NKT (NKT) CMD 2017 summary

Demerger and capital structure

• The planned separation followed the ABB power-cable acquisition; an EGM was scheduled for 10 October 2017, with final trading in the old shares on 11 October and trading in the two new companies from 12 October. Existing shareholders would receive shares in both; no new shares or bookbuilding.

• The two businesses were assigned different leverage targets: Nilfisk at or below 2.5x and the cable business around 1.5x; opening leverage was 3.1x and about 2.2x, respectively, with deleveraging subject to dividends and M&A.

• Direct reporting of the cable and Photonics leaders to the board was to continue under the existing governance model.

Nilfisk strategy and growth

• The strategy is to simplify and grow: streamline products, brands, manufacturing footprint and pricing while scaling tested sales initiatives across regions.

• Accelerate Plus targets EUR 35m in savings by end-2019; EUR 17m of levers had been executed by June, including EUR 12m of the EUR 17m overhead target. Savings were expected to show fully in the bottom line by 2020.

• Organic growth priorities include autonomous cleaning, sales and service excellence, Viper mid-market expansion, strategic accounts and targeted emerging markets, especially China; M&A remains focused on professional-business and channel access.

• First autonomous products were expected in H1 2018; over 5–7 years, autonomous machines could contribute up to 10% of revenue, with roughly 40% of current product categories considered suitable.

Nilfisk financial outlook

• FY2017 guidance: organic growth 2%–4% and EBITDA before special items of 11%–11.5%; medium-term, over 3–5 years, organic growth of 3%–5%, EBITDA margin of 13%–15% and ROCE above 20%.

• Incremental revenue growth was estimated to contribute about 40% to the bottom line, all else equal; working capital was expected to normalize around 17.5% of revenue versus 16.6% at June.

• Opening leverage was 3.1x, with a target of 2.5x or below expected in roughly 18 months; ordinary dividends target one-third of profit, but no 2017 dividend was anticipated as deleveraging took priority.