2020 INTERIM RESULTS For the half-year ended 30 June 2020 29 July - - PowerPoint PPT Presentation
2020 INTERIM RESULTS For the half-year ended 30 June 2020 29 July 2020 WELCOME & INTRODUCTION 01. COVID-19 RESPONSE & IMPACT 02. PERFORMANCE SUMMARY 03. OTHER BUSINESS DRIVERS 04. EARNINGS ANALYSED 05. PERFORMANCE BY SEGMENT
2020 INTERIM RESULTS
For the half-year ended 30 June 2020
29 July 2020
WELCOME & INTRODUCTION
& BRANDING 07. OUTLOOK & FOCUS
Mark Dytor – CE Mark Kathan – CFO Edwin Ludick – Executive Dean Mulqueeny – Executive Dean Murray – Executive Candice Watson – Group HC Executive
INTRODUCTION: EXECUTIVE TEAM
2
Steve Dawson Fikile De Buck Walter Dissinger Godfrey Gomwe Khotso Mokhele
NON-EXECUTIVE DIRECTORS
3
Rams Ramashia Marna Roets Philisiwe Sibiya Jonathan Molapo
01.
COVID-19: RESPONSE
– Risk acknowledged in February – Task Team established early March
› Strategic intent defined › Manage and mitigate effects on people and business (BCM) › Response Plan developed and updated as required › All Exco members plus internal and external subject experts › Daily meetings continue
– 7 600 employees in 26 countries on six continents – Impact and restrictions not uniform across geographic/market footprint – In SA: some businesses classified as providers of essential services
› Coal mining, agriculture and potable drinking water industries › Other Group business curtailed or halted
5
COVID-19: INTERNATIONAL CONTEXT – CUMULATIVE CASES (AS AT 24 JULY 2020)
6
DRC
Active: 0 Recovered: 2
Germany
Active: 0 Recovered: 1
Indonesia
Active: 0 Recovered: 2
Ghana
Active: 0 Recovered: 3
Mali
Active: 0 Recovered: 1
South-Africa
Active: 90 Hospitalised: 1 Recovered: 80 Mortality: 3
CUMULATIVE CASES ACTIVE HOSPITALISED MORTALITY RECOVERED
GROUP
183 90 1 3 89
SA
174 90 1 3 80
INTERNATIONAL
9 9 MORTALITY RATE
0,041%
ACTIVE CASES RELATIVE TO NO. OF EMPLOYEES
1,24%
TOTAL TESTS
503
COVID-19: SOUTH AFRICA – EMPLOYEE DISTRIBUTION
54 15 8 6 5 4 3 3 2
Gauteng KwaZulu-Natal Western Cape Free State Mpumalanga North West Limpopo Eastern Cape Northern Cape
Employees 4 714
EMPLOYEE DISTRIBUTION IN DESCENDING ORDER (%)
PROVINCE 7
8
1 3 37 90 1 1 6 89 1 1 3
APR MAY JUNE JULY Active Recovered Hospitalised Mortality
COVID-19: EMPLOYEE HEALTH TRACKER REVIEW
International Cumulative cases recorded: April to July
4 44 183 1
48% recovered
32 10 20 6 11 5 2 2 2 39 10 10 7 3 6 4 1 1 2 1
GP MP KZN WC FS NC NW EC LP Active Recovered Hospitalised Mortality
Cases recorded in SA by province
9
COVID-19 RESPONSE: WORKING ARRANGEMENTS
35% 47% 62% 81% 81% 18% 14% 13% 11% 12% 47% 39% 25% 8% 7%
MARCH APRIL MAY JUNE JUL
Working on Site Working from Home Lockdown
Lockdown restrictions lifted
China; Mauritius, Malawi; USA; Mali; Guinea; Germany; Zambia; Ghana; Senegal; DRC
Partial lockdown
Burkina Faso; Tanzania; Brazil; Australia; Namibia; Botswana; Chile; South Africa; Indonesia; Swaziland;; Zimbabwe
Full lockdown
Nigeria
R9,8m invested R2m for Solidarity Fund 3 200 food parcels distributed R1,87m pledged for food parcels
Initial socio-economic relief initiatives focused on provision of preventative gear and products in areas of need. Further provision made towards food security as the pandemic escalated.
COVID-19: RELIEF INITIATIVES AS AT JULY 2020
120 000 beneficiaries
DISTRIBUTION OF 10 000 PARCELS TARGETED
10
02.
PERFORMANCE SUMMARY
13
REVENUE
Underlying* +3% to R12 280m
Foreign & export revenue: 48% of total revenue
EBITDA
Underlying* +7% to R1 618m
HEPS
Underlying* +28% to 593c
GEARING
32% (FY19: 36%)
* Excl. realignment/restructuring costs, impairments, profit from sale of business unit and estimated COVID-19 impact.
PROFIT FROM OPERATIONS
Underlying* +9% to R1 065m
INTERIM DIVIDEND OF 100c DECLARED
Deferred final dividend for ’19 to be paid in ’20
PERFORMANCE SUMMARY
14
COVID-19 effects on people and business in 2Q
› No certainty on timing/extent of recovery to pre-pandemic business levels
Cash management prioritised Restructuring of Food & Beverage and Chemicals segments
› Costs of R64m incurred › R69m impairments (exit non-performing businesses) › Anticipate at least R100m annualised benefits Sale of paper chemicals business unit concluded › R208m received Anticipated benefits of Mining Solutions and Water & Process realignment projects realised
SALE OF PAPER CHEMICALS BUSINESS UNIT
15
Profit on disposal of business
Net assets disposed of and liabilities recognised
Selling price
>7x EBITDA
− Group was principal’s pulp and paper specialty chemical distributor in Africa − Strategic decision by principal to supply market directly
PERFORMANCE SUMMARY CONT.
16
Safety performance
› Improvement trend sustained
› TRIR of 0,36 (1H19: 0,51 & FY19: 0,38) Retained Level 2 B-BBEE Contributor status
GCR rating maintained: A+ with stable outlook
SAFETY PERFORMANCE: TRIR
0,35 0,45 0,39 0,58 0,38 0,36
0,0 0,2 0,4 0,6 0,8 1,0
2015 2016 2017 2018 2019 1H20
17
03.
BUSINESS DRIVERS
ZAR/US$ exchange rate
19
BUSINESS DRIVERS
Gold
20
BUSINESS DRIVERS
PGMs
21
BUSINESS DRIVERS
Cobalt, copper and nickel
22
BUSINESS DRIVERS
Coal and iron ore
23
BUSINESS DRIVERS
24
SA mining production volumes
BUSINESS DRIVERS
Brent crude oil
25
BUSINESS DRIVERS
26
SA manufacturing production volumes
04.
PERFORMANCE ANALYSED
1H20 1H19 % change EBITDA Profit from
HEPS EBITDA Profit from
HEPS EBITDA Profit from
HEPS (Rm) (Rm) (cps) (Rm) (Rm) (cps) (%) (%) (%)
Reported 1 111 558 240 1 361 826 365 (18,4) (32,4) (34,2) Restructuring/strategic realignment 92 92 59 156 156 100 Impairment 69 69 Profit on sale of business (108) (108) Underlying excl. COVID-19 1 164 611 299 1 517 982 465 (23,3) (37,8) (35,6) Estimated impact of COVID-19 454 454 294 Underlying 1 618 1 065 593 1 517 982 465 6,7 8,5 27,6
28
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Restructuring Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
PROFIT FROM OPERATIONS ANALYSED
29
Rm
1H19 1H20
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Restructuring Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
1H19 1H20
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Strategic realignment Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
1H19 1H20
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Strategic realignment Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
1H19 1H20
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Strategic realignment Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
1H19 1H20
381 466 445 92 156 69 92 (108) 454 826 982 558 611 1 065
200 400 600 800 1 000 1 200
1Q19 2Q19 1H19 Strategic realignment Underlying 1H19 1Q20 2Q20 1H20 Profit on sale
Impairments Restructuring Underlying 1H20 excl. COVID-19 COVID-19 impact Underlying 1H20
1H19 1H20
TP margin:
7% 7% 8% 8% 2% 5% 5% 9%
TP margin
6%
30
EARNINGS ANALYSED
– EBITDA -18,4% to R1 111m – Profit from operations -32,4% to R558m – HEPS -34,2% to 240c – Trading margin = 5% (’19: 6,9%) – RONA of 11,4% (’19: 13,3%) – Tax rate unchanged at 32%
565 293 386 458 365 240 894 818 959 1 045 1 150 15 16 17 18 19 H1 20
HEPS
H1 (cps) FY (cps)
1H
1H20
Borrowings (Rm) Finance lease liabilities (Rm) Gearing (%)
1 178 297 424 4 177 3 454 3 208 576 514 15 3 5 41 36 32
(5) 5 15 25 35 45 55 65 75 85 95
1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500
15 16 17 18 19 H1 20 1H20 31
COVID-19: CASH MANAGEMENT
– Capex = R322m
› R117m for expansion projects › R205m for sustenance
– NWC to revenue of 18,7% (17,8% in ’19) – Net borrowings of R3 722m – Gearing at 32% (53% in June ’19) – Cash interest cover of 6,7x – Foreign dividends of US$9m repatriated – Interim cash dividend of 100c declared – Final cash dividend No. 172 for ’19 to be paid in ’20
(4 030) (3 454) (3 208) (3 722) 576 1 084 (166) (163) 145 (302) 208 (82) (114) (217) (147) (514)
Net borrowings at 31 Dec '19 Finance lease liabilities 31 Dec '19 Pre-IFRS 16 Net cash generated from
Net interest paid Tax paid Working capital Net capex Proceeds from the sale of paper chemicals business Acquisition
Money market investments FX movement Other 30 Jun '20 Pre-IFRS 16 Finance lease liabilities 30 Jun '20
NET DEBT & CASH UTILISATION
32
Rm
g Cash
Gearing:
36%
Gearing:
27%
Gearing:
32%
Gearing:
31%
NET DEBT & CASH GENERATION (EXCL. IFRS 16)
33
Rm
(3 454) (3 734) (3 208) (3 036) (3 734) (41) (239) 504 22 172
(3 900) (3 700) (3 500) (3 300) (3 100) (2 900) (2 700) (2 500)
At 31 Dec '19 Net cash utilised FX movements At Q1 '20 Net cash generated FX movements At Q2 '20 Money market investments Net borrowings at 30 June '20 Dividend declared Performance shares At 30 June '20 with deferred cash flows Gearing:
31%
Deferred cash flows
Gearing:
31%
Gearing:
27%
Gearing:
30%
1Q20
Gearing:
26%
2Q20 COVID-19
(3 454) (3 734) (3 208) (3 036) (3 694) (41) (239) 504 22 172 (556) (102)
At 31 Dec '19 Net cash utilised FX movements At Q1 '20 Net cash generated FX movements At Q2 '20 Money market investments Net borrowings at 30 June '20 Dividend declared Performance shares At 30 June '20 with deferred cash flows
34
NET DEBT ANALYSIS
Group loan covenants Net debt to EBITDA: ≤2,5 – Actual: 1,3 Net debt to EBITDA breached if – Borrowings +R3,5bn; or – EBITDA -R1,4bn EBITDA to net financing cost: ≥3,0 – Actual: 6,3 Consolidated tangible net worth ≥ R2,5bn – Actual R7,5bn
PAYMENT PROFILE
Rm 2020 2021 2022 2023 2024
Existing term 1 100 1 100 DMTM auction 360 520 880 DMTN private placement 500 300 800 Term – ZAR 200 500 700 Term – US$ 208 243 261 348 1 060 Term – EUR 1 327 1 327 Short-term borrowings 21 21 Net debt (excl. IFRS 16) 230 1 903 761 2 994 5 888 IFRS 16 lease liabilities 514 Cash and cash equivalents (2 680) Net debt 3 722 US$ 12 14 15 20 61 EUR 68 68
CANCELLATION OF TREASURY SHARES
– AECI subsidiary held 9,755% of listed ordinary shares – Transaction approved and implemented to cancel these treasury shares
› No negative impact on shareholders › No additional cost to the Group
– All regulatory requirements fulfilled and shares successfully delisted and cancelled – Subsidiary to be deregistered in due course – Limit on capacity to repurchase shares removed
35
05.
(R31m) 214,8% R53m 77,4% R393m 21,2% R100m 104,1% R126m 22,3%
PERFORMANCE BY SEGMENT: REPORTED
37 Segment
MINING SOLUTIONS
Revenue
R5 397m 3,5% R694m 12,9%
WATER & PROCESS
R676m 4,4% R126m 70,3%
PLANT & ANIMAL HEALTH
R2 616m 19,5% R229m 21,2%
FOOD & BEVERAGE
R563m 12,5% (R13m) 127,1%
CHEMICALS
R1 969m 30,5% R137m 57,8%
GROUP
R11 265m 5,9% R1 111m 18,3% R558m 32,4%
EBITDA Profit from ops
MINING SOLUTIONS
39
REVENUE BY MINERAL MINED (%)
25 16 21 16 5 8 9
Gold PGMs Coal Copper Diamond Iron ore Other
Outer:1H20 Inner: 1H19 22 22 20 18 4 9 5
MINING SOLUTIONS
40
– Revenue
› Forex – significant impact › Ammonia – small effect › Foreign revenue up from 59% at year-end ’19 to 64% of total revenue
» Lower sales in SA, weaker ZAR:US$ exchange rate effect
– Underlying TP +31% – Working capital
› Inventory well controlled but low sales in 2Q
– Capex control
› No.11 shutdown postponed; delays in completing some abatement projects; discipline to be maintained in 2H
– Two very different quarters – Less favourable product mix
› Higher traded volumes
– AECI Mining integration progressed well
› SAP system from July ’20, including Financial Shared Service Centre
19,7%
(1H19: 18,3%)
7,3%
(1H19: 8,9%) Underlying 1H20: 13,2%
Revenue EBITDA Trading profit Trading margin Trade WC
R694m
-12,9%
Underlying 1H20: R1 090m 20,9%
R393m
-21,2%
Underlying 1H20: R789m 30,8%
19,7%
(1H19: 18,3%)
7,3%
(1H19: 8,9%) Underlying 1H20: 13,2%
Revenue EBITDA Trading profit Trading margin Trade WC
R5 397m
-3,5%
Underlying 1H20: R5 957m 6,5%
R694m
-12,9%
Underlying 1H20: R1 090m 20,9%
R393m
-21,2%
Underlying 1H20: R789m 30,8%
206 344 293 49 104 15 382 603 789
100 200 300 400 500 600 700 800 900
1Q19 2Q19 Strategic realignment Underlying 1H19 1Q20 2Q20 Restructuring COVID-19 impact Underlying 1H20
MINING SOLUTIONS: COVID-19 IMPACT 1H20
41
–SA: severely affected
› Slow resumption of operations, particularly underground mining sector › Permanent closures › ISAP: 60%-65% utilisation › Realignment projects in Explosives achieved targets
Rm
1H19 1H20 10% 11% 13% 2% 13%
TP margin
8%
–SADC countries: affected – Central Africa severely affected
› Anticipate ramp-up to year-end
– West Africa, Indonesia and Australia unaffected
MINING SOLUTIONS
Two key SA tenders adjudicated in 1H – First tender
› Awarded 100% of tender volumes for 5 years (coal mining)
» Value-added products and services
– Second tender
› Lost bulk commodity product volumes (surface mining), effective August ‘20
» Aggressive pricing for 3 years
› 40%-50% of lost volumes placed elsewhere › Should recover balance by 1Q21 (new business) › Regained technology-based business
– Good results in West Africa, Indonesia and Australia – Dinacon acquisition (Brazil) finalised and integrated
› Delay in rolling out growth plan
» Restriction of movement of expert resources (COVID-19)
42
MINING EXPLOSIVES
MINING SOLUTIONS
– Very good 1Q but volumes lower in underground mining in 2Q
› Slow recovery
» At 70%-80% in May and June
– Liquid xanthates sales severely affected
› Mainly in SA
– Full order book for solid xanthates
› Improved sales to South America
– Good sales of flocculants ytd
› But large export customer on care and maintenance from May
43
MINING CHEMICALS
MINING SOLUTIONS
44
– South Africa
› Underground mining remains a concern › More normalised business in 1Q/H21 › Closed ANFEX plant at Modderfontein › Rolling out underground emulsions products, but slower than anticipated › Benefits of realignment project in ’19 on track › New business opportunities in chemicals put on hold by customers or postponed; roll-out of projects taking longer due to COVID-19 (e.g. technical experts unable to travel)
– Outlook in West Africa, Indonesia and Australia remains positive – Central Africa
› Normalised activity expected to ramp up to year-end › Significant tender activity
– SADC countries
› Ramping up
» Botswana at 75% by year-end
– Dinacon
› COVID-19 remains a serious concern in Brazil; will only improve in early ’21
– Chile: emulsion plant site being established – Development of value-adding products continues
› Hot holes, reactive ground
OUTLOOK
WATER & PROCESS
46
– Underlying performance
› TP +23%
» COVID-19 impact = R17m » Realignment project benefits » Improved quality of business with lower cost to serve » Adjusted for realignment of Operations and Nigerian business
– South Africa
› Overall good performance
» Increased volume in public water » Refining and mining sectors negatively affected by COVID-19 » Change in sales product mix
– Exports
› 27% of overall revenue; declined by 2,5%
» Public water +10% » DRC mining sector +44%, rest of sector flat » Oil and gas sector -51%
23,7%
(1H19: 18,4%)
12,4% R676m
-4,4%
Underlying 1H20: R709m 0,3%
R126m
70,3%
Underlying 1H20: R150m 19,0%
R100m
104,1%
Underlying 1H20: R124m 22,8%
23,7%
(1H19: 18,4%)
14,8%
(1H19: 6,9%) Underlying 1H20: 17,5%
Revenue EBITDA Trading profit Trading margin Trade WC
R676m
-4,4%
Underlying 1H20: R709m 0,3%
R126m
70,3%
Underlying 1H20: R150m 19,0%
R100m
104,1%
Underlying 1H20: R124m 22,8%
WATER & PROCESS: EARNINGS ANALYSED
47
Rm
33 56 16 44 52 7 17 101 124
20 40 60 80 100 120 140
1Q19 2Q19 Realignment Underlying 1H19 1Q20 2Q20 Realignment COVID-19 impact Underlying 1H20
1H19 1H20 4% 14% 17% 13% 18%
TP margin
10%
PROJECT PURPOSE: ECOSYSTEM AND FOCUS AREAS
Objectives
– Improve access to drinking water for all – Reduce use of potable water for non-drinking purposes – Improve quality of water/effluent discharged – Drive and enhance environmental and societal benefits Implement or improve – Water re-use and recycling, drive closed loop systems – Discharged water quality – protect environment and reduce treatment loads – Alternative sources of sustainable water supply – Maximise use of abundant and legacy water sources (e.g. desalination and acid mine drainage) – Apply appropriate water qualities for specific applications (fit for purpose rather than potable water for all) Strategic projects in execution – key market segments – Public – Private (refineries, chemical plants) – Mining (incl. Acid Mine Drainage)
48
PROJECT PURPOSE: PUBLIC WATER
49
– Private-public partnership – Decentralised model allows for localised solutions – Phase 1 commissioned in ’18 – Supplied 1m litres per day – Phase 2 upgrade commissioned July ‘20 – Supplying 1,5m litres per day (>6 000 people benefiting)
KZN DRINKING WATER PROJECT COMMISSIONED JULY 2020
PROJECT PURPOSE: PUBLIC WATER
50
Phalesane and Tane Primary Schools Containerised plant – Supplying 1 800 children with drinking water daily – 3 x 10 000ℓ tankers supplying 800 families in surrounding area Kekana Primary School – D2 Skid – 900 children Mauluma Primary School – D2 Skid – 450 children
CLEAN WATER SUPPLIED TO OVER 3 000 CHILDREN
PROJECT PURPOSE: PUBLIC WATER
51
Making a difference in Ravele Village & Mauluma Primary School Limpopo – Treating borehole water – 72 000ℓ per day provided for 450 people – Particularly relevant during COVID-19 – Significant growth in sales
throughout SA – Sales opportunities being explored in conjunction with CSI enabling projects
LIMPOPO D2 SKID AND HIPPO ROLLER HAND OVER
PROJECT PURPOSE: PRIVATE SECTOR, AECI SITES
52
– Target: reduce fresh water consumption by >20% by ‘25 – Modderfontein
› Phase 1 – influent potable water reduction › Increase PSE water consumption and optimise operational water reuse › Initial potable water annualised savings of over 400m litres › Civil works underway › Target commissioning in 4Q20 › Use as industry case study › Phase 2 – effluent discharge reduction project
– Umbogintwini
› Study initiated - reduce effluent discharge to sea
– Next phase Sasolburg and Chloorkop sites
53
PROJECT PURPOSE: OPPORTUNITIES
– Key opportunities being prioritised – Awarded contract – potable water reduction technology at a refinery – Borehole water treatment solutions deployed in Gauteng and Limpopo – Drought relief proposal submitted – two coastal provinces (desalination) – Proposals submitted - assessment and solution to improve water in specific basins in Limpopo
>R300m PROJECT FUNNEL
Sector Active
Public 9 Private 5 Mining 5 TOTAL 19
WATER & PROCESS: OUTLOOK
– COVID-19 impact remains a risk as mining and refining sectors return to normalised trading – Realignment project annualised upliftment on track – Working capital reduction – Continuity of supply on new Water Board tenders – Water treatment technologies of the future under investigation
South Africa
– Focus on Project Purpose growth – Maintaining base business and securing long-term contracts
Exports
– Growth in Public Water and Mining – Ready for upturn in Oil & Gas
54
PLANT & ANIMAL HEALTH
56
– COVID-19 had little impact on agricultural sector – Revenue growth in both Nulandis and Schirm – Significant TP growth year-on-year
› Margins › Manufacture of hand sanitiser and disinfectants to combat COVID-19 › Weaker exchange rate assisted
– Strict working capital control – Successful cost control initiatives in both businesses – Good momentum going into 2H20 14,5%
(1H19: 18,2%)
4,8%
(1H19: 4,7%) Underlying 1H20: 1,5%
-13,5% R2 616m
19,5%
Underlying 1H20: R2 365m 8,1%
R229m
21,2%
Underlying 1H20: R139m 26,5%
R126m
22,3%
Underlying 1H20: R36m 65,0%
14,5%
(1H19: 18,2%)
4,8%
(1H19: 4,7%)
Revenue EBITDA Trading profit Trading margin Trade WC
R2 616m
19,5%
R229m
21,2%
R126m
22,3%
57
PLANT & ANIMAL HEALTH
Schirm
– Further improvement in safety performance – Cost reduction projects executed at all German facilities – Sugar beet project completed
› Registration process concluded by customer › Production on new synthesis plant fully ramped up to meet customer demand › Leased Magdeburg production site closed in June ’20
– Rapid deployment of sanitiser and disinfectants
› German Department of Interior order › General commercial market sales
– Significant decline in activity in German automotive sector (COVID-19) – Solid performance sustained in US business – unaffected by COVID-19 – Strong cash generation
58
SCHIRM: OUTLOOK
– Capex
› Suspension concentrate plant (herbicides) in US to be completed in time for ’20/21 agricultural season › Blender at Bar-Ebenhausen installed and being ramped up
– Ramp-up of new blue chip contract at Wolfenbüttel – Automotive chemical additives market expected to remain depressed to year-end – Project pipeline with blue chip customers – Sanitiser and disinfectants sales into ’21
PLANT & ANIMAL HEALTH
Nulandis
– Minimal COVID-19 impact
› Essential service in SA
– 2H19 momentum maintained – Local sales of in-house products +18% – New agents appointed to grow SA footprint – Strong growth in exports – Cost savings initiative completed, including some restructuring
› Annualised savings of R10m anticipated
– Turnaround at FOL, Malawi
› Revenue +38%
– Global registrations for Biocult progressed
59
NULANDIS: IN-HOUSE PRODUCTS
60
Soil pathogen control
Untreated control Farm standard Biocult WS
Root development Frost control Stress management
Xanbac No Xanbac No Alexin Alexin Alexin Alexin Alexin Alexin No Alexin
NULANDIS: NEW PRODUCTS & SERVICES (AECI.GO)
61
SUPPLANT
AECI: agri inputs supplier
Agri- Products Agri-Services & Agri -Tech
SupPlant’s connected intelligent farming technology autonomously provides growth-based watering Deployment on SA
— save water — increase yield — improve profits
Farmers app Management platform E-commerce
IoT APPLIED: CONNECTED VALUE CHAIN KHULA
Khula & AECI facilitating access to resources, information and profitable market offtake for emerging farmers
+ 200k emerging farmers
in SA
NULANDIS: OUTLOOK
– Positive outlook to year-end
› Good winter rainfall in Western Cape › Benefits of growing agent footprint in SA › Sustained focus on in-house products and technology › Export drive › SupPlant deployed on 5 farms – another 5 targeted for 2H20 › Khula app – targeting 200 000 emerging farmers
62
FOOD & BEVERAGE
64
– Severe COVID-19 impact on all product categories
› R18m effect on TP › Ongoing effects in alcoholic beverage and food service sectors, in particular
– Restructuring costs of R32m – Goodwill impairment of R12 million – Exiting sauces business (Cape Town) – More focused portfolio to improve quality of earnings 20,7%
(1H19: 23,4%)
(1H19: 4,2%) Underlying 1H20: 4,8%
Revenue EBITDA Trading profit Trading margin Trade WC
R563m
-12,5%
Underlying 1H20: R648m 0,7%
-127,1%
Underlying 1H20: R49m 2,5%
Change: -214,8% Underlying 1H20: R31m 15,6%
CHEMICALS
66
– Disappointing performance
› Significant further deterioration in already very subdued manufacturing sector and SA economy overall › Several more customer closures › Negative COVID-19 effects of R127m on TP » Non-essential services prohibited in lockdown
» Extended shutdowns in refining, smelting, manufacturing sectors » SANS Fibers: decreased activity in North American and European automotive industries » Good gains in sanitiser and homecare markets › Unsustainable cost base in some businesses
– Sale of paper chemicals business unit – R108m TP benefit 14,3%
(1H19: 12,9%)
2,7%
(1H19: 8,3%) Underlying 1H20: 6,3%
Revenue EBITDA Trading profit Trading margin Trade WC
R1 969m
-30,5%
Underlying 1H20: R2 553m -9,9%
R137m
-57,8%
Underlying 1H20: R245m -24,5%
R53m
Change: -77,4% Underlying 1H20: R161m -31,1%
MUCH ASPHALT
67
Disappointing performance y-o-y
– Delays in SANRAL and major project work – COVID-19 effects significant in 2Q – 100% closure in April – Bitumen supply to asphalt and binder businesses affected by poor supply from refineries
› Supply concerns remain
– Continued DoT and Metro work – Business continuity plan in place and focus on cash preservation – Geographic footprint assisted – Level 1 B-BBEE Contributor status maintained
Outlook
– Initiated cost saving and realignment project -
R30m annualised benefit expected
– Work in Namibia to commence in August – Steady ramp-up in SA from May – Infrastructure Fund announced by SA Presidency – All major customers indicating increased activity in medium term – Remain well positioned for upturn in SA
PORTFOLIO MANAGEMENT & RESTRUCTURING
68
– Food & Beverage incorporated in AECI Chemicals
› 2 businesses consolidated into 1
– 4 Chemical businesses consolidated into 2 – s189 process completed – 30% reduction in employee complement – R64m restructuring costs incurred in 1H
› To be recovered in 2H20 - savings and projects
– Impairments of R69m
› Mainly exit of sauces business and IOP tall oil distillation plant closure
– R100m “structural and sustainable” annualised benefits
› Improve quality of earnings
» TP margin >10%
AECI CHEMICALS
69
PILLAR BREAKDOWN
06.
AECI BRAND ARCHITECTURE
71
PILLARS
AECI MINING
72
PILLAR BREAKDOWN
AECI WATER
73
PILLAR BREAKDOWN
AECI AGRI HEALTH
74
PILLAR BREAKDOWN
AECI CHEMICALS
75
PILLAR BREAKDOWN
AECI PROPERTY SERVICES
76
PILLAR BREAKDOWN
77
07.
OUTLOOK: ENVIRONMENT
CHANGE RISK/OUTLOOK SINCE FEB ’20 GLOBAL
Uncertainty created by shifts in world trading relationships Increased Effects of COVID-19 Increased exponentially Effects of extreme weather events Unchanged Socio-political instability on the continent Unchanged Mining sector outlook remains robust Unchanged
SA
Unreliability of electricity supply Increased Poor service delivery Increased Low GDP growth and investment levels Increased significantly (sovereign rating downgraded in March) Depressed manufacturing sector Increased significantly Sustainability of mining sector (especially underground) Increased Loss of skills Unchanged
80
FOCUS: PROGRESS AGAINST 2020 OBJECTIVES
Improve safety performance further and continue implementing Zero Harm strategy Progress further the achievement of the investment case objectives of Schirm and Much Asphalt Ensure delivery of expected annualised benefits from strategic realignment projects in Mining Solutions and Water & Process
› Some delays in customer-facing projects
Execute the portfolio management and restructuring project in Food & Beverage and Chemicals and realise anticipated benefits over the full year Integrate Brazilian explosives business acquired as soon as the judicial process completed
› Roll-out of growth plan delayed by COVID-19
Establish explosives manufacturing facility in Chile
Site identification process well advanced
81
FOCUS: PROGRESS AGAINST OBJECTIVES FOR 2020 CONT.
Continue to leverage existing geographic footprint Continue to explore and pursue growth opportunities, incl. acquisitions and opportunities identified through AECI’s Growth and Innovation office Develop Water and Food security strategy further Diligent management of cash
› Cash management the priority to year-end to maintain solid liquidity position » Cost control
» Working capital » Capex
82