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.

NKT up by 15% following NKT Flexibles divestiture

NKT continues to power ahead for the second trading day in a row. The company announced the divestment of NKT Flexibles I/S to National Oilwell Varco, Inc. (NYSE:NOV) on Friday. The agreement values the flexible pipelines supplier at around 3.8 billion Danish Kroner in cash (about 1.4 P/B). NKT Flexibles is currently a subsidiary of NKT Holding A/S (OMX: NKT 51%) and Subsea 7 S.A. (OSE: SUBC 49%, NASDAQ: SUBC, initially from the Acergy side)

NKT Flexibles supplier offshore and chemical industries with risers, flowlines, jumpers and joints. NKT has a factory at Kalundborg harbour in Denmark where it employs 700 people. The company has won a supply framework agreement with Petrobras and is currently building a new facility in Brazil, which is expected to be in operation by 2013. The transaction is subject to competition authorities' approval.

NKT gets an order for West Duddon Wind Farm

NKT Holding A/S (OMX: NKT) opened positively after it announced that its subsidiary NKT Cables has won an 80 million Euro contract with DONG Energy and ScottishPower Renewables. Nkt will supply of on- and offshore high voltage cables for the West of Duddon Sands offshore wind farm in the Irish Sea. West of Duddon Sands is among the largest wind farm projects in the world and can be an important reference for NKT. The excitement wore off as the day went on and NKT Holding closed down 2%.