NKT Q2 2015: Operational Ebitda improved by 36%. 2015 outlook is specified within initial guidance

Nasdaq Copenhagen
Nikolaj Plads 6
DK - 1007 Copenhagen K 

20 August 2015
Announcement No. 17

NKT Q2 2015: Operational Ebitda improved by 36%. 2015 outlook is specified within initial guidance

Group Executive Director, Michael Hedegaard Lyng, commenting on Q2 performance:
- At Group level our second-quarter performance was in line with expectations; operational EBITDA improved by 36% and organic growth was 6%. The results were driven by NKT Cables, which showed good progress in terms of both growth and earnings, clearly impacted by the DRIVE programme. In Nilfisk, organic growth was flat and lower than expected, and at the same time earnings were impacted by continued investments in sales and service and by costs due to the temporary delivery issues emerging in the first quarter and resolved early in second quarter. 

Q2 2015 financial highlights

• Operational EBITDA increased by 36% to DKK 441m and operational EBITDA margin (std. metal prices) increased by 2.3%-points to 12.0%
• Organic growth was 6% and revenue amounted to DKK 4,471m
• Total impairment was DKK 393m, incurred from NKT Cables’ APAC operations (DKK 374m) and from divestment agreement of Fiber Processing operations in Photonics Group (DKK 19m)
• The full potential of NKT Cables’ DRIVE programme was increased by DKK 50m to DKK 450m 

The outlook for 2015 is specified within initial guidance
In 1st half 2015 the Projects business in NKT Cables has delivered higher growth than anticipated, and production of offshore cable orders is proceeding to plan. At the same time, Nilfisk has realised weaker than anticipated growth and increased costs relating to the temporary delivery issues. In addition, effects of the Commercial Excellence programme are materialising later than anticipated, and this development combined with strong organic growth of 9% in Q4 2014 has led to a more cautious outlook for Nilfisk for the full-year 2015.

The outlook for NKT for 2015 is therefore specified within the initial guidance. NKT now expects a consolidated organic growth of around 3% (previously: 0-3%) and improved operational EBITDA margin (std. metal prices) of around 0.5%-point (previously: up to 1%-point) from 9.6% realised in 2014. For further details on the specified 2015 outlook, please refer to NKT's Q2 Interim Report 2015, page 6.

Nilfisk: Growth lower than expected. Three acquisitions completed
Overall, Nilfisk realised 0% organic growth with continued progress in EMEA which was offset by negative developments in the Americas and APAC. Operational EBITDA was DKK 214m, down DKK 4m, impacted by investments in sales and service as well as by delivery issues emerging in Q1 and resolved in Q2 2015. In line with the strategy to take active part in the industry consolidation, three acquisitions were completed.

NKT Cables: Strong improvement in operational EBITDA Impairment from APAC operations
Overall, NKT Cables achieved 13% growth, driven by the Projects business, while development was flat in Products, and negative in APAC. Operational EBITDA was DKK 243m, up DKK 127m due to revenue growth and DRIVE impact. The full potential of DRIVE was increased by DKK 50m to DKK 450m. Furthermore, results were impacted by an impairment of DKK 374m from APAC operations. 

Group Executive Director, Michael Hedegaard Lyng, on the impairment from the APAC operations:
- A strategic review of the future setup for APAC was launched in 2014 and included discussions with external parties. However, the alternative options showed not to be attractive and we have therefore now launched a restructuring of APAC and incurred an impairment of DKK 374m.

Photonics Group: Divestment agreement of Fiber Processing operations. Group CEO appointed
Organic growth was -14%, due to contractions in all segments. However, both order intake and order backlog was high. A divestment agreement of the Fiber Processing operations was signed with effect during September 2015. In June, Basil Garabet was appointed CEO of Photonics Group to drive the strategy of gaining commercial scale in Imaging and Sensing.

Teleconference
A teleconference for investors and financial analysts will be hosted by NKT at 10:00 AM CET today and can be accessed at www.nkt.dk. The presentation for the call will be available shortly after this release. To attend, please dial in from:

• Denmark: +45 3544 5583
• UK: +44 203 194 0544
• US: +1 855 269 2604