1-Mar-09 BUY Target: NOK 8.5 Medium Kverneland Financial position strongly improved valued P/B 0.5x Frank Harestad Direct: +47 5183 6315 Mobile: +47 9300 5060 Email: frank.harestad@pareto.no
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
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. -3.6 4Q07! 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
Revenues & Margins 1992-2009E EURm 600 % 12.0 500 9.6 400 7.2 300 200 4.8 100 2.4 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E Revenues Net operating margin 0.0 4
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 76 + 7% 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) 2007 2008 2009E 2010E Arable 12.8 17.0 12.0 15.0 Sprayers 1.7 3.4 4.0 5.0 Grass 8.2 10.8 7.0 8.0 Other (13.3) (4.0) (3.0) (3.0) EBITDA 9.4 27.2 20.0 25.0 EBITA 0.5 18.3 11.0 16.0 Net profit (11.7) (2.1) 80.2 6.7 EPS EUR -0.06 0.03 0.02 0.04 Market Cap 205 95 80 80 Net debt 112 110-9 -26 EV 317 205 71 54 P/E - 20.2 24.9 11.9 EV/EBITDA 38.2 7.7 3.5 2.2 P/B 3.8 1.2 0.5 0.5 5
KVE vs. peers! Bale divestment not reflected in valuation 18 9/3/09 16 14 12 10 8 6 4 2 M A M J J A S O N D J F KVERNELAND (~NK) DEERE (~NK) AGCO (~NK) BUCHER INDUSTRIES (~NK) Source: DATASTREAM 6
KVE valuation versus peer group P/B 09 EV/EBITDA 09E 1.6 10 1.4 8 7.9 1.24 1.2 6 1.0 0.8 4 3.3 2.8 3.5 0.6 0.4 0.66 0.61 0.49 DEERE BUCHER AGCO KVE 2 0 DEERE BUCHER AGCO KVE 7
Declining agriculture prices but still decent levels Wheat spot USD/bu (-20y) 14 12 10 8 6 4 2 0 Feb-89 Feb-93 Feb-97 Feb-01 Feb-05 Feb-09 8
Kverneland: Western Europe & Nordic 73% of sales America 5% ROW 5% CEE & CIS 17% Nordic 11% WE 62% 9
KVE: stronger balance sheet % Net interest bearing Debt/ Equity 240% 200% 160% 120% 80% 40% 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002E2003E 2004E 2005 2006 2007 2008 2009E -40% 10
Kverneland: P/B & EV/EBITDA 1992-2009E P/B 4.0 EV/EBITDA 40 3.5 35 3.0 30 2.5 25 2.0 20 1.5 15 1.0 10 0.5 5 0.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003E 2004 2005 2006 2007 2008 2009E P/B EV/EBITDA 0 11
KVE: Shareholders 09.03.09 Shareholders # shares % Umoe Industri AS 49 075 120 31.8 Odin Norge 11 205 110 7.3 Ferncliff 10 883 740 7.1 Orkla ASA 10 254 270 6.7 MP Pensjon 8 516 190 5.5 Citibank N.A 7 900 651 5.1 Skagen Vekst 4 845 000 3.1 Six SIS AG 4 156 750 2.7 AS Bemacs 3 427 440 2.2 Brown Brothers 1 585 430 1.0 Sparebanken Rogaland 1 422 673 0.9 Pactum 1 362 000 0.9 Rishaug Eiendom 1 294 000 0.8 Svenska Handelsbanken 1 172 471 0.8 Nordea Avkastning 1 121 387 0.7 Nordea Vekst 1 032 870 0.7 Others 35 054 088 22.7 Total 154 309 190 100.0 12
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
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