Rockwool International A/S: Strategisk analyse og værdiansættelse

Dennis W. Hollender

Student thesis: Diploma thesis

Abstract

The purpose of this thesis is to assess the estimated value of Rockwool International A/S and to reach a conclusion on the fair value of the Rockwool International A/S B-stock compared to the closing rate as per March 10th 2011. To achieve this, strategic analyses of Rockwools internal and external conditions are determined. Combined with an analysis of some key indicators the future development of Rockwool International has been estimated. The results of both analysis are used in the budget process were future performance is estimated. Rockwool is one of the largest stone wool manufactures in the world with a total turnover in 2010 of 11.7 billion DKK, which is an increase of 5% versus prior year. Rockwool was founded in 1909 and today the company has more than 8.800 employees and 21 factories. Stone wool is an effective insulation material that besides the functionality to insulate also secures buildings better in the case of a fire compared to other insulation materials. The largest competitors are analyzed to be Saint Gobain in France, Knauf in Germany and finally URSA in Spain. Rockwool has been very successful in the latest years and considered to one of the best manufacturers in the World. The strategic analysis showed that Rockwool International A/S possesses both internal strengths and weaknesses. The company is skilled with a strong knowhow that together with a diverse structure with many segments gives Rockwool the opportunity to provide their customers with an excellent service. The external threats and opportunities were analyzed using the PEST methodology combined with using Porter’s Five Forces. It’s clear that Rockwool has great opportunities from political decisions and that the coming years may bring solid turnover to the company if decisions are taken to make environmental friendly insulation mandatory. The competitive tension was identified and as a result of a slow market with a few large competitors considered as moderate. An analysis of the historical financial performance in the period 2006-2010 was carried out based on the official annual reports. To make the financial analysis the figures was reformulated. Rockwool has been hit by the financial crisis but has recovered in the latest year. Based on the strategic and financial analyses the future proforma budgets was prepared. The budget period was set for 5 years followed by the T-values. Once finalizing the budgets the valuation was performed were future free cash flow and WACC was determined in order to calculate the fair value using DCF and RIDO valuation models. As a supplement the valuation was tested using multiple analyses. Based on the above valuation models the market value of Rockwools equity after minorities was calculated to 12.3 billion DKK which is equivalent to 562,2 DKK per stock. As a final conclusion this thesis can now state that the stock is overestimated by 72,8 DKK equivalent to 11.5% compared to official closing price of 635 as of March 10th 2011.

EducationsGraduate Diploma in Financial and Management Accounting, (Diploma Programme) Final Thesis
LanguageDanish
Publication date2011
Number of pages100