Barloworld Limited. Reviewed interim results to 31 March May 15, 2006

Transcription

1 Barloworld Limited Reviewed interim results to 31 March 2006 May 15, 2006

2 BARLOWORLD IS A DIVERSIFIED INDUSTRIAL COMPANY Over people in 31 countries Barloworld s way of doing business - market-leading products, services and business solutions to our customers through dedicated teams of industry specialists, backed by a powerful corporate office Divisions - Equipment - Industrial distribution - Motor - Cement - Coatings - Scientific To make our customers businesses excel Leading brands

3 1H 06 RESULTS HIGHLIGHTS Revenues R19 462m Operating profit R1 748m +8% +16% Operating margin 9.0% (1H 05: 8.4%) Cash generated from operations R1 913m HEPS 402 cents Dividend 150 cents (1H 05: 130 cents) +30% +10% +15% Intended disposal of steel tube

4 1H 06 CORPORATE ACTIVITY HIGHLIGHTS 2x4x4 Improving the performance of our businesses Organic expansion into new geographies and complementary products and services Incremental acquisitions and disposals Value Based Management Customers Shareholders Employees Community Strategic focus unchanged

5 1H 06 CORPORATE ACTIVITY HIGHLIGHTS Improving the performance of our businesses Scientific turnaround Truck Center turning around UK handling restructured Rent a Car - Sweden Cement - Batsweledi - Jupiter Organic expansion - Western Cape/Inland milling Equipment - New facility in Durban - Investment in Siberia - New people in Spain Coatings - Bristol launch in SA - Concept Store launched Incremental acquisitions and disposals Acquisitions - Midas Paints and Prostart - Avis & Budget (Denmark) - 50% of Avis Fleet Services - Offer for Wattyl Disposals (WIP) - Steel tube division - US lease book - UK leasing business Setting platform for future growth

6 Financial Review Clive Thomson May 15, 2006

7 ACCOUNTING POLICIES AND DISCLOSURES Accounting standards adopted IFRS 2 Share-based Payment - Charge of R11m (5 cps) for 1H 06, R12m (6 cps) for 1H 05 - Charge of R38m (17 cps) for FY 05 includes R15m impact of BEE logistics deal IAS 27 Consolidated and Separate Financial Statements - No impact Accounting disclosures Steel tube classified as discontinued operation - Net assets disclosed as held for sale at recoverable amount Leasing borrowings deducted from net assets in segmental disclosures - Consistent with interest paid deducted from operating profit New standards do not have a material impact

8 INCOME STATEMENT HIGHLIGHTS Rm Revenue Operating profit Fair value adjustments Finance costs Profit before exceptionals Exceptional profits Taxation including STC Net profit from continuing operations Loss/profit from discontinued operation Headline earnings Headline EPS (cents) Dividend per share (cents) 1H (69) (245) (558) (116) H (47) (199) (505) % Ch Operating result driven by strong cement performance

9 FINANCIAL INSTRUMENT ADJUSTMENTS Rm Equipment southern Africa Corporate Other operations Total financial instrument adjustments Recoupment at operating profit level Impact on profit before tax 1H 06 (38) (16) (15) (69) 36 (33) 1H 05 (42) 2 (7) (47) Rand strength continues to impact

10 EXCEPTIONAL ITEMS Rm Profit on disposal of properties, investments and subsidiaries Impairment of assets Exceptional profits before tax Taxation and minorities Net exceptional profits from continuing operations 1H (1) 19 1H (5) Exceptional profits not significant

11 TAXATION RATE ANALYSIS Rm Taxation per income statement Prior year tax excluding exceptionals Tax on exceptionals Taxation before STC & exceptionals 1H (2) (1) 439 1H (2) (2) 397 Profit before exceptionals and dividend income Effective tax rate (%) - excl STC % % STC on dividends paid Lower effective tax rate before STC

12 HEADLINE EARNINGS RECONCILIATION Rm 1H 06 1H 05 % Ch Net profit attributable to BAW shareholders (4) Net exceptional profits (15) (10) Loss on sale of plant and equipment 1 3 Impairment loss discontinued operation 123 Headline earnings Headline earnings per share (cents) HEPS rises 10%

13 BALANCE SHEET HIGHLIGHTS Total assets increased by 4% to R29 778m Translation impact on net assets of R326m (decrease) Steel tube assets and liabilities disclosed separately as held for sale Treasury share cancellation Current review to further optimise capital structure Capital commitments of R2 364m Balance sheet remains strong

14 SEGMENTAL GEARING RATIOS Debt to equity (%) Trading Leasing Car Rental Total group Target range Mar Mar Trading interest cover at 10.5 times (Target > 5 times) Board approves trading gearing range increase to 30-50% Car rental and leasing gearing ranges unchanged Gearing change to optimise capital structure

15 CASH FLOW HIGHLIGHTS Cash generated from operations +30% to R1 913m (1H 05: R1 466m) Working capital increase of R826m (1H 05: R948m) Dividends paid increased to R933m (1H 05: R883m) Cash used in investing activities of R1 654m (1H 05: R1 324m) includes: Rm Acquisition of subsidiaries and investments Acquisition of property, plant and equipment Rental assets and hire vehicles (net) 1H H Cash conversion ratio above 100%

16 PROFIT AND MARGINS H 01 1H 02 1H 03 1H 04 1H 05 1H H 01 1H 02 1H 03 1H 04 1H 05 1H 06 Operating profit (Rm)* Operating margin (%)* Steady growth in profitability * Before fair value adjustment

17 EARNINGS AND DIVIDENDS FY 01 FY 02 FY 03 FY 04 FY 05 1H 06 FY 01 FY 02 FY 03 FY 04 FY 05 1H 06 HEPS (cents) Ordinary dividends (cents) Steady dividend growth

18 Operational Review Tony Phillips May 15, 2006

19 1H 06 MACRO CONDITIONS Southern Africa International Equipment Motor Cement & Lime Coatings Equipment Industrial distribution Car rental Scandinavia Coatings Australia Scientific Infrastructure construction activity levels up Mining new expansion projects New vehicle sales up 15%* Rental demand up 19%* Cement industry sales up 13%* Steady growth Spanish construction sector remains buoyant South east US economy growing UK trading conditions flat Rental days up 12%* Australia tough trading conditions Europe conditions weak Semi-conductor cycle picking up * Year on year growth

20 REVENUE UP 8% Equipment +9% Industrial Distribution Motor +8% Cement +20% Coatings Scientific Corporate and Other Revenue (Rm) 1H 06 1H Strong demand in southern Africa

21 EQUIPMENT Competitive pressure in Iberia, but improved after sales business High levels of activity in southern African market Siberia on track for US$100m revenue target Europe Southern Africa Margin 8.7% 9.1% 6.7% 7.5% Operating profit (Rm)* 1H 06 1H Activity growing strongly in southern Africa * Including fair value adjustment

22 EQUIPMENT - CUSTOMER ORDER BOOK Southern Africa Iberia Siberia Customer order book (Rm) 31 Mar Sep Mar Strong order intake in all territories

23 EQUIPMENT - ORDER BOOKS R3 013m total customer order book - R2 093m scheduled for delivery in R920m scheduled for delivery in 2007 R5 147m orders placed with Caterpillar Mar 06 Sep 05 Rm Customer Order Book Order Book on Caterpillar Largest ever order book on Caterpillar

24 INDUSTRIAL DISTRIBUTION Good performance from US handling operations Truck Center management initiatives proving successful Flat trading conditions and further rationalisation in UK handling Leasing business impacted by adjustments North America Europe Leasing Margin 1.6% 1.0% -0.2% 2.3% 2.1% 9.9% Operating profit (Rm)* 1H 06 1H Revising business model in UK * Including fair value adjustment

25 INDUSTRIAL DISTRIBUTION MANAGEMENT ACTION TAKEN Truck Center - Management initiatives to reduce cost and improve after sales service UK handling - Commoditisation of lift truck market - Business remodeled as industry changes - Focus on service offering (handheld service unit) - Move from regional to centralised management Leasing - Freightliner book continued to be managed out - US handling lease book to be sold - Options under consideration for UK lease business Management action essentially complete

26 MOTOR Continued strong performance from new car sales in South Africa Avis southern Africa volumes up, rates recovering Discontinued GM discount in Sweden Southern Africa - Trading Australia - Trading Southern Africa - Rental Europe - Rental Leasing Operating profit (Rm)* Margin 1.9% 1.8% 0.5% 0.5% 24.5% 26.4% -2.2% 7.5% 10.3% 14.4% 1H 06 1H Focus on rental rate recovery * Including fair value adjustment

27 MOTOR: PERFORMANCE HIGHLIGHTS Revenue: R6.5bn - R7.1bn including proportionate share of associates Operating profit: R261m - R287m including proportionate share of associates - Motor Retail (southern Africa) operating profit up 32% Operating profit margin 4.0% Retail units sold (new and used) Rental days all territories (million) Vehicles under finance and maintenance 1H H Avis taking lead in rental market

28 CEMENT Domestic cement volumes up 13% Jupiter kiln successfully recommissioned High capacity utilisation rates Margin Southern Africa 39.2% 35.4% Operating profit (Rm)* 1H 06 1H Cement demand forecast to grow 12% in 2006 * Including fair value adjustment

29 CEMENT - CAPACITY EXPANSION ON TRACK Batsweledi project - Capacity increased to 1.25mt - Progressing on plan and within budget - Commissioning by 2008 Jupiter factory recommissioned - Capacity increase of tons per year Feasibility studies - estimated R3bn capex - Expansion and modernisation in Western Cape - New inland milling capacity New expansion plans

30 COATINGS Acquisitions support revenue growth 1H 06 operating margins impacted by costs for growth initiatives Wattyl offer still subject to Australian competition authority approval Southern Africa Margin 15.5% 18.5% Australia and Asia -3.6% -3.4% Operating profit (Rm)* 1H 06 1H Growth initiatives underway in southern Africa * Including fair value adjustment

31 SCIENTIFIC Cost reductions result in successful turnaround in profitability Trading weakness in UK Apparent upturn in semi-conductor industry Europe Margin 7.3% 1.2% North America -0.5% -4.5% Asia 4.3% 4.3% Operating profit (Rm)* 1H 06 1H Cost reduction initiatives successful * Including fair value adjustment

32 Outlook Tony Phillips May 15, 2006

33 OUTLOOK FOR 2H 06 Southern Africa International Equipment Motor Cement & Lime Coatings Logistics Equipment Industrial distribution Car rental Scandinavia Scientific Record activity levels Strong new vehicle sales Rental demand up and ongoing rate recovery Another strong year for cement demand Steady growth in southern African market Continued re-investment in growth Spanish construction sector remains buoyant Siberia on track for $100m revenue target Continued strong US handling growth Record Truck Center order book Cost reduction benefits in UK handling Plans to restore Sweden s profitability Cost saving benefits

34 MANAGEMENT PRIORITIES FOR 2H 06 Southern Africa International Corporate Equipment Motor Equipment Industrial distribution Car rental Scandinavia Coatings Australia Manage lead times with Caterpillar Rental rate and damages recovery Regain market share Truck Center: Capitalise on good truck demand in 2H UK handling: Capture cost reduction benefits Leasing: Finalise sale of lease books Restore Sweden s profitability Reduce costs and conclude Wattyl Further optimise capital structure Finalise intended disposals

35 FULL YEAR OUTLOOK For the full year we expect continued growth in our southern African businesses and further recovery from the offshore operations

36 Enquiries Investor Enquiries Rowan Goeller Head of Investor Relations Barloworld Limited Phone: May 15,

37 Barloworld Limited Reviewed interim results to 31 March 2006 May 15, 2006