Q2 report Apr-Jun 2020 JONAS GUSTAVSSON, CEO / JUUSO PAJUNEN, CFO / JULY 14, 2020 1
Stable results in a challenging quarter Q2 2020 — Sales affected mainly by the automotive segment, Net sales: SEK 4,808 million (5,393) -11% where volume decreased by ca 40% EBITA*: SEK 383 million (481) — Stable results due to extensive cost mitigation EBITA-margin*: 8.0% (8.9) activities and good development within Infrastructure, Process Industries and Energy Jan-Jun 2020 — Strong cash flow +2.9% Net sales: SEK 10,063 million (9,782) — Repositioning of automotive segment initiated to provide more value-adding services EBITA*: SEK 858 million (870) EBITA-margin*: 8.5% (8.9) — Slight recovery and stabilisation in demand end of quarter, still with uncertainty how market will develop in remaining 2020 *Excl Items affecting comparability 2
Extensive measures in response to Covid-19 — Remote work and digital collaborations as well as other safety precautions — Ca 1,900 employees on short term work and permanent layoff of about 200 employees, mainly within automotive — Reduction of all cost spending — Increased pace of ongoing efficiency program of SEK 120 million but still focus on mitigating market turmoil — Total costs reduced by approx. SEK 500 million in Q2, mix of short-term and permanent savings — State subsidies to support our employees of approx. SEK 87 million 3
Reduction of sales mitigated in cost structure Change vs. PY, BSEK 0,59 Reduced EBITA of appr. 0,1 BSEK 0,49 Direct project expenses: Materials, subconsulting and other project 0,24 related expenses reduced along with the sales -11% Indirect expenses: Other expenses such as personnel expenses, 0,25 facility, IT etc. Reduction Reduction of Revenue of Expenses 4
Market update — Major impact of Covid-19 in the automotive segment and varied effect on other industry segments and markets — In Infrastructure , demand strong in the Nordics while Central Europe more impacted — In Industrial & Digital Solutions significantly lower volumes in automotive and related supply chain. Strong demand in food & pharma — Solid demand in Process Industries , however shift in client behaviour and longer decision-making processes — Stable demand in Energy and increased activity in the market noted end of Q2 — In Management Consulting, strong demand in energy consulting. Continued impact on transaction-related services 5
Industry segment portfolio — During Q2 increased share in Infrastructure Infrastructure and Process Energy and Power 3% 4%2% Industries due to a stable and 3% 21% (20%) Process Industry favourable situation in the Nordic 4% public sector as well as the Real Estate continued stable bioeconomy 6% Automotive and Vehicles Net sales sector Life Science, Food & Pharma by segment 7% (9%) — Two major repositioning areas; Telecom and ICT Jan-Jun 2020* Automotive and Energy Manufacturing Industry (19%) 18% Management Consulting — AFRY-portfolio geared towards (14%) 16% Infrastructure, Process Industries Defence as well as fast growing segments Other 16% such as Food & Pharma (15%) *Numbers in brackets refer to FY 2019 6
New projects — Owner’s engineering services assignment for 6 gas-fired cogeneration power plant projects in Thailand — Assignment for Vistin Pharma to double the production capacity of diabetes medicine — Process solutions for TINE in Norway — Contract for consultancy services for Daimer Basha dam project, Pakistan — New contract with Largo Resources in Brazil — Digitalisation of Lund with integration platform — Production line for Oatly in Singapore 7
Growth mainly impacted by the automotive segment Q2 2020 REPORTED NET SALES, MSEK — Total growth: -10.9% 6000 22000 — Organic growth: -9.2% 20000 — Adjusted/underlying organic growth: -9.8% 5500 18000 5000 16000 COMMENTS 4500 14000 — Growth affected by a vast reduction in demand in 4000 12000 automotive, the repositioning of Division Energy 3500 and the completion of a large EPC+ project 10000 3000 8000 2500 — Volume down 40% in the automotive segment 6000 2000 4000 1500 2000 — Continued limited growth in some segments in Q3 is Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 expected 18 18 18 19 19 19 19 20 20 Quarter Rolling 12 month 8
Stable results despite decline in volume Q2 2020* REPORTED EBITA, MSEK EBITA amounted to SEK 383 million (481) — excl. items affecting comparability — EBITA margin down to 8.0% (8.9) 550 2000 COMMENTS 1800 500 1600 — Negative impact mainly from the challenging 450 1400 situation within automotive 400 1200 350 — Strong positive impact from efficiency program 1000 and general cost savings 300 800 250 — SEK 500 million in cost savings in the quarter 600 200 400 — Solid development within Infrastructure, Process 150 200 Industries and Energy Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 18 18 18 19 19 19 19 20 20 Quarter Rolling 12 month * Excl. items affecting comparability 9
Division performance Q2 PROFITABILITY MIXED AMONG DIVISIONS EBITA CHANGE COMPARED TO PREVIOUS YEAR — Minor calendar effects; approx. 3 hours more vs. 2019 8.9% — Negative impact in divisions by Covid-19 but 481 18 scale of impact mixed — Repositioning of Energy providing results 8.0% 69 383 4 4 9 2 Q2 2019 Infrastructure Industrial & Process Energy Management Common Q2 2020 Digital Industries Consulting Solutions 10
INFRASTRUCTURE — Results negatively impacted by the Growth and profitability real estate segment and business in Central Europe. Strong transport infrastructure in the Nordics. INDUSTRIAL & DIGITAL SOLUTIONS Q2 ORGANIC GROWTH, % Q2 EBITA % (previous year) — Growth and profitability down due ADJUSTED WITH CALENDAR EFFECTS to a sharp drop in volumes in automotive segment. Strong development in Food & Pharma. 15 12,0 PROCESS INDUSTRIES 10.3 (15.3) — Strong development in China, 10 8.9 10,0 9.4 (9.6) 9.2 (7.3) Brazil and North America. Growth 8.7 (9.6) impacted mainly in the Nordics 5 OPEX business. 8,0 1.3 ENERGY 0 -1.6 6,0 5.0 (8.8) — Decline in growth due the -5 completion of a large EPC+ project, improved profitability due 4,0 -10 to the repositioning and cost savings. -11.5 2,0 -15 MANAGEMENT CONSULTING -18.5 -20 0,0 — Profitability impacted negatively Industrial Industrial by lack of success fees. Process Management & Digital Management & Digital Process consulting Infrastructure Solutions Industries consulting Solutions Industries Energy Energy Infrastructure 11
Net debt development – strong liquidity Net Debt, MSEK excl. items affecting comparability and IFRS16 8 000 7 144 — Strong operating cash flow in Q2 pushing 7 000 6 000 adjusted Net Debt/EBITDA to 2.0 (reported at 5 154 5 112 4 424 4 424 4357 5 000 2.3) 3 586 3 455 4 000 2 631 3 000 — Driven by reduction in net working capital 2 000 1 000 — Net Debt position improved from SEK 4,357 0 Q2 2017 2018 Q1 Q2 Q3 Q4 2 019 Q1 million to SEK 3,586 million 2020 2020 2019 2019 2019 2019 Net Debt/EBITDA* — No signs of delays in customer payments excl. items affecting comparability and IFRS16 4 — Available liquid assets of SEK 1,367 milion 4 2.8 and unutilised credit lines of SEK 2,852 3 2.5 2.5 2.5 2.5 2.3 2.2 2.2 3 million 2,0 2 2 1 1 0 Q2 Q1 2017 2018 Q1 Q2 Q3 Q4 2 019 2020 2020 2019 2019 2019 2019 * Calculated excluding IFRS16 impact, including Pöyry for rolling 12m and excluding items affecting comparability 12
Focus moving forward Win in new normal (Q3/Q4) Sustain & lean (Q2/Q3) React & adjust (Q1/Q2) — Leverage from lean and flexible structure with strong position in key segments and regions. — Based on 120 MSEK cost program, and short-term — Growth, M&A, brand- savings in Q2, setting lean building and attractive operational structure: employer — React to Covid-19 crisis - - Increased efficiency distance work using digital — Execution of strategy with - Increased flexibility platforms focus on: — Review of strategy and - Sustainability — Cost savings across all scenario planning: Where - Digitalisation areas including short term to play and how to win in allowances new normal — Focus on operational — Repositioning of Energy efficiency and adjusting and Automotive investments 13
Thank you! Save the date: Capital Markets Day on November 24
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