BELL EQUIPMENT LTD Final Results Announcement & Business Review. March Prepared for the Challenging Year ahead.

Transcription

1 BELL EQUIPMENT LTD 2008 Final Results Announcement & Business Review March 2009

2 Agenda Synopsis 2008 Financial Results 2008 Understanding BELL EQUIPMENT Market View Strategy Cash Flow Initiatives Cost Reduction Initiatives Key Risk Analysis Questions

3 Synopsis Challenging markets Credit crisis Impact European Market slows from 2Q Dramatic slowdown in Domestic Market 4Q High Inventory Overrun Supplier Shortages Earlier in Year Forecasting Challenges Product Mix problems BELL makes market share gains BBBEE verification gives BESSA level 5 status Production rates cut 3Q Right sizing begins 4Q

4 Financial Results 2008

5 Financial Summary 2008 Revenue R5,46 billion Operating Profit R589 million Profit After Tax R361 million Earnings per Share 367c Fully diluted EPS 367c NAV per Share 1864c

6 Condensed Income Statement For the year ended Financial Results 2008 R 'million 31 Dec Dec 2007 Revenue Cost of sales Gross Profit Net operating expenses (832.6) (482.9) Profit from operating activities Net interest paid (74.6) (19.7) Profit before tax Taxation (153.8) (109.7) Profit after tax Earnings per share (basic) (cents) 367c 385c

7 Condensed Balance Sheet Financial Results 2008 R 'million at 31 Dec 2008 at 31 Dec 2007 ASSETS Non-current assets Property, plant and equipment Other non-current assets Current assets Inventory Trade and other receivables Other current assets Total assets EQUITY AND LIABILITIES Capital and reserves Non current liabilities Current liabilities Trade and other payables Short term interest-bearing debt Other current liabilities Number of shares in issue ('000)

8 NAV & Working Capital days Net Asset Value Per Share (cents) Financial Results 2008 cents per share 2,000 1,800 1,600 1,400 1,200 1, Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Growth of R4.08 per share over the 2008 financial year (100) (200) (70) (64) (53) (90) (74) (82) (76) (92) (76) Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec Jun Dec debtors days inventory days creditors days trade cycle days

9 Our Products Understanding Prepared for the BELL Challenging EQUIPMENT Year ahead. Co Articulated Trucks Designed and built in Richards Bay Built in Germany and distributed in Europe Front End Loaders Deere licenses Bell assembly in R/Bay Tractor Loader Backhoes Deere licenses Bell built in R/Bay Sugar and Forestry machines Designed and built in Richards Bay Branded Machines Imported: Graders Bulldozers Excavators Imported: Compaction & Road building BELL ASSURE Parts Service Finance Training

10 Global Network +120 Outlets Understanding Prepared for the BELL Challenging EQUIPMENT Year ahead. Co

11 Products and RSA Market Position No1 TARGET No1 TARGET No1 No2 No2 No3 No6 CURRENTLY No3 No3 No1 No2 No1 No6 No1 Understanding Prepared for the BELL Challenging EQUIPMENT Year ahead. Co

12 Market View

13 European Markets European Market View

14 European Markets European Market View

15 Civil Infrastructure Spending Southern Africa Domestic Market View Feb 2009

16 Turning Point? 8 Domestic Market View year-on- -year (%) Other emerging market and developing countries South Africa ?? Source :IMF

17 Currency Weakness positive for BELL 16 Domestic Market View Rand R/Euro R/$

18 Strategy

19 Sustainable Business Strategy Best in Class Features Fuel Efficiency Innovative Design Economy of Scale Currency benefit Competitive Products Global Business Product and Geographic Diversity Reduces risk of dependence on any one region Agri Construction Mining Deere, Hitachi and Liebherr in Europe Strong Partners Optimal BBBEE Position Focused on medium To long term growth Sectors Max Points Customers Benefit

20 Focused on Short Term Africa Advantage Less affected by Global Slowdown BELL more competitive Supply Chain advantage Network Coverage

21 Revenue Base Changing 2008 Sales R5,5 billion Spain 1% Germany 5% Africa 21% Other 1% France 4% UK 10% RSA 49% USA 1% Asia 7%

22 Focused Opportunities 2009 BELL business is 80% from Developing markets Market Share core Products New full line - Bomag Compaction Machines Sugar and Forestry projects Infrastructure projects Limited mining opportunities BELL Assure (Lifetime Revenue Stream) Parts Service Finance Fleetm@tic 22

23 RSA Infrastructure Spend

24 Annuity Income Training Service Finance Parts Used Life Time Revenue Stream (LTRS)

25 Estimated Lifetime Parts Stream 70 Assumes 100% recovery of all Parts % 70 % of Initia al Unit Sale Value % 14 % 23 % 32 % 37 % 52 % % 0.2 % 0.6 % 1.5 % 1.7 % 3.5 % 4 % 8 % Year 1 Year 2 Year 3 Year 4 Year 5 Hours and Years of Operation

26 Jetpark - Global Parts Centre Total Cost of +R220 million Completion this Month R60-70 Million worth of Parts per month

27 Cash Flow Initiatives

28 BELL Focus going Forward Cash is King Culture! Manage Inventory Production Cuts and cancelled Materials Targeting Sales reducing Inventories Manage Receivables Tougher Credit Control Lower risk higher security Sales & Operations Review now Weekly Reduced commitment on component Suppliers Quicker response to Market demand Reduction Plan will be met

29 UNITS & OTH HER MATERIALS Inventory Plan Dec 2008 to Dec ,800 UNITS OTHER TOTAL 1,600 1,400 1,200 1, Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 3 TOTAL GR ROUP INVENTORY

30 BELL Factories - Production Adjusted Average Production 2008 Production Cut 60% 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

31 Cost Reduction Initiatives

32 Cost Reduction Actions - Completed Capex Reduction Freeze on Capex extended to June Capex budget 2009 revised down 40% Reduced Expenses Travel and Exhibitions Rental of Properties Factory Expenses Marketing and Vehicle leases Capex and Opex freeze 800 Contract workers released Budget reworked R200m cost reduction Factories on Short-time Interest Costs Reduced Borrowings by year end Expected interest rate reduction 3-3,5%

33 Further Cost Reduction - Opportunities Restructure distribution Operations Refocus Manufacturing Operations - localisation Deploy resources to LTRS opportunities Process efficiency Capex Review next stage Expense review Head count reductions Travel and Transport Exhibitions

34 Potential Assistance Government Support Distressed Industry Programme (Presidency has identified Capital Equipment as priority Working with The dti, NUMSA, SEIFSA and others Skills development Development Finance Institutions Bridging Finance Supplier Finance Customer Finance

35 Current Outlook Global markets continue to deteriorate Margin pressure during de-stocking period BELL strategy fundamentally sound BELL products remain globally competitive Continued investment in R&D Effective steps taken to Reduce Inventories Operating Costs aligned to current market Expect some attrition in Competitor landscape Well positioned for Growth when markets turn!

36 Key Risk Analysis Liquidity Excess Inventory Major Market changes Bad Debt Skills availability Quality Delinquent Supplier Physical Injuries Additional facilities in place & Cash forecasting Weekly SOP & Production curtailed Sales forecasting and monitoring Credit management Retention and development & succession plans Robust Process for continuous improvement Monitoring and alternatives Insurance and regular assessment Safety priority, training and audits

37 Concluding... The Bell Group faces difficult Global markets BELL will: Survive the current global contagion and emerge leaner and meaner Continue to Strengthen its Distribution channels Benefit from planned Infrastructure spend in Southern Africa Invest in its People and Products Grow the Global machine park and Annuity income associated Lead in Technology of its Core Products

38 Thank You! QUESTIONS?