Q4 2019 Presentation February 11, 2020 Fourth quarter Q4 2019 in - PowerPoint PPT Presentation

Q4 2019 Presentation February 11, 2020

Fourth quarter Q4 2019 in Brief • Sales up +16% 18% acquired, -5% organic and 3% currency. Order intake higher than net sales o Lower underlying demand but slightly higher market share o • Operating profit unchanged, adjusted for acquisition cost. Operating margin unsatisfactory, mainly due to low demand in the quarter International: significant profit and margin decline over strong comparable, due to o negative organic growth, unfavorable business mix and insufficient sourcing savings Sweden: slight operating profit increase over weak comparable, due to o acquisitions and good cost control, despite negative organic growth • Strong cash flow – FY doubled vs PY • Continued focus on sourcing savings. Global efficiency program aims at 40 MSEK opex savings by 4Q20. New organization for continued strong growth • Acquisition of American Bolt & Screw in North America: 500 MSEK, 11% EBITA • Board proposes increased dividend 2

Fourth quarter Financial highlights, Group Quarter 4 Δ Jan-Dec Δ SEK million 2019 2018 % 2019 2018 % Order intake 1 148 982 17 4 354 3 798 15 Net sales 1 124 966 16 4 348 3 786 15 Gross profit 297 271 1 183 1 088 10 9 % 26,4 28,1 27,2 28,7 Operating expenses -224 -189 -799 -721 19 11 % -20,0 -19,6 -18,4 -19,0 Operating profit (EBITA) 73 82 -11 384 367 5 % 6,5 8,5 8,8 9,7 Net profit 39 62 -37 253 255 -1 Operating cash flow 94 63 351 175 49 101 EBITA Q4 2018 82 Currencies +2 Volume -18 Price/cost/mix/other +4 Acquisitions +12 EBITA Q4 2019, continuing business 82 Acquisition cost -9 EBITA Q4 2019, as reported 73 3

Fourth quarter Financial development, Group Quarterly Net Sales growth Net Sales EBITA Organic growth Total growth 5 000 500 25 4 500 450 20 4 000 400 LTM Net Sales, SEK millions 3 500 350 LTM EBITA, SEK million 15 3 000 300 10 Percent 2 500 250 5 2 000 200 1 500 150 0 1 000 100 -5 500 50 0 0 -10 4

Fourth quarter Segment International Quarter 4 Δ Jan-Dec Δ SEK million 2019 2018 2019 2018 % % Order intake 715 668 7 2 838 2 648 7 Net sales 699 644 2 836 2 615 9 8 Gross profit 201 197 2 833 788 6 % 28,8 30,6 29,4 30,1 Operating expenses -147 -129 -545 -498 14 9 % -21,0 -20,0 -19,2 -19,1 Operating profit (EBITA) 55 68 288 290 -19 -1 % 7,8 10,6 10,2 11,1  Net sales up by 9%, all contributed by latest acquisition EBITA Q4 2018 68  Organic growth -5%: considerably lower underlying demand but Currencies +4 somewhat higher market share Volume -13  Gross margin down to 28.8%, 50/50 due to mix in quarter Price/cost/mix/other -10 and insufficient sourcing savings Acquisitions +6  Focus on sourcing savings and cost control going forward EBITA Q4 2019 55 5

Fourth quarter Financial development, International Quarterly Net Sales growth Net Sales EBITA Organic growth Total growth 3 500 350 35 30 3 000 300 25 LTM Net Sales, SEK millions 2 500 250 LTM EBITA, SEK million 20 2 000 200 Percent 15 10 1 500 150 5 1 000 100 0 500 50 -5 0 0 -10 6

Fourth quarter Segment Sweden Quarter 4 Δ Jan-Dec Δ SEK million 2019 2018 2019 2018 % % Order intake 433 314 38 1 516 1 149 32 Net sales 424 322 1 512 1 172 32 29 Gross profit 100 81 23 371 323 15 % 23,5 25,1 24,5 27,6 Operating expenses -71 -53 34 -239 -198 21 % -16,7 -16,5 -15,8 -16,7 Operating profit (EBITA) 29 28 4 132 126 5 % 6,8 8,7 8,7 10,7  Net sales up by 32%, all contributed by acquisition of HT Bendix EBITA Q4 2018 28  Organic growth -5%: Lower underlying demand and Currencies -2 unchanged market share Volume -5  Gross margin down year-on-year, mainly attributable to acquisitions Price/cost/mix/other +1 (adjusted for acquisitions, gross margin was 24.9% (25.1)) Acquisition +7  EBITA improvement despite negative organic growth EBITA Q4 2019 29 due to acquisitions and good cost control  Focus on sourcing savings and cost control going forward 7

Fourth quarter Financial development, Sweden Quarterly Net Sales growth Organic growth Total growth Net Sales EBITA 60 2000 200 50 LTM Net Sales, SEK millions 1500 150 40 LTM EBITA, SEK million 30 Percent 1000 100 20 10 500 50 0 0 0 -10 8

Fourth quarter Challenges and opportunities in a weaker market Challenges Opportunities • Adapt cost base to • Customers more weaker underlying focused on efficiency  growth… new business leads • …while continuing • Low demand for investment in suppliers  Leadership 2020 sourcing savings •  more focus on • Some competitors improving internal challenged or failing efficiency • Potentially, more acquisition candidates 9

Fourth quarter Gross margin development Segment Sweden Group GP%-development GP%-development 32,0% 32,0% 30,0% 30,0% 28,0% 28,0% 26,0% 26,0% 24,0% 24,0% 22,0% 22,0% Q1 19 Q2 19 Q3 19 Q4 19 Q1 19 Q2 19 Q3 19 Q4 19 Segment Sweden, excl. HT Bendix Group, excl. HT Bendix & ABS Segment Sweden, as reported Group, as reported 10

Fourth quarter Despite weak ending, 2019 showed all-time high sales and operating profit, fourth time in a row EBITA, MSEK 450 CAGR = 12,8% 400 350 300 250 200 150 100 50 0 2012 2013 2014 2015 2016 2017 2018 2019 11

Fourth quarter New organization for continued growth and improved efficicency To better reflect the Group’s international reach and 2  4 opportunities, Sweden/International will be replaced by Operating Segments West, North, East, and UK/US To increase focus on growth opportunities and operational 6  10 improvement, and to allow for future scalability, the existing Business Units 6 regions will be replaced by 10 business units • New organization fully operational by April 2020 Efficiency project • Efficiency project launched in Q3 2019, expected to save 40 MSEK on full-year basis, full effect by Q4 2020 • No significant restructuring costs incurred or expected 12

Fourth quarter Acquisitions since 2014 Acquisition of American Bolt & Screw in North America in November  Strategic footprint for further growth in North America  Annual sales of SEK ~500m, EBITA ~11% 13

Fourth quarter EBITA Bridge Group International Sweden Other EBITA Q4 2018 -15 82 68 28 Currency 0 +2 +4 -2 Volume 0 -18 -13 -5 Price/cost/mix/other 14 +4 -10 +1 Acquisitions 0 +12 +6 +7 EBITA Q4 2019, continuing business -1 82 55 29 Acquisition costs 0 0 -9 -9 EBITA Q4, 2019 -10 73 55 29 Group International Sweden Other EBITA YTD 2018 -49 367 290 126 Currency 0 +5 +11 -6 Volume 0 +19 +27 -8 Price/cost/mix/other +23 -23 -46 +1 Acquisitions +6 +19 0 +28 EBITA Q4 2019, continuing business -23 397 288 132 Acquisition costs -9 -12 0 0 EBITA Q4, 2019 -35 385 288 132 14

Outlook Summary and outlook Fourth quarter: EBITA unchanged, but unsatisfactory margin • Organic growth negative for first time since 2013: lower underlying demand, and production and inventory adjustments by customers • EBITA unchanged before acquisition costs, but margin too low due to low demand Full year: important step forward, but margin needs to improve • Good growth in challenging market • Improved market share, and good progress in Leadership initiatives • Two large acquisitions drive growth and strengthen offering, reach • All-time high net sales and EBITA, but margin not good enough Outlook: continued market uncertainty, but Q1 has started better than Q4 ended Priorities 2020 • Increased focus on new business generation • Profit improvement: sourcing and opex savings, and contribution from acquisitions • Continue building Leadership platform 15

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