gunnebo group
TRANSCRIPT
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.”
© Gunnebo Group.3 21 April 2020
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
© Gunnebo Group.4 21 April 2020
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
© Gunnebo Group.5 21 April 2020
Market Update: Impact of the Covid-19 Pandemic on the Gunnebo Group
© Gunnebo Group.6 21 April 2020
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
© Gunnebo Group.7 21 April 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
© Gunnebo Group.8 21 April 2020
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
© Gunnebo Group.9 21 April 2020
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
© Gunnebo Group.10 21 April 2020
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
© Gunnebo Group.11 21 April 2020
• 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
© Gunnebo Group.12 21 April 2020
• 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
© Gunnebo Group.13 21 April 2020
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
© Gunnebo Group.14 21 April 2020
–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
© Gunnebo Group.15 21 April 2020
• 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
Q&A