Q1 2019 PRESENTATION Rolf Barmen (CEO) Birte Strander (CFO) Oslo, 15 th May
Q1 2019 HIGHLIGHTS Rolf Barmen (CEO)
Highlights first quarter 2019 Strong price management in an important quarter Key Highlights 1 # of deliveries (end of period) Net change in # of deliveries • Net revenue adj. and EBIT adj. performance better than expected, driven by strong price management and favourable 606 652 1 679 market dynamics Increase of 14 % YoY Of which org. growth 1 679 • 3% YoY growth in volume sold, driven by 14% YoY growth in # of deliveries 2 Volume sold Gross revenue • Partly offset by mild weather, negatively affecting 4 402 GWh NOK 2 545,6m average consumption per delivery Increase of 3 % YoY Increase of 33 % YoY • Positive organic growth in all segments QoQ 3 3 2 Net revenue (adj.) K6 EBIT (adj.) • Fjordkraft is now the largest mobile service provider without its own mobile network NOK 378,4m NOK 181,9m • Positive revision of targets following strong results 9 Increase of 20 % YoY K7 48 % Adj. EBIT margin (this q.) Basic EPS (reported) K13 NIBD (cash) NOK 1,29 NOK 23,3m Increase of 32 % YoY K19 NIBD/LTM EBITDA: 0,04 Sources: Company information 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 640,474 2) Not including Alliance volume. Volume turnover for alliance partners Q1 2019: 1,511 GWh 3) Adj. Net revenue and EBIT are reported figures adjusted for any estimate deviations on sales and distribution of electricity related to previous reporting periods, special items, unrealised gains and losses on financial derivatives and depreciations from acquisitions | Quarterly Presentation | Q1 2019 3
Sustainability report for 2018 – read more at investor.fjordkraft.no | Quarterly Presentation | Q1 2019 4
BUSINESS REVIEW Rolf Barmen (CEO)
Market development Key highlights in Q1 2019 Weekly elspot prices (NOK/kWh) 2 - Decreasing elspot prices throughout the quarter 0,6 – beneficial for variable products 0,5 • Warmer than normal weather in three out of three 0,4 months, negatively affecting average consumption 0,3 per delivery 1 0,2 - January: +1.2°C above normal 0,1 - February: +3.5°C above normal 0,0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 - March: +1.2°C above normal 2018 2019 Forward price Market churn (LTM) 3 25% 21% 20% 15% 18% 10% 5% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 16 16 16 16 17 17 17 17 18 18 18 18 Sources: Consumer Business 1) Temperature figures from met.no’s monthly reports 2) Weekly system prices in NOK from Nordpool, forward prices from Montel 3) Figures from the Norwegian Water Resources and Energy directorate | Quarterly Presentation | Q1 2019 6
Segment development - Consumer # of electricity deliveries 1 (‘000) Key highlights in Q1 2019 • Positive organic development quarter over quarter 600 - Net additions in Q1 2019 were 921, all of which organic 500 400 • Volume growth of -1% YoY driven by decrease in average consumption, partly offset by growth in # of 300 529 530 520 520 469 deliveries 200 - Avg. volume per delivery decreasing -13% YoY 100 4,340 kWh in Q1 2019 vs. 4,967 kWh in Q1 2018 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Volume (GWh) 2 500 8 000 7 000 2 000 6 000 5 000 1 500 4 000 2 320 2 299 2 077 1 000 3 000 1 376 2 000 1 126 500 1 000 0 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q1 2019 7
Segment development - Business # of electricity deliveries 1 (‘000) Key highlights in Q1 2019 • Increase in deliveries 90 80 - Net additions in Q1 2019 were 758 70 60 • Volume growth of 7% YoY driven by growth in # of 50 deliveries 40 76 76 76 76 64 30 - Avg. volume per delivery decreasing -11% YoY 20 27,653 kWh in Q1 2019 vs. 31,121 kWh in Q1 2018 10 0 • Increase in market share according to TNS Kantar’s Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 survey 2 , now no. 1 in the Business segment alongside Hafslund Volume (GWh) 2 500 7 000 6 000 2 000 5 000 1 500 4 000 3 000 2 103 1 000 1 968 1 884 2 000 1 328 1 118 500 1 000 0 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q1 2019 8
New Growth Initiatives # of Mobile subscribers 1 (‘000) Key highlights in Q1 2019 • The organic growth in mobile subscribers continues 80 - Growth of 5,667 subscribers in Q1 2019 70 60 • Fjordkraft is now the largest mobile service provider 50 without its own mobile network 40 72 66 30 61 57 49 20 • -6% YoY Alliance volume growth driven by mild 10 weather 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 • New contract in Extended Alliance • ~6,000 deliveries with expected start-up Q3 Volume Alliance (GWh) 2 000 5 000 4 000 1 500 3 000 1 000 1 603 2 000 1 511 1 358 500 910 1 000 713 0 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Quarter LTM Sources: Company information 1) Number of mobile subscribers at the end of the period | Quarterly Presentation | Q1 2019 9
FINANCIAL REVIEW Birte Strander (CFO)
Solid growth in adj. net revenue Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm) +20% 1 400 400 +19% 5 16 1 200 350 43 300 1 000 250 800 200 378 600 1 152 1 088 314 1 048 150 1 005 968 400 100 200 50 0 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Consumer Business NGI Q1 19 Quarterly adj. net revenue improvement ~ 90/10 split between improved margins and volume growth 1 YoY due to strong price • management and mild weather • Favourable elspot price development positively impacting variable product margins in both Consumer and Business segments • 3% volume growth YoY, driven by increase in # of deliveries • 10% decrease in average consumption per delivery in the Consumer and Business segment in total Last twelve months adj. net revenue improvement ~ 60/40 split between improved margins and volume growth 1 YoY • • Improvement mainly driven by the Consumer segment Sources: Company information 1) New Growth Initiatives figures are excluded from the calculations, as high volumes with very low margins distorts the analysis | Quarterly Presentation | Q1 2019 11
Strong adj. EBIT performance Change in adj. EBIT (NOKm) Adj. EBIT LTM (NOKm) +18% 250 450 40% +24% 400 35% 200 37% 37% 36% 36% 36% 4 350 23 30% 9 300 150 25% 250 20% 425 200 390 100 379 361 364 182 15% 150 147 10% 100 50 Adj. EBIT Adj. EBIT 5% 50 margin: 47% margin: 48% 0 0 0% Q1 18 Consumer Business NGI Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 EBIT LTM (adj.) LTM adj. EBIT margin • Adj. EBIT performance and EBIT margin stronger than expected, mainly driven by growth in net revenues • OPEX increasing by 17% YoY, driven by sales and marketing, variable costs and administrative costs • Synergy realisation on track so far in 2019 • All time high adj. EBIT last twelve months, 1pp increase in LTM adj. EBIT margin • The Business segment is the main driver of the increase Sources: Company information | Quarterly Presentation | Q1 2019 12
Solid performance across all segments Consumer segment Business segment New Growth Initiatives Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 300 +19% 300 300 250 250 250 200 200 200 +19% 150 150 150 +56% 267 223 213 100 100 100 174 156 50 50 50 97 82 83 62 65 9,1 5,6 6,7 9,3 14,3 0 0 0 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Adj. EBIT (NOKm) Adj. EBIT (NOKm) Adj. EBIT (NOKm) 150 46% 47% 50% 150 80% 120 61% 60% 100 34% 40% 52% 32% 49% 60% 48% 80 100 100 23% 30% 60 40% 126 40 20% 103 50 50 20 72 20% 10% 55 59 32.2 50 43 35 0 31 31 72.7 0 0% 0 0% -6,5 -7,7 -7,8 -7,3 -2,9 -20 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 EBIT (adj.) EBIT margin adj. EBIT (adj.) EBIT margin adj. • Increase in adj. net revenue driven by • Margin improvement accounting for ~70% • Adj. net revenue growth and adj. EBIT improved margins of the adj. net revenue improvement improvement primarily driven by product optimization within Mobile • 1 pp adj. EBIT margin improvement YoY • Increase in variable contracts, now driven by strong price management in amounting to 6% • Alliance contributing with ~30% favourable market conditions of the improvement in adj. net • 1 pp adj. EBIT margin contraction YoY, revenue and ~20% in adj. EBIT driven by sales and marketing costs Sources: Company information | Quarterly Presentation | Q1 2019 13
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