NKT bullish in outlook after a difficult year

NKT Group’s (OMX: NKT) revenue growth slowed in Q4 2011. In Q4 2010 the company had a lot of installation works for NKT Cables. A complete halt in the activities in the Chinese high speed railway market due to policy changes following a serious accident also explains the stagnation. With copper and aluminium prices fixed at 1550 and 1350 EUR/tonne, Q4 revenues were almost flat at 3.18 billion. Without this adjustment revenue was down from 4.0 to 3.9 billion. Fourth quarter EBITDA was 282 million and EBT -3 million.

Reported full-year revenue was the highest in company history at 15.6 billion. EBITDA topped 1 billion and profit before tax was 165 million. The group was 558 million operating cash flow positive for the year as a change in working capital released over a billion of tied-up capital in aggregate. Earnings per share for the full-year were 5.3 DKK (11.3). The Board of Directors is suggesting a dividend of 2 DKK per share, which would be the same as last year.

The stock opened with a drop but as markets began focusing on 2012 guidance, a big reversal pushed it up to finish the day 8.7% on the plus at 259 DKK. The company said it expects 5-10% organic growth, EBITDA of 1.05-1.5 billion (which would be 200-400 million improvement adjusted to the divestment of NKT Flexibles, which is expected to be concluded in H1 2012 at a 1.3 billion profit) and falling debt in 2012.

NKT has its very own five year plan called “Powered by NKT” for 2011-2015. It will be focusing on the power cable company NKT Cables, cleaning equipment maker Nilfisk-Advance and industrial fibre optical component maker NKT Photonics. The revenue split between the three in 2011 was approximately 59% Cables, 40% Nilfisk-Advance and 1% Photonics. The strategic annual growth targets are 7-8% 6-7% and 20%. With standard metal prices mentioned above, Cables and Nilfisk-Advance are relatively equal in size.