interim report, q2 - af consult · a leading engineering, design and advisory company 75% net sales...

JONAS GUSTAVSSON, CEOJUUSO PAJUNEN, CFO

JULY 12, 2019

Interim report, Q2APRIL – JUNE 2019

Agenda

— New appointments

— Overall performance

— Market and highlights

— Financials

— Divisional performance

— Strategy execution

— Summary

Juuso Pajunen appointed Executive Vice President and CFO

Juuso Pajunen was the CFO at Pöyry since 2016 and has held several similar positions within the company since 2004.

Juuso has a M.Sc. (Econ.) from the Helsinki School of Economics.

Marie Trogstam appointed Vice president and Head of Sustainability

Marie Trogstam has extensive experience from driving sustainability businesses in international companies, Telia Company and SAAB Defence

Marie will join ÅF Pöyry on Oct 1

Stable growth and profitability

+49.5%APR – JUN 2019

Net sales: SEK 5,393 million (3,608)

EBITA*: SEK 481 million (366)

EBITA-margin*: 8.9% (10.2)

+31.4%

— Stable performance

— Integration and cost synergies ahead of plan

— Overall good demand

— although slower demand in the automotive segment

— slow down in residential buildingimpacting architecture business

— weak development in infrastructurebusiness in Denmark

*Excl Items affecting comparability

JAN – JUN 2019

Net sales: SEK 9,782 million (7,023)

EBITA*: SEK 870 million (691)

EBITA-margin*: 8.9% (9.8)

+39.3%

+25.9%

Successful integration of Pöyry

Acquistion of Pöyry completed

Two successful rights issues

Integration ahead of plan

Annual run-rate cost synergies after Q2 SEK 99 million

Stable organic growth

Stable earnings

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A leading engineering, design and advisory company

75%Net Sales in the Nordic Region

18%Net Sales in Europe outside Nordics

50Country presence

16%Fixed price projects

50%Project delivery

34%Service delivery

21%

13%

10%

17%

6%

5%

14%

2%3%

3%6% Infrastructure

Real Estate

Automotive & Vehicle

Energy and Power

Manufacturing Industry

Life Science, Food & Pharma

Process Industry

Telecom and ICT

Defence

Management Consulting

Other

1) ÅF estimate of the combined company2) EUR/SEK: 10.3090 (ECB September 30, 2018)

ÅF PöyryNet sales

Sep 2018 LTM1,2

- AB Volvo

- BillerudKorsnäs

- Ericsson

- FMV

- North Negros Biopower

- Scania

- Trafikverket

- Vattenfall

- Verbund

- Volvo Cars

Strong customer base

ÅF Pöyry’s ten largest customers 2018

Market development

The demand for sustainable solutions continued to be good with disruptive trends as strong drivers.

The market for infrastructure continues to be favourable, and we can especially note a high demand for technical solutions in buildings.

Demand in the industry sector remained stable, with 5G, electrification and automation as drivers. However, demand in the automotive industry is being impacted by cost savings and reprioritisation of R&D programmes, despite the fact that the industry is facing extensive technical changes.

The process industries market remains strong, especially in Europe.

In the energy market we see continued demand for large-scale energy projects in Southeast Asia, and at the same time demand for renewable energy is on the rise.

There is also persistently high demand for advisory services due to major transformations within process industries and the energy sector.

Example of projects— New framework agreement for Statens fastighetsverk to assess possible

places for solar power on a number of properties.

— Project to produce an implementation study for a new tram line and city

bus in Gothenburg.

— Multidisciplinary counseling when the city of Geneva in Switzerland

updates and expands the largest treatment plant in the country.

— ÅF Pöyry and Siemens are strengthening the cooperation in relation to

virtual commissioning.

— New turnkey project for Arla Foods site in Hobro, Denmark.

— Kemi bioproduct mill pre-engineering project for Metsä Fibre’s, part of

Metsä Group

— Orders in the Swedish nuclear sector for decommissioning and waste

management services.

— Several orders in hydro power, including new assignments in Austria,

Laos, India, Malawi, Nigeria, Peru and Columbia.

Net sales: SEK 5.393 million (3.608)

Total growth: 49.5% (11.6)

Organic growth: 2.5% (2.8)

Adjusted/underlying organic growth: 3.2% (5.0)

Continued organic growth

Q2 2019

COMMENTS

- Net sales increased by 49.5% compared to the corresponding period in previous year

- Solid organic growth of 2.5% (2.8) in the quarter

- Stable demand in majority of markets

NET SALES, MSEK

Pöyry was consolidated in ÅF Pöyry as of 28 February 2019

Stable earnings

Q2 2019*

EBITA increased to SEK 481 million (366)

EBITA margin was 8.9% (10.2)

EBITA, MSEK

excl. items affecting comparability

COMMENTS

- Items affecting comparability totalled 76 MSEK and relate to integration costs

- Solid earnings in the quarter in key businesses like buildings, digital and process industries

- Earnings impacted by slower demand in automotive and residential building impacting architecture business

Pöyry was consolidated in ÅF Pöyry as of 28 February 2019.

*excl Items affecting comparability

The Combined Group

The numbers are presented as if the consolidation of ÅF Pöyry took place on 1 January 20181) Adjusted EBITA is according to the definition in ÅF’s annual report 2018, EBITAexcluding items affecting comparability.

COMMENTS

- Due to progress of integration, from Q3 the presentation will be only ÅF Pöyry and not split legacy entities

- Solid growth in former ÅF and continued improvement in former Pöyry

SEK M Comments

Net Debt as of Mar 31, 2019 7,144

Cash flow from operating activities -51Seasonality – bonuses, employee related expenses

CAPEX 61

Acquisitions and Contingent Considerations 191 Related to acquisitions before 2019

Dividend 560

Rights issue -2,757

Repayment of hybrid bond 5

Other 1

Net Debt as of June 30, 2019 5,154

Net Debt/EBITDA rolling 12 months 3.7 Net debt/EBITDA when Pöyry R12m included is 2.7

Cash flow and Net debt (excl. IFRS 16 – Leases)

CASH FLOW FROM OPERATIONS GENERATED SEK M 51 (182) IN Q2 2019

SEK M Comments

Net Debt as of Mar 31, 2019 9,824

Cash flow from operating activities -51

CAPEX 61

Acquisitions and Contingent Considerations 191

IFRS - Leases -106

Dividend 560

Rights issue -2,757

Repayment of hybrid bond 5

Other 1

Net Debt as of June 30, 2019 7,728

Net Debt/EBITDA rolling 12 months 4.7

Cash flow and Net debt (incl. IFRS 16 – Leases)

CASH FLOW FROM OPERATIONS GENERATED SEK M 51 (182) IN Q2 2019

Q2 2019

Infrastructure

The historical figures above are adjusted based on the organisational changesimplemented June 1, 2019. Comparative figures for growth in 2018 are notavailable due to the fact that 2017 numbers have not been adjusted for thereorganisation.1) Excluding effects of IFRS 16 Leases 2019 accounted for in Group wide.2) FTEs 2019 include ÅF employees plus four months of Pöyry.

– Second quarter net sales amounted to SEK 2,020 million (1,537)

– EBITA amounted to SEK 195 million (174) and the EBITAmargin was 9.6 percent (11.4)

– Solid development within the Buildings business area

KEY RATIOS1Apr – Jun

2019Apr – Jun

2018Jan – Jun

2019Jan – Jun

2018Full year

2018

Net sales, MSEK 2,020 1,537 3,827 2,994 5,955

EBITA, MSEK 195 174 376 339 637

EBITA margin % 9.6 11.4 9.8 11.3 10.7

Average number ofemployees, FTEs2

5,954 4,395 5,511 4,325 4,445

Total growth, % 31.4 - 27.8 - -

Structural changes, % 26.0 - 18.7 - -

Currency, % 1.1 - 1.5 - -

Organic, % 4.3 - 7.7 - -

of which adjusted/ underlying organic growth due to calender affect, %

6.4 - 8.0 - -

Q2 2019

Industrial & Digital Solutions


2019Apr – Jun

2018Jan – Jun

2019Jan – Jun

2018Full year

2018

Net sales, MSEK 1,483 1,472 3,060 2,925 5,782

EBITA, MSEK 131 144 276 281 525

EBITA margin % 8.8 9.8 9.0 9.6 9.1


3,825 3,732 3,835 3,672 3,748

Total growth, % 0.7 - 4.6 - -


Currency, % 0.2 - 0.2 - -

Organic, % -0.5 - 2.5 - -


1.6 - 3.3 - -

The historical figures above are adjusted based on the organisational changesimplemented June 1, 2019.Comparative figures for growth in 2018 are not available due to the fact that 2017numbers have not been adjusted for the reorganisation.1) Excluding effects of IFRS 16 Leases 2019 accounted for in Group wide.2) FTEs 2019 include ÅF employees plus four months of Pöyry.

– Second quarter net sales amounted to SEK 1,483 million (1,472)

– EBITA amounted to SEK 131 million (144) and the EBITA margin was 8.8 percent (9.8)

– Continued demand for services within product development,electrification and automation

Q2 2019

Process Industries

The historical figures above are adjusted based on the organisational changesimplemented June 1, 2019.Comparative figures for growth in 2018 are not available due to the fact that 2017numbers have not been adjusted for the reorganisation.1) Excluding effects of IFRS 16 Leases 2019 accounted for in Group wide.2) FTEs 2019 include ÅF employees plus four months of Pöyry.

– Second quarter net sales amounted to SEK 914 million (213)


– Digitalisation and sustainability remains high on theagenda in all process industry sectors


2019Apr – Jun

2018Jan – Jun

2019Jan – Jun

2018Full year

2018

Net sales, MSEK 914 213 1.360 418 811

EBITA, MSEK 88 24 130 42 91

EBITA margin % 9.6 11.4 9.6 10.1 11.2


3,021 668 2,230 667 688

Total growth, % 329.7 - 225.3 - -


Currency, % 0.5 - 0.6 - -

Organic, % 12.4 - 10.4 - -


11.6 - 10.0 - -

Q2 2019

Energy

The historical figures above are adjusted based on the organisational changesimplemented June 1, 2019. Comparative figures for growth in 2018 are notavailable due to the fact that 2017 numbers have not been adjusted for thereorganisation.1) Excluding effects of IFRS 16 Leases 2019 accounted for in Group wide.2) FTEs 2019 include ÅF employees plus four months of Pöyry.

– Second quarter net sales amounted to SEK 830 million(406)


– The global energy sector continues to be in a state oftransformation. Significant changes are taking place intechnology, politics and market conditions.


2019Apr – Jun

2018Jan – Jun

2019Jan – Jun

2018Full year

2018

Net sales, MSEK 830 406 1,369 765 1,559

EBITA, MSEK 61 29 91 43 72

EBITA margin % 7.3 7.1 6.7 5.7 4.6


2,146 993 1,726 998 992

Total growth, % 104.6 - 79.0 - -


Currency, % 2.3 - 2.7 - -

Organic, % -4.0 - -2.2 - -


-4.4 - -3.9 - -

Q2 2019

Management Consulting

Comparative figures for growth in 2019 and 2018 are not available due to thefact that this division is formed entirely by Pöyry.1) Excluding effects of IFRS 16 Leases 2019 accounted for in Group wide.

– Second quarter net sales amounted to SEK 197 million (-)

– EBITA amounted to SEK 30 million (-) and the EBITA margin was 15.3 percent

– Solid transaction volume across all sectors and requirementto meet the Paris decarbonisation targets along withthe impact of digitalisation


2019Apr – Jun

2018Jan – Jun

2019Jan – Jun

2018Full year

2018

Net sales, MSEK 197 - 271 - -

EBITA, MSEK 30 - 44 - -

EBITA margin % 15.3 - 16.1 - -

Average number ofemployees, FTEs

348 - 227 - -

Total growth, % - - - - -

Structural changes, % - - - - -

Currency, % - - - - -

Organic, % - - - - -


- - - - -

Continued focus on employer branding

Our employees are our most essential asset. We are one of Sweden’s most popular employers among young professionals and scientific researchers. Our ambition is to attract, develop and retain the best talents in the world, wherever we meet them.

YOUNG PROFESSIONALS

1. Ikea

2. Volvo Cars

3. Google

4. ÅF

SCIENTIFIC RESEARCHERS, 2019

1. ÅF

2. ABB

3. Astra Zeneca

Strategy execution

GROWTH

International expansioninto leading positions

Geographical expansion in core countries

International growthin selected niches

Expansion in international investment projects

VALUE CREATION

Business model shiftto deliver higher value

Increase share of projects and solutions

Cross ÅF solutions to meetglobal growth drivers

Invest in and develop concepts and selected products

Optimisation of professional services

OPERATIONS

Operational excellence

Simplified and focused organisation

Adjusted financial steering

Optimised pricing

and sourcing

Ethical commitment

PEOPLE

Best in classpeople practices

Leadership development

People engagement

and development

Employer branding

Recruitment and onboarding

Diversity and inclusion

• SEK 99 million as an annual run-rate achieved in the first half year 2019

• Main part of cost synergies executed 2019, calculated as an annual run rate

• Lower general and administrative costs

• Office and operating structure efficiency improvements

• Information system efficiency improvements

• Operational synergies (MGM-delayering and Sales)

• Win of projects based on competence, size and footprint – all divisions

• Cross-sales, Finland-Sweden - all divisions and capabilities

• Focused growth in Forrest, Mining, Petrochemicals & Bio economy – size and scale

• Growth of infrastructure business in Finland –maximize leverage from strong Swedish platform and competencies

• Win of infrastructure projects Switzerland and leverage Europe-business

• Digitalization projects and service in Finland and across all divisions

COST SYNERGIES REVENUE SYNERGIES

Committed cost synergies of >180 MSEK and substantial revenue synergies

Financial targets

Growth• Annual growth of 10% The target includes add-on

acquisitions. Larger platform acquisitions will also be made

Profitability• An EBITA margin of 10 percent (excluding items

affecting comparability) over a business cycle

Dividend policy

• The Board of Directors has adopted a dividend policy according to which the dividend corresponds to approximately 50 percent of consolidated profit after tax excluding capital gains

Net debt• Net debt in relation to EBITDA of 2.5x

(excl IFRS 16 Leases)

ÅF Pöyry - a strong plattform to drive continued long term value creation

Summary

— Stable performance during first half year 2019

— Continued organic growth of 5.2 percent (2.8)

— Overall continued good demand, although indications on slower demand in some segments

— Integration and cost synergies ahead of plan

interim report, q2 - af consult · a leading engineering, design and advisory company 75% net sales...

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