NKT A/S Q3 2018: Financial results in Q3 2018 as expected, while financial outlook for full year 2018 adjusted  


Company Announcement

16 November 2018 
Announcement No. 17

NKT A/S Q3 2018: Financial results in Q3 2018 as expected, while financial outlook for full year 2018 adjusted  

Interim CEO and CFO Roland M. Andersen comments:

- Overall, the financial results were as expected in Q3 2018. However, due to recent unexpected circumstances we have lowered our financial outlook for 2018 in NKT. I am pleased to see that our high-voltage order backlog has started to grow again, but even though we have taken our fair share of projects during the 2nd half 2018, earnings will be lower in 2019 compared to 2018. It is satisfactory to notice that NKT Photonics maintained its growth momentum in Q3 2018.

Q3 2018 financial highlights

EURmNKTNKT Photonics
Revenue286.9*15.2
Organic growth-1%21%
Operational EBITDA 26.1 1.5
Operational EBITDA margin9.1%*9.9%

* Std. metal prices

Updated 2018 financial outlook
The 2018 financial outlook for NKT has been updated, whereas for NKT Photonics, it is unchanged from Company Announcement No. 1 of 27 February 2018.

For NKT, revenue* is still expected to be approx. EUR 1.0-1.1bn. The operational EBITDA is now expected to be approx. EUR 70m (previously in the lower end of approx. EUR 90-110m). The lowered expectation is due to NKT unexpectedly being impacted by external factors related to two ongoing high-voltage projects.

One-off costs are expected to be approx. EUR 27-28m, compared to previously approx. EUR 20m.

For NKT Photonics, revenue is still expected to be approx. EUR 65–70m and the EBITDA is still expected to be approx. EUR 10m.

Preliminary 2019 financial outlook
Although NKT has won its fair share of tenders for high-voltage projects in its relevant markets, the period since August 2018 has not resulted in awards of enough projects that will impact earnings materially in 2019, which accordingly will be lower than in 2017 and 2018. The operational EBITDA is expected to be approx. EUR 10-30m in 2019. The outlook does not include NKT Photonics.

NKT will provide a more detailed 2019 financial outlook and an update on assumptions and initiatives latest in the Annual Report 2018 to be released on 28 February 2019. This will also include a 2019 financial outlook for NKT Photonics.

NKT: Revenue negatively impacted by Swedish medium-voltage market, and operational EBITDA was lower than Q3 2017. Pick-up in high-voltage project awards since end-Q2 2018
In Q3 2018, the revenue (std. metal prices) amounted to EUR 286.9m, down from EUR 303.2m in Q3 2017. The organic growth was -1%, which was negatively impacted by installation restrictions in the Swedish medium-voltage market. The operational EBITDA of EUR 26.1m in Q3 2018 was EUR 17.7m below Q3 2017. This primarily reflected the composition of projects in Solutions, where average project margins and capacity utilization were lower, combined with unsatisfactory profitability in Applications.

After a period during 2017 and 1st half 2018 with a relatively low level of project awards in the high-voltage market, it has started to improve. NKT has since end-Q2 2018 added four large high-voltage orders to its order backlog, two in Q3 2018 and two after the balance sheet date, with a total contract value for NKT of approx. EUR 520m. Though the recent development is positive, the limited number of awards to NKT during the last 12 months will impact the activity level for the Solutions business line in the remainder of 2018 and in 2019.

NKT Photonics: Growth momentum maintained in Q3 2018, with 21% organic growth
The revenue for NKT Photonics amounted to EUR 15.2m in Q3 2018, up from EUR 11.2m in Q3 2017, corresponding to organic growth of 21%. The robust growth trend from 1st half 2018 was thus maintained. The positive development reflected solid performance across product categories and business segments. The growth in revenue also positively impacted profitability. The EBITDA in Q3 2018 amounted to EUR 1.5m, against EUR -0.8m in the same period of 2017.

NKT Photonics continued to deliver solid progress in order intake, which was up by 22% in Q3 2018. As with revenue, the order intake was broad-based across business segments.

Teleconference

NKT A/S hosts a teleconference for investors and financial analysts at 10:00 am CET today, 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: 

Denmark: +45 3515 8049
UK: +44 330 336 9105
US: +1 929 477 0324

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

Attachment


Attachments

NKT Interim Report Q3 2018