Q3 2018 Financial Results 1
Forward-looking statement The statements on the future in this presentation, including expected sales and earnings, are associated with risks and uncertainties and may be affected by factors influencing the activities of the Group, e.g. the global economic environment, including interest and exchange rate developments, the raw material situation, production and distribution-related issues, breach of contract or unexpected termination of contract, price reductions due to market-driven price reductions, market acceptance of new products, launches of competitive products and other unforeseen factors. In no event shall ROCKWOOL International A/S be liable for any direct, indirect or consequential damages or any other damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other action, arising out of or in connection with the use of information in this presentation. 2
Highlights YTD Q3 Sales of EUR 1,962 million up 13.4% in reported figures Sales increase in local currencies 16.1% incl. 3 percentage points from Flumroc EBIT of EUR 258 million up 39% over last year Free cash flow of EUR 138 million at level with last year EBIT margin of 13.2% up 2.5 percentage points Net profit EUR 199 million improvement of EUR 64 million 3
Highlights Q3 Sales of EUR 692 million up 13.1% in reported figures Sales increase in local currencies 14.6% incl. 3.3 percentage points from Flumroc EBIT of EUR 97 million up 28% over last year Free cash flow of EUR 110 million EUR 17 million lower than last year EBIT margin of 14.0% up 1.6 percentage points Net profit EUR 76 million improvement of EUR 20 million 4
YTD Q3 sales growth of 16.1% NET SALES EURm Sales grew 16.1% in local currencies including Flumroc, and reached EUR 1,962 million. +16.1% +13.4% Sales increased 13.4% in reported figures with a negative currency effect of 2.7 percentage points. Flumroc contributed with 3 percentage points to the growth. 1,730 1,962 Reported figures Local currencies The increase in sales has been driven by good market conditions and an increased demand for noncombustible insulation products. YTD Q3 2017 YTD Q3 2018 Insulation up 20.0% in local currencies, and 17.3% in reported figures, owing mainly to the building insulation segment across Europe and North America. Systems sales up 3.8% in local currencies and 1.2% in reported figures. NET SALES PER BUSINESS AREA EURm +20.0% +17.3% 1,309 1,536 +3.8% +1.2% 2017 2018 Local currencies 2018 Reported figures 421 426 Insulation Systems 5
Q3 sales growth of 14.6% Sales grew 14.6% in local currencies including 3.3 percentage points from Flumroc. NET SALES EURm +14.6% Sales increased 13.1% in reported figures with a negative currency effect of 1.5 percentage points. +13.1% 692 Reported figures Local currencies 612 Insulation up 18.4% in local currencies, and 16.6% in reported figures. Systems sales up 2.3% in local currencies and 1.6% in reported figures, with lower growth compared to the previous quarter as Grodan sales development in North America is still low. 471 Q3 2017 Q3 2018 NET SALES PER BUSINESS AREA EURm +18.4% +16.6% 548 +2.3% +1.6% 2017 2018 Local currencies 2018 Reported figures 141 143 Insulation Systems 6
Regional developments Q3 Growth in local currencies Western Europe 14.2% 14.0% incl. FX effect Key developments Share of Sales Growth in all key markets Especially France, UK, Italy, and Spain performing well Small negative currency effect of 0.2 %-points 58% CEE incl. Russia 28.0% 22.3% incl. FX effect Good market development across region Negative currency effect of 5.7 %-points, mainly driven by the rouble 22% North America, Asia and others 3.9% 2.6% incl. FX effect Double digit growth in U.S. insulation segment Good growth in China, South East Asia Negative currency effect of 1.3 %-points 20% 7
Profitability EBITDA up 16% to EUR 137 million in Q3 2018 Q3 EBITDA margin of 19.8%, mainly due to higher sales prices, which together with good factory performance has offset the pressure from input costs and a negative impact from factory mix and cost from longer transportation distances. EURm 105 67 94 58 86 46 103 64 119 76 +16% +28% 132 112 109 91 72 70 137 97 EBITDA EBIT Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 EBIT up 28%, reaching EUR 97 million in Q3 2018 Corresponding to a 14.0% EBIT margin, an increase of 1.6 percentage points. EBIT YTD Q3 2018 increased 39%, to EUR 258 million. 18.3% 11.8% 16.1% 16.2% 17.7% 19.4% 16.9% 18.6% 9.9% 8.6% 10.9% 12.4% 11.2% 11.6% 19.9% 19.8% 13.6% 14.0% EBITDA-margin EBIT-margin Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 8
Strong improvement in Insulation Insulation EBIT increased 33% to EUR 78 million in Q3 2018 EBIT EURm +33% 78 +11% EBIT margin improved 1.4 percentage points to 12.4%. 59 Q3 2017 Most markets contributed positively. Q3 2018 17 19 Better Systems performance Systems EBIT increased 11% to EUR 19 million in Q3 2018 EBIT margin 13.1%, which is 1.0 percentage points higher than the same period in 2017. Grodan still challenged in the U.S. EBIT-MARGIN (%) 15.8% 9.2% Insulation 11.0% 8.0% 13.6% 14.5% 12.1% 6.2% 8.7% 10.0% 11.4% 11.0% 10.2% 10.5% Systems 13.9% 13.1% 12.5% 12.4% Insulation Systems Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 9
Free Cash Flow Cash flow from operations before financial items and tax was EUR 179 million in Q3 2018, which is EUR 16 million higher than same period last year, mainly from higher EBIT. NWC increased to 9.6% (LY: 8.5%) of net sales, increasing from EUR 196 million in Q3 2017 to EUR 250 million in Q3 2018, due to high demand. Investments totaled EUR 141 million in nine months of 2018 (LY: EUR 93 million). Free cash flow in YTD 2018 reached EUR 138 million, while it reached EUR 110 million in Q3 2018, some EUR 17 million lower than last year due to increasing investments. ROCKWOOL is net debt free with a net cash position end of Q3 of EUR 316 million, an improvement of EUR 100 million. FREE CASH FLOW EURm 127 97-50 64 127 27 Q3: EUR -17m Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18-35 62 110 10
Investment activities Investments totaled EUR 141 million in nine months of 2018 (LY: EUR 93 million) Capacity investment mainly in the factory project in West Virginia, the new factory in Romania and an upgrade of one of the factories in Poland. Investments partly offset by sale of listed securities in Flumroc amounting to EUR 18 million, not included in the graph. INVESTMENTS EURm Capacity Program Maintenance CAPEX 52 49 41 19 35 37 22 30 14 28 15 21 9 20 9 12 33 10 27 27 20 19 21 5 17 9 5 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 11
Outlook for 2018 12
Guidance 2018 changed 1. Sales 2. EBIT Growth in net sales is now expected to be 14-15% in local currencies* (previously announced 13-15%). EBIT margin is expected to reach around 13%. 3. INVESTMENT Investment level excluding acquisitions is now expected to be around EUR 230 million (previously announced EUR 260 million), mainly due to paying a number of large contracts later than expected. * Including around 2-3 percent from the acquisition of Flumroc 13
Key figures for the Group EURm Q3 2018 Q3 2017 YoY (%) YTD Q3 2018 Income statement YTD Q3 2017 YoY (%) FY 2017 Net Sales 692 612 13.1% 1,962 1,730 13.4% 2,374 EBITDA 137 119 15.1% 382 308 24.0% 417 EBIT 97 76 27.6% 258 185 39.5% 258 Profit before tax 95 75 26.7% 250 182 37.4% 275 Profit for the period 76 56 35.7% 199 135 47.4% 214 Balance sheet Total Assets 2,347 2,104 11.5% 2,164 Equity 1,821 1,573 15.8% 1,685 Equity ratio 77.4% 74.6% 2.8pp 77.5% 14
Questions? 15
ROCKWOOL International A/S Hovedgaden 584 DK-2640 Hedehusene Denmark CVR No. 54879415 Tel: +45 46 56 03 00 www.rockwoolgroup.com 16