Barloworld Limited. Interim results for the six months to 31 March May 2013

Transcription

1 Barloworld Limited Interim results for the six months to 31 March May 2013

2 Overview Clive Thomson CEO, Barloworld Limited

3 Salient features Revenue up 11% to R31.3bn Operating profit up 14% to R1 463m Profit before exceptional items up 20% to R995m HEPS up 31% to 321 cents (1H 12: 245 cents) Interim dividend of 96 cents per share up 20% 3

4 Salient features non financial Maintained Level 2 B-BBEE rating and most empowered company in General Industrial sector (Mail & Guardian survey 2013) Remain in JSE SRI Index ( Best Performer category) One of six JSE Top Performer companies in CDP s Carbon Performance Leadership Index (CPLI) 2012 Zero fatalities and improved Lost Time Injury Frequency Rate (LTIFR) Improved energy and greenhouse gas emissions efficiency Continued focus on leadership, talent, diversity and skills development Stakeholder engagement initiatives continue 4

5 Key developments Concluded acquisition of Russian Bucyrus distribution business for R420m Bucyrus southern Africa business trading in line with expectations Significant mining contracts awarded, including Husab Uranium (R1.3bn) and B2 Gold Corp (R0.5bn) in Namibia Power systems business continues to show growth across all regions Disposed of Handling Belgium on 8 May generating proceeds of 7.5m Avis Fleet Services successfully implemented City of Johannesburg outsource fleet management contract Formed Barloworld Transport Solutions in merger with Manline Logistics 5

6 Financial Review Don Wilson Finance Director

7 Income statement highlights (Rm) 1H 13 1H 12 % chg Revenue EBITDA Operating profit Fair value adjustments on financial instruments 7 (106) Net finance costs and dividends received (475) (347) Profit before exceptional items Exceptional items (34) (26) Taxation (333) (343) Secondary tax on companies - (25) Income from associates and joint ventures Net profit HEPS (cents)

8 Income statement highlights (Rm) 1H 13 1H 12 % chg Revenue Equipment Southern Africa Europe Russia Handling (52) Automotive and Logistics Corporate Average exchange rates (Rands) 1H 13 1H 12 United States Dollar Euro British Sterling

9 Income statement highlights (Rm) 1H 13 1H 12 % chg Revenue EBITDA Operating profit Equipment Southern Africa (5) Europe (5) (115) 96 Russia Handling Automotive and Logistics Corporate (52) 5 9

10 Statement of financial position (Rm) 1H 13 FY 12 Non-current assets Current assets (excluding cash) Cash and cash equivalents Assets classified as held for sale Total assets Interest of all shareholders Total debt Other liabilities Liabilities classified as held for sale Total equity and liabilities Net debt

11 Summarised statement of cash flows (Rm) 1H 13 1H 12 Operating cash flows before working capital Increase in working capital (2 408) (3 574) Net investment in leasing assets and vehicle rental fleet (1 108) (1 155) Cash utilised in operations (863) (2 345) Other net cash flows (730) (636) Dividends paid (358) (250) Net cash applied to operating activities (1 951) (3 231) Net cash used in investing activities (963) (231) Net cash outflow (2 914) (3 462) 11

12 Investment in working capital supports revenue growth (Rm) 1H 13 1H 12 Inventories (increase) (842) (2 361) Receivables (increase) (749) (1 134) Payables decrease (817) (79) Total working capital (increase) (2 408) (3 574) (Rm) 1H 13 1H 12 Equipment southern Africa (1 457) (1 779) Equipment Europe Equipment Russia (593) (773) Handling (275) (385) Automotive and Logistics (242) (663) Other (77) (13) Total working capital (increase) (2 408) (3 574) 12

13 Capital structure remains strong Group segmental gearing ratios are as follows Debt to equity (%) Trading Leasing Car Rental Total group Target range Gross Net Ratio at 31 Mar Ratio at 30 Sept Ratio at 31 Mar Net debt of R11 003m (Sept 2012: R7 464m) increased by R3 539m EBITDA interest cover 5.1 x (Sept 2012: 5.9 x) Fitch affirmed AA- rating in February 2013, stable outlook Trading ratio to decline to within target range by September 13

14 Debt maturity profile Interest bearing debt Redemption (Rm) Total Short-term Long-term South Africa Offshore Total debt Mar Total debt Sept Total debt Mar Debt relating to acquisitions R896m Ratio of long-term to short-term debt 55:45 (Mar :34) Extended maturity profile of R1bn Bucyrus acquisition facility to January 2015 R5.7bn unutilised bank facilities at March 2013 Cash and cash equivalents R1 709m (Sept 2012 R2 624m) Steps taken to lengthen maturity profile underway 14

15 Business overview Equipment southern Africa

16 Operational review Equipment southern Africa Revenue up by 20% to R9.0bn boosted by Extended Mining Product Range (EMPR) sales and increases in after-market revenues Operating margin affected by - Rand weakness impacting cost of sales - Lower margins from EMPR business - Costs associated with increased capacity DRC joint venture profit share of R73m compared to R35m in 1H 12 Significant new deals awarded in the period Operating profit (Rm) Margin Southern Africa 7.2% 9.1% H'13 1H'12 16

17 EMPR acquisition integration The business is performing in line with expectations The focus has been on stabilising, growing and realising the synergies between the CAT Legacy and EMPR businesses An additional 480 people were welcomed into the business R650m worth of EMPR inventory was taken on Celebrating Dealer Day 1 in Kuruman Husab and FQM deals awarded Dealer Day 1 on the Goedgevonden MARC site 17

18 COTE D`IVOIRE CENTRAL AFRICAN REPUBLIC Major mining opportunities CAMEROON surface ANA GO IN ETHIOPIA Jindal Coal Copper Iron ore Uranium Exxaro Medupi Expansion GABON FQM Kalumbila UGANDA Gold RWANDA DEMOCRATIC REPUBLIC BURUNDI OF THE CONGO Barrick Lumwana (ZAIRE) TANZANIA KENYA Vale and Rio Tinto Tete Nippon Steel- Revuboè B2 Gold ANGOLA ZAMBIA MALAWI ResGen Boikarabelo Extract Resources Husab NAMIBIA ZIMBABWE CoAL Makhado Kumba Sishen BOTSWANA SWAZILAND BHP Billiton Kipypanya Exxaro Belfast Project LESOTHO SOUTH AFRICA Zonnebloem Xstrata Xstrata Tweefontein Anglo New Largo 18

19 COTE D`IVOIRE CENTRAL AFRICAN REPUBLIC Major mining opportunities CAMEROON underground ANA GO IN ETHIOPIA Coal Copper Diamonds Discovery Metals GABON DEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE) Platinum UGANDA Nickel RWANDA BURUNDI TANZANIA KENYA Glencore Mopani Platinum Group Metals Anglo Elders Tubalisha Sasol ANGOLA ZAMBIA MALAWI Palabora Rio Tinto Petra Diamonds Cullinan NAMIBIA ZIMBABWE Sasol Impumelelo Anglo New Denmark BOTSWANA SWAZILAND Exxaro Matla Xstrata Tweefontein LESOTHO SOUTH AFRICA Sasol Bossjespruit Nkomati Anthracite Sentula Anglo Goedehoop 19

20 COTE D`IVOIRE CENTRAL AFRICAN REPUBLIC Major infrastructure CAMEROON projects planned ANA GO IN ETHIOPIA Awarded and in progress To commence short term Potential UGANDA Refinery Dams, Rail, Ports, Roads GABON DEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE) RWANDA BURUNDI TANZANIA KENYA Mine Infrastructure Infrastructure Backlogs North South Water Pipeline ANGOLA ZAMBIA MALAWI Power, Ports, Roads and railways Various Road Rehab Neckartal Dam NAMIBIA BOTSWANA ZIMBABWE Mine Infrastructure Rail and Dams Mine Infrastructure and Provincial and Municipal Infrastructure LESOTHO SOUTH AFRICA SWAZILAND 17 SIPS* Projects * 17 Strategic Integrated Projects(SIPs) which have been developed and approved to support economic development and address service delivery in the poorest provinces in South Africa. Each SIP comprises of a large number of specific infrastructure components and programmes 20

21 Swakop Uranium Husab Project Total contract value: R1.3bn Supply, assembly and commissioning of hydraulic face shovels, electric rope shovels, MD6290 rotary blasthole drill rigs, MD6640 rotary blasthole drills and C175 diesel engine motivators The Husab Project is regarded as the most important uranium discovery in recent years and will elevate Namibia to the third biggest uranium producer in the world 21

22 B2 Gold Otjikoto Project Total contract value: R0.5bn Gold mine situated 300km north of Windhoek Caterpillar fleet to be supplied will include mining trucks, wheel loaders, and support equipment The first half of the fleet will be delivered during 2013, and the balance during 2014 and 2015 Key partnership between client and Barloworld Namibia with respect to fleet sizing, site requirements and ensuring that the final fleet will deliver the best cost per ton 22

23 Electric Drive Truck introduction Kumba Total contract value: R0.3bn Caterpillar s first Electric Drive Truck on the African continent Sets new standard for performance and features state-of-the-art safety and maintenance features In March, we commissioned six Cat 795 AC trucks at Sishen for a 2 year trial period 23

24 Outlook Activity will continue to be impacted by slowdown in global mining capex Firm back orders marginally lower at R5.2bn (Sept 2012: R5.3bn) 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 Execution of EMPR large mining machine deliveries and site solutions Parts and service revenues expected to remain solid Order book (Rm) Southern Africa Mar 2013 Sep

25 Business overview Equipment Iberia

26 Operational review Equipment Iberia Revenue up 19% in Euro terms resulting from low margin export sales No restructuring costs incurred during the period under review (R73m in 1H 12) Salary decreases were effected in Spain to further lower cost base Strongly positive cash flows through working capital reductions Power Systems continues to act as a buffer against shrinking equipment market Product support capacity maintained as 108 technical staff operate in 8 countries Operating loss (Rm) Margin -0.2% Iberia -6.1% H'13 1H'12 26

27 Industry trend new equipment market Units actual Units prior forecast Units New forecast Regional austerity measures and weakness of macro economic drivers pushes out new machine market recovery Source: Management estimates / external research 27

28 Maintaining technical capacity and group synergy WESTERN SAHARA ALGERIA TUNISIA LIBYA EGYPT Other Saudi Arabia Norway Dominican Republic CAPE VERDE THE GAMBIA GUINEA-BISSAU SENEGAL SIERRA LEONE MAURITANIA GUINEA LIBERIA COTE D`IVOIRE MALI BURKINA FASO GHANA BENIN TOGO NIGER CHAD SUDAN NIGERIA CENTRAL AFRICAN REPUBLIC CAMEROON ERITREA ETHIOPIA DJUBOUTI EQUATORIAL GUINEA SAO TOME AND PRINCIPE Congo 1 technician Angola 21 technicians GABON UGANDA KENYA RWANDA DEMOCRATIC REPUBLIC BURUNDI OF THE CONGO (ZAIRE) TANZANIA ANGOLA NAMIBIA ZAMBIA BOTSWANA ZIMBABWE MALAWI SEYCHELLES Malawi 7 technicians Mozambique 24 technicians MAURITIUS South Africa 49 technicians SOUTH AFRICA LESOTHO SWAZILAND 28

29 Outlook Macro economic environment remains challenging with limited prospect of short term recovery Order books lower due to delivery of un-cancelled portions of mining deals during the period Power Systems activity in marine and other niche markets expected to continue Lower cost base will allow for future profitability when market recovers Expected to remain cash positive for full year Order book ( m) Iberia Mar 2013 Sep

30 Business overview Equipment Russia

31 Operational review Equipment Russia Continued growth with revenue in Dollars improving 18% on prior year Bucyrus Russia acquired on 1 December 2012 and trading in line with expectation Operating profit impacted by increase in headcount, EMPR acquisition costs and facility-related expenses as we invest for future growth Aftermarket business increased by 24% as we reap the benefits of larger machine fleet in the field Power and Irkutsk facilities completed active projects underway in other regions Operating profit (Rm) Margin 7.2% Russia 8.8% H'13 1H'12 31

32 Territory coverage Owned facilities 9 Rented facilities 20 Investment plan US$80m (US$48m spent to date) 32

33 World class facilities Novosibirsk campus expansion Irkutsk completed Belovo Project concept underway Novokuznetsk (re-branded) 33

34 Power of Siberia gas pipeline project Implem. period /14 Length more than 1 500km Project costs approx. 30bn rub. Implem. period Length 3 000km Implem. period Length 1 125km Implem. period Length more than 4 000km Project costs more than 700bn rub. Gas deposits 1.24 trillion m³ Oil deposits 68,4 m t Implem. period Length more than 2 100km Project costs more than 450bn rub. Gas deposits 1,9 trillion m³ 34

35 Outlook Mining activity remains the biggest driver of revenue High potential expected from EMPR business from 2014 Coal sector to remain weak, offset by strong project pipeline in gold and nickel Continued growth expected in aftermarket revenues Strong cash generation in H2 13 as inventories delivered Order book (US$m) Russia Mar 2013 Sep 2012 Note: March 2013 order book excludes $100m EMPR orders retained by CAT on which we earn a service fee to be delivered between Apr 2013 and March

36 Business overview Handling

37 Operational review Handling Operating profit growth in southern Africa aided by sales mix and currency gains Netherlands profits benefited from cost reductions and improved equipment margins Belgium achieved breakeven result Prior period included 1.4m profit from Handling US and UK Operating profit (Rm) Margin 2.7% Handling 1.0% H'13 1H'12 37

38 Outlook Overall order book decline as order intake subdued Southern African operations expect continued solid performance Netherlands outlook muted as European growth slows Belgium sold on 8 May generating proceeds of 7.5m Order book (Rm) Handling Mar 2013 Sep

39 Divisional overview Automotive and Logistics

40 Operational review Automotive and Logistics Strong overall result in a competitive trading environment Revenue: R16.3bn (1H 12: R14.1bn) up 15% Record operating profit R673m (1H 12: R531m) up 27% Operating margin for the period 4.1% (1H 12: 3.8%) All business units performed well Operating profit (Rm) Car Rental Motor Retail Fleet Services Logistics +19% +13% +44% +25% Margin 8.1% 8.1% 2.4% 2.1% 15.9% 13.8% 2.1% 2.2% H'13 1H'12 40

41 Car Rental Improved operating profit by 13% Sustained growth in rental days Rate per day impacted by high insurance replacement business Operating costs well contained Maintained high fleet utilisation at 74% Strong used vehicle profit contribution Maintained customer satisfaction above 90% Car Rental southern Africa 1H 13 (growth) Rental days +5.7% Rental revenue per day +0.7% 41

42 Motor Retail Southern Africa delivered a good result Revenue up 13% supported by overall volume improvements Improved operating profit by 28% and margin to 2.5% Gross margin expansion and cost containment Continued strong finance and insurance contribution Australia performed in line with expectations Revenue up 13% with 16% improvement in operating profit Activity levels improved across all departments Motor Retail 1H 13 (growth) southern Africa Australia New unit sales (Oct 2012 Mar 2013) +10% +3.2% Parts revenue +8.9% +22% Service hours +1.3% +1.6% 42

43 Fleet Services Excellent operating profit growth up 44% Strong finance fleet growth secured through targeted initiatives Sustained growth in fleets under maintenance Good used vehicle profits with improved margins Fleet Services 1H 13 (growth) Finance fleet +12% Under maintenance +20% Total vehicles under management +23% 43

44 Logistics Improved operating profit by 19% Turnaround continues and positioned for growth Established Barloworld Transport Solutions by merging Dedicated Transport with Manline Logistics to form a substantial transport business Acquired minority share in re- to position the business in environmental supply chain and waste management sector Supply Chain Management contracts performing well International operations continue to face difficult trading conditions 44

45 Outlook Clive Thomson CEO, Barloworld Limited

46 Outlook Southern Africa: Expect a challenging mining environment due to softening in commodity prices and slowdown in mining capex; recovery in construction sector should maintain momentum Equipment and Handling Russia: Solid performance to continue on the back of mining deliveries, improving infrastructure spend and healthy project pipeline Iberia: Industry likely to contract further however operating performance will continue to show a turnaround on lower cost base Power Systems: Expected growth in all regions as improved focus yields benefits Handling: Growth in southern Africa but Europe subdued Automotive and Logistics Car Rental: Expected volume growth but rates flat in competitive environment Motor Retail: An improved performance in southern Africa and stable in Australia Fleet Services: Continued growth from new and existing customers Logistics: Continue positive momentum and positioned for growth 46

47 Outlook Clive Thomson, CEO of Barloworld, said Our financial performance has been strong in the first half with headline earnings per share up 31% over the prior period. Within our Equipment division the newly-acquired Bucyrus businesses performed in line with expectation and offset revenue declines in the traditional Caterpillar business on the back of a slowdown in mining capital expenditure. Our Iberian business showed a good turnaround in profitability off a lower cost base. The Automotive and Logistics division delivered a strong overall result with all business units performing ahead of last year. We completed the sale of our Handling business in Belgium which will enable the continued redeployment of capital into higher returning opportunities. Notwithstanding some short term headwinds in the mining sector we expect to continue to make good progress in the second half and deliver a solid result for the full year to September May

48 Barloworld Limited Interim results for the six months to 31 March May 2013