gunnebo q4 2018...2019‐02‐06 1 gunnebo group q4 2018 6 february 2019 the group in...

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Gunnebo Group Q4 20186 February 2019

The Group in Brief – Continuing Operations

5,100 MSEK

Turnover 2018

4,500

No of Employees

25

Sales Companies

100

Distributor Markets

OfferingSafe Storage, 36%

Cash Management, 21%

Entrance Control, 20%

Integrated Security, 23%

Q4 2018© Gunnebo Group.2

Sales by Region, YTD Q4 2018

Sales by Customer Segment,YTD Q4 2018

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Strong Cash Flow and Continued Sales Growth

• The reported EBITA increased in Cash Management and Entrance Control

• Free cash flow was strong in the quarter at MSEK 133 (71) of which MSEK 88 came from improved working capital

• During the quarter we have closed the divestment of France, Belgium and Luxembourg

• Continued focus on main Business Units – small Integrated Security business in the UK divested

CEO Comments on Q4

“During the fourth quarter, the Group’s sales growth was 6%, coming from growth in all four Business Units of Safe Storage, Cash Management, Entrance Control and Integrated Security”

Henrik Lange, President and CEO


Strong Cash Flow and Continued Sales Growth

• Sales growth ended at 3% with double-digit growth for Entrance Control and single-digit growth for Safe Storage and Cash Management

• The EBITA for Safe Storage, Cash Management and Entrance Control improved by close to MSEK 60

• Free cash flow for the full year was MSEK 124 (-74), an improvement of MSEK 198

CEO Comments on Full Year 2018

“For the full year 2018 the Group’s sales growth ended at 3% with double-digit growth for Entrance Control and single-digit growth for Safe Storage and Cash Management, while Integrated Security contracted by 5%.”

Henrik Lange, President and CEO


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• Net sales amounted to MSEK 1,420 (1,300), sales growth was 6%

• EBITA amounted to MSEK 110 (120) and the EBITA margin was 7.7% (9.2)

Summary of the Quarter Continuing Operations


Sales Sales2018 2017 growth 2018 2017 growth

Net sales, MSEK Q4 Q4 % YTD YTD %

Safe Storage 506 449 8 1,826 1,708 4Cash Management 296 254 12 1,090 1,031 2Entrance Control 280 260 3 1,048 894 13Integrated Security 338 337 1 1,164 1,228 -5Total 1,420 1,300 6 5,128 4,861 3

2018 Margin 2017 Margin 2018 Margin 2017 Margin

EBITA, MSEK Q4 % Q4 % YTD % YTD %

Safe Storage 44 8.7 46 10.2 151 8.3 126 7.4Cash Management 42 14.2 27 10.6 122 11.2 120 11.6Entrance Control 52 18.6 48 18.5 176 16.8 145 16.2Integrated Security 7 2.1 35 10.4 1 0.1 107 8.7Group Functions -35 - -36 - -106 - -123 -Total 110 7.7 120 9.2 344 6.7 375 7.7

Cash Management

Entrance Control

Safe Storage 36%of Sales

8.3%EBITA

Integrated Security

21%of Sales

11.2%EBITA

20%of Sales

16.8%EBITA

23%of Sales

0.1%EBITA

4%Sales Growth

2%Sales Growth

13%Sales Growth

-5%Sales Growth

Business Unit Performance Full Year 2018, % Continuing Operations

© Gunnebo Group.6 Q4 20186

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Business Unit Safe Storage Q4 2018 Continuing Operations

• 36% of Group Sales (YTD)

• Sales growth of 8% in Q4

• Strong sales development for ATM safes and sales in the US

• In Europe, Spain had a good quarter, where most other markets had weak sales

• In Asia-Pacific, the important Indian market continued to show strong growth, as did the markets in South East Asia and China

• In Americas, both US and Canada finished the year with strong sales growth

SALES BY REGION, YTD 2018

MSEK


57%26%

17%

EMEA APAC Americas

7

2018 2017 2018 2017

Q4 Q4 YTD YTD

Net sales, MSEK 506 449 1,826 1,708

Sales growth, % 8 -17 4 -8EBITA, MSEK 44 46 151 126

EBITA margin, % 8.7 10.2 8.3 7.4Items affecting comparability (IAC), MSEK -17 -16 -24 -27

Operating capital employed 491 444 491 444

Safe Storage

• Europe: Several orders for automated safe deposit lockers, SafeStore Auto, received from among others one traditional bank and one private investor in Hungary and Swiss Berner Kantonalbank.

• Switzerland: Major bank places several orders for vaults and vault doors.

• Sweden: Swedish government continues to invest in safes secured for Electro-Magnetic-Pulse (EMP)

• South East Asia: Private investor from Singapore confirmed an order for Safe Store Auto-Maxi solution with over 4000 lockers in one location.

• India: A leading gold loan company continues to engage Gunnebo to enhance security level in its branches across India.

• South Africa: A major Bank places order for more than 300 Blast Resistant ATM safes.

• Canada: Several larger service contracts on locksmith services were signed in the quarter.

Business Unit Safe Storage – Q4 2018 Highlights

© Gunnebo Group.8 Q4 2018© Gunnebo Group.8

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Business Unit Cash Management Q4 2018 Continuing Operations


• Sales growth of 12% in Q4

• Strong sales of its closed cash management system, SafePay, in the quarter, coming from the Nordics, Spain and Italy. Sales to CIT also developed well.

• Strong growth in the Middle East due to continued major deliveries to a regional CIT company.

• Sales in Asia-Pacific were weak overall.

• In Americas, sales were flat in Brazil and the US and weaker on other markets.


MSEK


2018 2017 2018 2017

Q4 Q4 YTD YTD

Net sales, MSEK 296 254 1,090 1,031

Sales growth, % 12 -2 2 8EBITA, MSEK 42 27 122 120


Operating capital employed, MSEK 258 284 258 284

Cash Management

• Denmark: Retailer Netto continues the roll-out of closed cash management, SafePay, to its stores across the country.

• Denmark & Sweden: Retailer Coop also continues to upgrade its cash management solutions by installing closed cash management, SafePay, in more stores.

• Middle East: A large CIT-company in the Middle East continues to buy Gunnebo’s cash management solutions to streamline the cash process for its retail customers.

• Dominican Republic: Banco Popular decides to invest in cash handling solutions. Together with the local partner Cash Management Dominicana, Gunnebo is to supply hardware and customized software to the bank.

• Brazil: After a successful pilot with one of its main retail customers, CIT-company Prosegur has now started full roll-out of cash management solutions from Gunnebo for the client.

Business Unit Cash Management – Q4 2018 Highlights


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Business Unit Entrance Control – Q4 2018 Continuing Operations


• Sales increased by 3% in Q4.

• In Europe, sales developed well, especially in the Nordics, Switzerland, Spain and Italy.

• In Asia-Pacific and Middle East, the major Entrance Control markets China, South Korea and Middle East all had a slow quarter, which is mainly due to phasing of projects.

• In Americas, sales showed strong development in both US and Canada where growth was primarily coming from airports.


MSEK


2018 2017 2018 2017

Q4 Q4 YTD YTD

Net sales, MSEK 280 260 1,048 894

Sales growth, % 3 -6 13 10EBITA, MSEK 52 48 176 145



Entrance Control

• Italy: Global logistic company (DHL) choses SpeedStiles and CCTV solution from Gunnebo when improving security and access control at sites in the country.

• Sweden: Aviation company Swedavia and other Swedish airports continues to invest in improved passenger flow by installing pre-security gates.

• Spain: CIT company Prosegur upgrades security at its Madrid offices with entrance solution from Gunnebo.

• South Korea: The commercial building Sae Woon installs SpeedStiles to regulate the flow to and form the building.

• China: The successful business to supply solutions for entrance control to metro lines in the country continues. In the quarter, a metro line in Wuhan decide to install Gunnebo’s metro gates.

Business Unit Entrance Control – Q4 2018 Highlights


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Business Unit Integrated Security – Q4 2018 Continuing Operations


• Sales growth of 1% in Q4.

• Sales growth was negative in Europe with strong sales in Sweden and Germany that did not compensate for weaker performance in other markets.

• Sales in Asia-Pacific showed a slight growth where good levels of sales in Australia and India did not compensate for the weaker fire sales, mostly related to the big fire projects in South East Asia last year.

• In Americas, sales showed strong development in Mexico, developed well in Canada and US but weaker in Brazil.


MSEK


2018 2017 2018 2017

Q4 Q4 YTD YTD

Net sales, MSEK 338 337 1,164 1,228

Sales growth, % 1 -1 -5 -6EBITA, MSEK 7 35 1 107



Integrated Security

• Spain: National Sport Spain Council equips their HQ and sportsman residences with electronic security software and wireless locks from Gunnebo.

• India: Sales of fire products under the Minimax brand continue to develop well.

• Brazil: Lojas Americanas, one of the leading retail chains in Brazil, with more than 1,400 stores and present in all Brazilian states, continues to roll out EAS and CCTV solutions, together with other loss prevention equipment from Gunnebo, to their stores nationwide.

• Mexico: Several banks sign contracts with Gunnebo for electronic security refurbishment projects.

• Gunnebo Business Solutions: The Group continues to develop a common software platform and the commercialization of solutions for the retail industry.

Business Unit Integrated Security – Q4 2018 Highlights


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Integrated Security Business Different in Different Geographies

© Gunnebo Group 15 11 January 2019

Americas

• Loss prevention solutions in Brazil

• Electronic Security service business in Mexico and Canada

Europe, Middle East & Africa

• Integrator business in Spain & Portugal (Iberia)

• Different electronic security offering, sometimes also security doors & partitions in each country

• Gunnebo Business Solutions software platform

• Electronic Article Surveillance, sold under the Gateway brand

• Integrated Security projects in the Middle East

Asia-Pacific

• Fire and Electronic Security project in Indonesia

• Fire products, sold under the Minimax brand, and Integrated Security in India

• Different local businesses

• Different level of profitability

• Different strategic agendas

• No real synergies between the variousbusinesses

Integrated Security is a Variety of Local Businesses

© Gunnebo Group 16 11 January 2019

• Common goal: To reach or exceed the Group targets of:

• 5% sales growth

• 10% EBITA

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Discontinued Operations – Q4 2018

• The divestment generated a total transactional loss of MEUR 69, of which MEUR 60 was recorded in Q2 and MEUR 9 in Q4.

• Net sales for discontinued operations in the fourth quarter amounted to MSEK 208 (332) while the operating profit was -9 (11). YTD the operating loss was -103 (3).

On December 3, 2018, the Group completed the divestment of its businesses in France, Belgium and Luxembourg. This business has been reported as “Discontinued Operations” as of the second quarter 2018.


2018 2017 2018 2017MSEK Q4 Q4 YTD YTD

Net sales 208 332 976 1,130

Operating expenses excl. depreciation and amortisation -213 -315 -1,057 -1,103

EBITDA -5 17 -81 27

Depreciation and amortisation -4 -6 -22 -24

EBIT -9 11 -103 3

Financial income and expenses, net 0 -1 -2 -3

Profit before taxes -9 10 -105 0

Income taxes -1 2 10 8

Results from operating activities -10 12 -95 8

Loss on divestment -99 - -708 -

Net profit/loss from discontinued operations -109 12 -803 8

• Net sales amounted to MSEK 1,420 (1,300), sales growth was 6%

• EBITA amounted to MSEK 110 (120) and the EBITA margin was 7.7% (9.2)

• EBIT amounted to MSEK 67 (93) and the EBIT margin was 4.7% (7.2)

• EBIT includes a one time impairment of intangible asset (MSEK -11)

• Net profit for the period for the continuing operations was MSEK 22 (64). Including the discontinued operation net profit for the period, was MSEK -87 (76)

• Free cash flow was MSEK 133 (71)

• Proposed dividend for the full year is 0.50 SEK (1.20)

Summary of the Quarter


Sales Sales2018 2017 growth 2018 2017 growth

Net sales, MSEK Q4 Q4 % YTD YTD %

Safe Storage 506 449 8 1,826 1,708 4Cash Management 296 254 12 1,090 1,031 2Entrance Control 280 260 3 1,048 894 13Integrated Security 338 337 1 1,164 1,228 -5Total 1,420 1,300 6 5,128 4,861 3

2018 Margin 2017 Margin 2018 Margin 2017 Margin

EBITA, MSEK Q4 % Q4 % YTD % YTD %

Safe Storage 44 8.7 46 10.2 151 8.3 126 7.4Cash Management 42 14.2 27 10.6 122 11.2 120 11.6Entrance Control 52 18.6 48 18.5 176 16.8 145 16.2Integrated Security 7 2.1 35 10.4 1 0.1 107 8.7Group Functions -35 - -36 - -106 - -123 -Total 110 7.7 120 9.2 344 6.7 375 7.7

2018 2017 2018 2017

Other financial information, MSEK Q4 Q4 YTD YTD

Amortisation and impairment from acquisition related intangibles -13 -4 -40 -22

Items affecting comparability (IAC) -30 -23 -39 -52

EBIT 67 93 265 301

Net profit for the period 22 64 120 152

Earnings per share, SEK 0.27 0.76 1.57 1.90

Discontinued operations

Net profit for the period -109 12 -803 8

Earnings per share, SEK -1.42 0.15 -10.52 0.10

Continuing and discontinued operations

Net profit for the period -87 76 -683 160

Earnings per share, SEK -1.15 0.91 -8.95 2.00

Free cash flow 133 71 124 -74

Dividend per share (*proposed), SEK - - 0.50* 1.20

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EBIT and EBITA by Quarter, MSEK Continuing Operations


EBITA Margin by Quarter, % Continuing Operations


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EBITA Bridge by QTD, MSEK Continuing Operations


EBITA BRIDGE Q4EBITA 2017 120

Sales growth 17

Structure 3

Currency 0

Other -30

EBITA 2018 110

Free Cash Flow, MSEK Continuing and Discontinued Operations

Q4 2018

MSEK2018 Q4

2017 Q4

2018 YTD

2017 YTD

Operating profit -72 104 -410 304Depreciation 13 16 61 66Amortisation, acquisition related intangibles 3 4 19 22Impairments and write-downs, discontinued operations 113 0 526 0Amortisation and impairment - other intangibles 18 9 55 29Other -1 -23 -96 -150Change in working capital 88 13 87 -200Operating cash flow 162 123 242 71Investing cash flow excluding acquisitions -29 -52 -118 -145Free cash flow 133 71 124 -74

© Gunnebo Group.22

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Free Cash Flow by Quarter and Last Twelve Months, MSEK Continuing and Discontinued Operations

Free cash flow 12M


Net Debt/EBITDA Continuing Operations

MSEK


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Annual Sales Growth of 5% Growth 6%

EBITA of >10%Profitability

Net Debt/EBITDA of <2.5Net Debt /EBITDA

Annual Dividend of 30-50% of the Net ProfitDividend*

Sustainability

TargetOutcome

Q4 FY 2018

• Reduce use of electricity, CO2 emissions and increase recycling

• All manufacturing units ISO 14001 certified

• All major suppliers compliant with Code of Conduct

• All major manufacturing units OHSAS 18001 certified

3%

7.7% 6.7%

- 3.5

0.50 SEK FY 2018*

* Proposed

Group Targets & Outcome Q4/Full Year 2018


• 11 April, 2019 AGM 2019

• 26 April, 2019 Q1 Report 2019

• 19 July, 2019 Q2 Report 2019

• 22 October, 2019 Q3 Report 2019

• 7 February, 2020 Q4 Report 2019

• 21 April, 2020 Q1 Report 2020

Financial Calendar


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www.gunnebogroup.com

• Definition: Growth in net sales in constant currencies, hence includingorganic, acquired and divested sales

• Target is to grow the main Business Units in line with market or better

• With focus on the main Business Units, the Group will be better structured to capture growth in the market

Annual Sales Growth of 5%

Continuing Operations


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• Definition: EBIT excluding IAC and acquisition related amortization and impairments. For the Business Units, no costs for Group functions are allocated.

• Target is to reach a 10% EBITA throughfocusing on the main Business Units, driving both topline growth and marginimprovements.

• EBITA target defined by Business Unitwill allow dedicated focus on drivingimprovements.

EBITA of >10%

Continuing Operations


• Definition: Period end net debt excludingpension liabilities divided by EBITDA for the last 12 months

• Will ensure the Group’s capital strength.

• Target will drive a clear cash flow focus by Business Unit.

• When acquisition is performed the Group expects the Net Debt/EBITDA to increase and over time reduce to a normalized level again.

Net Debt/EBITDA of <2.5


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• Increase from 30-40% of net profit to 30-50% will ensure good direct return.

• The Business Unit focus will giveincreased profitability enough to bothreinvest in our business and alsoincrease the dividend level to the Group’s shareholders.

• By ensuring a Business Unit focus the Group will improve its profitability and thus dividends over time.

Dividend of 30-50% of Net Profit


0%

20%

40%

60%

80%

2014 2015 2016 2017 2018*

Annual dividend of net profit, %

*Proposed, based on net profit from continuing operations

gunnebo q4 2018...2019‐02‐06 1 gunnebo group q4 2018 6 february 2019 the group in...

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