Barloworld Limited Year end results 30 September 2012 19 November - - PowerPoint PPT Presentation

Barloworld Limited

Year end results 30 September 2012 19 November 2012

Overview

Clive Thomson CEO, Barloworld Limited

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• Revenue up 18% to R58.6bn
• Operating profit up 31% to R2 988m
• Profit before exceptional items up 38% to R2 119m
• HEPS up 46% to 680 cents (2011: 465 cents)
• Return on net operating assets 18.8% (2011: 17.1%)
• Total dividend of 230 cents per share up 48%

Salient features

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Key strategic developments

Automotive and Logistics

• Acquired Avis Coach Charter
• Opened Soweto Toyota and Soweto VW joint venture dealerships
• Acquired fuel management company and remaining 50% of Phakisaworld
• Expanded Avis Fleet Services into Ghana
• Acquired specialised chemical transporter and formed Manline JV
• Acquired 25% Logistics minority

Handling

• Disposed of Handling US for R465m in complex transaction involving split of

dealership territory

• Successfully concluded disposal of Handling UK for R626m
• Expanded agriculture business in Siberia, western Russia and Mozambique

Equipment

• Bucyrus Africa and Eqstra mining services acquired for R1 381m
• Reached agreement to acquire Bucyrus Russia effective 3 December for R436m
• Finalised agreement to convert Congo Equipment in the DRC into a 50 year JV
• EMD Africa JV with Electromotive Diesel to capture locomotive and rail services
• pportunities
• MWM distribution rights for gas engines in southern Africa and Russia

Financial Review

Don Wilson Finance Director

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Income statement highlights

(Rm) FY’12 FY’11 % chg Revenue 58 554 49 823 18 EBITDA 4 905 3 993 Operating profit 2 988 2 289 31 Fair value adjustments on financial instruments (93) (65) Net finance costs (776) (693) Profit before exceptional items 2 119 1 531 38 Exceptional items 190 62 Taxation (789) (566) Secondary Tax on Companies (26) (18) Income from associates 141 71 Net profit 1 635 1 080 51 HEPS (cents) 680 465 46

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Income statement highlights

Average exchange rates (Rands) FY’12 FY’11 United States Dollar 8.02 6.91 Euro 10.45 9.67 British Sterling 12.69 11.12 (Rm) FY’12 FY’11 % chg Revenue 58 554 49 823 18 Equipment 24 273 18 687 30

Southern Africa 16 326 12 578

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Europe 4 180 3 574

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Russia 3 767 2 535

49 Automotive and Logistics 29 490 26 415 12 Handling 4 774 4 709 1 Corporate 17 12

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Income statement highlights

(Rm) FY’12 FY’11 % chg Revenue 58 554 49 823 18 EBITDA 4 905 3 993 Operating profit 2 988 2 289 31 Fair value adjustments on financial instruments (93) (65) Net finance costs (776) (693) Profit before exceptional items 2 119 1 531 38 Exceptional items 190 62 Taxation (789) (566) Secondary Tax on Companies (26) (18) Income from associates 141 71 Net profit 1 635 1 080 51 HEPS (cents) 680 465 46

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Income statement highlights

(Rm) FY’12 FY’11 % chg Revenue 58 554 49 823 18 EBITDA 4 905 3 993 Operating profit 2 988 2 289 31 Equipment 1 740 1 352 29

Southern Africa 1 535 1 228 25 Europe (139) (102) Russia 344 226 52

Automotive and Logistics 1 152 911 26 Handling 38 72 Corporate 58 (46)

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Income statement highlights

(Rm) FY’12 FY’11 % chg Revenue 58 554 49 823 18 EBITDA 4 905 3 993 Operating profit 2 988 2 289 31 Fair value adjustments on financial instruments (93) (65) Net finance costs (776) (693) Profit before exceptional items 2 119 1 531 38 Exceptional items 190 62 Taxation (789) (566) Secondary Tax on Companies (26) (18) Income from associates 141 71 Net profit 1 635 1 080 51 HEPS (cents) 680 465 46

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Statement of financial position

(Rm) FY’12 FY’11 Non-current assets 13 470 12 667 Current assets (excluding cash) 19 716 15 498 Cash and cash equivalents 2 624 2 754 Assets classified as held for sale 13 Total assets 35 810 30 932 Interest of all shareholders 13 167 12 652 Total debt 10 088 7 243 Other liabilities 12 555 11 037 Total equity and liabilities 35 810 30 932 Net debt 7 464 4 489

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Summarised statement of cash flows

(Rm) FY’12 FY’11 Operating cash flows before working capital 5 199 4 528 Increase in working capital (3 128) (27) Net investment in leasing assets and vehicle rental fleet (2 114) (1 397) Cash utilised in operations (43) 3 104 Other net cash flows (1 311) (1 189) Dividends paid (443) (257) Net cash applied to operating activities (1 797) 1 658 Net cash used in investing activities (1 120) (712) Net cash (outflow)/inflow (2 917) 946

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Investment in working capital supports revenue growth

(Rm) FY’12 FY’11 Equipment southern Africa (1 879) 100 Equipment Europe 212 5 Equipment Russia (791) (135) Automotive and Logistics (211) (37) Handling and other (459) 40 Total working capital – (increase) (3 128) (27) (Rm) FY’12 FY’11 Inventories – (increase) (3 147) (1 359) Receivables – (increase) (937) (791) Payables – increase 956 2 123 Total working capital – (increase) (3 128) (27)

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Capital structure remains strong

Group segmental gearing ratios are as follows: Debt to equity (%) Trading Leasing Car Rental Total group Target range 30 - 50 600 - 800 200 - 300 Gross Net Ratio at 30 Sept 2012 50 472 217 77 57 Ratio at 30 Sept 2011 30 577 196 57 36

• Net debt of R7 464m (Sep 2011: R4 489m) increased by R2 975m
• EBITDA interest cover 5.9 x (Sep 2011: 5.3 x)
• Fitch A+ rating maintained, stable outlook

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Debt maturity profile

• Ratio of long-term to short-term debt 70:30 (Sep 2011 – 76:24)
• New 3 and 5 year bonds raised in April, R760m to extend maturity profile
• R1bn 18 month note to fund Bucyrus southern Africa acquisition
• R6.4bn unutilised bank facilities at Sept 2012
• Cash and cash equivalents R2 624m (Sept 2011 – R2 754m)

Interest bearing debt Redemption (Rm) Total Short-term Long-term South Africa 8 958 2 138 6 820 Offshore 1 130 902 228 Total debt September 2012 10 088 3 040 7 048 Total debt September 2011 7 243 1 721 5 522

Divisional overview

Equipment southern Africa

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1 000 2 000 Southern Africa

Operating profit (Rm)

Sep 2012 Sep 2011

Operational review – Equipment southern Africa

Performance

• Revenue up 30% to R16.3bn
• Operating profit up 25% to R1 535m
• Profit boosted by increased demand for mining machinery in South Africa,

Zambia and Botswana

• Angolan recovery continues on back of infrastructure investments
• Investments in product support capability underpin parts and service growth
• Market leadership position maintained

Margin

9.4% 9.8% 25%

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Status of Bucyrus transaction

• Acquisition of Bucyrus Africa and Eqstra Mining Services

business for US$164m successfully concluded on 2 July 2012

• Bedding down and integrating the business
• Focused management team in place
• Significant machine sale opportunities being pursued
• Plans established to drive up after sales activity
• Earnings impact not material in 2012

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Most extensive mining product range in the industry

Open Pit Hard Rock Room and Pillar Longwall Underground Mining Surface Mining

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ANGOLA BOTSWANA CAMEROON COTE D`IVOIRE GHANA KENYA MALAWI NAMIBIA TANZANIA UGANDA ZAMBIA

ZIMBABWE

ETHIOPIA BURUNDI BENIN

DEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE) CENTRAL AFRICAN REPUBLIC

GABON LESOTHO RWANDA SWAZILAND TOGO SOUTH AFRICA IA

Major surface mining opportunities

Jindal Bannerman – Etango Extract Resources – Husab Kumba – Sishen Exxaro – Belfast Project Xstrata – Tweefontein Vale and Rio Tinto –Tete Anglo Coal- Revuboe Zonnebloem Xstrata ResGen – Boikarabelo CoAL – Makhado Anglo – New Largo FQM – Kalumbila Barrick – Lumwana Coal Copper Iron ore Uranium

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ANGOLA BOTSWANA CAMEROON COTE D`IVOIRE GHANA KENYA MALAWI NAMIBIA TANZANIA UGANDA ZAMBIA

ZIMBABWE

ETHIOPIA BURUNDI BENIN

DEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE) CENTRAL AFRICAN REPUBLIC

GABON LESOTHO RWANDA SWAZILAND TOGO SOUTH AFRICA IA

Major underground mining opportunities

Hwange Zimbabwe Debswana Morupule DeBeers Venetia Total Forzando West Xstrata – Tweefontein Anglo – New Denmark Glencore – Mopani Mabila Ermelo Project Sasol Impumelelo Exxaro – Matla Sasol Bossjespruit Anglo – Goedehoop Coal Copper Diamonds

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Progress on Bucyrus opportunities in Zambia

Confirmed order from FQM for mining machinery worth US$115m 3 Electric Rope Shovels (Model 7495)

• first machine due for delivery during

February 2013

• planned commissioning during July 2013
• second and third machines to follow at

roughly three month intervals

7 Rotary Blast hole Drills (Model 6640)

• first machine due for delivery during

September 2013

• planned commissioning during January 2014
• final machine to be commissioned mid 2015

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Congo Equipment JV extension

Joint Venture Extension - Tractafric

• Excellent result: equity accounted share of

the JV profits more than doubling from R63m to R138m

• Term of the JV agreement previously

scheduled to terminate in 2017, extended 50 years from October 2012

• Major customers include Tenke Fungurume

Mining (Freeport) and Katanga Mining (Glencore)

• Strong growth in aftersales

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2 000 4 000 6 000 Southern Africa

Order book (Rm)

Sep 2012 Sep 2011

Equipment – southern Africa

Outlook

• Expect a challenging 2013 due to softening in commodities following slowdown in

Chinese growth and uncertainty in the SA mining industry

• Firm back orders of legacy Cat product in southern Africa lower at R3.9bn

(2011: R5.2bn)

• Focused on growing sales of the Cat electric drive and Unit Rig (ex-Bucyrus)

models – opportunities in the electric drive and ultra-mining truck market

• Modest on-going improvement in construction activity including Angola
• Parts and service revenues expected to remain solid

Bucyrus

Divisional overview

Equipment Iberia

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• 150
• 100
• 50

Iberia

Operating profit (Rm)

Sep 2012 Sep 2011

Operational review – Equipment Iberia

Performance

• Revenue up 8% in Euro terms based on low margin export sales
• Restructuring costs of R102m (€9.7m) in 2012 compared to R73m (€7.5m) in

2011 – headcount reduced by 15% year on year

• Positive cash flows through continued strong working capital management
• Power Systems provides buffer against weak construction activity
• Product support capability maintained
• Retained market leadership position

Margin

• 3.3%
• 2.9%

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Industry trend – Iberia (units)

22 982 10 059 4 620 3 996 2 964 2 225 6 895 5 000 10 000 15 000 20 000 25 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Power Systems opportunities

Electric power generation

• Standby opportunities driven by Data

Centres

• Awarded contracts to provide critical power

to the two largest telecoms providers Rail

• International rail customers now utilising

local Spanish manufacturers

• Opportunities in Asia and Africa

Marine

• Marine order book has grown due to
• pportunities in passenger vessels, fishing,
• ffshore, tug & salvage and patrol boats

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100 200 300 Iberia

Order book (€m)

Sep 2012 Sep 2011

Equipment – Iberia

Outlook

• Macro economic environment expected to remain challenging in the coming year
• Order books lower due to cancellation of portion of mining package deal
• Power systems growth due to activity in marine and other niche markets
• Focus on expanding market share while maintaining margins
• Continued focus on cost control, cash generation and asset efficiency
• Expect to deliver improved operating performance due to lower cost base

Divisional overview

Equipment Russia

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100 200 300 400 Russia

Operating Profit (Rm)

Sep 2012 Sep 2011

Operational review – Equipment Russia

Performance

• Another record result with operating profit growing 52% to R344m
• Improved operating margin of 9.1% driven by strong aftermarket growth
• Significant growth in mining, power, construction and forestry segments
• Investment in facilities to support customer base
• Growing market share

9.1%

Margin

8.9%

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Territory Coverage

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Facilities

Novosibirsk upgrading Neryungry – Project concept underway Irkutsk – opening in December 2012 Magadan – opening in 2013

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Bucyrus Russia transaction overview

Equipment Russia will sell, service and support all the former Bucyrus mining products in Siberia and Russian Far East Asset based transaction for consideration of US$50m with cash and debt facilities in place to fund the transaction Estimated FY2013 revenue US$75m Projected EBIT margin 4% in 2013 with potential to grow to 6% within 2 to 3 years on back of aftermarket growth 100 employees and contractors to be employed by Barloworld, primarily in customer support and field service in Novokuznetsk

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Current Bucyrus facility in Novokuznetsk

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50 100 Russia

Order book (US$m)

Sep 2012 Sep 2011

Equipment – Russia

Outlook

• Mining activity will remain the biggest driver due to the commodity rich territory
• The softening in commodity prices will impact mining revenue
• Strong growth is expected in power as well as the parts and service business
• Branch infrastructure throughout the territory remains key to growing market share
• Increased investment to develop high quality technical skills
• Bucyrus transaction will supplement revenue growth

Divisional overview

Automotive and Logistics

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• 200

400 600 Logistics Fleet Services Motor Retail Car Rental Operating profit (Rm) Sep 2012 Sep 2011

Operational review – Automotive and Logistics

• Strong overall result in a competitive trading environment
• Revenue: R29.5bn (FY’11: R26.4bn) – up 12%
• Record operating profit R1 152m (FY’11: R911m) – up 26%
• Operating margin for the year 3.9% (FY’11: 3.4%)
• All business segments performed well

2.2% 15.2% 2.4% 7.1% 0.8% 16.0% 2.1% 6.6%

Margin +14% +26% +23% +170%

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Car Rental

• Strong growth in rental days
• Pleasing revenue per day increase in a competitive

environment

• Operating costs well contained
• Further improved fleet utilisation to 76%
• Continued solid used vehicle profit contribution
• Integrating coach charter operations
• Sustained customer satisfaction above 90%

Car Rental – southern Africa FY’12 (growth) Rental days +11% Rental revenue per day +6.6%

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Motor Retail

Southern Africa delivered a good result

• Revenue up 8%
• Improved operating profit by 26% and margin to 2.3%
• Cost containment supported the result
• Continued strong finance and insurance contribution

Australia continued to perform well

• Activity levels improved across all departments

Motor retail FY’12 (growth) Southern Africa Australia New unit sales (Oct 2011 – Sep 2012) +5.6% +12% Parts revenue +9.7% +25% Service hours

• 1.2%

+5.3%

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Fleet Services

• Pleasing result in low interest rate environment
• Strong finance fleet growth supported by Phakisaworld acquisition
• Strong growth in fleets under maintenance
• Stable used vehicle profits despite lower margins
• Acquired fuel management company, enhances offering

Fleet Services FY’12 (growth) Finance fleet +12% Under maintenance +15% Total vehicles under management +17%

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Logistics

Good turnaround and positioned for growth

• Southern Africa
• Ellerines supply chain contract progressing well
• Higher volumes through Barloworld Equipment
• Acquired chemical transport business effective 30 April 2012
• Established Barloworld Manline Logistics JV
• Europe, Middle East and Asia
• Rationalisation and cost control taking effect, stabilising volumes in sea-

air market

• Appointed new local management in Spain and Far East
• Secured first significant supply chain management contract in Dubai-

Pan Furnishers

• United Kingdom
• Supply chain software selling well and planned upgrades all on schedule

Divisional overview

Handling

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Operational review – Handling

Performance

• Trading profit improvement more than offset by currency impacts in South Africa
• Agriculture SA grows strongly but sales impacted by H2 drought
• Break-even in Mozambique; robust growth from SEM
• Europe and US impacted by business disposals
• Strong growth in Belgium but weak demand in Netherlands and UK

4.1% 6.7%

• 0.4%
• 0.1%
• 1.4%
• 0.1%

Margin

• 20 0

20 40 60 80 100 Southern Africa Europe US

Operating profit (Rm)

Sep 2012 Sep 2011

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Handling

Outlook

• The Eurozone debt crisis continues to impact negatively on markets in

Belgium/Holland

• Used equipment aside, pressure on margins to continue
• End September order book up 9% on Sep 2011
• Further growth in agricultural footprint being explored
• Expect modest improvement over last year in lift trucks but higher growth

prospects in Agriculture

* Europe Sept ‘11 O/B excludes UK

200 400 Southern Africa Europe

Order book (Rm)

Sep 2012 Sep 2011 *

Outlook

Clive Thomson CEO, Barloworld Limited

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Outlook

Automotive and Logistics

• Car Rental: Expected growth despite competitive trading environment
• Motor Retail: A stable performance in southern Africa and Australia
• Fleet Services: Continued growth from new and existing customers
• Logistics: Continue positive momentum and well positioned for growth

Handling

• Lift truck profits expected to show modest improving trend
• Expansion of agriculture footprint to yield medium term benefits
• Strong performance in Agriculture should continue
• Further growth expected in SEM product line

Equipment

• Expect a challenging mining environment due to softening in commodity prices and

uncertainty in the SA mining industry

• Continued modest improvement in construction activity in southern Africa, particularly

Angola

• Iberian industry to remain depressed however forecast improvement in operating

performance on lower cost base

• Solid performance to continue in Russia on the back of mining deliveries and

improving infrastructure spend

• Power Systems expected to continue to grow in all regions

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Outlook

Clive Thomson, CEO of Barloworld, said: “The group delivered a very pleasing result for 2012 with operating profits up 31% and HEPS increasing

by 46%. Our Equipment businesses in southern Africa and Russia achieved record mining deliveries and Automotive and Logistics delivered strong results in all trading segments. We also concluded a number of important strategic transactions. The most significant was the acquisition of the Bucyrus distribution businesses in southern Africa for R1.4 billion which now provides us with the most complete mining equipment product range in the industry. Importantly, we finalised the disposals of our materials handling businesses in the US and UK for R1.1 billion, which continues our redeployment of capital into higher returning opportunities. There is more uncertainty in the global and local economy for the year ahead which has led to some deferment in mining capital expenditure plans. This will impact equipment demand and deliveries but

• verall we expect the group to continue to make solid progress across most of our businesses”

19th November 2012