NKT Q2 2016 earnings in line with expectations. Full-year outlook maintained

Nasdaq Copenhagen
Nikolaj Plads 6
DK-1007 Copenhagen K

18 August 2016
Announcement No. 38

NKT Q2 2016 earnings in line with expectations. Full-year outlook maintained 

Group Executive Director, Michael Hedegaard Lyng states:

- Our second-quarter earnings were as expected, impacted by the current order portfolio in NKT Cables’ Projects business. Overall, Nilfisk realised increased earnings, but lower organic growth than expected. To secure the long-term growth ambitions, we introduce a new organisational structure and business model by end-2016, which also contains cost savings of EUR 35m.

- For full-year 2016, we maintain our guidance, while we have specified the underlying assumptions. We now expect NKT Cables’ operational EBITDA margin to be approx. 9% compared with originally 8-9% due to good momentum in Products, while we expect Nilfisk’s earnings to be 10.0-10.5% against the initial range of 10-11%, combined with organic growth of 1-3%. 

Q2 2016 financial highlights

• Operational EBITDA amounted to EUR 52.9m. Operational EBITDA margin (std. metal prices) was 10.9% and in line with expectations
• Organic growth was -5%, and revenue amounted to EUR 553.2m
• Working capital was EUR 318.8m, a reduction of EUR 55.4m from Q2 2015
• Cash flow from operating activities was EUR 28.7m, up from EUR 5.2m in Q2 2015
• Return on capital employed (RoCE) was 9.3%, down from 11.2% in Q2 2015

2016 outlook maintained
NKT’s expectations for 2016 are unchanged at flat consolidated organic growth and operational EBITDA margin (std. metal prices) on par with 9.4% realised in 2015. Underlying assumptions are specified for Nilfisk and NKT Cables, cf. page 16 in the Q2 2016 Interim Report. 

Nilfisk: 3% organic growth and EBITDA improved to EUR 32.5m. New organisational structure to secure growth and with cost savings with EUR 35m impact by 2019
In Q2, Nilfisk recorded 3% organic growth and improved the EBITDA margin by 0.4%-points to 11.8%. Despite positive effects from increased focus on sales and service, overall organic growth is not materialising to the expected extent. To secure growth ambitions a new organisational structure and business model will be implemented by end-2016 aligned with customer and market segmentation and to reduce complexity. The new structure is also expected to bring cost savings with an EUR 35m impact by 2019 and will be initiated immediately.  

NKT Cables: Positive development in Products. Revenue and profitability impacted by Projects as expected
In NKT Cables, the Products business delivered 9% organic growth, driven by Central Europe and Sweden. As expected, overall performance with organic growth of -13% and operational EBITDA of 10.8% was impacted by the current order portfolio in the Projects business. Roll-out of the EXCELLENCE 2020 strategy progressed to plan; the Group Management team is now complete and a number of segment initiatives are being implemented. 

NKT Photonics: Satisfactory financial performance. Activities to gain commercial scale on track
NKT Photonics achieved organic growth of 19%, driven by the Sensing & Energy segment, and earnings improved slightly. The integration of Fianium progressed to plan and a major 18-month frame contract with an industrial customer was signed.

Teleconference
NKT will host a teleconference for investors and financial analysts at 09:00 am CET today, and it 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