Lindab€¦ · − Building Components (BABC) − Building Systems (BABS) − Conclusion – the...

lindab| we simplify construction

Lindab Capital Market Day

”Focused journey towards increased profitability”

23 August 2012


2

BA Ventilation

Nils-Johan Andersson

BA Building Systems

Hans Berger

BA Building Components

Peter Andsberg

CEO

David Brodetsky

CFO

Per Nilsson

Director Belgium

Building Research Inst

Peter Wouters

Centrum Klima

Marek Perendyk

Today’s speakers


10.00

12.00

12.45

14.30

17.00

Agenda

3

− General information and introduction to Lindab

− Trading update and future market development

− Changes in energy efficiency legislation and impact on

Lindab’s business long term

− The road from 6 – 10 %

− Lunch

− Factory tours Förslöv and Grevie

− Business Area Presentations

− Ventilation (BAV)

− Building Components (BABC)

− Building Systems (BABS)

− Conclusion – the road ahead

− Closure of conference


10.00

12.00

12.45

14.30

17.00

Agenda

4






− Lunch









Sales SEK 6.9bn, 4300 employees

Good track record of growth and profitability

Entrepreneurial culture built on 3 core values:

Customer success Down-to-earth Neatness and order

Lindab in brief

5


Synergies in production

Presence in 31 countries

Little exposure to PIIGS (2%)

Growing in CIS (~10% of sales)

All numbers and % of sales from 2011

28%

46%

23%

Nordics

Western Europe

CEE/ CIS

Main focus is Europe 97%


Our Business Idea – Simplifying construction

7


Lindab operates in three Business Areas

Roof drainage

systems

Beams and

studs

Roof and wall profiles Pre-engineered single and multi

storey buildings

Circular ducts and fittings

Indoor climate products

8

Building Components (33% of sales)

#1 in Europe in Steel Rain Water Systems

Market leading positions in all BAs

Ventilation (53% of sales)

#1 in Europe in Air Duct Systems

Building Systems (14% of sales)

#1 in Europe in pre-engineered

steel buildings


Competitive difference – strength in distribution

9

Leading distribution network in

top 5 markets and presence in

others

− One stop shop

− Develop sales of traded

products

− Secures sales of our core

products

More than 120 own branches

− Close to the installer

− Shared branch network in SE

and NO (BAV and BABC)

− 70% of sales to installers

Branch location


And “Best-in-class” production

10

Well balanced footprint

– 1/3 centralised highly automated

– 1/3 low cost countries (and growing)

– 1/3 local production

– Facility in Russia (investing more)

Central production

Regional production


Synergies within Lindab Group

11

Raw material

processing Production Logistics

Distribution

network Purchasing

Steel volumes

and purchasing

contracts

Shared

purchasing

organisation

Lindab

synergies

Relative

size

Slitting

Raw material

handling

Shared

locations and

admin functions

Shared logistic

contracts and

trucks

Project sales

Geographic

expansion, e.g.

WE and Russia

Shared Services (IT, Finance, HR etc.)

2

5

%

Sales

Shared branch

network

Very high Low


Good record of growth and profitability; Margin

recovery post 2009 despite flat sales

12

Sales MSEK

EBIT Margin (%) (excl. one-off items)

“Soft economy” “Good economy”

Significant margin improvement

due to volume increase, pricing

and acquisitions

“Weak economy”

Margin improvement mainly due

cost and efficiency improvements

5 160 5 235 5 302 5 477 6 214

7 609

9 280 9 840

7 019 6 527 6 878 6 962

6.2% 6.2% 5.8%

7.0%

8.9%

12.3%

14.1%

13.0%

4.3%

5.3%

5.9% 6.4%

0%

4%

8%

12%

16%

0

2 000

4 000

6 000

8 000

10 000

12 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201206 LTM


10.00

12.00

12.45

14.30

17.00

Agenda

13






− Lunch









14

"As expected, demand has remained weak during the first few weeks of the

third quarter.

Sales have decreased compared to the same period last year, adjusted for

structure and currency, but at a lower rate than the decline experienced in the

second quarter.

The main trends are unchanged compared to the second quarter 2012 with the

exception of improved demand in Western Europe particularly supporting the

Ventilation Business Area.”.

Trading update – start of Q3, 2012


15

Slow recovery predicted for European construction market

Lindab weighted Euroconstruct forecast* - not perfect correlation

Large uncertainty in construction market and the future outcome will mainly

be dictated by Euro crisis development

Risk of significant decline considered limited

*) Adjusted for Lindab's geographical mix, segment exposure and late cyclicality

-0.5%

0.6%

2.2%

-1.0%

0.0%

1.0%

2.0%

3.0%

2012 2013 2014

Rea

l g

row

th

Near-term Market Outlook


16

Relatively good near-term outlook due to strong government finances and

positive underlying demand

Though, negative trend in latest building statistics, especially in Sweden

Norway strongest market and should remain resilient

Lindab weighted Euroconstruct forecast *


0.1%

1.3%

3.0%

0.0%

1.0%

2.0%

3.0%

2012 2013 2014

Rea

l g

row

th

Near-term Market Outlook: Nordics


17

Weak outlook, especially for the PIIGS markets

Uncertainty regarding Euro crisis likely to remain

Several market indicators have turned downward in 2012

German construction market predicted to remain rather stable



-1.0% -0.2%

1.3%

-1.0%

0.0%

1.0%

2.0%

2012 2013 2014

Rea

l g

row

th

Near-term Market Outlook: Western Europe


18

Residential market remain weak due to low purchasing power

Non-residential construction market in export dependent countries like CZ

and SK strongly dependent on development in Western Europe

Poland more resilient due to large domestic market

Some international competitors have left selected markets in CEE



-1.9%

-0.6%

1.5%

-2.0%

-1.0%

0.0%

1.0%

2.0%

2012 2013 2014

Rea

l g

row

th

Near-term Market Outlook: CEE


19

Near-term Market Outlook: Russia/CIS

Russia/CIS is the main growth region in Europe

– GDP is forecast to grow with 4% p.a.

– Capital investments are expected to grow with 8-10% p.a.

Forecast Russian total construction market (VTT, June 2012)

Strong order intake as reported in Q2 by Building Systems, especially in Russia

5.0%

4.0% 4.0%

0.0%

2.0%

4.0%

6.0%

2012 2013 2014

Rea

l g

row

th


20

Western Europe remain subdued for some years

More promising outlook for Nordic region

CEE and especially CIS should outperform the rest of Europe

Need of sustainable and energy efficient solutions will have strong positive

impact on construction market

Lindab well placed geographically

– Solid base to grow from in Nordic region

– Limited exposure to PIIGS markets

– Building Components and Building Systems have large share of sales to growth markets

Ventilation particularly well placed to benefit from energy efficiency trend

Long-term Market Outlook


10.00

12.00

12.45

14.30

17.00

Agenda

21






− Lunch









10.00

12.00

12.45

14.30

17.00

Agenda

22






− Lunch









Focusing on our

strengths

Focusing on

geographic growth

Focusing on growth

segments

Strategic Focus Areas Fittings and distribution in Ventilation

Residential in Building Components

Large Industrial Buildings in Systems

Energy efficiency solutions

Main focus

Russia and CIS

Close to home

Large market

Stronger growth

23

2009 to date: Rolled out new strategy


Focusing on our

strengths

Focusing on

geographic growth

Focusing on growth

segments

Selected key initiatives

Added 10 branches since 2010

Lindab center concept in CEE

Product development

New markets

Russia – start up and

current expansion

24

2009 to date: Rolled out new strategy

Acquisitions strengthening the core

Unmanned branch concept

Leading distributor in Poland

Sandwich panels in Nordic


Fixed costs reduced by ~20% vs 2008

Consolidated production

– Closed plants in SE, CZ, HU, RU, US, GB, DE

– Consolidated production in SE, CZ, LU, EE

Further significant investments in automation

– BABS robotic welding

– BAV fittings and Comfort

25

2009 to date: Cost and efficiency improvements


26

Indexed growth (n=100, 2009)

[Currency and structure adjusted]

90

95

100

105

110

2009 2010 2011 201206 LTM

Lindab Group organic

Euroconstruct (Lindab weighted)

Results of actions - Sales growth > market

Average sales above

market 3 to 4% p.a.

since 2009


27

82

90

98

106

114

2009 2010 2011 1206LTM

Sales vs. Cost Development (adj. for currency) (n=100, 2009)

Sales

Fixed costs

Results of actions - Cost improvements

Operating leverage of

35% assuming fixed

GP%


Results of actions - Efficiency improvements

28

Indexed Gross profit development (n=100, 2009)

100 101

99

102

90

95

100

105

110

2009 2010 2011 201206 YTD

Highest GP% in 2012

since 2008


January 2012: New near term 10% EBIT target 2014*

29

Actions are having a positive impact

Previously expected that a solid recovery from 2011

would boost our performance

Recovery will be slower than previously expected

Current margins are insufficient

Need to do more

* Assuming market conditions prevailing in early 2012


The road from 6-10% - a mix of focused growth

activities and cost savings / efficiency improvements

30

~50%

~50%

0%

2%

4%

6%

8%

10%

2011 EBIT% Focused growth activities

Cost savings and Efficiency

improvements

2014 EBIT% target

~50%

~50%

10%

6%

Lindab Group EBIT% Bridge


0

40

80

120

2012 2013- (annual)

The road from 6-10% 2011 to 2014:

Profit improvement initiatives

31

Sales growth activities

− Accelerating benefits from activities launched

− New activities

2012: 150 MSEK cost plan. Key activities :

− Re-location to lower cost countries

− Continued consolidation of production

− Reduction of CEE/WE capacity for BABS

Cost plan targeted net savings

SEK 100m

SEK 60m


The road from 6-10% 2011 to 2014:

Profit improvement initiatives

32

Efficiency / gross profit activities:

− Lean implementation continues

− Purchasing focus

− Selected pricing activities

Accelerating benefits from acquisitions

− Synergies


Summary: Road to 10%

33

Target: 10% EBIT run rate by end of 2013 and for full year 2014 –

for each Business Area and for Lindab Group

Gap from 6 to 10% filled by

− ~2% from sales activities

− ~2% from cost and efficiency initiatives

Additional action if markets remain weak


10.00

12.00

12.45

14.30

17.00

Agenda

34






− Lunch









10.00

12.00

12.45

14.30

17.00

Agenda

35






− Lunch









Business Area Ventilation

36

“The #1 Ventilation supplier and

distributor in Europe“


37

To provide a user friendly one-stop shop offering to our customers with

strong focus on solutions that “simplify construction”

Ensure that our customer, the installer, get superior availability and

support

Product development with focus on energy efficiency

Continued leverage of our #1 market position in ADS in Europe

Our main goals


Circular and rectangular ducts

for ventilation systems

Air Duct Systems (~80% of sales) Comfort (~20% of sales)

Traded goods

Wide range of accessories to

complete the offering and simplify

for our customers

Air systems

Diffusers, grilles, control valves and VAV

(Variable Air Volume) system

Water systems

Chilled beams, facade systems

and heating strips

Acoustics

Silencers to create a quiet indoor

climate

Product groups


39

Sales MSEK


3 568

4 507 4 783

3 878 3 535 3 612 3 681

9.9% 10.5%

9.5%

4.9% 5.3%

6.1% 6.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

1 000

2 000

3 000

4 000

5 000

6 000

2006 2007 2008 2009 2010 2011 201206 LTM

Sales and profitability development


40

BAV: The road to 10% EBIT

BAV road to 10% EBIT

Focused growth

activities

Cost savings and

efficiency improvements


BA Ventilation focused growth:

Improving Distribution

41

Selectively improved branch network

− New branches in Visby, Gent, Liege,

Brussels, Frankfurt

− Location in Gothenburg

− Planned improvements in Malmö

Strengthened purchasing team and

capabilities

Improved sales follow up routines and

KPIs



Product development InCapsa (fittings growth)

42

Revolutionary renovation solution for residential housing

One craftsman for installation (compared to three for traditional concepts)

No need for tenants to move out

Residential ventilation segment fastest growing segment, e.g. 800k apartments to

be renovated in Sweden (Miljonprogrammet)

Product launched in March 2012

../../../../Pictures/CMD/Movies/Lindab_Master_110714_2_h264.mov



Product development Comfort

43

VAV solution – Pascal

– Energy minimising with demand control function

– Launched Jan 2012

Flexible Premum and Premax chilled beams

– Energy conscious - High cooling capacity/weight ratio

– Launched Jan 2012

eHybrid solution

– Variable Air Volumes (VAV) combined with Multi-

Service Beams

– Excellent energy performance

– Launched Feb 2011



Market entrance leveraging BABS footprint

44

Expansion into CIS, recently

winning two large orders of

SEK 7m each

Project sales combining

BABS and BAV offering


BAV efficiency improvements: Moving Comfort

production to new factory in Czech Republic

45

Lean programme under implementation

>10% productivity improvements

achieved in 2011; Similar trend 2012

New automated box production


BAV efficiency improvements:

Improving cost base in Western Europe

46

Improved UK overall cost position

− Closed branch in Stockton

− Moved service production into one location (Manchester)

− Consolidated overhead functions into Northampton

Adjusted

footprint

Continued

West to East

strategy

Moved main production operations from Germany to

Karlovarska in Czech Republic


BAV additional growth through acquisitions:

Centrum Klima

47

Acquisition of all shares in Centrum Klima, a listed ventilation company

on the Warsaw stock exchange, finalized by a squeeze out process

August 7th, 2012

De-listing expected by October 2012

Consolidated Lindab and Centrum Klima operations in Poland


Centrum Klima, a successful ADS supplier with strong

base in Poland

48

Centrum Klima – one of the largest round

ADS players in Europe with market leading

position in Poland

~SEK 200m in sales 2011

~65% of sales in Poland, ~35% in rest of

Europe

Strong purchasing network with long

experience of trading with Asia


49

Operates from one main site located in the Warsaw

proximity

Wieruchów (Aug 2010 – tot area: 40 000m2)

Head Office,

Production (machine park: 3500m2),

Main Warehouse (5000m2)


50

A very strong sales and profitability track record

Sales

(PLN m)

EBIT %

(line)

37

53

72 76 72 85

93

10%

12%

14%

13% 12%

9%

11%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

50

100

2005 2006 2007 2008 2009 2010 2011

1PLN = 2.02 SEK 14/8 2012


51

Lindab and Centrum Klima – a perfect match!

Further leverage of Lindab’s world-class fittings production in Grevie

Ensure a leading position in distribution in Poland

Harmonisation of the traded portfolio to improve customer service across all

our branches

Adding further purchasing capabilities and network

Strengthened the BAV management team


52

BAV: The road to 10% EBIT

BAV summary of key activities

Focused growth activities

Development of

distribution business

Selected additions of

branches

Product development

Project sales leveraging

BABS network

Synergies from

Centrum Klima

Cost savings and


Correction of

underperforming units

Shift of production to low

cost regions

Consolidation of

production


Business Area Buildings Components

53

“European #1 in Rainline and steel

residential roofing

Market leader for industrial/commercial

steel roof and wall solutions in core

markets“


Innovative system solutions “simplifying construction”

Continued leverage of strong footprints in Nordics and CEE

Development of new growth markets, e.g. Russia

Continued focus and strengthening of our #1 position as the supplier to

small and mid-sized customers

Strong company culture ”The Lindab Spirit”

Our main goals


55

Coverline Profiled sheet metal roof, wall

products, sandwich panels and

accessories

Construline Lightweight construction solutions

made of steel

Doorline A wide range of sectional industrial

and garage doors

Residential (~60% of sales) Industrial (~40% of sales)

Rainline The biggest steel rainwater

system producer in Europe

Topline Leading suppliers of thin

steel based residential

roofing products

Seamline Wide range of sheet metal

based products and

accessories

Best-in-class products, both in the residential and

industrial segment


BA Components sales and profit development

56

Sales MSEK


2 433

2 812 2 927

2 144 2 118 2 268 2 239

15.9% 16.0%

14.1%

6.3%

8.7% 8.5% 7.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2006 2007 2008 2009 2010 2011 201206 LTM

Improved profitability despite challenging market environment

2009

Sales dropped with 28%,

early action on cost.

2012

Weaker demand than

expected, further cost

adjustments.


57

BABC: The road to 10% EBIT

BABC road to 10% EBIT

Focused growth

activities

Cost savings and



58

BA Building Components: Summary of key activities

Focused growth activities Cost savings and


Further strengthened offering in

Nordics

− Builder Merchants

− Go-to-market approach

”Systemline”

Product development

Lindab Center concept in CEE

Residential sales in WE, US new

opportunity being developed

Expansion to growth market

Russia

Acquisition of Plannja’s Sandwich

panel business

Consolidation of production in

Nordics

Improved cost structure in CEE

Raw material optimization

Improve profitability in lowest

performing units


Improved concept for BM

relationships developed

Separate resources to manage

relationships put in place

Result: 100+ stock holding

retailers in our network

59

BA Building Components focused growth: Increased

focus on Building Merchants

http://www.lindabgroup.com/english/pages/default.aspx





The new Lindab ”Click Roof”

60

Easy-to-install seamed roof system

Introduced in all markets during 2011

BA Building Components focused growth:

Product development



Product development

Brand new state of the art

Lindab roofer software

Quick and professional quotes.

User friendly


Result: Small building sales has more than doubled

between 2009-2011

Strengthening of separate

organisation

Increased sales focus

62


Increased focus on “Systemline” in Nordics


63

Förslöv, Sweden Jels, Denmark

Improving distribution, availability and service!

100+ centers by 2011 across all CEE markets

Strong Lindab appearance and loyalty, over 5000

registered installers in our loyalty program


Lindab Centers in CEE


64

BAV branches

BABC residential products

2012

2011

2010

BA Building Components focused growth: Residential

growth in WE leveraging BAV existing branch network


65

Russia expansion plan under final

evaluation

Attractive options identified

Decision in the coming months


Russia expansion


66

Plannja’s sandwich panel and high profile

business acquired in March 2012

The perfect complement to our industrial

offering and gives us real potential to grow in

the Nordic region

BA Building Components: Extension of Industrial Offer

through acquisition of Sandwich panels


Designed for energy

efficiency

Short lead time

reduces labour need

Panels has considerable advantages in terms of energy

efficiency and simplified construction process

Above general construction market

growth (>2x, 2000-2011)


68

Moved cassette production from Denmark to Förslöv

Consolidated

production in

Nordics

Improved cost

structure in CEE

Re-located operations in Slovakia

Further streamlining of CEE organization

(beyond cost plan)

Raw material

optimization

Product development focused on steel usage

Optimising supplier base

Changing material when applicable

BA Building Components Cost Savings and Efficiency

improvements: Improving manufacturing cost position


69

BABC: The road to 10% EBIT

BA Building Components summary of key activities


Further strengthened

offering in Nordics

Lindab Center concept

in CEE

Residential sales

in WE, US new opportunity

being developed

Expansion to growth

markets Russia

Acquisition of Plannja

Sandwich panels

Cost savings and

Efficiency improvements

Consolidation of production in

Nordics

Improved cost structure in

CEE

Raw material optimization

Improve profitability in lowest

performing units


Business Area Buildings Systems

70

“The preferred partner of sustainable

solutions for industrial buildings in EU,

Russia and CIS“


Single-Storey Buildings

Low-rise, tailor-made buildings for industrial and commercial applications, e.g.

logistics and distribution centres, warehouses and manufacturing plants

Multi-Storey Buildings

Steel framed buildings for offices, commercial buildings, parkings and process plants

Preferred partner for industrial buildings


• Builder Network: 75%

on the local / regional level

• Key Accounts: 25%

on the international level

Our market approach


73

70-80% of sales 20-30% of sales

Storage

Manufacturing

Commercial

Garages

Offices

Recreational

Customers benefit from a wide category of buildings

types


BA Building Systems sales and profit development

74

Sales MSEK


1 546

1 900 2 066

978 874

998 1 042

15.8%

21.6% 21.6%

0.7% 2.1%

3.8%

6.4%

0%

4%

8%

12%

16%

20%

24%

0

500

1 000

1 500

2 000

2 500

3 000

2006 2007 2008 2009 2010 2011 201206 LTM


75

BABS: The road to 10% EBIT

BABS road to 10% EBIT

Focused growth

activities

Cost savings and



76

BA Building Systems: Summary of key activities

Focused growth activities Cost savings and


Russia expansion

New small building concept

Expand Builder Dealer coverage

Builder activation program

Balancing production capacity

situation in WE/CEE

West-East strategy for

engineering and support

functions

Automation of mfg operations


77

Today Russia represents

~1/3 of BA Building

Systems sales

(continued market

growth expected)

Lindab address both

− Foreign investments

through key accounts

− Local investments

through our Builder

Dealer network

0

50

100

150

2008 Dec 2012 May

Very strong

momentum in

Russia!

Lindab BABS sales development Russia

(LTM, index n=100, 2008 Dec)

BA Building Systems focused growth:

Increasing speed in Russia


78

Shifting resources from regions

with spare capacity to Russia,

e.g.

− Sales resources in Europe to

key account sales in Russia

− Engineering resources in

Hungary



Recruiting 15-20 new Builder

Dealers each year

Doubling number of engineers

between 2011 and 2012

Extension on Yaroslavl factory

Meeting existing demand through

balancing resources Building for future growth


79

Extension of Yaroslavl

factory will be completed by

end of 2012

Capacity will increase 40%

to ~800MSEK when

finished




80

Cold formed solution with lower mfg

costs compared to welded solutions

Span width 8-25m

Estimated market size (WE/CEE),

15000 buildings per year

To be launched first half 2013

Highlighted as a key area in customer interviews during our strategy process;

Will be sold through existing builder dealer network


New small building concept developed


81

First station installed in 2011

(second in progress)

Reduced welding labour time

with up to 4x

Automatic data transfer from

own developed engineering

software

BA Building Systems Cost Savings and Efficiency

improvements: Automated welding system

../../../../Pictures/CMD/Movies/Robotic welding short movie.wmv


82

Right sizing of capacity completed after downsizing mfg operations

in Czech Republic (2012) and Hungary (2009)

Automation and efficient plant layout enable lowest cost production

in Luxembourg

Labour intensive parts still produced in Czech Republic

BA Building Systems Cost Savings and Efficiency

improvements: Right-sizing of production capacity


83

BABS: The road to 10% EBIT

BA Building Systems summary of key activities


Russia expansion

New small building

concept

Expand Builder Dealer

coverage

Builder activation

program

Cost Savings and

Efficiency improvements

Balancing production

capacity situation in

WE/CEE

West-East strategy for

engineering and support

functions

Automation of mfg

operations


10.00

12.00

12.45

14.30

17.00

Agenda

84






− Lunch









The road from 6-10% - a mix of focused growth

activities and cost savings/ efficiency improvements

85

~50%

~50%

0%

2%

4%

6%

8%

10%

2011 EBIT% Focused growth activities

Cost savings and Efficiency

improvements

2014 EBIT% target

~50%

~50%

10%

6%

Lindab Group EBIT% Bridge


A good track record since 2009

86

Average sales above market

3 to 4% p.a. since 2009

Operating leverage of 35%

assuming fixed GP%

Good GP% trend – Highest GP% in

2012 since 2008

86 90 94 98

102 106 110 114

2009 2010 2011 1206LTM

Sales vs. Cost Development (n=100, 2009)

Sales Fixed costs

90

95

100

105

110

2009 2010 2011 201206 LTM

Indexed growth (2009 n=100)

100 101

99

102

90

95

100

105

110

2009 2010 2011 201206 YTD

Indexed Gross profit development


87

Accelerating profit improvement activities

− Numerous sales activities implemented recently

− New sales activities

− Full benefit of 2012 cost plan

− Efficiency / margin initiatives

− Increasing synergies from acquisitions

Pace of recovery uncertain

− Will be strongly correlated to macro economics

− Corrective actions if needed

The Road from 6 to 10%


88

Conclusion: 10% and beyond

2014 target:

10% EBIT

Full

realization

of strategy

Focus on our strengths

Good geographic balance

− Strong position in CEE

− Russia and CIS

Environmental efficiency

Recovery accelerates


THANK YOU

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