Per Gullstrand, Business Area Central and Eastern Europe Capital Markets Day, May

Transcription

1 Growth opportunities in CEE Per Gullstrand, Business Area Central and Eastern Europe Capital Markets Day, May

2 Business area CEE highlights Q1/2008 Strong net sales growth of 46% Acquisition in Czech Republic Continued strong demand in Central Europe Contribution margins not satisfying Focus on further acquisitions Increase in service sales from low level Production services, sales and warehouse facilities Sales facilities

3 Strong growth Czechprofil contribution: SEK 34.5 M Czechprofil Net sales, SEK M EBITA Underlying EBITA Q Q Q Q Q Q

4 Sales by channel, tonnes Direct, 17% Service, 16% Inventory, 67%

5 Sales by customer segment Other, 21% Equipment & machinery, 25% Transportation, 7% Construction, 11% Subcontracting, 16% Machinery & distr. for power industry, 10% Process industry, 10%

6 Sales by product group Aluminum, 9% Other, 8% Long products, 21% Stainless steel, 16% Flat products, 46%

7 Unlocking the market potential Size of market 54 M tonnes: 1. Russia Poland 8 3. Czech Republic 5 4. The rest of the business area 8 The growth rate: EU 10 countries expected to grow by: CAGR by 6.6% Some challenges: Rules are constantly changing in Russia Consolidation has started Market valuation of targets in Poland are high Smaller M&A targets in Czech Republic Competitors generally accept lower profitability BE Group CEE Volume: 73,000 tonnes in 2007 Organic growth rate: >20% per year in strategy plan Some challenges: Profitable growth Service development Acquisitions

8 Continued growth momentum CAGR, percent Equipment prod duction Basic metal industries Construction Industrial machinery excl. electrical Machinery & equipment, nec Electrical industrial machinery Electrical appliances & house wares Motor vehicles & parts Transportation equipment

9 Large and highly competitive markets Poland Competitor Thyssenkrupp Energostal Stalprodukt Złomrex Grupa Polska Stal Bodeko Czech Republic Competitor Ferona a.s. Nypro butni Prodei a.s. Metal Trade Comax Femax a.s. Železo Hranice Size, EUR M

10 Knowledge transfer as the base of success Estonia Latvia Lithuania Ten years of experience in the Baltic states Stable earnings with a broad customer base Experiences to be shared with other countries

11 Growth for improved profitability BE Group Strategies Grow faster than the market Increase sales of value added services Increase Group coordination Strong and target oriented leadership BA Central and Eastern Europe focus areas 1. > 20% profitable organic growth p.a. 2. Major growth from acquisitions 3. Invest and improve profitability in production services 4. Introduce new value-adding services, in production, logistics & finance 5. Steer the business area through the operational goals 6. Co-ordinate purchase, stock & production in CEE 7. Educate and hire leaders to broaden the competence base

12 Growing with profitability Grow turnover to >SEK 3 4 billion Increase service share Reach underlying EBITA of 4%

13 Grow more than the market Sourcing is key Key issues Strong growth in service sales, but from a low level 91 Capture and manage international customers Investments in production facilities, machinery, processes and people 8 CAGR 127%

14 Group and business area coordination New BA organization with coordinated purchasing function Operational goals are used to steer the business area forward Partly centralization of warehousing under evaluation Business Area Manager Finance Service Supply Sales

15 Growth in the Czech Republic

16 Acquisition in Czech Republic Strengthens the market position Consolidated from January 2008 Positive impact from combined operations on growth and profit Creation of platform in Czech Republic Czechprofil s.r.o. Net sales 2007: SEK 166 M Distribution 2007: 26,000 tonnes Flat and long products with service Three sites in eastern part 40 employees

17 BE Group + Ferram Steel

18 Ferram Steel in Czech Republic Business description General comment: Sales and distribution company with two sites. Head office and new stock in Ostrava and in Opava. Business: Strong position in the east part of Czech republic, with sales to Poland and Slovakia as well ISO 9001 certified Suppliers from China, Ukraine & local Good logistics Key figures SEK M 2007 Sales 343 Operating profit 15 Return on sales 4.6% Net debt 61 No. of employees 40 Ton 50,000

19 Why eastern Czech Republic? The acquisition will be the second step in becoming one of the main players in Czech Republic, with a solid platform for organic growth An advanced logistical centre in Ostrava will enable further organic growth in Czech Republic, Slovakia, and southern Poland Ferram Steel has good supplier connections Poland Wroclav 1 Steel works Flat products Czech Republic 7 Austria Opava Sosnowiec 2 3 Ostrava 4 5 Prerov Uherske Hradiste (Radius 160 km) Slovakia Czestochowa (Duferco) Katowice (ArcelorMittal) Krakow (ArcelorMittal) Ostrava (ArcelorMittal) Ostrava (Vitkovice) Kosice (US Steel) Linz (Voest-Alpine)

20 Strong market position after acquisition Czech Republic Competitor Ferona a.s. Nypro butni Prodei a.s. Metal Trade Comax Femax a.s. Size, EUR M BE Group 81

21 Summary Strengths Dynamic team Part of BE Group BE Group service concept Opportunities Market size and growth Acquisitions Centralization of Supply (warehousing) International customers Weaknesses Limited production knowledge and equipment Margin & profitability Economy of scale in each country Threats Economic over heating (Baltic States) Critical success factors and main focus areas: 1. Execute and integrate acquisitions 2. Service development 3. Manage profitable growth

22 BE STRONGER WITH BE