Gunnebo Group

Earnings Call Q1, 2020 Stefan Syrén, President & CEO and Åke Bengtsson, CFO

Tuesday 21 April 2020

Gunnebo Group

I. Overall Development Q1, 2020

and Market Update

II. Financial Summary

III. Business Unit Performance Q1, 2020

IV. Outlook and Summary

V. Q&A

Earnings Call Q1, 2020 – Agenda Tuesday 21 April 2020

© Gunnebo Group.2 21 April 2020

“We are still facing great uncertainty, Covid-19 and its long-term effects on Gunnebo

are still difficult to assess. Our direction remains unchanged and the planned change

processes for a stronger Gunnebo are ongoing. At the same time, we see business

opportunities in changing behavioural patterns in society, which may increase the

demand for products and services in people flow management and safe storage.”


People & well-being Financial stabilityCustomers &

Supply chain

• Group order intake increased 4%, Order book increased 8% and sales increased 2%

• Sales and Order in line with January and February, corresponding period LY

• Significant slowdown in the marketplace where slower demand is recognised in all parts of the business

• Covid-19 effect more significant from March 2020 (sales estimated approx. MSEK 75, EBITA estimated approx. MSEK 25)

• EBITA amounted to MSEK 25 (47) and the EBITA margin was 2.1% (3.9)

• The Free cash flow for the period was MSEK –54 (1)

Overall Development Q1, 2020: Summary of the Quarter


Order Intake Net Sales

• Two major airport projects and

large metro project in Asia

• Large vault order for European

National Bank

• Secure IT

• NRF 2020 in New York and

EuroShop 2020 in Düsseldorf,

launch of the Safe Deposit D6

• Opening of Centre of Excellence

in Dubai and Bangalore, India

Overall Development Q1, 2020: Order and Marketing Highlights


Market Update: Impact of the Covid-19 Pandemic on the Gunnebo Group


Measures have been taken in all parts of the business to mitigate the impact of the Covid-19 pandemic.

Market Outlook Impact on Performance

Impact on Financial PositionImpact on Delivery and Service

Capacity

Impact on Manufacturing Units Impact on Inventories

Other Significant Consequences

Financial Summary: Q1 2020


MSEK2020

Jan-March

2019

Jan-MarchChange

Order intake 1,490 1,432 4%

Of which organic, % –1 8

Order Book 1,506 1,391 8%

Net sales 1,224 1,206 2%

Of which organic, % –4 0

EBITA 25 47 –22

EBITA margin, % 2.1 3.9

Adjusted EBIT 22 46 –24

Adjusted EBIT margin, % 1.8 3.8

EBIT 13 40 –27

Net profit for the period –5 7 –12

Return on operating capital employed, % 31.5 34.3

Return on capital employed, % 9.8 11.5

Earnings per share, SEK –0.05 0.09 –0.14

Operating cash flow –40 55 –95

Free cash flow –54 1 –55

Free cash flow per share, SEK –0.57 0.01 –0.58

Net debt 1,432 1,593 –162

Net debt/EBITDA, times 3.4 3.4 0.0

EBITA

Financial Summary: Working Capital and Free Cash Flow


Cash Flow, MSEK Q1, 2020 Q4, 2019 Q3, 2019 Q2, 2019 Q1, 2019

Operating Cash Flow –40 274 62 10 55

Free Cash Flow –54 203 25 –32 1

Free cash flow R12M

MSEK MSEK

Working Capital Free Cash Flow

Financial Summary: Net Debt/EBITDA


MSEK

MSEK Q1, 2020 Q4, 2019 Q1, 2019

Net debt incl. post-

employment benefits

1,804 1,761 1,978

Net debt 1432 1,350 1,593

Net debt incl. post-

employment benefits/

EBITDA, times

4.31) 3.91) 4.21)

Net debt/EBITDA, times 3.41) 3.01) 3.41)

1) The proforma rolling 12-month EBITDA has been calculated as an indicative figure for the quarters in 2019

due to the transition to IFRS 16 Leases as of 1 January 2019 and the acquisition of Cominfo in July 2019.

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

5,00

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

1 2 3 4 1 2 3 4 1

2018 2019 2020

Net debt incl. post-employment benefits (PEB)

Net debt

Net debt incl. PEB/EBITDA

Net debt/EBITDA

Business Unit Performance Q1, 2020: Entrance Control


27%Order intake Growth

39%Sales Growth

28%of Group Sales

9.8%EBITA

• Good order intake and Sales, although less than expected

due to Covid-19

• Business activity in China gradually come back in March

• Kunshan and Lavis temporary closed during Quarter

• Airport and Mass Transit, strategic wins

• Business opportunities for products with higher degree

of connectivity and peripherals

3%Order intake Growth

5%Sales Growth

43%of Group Sales

5.7%EBITA

Business Unit Performance Q1, 2020: Safe Storage


• A relatively good quarter, despite Covid-19 effects

• Halol temporary closed, but ATM production opened early April

• Go to market model through partners, delivers according to plan

• Important partner to bank customers in Europe (national bank)

• Strong sales in the US

• Cost measures continues

• Service business in line with LY, considered critical for society

although Covid-19 effect on installations and product sales

• Launched new Safe Deposit D6 at EuroShop

• Delays in marketing/launch of new products

• Good development for Drive-up Systems in the US

• Focus on cost measures to improve profitability

–7%Order intake Growth

–16%Sales Growth

18%of Group Sales

1.2%EBITA

Business Unit Performance Q1, 2020: Cash Management


• Approximately 20% has moved to Safe Storage and Entrance Control (synergies in customer and

products)

• Extensive work with the strategic review of the Business Unit and addressing underperforming

businesses

Other Business Consists of a Diversified Mix of Portfolio Companies


Project based Integrator business

in Europe and Mexico under the

Gunnebo brand

• Electronic security solutions for

access control, intruder security

and video surveillance

• Gunnebo generally sells, installs

and services products purchased

via third-party suppliers

Electronic article surveillance (EAS)

and loss prevention encompassing

anti-theft systems for the retail in

Brazil and Europe

• Sales of in-house developed

products and third-party products

under the Gateway brand

• Loss prevention solutions including

CCTV and access control under

the Gunnebo brand

Fire projects and fire safety

in Indonesia and India under the

Gunnebo brand

• Integrated fire security systems

for larger sites

• Fire safety refers to sales of fire

hydrants, fire extinguishers,

protection panels and flexible

sprinkler piping (in India under the

Minimax brand)

Business Unit Performance Q1, 2020: Other Business


–5%Order intake Growth

–30%Sales Growth

11%of Group Sales

–14.0%EBITA

• Measures for underperforming businesses (delay 3-6 months)

• Covid-19 effect:

• Integrator business: primary installations in Italy and Spain

• Electronic article surveillance: retail customers in Europe

and Brazil

• Fire projects and fire safety: project based (Indonesia)

and installations (India)

Outlook and Summary: Secure Long-Term Financial Stability


• Measures have been taken in all parts of the business to

mitigate the impact of the Covid-19 pandemic

• Expected significant effect from Q2, 2020

• Three focus areas: people & well-being, financial stability and

customers & supply chain

• Overall objective is to maintain deliveries in order to minimize

the consequences for the company's customers

• Cost mitigation will be key action, together with cash flow

management

• Strategic review, Other Business continues, with delays

• Financial targets per Business Unit postponed until

H2, 2020

Gunnebo Group

Documents

Transcript of Gunnebo Group