NKT A/S 2018 Annual Report: Financial results below expectations in 2018, while high-voltage order backlog improved

28 February 2019
Company Announcement No. 2

NKT A/S 2018 Annual Report: Financial results below expectations in 2018, while high-voltage order backlog improved

Interim CEO and CFO Roland M. Andersen comments:

- Overall, our financial results in 2018 were in line with the latest financial outlook from November 2018. However, 2018 turned out to be difficult for NKT with both internal and external challenges, and thereby lower earnings than initially expected. Nevertheless, the year also reaffirmed our belief in the long-term market potential for NKT as we celebrated high-voltage order intake of more than EUR 800m during 2nd half 2018. It was satisfactory that NKT Photonics maintained strong growth momentum throughout 2018.

Financial highlights

* Std. metal prices

2019 financial outlook
The company provides separate financial outlook for NKT and NKT Photonics.

For NKT, revenue (std. metal prices) is expected to be approx. EUR 0.9-1.0bn. The operational EBITDA is expected to be approx. EUR 10-30m, which is in line with the preliminary 2019 financial outlook announced in November 2018.

For NKT Photonics, revenue is expected to grow by approx. 15-20% organically and the EBITDA margin is expected to increase to approx. 15-20% in 2019.

NKT: Revenue increased in 2018, while operational EBITDA was lower than in 2017.  NKT secured five large high-voltage projects in 2nd half 2018
In 2018, the revenue (std. metal prices) increased to EUR 1,080m from EUR 1,058m in 2017. This growth was primarily due to additional two months' revenue contributed by the acquired ABB HV Cables activities. NKT delivered flat organic revenue growth in 2018. This was driven by positive contribution from Service & Accessories and by improved sales in selected countries in Applications. This was offset by Solutions that was impacted by lower project activity and by two project-specific delays in Q4 2018.

NKT reported operational EBITDA of EUR 70.2m in 2018, against EUR 138.3m in 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.

In 2nd half 2018, NKT secured five large high-voltage projects with a total contract value of more than EUR 800m. These projects included the company's largest ever offshore export cable order, the Ostwind 2 grid connection in Germany. However, the orders received will have no material production impact for Karlskrona in 2019. The lower level of activity and profitability in 2019 will therefore reflect the relatively low level of project awards in 2017 and 1st half 2018.

NKT Photonics: Strong growth momentum throughout 2018, resulting in improved revenue and earnings
The revenue for NKT Photonics was EUR 67.7m in 2018, compared to EUR 50.9m in 2017, corresponding to organic growth of 16%. The company therefore returned to double-digit organic growth for the first time since 2013. The increase in revenue was driven by improved performance across product categories and business segments.

The EBITDA more than doubled to EUR 9.0m in 2018 from EUR 3.5m in 2017. The improved profitability was mainly driven by the growth in revenue. The EBITDA margin was 13.3% in 2018, against 6.9% in 2017.

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 (Confirmation code: 1448508): 

Denmark: +45 3272 8042
UK: +44 2071 928 000
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_2018_190228 NKT_Sustainability_Report_ 2018

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