Eltel AB Investor presentation March 2020 Eltel in brief Founded - PowerPoint PPT Presentation

Eltel AB Investor presentation March 2020

Eltel in brief Founded in 2001 Northern European market leader Operations throughout the Nordics, Poland and Germany Net sales EUR 1.1 billion, 6,700 employees UN Global Compact signatory since 2014 Listed on Nasdaq Stockholm since 2015 2

Focus on segments Net sales Q4 2019 Power and Communication 1 % 7 % 8 % The Nordics, Poland and Germany 27 % 10 % Grow in line with market, capitalise on trends, improve operational processes, make selective acquisitions, increase efficiency 22 % 25 % Sweden Finland Norway Denmark Poland Germany Other countries 3

Eltel’s business – driven by stable customers with long term investment needs Segments Drivers  Regulatory demands Power  Outsourcing  Ageing infrastructure  Increasing end-customer demands Communication  Technical shift 4

Eltel AB Q4 2019 Presentation 14 February 2019

Today’s presenters Casimir Lindholm Petter Traaholt President and CEO CFO 6

Highlights • Strong operational cash flow and reduced net debt • Improved quality and deliveries towards our customers • Result mainly impacted by lower net sales and restructuring costs in Communication Sweden as well as project revisions in High Voltage and Communication Sweden • Large parts of Eltel performs better than previous year • Signed agreement to divest German Communication business • Signed amendment to bank agreement 7

Total Group: Q4 2019  Net sales -15.7% to EUR 278.9 million (330.9)  Organic growth in Power and Communication* -12.9%  Operative EBITA EUR -14.9 million (2.9) Total Group  Operative EBITA margin -5.3% (0.9)  Cash flow from operating activities** EUR 59.5 million (70.0)  Net debt ended at EUR 123.8 million down from EUR 191.4 million previous quarter *Adjusted for divested operations and currency effects **Before IFRS 16 impact 8

Net sales segments: Q4 2019  Net sales -19.2% to EUR 93.0 million  Reduced customer orders and project write-downs in High Voltage  Lower volumes in Smart Grids Power  Loss of contracts, ramp down and project write-downs in Sweden  The decrease was partly offset by Finland, due to wind power projects Organic net sales* -19.0%   Net sales -11.7% to EUR 182.9 million  25% volume drop in customer investments in Sweden, in addition to write-downs  Lower volumes in Finland Communication  EUR 7.1 million relates to divestment of Communication Poland, Q3 2019  Increased volumes in Norway, Denmark and Germany  Organic net sales** -6.3%  Net sales -10.9% to EUR 3.2 million Other  Relates mostly to Power Transmission International  In line with the strategy of divestments and discontinuations of operations *Adjusted for currency effects ** Adjusted for divested operations and currency effects 9

Operative EBITA segments: Q4 2019  Operative EBITA EUR -12.0 million (-1.9)  Operative EBITA margin -12.9% (-1.6)  Write-downs in a handful Polish and one Norwegian High Voltage projects, due to outage delays, Power increased cost to complete including overcapacity. Updated strategy in High Voltage Poland  Costs related to finalising unprofitable projects and ramp down in Sweden  Lower net sales in Smart Grids lead to reduced operative EBITA of EUR -2.4 million  Finland’s volume growth, improved performance and selective tendering improved the result  Operative EBITA EUR 2.0 million (9.7)  Operative EBITA margin 1.1% (4.7)  Approx. EUR 6 million relates to drastically reduced net sales, subsequent overcapacity and Communication restructuring costs in Sweden, in addition to write-downs and provisions in Sweden  Reduced volumes and restructuring costs in Finland  Norway continued to deliver strong results for the quarter  Operative EBITA EUR -0.6 million (-1.1) Other  Operative EBITA margin -20.4% (-30.4)  Result in line with the planned ramp down

Full year 2019  Net sales -8.5% to EUR 1,087.6 million (1,188.9)  Organic growth in Power and Communication* -6.4% Total Group  Operative EBITA EUR -11.3 million (-2.2)  Operative EBITA margin -1.0% (-0.2)  Cash flow from operating activities** EUR 25.7 million (3.2) *Adjusted for divested operations and currency effects **Before IFRS 16 impact 11

Focus in 2020 Operational focus  Tender  Right people Implementation & execution   No. 1 Nordic player  Production planning  High customer satisfaction  Training  Engaged employees  Lower risk and fewer capital Strategic focus intensive projects  Continuous evaluation of the existing portfolio,  Cash generation including the intended divestment of Aviation &  Lower net debt Security in Q1 2020 Restructure Polish High Voltage business   Strengthen the balance sheet  Operational Excellence 12

Our long-term plan >2022 “Investing in sustainable profitable growth” 2019−2021 “Operational excellence” 2017−18  Continued focus on “House in order” operational excellence  Pursue structural M&As in  Prioritise core operational the Nordics when financial improvements (operational situation improves excellence)  Innovation and new market  Restructure non-performing development business  Reorganisation to strengthen focus on local markets  Strengthen the financial situation of the company  Increased focus on operational KPIs to foster continuous improvements and sharing of best practices  Initiatives to control project business risk 13

Q&A

Appendices

Our services – in business segments Power Communication Other 35% 64% 1% The only regional stakeholder Market leader in the Nordic region Includes non-core business active in all the Nordic countries activities that are being Markets divested or ramped down The Nordics, Germany, Lithuania Markets The Nordics, Poland, Germany Markets Services Outside Europe • Mobile and fixed networks Services maintenance and upgrades • Electricity distribution and transmission Services • Fibre to the home (FTTH) maintenance and upgrades • Power transmission projects outside • Aviation and Security • Electricity distribution upgrades Europe • Projects in High Voltage • Smart Grids

Our core markets with a foreseen market growth of almost 3% Sales split 2019 1 % Core markets 7 % of Eltel CAGR 8 % 27 % 2022f Market +3% size (2019E): 10 % EUR 11.6bn 22 % 25 % Sweden Finland Norway Denmark Poland Germany Other countries Source: Company information, management estimates 18

Eltel’s segments – built on core competences with solid market position Services split (2019A) Projects incl. Power Maintenance roll-outs 23% 23%  Maintenance  Upgrades  Projects incl. roll-outs Upgrades Communication 56% 19

Market size and outlook - Power Eltel markets  Investments by major grid owners expected to increase  Network modernisation and reliability BNEUR together with transition to smart electricity +3% meters important market drivers 7.2 7.9  Increased build out of renewable energy production drives significant investments into grid network 2019 2022  Growing market with tough competition creates price pressure Source: Company information, management estimates 20

Market size and outlook - Communication Stable markets  Strong growth in data traffic within both fixed and mobile communication  Stable markets with tough competition BNEUR between telecom operator which puts some price pressure on technical Infranet +2% services 4.4 4.6 Telecom operators are expected to  continue invest in 4G/LTE 2019 2022  Low fibre penetration in Germany implies strong growth potential within fixed communication Source: Company information, management estimates 21