Delivered 60 million of validated cost savings to our customers

Transcription

1 2013 Preliminary Results For the year ended 31 December 2013 Continued progress in difficult markets Delivered 60 million of validated cost savings to our customers

2 Agenda Overview Financial highlights Market drivers Growth Strategy Key Accounts Insites TM Product range extension Market segmentation Current trading and outlook 2

3 Overview Group revenue up 1.9% to million with an improving trend Gross margin up 100 basis points to 31.5% Profit before tax up 4.4% to 35.4 million Strong operating cash generation of 45.5 million $100 million of additional long term funding Organic growth strategy delivering market share gains Acquisition of Lönne Holding AS post year end Full year dividend up 8.5% 3

4 Customer validated cost savings Over 6,380 separate cost savings provided to our customers in m 4

5 Brammer well positioned to outperform market Growth rates are improving in most key segments Group SPWD growth in Q4-6.0 ppt improved over Q1 Bearing sales decline has bottomed out with growth of 2.6% in Q4 Non-bearing sales growth continues to accelerate T&GM grew 7.1% Key Accounts growth accelerated to 12.9% in Q4 Continuing market uncertainty 5 Business area at 2013 constant currency rates ( 1.25: 1) Q1 Q2 Q3 Q4 FY Growth rates (%) m SPWD Total group Revenue Bearings Non-bearings Tools & General Maintenance Key Accounts Base business

6 Financial highlights

7 Highlights Total sales Operating profit Working capital days Statutory 1.9% Constant currency -0.2% FX 2.1% Statutory 6.7% Constant currency 1.3% FX 5.4% Receivables Inventories Payables (60.6) (65.9) Total Operating margin Earnings EPS +2.8% Dividend DPS +8.5% % 5.8% % Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items. Prior periods results are restated to reflect retrospective application of IAS19R- Revised

8 Profit & Loss FX Change Reported IAS 19R Restatement 2012 Reported Change Turnover % % Gross margin Gross % 31.5% 30.5% % - Sales, Distribution and Administrative Costs (165.5) (161.4) (157.6) (3.9) (157.6) - Underlying operating profit % % % 6.1% 5.8% % - Interest (4.4) (3.6) (2.7) (0.2) - (0.7) (2.7) - Underlying profit after interest % (0.6) % m Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items. Prior periods results are restated to reflect retrospective application of IAS19R- Revised

9 Ratios Change 2013FX Reported IAS 19R Restatement 2012 Reported Change Turnover % % Underlying operating profit % % Return on Sales 6.1% 5.8% % - Closing operating capital^ Return on operating capital employed** 34.7% 34.8% 34.3% 34.6% % - Return on investment*** 18.5% 17.8% 18.0% % - ^Segmental assets including goodwill less liabilities, before current and deferred tax, dividends, cash, loans, deferred consideration & pension liability at constant currency **Underlying operating profit as a percentage of operating capital as defined in ^ but excluding goodwill and acquired intangibles ***Underlying operating profit as a percentage of operating capital as defined in ^

10 Sales* contribution by growth driver - FY Key Accounts 19.0 Insites TM 21.6 Market segmentation (70.1) & Product extension Eliminations + & Base business decline Base business (29.4) Eliminations (40.7) *At constant currency management rates 1.25: 1 + Eliminating sales included in more than one category 10

11 Sales* contribution by growth driver H Key Accounts 12.8 Insites TM 16.9 Market segmentation & Product extension (40.9) Eliminations + & Base business decline Base business (11.2) Eliminations (29.7) H H *At constant currency management rates 1.25: 1 + Eliminating sales included in more than one category 11

12 Capital expenditure Infrastructure investment in two new distribution centres Continued IT investment delivering enhanced data management and trading platforms Continued investment in growth drivers Land & Buildings Equipment Intangible assets Total New National Distribution centres Alcoa Insites TM Tools & General Maintenance Division Information Technology Vehicles Branch investment and other Total m 12

13 Cash generation Depreciation and amortisation 2.7 Share option charges (9.7) Inventories (2.1) 11.6 Receivables Payables (2.9) Exceptional and acquisition Operating profit (before amortisation, acquisition costs and exceptionals) 45.5 Operating Cash Flow m 13

14 Movement in net debt Movement in net debt Opening (53.8) Exchange (0.7) Movement 1.6) (13.5) Closing (52.9) Capital expenditure (net) (4.9) Interest and pension funding (7.5) Tax (2.3) Purchase of own shares (net) (4.2) Acquisitions 45.5 Operating Cash Flow (11.5) Dividends 1.6 Net cash inflow m 14

15 Growth strategy

16 Growth Strategy Growth Capability Costs Synergies Geographical development Key Accounts development Business Skills Development European Buying Systems Integration Insites TM expansion Distributed Learning Programme Development IT and Other Cost Reductions Brand Development Product range extension Internal Communications and Involvement Capital Employed Management Supplier Relationship Management Country organic growth People Development Supplier Rationalisation Business Best Practice Bearings c.10% share of 2bn market MPT 3% share of 5 bn market Fluid Power 1% share of 10 bn market Tools & General Maintenance 1% share of 50 bn market 16

17 Key Accounts Update Key Accounts SPWD grew by 8.7% Now represents 54.6% of group sales SPWD growth rates accelerating from 1.9% in Q1 12 new pan-european contracts won Strong growth in defensive segments up 12.0% Pipeline is at record levels Case study Brammer was awarded an External Business Partner Excellence Award/Excellence Award from P&G Recognition for going above and beyond in 2013 Brammer was among the 80 carefully selected external parties Brammer saved P&G 0.7m over 12 months * Sales per working day 17

18 Key Accounts Key Account Sales Performance Multi-site Status Scope Sales Growth Tier 1 EU contract Part EU Group 118.4m 136.9m 15.5% Tier 2 National contract Part EU Group 152.7m 164.1m 7.5% Tier 3 No contract Part EU Group 41.6m 43.5m 4.6% Tier 4 National contract National Group 84.2m 87.5m 3.9% 396.9m 432.0m 8.7% 18

19 No. of key Accounts EU KA Revenues (M ) Pan-European Supply Agreements Experience at scale More than 500 people serving 60 Pan-EU Key Accounts Key Account support provided in 16 countries 14 Key Accounts are in the Global Fortune 500 list Key Milestones & Investments First ever EKAM Employed Investment in European KA Team Central support team established KA Tools established Sector Management established Focus on resilient sectors Account Development Managers Major Investments in KA infrastructure

20 Insites TM Update Total 383 Insites TM 144 full time; 239 part time 46 new full time; 78 new part time Increased by 56 overall* Continued strong sales growth of 13.0% Insite TM sales 48% of total key accounts business EU Insite TM pipeline strong with 336 opportunities Currently in direct negotiation with 100 customer locations Case study Food and Drink Master Supply Agreement for EU operations for global food & drinks manufacturer; total opportunity 4.8m Turnover growth in 2013 of 113% Insite TM sales 2.6m, 83% of total sales 14 Insites TM 5 full time; 9 part time Agreement covers all product groups Total number of cost savings: 98 Cost savings achieved were 195% of target *Net, including Buck & Hickman 20

21 Product Extension Update Bearing SPWD declined 6.3% reflecting market conditions Key bearing suppliers report bottoming out of market Non-bearing SPWD up 1.7% driven by product range extension through Europe Further market share gains secured Growth rates improving Case study - Catalogues First edition of the Brammer Tools & General Maintenance catalogue generated 7.2m run rate Successful launch of 2014 catalogue Further sales growth expected from: EU rollout of Roebuck brand and related product catalogue EU-wide distribution of new MRO catalogue, now expanded to reflect full non-t&gm product portfolio 21

22 Product Extension Bearings -6.4% (SPWD -6.3%) Non-Bearings +1.8% (SPWD +1.7%) Mechanical Power Transmission -1.6% Tools & Maintenance +7.1% Tools & Maintenance Seals Health and Safety Fluid Power Fluid Power +4.0% Mechanical Power Transmission Chains & Sprockets Fluid Power Bearings Motors Gearboxes Mechanical Power Transmission - Belts & Pulleys Linear Motion - Industrial Automation m like for like at constant currency 22

23 European Product Division Update Turnover grew 7.1% overall and 35.7% on the continent Growth rate accelerating throughout the year Successful rollout of European catalogue to over 30,500 customers Continued investment in European Product Division, now comprising 30 professionals Expansion driving Key Accounts sales Growing T&GM European presence delivered new Key Account customers Nine contract extensions with existing Key Account customers Sales to prior year Key Account wins up by 47% 23

24 Market Segmentation Update Focus on defensive segments continues Utilities up 4.5% and Food & Drink up 8.8% Growth in other sectors, with Consumer Goods up 35.9% Market focus is increasing resilience and market share Expanded range of segment specific material Case study Food & Drink Good growth in a difficult market Segment specific marketing material adds value to win sales Soft drinks Baking Brewing Confectionary Segmentation approach co-ordinated with Key Account strategy 24

25 Market Segmentation 23.6 Utilities +4.5% Pulp, Paper & Packaging Food and Drink +8.8% Automotive +5.9% Recycling -3.0% Construction & Aggregates -8.3% Metals 2.8% m 25

26 CURRENT TRADING & OUTLOOK

27 Sales per working day - Overview 27

28 Sales per working day - Europe Since 2007: - European Production Index is down 7.9% - Brammer is up 55.4% (27.1% excluding Buck & Hickman) 28

29 Sales per working day - Growth Q1-13 Q2-13 Q3-13 Q UK* 8.3% (0.4)% 8.0% 16.8% 7.6% % 0.4% 5.0% 2.2% Germany 8.1% (30.8)% 13.6% 16.1% 0.6% -7.5% -1.7% -0.8% 1.8% -2.4% France 9.4% (14.6)% 11.1% 14.2% 3.5% -1.9% -2.7% -7.0% -6.3% -4.7% Spain 8.3% (22.3)% 9.5% 12.3% -0.3% -3.3% -3.8% 8.5% 15.8% 3.8% Netherlands 11.4% (16.6)% 10.3% 17.2% 8.5% 4.6% -4.9% 2.2% 9.0% 2.8% Poland % 24.1% 3.0% -1.5% 3.1% 0.7% 6.1% 1.9% Total 12.0% (16.1)% 11.6% 21.8% 17.1% -2.9% -0.3% -0.6% 3.4% -0.2% Organic 8.5% (16.1)% 11.6% 15.9% 2.9% -2.9% -0.3% -0.6% 3.4% -0.2% 29

30 Growth Track Record Total Revenue GP % 30.1% 30.9% 30.5% 30.4% 30.0% 30.1% 30.1% 30.3% 30.5% 31.5% Operating profit TP % 3.6% 4.4% 4.8% 5.2% 5.5% 4.3% 4.9% 5.6% 5.8% 6.1% Operating cash flow Net Debt ( equiv) Total Customer Signed off Cost Savings m 30

31 Lönne Holding AS Acquisition of Lönne Holding AS, a leading distributor of OEM and MRO industrial products A leading presence in the Nordic market; A number of cross-selling opportunities to Lönne s customer base particularly in Tools and General Maintenance; A significant incremental opportunity to service existing key accounts 31

32 Outlook Investment made in growth projects expected to drive revenue and profit growth Some tentative signs of improvements in our key markets but outlook still uncertain Brammer growth rates improving into 2014 Key Accounts pipeline at record levels Continued successful execution of organic growth strategy Focus on growth drivers continues to gain market share 32

33 Appendices

34 Brammer Europe s leading distributor of industrial maintenance, repair and overhaul products ( MRO ) Bearings Mechanical Power Transmission Fluid Power Tools & General Maintenance Added value service A fragmented 65 billion + market Over 350 locations across 16 countries 4.8 million product lines More than 100,000 customers Robust fundamental growth drivers 34

35 Segments* UK Germany France Spain Benelux Eastern Europe & Other Turnover Sales per working day growth (Like for like) Total 2.2% -2.4% -4.7% 3.8% -3.7% -3.1% -0.2% Underlying operating profit Return on sales 7.2% 5.7% 5.1% 11.1% 5.1% - 6.1% Return on sales % 6.6% 5.0% 10.0% 5.2% 1.2% 5.8% Operating capital employed* Return on operating capital employed Return on operating capital employed % 27.3% 30.0% 64.6% 22.7% % 63.7% 32.5% 46.7% 67.7% 25.7% 4.7% 34.3% m * At actual rates. Changes in reportable segments have been reflected in all periods presented explained further in note 2 in the annual report ** Segmental assets excluding goodwill and acquired intangibles less liabilities, before current & deferred 35 tax, dividends, cash, loans, deferred consideration & pension liability

36 Exchange rates Average Closing m As at December close 36

37 Costs Sales, Distribution and Administrative Costs FX Reported 2012 Restated IAS 19R Restatement 2012 Reported (165.5) (161.4) (157.6) (3.9) (157.5) 0.1 (157.6) Intangible amortisation Acquisition related Exceptional item Total Costs (1.2) (1.3) - (168.0) (1.3) - - (6.4) (169.1) (165.3) (3.9) (1.3) - (6.4) (165.2) (1.3) - (6.4) (165.3) Underlying costs up 2.5% at constant currency Total costs down 1.1m at constant currency Total costs increased by 2.8m m 37