Transcript Temporibus autem quibusdam et aut officiis debitis aut

Den Danske Finansanalytikerforening
Dalhoff Larsen & Horneman A/S
3. juni 2008
Jørgen Møller-Rasmussen, CEO
Claus Mejlby Nielsen, Vice President Treasury & IR
CONTENTS
• General presentation
3
• Q 1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
2
CONTENTS
• General presentation
3
• Q1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
3
IN SHORT
One of the world’s major timber wholesalers
• Forecast group revenues of
DKK 5.7 billion in 2008
• Largest producer of
sustainable tropical
hardwood in Africa
• >85% of DLH’s revenues are
generated outside Denmark
• Strategic focus on international B2B timber trade after
divestiture of buildingmaterials-chain in DK to
Saint-Gobain
• Sales and procurement
offices, warehouses and
processing facilities in 31
countries on 5 continents
• Approx. 3,600 employees
• Listed in Copenhagen
since 1986
• Market cap DKK 1.4 billion
(EUR 175 million)
4
INTERNATIONAL TIMBER TRADE
Global sourcing, processing,
trading and distribution of
tropical and tempered
hardwood products and
timber-based sheet materials
and softwood.
5
FROM THE FOREST TO THE END-USER
X
6
TRENDS
THEREFORE
• The consumption of timber is
growing (most in the emerging
markets, relatively)
Focus on emerging markets
• International division of work
increases cross-border trade
Further globalisation
• Processing moves upstream in the
value chain
More own processing
• The market is getting more
transparent
Economies of scale via growth
and efficiency measures (IT)
• Shortage of raw materials
Focus on sourcing
7
HOUSE OF VALUES
8
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Environment ∙ Human rights ∙ Social responsibility
• Good Supplier Program
• Enhanced efforts to introduce sustainability in the DLH Group’s
businesses
• Now the worlds largest supplier of certified tropical hardwood
• Dialogue and cooperation for human rights
9
STEPWISE IMPLEMENTATION OF FSC
Tropical Hardwood
12%
Certification – FSC/PEFC
20%
Verified Legal Compliance VLC/TLTV
24%
80%
100%
Verified Legal Origin – VLO
Known origin
Known and unknown origin
• Separate CSR-publication as at 17 March 2008
• Leading position worldwide in sustainable tropical hardwood
• 2nd forest concession in CIB, Congo, FSC certified
10
DIVIDEND AND SHARE BUY-BACK
DKK/share of DKK 10
2,5
Share buy-back programme
2,0
• Launched 26 May 2008
1,5
• Up to DKK 100 million
(7% of B-cap.)
• ”Safe-harbour”-method
1,0
2,0
2,0
1,5
0,5
• At a later stage DLH can issue
new shares in connection with
major acquisitions
1,0
0,6
0,6
2002
2003
• Ends 1 March 2009
0,0
2004
2005
2006
2007
Financial year
11
CONTENTS
• General presentation
3
• Q 1 08
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
12
GROUP INCOME STATEMENT
DKK million
Revenue (continuing operations)
Gross profit
Q1
2008
Q1
2007
1,361
1,443
223
262
16.4%
18.1%
195
194
28
68
2.1%
4.7%
Profit before tax
3
46
Profit after tax (continuing operations)
2
31
Profit after tax of discontinued operations
580
7
Profit after tax
582
38
Gross margin
Costs
EBIT
EBIT margin
13
Revenue Developement Q1 2008
DKK million
-10,8%
1.400
-155
+5,1%
73
1.200
1.000
1.443
1.361
2007
Organic growth
Acquisition
2008
14
INVESTED CAPITAL
All operations
Continuing Operations
end of 2007
end of Q1 2008
3.234
3.234
2.914
Anlægsaktiver
Non-current
assets
907
729
Egenkapital
Equity
1.172
Non-current
assets
799
1.068Equity
NettoomsætningsCurrent
Interest
Assets aktiver
bearing
2.327
Current
Assets
2.115
debt
2.143
2.062
Inv. Capital
2.914
Financing
Inv. Capital
1.747
Interest
bearing
debt
1.166
Financing
DKK million
15
CASH FLOW
Continuing operations
DKK million
Q1
Q1
2008
2007
61
83
-158
-189
Operating activity
-97
-106
Acquisition of enterprises
-65
0
Other investments
-46
-17
-208
-123
923
-2
Cash flow from main activities before
changes in working capital
Change in working capital including
financial items and tax
Operations after investments
Discontinued operations
16
Summary Q1 2008
• Overall picture: Weak market in Q1
- due to lower building activity
- and an overstock situation in the market
- hence declining prices
- reduced turnover
- and decreased EBIT-Margin
- and high inventories
• However a number of satisfying markets
(e.g. Middle- & Far East, France, Eastern Europe, Sweden)
• Successful divestment of Building Materials Division to Saint
Gobain
Large one-off income item
17
CONTENTS
• General presentation
3
• Q1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
18
FORECAST FOR 2008
DKK million
Revenue
Realised
2007
Expected
2008
5,720
5,600
EBIT
244
160
Profit before tax
159
100
Profit after tax
100
60
47
580
147
640
Profit after tax of discontinued
operations/including proceeds
Profit after tax
19
PROFIT BEFORE TAX
DKK million
250
200
67
150
62
580
53
30
100
144
8
50
3
110
16
38
43
2001
2002
66
159
100
122
0
2003
2004
2005
2006
2007
2008F
20
AVERAGE INVESTED CAPITAL
DKK million
3.500
3.000
557
535
2.500
2.000
499
1.500
483
462
464
484
2.288
1.000
500
1.199
1.294
1.213
1.223
2001
2002
2003
2004
2.641
2.900
1.491
0
2005
2006
2007
2008F
21
CONTENTS
• General presentation
3
• Q1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
22
EQUITY STORY
• Industry with growth potential
• Strong business concept
• Strong environmental profile
• Considerable economies of scale
• Structural opportunities
23
BUSINESS BASIS 2008
Future
Future
market mix
business mix
Denmark
Other Nordic
14%
countries
15%
Emerging
Byggemarkets
materialer
23%
23% Other Western
USA
8%
European
countries 40%
Softwood
&
Byggesheet
materialer Hardwood
materials
70%
23%
30%
Træ &
plade
18%
DKK 5.6 billion
DKK 5.6 billion
(percentage distribution of revenue)
24
RENEWED STRATEGY
The new DLH – one of the world’s leading timber wholesalers
• Full focus on the international B2B trade with timber and timber
products
• Strengthened efforts to implement sustainability in DLH group
units
• Rapidly proceeding towards a market position as the world’s
leading supplier of certified tropical hardwood
• Strategic extension of the value chain:
”From forest to end user”
• Enlarged security of supply in the long term
25
VALUE CHAIN
Hardwood
Indkøb
Softwood
Sheet
Råvare
Materials
Savværk
Forarbejdning
Eksport
Shipping
Forest
Sawmill
Processing
Export
Import
Salg
Import
Distribution
Distribution
End
customer
Slutkunde
proff.
Slutkunde
DIY
26
CONTENTS
• General presentation
3
• Q1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
27
NEW FINANCIAL GOALS - GROUP
Group
Realised 2007
Former goal
New goal 2012
Growth
in revenue
Profit
margin
Value
creation
Equity
ratio
4%
4.3%
Neg.
32%
>+10% p.a.
5.0%
Pos.
>30%
*)
5.5%
Pos.
>35%
*) ”…an aggregated growth during the strategic period which more than
compensates the divested activities”.
28
NEW FINANCIAL GOALS - SEGMENTS
Segmental
goals
Growth in
revenue
Profit
margin
Value
creation
Neg.
4.3%
Neg.
> +10% p.a.
6.0%
>0.25% of rev.
Reasonable
6.5%
>0.25% of rev.
Pos.
7.3%
Pos.
> +10% p.a.
5.0%
>0.25% af oms.
Very high
5.5%
>0.25% af oms.
Hardwood Division
Realised 2007
Former goal
New goal 2012
Timber & Board Division
Realised 2007
Former goal
New goal 2012
29
CONTENTS
• General presentation
3
• Q1 2008, Group
12
• Outlook 2008
18
• Renewed strategy
22
• Renewed financial goals
27
• M&A activities
30
30
M&A
• Acquisition candidates in a fragmented market
• Multiples based on EVA approach
• New share capital will only be issued to finance
specific acquisitions
31
BOHMANS, NOVEMBER 2005
Turnover: DKK 250 million
32
TT TIMBER GROUP, JANUARY 2006
Turnover: DKK 1.300 million
33
LJUNGBERGS, SEPTEMBER 2006
Turnover: DKK 300 million
34
OLLE ZETTERGREN, JULY 2007
Turnover: DKK 80 million
35
HUSTVEDT-GRUPPEN, AUGUST 2007
Turnover: DKK 140 million
36
PALMA, FEBRUARY 2008
Turnover: DKK 100 million
37
PUUKESKUS OY, May 2008
Hardwood activities only
38
FURTHER INFORMATION
• Stock Brokers monitoring DLH
• Danske Equities, Copenhagen
• Nordea, Copenhagen
• Kaupthing Bank, Copenhagen
• Website (incl. investor presentations):
www.dlh-group.com
• IR-contact:
[email protected]
39
www.dlh-group.com
40
COMPETITION
• No similar worldwide competitors
• Regional players e.g.
• Tradelink (Brazil  Europe, US)
• Denker (SEA  NL, Germany)
• Rougier (Africa  France)
• Danzer (Africa  Germany etc.)
• Large customers having own procurement organisation
• Large producers having own sales agents.
41
SHARE BASED INCENTIVE SCHEMES
• Revolving share option programme for
Group Management - 6 individuals
(1% of outstanding shares)
• Employees share programme issued in 2006
(1.3% of market value)
2002-2008
Allotments
(total)
Exercised
(total)
Net outstanding
options
President, CEO
229.437
122.310
107.127
Executive Vice Presidents
198.908
123.000
75.908
Total
428.345
245.310
183.035
42
SEGMENTATION 2007
Revenue 2007 DKK 7,4b
F 2008 DKK 5,6b
Building
materials
23%
EBIT margin 2007 4,3%
 F 2008 2,9%
Hardwood
55%
Timber &
Board
22%
(% of revenue)
43
RISKS
• Commercial risks
• Market and customer risks
• Political risks and other supply risks
(Cyclical business)
(3rd world countries)
• Financial risks
• Foreign exchange rates
(USD vs. EUR)
• Interest rates and funding
• Balance sheet risks
• Inventories
(Market prices)
• Trade receivables
• Prepayments to suppliers
• Environmental and human rights matters
(Compliance and reputation)
44
Renewed strategy:
FORESTRY
• New investments in forests
- Normally concessions and sawmills, exceptionally ownership of land
- Cooperation with investors about investments in plantation, will become
an important parameter in the CO2/climate solutions
• Strategic necessity in certain tropical areas
• Only in the Hardwood Division and presently only in Congo and
Gabon
• Supports the commercial interest regarding:
- Supply security
- Environment/sustainability (certification)
- Test of new species
45
jan-05
DLH
SmallCap Indexed
OMXC20 Indexed
nov-07
dec-07
jan-08
feb-08
mar-08
apr-08
maj-08
apr-06
maj-06
jun-06
jul-06
aug-06
sep-06
okt-06
nov-06
dec-06
jan-07
feb-07
mar-07
apr-07
maj-07
jun-07
jul-07
aug-07
sep-07
okt-07
sep-05
okt-05
nov-05
dec-05
jan-06
feb-06
mar-06
jun-05
jul-05
aug-05
feb-05
mar-05
apr-05
maj-05
SHARE PERFORMANCE
Share price
140
120
100
80
60
40
20
0
MidCap Indexed
46
jan-05
feb-05
mar-05
apr-05
maj-05
jun-05
jul-05
aug-05
sep-05
okt-05
nov-05
dec-05
jan-06
feb-06
mar-06
apr-06
maj-06
jun-06
jul-06
aug-06
sep-06
okt-06
nov-06
dec-06
jan-07
feb-07
mar-07
apr-07
maj-07
jun-07
jul-07
aug-07
sep-07
okt-07
nov-07
dec-07
jan-08
feb-08
mar-08
apr-08
maj-08
TRADING VOLUME
DKK mill.
400
350
300
250
200
150
100
50
Turnover DKK
47
SHAREHOLDERS
Composition of Shareholders
28.05.2008
Non-registered
shareholders
21,96%
DLH-fonden
25,83%
Ellen & Knud Dalhoff
Larsens Fond
4,21%
Countries abroad
6,63%
Treasury shares
0,78%
Fragaria GmbH
6,20%
Other registered
shareholders
27,98%
ATP
6,41%
48
Renewed strategy:
PROCESSING
• New investments in processing
• Often required precondition for own forest concessions
• Only in Hardwood Division, predominantly in (7) supply
countries
• Typically kiln-drying and production of semi-finished goods,
including a few finished products (f.inst. decking and flooring)
• Supports commercial interests:
- Environment and sustainability
- ”Market leadership” in the supply part
- Completes the supply chain
- Able to buy ”mill-run” from external sawmills
49
Renewed strategy:
TRADING
• Organic growth without capital investments
• Innovated focus in both divisions
• Back to back businesses with limited tied up capital
• Supports the commercial interests regarding:
- Markets without DLH distribution activity
- Introduction to new markets
- Utilization of imbalances in international trade
- Sales channel for surplus of own production
50
Renewed strategy:
DISTRIBUTION
• The major part of the investments will be within distribution
• Both strategic acquisitions and minor add-on purchases
• Acquisition of sales units with own inventory in both divisions
• Also in new countries
- In Hardwood Division global perspective
- In Timber & Board Division in geographic connection to existing areas
• Focus areas
- Nordic countries
- Western Europe
- USA
- Emerging markets
51
Renewed organisation:
ORGANISATION
• Continuously two divisions
• New regionalized geographical structure
• To support the integrated business model, strengthening of crossgroup coordination:
International relations
HR
Environment/CSR
Marketing
Logistic
Shipping
Production
• Search for new member of Group Executive Board
• Focus on implementation of new IT system (GTS) and the relating
organisational adjustments
52