The Rockwool Group in Brief

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Candace Poole
7 years ago
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1 Investor Tour London 7 September 2006

2 The Rockwool Group in Brief

3 The Rockwool Group As a supplement to a variety of already existing activities related to the construction industry, stone wool production was started in From the early sixties the Rockwool Group was started in its present form and the decision made to focus on development, production and bringing to market of stone wool products only. The Rockwool Group is today the worlds biggest producer of stone wool products and systems and number 2 in mineral wool in Europe.

From the early sixties the Rockwool Group was started in its present form and the decision made to focus on

4 The Rockwool Group This position has been obtained through prioritisation of: Process technology, engineering and R & D. Market share increase. Strong marketing and branding efforts.

5 The Rockwool Group The Rockwool Group was listed on the Copenhagen Stock Exchange in 1996 and is presently member of the Midcap+ section. Since the beginning of 2003 the value of its B- shares has increased from approx. DKK 95 per DKK 10 share to 791 at the end of august 2006.

Since the beginning of 2003 the value of its B- shares has increased

6 5 years Share Price Development Price in DKK Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 A-Share B-Share DK-Industry CSE2010PI

7 The Rockwool Group The Rockwool Foundation holds 23% of the share capital. The Foundation stimulates neutral research into social, political and economical circumstances in Denmark and abroad. There exists as far as management is aware no shareholder agreement between shareholders.

The Foundation stimulates neutral research into social, political and

8 Financial figures

9 Net sales meur Q Q2

715 767 603 711 400 200 0 1994 1995 1996 1997

10 EBITDA meur Q Q2

101 84 75 50 25 0 1994 1995 1996 1997 1998

11 Changes in EBITDA EBITDA Increased sales prices 46 Increased volumes / changes in product mix 23 Increased prices on purchases -51 Improved efficiency and other items 6 Total change in EBITDA 24 EBITDA

12 EBIT meur Q Q2

13 Profit after Minority Interests meur est 2005 Q Q2

27 18 34 54 27 41 10 0 1994 1995 1996 1997 1998 1999

14 Cash Flow from Operations meur Q Q2

124 115 104 72 60 40 20 21 0 1994 1995 1996 1997

15 Stocks, Debtors & Creditors meur Q Q2

-123-151 -159-163 -175-200 -225-250 1994 1995 1996

16 Investments & Acquisitions meur Q Q2

95 127 56 60 55 50 0 1994 1995 1996 1997 1998

17 Free Cash-Flow meur Q Q2

-80-100 -120-118 1994 1995 1996 1997 1998

18 Financial goals Target Actual % sales growth 9.6% Profit ratio at 9% 8.8% Return on invested capital at 14% 18.3% Free cash flow at 2% of turnover 1.6% Equity ratio at least 50% 63%

19 Expectations for 2006 Sales growth at 12% Net sales from EUR 1,344 million to approx. EUR 1,505 million. Net result after minority interests From EUR 77 million to approx. EUR 101 million. Investment and capital expenditure From EUR 127 million to approx. EUR 161 million.

Net result after minority interests From EUR 77 million to approx.

20 Development of the Group

21 Key points 1. Market development European building insulation market Other markets 2. Main changes in the competitive landscape 3. The capacity situation 4. Legislative opportunities EPBD ESD

22 Expected growth in European construction markets in 2006 > 5 % 3-5 % 1-3 % 0-1 % < 0 % Sources: Euroconstruct June 2006 et al.

23 European (EU) building insulation market No lasting negative effect on the increasing building industry activity from rising inflation (incl. energy prices), interest rates and regional shortage of certain building materials Increased focus on energy efficiency in buildings in particular from the legislator. The insulation market will outgrow the building market 4 to 6% by 2009 compared to today The residential market will remain stable at the rather high levels of previous years The non-residential market will grow in line with the generally positive macroeconomic picture

24 European (EU) building insulation market The refurbishment market is growing, fuelled by high energy prices and new financial incentives: In Germany EUR 1.4 bn/year for increased energy efficiency in existing dwellings. The interest has been overwhelming Incentive programmes being introduced in many other countries e.g. France, Spain and the UK. EU s structural funds now to target building projects in the new member states : EUR 6 bn (2% of total amount) for multi-family housing projects

25 Other markets The building insulation markets in North America, Russia and the Ukraine remain buoyant however with a slow down in the US residential segment The technical insulation market is growing fast due to a general under capacity in the petrochemical and power generation industries The horticultural greenhouse industry continues to suffer from high energy prices. Despite this, our Grodan business is making good progress

26 European competitive landscape Finnish stone wool and sandwich panel producer Paroc acquired by capital fund Arcapita Knauf indicates further glass wool capacity increase in Eastern Europe DT Group acquired by Wolseley

27 Geographic expansion Trondheim Vyborg Moss Grand Forks Milton Vamdrup Doense Hedehusene Moskva Wern Tarw Roermond Flechtingen Gladbeck Cigacice Malkinia Melaka (Malaysia) Caparroso Neuburg St. Eloy- Les-Mines Bohumin Gógánfa Tapolca Istria (under construction) Iglesias

28 Capacity situation The Rockwool Group is presently establishing new capacity both greenfield as well as at existing facilities in order to match the expected market growth in the coming years Management has at this point in time a number of additional capacity increase projects on the drawing board

29 Legislative opportunities The Energy Performance of Buildings Directive (EPBD) enforces: Building regulations must be based on total energy performance calculations Energy certification (incl. advise on energy efficiency improvement measures) of buildings which are constructed, sold or rented National building regulations to be revised (= tightened) concerning energy efficiency every 5 years Buildings > 1,000 m2 must be upgraded to follow energy efficiency requirements when undergoing major renovation

30 Legislative opportunities No member states managed to fulfil all requirements concerning implementation by the target date 4 January 2006 but Germany and Denmark were close In a number of countries, energy requirements for new constructions are now strengthened as a consequence of the implementation Such strengthened requirements will usually impact the market with a 12 months delay due to the building cycle Implementation of the EPBD is still ongoing:

31 Changes in energy requirements of new buildings

32 Legislative opportunities The Rockwool Group wishes to play a major role in the market for energy efficiency in buildings and has therefore established the BuildDesk Division BuildDesk is unbiased and offers software tools, services and consultancy BuildDesk is active in Germany, Holland, the UK and Denmark. A 5th market is expected to be added during 2006

33 Legislative opportunities Major BuildDesk achievements since March 2006 Launch of energy performance software for new domestic buildings and supporting seminars in the UK Energy certification and consultancy software and training launched in Denmark Strategic energy certificate partnership established in Germany with DENA (Deutsche Energie Agentur), the Federal Ministry of transport, building and urban affairs, the energy company E.ON and EID (Energiepass Initiative Deutschland) BuildDesk Online established; initially with a U value calculator

34 Legislative opportunities Directive on energy end-use efficiency and energy services (ESD) Adopted in December 2005 Enters into force in 2008 Goal: To improve end-use energy efficiency in each member state with minimum 9% over a period of 9 years either through national initiatives and/or through obligations on energy providers to help end users improve energy efficiency We expect the ESD will have a market impact comparable to the EPBD

Agenda. Welcome by CFO Knud Jørning 2. Main results from Q1-Q2 2006 by CFO Knud Jørning Group development by CEO Eelco van Heel 4.

Agenda. Welcome by CFO Knud Jørning 2. Main results from Q1-Q2 2006 by CFO Knud Jørning Group development by CEO Eelco van Heel 4. Investor meeting 1 September 2006 Agenda 1. Welcome by CFO Knud Jørning 2. Main results from Q1-Q2 2006 by CFO Knud Jørning 3. Group development by CEO Eelco van Heel 4. Questions Main results from Q1-Q2