Rockwool A/S

Thank you very much, and good afternoon, everybody. Sorry for the delay. We had some technical challenges here in Chennai from where we're taking the calls. Today, first of all, of course, I'm Kim Jung Andersen, the CFO, and with me here I have the CEO, Jens Biggersen. And today we will present to you the first half result, and then afterwards we go into Q&A. Before we start, I'd just like to remind you on slide number two, the forward-looking statement, and please be aware that this presentation contains uncertainties. And with this, we can quickly go into the presentation on slide number three.

Good morning, good day, everyone. It's Jens here. Kim and I and the whole board of directors of Rockpool, including my successor, Jess Munch, We are in India, in Chennai, and the reason we are here doing a board meeting is that about 90 kilometers southwest of Chennai, what was previously called Madras, we have bought a piece of land and we have approved a factory project for our second factory in India, where we have had quite a successful last couple of years filling up our first factory. So that's the reason we are here. calling from here, and I really can't blame India for the technical problems. Everything works here. It's some other issue that creates problems here. So if we move to slide three, the H1 results, as you know, I normally don't comment on here very much, but the contrast between H1 and Q2 is a little bit interesting. So in H1, we saw 8%, quite broad-based growth, but as we have seen in previous, probably in the last one and a half year, is the commercial side of the business going. We don't see much growth on residential, rather the opposite. So the residential is still a trouble, but we are doing fine on the commercial side of things. We looked at the results year-to-date. The EBITDA margin is 17.7%. And that has been achieved on more or less neutral pricing. We have a fraction of a price reduction. There's a mix of markets. In some markets, the price is going up. For example, North America and parts of Asia and the others where the price is just holding. And somewhere they are down, but we... We're kind of monitoring our market share and how we get that. So overall, we are very happy with the first half here. Moving on to slide four, second quarter highlights. Comparable differs a little bit. So Q2 wasn't very strong last year. Q1 wasn't strong either last year. I would say we have a really broad-based growth and record growth in North America. I don't think we ever had a bigger growth number and higher sales that goes for both Canada and the US. Overall sales, nominal, we always talk budget rate. Good to see that we crossed a billion. I'm not sure if that's the first time, but very, very strong quarter. And then on the EBIT margin, we reached 18.7%. And that includes... seven million euro ukraine uh provision or donations and uh just to sum up we are adding q1 q1 plus q2 is a little bit more than 13 million that we have donated let's move to slide five um i just gonna i'm not really gonna comment this but if you look at the up on the right is systems divisions growth. You see minus 1%. We did divest Charlesville, so on like-for-like numbers, system division have two percentage point better growth that's shown there. If we now shift to slide six, we see Q2. And what's pleasing here is to see that Here, obviously, the insulation business is growing very, very much. It's a super good quarter, but maybe from my perspective, even more pleasing is that the system division has gained a little bit of momentum. So if we add back the 2% last top line for Charlesville, we have about 5% on the comparable level. basis. So we are looking now in the coming quarters whether the growth will increase a little bit in the system division. The main driver for the system division growth is VoxPanel and GrowthOn that have had very strong development. If we turn to slide seven, the regional sales development, starting with It's a very scattered picture in Western Europe. We have some countries growing 20-30%. We have Sweden growing surprisingly quite well. Germany, single-digit growth, healthy growth back, turning the corner, although we don't see Germany on the residential side turning up at all, but that's on the commercial side. Then we have countries like Spain, France, UK that are around the zero, slightly negative, so quite a widespread on that. Moving to Eastern Europe and Russia, you see several countries with... very solid double-digit growth numbers, and one or two of the smaller ones are negative. And we are not listed here that Russia had a very good quarter, but so did Poland, and so did, for example, Ukraine. We are small in Ukraine, but we grew some 40% in Ukraine. Moving on to North America, Asia and others. quick summary of the whole thing that is China's negative US and Canada is on record growth and Southeast Asia, including Japan, very good growth. So Thailand, Malaysia, Indonesia, and where we are now, India, all very good growth. We are getting closer to a point where we can sell more, but it's nice to see that we are growing out here and also in North America. Let's go to profitability on slide eight. Margin has increased quite a lot. If you look there on the right-hand diagram, the EBITDA margin up to 25%, the EBITDA margin now 18.7%, which is a lot higher than a year back, so the trend upwards have been healthy. We have listed some of the factors, obviously volume growth, stable sales, prices. Input costs have kept stable. We see now maybe inflation coming back a little bit. We have had some favorable factors coming in, obviously, compared on the inflation, but we see also many materials kind of ticking up with normal inflation. One item here that is worth noting, if you look at the headcount, we are about 100 employees or so higher in the headcount compared to a year back. And that is with a 10% growth. So obviously we have a tremendous productivity improvement. They're almost 9%, 10% productivity improvement, and that gives us nice overabsorption where we don't fix costs on the factory or on the rest, and you see that flow through to the bottom line. So it's nice to see that that scalability is there in the business. I'm also quite happy with this quite sudden increase ramp up in the factories, where, for example, in North America, we have to step up capacity very quickly, and also some European countries step up. Germany, for example, increased the ships, but we have been able to do that relatively quickly, and that has helped us in supporting this growth. If we move to slide nine... Here, I only want to comment on margins in Q2 2024. And I guess I spoke about the 5% like-for-like growth of system division. Here, I'm quite pleased with that. The system division is up on around the 15% margin again. Of course, insulation at that margin is doing very well. And I also want to maybe clarify that the whole Ukraine donation has been put on insulation, so that you are aware of that. Look into the investment activities. No... nothing noteworthy. You recognize most of these things, but we have done a small acquisition in Vietnam. We have signed, and we are very close to close, I think, four to six weeks. And just to underline that we are here with the board in Asia, and we have since a while been working here in Asia to step up our efforts. It's a very small acquisition, but yet an important bridgehead into Vietnam. Many of us might not know that even a country like Vietnam has 100 million people and a very great outlook at the moment. So I'm happy that we could get that one because, again, it's clearly growth markets and it's good to have the more or less only stonewall factory in the country. We are also working on some other targets in the region. It's not a lot around, but we are scouting. Move on to slide 11. Networking capital percentage 11.5% down compared to a year back from 13.4%. Nothing special with that. It's nothing we really need to focus a lot on. It sits inherent in the business that we don't tie up too much networking capital. If we had one wish on that number, due to the volume growth, we perhaps would have liked to have a little bit more finished goods inventory. We had to sell a little bit more than we wanted to sell. We're going to work now maybe to bring that inventory up in the coming quarters. And then the last one up there, the net cash position, around 200 million net cash positive, and that's after the dividend, and it's after the share buyback. We are on track. We had about 160 million euro buyback planned for this year, and we are pacing relatively well on the curve. That's also good cash, and in spite of high investment, obviously, with the earnings level we have now, we have... a lot of cash in the company, so good to see that. Slide 12, as we normally do in the half-year report, we normally include one or two slides on sustainability. We have done that also here. There's not much drama about that. We have the five sustainability goals outlined, that with the time horizon to 2030, we're on track or ahead on all of those. I'll just pull out a couple of data points here. Okay, I'll take it from my memory. So if you look first on the CO2 emission intensity, this is the goal we defined before. Science-based target existed. As an engineer, that's a good metric. Here we have achieved with the index 2015, 100 in terms of ton CO2 per produced ton stonewall. We had the reference level 2015 of 100, and now inherently in the business we have reached the index 84, so that's 16 points, so 16% down. can produce through productivity improvements, conversions, green energy, and some other actions. And we will see this number now continue down over the coming years because we are investing and we are taking actions. In the annual report, on the sustainability report, you will see a number below the 84. So that's progressing well. And you know the green investment on the Catholic slide. You see what type of money we put into that. We are also working now, as we said, on... on our energy supplies and the contracting around that to see if we can get out of this extreme volatility the next round we have an energy crisis or something like that. So that work is ongoing. Science-based target that we also have a goal for talks about CO2 equivalent emissions in absolute terms, excluding acquisitions. We have a goal for that too. And it's quite pleasing to see that when the business is growing volume at top-line double-digit, that our CO2 emissions only increase with 6% or more than 10% volume and sales growth. So that's good. That shows that that kind of emissions per ton is working. It also shows the underlying challenge we have on 2030 and onwards of really, really convert the whole company more or less into electrical melting driven by green energy. So it's a really challenging target that we are working on. At this stage, we don't feel that it's impossible we have the technologies we have the investment plan but then of course the more we grow the more challenging that goal becomes so at the moment I would say the long term growth outlook is quite positive so it's a challenging goal but we are working and we can see that the actions we are taking are good on the rock cycle is Here it's referred to as the reclaimed waste schemes, where we take back our own products and upcycle them, recycle them. We have added now also Poland to the countries where we offer this service, and we have now 22 countries in the scheme. And the goal is 30 by 2030, so we are well ahead of that. We will beat that goal. We will be ready much before 2030. And then on safety, the safety goal, no serious accidents and no fatalities in the first half year. It's what we like to see. That's how we do it all the time, but as you know, we have a big, big operation with many factories, and at these factories, things can happen, but we are working very seriously on that, and it's good that we have a good first half here. Going to the outlook, slide 14. Going forward on sales, we haven't seen any change or any dramatic developments in the market, but we are stepping in a couple of quarters where we have more challenging comparables. So on the top line, that mid-single-digit percentage growth seems like a good outlook still. although we are ahead of that until now, but that's because of comparisons. But as we see it now, we see the business pretty much continue. That's good. On the EBIT margin, around 17%. Also there, we are a little bit ahead, but then, as you know, we have the December effect going the way. We also have the summer in France, profit of business for us. impact a bit, but we feel comfortable with that outlook. And on the investment, nothing really to report on that. We are on track to invest what we have planned to invest for the year. I should say, though, on the investment side, we have had more setbacks. Our new plant in France, we were surprised, I must say, that we got a negative verdict on one of the lawsuits. So we are regrouping on that. We have not at all given up the new factory in France, but we need to look at that and see how we keep pushing the plant in France. We thought we should be able to start building it now, but this was a setback, and we can expect a further delay. Possibly we'll move the resources and accelerate another project. We have a number of projects started, but we have absolutely not given up on the project. Keep working through that. Over to questions.

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