NASDAQ OMX Copenhagen
Nikolaj Plads 6
DK - 1007 Copenhagen K
20 August 2014
Announcement no. 13
NKT improved operational EBITDA by 16% in Q2 2014 while EBITDA was reduced by the settlement of the Baltic 1 offshore project. NKT’s expectations for full-year 2014 were maintained.
Q2 highlights
- Operational EBITDA increased 16% to 324 mDKK and operational EBITDA margin (std. metal prices) rose to 9.7% despite organic growth of -3%
- Revenue (std. metal prices) was 3,337 mDKK
- Baltic 1 settlement impacted EBITDA by -75 mDKK
- The effects of DRIVE are being realised faster than anticipated - for 2014 expected run rate was raised to 220 mDKK and expected impact to 130 mDKK
- NKT Cables’ order for the Gemini offshore wind farm project was confirmed
- Nilfisk-Advance made substantial, long-term investments in front-end initiatives
NKT's Group Executive Director & CFO, Michael Hedegaard Lyng, commenting on Q2 developments:
- Overall, our Q2 performance was satisfactory in terms of operational EBITDA, which increased significantly. Nilfisk-Advance realised continued organic growth and maintained high earnings. In NKT Cables, operational EBITDA increased due to DRIVE and continued growth in the Products business. All these developments were positive. Results were however impacted by the provision of 75 mDKK we have made relating to the Baltic 1 settlement. I am pleased that this claim is now settled so we can move forward. We still maintain good relations with the customer and our risk exposure is significantly reduced.
NKT Cables settles claim on Baltic 1
A three year old claim relating to the Baltic 1 project was settled in August 2014 and is expected to result in an additional loss of 35-75 mDKK. A provision of 75 mDKK has therefore been made in Q2 2014 - with no effect on operational EBITDA.
Expected 2014 full-year impact of DRIVE increased to 130 mDKK
The implementation of the DRIVE programme is progressing to plan. Cost savings for Q2 amounted to some 40 mDKK and to 60 mDKK for 1st half 2014. The effects of DRIVE are being realised faster than anticipated and expected 2014 run rate has therefore been raised to 220 mDKK and full-year impact to 130 mDKK. Expected full impact of DRIVE entering 2016 remains at 300 mDKK.
Nilfisk-Advance recorded organic growth of 4%. Earnings decreased slightly due to investments
The positive development was attributable to EMEA in particular and to the Americas, which were up 6% and 3% respectively. Despite continuous strong growth in China, APAC recorded negative organic growth of 5%. Operational EBITDA margin was 12.4%, a slight decrease of 0.5% point from Q2 2013 mainly due to substantial investments in front-end initiatives and to the divestment of floor sanding activities in the previous quarter.
NKT Cables realised -11% organic growth while operational EBITDA increased
The organic growth of 10% in Products was offset by an expected negative development of -36% and -27% in APAC and Projects, respectively. Adjusted for less installation work in Projects and a major project in APAC organic growth would have been 4%. Operational EBITDA margin in std. metal prices was 7.7%, up 2.9% from Q2 2013. In May, NKT Cables received the final and binding order for the Gemini offshore wind farm project, securing full visibility for submarine cable production at the Cologne plant well into 2015.
Photonics Group recorded 10% organic growth and launched new business activity
Organic growth in Sensing and Fiber Processing was up 24% and 18% respectively, while Imaging realised negative organic growth of -4%. The turnaround process for Fiber Processing remains on track, and in Sensing a new US onshore pipeline monitoring business was established which targets the oil and gas industry.
Full-year 2014 expectations unchanged
NKT’s expectations for 2014 are unchanged with consolidated organic growth of 0-3% and an operational EBITDA margin of 9-9.5% (std. metal prices), the upper range of organic growth being achieved if 1st half 2014 market developments continue through the 2nd half of the year.
Please address any questions to the undersigned on telephone +45 4348 2000.
Yours sincerely
NKT Holding A/S
Michael Hedegaard Lyng
Group Executive Director & CFO
