Kverneland. Financial position strongly improved valued P/B 0.5x. BUY Target: NOK Mar-09. Medium

Transcription

1 1-Mar-09 BUY Target: NOK 8.5 Medium Kverneland Financial position strongly improved valued P/B 0.5x Frank Harestad Direct: Mobile:

2 KVE: Bale divestment not reflected in valuation Kverneland is valued at historical all time low multiples, P/BOOK 0.5x and EV/EBITDA 3.5x.!Following the sale of Bale division KVE is close to debt free!the Bale division was sold for EURm 115 ~ EV/EBITDA 7x.!A EURm 77 gain will be recognized in 1Q09 vs total market cap EURm 82!With a solid balance sheet and numerous cost cutting efforts KVE is considered a robust player in current market!preseason sale has been decent and 1H09 numbers should be sound, but probably somewhat lower than last year!a potential recovery in the economy during 2H09 should be beneficiary for 2010 numbers 2

3 Kverneland 4Q08 numbers as expected The company delivered decent numbers in the seasonal weak 4Q. Sale of bale division for EURm 115 completed February 19 th. KVE close to debt free! A decent 4Q report! Incl. the divested Bale Division EBITDA for 4Q08 was EURm 6.1 vs 5.2E and -1.2 in 4Q07! Continued business EBITDA EURm 2.9. vs Q07! The major reason for the improvement is realization of higher sales prices! 4Q08 currency loss of EURm 12.5, mainly driven by hedging losses related to the weakening NOK vs EUR! The sale of the Bale division to Bucher closed! Received EURm 115 in cash, net debt ~zero! A EURm 77 gain will be posted in 1Q09! KVE will continue to distribute the Bale products until 3Q10! To utilize its extensive distribution KVE is likely to compensate with deliveries from other producers when this agreement ceases! However, unless a producer is acquired this will be low margin business 3

4 Revenues & Margins E EURm 600 % E Revenues Net operating margin 0.0 4

5 2009: weaker markets offset by lower costs/ more favourable forex!ebitda projected -25% in 09!Arable EURm 12 vs EURm 17 in 2008! Order back log EURm % 4Q07! Stronger EUR/NOK very beneficiary for plough factory!sprayers/grass EURm 11 vs 14 in 08! Grass order back-log EURm 56, 35% lower than 4Q07 Proforma figures: Bale incl. as discontinued operations and not in operating profit (EURm) E 2010E Arable Sprayers Grass Other (13.3) (4.0) (3.0) (3.0) EBITDA EBITA Net profit (11.7) (2.1) EPS EUR Market Cap Net debt EV P/E EV/EBITDA P/B

6 KVE vs. peers! Bale divestment not reflected in valuation 18 9/3/ M A M J J A S O N D J F KVERNELAND (~NK) DEERE (~NK) AGCO (~NK) BUCHER INDUSTRIES (~NK) Source: DATASTREAM 6

7 KVE valuation versus peer group P/B 09 EV/EBITDA 09E DEERE BUCHER AGCO KVE 2 0 DEERE BUCHER AGCO KVE 7

8 Declining agriculture prices but still decent levels Wheat spot USD/bu (-20y) Feb-89 Feb-93 Feb-97 Feb-01 Feb-05 Feb-09 8

9 Kverneland: Western Europe & Nordic 73% of sales America 5% ROW 5% CEE & CIS 17% Nordic 11% WE 62% 9

10 KVE: stronger balance sheet % Net interest bearing Debt/ Equity 240% 200% 160% 120% 80% 40% 0% E2003E 2004E E -40% 10

11 Kverneland: P/B & EV/EBITDA E P/B 4.0 EV/EBITDA E E P/B EV/EBITDA 0 11

12 KVE: Shareholders Shareholders # shares % Umoe Industri AS Odin Norge Ferncliff Orkla ASA MP Pensjon Citibank N.A Skagen Vekst Six SIS AG AS Bemacs Brown Brothers Sparebanken Rogaland Pactum Rishaug Eiendom Svenska Handelsbanken Nordea Avkastning Nordea Vekst Others Total

13 Kverneland Management Management Ingvald Løyning (President and Chief Executive Officer) Jens Kristian Rein (Chief Financial Officer) Claus U. Thomsen (Man. Dir., Grass Equipment) Wolfgang Kreienbaum (Man. Dir. Arable Soil and Plough Equipment) Arild Gjerde (Man. Dir., Sales and Marketing) Magne Svendsen (Man. Dir., BA After Sales) Company Board Jens Ulltveit Moe (Chairman) Kjell E. Almskog (Deputy Chairman) Øystein Stray Spetalen Karen Helene Ulltveit-Moe Toril Nag Marianne Lie Marit Røed Ødegaard Knut Øversjøen 13

14 Disclaimer These recommendations were not presented to the issuers before dissemination. Pareto and the analyst accept no responsibility and expressively disclaim any and all liabilities for any and all losses related to investments caused by or motivated by Recommendations from Pareto. Any person receiving a Recommendation from Pareto is deemed to have accepted this disclaimer. The disclaimer shall apply even if an Investment Recommendation is shown to be erroneous or incomplete or based upon incorrect or incomplete facts, interpretations or assessments or assumptions by Pareto, and irrespective of whether Pareto or any person related to Pareto can be blamed for the incident. For further disclosures on relevant definitions, methods, risks, potential conflicts of interest etc. and disclaimers please see All investment recommendations should be reviewed in conjunction with the information therein. 14