Positioned for
tomorrow
12/11/2020
Gyrid Skalleberg Ingerø,
Group Executive Vice President & CFO
KONGSBERG PROPRIETARY: This document contains KONGSBERG information which is proprietary and confidential. Any disclosure, copying, distribution or use is prohibited if not otherwise explicitly agreed with KONGSBERG in writing. Any authorised reproduction in whole or in pa rt, must include this legend.
© 2020 KONGSBERG - All rights reserved.
DISCLAIMER
This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, estimates and projections of the Company or assumptions based on information currently available to the Company. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. The Company cannot give assurance to the correctness of such information and statements. These forward-looking information and statements can generally be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use terminology such as "targets", "believes", "expects", "aims", "assumes", "intends", "plans", "seeks", "will", "may", "anticipates", "would", "could", "continues", "estimate", "milestone" or other words of similar meaning and similar expressions or the negatives thereof.
By their nature, forward-looking information and statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements that may be expressed or implied by the forward-looking information and statements in this presentation. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, the Company's actual financial condition or results of operations could differ materially from that or those described herein as anticipated, believed, estimated or expected.
Any forward-looking information or statements in this presentation speak only as at the date of this presentation. Except as required by the Oslo Stock Exchange rules or applicable law, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this presentation, including forward-looking information and statements, whether to reflect changes in the Company's expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this presentation is based.
Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements.
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 2 |
Solid revenue and EBITDA growth
Including acquired -and excluding divested companies
Revenue development 2015 - LTM Q3 2020
BNOK
26.4 | |
23.2 | |
8.4 | |
16.5 | 7.2 |
15.3 | |
14.0 13.8
5.8
6.3 | 6.3 | 6.1 | |||
17.3 | |||||
15.2 | |||||
9.2 | 7.5 | 6.4 | 7.0 | ||
2015 | 2016 | 2017 | 2018 | 2019 | LTM Q3 2020 |
EBITDA margin development 2015 - LTM Q3 2020
20%
18% | 19.0% | ||||||
16% | |||||||
14% | |||||||
12% | 11.8% | ||||||
10% | |||||||
8% | 8.5% | ||||||
6% | |||||||
4% | |||||||
2% | |||||||
0% | |||||||
20191 | |||||||
2015 | 2016 | 2017 | 2018 | LTM Q3 | |||
20201 |
KONGSBERG MARITIME | KONGSBERG DEFENCE & AEROSPACE | Other | KONGSBERG | KONGSBERG MARITIME | KONGSBERG DEFENCE & AEROSPACE | |||||||
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 3 | ||||||||||
1) Included effects from IFRS16 from 2019 |
Improved return on capital
ROACE (%) and AVERAGE CAPITAL EMPLOYED (BNOK) | ||||
▪ | Patria investment and Commercial Marine | |||
(CM) acquisition drive capital employed | ||||
33.6% | ||||
‒ Acquisition of CM fully reflected in capital | ||||
9.9% | 14.1% | 18.1% | employed as of LTM Q3 2020 | |
10.1% | 10.0% | ▪ | Increased ROACE driven by profitability | |
improvement
9.710.2
6.5 | 7.3 | 6.3 |
- Turn around & synergies realisation in CM/KM
2.7 | ‒ Increased scale and good project execution in | ||||||||||||
defence | |||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | LTM Q3 2020 | ||||||||
ROACE % | AVERAGE CAPITAL EMPLOYED (BNOK) | ||||||||||||
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 4 |
Solid backlog
Backlog development (BNOK)
33.3
31.7 | ||
12.7 | 10.7 | |
17.0 | ||
5.0 | 14.0 | 14.8 |
8.3 | ||
3.7 | 6.6 | 6.3 |
Q3 2018 | Q3 2019 | Q3 2020 |
Current year Next year Next year +
- Backlog "Next year" increased compared to last year
- Approximately 2/3 of backlog related to defence projects
- Backlog does not include;
- framework agreements
- majority of aftermarket in KM
- associated companies
- SaaS revenues
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 5 |
Updated ambitions towards 2022
Revenue target towards 2022 (BNOK)
> 30
24
2019 | 2020 | 2021 | 2022 |
Target EBITDA margin 2022 (%)
> 13% | |
KONGSBERG | |
MARITIME | |
> 14% | > 16% |
KONGSBERG | |
KONGSBERG | DEFENCE & |
AEROSPACE | |
> 14% | |
KONGSBERG | |
DIGITAL & | |
OTHER |
Updates compared to CMD 2019
- EBITDA target updated to include IFRS16
- All target adjusted up with 2%p
- Hydroid sold in March 2020
- Income from associated companies no longer included EBITDA
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 6 |
Priorities towards 2022
1. | Key success |
factor | |
2. | Profitability |
KONGSBERG | KONGSBERG |
MARITIME | DEFENCE & AEROSPACE |
Adapt to changing market | Growth/ramp-up |
Efficiency focus
andBenefit on scale and cost focus product harmonisation
New opportunities and execute on
KONGSBERG
DIGITAL
Scale
SaaS business model
Continue to roll out digital applications
3. Growth |
Cross sales and green technology
strategic steps
and products
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information |
7
Net working capital
KONGSBERG MARITIME
BNOK | |||||||
2.5 | 20% | ||||||
17% | |||||||
2.0 | 13% | ||||||
1.5 | 9% | 6% | 9% | ||||
1.0 | |||||||
1.9 | 1.4 | 1.6 | |||||
0.5 | 0.9 | 0.9 | |||||
0.7 | |||||||
0.0 | |||||||
2015 | 2016 | 2017 | 2018 | 2019 | Q3 2020 | ||
- Net working capital largely driven by project mix
- Net working capital expected to fluctuate going forward
- Net working capital adjusted for acquired and divested companies
KONGSBERG DEFENCE
BNOK
AEROSPACE& | 4.0 |
8%
2.0 | |
0.0 | 0.5 |
-2.0 |
2015
NWC % OF REVENUE
14% | |||||||
(2%) | |||||||
0.9 | |||||||
(0.1) | |||||||
(0.7) | |||||||
(1.1) | (1.1) | ||||||
(12%) | (15%) | (14%) | |||||
2016 | 2017 | 2018 | 2019 | Q3 2020 | |||
NWC KONGSBERG MARITIME | NWC KONGSBERG DEFENCE & AEROSPACE | ||||||
- Significant fluctuations in net working capital driven by;
- Payment structure from customer
- Project timeline within large projects
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 8 |
Cash, debt and bond maturity profile
Cash and Interest bearing debt (BNOK)
BNOK | |||||||||||
10.0 | |||||||||||
2.0 | |||||||||||
5.0 | 10.0 | ||||||||||
3.0 | 5.7 | 6.1 | |||||||||
0.0 | 1.8 | 1.9 | |||||||||
4.1 | 3.3 | 4.1 | 3.5 | ||||||||
0.9 | 4.3 | ||||||||||
-5.0 | 2015 | 2016 | 2017 | 2018 | 2019 | Q3 2020 | |||||
- ~2.5 BNOK of advance payments from customers
- Cash "looked in operation" increased post CM acquisitions
- Expected to gradually be reduced going forward
- Increased currency exposure as business grow
Bond maturity profile
BNOK
1.50
1.5
KOG12
1.0 | 1.00 | |||||
0.5 | KOG08 | 0.45 | 0.50 | KOG09 | ||
KOG11 | KOG13 | |||||
0.0 | ||||||
2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
- Spread maturity profile
- Evenly split between floating and fixed interest rate
- Undrawn committed credit facilities of BNOK 2.8
Cash Interest bearing debt Extraordinanry dividend & SBB
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 9 |
Leverage ratio and capital structure target
2.5 | 2.2 | ||||||||||
2.0 | |||||||||||
1.5 | |||||||||||
1.0 | Target | ||||||||||
0.5 | 0.4 | ||||||||||
0.0 | |||||||||||
(0.6) | (0.6) | ||||||||||
-0.5 | (1.1) | ||||||||||
(0.6) | |||||||||||
-1.0 | (0.9) | ||||||||||
-1.5 | (4.4) | ||||||||||
(1.7) | |||||||||||
(5.1) | |||||||||||
-5.5 | |||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Q3 2020 | ||||||
Net debt/EBITDA1 | Rights issue | EOD | Target range | ||||||||
Net debt/EBITDA of 1.0x +/- 1.0 securing;
- Access to funding
- Investment grade credit rating equivalent securing access to debt capital markets
- Customer confidence
- Long-termview in strategy and execution
- Ability to handle fluctuating working capital
- Foreign exchange hedging policy
- Financial flexibility
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 10 |
- Ex. IFRS16 and adjusted for Hydroid
Technology development securing our positions
Self-funded R&D ex. Product maintenance by business area 2013 - LTM 2020
5.0% | 5.4% | 5.0% | 6.7% | 5.9% | 5.6% | 4.2% | 4.2% |
1.06 | 1.11 | ||||||
0.98 | |||||||
0.18 | 0.14 | ||||||
0.90 | 0.85 | 0.85 | 0.14 | ||||
0.81 | 0.78 | 0.23 | |||||
0.16 | 0.14 | 0.17 | |||||
0.12 | 0.19 | ||||||
0.33 | 0.14 | ||||||
0.21 | |||||||
0.18 | 0.20 | 0.20 | 0.14 | ||||
- Invest for the future and secure #1 position
- Benefit from customer funded R&D
- Benefit from various civilian support schemes
0.65 | 0.74 | ||||||
0.51 | 0.53 | 0.51 | 0.55 | ||||
0.48 | 0.49 | ||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | LTM Q3 2020 |
- ~20% of annual R&D capitalized
% SHARE OF REVENUE KONGSBERG MARITIME KONGSBERG DEFENCE & AEROSPACE OTHER
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 11 |
Benefiting from civilian R&D support scheme
Committed funding as of 2020… | …results on sustainable products and solutions | |
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 12 |
Aligning dividend policy with financial strategy
Historical Pay-out Ratio (%) | Shareholder Remuneration (NOK) | |||||||||||||||
Total dividend | Ordinary dividend | |||||||||||||||
% | NOK | Increased # of | ||||||||||||||
276% | shares due to equity | 13.61 | ||||||||||||||
280 | 14 | |||||||||||||||
130% | issue | 1.11 | SBB PS | |||||||||||||
12 | ||||||||||||||||
120 | ||||||||||||||||
103% | 9.25 | |||||||||||||||
10 | ||||||||||||||||
100 | 93% | |||||||||||||||
81% | 8 | |||||||||||||||
57% | 10.00 | Additional DPS | ||||||||||||||
80 | 5.00 | |||||||||||||||
60% | 58% | 6 | 5.25 | |||||||||||||
55% | 4.25 | |||||||||||||||
60 | 1.00 | 3.75 | 3.75 | |||||||||||||
47% | 4 | |||||||||||||||
2.50 | ||||||||||||||||
Policy | ||||||||||||||||
40 | Range | 2 | 4.25 | 4.25 | 2.50 | Ordinary DPS | ||||||||||
20 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 0 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |
• Previous dividend policy targeted dividend of 40-50% of net income | • Revised policy provides predictability on a per share basis | |
• Historical pay-out ratio has been above policy range | • | Targets flat or growing dividend per share |
• | Extraordinary dividends and share buybacks to serve as supplements |
13
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information |
Active management of business portfolio
20162019
PATRIA OYJ. | R-R COMMERCIAL MARINE | ||
• Acquired 49.9% from the state of | • Acquired 100% from Rolls Royce | ||
Finland | |||
• | EV GBP 500m | ||
• | EV EURm 272 (49.9%) | ||
2019
AIM NORWAY
- Acquired from Norwegian Ministry of Defence (sold 49.9% to Patria)
- EV 151MNOK
2020
HYDROID INC.
- Sold 100% to Huntington Ingalls Industries in March 2020
- Sold at EV USD 350m
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information |
14
Patria and AIM Norway
Important part of KONGSBERG's MRO strategy
Patria
- Prime MRO provider for the Finnish Defence Forces
- Supplier of strategically important products and systems to Finland and other nations
- Cooperation's through certain strategical projects e.g. MRO
Revenue and EBIT development (EURm)
508 | 527 | |||||||
490 | 476 | |||||||
467 | ||||||||
75 | ||||||||
35 | 36 | 8 | 24 | |||||
2016 | 2017 | 2018 | 2019 | LTM Q3 2020 | ||||
Revenue (EURm) | EBIT (EURm) | |||||||
AIM Norway
- Premier MRO provider for the Norwegian armed aircrafts and helicopters
-
Strengthen KONGSBERGs role as a strategic partner for the
Norwegian armed force's operative requirements, both as a supplier of equipment and for maintenance
Revenue and EBITDA development (MNOK)
126 | 127 | 125 | 139 | ||||
106 | |||||||
43 | 25 | 41 | |||||
9 | 20 | 15 | 24 | ||||
Q2 191 | Q3 19 | Q4 19 | Q1 20 | Q2 20 | Q3 20 | ||
Revenue (MNOK) | EBITDA (MNOK) | ||||||
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 15 |
1) Q2 2019 only included one month
Rolls Royce Commercial Marine
Significant synergies
Target 500 | ||||||
MNOK annual | ||||||
cost synergies | ||||||
508 | ||||||
375 | 90 | 429 | 422 | |||
253 | 83 | 135 | 290 | 150 | 690 | |
72 | 418 | 160 | 1 587 | |||
181 | 292 | 294 | 272 | |||
130 | ||||||
Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
- Total of MNOK 690 in cost synergies generated from Q2 2019 - Q3 2020
- MNOK 528 in cross sales realised YTD 2020
- Strengthens Kongsberg Maritime as an integrator and technology leader
- Enhanced position to capitalise on industry trends and dynamics
Acquisition and integration costs
5.439 | ||||||||||||||||
61 | ||||||||||||||||
130 | ||||||||||||||||
194 | ||||||||||||||||
444 | ||||||||||||||||
4.865 | ||||||||||||||||
319 | 4.865 | |||||||||||||||
130 | ||||||||||||||||
189 | ||||||||||||||||
Q1 2018 - | 1. April | Q2 2019 - | Q1 2020 - | Total | ||||||||||||
Q1 2019 | 2019 | Q4 2019 | Q3 2020 |
- Total of MNOK 5.594 cash outflow related to acquisition and integration of Rolls Royce Commercial Marine (RRCM)
- RRCM generated positive FCF pre tax of ~MNOK 230 in 2019 (ex. Integration and restructuring)
- MNOK 260 and 445 generated in synergies in 2019 and YTD 2020 respectively
KM EBITDA excluding integration & restructuring costs and cost synergies | Synergies | Finance & acquisition cost | Integration cost | Purchase price | ||||||
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 16 |
Hydroid
Solid return on investment
- Acquired in 2008 for ~81 USDm
- Sold in March 2020 for ~350 USDm
- Implied EV/EBITDA multiple of 24x
- Pre tax IRR on investment of 15.2% (estimated ~12.8% including tax)
Cashflow from Hydroid (USDm) | |||
350 | |||
40 | |||
(81) | |||
2008 | Acc. Cf 2009-2019 | 2020 | |
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 17 |
POSITIONED FOR TOMORROW
Growth | Profitability | Portfolio management | ||||||||
• | Deliver backlog and | • | Scale and project | • Active management | ||||||
secure pipeline | execution | of business portfolio | ||||||||
• | Frontrunner new | • | Adapt to changing | |||||||
technology | markets | |||||||||
WORLD CLASS - Through people, technology and dedication | KONGSBERG PROPRIETARY - See Statement of Proprietary information | 18 |
KONGSBERG PROPRIETARY - See Statement of Proprietary information
Attachments
- Original document
- Permalink
Disclaimer
Kongsberg Gruppen ASA published this content on 11 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 November 2020 11:06:04 UTC