Q3 215 EKORNES ASA November 16 th 215
Agenda Highlights Operational review Financial review Summary & outlook
Highlights Stable development in underlying operating revenue and margin Stressless Q3 revenue up year-over-year, but order reserve low Evolving Stressless distribution strategy, adding distributors New Stressless -products launched in October Strong development for IMG Improving, but still challenging for the Svane -segment
Financial results Operating revenue Operating earnings (EBIT) NOKm NOKm 1 1 9 9 8 8 7 7 6 6 5 4 3 668.2 785.8 898.9 789.8 817.5 5 4 3 74.2 73.1 82.9 62.4 95.4 2 2 1 1 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Operational review
Segments operating revenue NOKm 1 9 8 785.8 898.9 789.8 817.5 IMG 7 6 5 4 3 2 1 668.2 Contract Svane Stressless Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Stressless Operating margin in line with Q3 214 Operating revenue and operating margin Revenues in local currency slightly up from Q3 214 NOKm 8 7 586.6 6 655. 711.8 624.3 641.1 % 2 15 Operating margin 12.6%, Q3 normally a strong quarter 5 4 3 2 1 12.2% 11.7% 1.4% 9.6% 12.6% 1 5 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Stressless Mixed development, distribution strategy evolved Q3 215 vs Q3 214: Other Nordic Norway Continued positive revenue UK/Ireland Japan development in Norway and Southern Europe Central-Europe Central-Europe, but growth USA/Canada/Mexico slowing Asia sales includes: China Southern-Europe and UK revenue Hong Kong Taiwan down Korea Singapore Contract/Other markets Challenging in the U.S. Malaysia Indonesia India Order reserve end of quarter NOK Mauritius 15 million vs NOK 237 million Australia / NZ Distribution strategy evolved Main collection split into two separate collections to enable marketing via different channels and adding of distributors
Stressless New products launched in October LegComfort
Stressless New products launched in October
Stressless Satisfactory production, but focus on improvement 1 694 seats produced per day in Q3 215 Up from Q2, down vs. 1 736 seats per day FY 214. Lower production in October due to technical issues Production capacity at 1 75 seats per day Dependent on product mix New models to be introduced adding complexity Focus on production efficiency measures Low order reserve at the end of Q3
IMG Performing above expectations Operating revenue and operating margin Strong development for IMG Operating margin of 29.7% in Q3 exceeds expectations Positive effect from raw materials Increased prices Q3 sales slightly down from previous quarters NOKm 11 1 9 28.6% 8 68.4 7 6 5 4 3 2 1 17. 22.8% 14.7 23.6% 11.6 29.7% % 4 35 3 25 2 15 1 5 Nov+Dec 214 Q1 215 Q2 215 Q3 215
IMG Market fluctuations USA/Canada/Mexico Norway and Other Nordic Asia Pacific & Other Increase in Norway/Nordic and Australia US market down from a very strong Q2 Efforts to launch IMG in Central Europe are ongoing, but will not have any impacts on 215
Svane Improvements but still challenging Decrease in revenue compared with Q3 214, high level of competition in Norwegian market Operating margin down from Q3 214, but improvements from Q2 this year Operating revenue and operating margin NOKm % 7 66. 67.5 62.4 35 6 3 5 4 3 2 46.3 48.4 25 2 15 1 1 3.2%.8%.6% 5-1 -2-3.3% -5-1 -14.% -15 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Ekornes Contract Decrease in revenue, increase in margin Decrease in operating revenue compared to Q3 214 Operating margin 12.9% in Q3 Operating revenue and operating margin NOKm % 18 15 16 15.6 16.1 11.7% 14 1.4% 13.2% 12.9% 12.5 12.4 12.4 12 1 1 8 6 6.3% 5 4 2 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Financial results
Operating revenue NOKm 1 9 Operating revenue NOK 817.5 million in Q3, up NOK 149.3 million from Q3 214 8 7 6 5 4 3 2 1 668.2 Q3 214 785.8 Q4 214 898.9 Q1 215 789.8 Q2 215 817.5 Q3 215 Slight revenue increase in Stressless -segment Positive currency impact on revenue NOK 4 million Revenues IMG were NOK 11.6 million in Q3 Ekornes acquired IMG with effect from November 1st 214
Cost reduction program introduced in August 215 Objectives Reduce cost base by NOK 15 million run-rate by end 216 Improve earnings Improve flexibility and ability for innovation and growth Focus areas and progress All parts of Ekornes include Main focus on Stressless and Svane segments Program initiated in August 215 and progressing, but not expected to have impact on 215
Operating earnings and operating margin NOKm 12 11 1 11.1% 9 1.8% 11.1% 1.1% 13.8% % 15 22.3% increase in operating revenue vs Q3 214 28.6% increase in earnings 8 7 6 5 4 3 2 74.2 9.3% 73.1 9.2% 82.9 7.9% 62.4 11.7% 95.4 1 5 51.8% increase in earnings adjusted for IMG accruals IMG earnings at NOK 3.2 million, above expectations 1 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 EBIT % EBIT % before IMG accrual EBIT before IMG accrual EBIT
Adjusted for IMG accrual the operating margin is up Contingent consideration purchase price IMG, accrual of NOK 17.3 million also in Q3, negative impact on operating earnings (IFRS) as expected Realization currency hedge in Q2 NOK -28.2 million, negative impact on operating earnings Accrual for employee bonus in Stressless -segment in Q3, NOK 2.6 million, no bonus accrual in Q3 214
Earnings per share (EPS) NOK 2. 1.5 Negative currency impact from translation of balance sheet items 1. 1.3 1.98 1.42 EPS NOK 1.42 in Q3, up from NOK 1.3 in Q3 214.5.75.77. Q3 214 Q4 214 Q1 215 Q2 215 Q3 215
Cash flow NOKm Cash end of quarter NOK 185 million 3 25 2 73 14 85 31 24 58 185 NOK 58 million decrease in short term debt in Q3 15 1 5 153 NOK 24 million investment in Q3 Cash 3.6.215 EBT Paid taxes Depr. and other operational activities Change inventory, AR and AP Investment activities Net financing activities Cash 3.9.215
Financial position NOKm Compared to YE 214: Short term interest bearing debt NOK 458 million, up NOK 125 million Well within covenants Undrawn facilities close to NOK 35 million Current liabilities, excluding short term interest bearing debt, up NOK 75 million Current assets, excluding cash, up NOK 162 million Equity ratio 5.6%, down from 57.% 214 dividend of NOK 147 million paid in Q2 Decrease value forward contracts NOK 136 million 3 2 5 2 1 5 1 5 Non-current assets Non-Current assets Other current assets Other current assets Cash Asset Cash Equity Equity Non-current liabilities Non-Current liabilities Current liabilities Current liabilities Equity and liabilities
Outlook and summary
Outlook Order receipts in October up vs. October 214, order reserve behind October 214 Order receipts up for Stressless -segment, down for Svane - and Contract-segment IMG order receipts in line with expectations No planned capacity changes in Q4, order situation monitored Focus on productivity improvements within production
Summary Stable development in underlying operating revenue and margin Stressless Q3 revenue up year-over-year, but order reserve low Evolving Stressless distribution strategy, adding distributors New Stressless -products launched in October Strong development for IMG Improving, but still challenging for the Svane -segment
Financial calendar Feb 17 th 216 Q4 presentation May 4 th 216 Q1 presentation Jul 15 th 216 Q2 presentation Nov 7 th 216 Q3 presentation General assembly May 3 rd (Ålesund) CEO: Olav Holst-Dyrnes olav.holst.dyrnes@ekornes.com Mobile: + 47 93 48 31 1 CFO: Trine-Marie Hagen trine-marie.hagen@ekornes.com Mobile: + 47 99 61 75 5 Presentations are held at Hotel Continental, Oslo - at 8. a.m.