MULTICONSULT BRIDGING THE PAST TO THE FUTURE Capital market update 8 November 2018
multiconsult.no DISCLAIMER This presentation includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this presentation, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “may,” “assume,” “plan,” “intend,” “will,” “should,” “estimate,” “risk” and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forward- looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this presentation.
Given the current profitability situation and the timing in the strategic period towards 2020, it is time to revise our strategy
multiconsult.no Agenda • Flashback to CMU 2016 • Recent developments • Improvement efforts • Our context today • Revised strategy • People & projects
multiconsult.no Steady long-term financial performance NET OPERATING REVENUES – MNOK EBIT AND EBIT MARGIN – MNOK/% EBIT, underlying EBIT margin 250 12% 3 000 10% 2 500 200 8% 2 000 150 6% 1 500 100 4% 1 000 50 2% 500 0 0% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 PROFIT AFTER TAX AND ROE – MNOK/% EQUITY AND ORDINARY DIVIDEND – MNOK Total shareholders Equity Net Profit Return on Equity 250 50% 600 Dividends paid 500 200 40% 400 150 30% 300 100 20% 200 50 10% 100 0 0% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: In 2015, an extraordinary dividend of MNOK 192 was paid to shareholders related to the IPO. ROE using Net Income
multiconsult.no Flashback to our context at CMD 2016 SHARE PRICE DEVELOPMENT From IPO to Capital Markets Day 2016 110 105 100 95 90 85 0 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 EBIT MARGIN PEER GROUP 12% 10% 233 1.5 x 8% 6% Equity Cash Debt 4% MNOK, NIBD/EBITDA 2% 31 Dec 2015 Multiconsult Peer Group RIF 0% 2012 2013 2014 2015 2016 Note: Multiconsult not a part of Peer Group. The group consists of Sweco, Pöyry, ÅF, Rejlers and Projektengagement
multiconsult.no Agenda • Flashback to CMU 2016 • Recent developments • Improvement efforts • Our context today • Revised strategy • People & project
multiconsult.no Industry profitability challenge intensified INDEXED DEVELOPMENT WAGE AND BILLING RATE 113 114 Wage • The last 5 years the wage increase 113 has been considerably higher than 112 the increase in billing rates. 111 110 • Since 2016 the billing rates have 109 moved upwards, although not 9.2% 108 enough to reduce the gap. 107 • The cumulative effect since 2013 106 8.8% is a marginalisation of 9.2%. 105 7.7% 104 Billing rate 104 4.3% 103 1.4% 102 101 100 0 2013 2014 2015 2016 2017 2018 Source: RIF; Multiconsult; Arkitektbedriftene Note: Billing rate is price per hour divided by chargeable hours (for Multiconsult Norway). Wage assumes a mix of 25% architects and 75% engineers (RIF), where 60% of the engineers are civil eng. For 2018 a wage increase of 2,8% percent is assumed. Hourly rate is YTD 2018.
multiconsult.no Coupled with Multiconsult effects EBIT DEVELOPMENT MULTICONSULT VS PEERS ESTIMATED MULTICONSULT EFFECTS ON 2017 EBIT MARGIN (Multiconsult not part of Peer Group) 11% 10% 5.6% 0.5% 9% 8% 1.1% 4.0% 7% 6% 5% 4% 3% 2% 1% 0% 2010 2011 2012 2013 2014 2015 2016 2017 Reported EBIT ERP effect Reorganisation Implied EBIT Average Peers Multiconsult RIF RIF 500+ Employees Note: Consolidated accounts. EBIT is adjusted for extraordinary events when the companies have reported adjusted EBIT in their annual reports. The group consists of Sweco, Pöyry, ÅF, Rejlers and Projektengagement. Source: RIF, Odin/BvD; Annual Reports
3-2-1 GO strategic objectives from CMU 2016 OBJECTIVES COMMENTS Develop multidisciplinary business • Acquired Iterio primo 2017 1 in Sweden • Further activities stopped due to reduced profitability Stepwise international build-up in • Established international sales offices 2 renewable energy • Identified and dialoged with potential strategic partners Establish a leading position within health • Successful wins on Tønsberg, Drammen, Helsingborg and Hammerfest hospitals 3 buildings in Scandinavia • Acquired important expertise through aarhus arkitekterne (LINK Denmark) • Successful wins on prestigious projects, market less mature than anticipated Capture a leading position within 4 urbanism in Scandinavia • Established a strong urbanism center of expertise • Defined a digital road map and established a digital platform 5 Scandinavian market leader in digitalisation • Won projects and several awards based on digitalisation One Group – Stronger organisation built • Successfully implemented corporate values MOVE across the group 6 by a shared culture
multiconsult.no Agenda • Flashback to CMU 2016 • Recent developments • Improvement efforts • Our context today • Revised strategy • People & projects
multiconsult.no “Intensified focus on improving profitability” Multiconsult, Outlook 3Q 2017 presentation “ Profitability improvement program launched ” Multiconsult, 4Q 2017 presentation
multiconsult.no Fighting off the profitability challenge in Norway Improving profitability for Greater Oslo & Regions Norway from 3Q 2017 Sales Billing ratio Project execution Efficiency gains • Release synergies from new • Further develop • Increased sale • Continue already ERP system strategic sales team established programs • Aligned procedures • Fully integrate existing • Key account • Improve client • Reduce internal activity acquisitions management program communication • No integration of new • Further focus on cost reduction • Prioritised tendering • Benefit from improved acquisitions in Norway transportation market • Manning control • Stricter pricing criteria
multiconsult.no Effects of improvement programme - Norway Improving profitability for Greater Oslo & Regions Norway Efficiency gains Sales Billing ratio Project execution Other operating costs per employee Backlog and order intake growth y-o-y Billing ratio development Net write-downs 300 1 500 72% 750 3,5% 1 400 +34% 700 -2% 71% 3,0% 1 300 650 250 70% 1 200 600 2,5% 69% 1 100 550 200 1 000 68% 500 2,0% +20% 900 450 67% TNOK 1,5% TNOK MNOK 800 400 150 66% 700 350 1,0% 65% 600 300 100 500 64% 0,5% 250 400 200 63% 0,0% 300 150 50 62% 200 100 -0,5% 61% 100 50 0 0 60% -1,0% 0 YTD 2017 YTD 2018 Backlog Order intake 1Q 2Q 3Q 4Q 1Q 2Q 3Q per employee per employee 2017 2017 2017 2017 2018 2018 2018 YTD 2017 YTD 2018 YTD 2017 YTD 2018 Net Operating Revenues 2017: Reclassified and KPI adjusted Net writedowns % of net revenue 2018: Adjusted for business development and allocation method Continue manning Still need to improve billing rates Maintain level Improve further and cost control on order intake
multiconsult.no Agenda • Flashback to CMU 2016 • Recent developments • Improvement efforts • Our context today • Revised strategy • People & projects
multiconsult.no Outlook - Norway MACRO ECONOMIC OUTLOOK YEARLY INVESTMENT NATIONAL TRANSPORT PLAN Yearly average, 2017 MNOK 77 391 6 461 110 3,0% 100 2,5% 90 26 900 80 50 108 3 024 2,0% 70 60 17 095 1,5% 50 40 1,0% 44 030 30 29 989 20 0,5% 10 0 2014 2015 2016 2017 2018E 2019E 2020E 2021E NTP 2014-2017 NTP 2018-2029 GDP growth Oil price Road Railways Other Source: SSB, NTP 2018 Note: Oil price is Brent Blent, USD/Barrel. GDP Growth is mainland Norway
multiconsult.no Outlook – Multiconsult markets FY2017 REVENUE (MNOK) EXPECTED CAGR 2017-2020 Other 16% 6-8% Renewable 1 616 B&P COMPOSITION 13% 48% 2017 Transportation 23% 6-8% 783 433 9-11% Other 16-18% EXPECTED Renewable B&P Others COMPOSITION 544 9-11% 13-14% 46-48% 2020 Transportation 22-24% 6-8% Total 3 375
multiconsult.no Agenda • Flashback to CMU 2016 • Recent developments • Improvement efforts • Our context today • Revised strategy • People & projects
The need for profitability improvement triggers the need for a revised strategy Long-term strategic direction remains • Execution horizon adjusted for expansion into Sweden and international Renewable Energy until normal profitability levels are regained
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