Q3 2019 PRESENTATION Rolf Barmen (CEO) Birte Strander (CFO) Oslo, 14 th November
Q3 2019 HIGHLIGHTS Rolf Barmen (CEO)
Highlights third quarter 2019 Continued growth in net revenue and EBIT Key Highlights 1 Δ in # of deliveries (QoQ) # of deliveries (end of period) • Net revenue growth across all segments – driven by both margin improvements and volume growth 619 455 11 892 • Strong development with an accelerating growth in number of Increase of 4 % YoY Of which org. growth 2 487 mobile subscribers (+51% YoY). Highest quarterly growth since the launch in Q2 2017 2 Volume sold Gross revenue • Fjordkraft on top in EPSI’s customer satisfaction survey for 2 307 GWh NOK 1 101.6m mobile subscribers in the consumer market in 2019 Increase of 3 % YoY Decrease of -17 % YoY • Also awarded for best call centre across all industries in September 3 3 2 Net revenue (adj.) K6 EBIT (adj.) • Successful acquisition of Vesterålskraft Strøm AS. Transaction NOK 259.3m NOK 63.0m completed 1 July 2019 9 Increase of 14 % YoY K7 Increase of 8 % YoY Basic EPS (reported) K13 NIBD (cash) NOK 0.32 (NOK 492.6m) Increase of 30 % YoY K19 NIBD/LTM EBITDA: -0.84 Sources: Company information 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 651,488 2) Not including Alliance volume. Volume turnover for alliance partners Q3 2019: 677 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 | Q3 2019 3
Launch of “Klimahub” – a climate neutrality database for businesses • A nation-wide database with information about a firm’s climate actions and focus • Includes an easy-to-use solution for businesses to calculate and register their CO2 emissions and climate actions • Fjordkraft offers counselling and CO2 quotas for businesses to become climate neutral • Builds upon Fjordkraft’s “Klimanjaro” initiative that was awarded the UN Climate Action Award • www.klimahub.no | Quarterly Presentation | Q3 2019 4
BUSINESS REVIEW Rolf Barmen (CEO)
Market development Key highlights in Q3 2019 Weekly elspot prices (NOK/kWh) 2 • Increase in elspot prices during the first part of the 0,6 quarter, then fairly stable throughout August and 0,5 September 0,4 • Temperatures warmer than normal in the quarter 0,3 in three out of three months, while two out of three 0,2 months were colder than last year 1 0,1 - July: +1.3°C above normal (3.0°C colder than 2018) 0,0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 - August: +1.7°C above normal (1.1°C warmer than 2018) 2018 2019 Forward price - September: +0.7°C above normal (0.8°C colder than 2018) Temp – deviation from normal (°C) 1 5 • NVE has stopped publishing their quarterly market 4 churn reports following the implementation of 3 Elhub. The next report is scheduled to H1 2020 2 1 0 -1 -2 -3 -4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Des Sources: 2018 2019 1) Temperature figures from met.no’s monthly reports 2) Weekly system prices in NOK from Nordpool, forward prices from Montel | Quarterly Presentation | Q3 2019 6
Segment development - Consumer # of electricity deliveries 1 (‘000) Key highlights in Q3 2019 • Positive development driven by both acquisition and 600 organic growth 500 - Net additions in Q3 2019 were 9,973, of which 2,274 400 organically 300 542 - Strong underlying organic growth in the quarter with 5,410 529 530 532 520 200 deliveries, while a downward adjustment of 3,136 deliveries stems from the revision of an externally 100 operated customer portfolio 0 • Volume growth of 9% YoY, with increase in avg. Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 consumption being the main driver for the growth Volume (GWh) - Avg. volume per delivery increasing 6% YoY 2,296 kWh in Q3 2019 vs. 2,166 kWh in Q3 2018 2 500 8 000 • Updated app with improved user interface and 7 000 2 000 functionality 6 000 5 000 1 500 4 000 2 299 2 077 1 000 3 000 1 381 2 000 1 232 1 126 500 1 000 0 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q3 2019 7
Segment development - Business # of electricity deliveries 1 (‘000) Key highlights in Q3 2019 • Positive development driven by both acquisition and 80 organic growth 60 - Net additions in Q3 2019 were 1,919, which of 213 organically 40 78 76 76 76 76 • Volume decrease 4% YoY driven by decrease in avg. consumption per delivery 20 - Avg. volume per delivery decreasing -4% YoY 0 14,113 kWh in Q3 2019 vs. 14,693 kWh in Q3 2018 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Volume (GWh) 2 500 7 000 6 000 2 000 5 000 1 500 4 000 3 000 2 103 1 000 1 884 2 000 1 316 1 118 1 075 500 1 000 0 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q3 2019 8
New Growth Initiatives # of Mobile subscribers 1 (‘000) Key highlights in Q3 2019 • Strong development with an accelerating growth in 100 number of mobile subscribers (+51% YoY). Highest 80 quarterly growth since the launch in Q2 2017 60 - Growth of 11,177 subscribers in Q3 2019 92 40 81 • Fjordkraft on top in EPSI’s customer 72 66 61 satisfaction survey for mobile subscribers 20 in the consumer market in 2019 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Volume Alliance (GWh) • 5% YoY Alliance volume decrease YoY, as Vesterålskraft is now included in the Consumer and 2 000 5 000 Business segments 4 000 1 500 • One new Extended Alliance partner implemented in 3 000 the quarter, comprising ~6,200 deliveries 1 000 2 000 1 511 • 10,000 electricity deliveries and 8,000 broadband 1 358 500 deliveries signed this quarter, with expected start-up 858 1 000 713 677 in 2020 0 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Quarter LTM Sources: Company information 1) Number of mobile subscribers at the end of the period | Quarterly Presentation | Q3 2019 9
FINANCIAL REVIEW Birte Strander (CFO)
Net revenue improvement across all segments Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm) +14% 1 400 300 +17% 1 200 2 6 250 24 1 000 200 800 150 1 226 600 1 193 259 1 152 1 088 1 048 227 100 400 50 200 0 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Consumer Business NGI Q3 19 • Several different factors contributing to the adj. net revenue improvement – both margin improvements and volume growth affecting positively Last twelve months adj. net revenue improvement ~ 75/25 split between improved margins and volume growth 1 YoY • 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 | Q3 2019 11
Continued increase in EBIT adj. Change in adj. EBIT (NOKm) Adj. EBIT LTM (NOKm) +8% +19% 70 40% 500 (1) 3 2 60 37% 37% 37% 400 36% 36% 50 30% 40 300 20% 63 30 450 58 446 425 200 390 379 20 10% 100 Adj. EBIT Adj. EBIT 10 margin: 26% margin: 24% 0 0 0% Q3 18 Consumer Business NGI Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 EBIT LTM (adj.) LTM adj. EBIT margin • EBIT improvement of 5 NOKm driven by the Consumer and Business segments • OPEX increase driven by sales and marketing costs, customer service costs and administrative costs • Adj. EBIT margin decreasing 2 pp YoY, however adj. EBIT margin LTM is increasing YoY and is stable quarter over quarter Sources: Company information | Quarterly Presentation | Q3 2019 12
Segment overview Consumer segment Business segment New Growth Initiatives Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 300 300 300 +15% 200 200 200 +9% +35% 267 213 100 100 100 191 180 156 97 83 73 70 65 6,7 9,3 14,3 10,4 9,1 0 0 0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Adj. EBIT (NOKm) Adj. EBIT (NOKm) Adj. EBIT (NOKm) 150 50% 80% 120 47% 150 60% 100 55% 34% 33% 40% 52% 60% 48% 47% 80 100 100 30% 23% 21% 60 40% 126 40 20% 50 50 20 72 20% 63 10% 59 32.2 38 43 35 40 0 31 33 72.7 0 0% 0 0% -7,8 -7,3 -2,9 -4,7 -8,6 -20 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 EBIT (adj.) EBIT margin adj. EBIT (adj.) EBIT margin adj. • Increase in adj. net revenue YoY – • Increase in adj. net revenue is driven by • Adj. net revenue improvement driven volume growth accounting for ~60% of improved margins, primarily from value ~60/40 between Mobile and Alliance the increase added services • Loss of revenue following the VKS • 2 pp margin contraction driven by sales • 1 pp margin contraction driven by sales acquisition affecting the NGI segment and marketing, customer service and and marketing costs and decrease in avg. • FY expectations in line with guiding administrative costs volume per delivery Sources: Company information | Quarterly Presentation | Q3 2019 13
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