Results presentation For the six months ending 30 June 2016 Results - - PowerPoint PPT Presentation

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Results presentation For the six months ending 30 June 2016 Results - - PowerPoint PPT Presentation

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1 Results presentation For the six months ending 30 June 2016 Results Presentation August 2016 2 1H16 Operating Review 1 Chris Weston, CEO Results Presentation August 2016 3 1H16 Operating Review Agenda 1H16 Financial Review Business

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1 Results Presentation August 2016

Results presentation

For the six months ending 30 June 2016

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2 Results Presentation August 2016

Chris Weston, CEO 1H16 Operating Review 1

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3 Results Presentation August 2016

Chris Weston, CEO 1H16 Operating Review 1

Agenda

Carole Cran, CFO 1H16 Financial Review 2 Chris Weston, CEO Business Priorities and 2016 Outlook 3

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4 Results Presentation August 2016

Difficult trading conditions, progress being made

4

Group summary

  • Implementation of business priorities continues to

progress well

  • Revenues of £685m, trading profit of £77m, driven by

known headwinds

  • Slow first half in North American petrochemical and

refining sector

  • Debtor provision increased, reflecting ongoing

payment challenges in Venezuela

  • Utility order intake to date of 875MW
  • Balance sheet; gearing at 1.2 times
  • Disciplined investment in new fleet
  • Half year dividend maintained
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5 Results Presentation August 2016

Operational summary

  • North America down 20%; difficult conditions in oil and

gas and petrochemicals and refining

  • Reduced headcount and capex spend; reorganised

North American business unit

  • Good performance in Europe and Australia Pacific
  • Temperature control revenues up 15%

Revenue by sector 1H16

18 18% 14 14% 11 11% 10 10% 7%

Services Construction Quarrying & Mining Other

6% 5% 11 11% 8%

Contracting Petrochemical & Refining Oil & Gas Utilities Events

10 10%

Manufacturing

Revenues 8% lower, weak trading in North America

42%

Rental Solutions

Group revenue

(ex pass through fuel)

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6 Results Presentation August 2016

Operational summary

  • Excluding Baku Games revenues down 2%
  • Strong performance in Eurasia and Africa
  • Steady performance in Middle East
  • Brazil and Chile challenging; removing costs

Revenue by sector 1H16

31 31% 12 12% 10 10% 8% 6%

Utilities Shipping Contracting Other

5% 5% 10 10% 6%

Quarrying & Mining Oil & Gas Construction Services Manufacturing

7%

Events

Revenues 12% lower, declines in Latin America offset growth in other regions

18%

Power Solutions Industrial

Group revenue

(ex pass through fuel)

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7 Results Presentation August 2016

Operational summary

  • Strong order intake of 875MW; (YTD 2015: 451MW)
  • Prospect pipeline remains healthy, but competitive market

place

  • 20% offhired in H1, main offhire Mozambique

Revenue by sector 1H16

84 84% 6% 5% 5%

Utilities Quarrying & Mining Oil & Gas Other

Revenues down 16%, known headwinds during the first half

40% Group revenue

(ex pass through fuel)

Power Solutions Utility

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8 Results Presentation August 2016

Key extension discussions in next few months

8

Extensions

450MW

Argentina

380MW

  • 180MW up for renewal this year
  • 85MW in B.Baria expected to

extend for 3 years

  • 95MW in Ashungang extended

until September

Bangladesh

130MW

  • Extension due in second half
  • Operated for more than 10 years
  • Running at lower levels
  • Continuing to support the country

Venezuela

160MW

  • Out of contract
  • Security a challenge
  • Need for power in country; working to extend

Yemen

  • New volume of around 2.5GW awarded to 5

and 10 year contracts

  • 120MW extended until September 2016,

subject to contract. Tender for extension to 2017 to be issued

  • Remainder of contract due for renewal

between October 2016 and June 2017

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9 Results Presentation August 2016

Carole Cran, CFO 1H16 Financial & Operating Review 2

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10 Results Presentation August 2016

  • Exceptional charge of £10m in H1
  • Total cash cost of £35m against

benefits of £80m

  • Tax rate of 28%

2 reflects country mix

Trading margins of 11%

Revenues decrease by 12%

£m (pre-exceptional items) 1H16 1H15 Reported Change Underlying Change1 Revenue 685 781 (12)% (12)% Revenue excl. pass-through fuel 661 752 (12)% (12)% Trading profit 77 114 (32)% (27)% Operating profit 82 115 (29)% Net interest expense (11) (13) 14% Profit before tax 71 102 (31)% Tax (20) (27) 26% Profit after tax 51 75 (33)% Diluted earnings per share 19.8p 29.6p (33)% Dividends per share (declared) 9.4p 9.4p

  • %

Net Debt at period end (634) (467) £m (post-exceptional items) 1H16 Trading profit 67 Profit before tax 61 Profit after tax 43 Diluted earnings per share 16.8p

1 Underlying excludes pass-through fuel and currency translation 2 Tax rate pre-exceptional costs

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11 Results Presentation August 2016

Rental Solutions

  • 20% decline in North America
  • Actions taken on cost base
  • Seasonal business, H2 weighted
  • Good performance in Europe and

Australia Pacific

1 Underlying excludes currency translation

£m 1H16 1H15 Reported Change Underlying Change1 Revenue 280 294 (5)% (8)% Trading profit 10 32 (70)% (71)% Trading margin 3% 11% ROCE 14% 20%

Challenging first half

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12 Results Presentation August 2016

Trading margin decline driven by Baku

Power Solutions: Industrial

  • 3pp margin drop driven by Baku

Games

  • Pressure on rates in Latin America
  • Margin accretion in Middle East

£m 1H16 1H15 Reported Change Underlying Change1 Revenue 117 136 (14)% (12)% Trading profit 9 15 (39)% (39)% Trading margin 8% 11% ROCE 9% 6%

1 Underlying excludes currency translation

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13 Results Presentation August 2016

Power Solutions: Utility

  • Margin improvement net of lower

costs and increased debtor provision

  • Debtor provision stands at $88m
  • Currency impact and working capital

affecting ROCE

Known headwinds impact revenues

1 Underlying excludes pass-through fuel and currency translation

£m (ex fuel) 1H16 1H15 Reported Change Underlying Change1 Revenue 264 322 (18)% (16)% Trading profit 58 68 (15)% 2% Trading margin 22% 21% ROCE 16% 22%

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14 Results Presentation August 2016

Gearing in line with strategic range

  • Activity levels drive higher working

capital

  • Trade debtors up by £33m
  • Net debt was £634m and includes

£75m of FX

  • Headroom against facilities of £355m

£m 1H16 1H15 Operating Profit 82 115 Depreciation & Amortisation 137 140 EBITDA 219 255 Working Capital (101) (1) Cashflows relating to exceptional items (15)

  • Other

(3) 1 Operating Cash Flow 100 255 Tax (22) (37) Net Interest (11) (13) Purchase of Fixed Assets (98) (147) Proceeds from Fixed Asset Disposals 14 5 Free Cash Flow (17) 63 Dividends (45) (45) Return of Value & Changes in Equity (8) 1 Net Cash Flow (70) 19 Exchange (75) 8 Movement in Net Debt (145) 27

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15 Results Presentation August 2016

Capital allocation discipline maintained

2014 2015

Power Solutions (Utility) Fleet

at 30 Jun (MW)

Power Solutions (Industrial) Fleet

at 30 Jun (MW)

Rental Solutions Fleet

at 30 Jun (MW) 2014 2015 2014 2015 2016 2015 4,828 5,267 2016 2015 2,494 2,316 2016 2015 2,322 2,266 Diesel Gas

Power Solutions Industrial Power Solutions Utility Rental Solutions 1H16 1H 1H15 15 1H 1H16 16 1H 1H15 15 1H16 1H 1H15 15 Average utilisation 62% 63% 76% 77% 51% 55% Fleet Capex / Fleet Depreciation 83% 80% 55% 115% 90% 105% Fleet Capex £23m £22m £32m £76m £36m £40m

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16 Results Presentation August 2016

Chris Weston, CEO Business Priorities and 2016 Outlook 3

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17 Results Presentation August 2016

Business priorities

Customer

  • Interviews with around a thousand customers
  • Streamlining customer experience from enquiry to payment
  • Enabling service differentiation by customer needs

Technology

  • Remote monitoring – operations centre now monitors

6 thousand assets

  • Developing applications in temperature control

Rental Solutions

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18 Results Presentation August 2016

Business priorities

  • Removed duplication and right-sized organisation
  • Improvements in project site delivery – 15% of

costs removed

  • Upgrading site performance management system
  • Optimising depot footprint

Power Solutions

EFFICIENCY

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19 Results Presentation August 2016

Business priorities

New products

  • Medium speed HFO engine: 15%* fuel saving
  • Solar-diesel product: 5-10% fuel saving

Efficiency

  • New gas engine in build
  • Adding 350 G3+ engines to fleet in 2016
  • Work continuing on G3++

*based on $50 oil price

MS HFO in assembly New Gas

Power Solutions

TECHNOLOGY

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20 Results Presentation August 2016

Business priorities

  • Progress on assessing supply, demand dynamics
  • Sales pipeline management tighter
  • Conversion rates up, helped by lower oil price,

costs out and G3+ fuel efficiency

Power Solutions

CUSTOMER

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21 Results Presentation August 2016

Efficiency

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Group business priorities

  • 700 roles removed from the organisation
  • Significant number of projects underway to

improve procurement

  • £40m of savings in 2016, £80m benefit from the

start of 2017

  • Cost savings are 80% opex, 20% capex
  • Balance reinvestment for growth with margins

and returns

REMOVING £80m FROM THE BUSINESS

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22 Results Presentation August 2016

2016 Outlook

Rental Solutions

  • Seasonal business, weighted towards the second half
  • Challenging conditions in North America

Power Solutions Industrial

  • Benefit from new work in Eurasia & Middle East flows into H2

Power Solutions Utility

  • Strong order intake of 875MW
  • Offhire rate expected to be around 30%
  • Working to recover overdue debt in Venezuela
  • Key extensions assumed

Group

  • Investing around £270m in fleet capex; increase from investment in medium speed HFO

Guidance held: PBT slightly lower than 2015 on an underlying basis

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23 Results Presentation August 2016

Appendix

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24 Results Presentation August 2016

Progressing well

Business priorities

CUSTOMER TECHNOLOGY EFFICIENCY

  • Tailor sales and service channels
  • Focus on key sectors
  • Pursue adjacencies
  • Evaluate bolt-on M&A opportunities

Priority

  • Work with our strategic partners to develop market

leading products

  • Strengthen and expand strategic partnerships
  • Reduce the overall cost of power for our customers

Priority

  • Streamlining our cost base
  • Optimising deployment of resources
  • Improving processes and systems

Priority

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25 Results Presentation August 2016 25

Revenue mix

Revenue % of Revenue (ex fuel) 1H16 £m 1H15 £m Underlying1 % 1H16 £m 1H15 £m Change pp Power 453 533 (15)% 69% 70% (1) Temperature Control 65 56 15% 10% 7% 3 Oil-Free Air 13 14 (12)% 2% 2%

  • Total Rental

531 603 (12)% 81% 79% 2 Service Revenue 130 149 (15)% 19% 21% (2) Revenue excl pass-through fuel 661 752 (12)% 100% 100%

  • Pass-through fuel

24 29 NA Total Revenue 685 781 (12)%

1 Excluding revenue from pass–through fuel and currency.

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26 Results Presentation August 2016 26

Balance sheet

£m 1H16 1H15 Intangible assets / goodwill 161 132 Tangible fixed assets 1,230 1,148 Working capital 565 327 Retirement benefit obligation (11) (9) Derivative financial instruments (6) (4) Provisions for taxes (54) (68) Net borrowings (634) (467) Net assets 1,251 1,059

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27 Results Presentation August 2016 27

Power fleet stable

MW in fleet Power Solutions Rental Solutions 1H16 1H15 1H16 1H15 Diesel 5,814 6,194 2,061 2,011 Gas 1,508 1,389 261 255 Total 7,322 7,583 2,322 2,266

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28 Results Presentation August 2016 28

Foreign exchange impact

Note: UAE Dirhams included within US Dollar as it is pegged to the US dollar; Argentinian Peso includes Power Solutions Utility contracts which are pegged to the US Dollar but paid and reported in Argentinian Pesos.

FX Rates Revenue (£m) FY15 Average July 2016 Average FY15 Actual FY15 Actual at July 2016 Average Rates Variance % Variance US Dollar 1.53 1.37 985 1,096 111 11% Euro 1.38 1.23 89 99 10 12% Australian Dollar 2.03 1.85 54 59 5 10% Argentinian Peso 14.17 20.12 124 87 (37) (30%) Brazilian Real 5.10 4.80 56 60 4 6% Canadian Dollar 1.95 1.82 47 50 3 7% Russian Rouble 93.52 93.67 29 29 0% Other 177 184 7 3% Total Revenue 1,561 1,664 103 7% Total Trading Profit 270 267 (3) (1%)

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29 Results Presentation August 2016

Disclaimer

The information contained in this presentation has largely been extracted from the Results Announcement for the half year ended 30 June 2016. This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking

  • statements. Any forward-looking statements made by or on behalf of Aggreko speak only as of the date they

are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. This presentation is published solely for information purposes. The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and

  • bserve, any applicable requirements.

All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.