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Gunnebo Group Q4, 20197 February 2020 Stefan Syrén, President and CEO Susanne Larsson, Group CFO
• Summary Q4 and YTD 2019
• Business Unit Performance
• Financial Update
• Focus 2020
Agenda 7 February 2020
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Summary, Q4 and YTD 2019
• Change journey towards a well performing Gunnebo
• Implementation of the global Business Unit structure
• Cost-efficiency programme launched in July and implemented according to plan
• Acquisition and integration of Cominfo
• Rights issue completed in Q3
• Strategic Overview of Integrated Security
• New President & CEO in November and a new, leaner Group Executive Team
2019: An Eventful Year For Gunnebo
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• Group order intake declined 8% in Q4 (-13% in constant currencies)• We move into 2020 with a slightly better order book than in 2019
• General slowdown in the marketplace where slower demand is recognised in parts of the business
• Sales up 6% (3% in constant currencies)
• EBITA amounted on same level as last year, MSEK 109 (110) and the EBITA margin was 7.2% (7.7)
• The Q4 free cash flow MSEK 203 (133) was strong and derived from high focus on working capital
• Net Debt/EBITDA-ratio of 3.0 (3.5), an improvement of 0.2 points compared to Q3
Summary of the Quarter – Q4, 2019
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• Group order intake increased 5% in 2019 (2% in constant currencies)
• Sales up 6% in 2019 (3% in constant currencies)
• EBITA amounted to MSEK 321 (334) and the EBITA margin was 5.9% (6.5)• Major results effect due to dual structures while rolling out the new Business Unit organisation
• Cash Management facing business contraction
• The free cash flow for the year was MSEK 197 (124)
• Net Debt/EBITDA-ratio of 3.0 (3.5), an improvement derived from both the right issue and our cash flow focus
Summary FY 2019
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• Cost-efficiency programme launched in July, 2019 to address areas of efficiency improvements to accelerate the margins development
• Cost savings of MSEK 100, with full effect from half year 2020 reconfirmed
• Total of non-recurring charges of MSEK 60 where the majority (MSEK 53) has been taken in 2019, as planned
• A mix of:• Productivity improvements in Europe, mainly within Business Units Safe Storage
and Integrated Security
• Dismantling of regional management structures as well as management changes to the Group Executive Team
• Charges connected to the cost-efficiency programme are mainly people-related
Update on the Cost-Efficiency Programme
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• After the introduction of the product-focused organisation, Gunnebo is ready to deliver the next phase of its development
• With this in mind, and considering that the company completed a new share issue of some MSEK 360 in 2019, of which MSEK 250 has already been used for acquisitions, the Board estimates that a continued strengthening of the Group’s balance sheet will increase the company’s scope for action in the coming year
• The Board therefore proposes a dividend of SEK 0.00 (0.50) per share for the financial year 2019
• This divergence from the long-term dividend policy should be regarded as temporary
Proposed Dividend 2019
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Business Unit Performance
Business Unit Entrance Control – Q4 2019/YTD 2019
• Order intake growth in Q4 of 6% in constant currencies. For FY, order intake increased 29% in constant currencies
• Sales in Q4 were on all-time high levels of MSEK 422 giving a 46% growth in constant currencies. FY, sales where up 21%, total MSEK 1,307 (1,048)
• Growth came from the Cominfo acquisition as well as project business to among others airport, metro and bus rapid transport (BRT)
• The Unit reported an all-time-high EBITA in Q4 of MSEK 76 (52), giving an EBITA margin of 18.0% (18.6). For the full year, EBITA amounted to MSEK 204 (176), giving an EBITA margin of 15.6% (16.8).
• Entrance Control has been able to both grow and invest during the year
MSEK
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2019 2018 2019 2018
Q4 Q4 YTD YTD
Order intake, MSEK 253 231 1,377 1,041
Reported growth, % 10 -5 32 4Order intake, growth, % 6 -10 29 0
Net sales, MSEK 422 280 1,307 1,048
Reported growth, % 51 8 25 17Sales growth, % 46 3 21 13
EBITA, MSEK 76 52 204 176
EBITA margin, % 18.0 18.6 15.6 16.8Items affecting comparability (IAC), MSEK -4 -2 -7 -5
Operating capital employed, MSEK 354 181 354 181
Entrance Control
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Business Unit Safe Storage – Q4 2019/YTD 2019
• Order intake declined by 18% in constant currencies during Q4. Order intake increased FY of 2% in constant currencies
• Sales had a slight decline in Q4 of 2% in constant currencies and increased FY of 6% in constant currencies
• Phasing of sales of ATM safes in Q4
• General slowdown in the market, mainly in Europe
• In Q4, EBITA amounted to MSEK 42 (44), resulting in a margin of 8.1% (8.7). For the full year, EBITA amounted to MSEK 144 (151), resulting in a margin of 7.1% (8.3)
• The lower margin is explained by a too high cost level in Europe and costs for setting up the new Business Unit global structure. This is addressed by the cost-efficiency programme launched in July 2019.
• Safe Storage have increased investments in innovation during the year
MSEK
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2019 2018 2019 2018
Q4 Q4 YTD YTD
Order intake, MSEK 444 511 2,020 1,889
Reported growth, % -13 19 7 10Order intake, growth, % -18 20 2 9
Net sales, MSEK 521 506 2,019 1,826
Reported growth, % 3 13 11 7Sales growth, % -2 8 6 4
EBITA, MSEK 42 44 144 151
EBITA margin, % 8.1 8.7 7.1 8.3Items affecting comparability (IAC), MSEK -10 -17 -17 -24
Operating capital employed, MSEK 428 491 428 491
Safe Storage
Business Unit Cash Management – Q4 2019/YTD 2019
• Order intake was weak in Q4; down 27% in constant currencies and FY down 15% in constant currencies
• Overall soft market demand
• Contract based business
• Strong Q4, 2018
• Net sales declined 10% in Q4 in constant currencies and 9% FY 2019
• We are addressing the cost structure in the Business Unit and are active in the market with new launches, broadening of the customer base to contribute to the sales progress ahead
• In Q4, EBITA amounted to MSEK 20 (42), resulting in a margin of 7.3% (14.2). For the full year, EBITA amounted to MSEK 68 (122), resulting in a margin of 6.6% (11.2)
• The lower margin is explained by:
• Drop in sales volume in all regions
• A mix effect with transition into distributor channels (CITs)
• Continued investments in growing customer segments
MSEK
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2019 2018 2019 2018
Q4 Q4 YTD YTD
Order intake, MSEK 203 271 1,051 1,194
Reported growth, % -25 32 -12 20Order intake, growth, % -27 28 -15 17
Net sales, MSEK 275 296 1,034 1,090
Reported growth, % -7 17 -5 6Sales growth, % -10 12 -9 2
EBITA, MSEK 20 42 68 122
EBITA margin, % 7.3 14.2 6.6 11.2Items affecting comparability (IAC), MSEK -6 -2 -8 -6
Operating capital employed, MSEK 237 258 237 258
Cash Management
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Entrance Control
• Office Building Segment: Very good development in USA and India in both private and government sector.
• Airport Segment: Large airport projects secured in Japan, China and USA, deployed strategic proof of concepts, opening the door to new countries and opportunitiesin Latin America.
• Leisure and Stadium Segment: secured a large project in one of the main theme parks in Europe.Won the implementation of gates in the VIP area of one English football club stadia.
• Public Transport Segment: won various projects in LATAM, mainly in Metro and BRT.
Commercial Highlights in the Quarter
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Safe Storage
• Germany: Roll-out of Gunnebo’s electronic lock KelNet to Stadtsparkasse München continued also in the fourth quarter. KelNet was launched under 2019 and allows central real-time authorisation and administrative control.
• China: Establishment of conceptual safe shops across China extends the footprint for sales to B2B as well as B2C in the country.
• USA: Gunnebo is a trusted partner to JP Morgan Chase Bank, providing electronic locks and safes as well as maintenance contract to re-establishments of bank branches across the country.
Cash Management
• Netherlands: Good order intake from large white label ATM network provider, who continue the roll-out of cash management equipment to its cash service centres across the country.
• South Europe: Roll-out of SafePay to several bigger retail chains gives good development of order intake in France and Spain.
• Australia: Major order received from multinational retailer to upgrade their cash management devices, including a software-as-a-service deal with an annual subscription fee.
Business Unit Integrated Security – Q4 2019/YTD 2019
• Integrated Security had a weak year in 2019; order intake of -2% in Q4 and FY -7% in constant currencies
• Net sales had a weak development in the quarter, -15% in constant currencies and -6% for FY 2019
• In the quarter, EBITA amounted to MSEK 5 (7), resulting in a margin of 1.7% (2.1). For the full year, EBITA amounted to MSEK 17 (1), resulting in a margin of 1.5% (0.1).
• As a consequence of the continuation of the strategic review, we recorded IAC’s in Q4 of MSEK -27 and impairments of MSEK -29
• The strategic review within the Business Unit continues
MSEK
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2019 2018 2019 2018
Q4 Q4 YTD YTD
Order intake, MSEK 243 234 1,037 1,094
Reported growth, % 4 -36 -5 -13Order intake, growth, % -2 -44 -7 -16
Net sales, MSEK 294 338 1,099 1,164
Reported growth, % -13 0 -6 -5Sales growth, % -15 1 -6 -5
EBITA, MSEK 5 7 17 1
EBITA margin, % 1.7 2.1 1.5 0.1Items affecting comparability (IAC), MSEK -27 -7 -25 -18
Operating capital employed, MSEK 197 268 197 268
Integrated Security
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• Approximately 20% will move to Safe Storage and Entrance Control from 2020 – synergies in Customer and Products
• Name change to Other Business, which better represents the diversified nature of the portfolio companies
• The new reporting structure and restated historic financials will be presented in Q1 2020
• The remaining assets within the “new” Other Business will remain under strategic review
Integrated Security: Agenda 2020
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Cash Management
Entrance Control
Safe Storage 37%of Sales
7.1%EBITA
Integrated Security
19%of Sales
6.6%EBITA
25%of Sales
15.6%EBITA
19%of Sales
1.5%EBITA
6%Sales Growth*
- 9%Sales Growth*
21%Sales Growth*
-6%Sales Growth*
Overview of Business Unit Performance FY 2019
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*Sales growth in constant currencies
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Financial update
• Order intake in Q4 amounted to MSEK 1,143 (1,247), order growth was -8% year-on-year (-13% in constant currencies)
• Order intake FY amounted to MSEK 5,485 (5,218), order growth was 5% year-on-year (2% in constant currencies)
• Net sales in Q4 amounted to MSEK 1,512 (1,420), where sales increased 6% compared to Q4 2018 (3% in constant currencies)
• Net sales FY amounted to MSEK 5,459 (5,128), where sales increased 6% compared to LY (3% in constant currencies)
Summary of the Quarter
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Order OrderReported intake Reported intake
2019 2018 growth growth 2019 2018 growth growthOrder intake, MSEK Q4 Q4 % % YTD YTD % %
Entrance Control 253 231 10 6 1,377 1,041 32 29Safe Storage 444 511 -13 -18 2,020 1,889 7 2Cash Management 203 271 -25 -27 1,051 1,194 -12 -15Integrated Security 243 234 4 -2 1,037 1,094 -5 -7
Total 1,143 1,247 -8 -13 5,485 5,218 5 2
Reported Sales Reported Sales2019 2018 growth growth 2019 2018 growth growth
Net sales, MSEK Q4 Q4 % % YTD YTD % %
Entrance Control 422 280 51 46 1,307 1,048 25 21Safe Storage 521 506 3 -2 2,019 1,826 11 6Cash Management 275 296 -7 -10 1,034 1,090 -5 -9Integrated Security 294 338 -13 -15 1,099 1,164 -6 -6Total 1,512 1,420 6 3 5,459 5,128 6 3
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• EBITA for Q4 amounted to MSEK 109 (110) and the EBITA margin was 7.2% (7.7)
• EBITA FY amounted to MSEK 321 (334) and the EBITA margin was 5.9% (6.5)
• EBIT amounted to MSEK 9 (67) for the quarter and MSEK 192 (265) for the full year
• Included in EBIT were IAC items totallingMSEK -68 (-30) in Q4 and MSEK -91 (-29) for the FY
• Q4 included a one time impairment of MSEK -29 (-10) and FY MSEK -29 (-21), all linked to Integrated Security
Summary of the Quarter
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2019 Margin 2018 Margin 2019 Margin 2018 Margin
EBITA, MSEK Q4 % Q4 % YTD % YTD %
Entrance Control 76 18.0 52 18.6 204 15.6 176 16.8Safe Storage 42 8.1 44 8.7 144 7.1 151 8.3Cash Management 20 7.3 42 14.2 68 6.6 122 11.2Integrated Security 5 1.7 7 2.1 17 1.5 1 0.1Group Functions -34 - -35 - -112 - -116 2) -Total 109 7.2 110 7.7 321 5.9 334 2) 6.5
2019 2018 2019 2018
Other financial information, MSEK Q4 Q4 YTD YTD
Amortisation and impairment from acquisition related intangibles -35 -13 -47 -40
Items affecting comparability (IAC) -68 -30 -91 -29 2)
IFRS 16 leasing effect 3 - 9 -EBIT 9 67 192 265
EBIT and EBITA by Quarter, MSEK
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EBITA BRIDGE Q4EBITA 2018 110
Sales growth 15
Structure 18
Currency 6Other -40
EBITA 2019 109
EBITA BRIDGE YTDEBITA 2018 334
Sales growth 61
Structure 48
Currency 20Other -142
EBITA 2019 321
EBITA Bridge, MSEK
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• Sales growth contributed to EBITA by MSEK 15 for the quarter and MSEK 61 YTD
• Savings from former and ongoing cost efficiency were MSEK 18 for the quarter and MSEK 48 YTD
• Currency explained MSEK 6 for the quarter and MSEK 20 YTD (where translation effects was MSEK 19 and transaction effects was MSEK 1 YTD)
• Other effects of MSEK -40 for the quarter and MSEK -142 YTD came mainly from the net of a positive product mix offset by overhead cost changes and loss from associated companies
Summary of the Quarter
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• Financial income and expense, net, was MSEK -18 (-18) in the quarter. While being the same amount the IFRS16 lease effect was MSEK -4 and the rest was mainly a decrease in interest expenses in Q4.
• For the full year the financial net totalledMSEK -76 (-53). Excluding the IFRS16 impact of MSEK -14, the increase was mainly explained by higher interest expenses and financing costs.
• Income taxes in Q4 was MSEK -16 (-27) and MSEK -71 (-92) for the full year. The effective tax rate of 61% (43%) was negatively impacted by impairment, losses not recognized and a lost tax case.
• Net profit for the quarter was MSEK -25 (22) and MSEK 45 (120) for FY
20191) 2018 20191) 2018MSEK Q4 Q4 YTD YTD
Net sales 1,512 1,420 5,459 5,128
Cost of goods sold -1,138 -1,018 -4,064 -3,686
Gross profit 374 402 1,395 1,442
Selling and administrative expenses -335 -322 -1,180 -1,188
Other operating income and expenses, net -30 -13 -23 11
Operating profit (EBIT) 9 67 192 265
Financial income and expenses, net -18 -18 -76 -53
Profit before taxes -9 49 116 212
Income taxes -16 -27 -71 -92
Net profit for the period from continuing operations -25 22 45 120
Net loss for the period from discontinued operations - -109 - -803
Net profit/loss for the period -25 -87 45 -683
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Free Cash Flow, MSEK Continuing and Discontinued Operations
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MSEK2019 Q4
2018 Q4
2019 YTD
2018 YTD
Operating profit 9 -72 192 -410Depreciation 13 13 51 61Amortisation and impairment, acquisition related intangibles 35 13 47 40Impairments and write-downs, discontinued operations 0 113 0 526Amortisation - other intangibles 7 8 32 34Depreciation - right of use assets 28 0 111 0Other -71 -1 -211 -96Change in working capital 238 88 162 87Operating cash flow 259 162 384 242Investing cash flow excluding acquisitions and divestments -29 -29 -81 -118Adjustment for IFRS 16 lease liability payments in financing cash flow -27 0 -106 0Free cash flow 203 133 197 124
Free Cash Flow by Quarter and Rolling Twelve Months, MSEK Continuing and Discontinued Operations
Free cash flow R12M
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Net Debt/EBITDA
MSEK
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Focus 2020
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Focus 2020 for a Stronger and More Profitable Company
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• Continue to finetune the Business Unit approach and reap benefits from the new structure
• Handle the higher degree of uncertainty
• Staying close to customers and market
• A clear focus on solving customer needs with innovative solutions
• Optimising business portfolio – strategic review of Other Business
• M&A as an opportunity to improve market positions
• High focus on cost
• Employees and operational excellence
• Financial targets per Business Unit
• 23 March, 2020 Annual Report 2019
(+ 2 weeks printed version)
• 21 April, 2020 Q1 Report & AGM 2020
• 17 July, 2020 Q2 Report 2020
• 4 November, 2020 Q3 Report 2020
Financial Calendar 2020
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