.6 16.7 16 16 16.0 14.8 14 14.7 14 12 10.9 12 10.2 10 9.4 10 8.5 8 7.9 8 6 6 4 4 2 2 0 0 1-9/2016 1-9/2017 1-9/2018 1-9/2019 EBITDA, M€ Operating profit, M€ Operating margin, % *Comparable figure, excluding IFRS16 impact of 8.9 M€
Slide 38: Our strengths
OUR STRENGTHS Keys to success despite challenging markets Strong niche player Integrated offering Vessels tailored for with deep understanding of including in-house know-how in customers’ ports customers’ flow of goods design and engineering Northern know-how and Long-term customer special expertise
Slide 39: Our value proposition
OUR VALUE PROPOSITION Reliable, safe and flexible deliveries regardless weather and ice conditions as sustainable as possible
Slide 40: New technologies for greener shipping
NEW TECHNOLOGIES FOR GREENER SHIPPING Investments made to ensure superior competitiveness – reduced fuel costs and CO2 emissions 2018 – 25.000 dwt at 10 tons LNG*/day 1975 – 23.000 dwt at 40 tons hfo**/day = 28 tons CO2 emissions/day at sea = 128 tons CO2 emissions/day at sea * Liquefied natural gas
Slide 41: AtoB@C successfully integrated
AtoB@C SUCCESSFULLY INTEGRATED Platform for future growth in new cargo types Accelerated entry to a market Business successfully integrated, Strategically important platform with new customers and but full potential still to be realized for future growth cargo types Acquisition value approx. 30 M€ A
Slide 42: Growing with new customer and cargo types
GROWING WITH NEW CUSTOMER AND CARGO TYPES The investment and acquisition greatly increase the capacity and revenue M€ DWT 200 550 000 Successful diversification into new 180 500 000 customer, cargo and vessel types – 160 450 000 well in line with how demand is 140 400 000 expected to change 350 000
Slide 43: Current ESL fleet
CURRENT ESL FLEET Class No of vessels Current utilization Expected long-term demand 56,000 DWT Supramax equals > ~ 3,000* X2 Profitable, but below expectations Slightly improving from a weak level 26,000 DWT LNG Handysize equals > ~ 1,400* X2 Good - as expected but full potential still to Continued
Slide 44: Transportation volumes in the main cargo classes
TRANSPORTATION VOLUMES IN THE MAIN CARGO CLASSES Transportation demand outlook next 12m Steel Forest Coal industry industry Biofuels Loading and unloading at sea
Slide 45: ESL aims to reach net sales 200 M€ and 12% operating profit rate
ESL aims to reach Net sales 200 M€ Operating profit rate 12% in 2023 45
Slide 46: Our vision
OUR VISION To be the most sustainable marine logistics partner for selected industries in northern Europe and arctic areas
Slide 47: Strategic drivers – sustainability and new technologies
STRATEGIC DRIVERS – SUSTAINABILITY AND NEW TECHNOLOGIES Fossil free society Carbon free steelmaking Wood based products Circular economy Biofuels Fossil free energy production
Slide 48: Decreasing demand for energy coal transports
DECREASING DEMAND FOR ENERGY COAL TRANSPORTS Million tons Percentage of (kg) energy coal 16 45 % Energy coal used to be 14 40 % an important profitability driver 12 35 % for ESL. Shipping 10 30 % 8 25 % 6 20 % 4 15 % 2 10 % The decrease in energy coal transport demand has not negatively 0 5% impacte
Slide 49: Transition from coal to biofuels
TRANSITION FROM COAL TO BIOFUELS Lower energy intensity means more m3 for the same energy content Woodchips 0.8 MWh / m3 Coal 5.6 MWh / m3
Slide 50: Long-term transportation volume estimates
LONG-TERM TRANSPORTATION VOLUME ESTIMATES Transportation demand outlook* Forest industry ++ Arctic area freight operations + Project cargos + (incl. Russia) Fertilizers Energy Sector Steel Industry Dry biomass (woodchips and pellets) + accompanying services + Scrap metals for steel industry + Limest
Slide 51: Possible future growth investment option
POSSIBLE FUTURE GROWTH INVESTMENT OPTION In order to meet the estimated future demand and to fulfil sustainability value proposition Capacity growth in smaller vessel class with the most environmentally friendly ships available New environmentally superior coasters Different types of ownership and f
Slide 52: Summary
SUMMARY AtoB@C Growth target 2023 Growth beyond 2023 Successfully integrated, yet full Net sales 200 M€ ESL ready for planning potential still to be realized new growth investments A platform for future growth LNG vessels Profitability target 2023 Market transformation New technology have significan
Slide 53: Thank you
THANK YOU The ft ASPO Company
Slide 54: Aspo's financial targets 2023
54 Capital Markets Day 26 November 2019 Aspo’s financial targets 2023 Operating profit rate ROE on average over Gearing at most 6.0% 20% 130% With current structure
Slide 55: Operating profit rate target 6%
55 Capital Markets Day 26 November 2019 Operating profit rate target 6%* Operating profit rate currently Factors affecting Aspo’s operating • ROE currently (Q3/2019): 14.0% (1–9/2019): 3.6% profit rate 10% • Proportion of lower-margin time 8% chartered vessels grew with the AtoB@C acquisition 6% • T
Slide 56: Return on equity target 20%
56 Capital Markets Day 26 November 2019 Return on equity target 20% ROE currently (1–9/2019): 14.0% Factors affecting Aspo’s ROE 30% • 2019 weaker than expected and 25% burdened with exceptions 20% • Sustainability value proposition supports creation of competitive 15% advantages and lower operating
Slide 57: Gearing target 130% at most
57 Capital Markets Day 26 November 2019 Gearing target 130% at most* Gearing currently (1–9/2019): 173.7% Gearing and debt service ability improved due to investments and IFRS 16 in 2019 Interest bearing 170% net debt / EBITDA (12m rolling) 6 150% 5.22 5.04 4.34 130% 4 110% 2 90% 70% 0 2009 2010 201
Slide 58: Foundation laid for sustainable growth
58 Capital Markets Day 26 November 2019 Foundation laid for sustainable growth Organic growth LNG vessels AtoB@C in the east
Slide 59: Guidance for 2019: Operating profit will be higher than in 2018
Guidance for 2019: Operating profit will be higher than in 2018 (20.6 M€) Thank you!