Q EKORNES February 16 th, 2017

Transcription

1 Q4 EKORNES February 16 th, 2017

2 Highlights Stable FY revenues of NOK 3.1 billion, Stressless slightly down, IMG, Svane and Contract up Year over year quarterly revenues down by 4.4%, explained by changes to revenue recognition and Stressless Cost reduction program announced August 2015 delivered, effects materializing into 2017 and 2018 Quarterly adj. EBIT margin up to 11.8%, from 9.9% in Q Underlying order receipts and order reserve somewhat down Continued focus on cost efficiency, increased prioritization of revenue growth initiatives Strong cash flow in quarter and year Dividend payment of NOK 6.00 per share proposed by the board 2

3 Financial results Operating revenues Adjusted EBIT & margin Reported EBIT & margin NOK million NOK million NOK million % ,5 % 23,3 % 25% ,5 918,5 759,5 712,8 752, ,9 % 14,3 % 15,6 % 11,8 % 20% 15% ,3 165,7 20% 15% ,9 % 77,9 127,3 108,8 111,2 93,8 10% 5% ,7 % 60,6 9,6 % 72,6 10% 5% 0 Q Q1 Q2 Q3 Q4 0 Q Q1 Q2 Q3 Q4 0% 0 Q Q1 Q2 Q3 1,1 % 8,7 Q4 0% 3

4 Longer term revenues and earnings development Operating revenues Earnings per share NOK million NOK 12,00 10,00 8,00 6,00 4,00 2, ,

5 Measures to improve operational efficiency Key focus area 2015 : Stressless and group functions Objective: Strengthen competitiveness Preparing for growth initiatives Simplification of logistics flows Stressless production capacity adjustements Concentrating Stressless Sofa production Further streamlining, automatization and digitization of production Focusing mgmt resources Cost efficiency program initiated Improving finance, accounting and control functions Reducing overhead with 50 FTEs Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q

6 Financial results (preliminary and unaudited)

7 Results influenced by special items Revenue deferrals (cut off) NOK 50 million in Q4 Reported/adjusted EBIT impact NOK 17 million in Q4 Changed forex codes in SAP Reported/adjusted EBIT impact NOK 32.5 million full year impact in Q4 No impact on pre tax result/eps Currency effects Loss on unrealized hedge contracts NOK 47.7 million in Q4. Reported EBIT impact Adjusted EBIT Asymmetric EBIT adjustments in Q3 and Q4 NOK 20 million adjusted EBIT delayed from Q3 to Q4. No impact on full year 7

8 Changes to SAP currency codes affects cost picture NOK million Change Income Change CoGS One off inventory Reduction other costs EBIT effect Stressless Svane Contract IMG Group Old practice: Fixed/historic forex basis for calculations in SAP, not a common standard Transfer from internal reporting to financial accounts through a number of manual calculations based actual forex on extractions from SAP New practice: Transition to actual forex planned during and implemented 1 October The transition revealed errors the manual calculations did not give the correct accounting lines for all bookings. Resulting in incorrect operational costs, off set by net financial items The error occurred in all segments using the SAP system IMG not included Impact: EBIT impact in negative NOK 32.5 million, all booked in Q4. No impact on pre tax result/eps 8

9 Currency effects Hedge portfolio value 2015 During the NOK strengthened towards Ekornes main currencies Hedge portfolio value YE 2015; NOK million, with the following split: : NOK 201 million 2017: NOK 178 million 2018: NOK 19 million Decreasing negative value on both realized and unrealized parts of the portfolio Realised losses of NOK million Difference between booked negative value of NOK 201 million and actual loss of NOK million for is NOK 42.2 million. Due to earlier hedge accounting the NOK 42.2 million has to be taken as a decrease of revenue and decrease of cost (other gains and losses) no EBIT impact. For Q3 only cost side was adjusted, under reporting adjusted EBIT by NOK 20,2 million (no impact on reported EBIT) From Q4 going forward the amount will be adjusted on both revenue and on cost. When presenting adjusted EBIT, unrealised gain on remaining portfolio is NOK 95.4 million 9

10 Hedging impacts on revenue and EBIT illustrative * Includes adjustments for currency only (not IMG contingent consideration and other adjusted costs) 10 Q4 NOK million Reported Adjusted* Without currency hedging Illustrative Revenue, gain in value hedge contracts before realisation Revenue, realized loss hedge contracts 21.8 Other gains and losses, gain in value before realisation hedge contracts Other gains and losses, loss in value unrealized hedge contracts Change from reported EBIT Full Year Without currency NOK million Reported Adjusted* hedging Illustrative Revenue, gain in value hedge contracts before realisation 42.2 NOK 42.2 Revenue, realized loss hedge contracts million Other gains and losses, gain in value before realisation hedge contracts Other gains and losses, gain in value unrealized hedge contracts Change from reported EBIT

11 Operating revenue weighed down by Stressless NOK million , , , , ,6 Revenues down 4.4% from Q Changes to revenue recognition moves NOK 50 million in sales to Q Positive underlying development for Stressless and IMG 0 Q Q1 Q2 Q3 Q4 11

12 Underlying margins improved year over year NOK million ,3 165,7 127,3 108,8 23,3 111,2 % 21,5 % 93,8 77,8 72,6 60,6 15,6 % 13,9 % 14,3 % 11,8 % 9,9 % 9,6 % 7,7 % 8,7 1,1 % Q Q1 Q2 Q3 Q4 40% 30% 20% 10% 0% Adjusted EBIT margin of 11.8%, up from 9.9% in Q EBIT strongly impacted by special items in the quarter Some improvements in underlying performance for Stressless Svane continues to show improvements in underlying operations, weak quarter revealing higher cost level Total reported EBIT Reported EBIT margin Total adjusted EBIT Adjusted EBIT margin 12

13 Cost efficiency program Announced August 2015 Status YE Aim to reduce costs by NOK 150 million by the end of compared with the cost level in 2014 Main focus on Stressless and Svane Could result in increased expenditure towards the end of 2015 Cost reductions necessary to ensure profitability and flexibility The bulk of the savings will come into effect in and 2017 YE 2014 cost base reduced by NOK 188 million (gross cuts), materializing in 2017 and 2018 Main reductions achieved through: Streamlining of logistics Streamlining of Stressless sales and marketing Concentration of Stressless sofa production, combining two production units into one Reduction in indirect costs, reduction in overhead organization Multiple measures across the value chain Net effect for the same period 2017 approx NOK 100 million due to: Changed sales mix increasing costs, will increase revenue Other factors and SAP error 13

14 Continued increase in EPS since Q EPS per quarter EPS per year EPS 12 months rolling NOK NOK NOK 10,00 10,00 10,00 8,00 8,00 8,70 8,00 8,08 8,70 6,00 6,00 6,95 6,04 6,00 5,96 6,79 4,00 4,00 4,35 5,00 4,00 4,99 2,00 2,94 2,71 2,00 2,00 0,00 0,83 Q Q1 1,61 Q2 Q3 1,45 Q4 0, ,00 Q Q1 Q2 Q3 Q4 14

15 Solid financial position NOK million Equity ratio up to 70.1%, vs. 52.3% at YE 15 Liquidity of close to NOK 1 billion Non Current assets Equity Cash and cash equivalents of NOK million Other current assets Non Current liabilities Current liabilities 0 Cash Assets Equity and Liabilities 15

16 Cash balance driven by strong operating cash flow NOK million ,5 Investments in operating assets at NOK 17.3 million Repayment of short term loans of NOK 60.2 million IMG purchase fully repaid Net cash increased by NOK 79.9 million during the period ,3 Cash ,5 93,0 37,3 EBT Paid taxes Depr. & other operational activities 170,0 Change inventory, AR, AP and Other Investment activities 60,6 Net financing activities 230,2 Cash

17 Strong cash flow throughout the year NOK million 800 Strong cash generation in Dividend of NOK 147 million paid in All short term debt paid in, close to NOK 300 million Investments low in, and lower than normal year ,4 49,7 136,1 160,4 446,1 444,5 229,6 230,2 Cash EBT Paid taxes Depr. & other operational activities Change inventory, AR, AP and Other Investment activities Net financing activities Cash

18 Dividend proposal of NOK 6.00 per share NOK Annual dividends 10,00 8,00 6,00 4,00 2,00 100% 80% 60% 40% 20% The board of directors propose a dividend of NOK 6.00 per share for Pay out ratio of 69% of EPS Number of shares gives NOK 221million payment To be approved by the AGM 3 May 2017 and payed out in May 0, Dividend per share (NOK) Pay out ratio (%) 0% 18

19 Operational review

20 Operating revenue per segment NOK million ,5 Stressless ,5 759,5 712,8 752,6 IMG ,0 711,8 575,1 520,1 555, ,2 107,2 109,4 115,0 120,3 61,1 87,5 54,5 67,6 61,0 Q Q1 Q2 Q3 Q4 Svane Contract 20

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22 Stressless Revenues down, margins up Operating revenue and EBIT margin (adj) Revenues down 6.1% yoy, mainly due to Changes to revenue recognition moves NOK 50 million of sales to Q1 17 Underlying revenue, adjusted for changes in revenue recognition and currency, is slightly up Cost measures having effect Adjusted EBIT margin up 7.2 pp from same period 2015 Bonus target for employees met for NOK million , ,0 575,1 520,1 555, ,6 % ,9 % 11,1 % 13,0 % ,8 % 0 Q Q1 Q2 Q3 Q4 25% 20% 15% 10% 5% 0% 22

23 Stressless Mixed picture Norway picking up from weak Q4 15 Positive effects from initiatives in Germany US up in the quarter UK down, but positive reception of new Signature model France remains weak due to competition Decrease in underlying order reserve USA/Canada/Mexico UK/Ireland Southern Europe Norway Other Nordic Central Europe Japan Asia sales includes: China Hong Kong Taiwan Korea Contract/Other markets Singapore Malaysia Indonesia India Mauritius Australia /NZ 23

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25 IMG Positive revenue and margin development Operating revenue and EBIT margin Stable revenues yoy Continued positive sales development in core markets EBIT margin stable well above the 30% mark Reduced raw material cost More favorable product mix Improved efficiency Good cost control within production an sales NOK million , , ,1 % 28,7 % ,4 115,0 32,0 % 30,4 % 120,3 31,6 28.7% % 40% 30% 20% 10% 0 Q Q1 Q2 Q3 Q4 0% 25

26 IMG Order intake increased Norway and other Nordic Continued growth in New Zealand and Australia North America weak due to lack of internal resources Scandinavia marked by though competition Still in an introductory phase in Central Europe and UK USA/Canada/Mexico Australia & other 26

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28 Svane Margins largely influenced by change in calculation base NOK million Operating revenue and EBIT margin % Small underlying revenue growth after several quarters with strong yoy growth Earnings heavily affected by change in calculation base for CoGS Underlying operational development stable ,1 9,1 % 87,5 18,5 % 54,5 1,7 % 67,6 6,1 % 61,0 20% 0% 0 25 Q Q1 Q2 Q3 Q4 20% 50 32,7 % 40% 28

29 Svane Small underlying revenue growth outside of Norway Norway Norway flat compared to corresponding quarter in 2015 Continued positive development in Denmark and Germany Central Europe Other Nordic 29

30 Ekornes Contract Increased focus on international yards Quarterly revenue down 4.9% yoy Increased focus on international yards in addition to local the players Shift in contract structure from few large local to many small international Positive development in hotel market with Radisson Blu Plaza contract EBIT margin negatively affected by change in calculation base for CoGS Operating revenue and EBIT margin NOK million , ,2 15, ,0 21,3 % 22,2 % 10,0 5 13,1 % 10,2 % 0 Q Q1 Q2 Q3 Q4 5 50% 40% 30% 20% 10% 0% 10% 10 12,1 % 20% 30

31 Underlying order receipts and reserve down NOK million Q Q1 Q2 Q3 Q4 Order receipts of NOK 836 million, down 8.8% from Q4 2015, unchanged from Q3 Underlying order reserve somewhat down from the previous quarter and the same quarter in 2015 NOK 290 million order reserve based on new currency calculation. Historical figures are not changed Total order receipts Total order reserve 31

32 Summary and outlook

33 Increased prioritization of growth initiatives in 2017 Innovation across the value chain: Product, production and distribution focused End customer centric product development Branding and marketing initiatives Optimize distribution Logistics improvements to simplify flows and better serve retailers Exploring sales via digital channels while safeguarding distribution partnerships 33

34 Summary and outlook Stable FY revenues of NOK 3.1 billion, Stressless slightly down, IMG, Svane and Contract up Year over year quarterly revenues down by 4.4%, explained by changes to revenue recognition and Stressless Cost reduction program announced August 2015 delivered, effects materializing into 2017 and 2018 Quarterly adj. EBIT margin up to 11.8% Underlying order receipts and order reserve somewhat down Continued focus on cost efficiency, priority to revenue growth initiatives Strong cash flow in the quarter and for the full year Dividend payment of NOK 6.00 per share proposed by the board 34

35 Contact information CEO: Olav Holst Dyrnes Mobile: CFO: Trine Marie Hagen trine marie.hagen@ekornes.com Mobile: