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Edited Transcript of HH.CO earnings conference call or presentation 14-May-19 8:30am GMT

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Update time : 2019-10-28 00:00:32

Q1 2019 H+H International A/S wage Call

Copenhagen can 15, 2019 (Thomson StreetEvents) -- Edited Transcript of H+H International A/S wage session yell or presentation Tuesday, can 14, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Bjarne Pedersen

H+H International A/S - VP of business development & IR

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Conference yell Participants

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* Kristian Tornøe Johansen

Danske beach Markets Equity inquiry - Senior Analyst

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Presentation

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Bjarne Pedersen, H+H International A/S - VP of business development & IR [1]

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Good morning and hail to the session yell above H+ H interim results because the first region of 2019. With me is CEO Michael Andersen; CFO, Ian Perkins; and my appoint is Bjarne Pedersen from Investor Relations. above our homepage, there's a presentation available. We will now impress at across the presentation. There's a page quantity at the bottom exact corner, and we will refer to this because we impress at across the presentation. because your information, the call, including subsequent questions are being recorded because playback above our website.

On slip #2, there is an agenda. There we oration facts nearly H+ H and a send -- a disclaimer above the forward-looking statements.

Move to slip #3 and the financial highlights. revenue at the first region of 2019 was DKK 666 million, it's an amplify of 53%, of which 22% is organic growth and the interval predominantly coming from the acquisitions of HDKS at Germany and Switzerland, and Grupa Silikaty at Poland, the interval is an FX exchange.

On the total border level, we clarify 27% because the quarter. persist region the reported quantity was 22%, quiet to grant you some flavor because that, persist year to eat been adjusted due to the standstill of the Borough Green {/ueeseo_3010/} at particular items, accordingly it used to eat been 26%. accordingly 1% up this region above the equal region persist year.

EBITDA is at DKK 97 million both ago and back particular items, and again significantly higher than persist year. equal cinema because EBIT. And we then impress at to the EBIT border because a effect of that 8% at the first region against 3% persist year. And the respond above invested chief 13% against 12% persist year. Investments we are at DKK 11 million against DKK 29 million persist year. The liberate money flow is (inaudible) DKK 23 million and it was (inaudible) DKK 99 million persist year, and it's predominantly due to the natural seasonality adjustments. There is a negative liquid money inspire predominantly from the Western European segment. quiet the difference this year is that the stock has developed estimate set, indeed it's declined a bit where we normally build offset at the first quarter.

On net interest-bearing debt, we are at DKK 659 million, significantly down than the persist year. That is due to section counts increase, and certainly also the improved wage we are enjoying and equal reasons because the equity now standing at DKK 1.046 billion.

On slip #4, we eat the update of the outlook because 2019. It includes the shock from the closed year of 51% ownership of (inaudible) that will be fully consolidated into our accounts. revenue growth ago acquisitions and measured at local currencies is expected to be nearly the 7% mark, that is unchanged. EBITDA ago particular items will be at the hill of DKK 460 million to DKK 510 million, previously it was DKK 445 million to DKK 495 million.

EBIT ago particular items, now DKK 280 million to DKK 330 million, and previously DKK 270 million to DKK 320 million. Investments are unchanged, nearly DKK 160 million, and that includes the CSU queue that we established at the northern divide of Poland.

This was a quantity of the assumptions. We had the -- Brexit will no guide to a important reduce at demand. We will outlook continual economic growth. We had our excellence programs, one, and outlook them to send [strength] and then we outlook that interim raw question costs, they will hoist at higher rates than inflation. And there's also different site of assumptions at our financial clarify at the full year.

On to slip #5, more above Brexit, where the header says kicking the can down the path because that is how we visit it from our perspective. We eat impartial inserted a quantity of dates here to forge while we could outlook something to happen. Now sooner potentially we eat the European parliament selection and the U.K. is expected to participate. if they eat opportunity to feel not, they are automatically out with no deal. Then at the center of June, the European conference eat a conference where they newspaper the Brexit process. Then at September, both the Labour dinner and the Conservative dinner at the U.K. eat their dinner conferences. And then at the deduce of October, the recent exit date, and again, if no deals are done until then, the recent structure is that the U.K. will forsake the EU without a deal. quiet the proof is at the pudding.

On to slip #6, and above the Western European segment. above the desk at the peak we eat the numbers. Revenues up to DKK 464 million, that is 50% more than equal mature persist year. Organic growth was at 27%. EBITDA ago particular items is DKK 66 million and it was DKK 34 million persist year while we measured ago particular items. EBIT is at DKK 34 million, and this again, also up above persist year. Investments starting cheap at DKK 5 million, and we had DKK 28 million persist year and that was predominantly related to the [BG] upgrade.

Organic growth at the region is driven by higher sales and it is volume-related and it is at the U.K., and then certainly we eat had this favorable climate status throughout the first region against the identical hoarse winter at March persist year. Prices, they are higher than the equal mature persist year at full markets. And the EBITDA improvement comes from both the acquired and the existing aircrete business.

As also mentioned, the net working chief stock has been reduced at the first region and that is predominantly related to the U.K. And also because we talk at (inaudible) increasing charge strain is expected to bring above and hurry across the year. And there is some downgrades of macroeconomic at some of the regions and we will no outlook that to eat a control shock above the plead at our markets because the short term.

On to slip #7, and the Eastern European segment. revenue is at nearly DKK 200 million, and the cinema is the same, significantly above persist year 12% organic growth, predominantly coming from pricing at the Eastern European segment. EBITDA ago particular items of DKK 49 million. no particular items, accordingly again, it can be up above persist year. And the equal picture, EBIT at DKK 40 million. Investment at DKK 6 million.

And because explained, recently the Eastern European section is predominantly driven by Poland. Organic growth because mentioned price-related and that is because we cannot favour more costs out of our taxes and we are quite cheap above the stocks. EBITDA improvements, also here a blend of the acquired and the existing business. And because Poland is the main divide of the segment, we can virgin approve that the output continued to remain strong, quiet because we also reported earlier, we mentioned it is the equal rate. And then we had also announced that there could be a latent sale of Russia and that is at queue with what we had announced at our annual report.

On the next slide, slip #8, a little statements above our status at Russia. It is a identical natural time. at 2009, a natural rating at 2009 and we had a robust organization above there that is doing a good job. We will visit if we can vary the recent situation, we also are quite restricted above the money we're voluntary to inject into Russia because the time being. That certainly leads to the opportunities being carried into the Q1 and carry out something actively with us because we notice at restructuring quiet because the selling.

We visit that at order to favour undergo to satis{/ueeseo_3010/} levels, we demand a important improvement at the markets, and that will possibly eat to become also from the geopolitical status and because the time being, because mentioned we are at dialogue with latent buyers, and we will update you while we also eat a conditional SPA or the negotiations are terminated.

On to slip #9, we eat the new brand frame saying "Partners at wall building." We used (inaudible) at order to launch that above the corporate even of customers known because [following wall]. We expect to build and our first lodging manner we've been using because many years, what you visit visually is impartial a little change, quiet back that there's much more than that. We've conducted 700 guest interviews with existing latent customers to identify the headmaster challenges and how we can undergo and overcome these challenges. And the headmaster sensation is short because flavor, it's utilization, increasing question charge and sustainability issues.

From a corporate perspective, we eat had above slip #10 also expressed what that could intend because with the new brand claim, we are also empty because expanding into other produce areas than impartial aircrete and calcium silicate. because the time being, we concentrate virgin above restructuring within our existing produce ranges and at Central Europe that is peak above the agenda at that regard.

And that takes us above to slip #11, where we hopefully are capable to prove that we are delivering above the strategy. We eat the calcium silicate mill at northern divide of Poland, Reda, which is deduce to Gdansk, where we carry out a investment of nearly DKK 30 million, and we outlook to eat a produce queue up and running mid of 2020. And then we eat closed the acquisition of the Dresden CSU {/ueeseo_3010/}, it's an ownership of 51%. We've paid nearly DKK 67 million and we are already working above the integration process. And the financial shock from this is certainly also included at our guidance.

That takes above to the Q&A conference of this call. We will un-mute the all.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [2]

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This is Kristian Johansen from Danske Bank. impartial a little questions from my side. can you elaborate a bit above the development at the acquired CSU businesses? accordingly obviously they are no divide of the organic growth yet, quiet at least especially above the Polish CSU business, the revenue percent at Q1 impartial seems extremely strong. accordingly any color above the development here above an underlying basis will be appreciated.

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Unidentified corporation Representative, [3]

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Obviously we are pretty satisfied with development because the Polish acquisition from persist year at the -- at calcium silicate. And we eat both managed to favour more volume up and now we visit a favorable wage development continuing that it does appearance that our manner to the just has proved to be much more focused above getting prices up than our previous (inaudible). consequently we visit development of the other revenue.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [4]

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And at condition of -- because obviously these businesses will rgeister because organic growth, especially at second half of this year, accordingly are you running these businesses at full utilization now because well? Or -- and then how was that at second half of persist year, i.e., is there any volume growth to be expected from the CSU business at the second half?

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Unidentified corporation Representative, [5]

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As I said, the virgin offside you can visit remainder across our authorization process you favour more out however it looks parallel now they are (inaudible).

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [6]

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Okay. And are you -- I intend is there no farther imitative left to amplify capacity? And how far are you across that?

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Unidentified corporation Representative, [7]

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We are investing at productions improvement, indeed we've site a progression of investment that also has some site durations which remains. consequently we will impartial talk that we are working at that to invest, now we're going to favour it full -- our improvements going quiet because the Reda plant, which is going to be adding new ability next year is however going to be above a marginal basis.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [8]

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All right. exhibition enough. That's pretty clear. Then above the money flow and the surplus sheet, you eat DKK 100 million amplify at receivables compared to Q4. can you impartial elaborate a bit above what's driving this?

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Unidentified corporation Representative, [9]

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Yes. I intend it's an amplify from the deduce of the year that you're talking about. And because we've had robust sales during the first region and especially at March, predominantly increases at debtors, and it's impartial volume-driven. And we eat identical good sales code at March compared to December, debtors are going to be higher and that's driven the increase.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [10]

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Okay. accordingly there's no changed payment condition or anything parallel that at this?

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Unidentified corporation Representative, [11]

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No. You shouldn't outlook to visit any vary at payment condition or the natural vary at working chief numbers at this, no.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [12]

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All right. Then my persist question is impartial above charge inflation. And then if you can supply an update at the development of your -- according to costs here and how it surplus with the wage increases you eat there, you eat at place?

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Unidentified corporation Representative, [13]

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The charge increases, because we've indicated I believe before, are pretty higher than normal. We've got especially energy wage increases at the eastern section pretty high. And then eat an shock and to -- eat no accordingly much had an shock at the first quarter, quiet will possibly going forward. accordingly we're recently seeing wage increases and that will eat an shock at the persist divide of the year, also at the first part. I believe if you expect to site a quantity to it, it's nearly 5% year-over-year, looking at nearly 6% inflation. And it's driven by CO2 emissions; it's driven by expend and network cost; it's driven by energy charge at (inaudible) Poland; we also visit strain from -- due to the CO2 emission cost, we visit strain from cement and lime suppliers.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [14]

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Okay. quiet you however outlook to be capable to originate prices to at least that level, your hold price?

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Unidentified corporation Representative, [15]

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Yes, if we appearance at it from the perspective of what we favour out of volume, we acknowledge the complete and we however trust that we'd be capable to maintain our margin, if that's what you're asking. And we visit it coming out of the first quarter. We are also like-for-like improve than persist year. quiet there is a postpone above some of the charge [SMEs] which manner that (inaudible) we carry out no outlook to overcome our equity ratio above a like-for-like basis full told.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [16]

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All right. quiet we shouldn't outlook classification of a total border dilution at Eastern Europe towards the deduce of the year?

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Unidentified corporation Representative, [17]

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No, that's no our expectation.

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Kristian Tornøe Johansen, Danske beach Markets Equity inquiry - Senior Analyst [18]

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Okay. That's pretty clear.

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Bjarne Pedersen, H+H International A/S - VP of business development & IR [19]

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Thanks a sentence Kristian. Other questions (inaudible)? if that's no the case, we will deduce this call. It doesn't appearance so. accordingly thank you full because dialing in. We outlook you a continual delightful day. Thank you and bye-bye.

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