26 February 2020
Company Announcement No. 1

NKT A/S Annual Report 2019: High-voltage order backlog at an all-time high and earnings in line with the financial outlook

NKT CEO Alexander Kara says:
- Our financial performance in 2019 was in line with expectations. The earnings in NKT were, however, at a too low level, and therefore I am pleased that in 2019 we booked new high-voltage orders of more than EUR 750m, ending the year with a high-voltage backlog at an all-time high. This is important for improving profitability in the years ahead, where NKT is well positioned to be a key player in the global transition towards renewable energy. 2019 was another growth year for NKT Photonics with 10% organic growth and improved earnings.

Financial highlights

 NKTNKT Photonics
EURmQ4 20192019Q4 20192019
Revenue262.2*945.0*25.574.6
Organic growth16%-10%15%10%
Operational EBITDA1.215.17.214.6
Operational EBITDA margin0.5%*1.6%*28.2%19.6%

* Std. metal prices

NKT: High-voltage order backlog was at an all-time high, while financial performance was negatively impacted by the reduced level of activity in Solutions as expected
The revenue (std. metal prices) in 2019 was EUR 945.0m, against EUR 1,080.1m in 2018. This development was primarily due to a reduced level of activity in Solutions, and the divestment of the railway activities. Organic growth was -10%. As expected the reduction in revenue led to lower profitability, with operational EBITDA of EUR 15.1m for 2019 against EUR 70.2m for 2018.

In 2019, progress continued on several tenders in the high-voltage market, and high-voltage projects with an aggregated value of more than EUR 750m were awarded to NKT in 2019, leading to an all-time high high-voltage order backlog of EUR 1.37bn. In November 2019, NKT announced its largest ever XLPE power cables order worth approx. EUR 360m. NKT is the main contractor for the delivery and installation of 320 kV DC on- and offshore export cable systems for the Dogger Bank Wind Farms Creyke Beck A and Creyke Beck B.

NKT Photonics: Organic growth of 10% in 2019 and increase in EBITDA
The revenue in NKT Photonics increased to EUR 74.6m in 2019, up from EUR 67.7m in 2018. Despite fewer larger projects than anticipated towards the end of 2019, organic growth of 10% was achieved. This exceeded the performance for the broader photonics industry.

Driven by the higher revenue, NKT Photonics lifted EBITDA to EUR 14.6m in 2019 from EUR 9.0m in 2018. This development demonstrated the operational leverage in the business, but also included positive non-recurring items related to reversals of provisions and revaluations that added around EUR 2m to EBITDA in 2019.

In November 2019, the NKT A/S Board of Directors initiated a review of strategic alternatives regarding NKT Photonics, with the objective of maximizing value creation. This process is ongoing.

Financial outlook for NKT
For NKT, revenue (std. metal prices) is expected to be approx. EUR 1.0–1.1bn and the operational EBITDA is expected to be approx. EUR 40–60m in 2020.

NKT anticipates an increasing demand for power cable solutions and services in the years ahead and as a technology leading provider NKT expects to be a significant beneficiary of this development.

NKT expects in particular the future development of the high-voltage market to be attractive, supported by the global transition towards renewable energy sources such as solar and wind and a political agenda to expand transmission lines to interconnect power grids within countries in the EU and also in the rest of the world. This transition will also drive demand for the NKT Applications and Service & Accessories business lines.

The growth of the high-voltage markets is, however, subject to various factors, including the timing of political decision-making, which makes the roll-out of specific projects challenging to predict.

In 2017, NKT provided medium-term financial targets, which targeted operational EBITDA of approx. EUR 200–225m and RoCE to be more than 13%. However, due to the aforementioned timing uncertainty for particularly future awards of high-voltage projects, NKT has decided to only provide financial outlook within the current financial year.

Financial outlook for NKT Photonics
For NKT Photonics, organic revenue growth is expected to be approx. 5–15% and the EBITDA margin to be approx. 15–18% in 2020.

In 2017, NKT Photonics provided medium-term financial targets. The annual organic growth is expected to be above 10%, the EBITDA margin is expected to reach approx. 25% and RoCE is expected to be approx. 20%.

Teleconference
NKT A/S hosts a teleconference for investors and financial analysts at 10:00 am CET on 26 February, and it can be accessed at investors.nkt.com. The presentation for the call will be available shortly after this release. To attend, please dial in from (confirmation code: 5871436): 

Denmark: +45 3272 8042
UK: +44 207 192 8000
US: +1 631 510 7495

Contacts
Investor Relations: Michael Nass Nielsen, Head of Investor Relations, tel: +45 2494 1654
Media Relations: Helle Gudiksen, Head of Group Communications, tel: +45 2349 9098

Attachments

  • NKT_Annual_Report_2019
  • NKT_Sustainability_Report_2019

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