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Gunnebo Industries
March 2018
2
Agenda
Market description
Company overview
Financials
3
Note: Figures represent Gunnebo Industries pro forma
EBITA and EBITDA are excluding non recurring items
Source: Company information
Gunnebo Industries is a manufacturer of high quality products, primarily used in
lifting systems
The Gunnebo brand is synonymous with quality and innovation
Gunnebo Industries designs and manufactures all parts of the lifting sling,
creating system optimization which leads to operational efficiency, weight
saving and flexibility for customers
Gunnebo Industries has a leading position in markets where safety, quality and
operational efficiency is a key priority, with particular strongholds in
Scandinavia, North America, Europe and Australia
For Gunnebo Industries’ clients the cost of lifting systems is low, whereas the
damages and lost profit resulting from a failure in lifting systems can be
detrimental
Primarily indirect sales through sling shops1) to industries such as construction,
industrials, oil & gas and mining
Direct sales of selected products to e.g. mobile crane OEMs and oil & gas rig
builders
Gunnebo Industries has outstanding customer relationships, many with a
history spanning more than 40 years
Global footprint with own sales companies in 10 countries supported by
distribution partners in more than 50 countries
Gunnebo Industries has some 500 FTEs
Headquartered in Västerås and majority owned by private equity fund Segulah
Gunnebo Industries – Innovative and high quality lifting solutions
Key financials At a glance
Customers by industry Customers by geography
Sales breakdown (2017)
MSEK 2014 2015 2016 2017
Sales 997 909 796 862
% growth 7% -9% -12% 8%
EBITDA 127 102 96 95
% margin 13% 11% 12% 11%
EBITA 102 75 71 74
% margin 10% 8% 9% 9%
Note: Customer by industry is an estimate of the customers end industry exposure; Source: Company information Note 1): Sling shop definition: Value-add distributor/ assemblers
4
Components, Chain & Shackles 2017 Sales: MSEK 722 (84% of total sales)
Two product lines offering premium products with outstanding quality
Blocks & Sheaves 2017 Sales: MSEK 140 (16% of total sales)
Gunnebo Industries produces world leading components, chain and shackles
Gunnebo Industries’ value proposition lies in its strength through innovation,
with a brand that has been associated with quality since 1764
Gunnebo Industries’ system is known for adding operational efficiency to the
user through time and weight savings, flexibility and innovative solutions
Unique production process, manufacturing in accordance with major standards
with most products proof loaded and marked for full traceability all the way
back to the raw material
Exposure to broad range of industry segments such as manufacturing,
construction, offshore, mining, aquaculture, fishing and transportation
Total market size estimated at ~ BSEK 14, of which the medium and high end
market accounts for about 50%
Johnson is the brand of the product line for crane blocks, sheaves, snatch
blocks and overhaul balls
Johnson products are recognized by the North American rigging industry as a
lifting equipment accessory of uncompromising quality
With a 50-year track record, it is one of the leading brands in the North
American lifting industry, primarily within mobile cranes and the O&G industry
Mobile crane and energy industries are the main market drivers, with the
medium and high end market estimated at ~BSEK 2
System design creates operational efficiency for the customers
Source: Company information Source: Company information
5
Quality and innovation since 1764
Q1’17
2015
2012
2008
1764 2017
Gunnebo
Industries
going forward
as a lifting and
related
applications
company
Q1-2
017
1952
G-Coupler
1965
BK-Hook
1990s
Johnson Quick
Reeve Crane
Blocks
2000
GrabiQ system –
grade 10
2015
The ROV retrieve
Shackle
2005
Gunnebo Industrier
AB separated from
Gunnebo AB and
both companies
listed on the stock
exchange
New strategy to
focus on lifting and
related
applications,
separation of other
operations into
distinct business
units with full P&L
accountability
Fastening and
Telesteps
business units
sold off in
Q1-2017
Segulah new
principal owner
after taking the
company private
through a buy-out
Traction
business unit
sold off as a
step in the
direction of
streamlining
Gunnebo
1764
Gunnebo starts
manufacturing
of nails, bolts
and belts for
ships
1950
Manufacturing
of shackles
started in
Norway
Manufacturing
of blocks started
in Tulsa, OK,
USA
1955
1970s
Developed the
unique ForgeFab
sheave process in
Tulsa, OK, USA
1975
UKN–Hook
2008
BKD
2010
MFH and the Arctic
master link
Source: Company information
6
New strategy
Focus on lifting
and related
applications
Downturn in key markets
O&G, mobile cranes, mining
New production
site opened in
Växjö
Operational and
process
improvements
Manufacturing
restructuring
initiated
Closure of
Ireland
subsidiary
New growth
strategy
launched
MSEK
Note: Numbers represent Gunnebo Industries proforma. EBITDA before non-recurring items
Source: Company information
Financial development
Pro forma financials
8%
10%
13%
11% 12%
11%
7
Customer Tenure
Customer 1 More than 40 years
Customer 2 More than 40 years
Customer 3 More than 15 years
Customer 4 More than 15 years
Customer 5 More than 20 years
Customer 6 More than 20 years
Customer 7 More than 30 years
Customer 8 More than 15 years
Customer 9 More than 15 years
Customer 10 More than 30 years
Strong brand loyalty among sling shops, end users and OEMs
All top ten customers have been established customers for 15 years or more
Diversified customer base across industries, products and geographies
With long-standing customer relationships
A diversified customer base Long standing customer relationships2) (top 10 customers)
Top 10 customers
Customer split by geography
Customer split by industry1) Comments
Note: Split based on 2017 revenue of MSEK 862. 1) Customer by industry is an estimate of the customers end industry exposure. 2) Customer tenure is used as proxy for brand loyalty
Source: Company information
8
Global manufacturing capabilities, sales and distribution
Lonevåg Växjö
Tulsa
Processes: Forging,
machining, heat treatment,
assembly, testing, painting
and packaging
Main product: Components
R&D: Components and
Chains
Processes: Forging,
machining, heat treatment,
assembly, testing,
packaging, painting and
galvanising
Main products: Shackles
Processes: Forging,
machining, heat treatment,
assembly, testing,
packaging and painting
Main products: Blocks and
Sheaves
R&D: Blocks and Sheaves
Gunnebo
Processes: Chain
manufacturing, heat
treatment, testing, painting
and galvanising
Main product: Chains
Note: Flags represent local sales offices, manufacturing sites pictured
9
World-class manufacturing process and production know-how
Testing Assembly Painting
Forging 1
Machining 2
Heat treatment 3
6 5 4
Comments
Fully integrated manufacturing
process with all critical
processes in-house
Full traceability from finished
product to raw material
100% of the products are proof
loaded to 200-250% of the
working load limit
Source: Company information
10
Gunnebo Industries’ success lies in its quality, technology and innovation
Outstanding quality level 1 All relevant certification standards incl. DNV, ISO and
NS9415,
Unique practice consisting of 100% testing and full traceability
Products are tested for 200-250% of rated capacity
2 World-class manufacturing process and production
know-how
State-of-the-art production
Fully integrated production flow
3 Long heritage of innovation and technical expertise Many of the products that are today’s industry standard have
been developed by Gunnebo Industries, with innovation since
1764
System design creating operational efficiency through time
and weight savings as well as increased flexibility
Design expertise and outstanding customer service
~20 engineers in technical department
Promising product pipeline Gunnebo Industries has equipped Asian Hercules III, one of the world’s largest heavy-lift sheerlegs
Asian Hercules III
Heritage products Patented products New products
Strong brand High brand loyalty1) with strong and long-standing relationships
4
Note: 1) Customer tenure is used as a proxy for brand loyalty
Source: Company information
11
Agenda
Market description
Company overview
Financials
12
Top 3 Top 3 Top 3 #1
Market leader in Scandinavia and top 3 globally
Australia & South America Europe North America Scandinavia
Components
Chains
Shackles
#1 Top 3 #1
#1 #2 #1
Top 3 #1 n.a
Components
Chains
Shackles
Top 3
Top 3
Top 3
Components
Chains
Shackles
Top 3
Top 3
Top 6
Components
Chains
Shackles
Top 3
Top 3
Top 3
Crane blocks
Sheaves
Other
Top 3
#2
Top 3
Market shares
Source: Management estimates
13
Gunnebo Industries’ core markets are positioned for growth
Total estimated targeted market size
BSEK ~9 Source: Company information and management estimates
Components, Chain & Shackle products
Blocks & Sheaves products
Growth of industrial and construction market
segments
Continuous growth of aquaculture industry
Offshore oil & gas market recovery
Growth of mining industries
Expected growth of mobile crane sales, emerging
from low levels
Positive underlying market fundamentals
Increasing fleet utilisation will trigger
investments in new cranes
Increasing activity in oil & gas
Positive active rig count trend
14
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
MNOK
EBITDA
0
100
200
300
400
500
600
700
800
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
BUSD BUSD
Opex Capex (RHS)
107
105
90
95
100
105
110
2012 2013 2014 2015 2016 2017E 2018E
Index Industrial production index
Eurozone US
116
153
90
100
110
120
130
140
150
160
2013 2014 2015 2016 2017 2018E 2019E 2020E
Index Construction index
Europe US
Note: 1) Numbers for MHG, LSG, GSF, BAKKA, NRS, SALM, SSC Source: Norwegian Directorate of Fisheries, Pareto Securities Equity research
Strong market sentiment across targeted industries for Components, Chain
& Shackle products
O&G – strong growth expected Aquaculture – strong growth ahead
Industrial – strong consensus going forward Construction – continuous positive trend
Source: Rystad Energy
Source: Euroconstruct, FMI’s 2018 Overview Source: Consensus Economics Forecast (June 2017)
6% Capex
CAGR 17-20E 10% Opex
17% EBITDA
CAGR 17-20E
Increase in active rigs in North America
Active rigs
2012 2013 2014 2015
Source: Baker Hughes
2016 2017 2018
16
Agenda
Market description
Company overview
Financials
17
Strong growth in 2017
Financial Summary (MSEK)
Sales Operating profit1) Order intake
Source: Company information
Note: 1) Operating profit including non-recurring items
MSEK
8% 20%
10%
MSEK MSEK
18
Strong order intake for Components, Chain & Shackles
Components, Chain & Shackles Blocks & Sheaves MSEK MSEK
Note: LTM order intake Source: Company information
19
Strong revenue and operating profit development for Components, Chain &
Shackles
Sales Operating profit1)
MSEK MSEK
Source: Company information
Note: 1) Operating profit including non-recurring items
20
Today 2019
Positive market outlook
Realisation of operating
leverage
Multiple activities to
support continued
market share gains
Manufacturing cost
reduction
Procurement
improvements
Additional savings
potential through
automation
Product pipeline
Participate in industry
consolidation
Adjacent product
categories
Market growth
1
Organic growth
initiatives
2
Cost savings and
efficiency improvements
Long term growth
opportunities
3 main pillars for profitable growth
3
Clear roadmap for continued profitable growth
