Q3 Report 2017 October 25, 2017
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Q3 Report 2017October 25, 2017
Page 2 GUNNEBO Q3 REPORT 2017
A weak operating profit, 49 MSEK (91).
Different trends across the business. Organic sales growth:
APAC +9%
EMEA -5%
Americas +/- 0
Overall the sales contracted organically by -2%
Profit development has not been satisfactory due to both one-time and structural effects
CEO’s comments
Page 3 GUNNEBO Q3 REPORT 2017
Third Quarter 2017 in Brief
2017 2016 2017 2016 2016
Q3 IN BRIEF Q3 Q3 YTD YTD Full year
Net sales, MSEK 1,409 1,448 4,359 4,312 6,088
EBITDA excl. non-recurring items, MSEK 96 139 323 358 561
EBITDA margin excl. non-recurring items, % 6.8 9.6 7.4 8.3 9.2
EBITDA, MSEK 78 125 288 316 489
EBITDA margin, % 5.5 8.6 6.6 7.3 8.0
Operating profit (EBIT) excl. non-recurring items, MSEK 67 105 235 266 438
Operating margin (EBIT) excl. non-recurring items, % 4.8 7.3 5.4 6.2 7.2
Operating profit (EBIT), MSEK 49 91 200 224 366
Operating margin (EBIT), % 3.5 6.3 4.6 5.2 6.0
Net profit for the period, MSEK 16 51 84 113 209
Basic earnings per share, SEK 0.21 0.65 1.09 1.46 2.71
Free cash flow, MSEK -63 18 -145 52 159
Page 4 GUNNEBO Q3 REPORT 2017
Net Sales, MSEK
Sales by Product Area, YTD
Page 5 GUNNEBO Q3 REPORT 2017
Organic Sales Growth by Quarter
Page 6 GUNNEBO Q3 REPORT 2017
Sales Growth by Quarter and YTD by Region
SALES VS LAST YEAR (QTD)
Organic Structure Currency Total
EMEA -5% 0% 0% -5%
APAC 9% 0% -3% 6%
AMERICAS 0% 0% -2% -2%
TOTAL -2% 0% -1% -3%
SALES VS LAST YEAR (YTD)
Organic Structure Currency Total
EMEA -2% 0% 2% 0%
APAC -3% 0% 4% 1%
AMERICAS 2% 0% 4% 6%
TOTAL -1% 0% 2% 1%
Page 7 GUNNEBO Q3 REPORT 2017
Organic Sales Growth Development by Region Q3 2017 vs Q3 2016
EMEA Asia-Pacific Americas
Sales: 0%Sales: +9% Sales: -5%
Group
Sales: -2%
Page 8 GUNNEBO Q3 REPORT 2017
Region Europe, Middle East & Africa (EMEA) Q3 2017
Sales decreased organically by -5%
Strong development of sales in UK and Middle East
Weaker development on all other markets, especially France where a strategic review is ongoing
Excluding France sales in the region hadan organic decline of 3%, and the Group was flat
Local production in South Africa under closure, full focus on customers and sales
Cash Management and Entrance Security showed good sales development in the quarter
Gunnebo was named Security Company of the Year in Denmark at the annual Security User Expo and in Sweden, Gunnebo received a prestigious award from the Nordic security industry.
EMEA Sales by Product Area, YTD 2017
0%
1%
2%
3%
4%
5%
6%
7%
0
200
400
600
800
1,000
1,200
1 2 3 4 1 2 3 4 1 2 3
2015 2016 2017
Operating margin %, excl. non-recurring items
Operating margin % 12M, excl. non-recurring items
Sales per quarter
2017 2016 2017 2016 2016
Q3 Q3 YTD YTD Full year
Net sales, MSEK 875 922 2,773 2,776 3,907
Organic growth, % -5 0 -2 0 0
Operating profit excl. non-recurring items, MSEK 4 42 62 96 172
Operating margin excl. non-recurring items, % 0.5 4.6 2.2 3.5 4.4
Non-recurring items, MSEK -9 -11 -25 -36 -59
Operating profit, MSEK -5 31 37 60 113
REGION EMEA
Page 9 GUNNEBO Q3 REPORT 2017
In recent years, the economic climate and trading conditions in South Africa and other markets in Sub-Saharan Africa have been adverse, resulting in the underutilisation of the local manufacturing unit in Wadeville
To improve profitability and allow full focus on customers and sales, the decision has been made to close the manufacturing unit in Wadeville, South Africa
The closure affects some 100 employees. It will be finalised during 2017
Going forward, products will be supplied from Gunnebo’s global Product Areas Cash Management, Entrance Security and Safes & Vaults respectively
Closure of Manufacturing in South Africa
Page 10 GUNNEBO Q3 REPORT 2017
Region Asia-Pacific Q3 2017
Sales increased organically by 9%
During the quarter the OKI fire project was finalized as planned, having a positive effect on both sales and profitability development
Good development on all markets in the region except India, where sales to public banks continued to contract
Entrance Security, Electronic Security and Fire project sales developed well
Safes & Vaults had a weaker sales development
APAC Sales by Product Area, YTD 2017 2017 2016 2017 2016 2016
Q3 Q3 YTD YTD Full year
Net sales, MSEK 268 253 786 778 1,129
Organic growth, % 9 2 -3 5 5
Operating profit excl. non-recurring items, MSEK 36 27 88 83 138
Operating margin excl. non-recurring items, % 13.4 10.7 11.2 10.7 12.2
Non-recurring items, MSEK -6 -1 -6 -2 -5
Operating profit, MSEK 30 26 82 81 133
REGION ASIA-PACIFIC
non-recurring items excl. non-recurring items
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
50
100
150
200
250
300
350
400
1 2 3 4 1 2 3 4 1 2 3
2015 2016 2017
Operating margin %, excl. non-recurring items
Operating margin % 12M, excl. non-recurring items
Sales per quarter
Page 11 GUNNEBO Q3 REPORT 2017
Region Americas Q3 2017
Organic sales development was flat
Positive development of sales in Brazil, weaker on other markets in the region
Strong sales of Cash Management, driven by drive-up tube systems to customers in the US. First order delivered in Mexico.
Weak development in Safes & Vaults due to low sales to US public authorities
Weak development of Electronic Security and related services, mainly explained by lower activity of sales in Mexico due to the earthquake at the end of the period
Gunnebo is rated as the main brand within anti-shoplifting surveillance technology by retailers in Brazil as part of the Annual Brand Survey carried out by Supermercado Moderno magazine
Americas Sales by Product Area, YTD 2017
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
50
100
150
200
250
300
350
1 2 3 4 1 2 3 4 1 2 3
2015 2016 2017
Operating margin %, excl. non-recurring items
Operating margin % 12M, excl. non-recurring items
Sales per quarter
0
2017 2016 2017 2016 2016
Q3 Q3 YTD YTD Full year
Net sales, MSEK 266 273 800 758 1,052
Organic growth, % 0 -5 2 -4 -2
Operating profit excl. non-recurring items, MSEK 27 36 85 87 128
Operating margin excl. non-recurring items, % 10.2 13.2 10.6 11.5 12.2
Non-recurring items, MSEK -3 -2 -4 -4 -8
Operating profit, MSEK 24 34 81 83 120
REGION AMERICAS
Page 12 GUNNEBO Q3 REPORT 2017
Gunnebo’s Product Areas and % of Sales YTD 2017
Cash Management
Deposit
Dispensing
Recycling
Closed Cash Management Systems
Services
EntranceSecurity
Entrance Control
Security Doors & Partitions
Electronic Article Surveillance
Services
Safes & Vaults
Safes
Vaults & Vault Doors
Safe Deposit Lockers
ATM Safes
Services
Electronic Security
Access Control
IntrusionDetection
Electronic Locking
RemoteMonitoring
Services
33%19% 22% 18%
Other
Fire Safety products and services
Other traded products and services
8%
Page 13 GUNNEBO Q3 REPORT 2017
Good sales development in the quarter
Growth area – has continued to strengthen the offering and competence
Continued roll-out of cash management together with a CIT partner in the MiddleEast
Continued good sales in the US
First delivery completed in Mexico
SafePay – growing demand for closed cash management outside the Nordics. Good levelof sales in France and the UK in the quarter.
Order for SafePay received from major Swedish retailer to outlet in Thailand
Product Area Cash Management
Cash Management
Deposit
Dispensing
Recycling
Closed Cash Management Systems
Services
19%
Page 14 GUNNEBO Q3 REPORT 2017
Strong sales development in the quarter from many markets, especially good in China
New orders to metro lines, as well as first order for a high-speed train station in China
Another interesting customer segment is Airport. During the quarter an order to supply immigration gates for the border control at Marseilles airport was received
Good development of sales to public and commercial buildings in the quarter. Examples of orders include a battery plat in South Korea and an office building project in the Philippines.
Within the high-risk site market segment, Gunnebo has received a prestigious order from a public authority in Australia
Product Area Entrance Security
EntranceSecurity
Entrance Control
Security Doors & Partitions
Electronic Article Surveillance
Services
22%
Page 15 GUNNEBO Q3 REPORT 2017
Sales had a slow development in the quarter:
Sales of graded safes and vaults decreased in the quarter mainly due to slower business in France, US, South Europe, India and South Africa
Sales of safes to global manufacturers of ATMs down from a high level mainly due to lower volumes in India
The interest for the automated safe deposit locker system, Safe Store Auto, has continued to be good during the quarter and several new orders were received
First order received from a private real estate investor in China
Product Area Safes & Vaults
Safes & Vaults
Safes
Vaults & Vault Doors
Safe Deposit Lockers
ATM Safes
Services
33%
Page 16 GUNNEBO Q3 REPORT 2017
Sales in the quarter declined, derived mainly from market segment bank in France which is the biggest market for this product area
Another big market is Mexico, where sales in the quarter were down due to poor market conditions and effects from the earthquake in September
Product Area Electronic Security
Electronic Security
Access Control
IntrusionDetection
Electronic Locking
RemoteMonitoring
Services
18%
Page 17 GUNNEBO Q3 REPORT 2017
Sales within Fire Projects, which is a niche business in South-East Asia, had a good development in the quarter where the large-scale OKI-project was finalized
Other - Fire Projects
Other
Fire Safety products and services
Other traded products and services
8%
Page 18 GUNNEBO Q3 REPORT 2017
Operating Profit by Quarter, MSEK
Operating profit Operating profit, excl. non-recurring items
Full yearOperating profit
excl. non-recurring
items
2016: 438 2015: 397
Operating profit
2016: 3662015: 320
Page 19 GUNNEBO Q3 REPORT 2017
Operating Profit and EBITDA by Quarter, excl. Non-Recurring Items
Operating Profit EBITDA
Page 20 GUNNEBO Q3 REPORT 2017
Operating Profit Bridge by Quarter and YTD
OPERATING PROFIT BRIDGE Q3
Operating profit 2016 91
Organic -5
Structure 9
Currency 0
Other -46
Operating profit 2017 49
OPERATING PROFIT BRIDGE YTD
Operating profit 2016 224
Organic -13
Structure 45
Currency 18
Other -74
Operating profit 2017 200
Page 21 GUNNEBO Q3 REPORT 2017
Operating Margin by Quarter, %
Operating margin %, quarter Operating margin % quarter, excl. non-recurring items
Operating margin %, LTM Operating margin % LTM, excl. non-recurring items
Full yearOperating margin,
excl. non-recurring items
2016: 7.22015: 6.6
Operating margin
2016: 6.02015: 5.30%
2%
4%
6%
8%
10%
12%
1 2 3 4 1 2 3 4 1 2 3
2015 2016 2017
Page 22 GUNNEBO Q3 REPORT 2017
Group Income Statement
Page 23 GUNNEBO Q3 REPORT 2017
Free Cash Flow by Quarter and Last Twelve Months
Free cash flow 12M
Page 24 GUNNEBO Q3 REPORT 2017
Free Cash Flow
MSEK2017
Q3
2016
Q3
2017
YTD
2016
YTD
2016
Full year
Operating profit 49 91 200 224 366
Depreciation 16 20 50 51 68
Amortisation- acquisition-related
intangibles6 6 18 18 24
Amortisation - other intangibles 7 8 20 23 31
Other -42 -27 -127 -90 -133
Change in working capital -65 -60 -213 -129 -122
Operating cash flow -29 38 -52 97 234
Investing cash flow excluding acquisitions -34 -20 -93 -45 -75
Free cash flow -63 18 -145 52 159
Page 25 GUNNEBO Q3 REPORT 2017
Net Debt
NET DEBT INCL. & EXCL. PENSION + NET LEVERAGE
Net debt Net leverage
Pension liability
Page 26 GUNNEBO Q3 REPORT 2017
Group Financial Targets & Outcome
FINANCIAL TARGETS & OUTCOME Target
2017 2016 2017 2016 2016 2017
Q3 Q3 YTD YTD Full year 12M
Organic growth -2% -1% -1% 0% 1% 0% 5%
Operating margin1)
4.8% 7.3% 5.4% 6.2% 7.2% 6.6% 7.0%
Return on capital employed1) 2)
11.4% 12.4% 11.4% 12.4% 12.8% 11.4% 15.0%
Equity ratio 34% 32% 34% 32% 34% 34% 30%
1) Excluding non-recurring items
2) During the last twelve-month period
Page 27 GUNNEBO Q3 REPORT 2017
When? November 23
Where? Fotografiska, Stockholm
Agenda
Update on Gunnebo’s strategic agenda
Presentation of Gunnebo’s major Product Areas
Demonstration of Gunnebo’s Retail Solution, that connects security products and other retail systems on one platform
Q&A session
Registration: [email protected]
Welcome to Gunnebo’s Capital Market Day 2017!
Page 28 GUNNEBO Q3 REPORT 2017
Financial Calendar 2017
2018111
2017111
Financial Calendar 2017/2018
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT
AGM 2018 April 12, 2018 1
Capital Markets Day 2017 November 23, 2017
Interim Report Q2 2018 July 19, 2018
Year-End Report 2017 February 2, 2018
Interim Report Q1 2018 April 24, 2018
Interim Report Q3 2018 October 23, 2018
www.gunnebogroup.com
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