4 We break new grounds in Modular Space … Enable In order to pursue strong organic growth Cramo Modular people to Space needs to increase its resources – both personnel, perform product and network. We change the game plan : our delivery channels are easy Simplify to understand and simple to use. Our process and delivery organisation supports our customer operations and allows platform us to deliver projects fast and with high quality – we even aim to exceed our customers’ expectations . We will better be able to predict and estimate our near Shape scalable future need for different resources. Our systems are production supporting us in our actions and decisions. We can adjust capacity our production capacity quickly and cost efficiently according to the market demands. By 2020 we have harmonised our sourcing and purchasing operations which allow us to increase our efficiency and improve our timing of the needed capital . 22
…and capture the potential in 5 Germany Expand in Central Europe, and Germany especially, is the main line with our current organic growth area for Modular Space. offering We will expand our offering both geographically as well as with all products and segments in the region. Invest to a comprehensive network We will build a strong network of our own sales offices , hubs and warehouses, supported by well working sub-contractors. We harmonise our Execute processes, systems and operations to get scale additional benefits. growth through M&A In order to even boost our growth plans, we will carry through few acquisitions . We will integrate the new organisations systematically to Cramo Adapteo. 23
Way forward to capture potential Enable people Leading Innovation position to perform Align, 2 optimise, grow divisions 24
Conclusion • New strategy ” Shape & Share ” • Two stand alone divisions • Align, optimise, grow • New financial and non-financial targets 25
Financial performance & targets Capital Markets Day, February 2017 Aku Rumpunen CFO 26
Agenda 1 Financial performance 2013-2016 2 Segment structure and market outlook 3 Financial targets 2017-2020 27
Sales growth and profitability improvement mEUR Sales, EBITA & EBITA margin 400 23% 356 331 350 22% 317 313 300 21% 20,7% Sweden 250 20% ER: #1 200 19% 18,6% 17,8% MS: #1 150 18% 17,5% 100 74 17% 62 55 56 50 16% 0 15% 400 23% 22,0% 350 22% 20,2% 300 21% Finland 19,6% 250 20% 18,8% ER: #2 200 19% MS: #1 150 18% 124 111 104 103 100 17% 50 28 16% 20 22 19 0 15% 2013 2014 2016 2015 Note: Numbers presented as comparable EBITA and EBITA margin 28
In Norway solid profitability with sliding sales, in Denmark profitability improvement Sales, EBITA & EBITA margin mEUR 100 15% 91 83 Norway: 80 70 67 ER: #3 10% 60 7,7% MS: #4 7,3% 7,7% 40 5,4% 5% 20 7 5 5 4 0 0% 100 15% 12,6% 80 10% Denmark 6,6% 60 ER: #5 32 40 5% 30 29 28 MS: #1 20 0,1% 4 2 0% 0 0,3 -1 -4,0% -20 -5% 2013 2014 2016 2015 Note: Numbers presented as comparable EBITA and EBITA margin 29
Central Europe turned profitable, while stable development in Eastern Europe Sales, EBITA & EBITA margin mEUR 100 20% 79 78 77 75 80 15% Central 60 10% Europe 40 5% 5,0% DE: #4 20 0% AU: #2 -1,4% 4 -3,2% 0 -5% -1 -7,7% -2 -6 -20 -10% 100 20% Eastern Europe 15,5% 80 15% #2 in Baltics, and 12,3% 12,3% one of the leading 12,2% 60 rental companies 53 50 50 51 10% in Poland, Czech Republic and 40 Slovakia 5% 20 8 6 6 6 0 0% 2013 2014 2016 2015 Note: Numbers presented as comparable EBITA and EBITA margin 30
Financial performance by business divisions Sales, EBITA & EBITA margin mEUR 700 35% 595 578 568 560 600 30% 500 25% Equipment 400 20% Rental 300 15% 15% 14% 12% 9% 200 10% 90 83 66 100 53 5% 0 0% 700 35% 600 30% 32% 30% 29% 26% 500 25% Modular 400 20% Space 300 15% 200 10% 118 100 93 81 100 5% 30 31 26 27 0 0% 2013 2014 2015 2016 Note: Numbers presented as comparable EBITA and EBITA margin 31
Financial targets from previous strategy period achieved Profit Profitability Gearing Sales Return on equity distribution EBITA-% > 15 % of Profit distribution Gearing maximum Sales growth faster ROE > 12 % over a sales over a policy: stability, with 100 % than the market business cycle business cycle appr. 40 % of EPS Target Level Target Level CAGRs 13-16 Target Level 14,9 % 15,6 % 1,54 3,1 % 13,0 % 84,7 % 2,9 % 12,2 % 10,9 % 11,2 % 75,1 % 74,5 % 72,9 % 1,13 8,3 % 8,3 % 1,01 0,91 Target 0,75 0,65 0,60 Level 0,55 13 14 15 16 13 14 15 16 13 14 15 16 13 14 15 16 Rental Cramo market* comparable EPS DPS sales growth Note: EBITA margin and ROE presented before items affecting comparability. * ERA market report 2015-2016 with constant 2012 FX rates in markets in question. 32
Agenda 1 Financial performance 2013-2016 2 New segment structure and market outlook 3 Financial targets 2017-2020 33
New segment structure and financials 2016 ER Finland and ER Scandinavia ER Central Europe Modular Space Eastern Europe Net sales (mEUR) Net sales (mEUR) Net sales (mEUR) Net sales (mEUR) 79 118 379 139 EBITA (margin-%) EBITA (margin-%) EBITA (margin-%) EBITA (margin-%) 22 (16%) 4 (5%) 31 (26%) 65 (17%) ROCE % ROCE % ROCE % ROCE % 11% 17% 12% 4% FORTRENT Numbers presented as comparable EBITA, EBITA margin and comparable ROCE % 34
Sales disclosed from largest countries by business division 2016 sales (mEUR) 299 ER SWEDEN SWEDEN 58 MS SWEDEN 98 ER FINLAND FINLAND 31 MS FINLAND 62 ER GERMANY GERMANY 9 MS GERMANY 60 ER NORWAY NORWAY 7 MS NORWAY 35
Economical indicators and market outlook ER Finland and ER Scandinavia ER Central Europe Modular Space Eastern Europe Rental Rental Rental Market position market market 2.9 0.6 #3-5 4.5 Market #1 Nordics (BEUR) (BEUR) (BEUR) Construction Construction Construction Urbanisation rate in EU * (BEUR) 110 90 (BEUR) 370 1990 2014 2050E market market market (BEUR) 70% 73% 82% Rental penetration (%) Rental penetration (%) Rental penetration (%) Share of sales from public sector >60% 2.6 0.7 1.2 GAGR 14-16 5,3 % 8,0 % 4,8 % 4,4 % 6,9 % 3,7 % 3,6 % 3,1 % 2,7 % 2,5 % 2,5 % 2,5 % 2,3 % 2,2 % 2,0 % 2,1 % 1,7 % 1,6 % 0,6 % 1,2 % Organic rental Organic rental orderbook growth sales growth 2016E 2017F 2018F 2016E 2017F 2018F 2016E 2017F 2018F Construction market growth (%), * ) World urbanisation prospects 2014, United Nations Euroconstruct Dec 2016 Rental market growth (%), ERA June 2016 36
Agenda 1 Financial performance 2013-2016 Segment structure and market outlook 2 3 Financial targets 2017-2020 37
More out of engine Equipment Rental Modular Space Enable people to Enable people to Perform Perform Capturing operational Secure resources Innovation excellence Capture potential in Simplifying customer Germany offerings Shaping the future People Shaping the future perfor- mance Fleet efficiency 38 38
Specific financial targets for two business divisions to better drive growth & returns STRATEGY SHAPE & SHARE 2013-2016 2017-20 Sales growth faster Different sales targets Sales Two individual business models than the market for ER and MS EBITA-% > 15 % of Individual ROCE sales over a targets for ER and MS business cycle Profitability ROCE better target measure for capital intensive businesses ROE > 12 % over a GROUP ROE target business cycle Debt Leverage strong balance sheet, net Gearing maximum NET DEBT / EBITDA leverage debt / EBITDA better measures the 100 % debt paying capacity Profit Stability, with appr. 40 Pay-out ratio distribution % of EPS 39
Financial targets for Cramo Group 2017-2020 Equipment Rental Modular Space Organic sales growth Double digit organic rental sales > market growth ROCE > 12.5% ROCE > 14.5% GROUP Net Debt / EBITDA < 3x ROE > 15% Dividend payout ratio ~40% * Financial targets: on average during 2017- 2020 * ROCE = EBIT / capital employed (average) 40
ROCE targets to drive efficient capital allocation to capture return and growth potential Equipment Rental Modular Space 14,5 % 13,6 % 14,0 % 12,5 % 12,7 % 12,4 % 11,1 % 9,1 % 9,2 % 7,3 % 6,5 % 2013 2014 2015 2016 2017-20 2013 2014 2015 2016 2017-20 MS ROCE Target Avg. 2013-16 ER ROCE Target Avg. 2013-16 41
Return on equity target increased to 15 % 15,0 % 14,9 % • ROE target increased by 300 basis points from previous target 12,0 % • Target increased based on higher targeted ROCE 10,9 % by two business divisions ER / MS 8,3 % 8,3 % 2013 2014 2015 2016 2017-20 Comparable ROE Target 2017-20 Target 2013-16 42
Strong balance sheet enables to grow when returns available NET DEBT / EBITDA Capacity to grow • Debt capacity for growth and M&A when returns 3,00 are available • Financial headroom > EUR 250m 2,30 Strategic fit 2,10 1,98 1,77 • Complementing services, capabilities, products and know-how • Entry to new attractive markets • Integration and cultural assessment Valuation and returns • Fulfilling financial targets i.e. return on capital employed 2013 2014 2015 2016 2017-20 Net debt / EBITDA Group • Shareholder value creative Net debt / EBITDA Target 43
Debt maturity structure and available facilities 650 Liquidity position 550 • Undrawn committed credit facilities EUR 206.1m 450 • EUR 250m revolving credit facility EUR million 350 Current debt financing arrangements 250 • EUR 150m senior bond 150 maturing in February 2018 • EUR 375 unsecured syndicated 50 facilities maturing in January 2020 and 2021, consisting of EUR 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021 12/2022 125m term loan and EUR 250m -50 revolving credit facility Bond 2022 Bond 2018 • EUR 200m commercial paper Syndicated Term Loan & RCF Commercial Papers program Other Debt Undrawn Committed Facilities 44
Flexibility in cash flows Investment cash flow largely subject to Cramo’s discretion 200 175 172 160 146 139 138 100 121 118 104 65 62 68 50 36 77 EUR million 27 8 7 0 -6 -41 -11 -37 -55 -84 -96 -110 -96 -100 -125 -139 -165 -175 -194 -217 -200 -300 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cash flow from operations Cash flow from investments Free cash flow Targeted higher returns will generate higher operative and free cash flow, however leaving room for growth investments when returns are available 45 45
Summary: Group financial targets – Vision 2020 Growth Grow organically supported by acquisitions Optimise Optimise capital allocation to generate higher returns and capture growth potential in chosen markets MS + ER Align Align operations within two individual business divisions to create operational excellence and realise group synergies Perform to achieve higher returns that satisfies stakeholders while Shaping the whole industry with Sharing Economy 46
Conclusion • Growth and performance improvement targeted for 2017-2020 • Financial targets set separately for two business divisions • More focus on capital efficiency • New reporting segments to reflect strategy execution 47
Modular Space Petri Moksén SVP, Modular Space 48
Overview of Modular Space #1 4 Central Europe Nordic market Solutions leader Driving Full Complete customer package life-cycle advantages 49
How it works Analysis & Assembly Maintenance & Disassembly design service & removal 50
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To whom Schools Offices Accommodation Daycare 52
Services in addition to the rental offering During delivery Customisation of the units Transport to project site Assembly of the units Other services During return During rental Disassembly of the units period Transport off-site Reset of customisation of Maintenance the units Other services 53
Number of modules returned & delivered • Units delivered – 2016: 5572 – 2015: 3530 • Units returned – 2016: 3938 – 2015: 2428 54
The Cramo Modular space concept Flexible solutions for wide array of temporary space needs Cramo Adapteo Temporary space needs Cramo rebranded its high quality modular space operations as Cramo Adapteo Schools Daycare in early 2014 Adapteo’s main customer group is the public sector. Industrial companies and large projects also important Office space Accommodation Initial need often for 2-3 years, but contracts typically Temporary need extended up to 5 years Competitive solutions especially for site-specific space need Site-specific (e.g. schools) 55 55
Modular space provides stability and visibility Flexible solutions for a wide array of temporary space needs Cramo Modular Space Temporary space needs Share of group 2016 26% 21% Schools & Steady cash flow with a 16% significant contribution to Daycare group profitability Offices Sales EBITDA EBITA Key focus segment in 32 investments and an % important growth area for the group Accommodation Capital employed Highlights The fact that the main customer group is the public sector provides diversification benefits 56 56
Cramo Story and Adapteo Proofs of Promise Always A perfect responsive delivery Uptime is key 57
Highlights of 2016 • Sales growth + 18,6 % • Strengthened position in Germany • Product and solution development • New innovative solutions 58
Slush event, Helsinki, Finland 2016 59
Bauma 2016 in Munich, Germany 60
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Organisational and operational model • Best-in-Class, business excellence model built- in to the organisation and to the way of working • Fully operating cross-border model • Target improvement – Price management and price increases – Cost control – Efficiency in all operations – Securing maximised profit • Decentralised organisation and operational responsibility • Organisational model supporting our expansion in current countries as well as to new countries 62
Growth drivers – constant demand for new space Market and customer growth drivers Business model, operational model drivers Faster Shorter Increased Increasing speed of urbanisation lifecycles flexibility delivery Improved and Rapid Increased Matching transparent changes in sustainability cost capital quality awareness dynamics efficiency 63
Actions to pursue growth opportunities ORGANIC + ACQUISITIVE GROWTH • Utilising brand • Leveraging the large and versatile fleet • Technical expertise • Differentiation opportunities • Best-in-Class • Proactive sales work • Cost competitive, flexible and scalable • Synergies from Cramo Group • Energy efficient - new fleet • Consolidation opportunities in selected markets 64
Strategy focus points Shaping People Resources Germany the future 65
Conclusion • Strong sales growth • Capturing potential in Germany • New strategy focus areas about people, resources, Germany and shaping the future 66
Enable people to perform Petra Schedin Stergel SVP Human Resources 67
“Always treat your employees exactly as you want them to treat your best customers.” – Stephen R. Covey 68
People Vision 2020 – a part of Shape & Share • We recruit • We develop • We learn and share • We are role models 69
We live in a changing world … Shift in global economic power Demographic and social change Resource scarcity Technological break-throughs 70
…with a changing talent market Distinct Leaders Differentiate Relationships Collaborate 71
Our People-work is clearly linked to the overall business strategy, vision and goals. Growth Building a new footprint in chosen markets Targeting organic growth Evaluating potential acquisitions target companies in new markets Optimise Shaping the business structure and model Enhancing the performance culture Creating a digital concept • Enhancing the pe Align Implementing common processes and tools Living the Cramo story 72
Develop our People Business Vision How What People strategy Business strategy Our People-work is clearly linked to the overall business Employer Branding Marketing strategy, vision and goals. Sales Recruitment Product - Employee development Engagement 73
What makes us great: professional experience CUSTOMER JOURNEY EMPLOYEE JOURNEY Determines whether potential and Determines whether potential and existing existing customers will buy and employees will choose us, feel the recommend our products and services engagement and recommend us as an employer 74
Focus area: Enable people to perform Develop Root People to Performance Perform Culture 1 2 Drive Roll-out Cramo Story Cramo Care 3 4 75
Next step: create a People strategy PURPOSE. Describe … • … and explain expected behaviors and Cramos values • … which activities we will prioritise in order to attract and retain the right employees • … what and how to communicate regarding our employee value proposition CONTENT . Define and describe … • … our common people processes. • … our common people KPI’s. • … managers responsibilities visavi their employees. • … HR responsibilities. 76
Employee lifecycle: the people business Exit Attract Define common processes within Employee every area to make sure we follow lifecycle Develop & Recruit our strategy and deliver quality. Motivate Introduce Customer 77
Cramo Story • Differentiate from competitors • Strengthen brand • Passion to meet expectations • Contribute to customers’ success 78
Cramo Story – next step Define leadership Create a clear Link Strategy Be a role model People perspective Cramo Story Values and Own Cramo Story from How: Behaviors the top My great day at work Employee lifecycle: Your performance: See the Systems and tools How should I create individuals and a great day at work build the team Consequence spirit Package all HR-tools One Cramo also on Happy people and communicate the inside Happy customers great internal stories 79
Cramo Care – our strategic approach on sustainability COMMITMENT AND PRINCIPLES Code of Conduct and Business Ethics Supplier Code of Conduct UN Global Compact ISO CUSTOMER CARE EMPLOYEE CARE • • Customer Diversity and equality • Safety satisfaction • Recruitment and • Safe solutions competence Sustainability • Energy-efficient development • Growth solutions • Dialogue, • Risk • Anti-corruption empowerment and management and high business satisfaction • Return on ethics capital SOCIAL CARE ENVIRONMENTAL CARE • • Energy efficiency Local engagement • Compliance with laws, • Resource efficiency regulations • Waste management • Waste management • Low emissions • Low emissions 80
Conclusion • We will enable people to perform • We will root performance culture • We will drive Cramo Story • We will roll-out Cramo Care 81
Fleet optimisation and the digital journey Martin Holmgren SVP Fleet Management 82
Introduction to Fleet Management Mission: Objective: Optimise focus on assets and ROCE drive digitalisation Fleet size: New digital 230,000 strategy 83
Key success factors • Harmonised and digital fleet processes • Strict control of investment releases • Fleet efficiency focus and common fleet KPI’s • Professional purchasing organisation • Internet of Things innovations 84
Next level of fleet optimisation to meet new financial targets C- Cramo Field Buy Continuous TMS development 85
Digitalisation trends and drivers IoT Sustainability Digital New development governance for a sustainable model business 86
Cramo’s digital development path -2013 2014-2016 2017-2020 2020- Performance management Harmonised The future IoT and new and processes and business of IoT in digitalisation of It-systems solutions rental processes 87
IoT value chain development and obstacles Data exchange OEM systems Propriety system standards Cramo - Generic connection box and user interface Associations develops towards standardisation (ERA, VDBUM, ISO, OEM ’s have invested Rental companies and AEMP/AEM) OEM takes in their own application multiple fleet owners part in this development software systems, have invested in generic mostly used by small systems disconnected to fleet owners and the OEM systems themselves A major success factor is further standardisation of data collection and data communication to connect OEM’s data sources with rental companies application systems 88
We have track units on 10,000 machines TODAY FUTURE NEEDS • • Identifying where the equipment is in Access control, meaning if you don’t have the right training, you case of theft can’t use the equipment. • Engine hours are updated with • information of running hours to trigger Reception of machine failure codes preventive service orders and alert us so we can use them for our needs. that it is time for service. • Automated return control process • Invoice customers solutions • Included in equipment insurance model 89
Value proposition Machine health Customer Machine Control Firmware Run time data Sell data Positioning Remote error 90
Conclusion • Well positioned to capture the potential in digital • Next level of fleet management will support financial target • Moved towards fully connected fleet • We are shaping the way of doing business 91
Cramo Customer Centric Program Jonas Pärssinen Director Business Development 92
New types of companies are taking over 93
Before Now 94
Evolution of Value Creation 1990 1900 1960 2010 Age of the Customer Age of Manufacturing Age of Distribution Age of Information Empowered buyers Mass manufacturing Global connections Internet connects makes industrial and transportation information, supply with full mobile access demand a powerhouses systems make chains and value. new level of successful distribution key • customer obsession. Google Search • • • Ford Grocery Chains Amazon • • • General Electric (Wal-mart, Comcast Uber • • AirBnB Boeing Target) • • Sunfleet Toyota • • IKEA Google Now • UPS We are in the Age of the Customer 95
Rethink how we create value for our customers 96
97
Cramo Customer Centric Initiatives Arenas of Development & Transformation Production Digital Business 98
Cramo Customer Centric Initiatives Digital Business Production Home pages and social Depot roles, market Efficient Supply Chain & media presence presence and Fleet optimisation Customer Service Digital platform with Enhanced network Customer Offerings, tools and near endless Pricing & smart possibilities to serve and structure our Customers Segmentation 99
Conclusion • We rethink what creates value • Cramo will enter the age of the customer • We focus on clear initiatives: Digital, Business, Production 100
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