Kverneland Group Presentation of 1Q 2008 Accounts

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       Kverneland Group
Presentation of 1Q 2008 Accounts


           Web Cast
          May 9th, 2008



           Ingvald Løyning, CEO
          Jens Kristian Rein, CFO
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Kverneland Group - 1Q08 Presentation




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Key Issues 1Q 2008
 Operating revenues increased by 24% compared to 1Q last year.
 EBITDA; EUR 16.3 Mill compared to EUR 15.3 Mill in 1Q 2007.
 1Q results included out-period provisions of EUR 0.7, while 1Q last year
 incorporated a non-recurring income of EUR 1.5 Mill:
     Adjusted for these cost items EBITDA 1Q-08 was up EUR 3.2 Mill on
     last year
 Order intake of EUR 119.4.8 Mill, up 5% on 1Q last year.
 Strong demand fundamentals and improved order book; 48% above last
 year.
 Reduced margins compared to last year due to unfavourable market- and
 product mix.
 Implemented sales-price increases will materialize gradually from 2Q 2008


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Operations
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Business Area Arable

                    Revenues                                                  EBITDA Margin
 70                                                         20 %
                                                            18 %
 60
                                                            16 %

 50                                                         14 %
                                                            12 %
 40                                                         10 %
                                                             8%
 30
                                                             6%
 20                                                          4%
                                                             2%
 10
                                                             0%
  0                                                         -2 %
        1Q          2Q         3Q         4Q                          1Q        2Q            3Q     4Q
  07    58,9       47,3        52,2       49,8                 07    14,8 %    6,6 %      3,4 %     -1,6 %
  08    66,7                                                   08    11,3 %


 Operating revenues rose 13% for the quarter
                                                            EBITDA; 3.5 percentage points below 1Q 2007
 Order book 64% above 1Q last year
                                                            Unfavourable market mix; relatively lower sales
 Restricted financing availabilities for the                to high-margin markets in CIS
 farming industry have led to a temporary
 market slow-down in Russia, with delayed                   High maintenance costs in the plough factory
 deliveries
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Business Area Grass

                   Revenues                                                 EBITDA Margin
 80                                                      20 %
                                                         18 %
 70
                                                         16 %
 60                                                      14 %
                                                         12 %
 50                                                      10 %
                                                          8%
 40
                                                          6%
 30                                                       4%
                                                          2%
 20                                                       0%
                                                          -2 %
 10
                                                          -4 %
 0                                                        -6 %
       1Q         2Q          3Q          4Q                        1Q        2Q            3Q      4Q
 07    54,1       75,2        33,3       67,0               07     15,7 %    11,8 %     -5,4 %     6,4 %
 08    71,7                                                 08     11,0 %


 Operating revenues rose 33% for the quarter              EBITDA; 4.7 percentage points below 1Q 2007
 Order book 25% above 1Q last year                        Unfavourable product mix; relatively higher sales
 Positive market development and satisfactory             of traded products
 production output                                        Negative currency effects on invoiced sales to
 Strong improvements in the Forage area                   UK and US
 compared to 1Q last year
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Business Area Crop Care

                  Revenues                                                 EBITDA Margin
 18                                                    12 %

 16                                                    10 %

 14                                                     8%
                                                        6%
 12
                                                        4%
 10
                                                        2%
 8
                                                        0%
 6
                                                        -2 %
 4
                                                        -4 %
 2                                                      -6 %
 0                                                      -8 %
       1Q         2Q          3Q        4Q                         1Q         2Q           3Q     4Q
 07    15,4       14,0        7,6      12,3                07     10,6 %     2,5 %     -7,4 %    2,8 %
 08    17,8                                                08     10,5 %


 Operating revenues rose 16% for the quarter             EBITDA; margins on par with last year
 Order book 49% above 1Q last year                       Improved production output, and delivery
 Strong market fundamentals                              performance. However, delivery accuracy
                                                         needs to be further improved


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Order Book (EUR Mill)

225                                                                        07

200               08
175

150          07                                                       06
125

100     06                                      07
                              07
 75
                         06                06
 50

 25

  0
             1Q               2Q                3Q                         4Q

 The order book as per March-08 was EUR188.8 Mill, which is 48% up on last year
 The strong demand for agricultural implements continues
 The positive investment climate is driven by high demand and prices for farm output
 Both the food demand and input to BIO energy are important underlying factors
 The strong order intake is also driven by low stock levels in the distribution network
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Market Development – YTD Sales by Region (EUR Mill)
100



80



60



40



20



 0
          WE               Nordic          CEE & CIS                   America   ROW
 06       75,3              17,2              20,5                       3,7     7,6
 07       77,5              18,0              22,5                       5,5     5,3
 08       99,2              19,9              27,4                       6,7     5,9


  Order intake in 1Q 2008 was EUR 119.4 Mill, 5% up on 1Q last year
  Western Europe accounted for 75% of the Group’s total sales in the quarter
  Increase sales in all regions compared with last year
  Net sales growth and order intake has been restricted by the capacity limits in production sites
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Sales Development – Western Europe (incl. Nordic) (EUR Mill)
130
                 07
120
110
                               07                                           07
100         07
       06
 90
                          06                                           06
 80
 70                                                07

 60
                                              06
 50
 40
            1Q                 2Q                  3Q                       4Q


  The high prices for the main farm output continue to stimulate the investment climate, particularly
  strong in the arable sector.
  Consequently the demand for our products remains strong
  Further net sales growth has been restricted by capacity limitations and long lead times for important
  product groups

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Sales Development – CEE (EUR Mill)

16               08      06

14                                         06
                              07                 07
12
            07
10                                                                   06 07
       06
 8

 6

 4

 2

 0
            1Q                2Q                 3Q                     4Q

 The positive industry outlook and investment climate continues
 Strong positive market drive from the high commodity prices, EU subsidies and the positive economic
 development in the region.
 Very strong demand for implements
 Further net sales growth has been restricted by capacity constraints caused by the high and early order
 intake in Western Europe
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Sales Development – CIS (EUR Mill)
16

14           08
       06 07            06                                               07
12                           07

10                                                                  06
                                               07
 8                                       06

 6

 4

 2
 0
           1Q                2Q               3Q                         4Q


 Continued positive development of the agricultural sector, especially in Russia
 Strong total market growth for implements
 Further net growth has been restricted by a combination of the following:
         Some Products being sold out early to Western Europe and other regions
         A temporary market slow down for some segments due to restrictions on local financing in
         Russia, especially from the Russian Agricultural Bank

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Financials
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 Profit & Loss Account (EUR Mill)
                                                                                     2008    2007    2007
(EUR Mill)                                                                             Q1      Q1      FY
Operating revenues                                                                   159,1   128,8   503,8
Operating cost excluding depreciation and amortisation                               142,8   113,5   481,7
EBITDA                                                                                16,3    15,3    22,1
Depreciation and amortisation                                                          2,8     2,5    10,1
Write down                                                                             0,0     0,0     1,3
Restructuring and reorganisation cost                                                 -0,5     0,7     1,1
Operating profit / loss (EBIT)                                                        14,0    12,1     9,6
Financial income                                                                       0,1     0,3     0,1
Financial cost                                                                        -5,8    -4,5   -16,7
Profit / loss from associated companies                                                0,1     0,0     0,3
Profit / loss before income taxes                                                      8,4     7,9    -6,7
Income taxes                                                                          -0,1    -3,0    -2,7
Profit / loss                                                                          8,3     4,9    -9,4
Minority interests                                                                    -0,4    -0,3    -1,0
Profit / Loss from discontinued operations                                             0,0    -0,9    -1,3
Profit / loss attributable to equity holders of the company                            7,9     3,7   -11,7




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EBITDA Development (EUR Mill)
20

                 08
            07
15     06
                                07


10

                           06

 5




 0
            1Q                  2Q                      3Q                4Q
                                                                     06   07

 -5                                                     07


                                                 06
-10
  EBITDA improvement compared to previous years
  Out-of period provisions of EUR 0.7 Mill pulled down the results generated from the operation
  1Q-07 included a non-recurring income (cost reduction) of EUR 1.5 Mill
  Negative currency effects on sales to UK and US
  High price-pressure on raw materials and purchased components;
  Implemented sales-prices adjustments will start materializing in 2Q
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 Balance Sheet (EUR Mill)
                                                  As per                  As per     As per
(EUR Mill)                                       31.03.08                31.03.07   31.12.07
ASSETS
Intangible assets                                    35,2                   35,6       34,3
Fixed assets                                         68,6                   74,9       68,7
Current assets                                      298,9                  304,4      254,9
Total assets                                        402,7                  414,9      357,9


LIABILITIES AND EQUITY
Total equity                                         62,0                   84,6       54,2
Interest bearing debt                               136,4                  129,1      122,7
Other Liabilities                                   204,3                  201,2      181,0
Total liabilities and Equity                        402,7                  414,9      357,9


Equity ratio                                       15,4 %                 20,4 %     15,1 %
Net-interest bearing debt                           128,8                  121,7      112,0


    Due to higher activity net working capital increased by EUR 23.7 Mill in the quarter, vs. EUR. 52.4
    Mill in 1Q last year
    Net interest-bearing debt increased due to higher activity/increase in working capital
    The Vineyard business was separated from the Group in August last year with a total balance of
    EUR 35.1 Mill

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Summary
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Stock and Price development for Wheat




Source: IGC (International Grains Council)

                                                                              Stocks as a % of
                     40                                                       consumption
                           35      34      34
  % of Consumption




                     30                            27
                                                           21      23         22
                                                                                       19       18
                     20


                     10


                      0
                          99/00   00/01   01/02   02/03   03/04   04/05      05/06    06/07   07/08


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Price Development on Milk

                                                  Net Milk Producer Prices, 2006-2008
                  31
                  30       2006     2007         2008
                  29
                  28
                  27
                  26
pence per litre




                  25
                  24
                  23
                  22
                  21
                  20
                  19
                  18
                  17
                  16
                  15
                    Jan   Feb     Mar      Apr      May        Jun         Jul        Aug   Sep   Oct   Nov   Dec
  Source: Department of Agriculture and Rural Development




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 Strong Business Climate for Agricultural Machinery
                               Goldman Sachs Agricultural index
        500


        450


        400


        350


        300
Index




        250


        200


        150


        100


         50
          70   72   74   76   78   80   82   84   86   88    90    92    94        96   98   00   02   04     06    08

                                                                                                  Source: Reuters EcoWin
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Summary

 Sales-price increases have been implemented; will materialize gradually from
 2Q, with full effect from 3Q.

 Delivery performance improved compared to 1Q-07; factories are currently
 delivering a steady good output according to plan.
 The turnaround process continues to address issues to improve on operations;
 out-sourcing initiatives (Rakes), efficiency improvements, product re-
 engineering, sourcing.
 Strong order book; 48% above last year.
 The market for agricultural machinery remains strong; the positive
 development is expected to continue.
 With the strong order book and realization of implemented sales-price
 increases we expect sustainable growth and increased profitability compared
 to last year.


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Q&A




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