Barloworld Limited Results · 2015-10-02 · Barloworld Limited Results for the year ended 30...

Barloworld Limited Results

for the year ended 30 September 2014

Barloworld Limited Results for the year ended 30 September 2014

Overview

Clive Thomson

CE, Barloworld Limited


3

● Revenue up 4% to R62.1bn

● Operating profit up 16% to R3 830m

● Basic earnings per share increased 33% to 1 012 cents

● Headline earnings per share from continuing operations up 10% to 857 cents

● Total dividend per share increased 10% to 320 cents

● Australian motor retail operations disposal for R1.3bn

Salient features


4

Key developments

Group

Corporate • Tragically 3 work-related fatalities due to motor vehicle accidents – safety priority

• Workforce diversity focus – Level 2 B-BBEE rating

• Driving talent and people development initiatives

• Constituent of the Dow Jones Sustainability Emerging Markets Index

Automotive

and

Logistics

Car Rental • Enhanced level of financial return through operating efficiencies

Motor Retail • Successful disposal of the Australian operations generating proceeds of R1.3bn • Acquired Leach Toyota in Kuruman effective 10 Mar 2014 • Acquired 51% of Jaguar Land Rover Witbank effective 1 Jul 2014

Fleet Services • Acquired fleet leasing company in Tanzania effective 4 Nov 2014

Logistics • Acquired extra heavy abnormal transport business effective 5 Sept 2014

• Sold loss making airfreight business in the Far East effective 1 Nov 2013

Equipment

and

Handling

Equipment

southern Africa

• Successful integration of EMPR which delivered results well ahead of acquisition expectations

Equipment

Russia

• Pleasing performance notwithstanding impact of Ukraine crisis and mining

slowdown

Equipment

Iberia

• Improving macro economic outlook but construction sector remains subdued • Implemented restructuring in Spain which will lower cost base by €7.4m into 2015

Power Systems • Strategic plan finalised with Caterpillar to grow electric power, marine, petroleum

and industrial segments

Handling • Acquisition of AGCO agricultural dealership in Zambia in Sept

• Netherlands Handling business sold in Dec 2013 to complete exit of international

Handling operations


5

Group revenue and operating profit split – September 2014

50%

50%

Revenue

Equipment and Handling

Automotive and Logistics

58%

42%

Operating profit

Equipment and Handling



Financial overview

Don Wilson

Finance director


7

Income statement highlights

(Rm) FY’14 FY’13 % chg

Continuing operations

Revenue 62 101 59 498 4

EBITDA 6 170 5 389

Operating profit 3 830 3 313 16

Fair value adjustments on financial instruments (156) (47)

Net finance costs (1 078) (972)

Profit before exceptional items 2 596 2 294 13

Exceptional items (66) (79)

Taxation (837) (729)

Income from associates and joint ventures 217 185 17

Net profit after taxation 1 910 1 671 14

Discontinued operations

Profit from discontinued operations 428 46

Net profit 2 338 1 717 36

Basic earnings per share (EPS) 1012 763 33

Headline earnings per share (HEPS) group 883 821

Headline earnings per share (HEPS) continuing operations 857 780 10


8




Revenue 62 101 59 498 4

Equipment and Handling 30 960 30 682 1

Southern Africa 20 903 19 126 9

Europe 4 134 4 377 (6)

Russia 3 994 4 645 (14)

Handling 1 929 2 534 (24)

Automotive and Logistics 31 137 28 806 8

Corporate 4 10

Average exchange rates (Rands) FY’14 FY’13 % chg

United States Dollar 10.57 9.28 14

Euro 14.35 12.18 18

British Sterling 17.56 14.48 21


9




Revenue 62 101 59 498 4

EBITDA 6 170 5 389











Net profit 2 338 1 717 36





10




Revenue 62 101 59 498 4

EBITDA 6 170 5 389


Equipment and Handling 2 284 2 123 8

Southern Africa 1 968 1 678 17

Europe (168) (16)

Russia 429 407 5

Handling 55 54 2

Automotive and Logistics 1 644 1 322 24

Corporate (98) (132)


11




Revenue 62 101 59 498 4

EBITDA 6 170 5 389











Net profit 2 338 1 717 36





12

Statement of financial position

(Rm) FY’14 FY’13

Non-current assets 17 287 16 023

Current assets (excluding cash) 22 557 21 518

Cash and cash equivalents 4 162 2 695

Assets classified as held for sale 371

Total assets 44 006 40 607

Interest of all shareholders 17 486 15 907

Total debt 11 316 10 253

Other liabilities 15 204 14 341

Liabilities classified as held for sale 106

Total equity and liabilities 44 006 40 607

Net debt 7 154 7 558


13

Summarised statement of cash flows

(Rm) FY’14 FY’13

Operating cash flows before working capital 6 302 5 924

(Increase) / decrease in working capital (470) 539

Net investment in leasing assets and vehicle rental fleet (2 879) (2 208)

Cash generated from operations 2 953 4 255

Other net cash flows (1 997) (1 648)

Dividends paid (742) (598)

Net cash retained from operating activities 214 2 009

Net cash applied to investing activities (69) (1 349)

Net acquisitions (1 385) (1 454)

Proceeds on disposal 1 316 105

Net cash inflow 145 660


14

Investment in working capital

(Rm) FY’14 FY’13

Inventories – (increase) / decrease (251) 17

Receivables – (increase) (350) (176)

Payables – increase 131 698

Total working capital – (increase) / decrease (470) 539

(Rm) FY’14 FY’13

Equipment southern Africa (636) 265

Equipment Europe 140 32

Equipment Russia 159 (32)

Handling (14) (267)

Automotive and Logistics 111 165

Corporate (230) 376

Total working capital – (increase) / decrease (470) 539


15

Debt maturity profile

Interest bearing debt Redemption

(Rm) Total Short-term Long-term

South Africa 10 775 4 074 6 701

Offshore 541 321 220

Total debt Sept 2014 11 316 4 395 6 921

Total debt Sept 2013 10 253 2 968 7 285

● Ratio of long-term to short-term debt 61:39 (Sept 2013 – 71:29)

● In Dec 2013 the company issued three senior unsecured notes totalling R1.5bn

● 5 year bank revolving credit facility R1bn

● Barloworld Transport banking facilities of R561m

● R8.4bn (committed R6.1bn) unutilised bank facilities at Sept 2014

● Cash and cash equivalents R4 162m (Sept 2013 – R2 695m)


16

Capital structure remains strong

Group segmental gearing ratios within target ranges

Debt to equity (%) Trading Leasing Car Rental Total Group

Target range 30 - 50 600 - 800 200 - 300 Gross Net

Ratio at 30 Sept 2014 40 662 205 65 41

Ratio at 30 Sept 2013 38 666 224 64 48

● Net debt of R7 154m (2013: R7 558m)

● EBITDA interest cover 5.5 x (2013: 5.4 x)


Divisional overview


Divisional overview

Equipment southern Africa

19


● Revenue up 9.3% to R20.9bn

● Operating profit up 17.3% to R1 968m

● Operating margin expansion due to aftermarket mix and rental growth

● EMPR continues to deliver well ahead of acquisition projections

● Geographic spread provided resilience in a tough mining climate

• Zambia, Mozambique and Namibia delivered strong results

● Income from joint ventures up 23.7% to R223m

Operational review – Equipment southern Africa

0 1 000 2 000 3 000

SouthernAfrica

Operating profit (Rm)

Sep 2014 Sep 2013

Margin

9.4%

8.8%

20


Southern Africa sales history

37%

30%

28%

34%

46%

36%

33%

41% 43%

0

5

10

15

20

2006 2007 2008 2009 2010 2011 2012 2013 2014

Rbn

Equipment sales Product support

21


Southern Africa revenue – Sept 2014

47%

43%

6%

4%

Revenue by line of business

New equipment Product support

Used equipment Rental

28%

30% 21%

9%

12%

New equipment sales by industry

Mining Construction

EMPR Power

Contract mining

22


*Using a constant R/$ exchange rate of R9.25

Equipment industry outlook (southern Africa)

0

5

10

15

20

25

30

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

*Rbn

Building Construction Heavy Construction Contract Mining Mining Houses

Actual Outlook

23


Surface mining opportunities 2015 - 2020

Coal

Orapa Cut 3 (2015-2016)

Etango-Bannerman (2019-20)

Exxaro Medupi Exp (2015)

Argent- Shanduka (2015)

Sedibelo PPM (2016)

Belfast Project–Exxaro (2016-18)

Zambeze Rio Tinto (2017)

Moatize exp - Vale (2016)

ResGen – Boikarabelo (2015)

Waterberg Coal –Sekoko (2017)

Kipanya BHP (2016-2018)

Zonnebloem Xstrata (2017)

Mogalakwena Amplats (2017)

Cateruca - AEMR (2016-18) Lumwana-Barrick Gold (2018)

Jwaneng Cut 9 (2017-20)

Iron ore Diamonds Platinum Copper

Anglo – New Largo (2017)

Uranium

Vedanta (2016)

Zinc

Sishen - KIO (2015-20)

24


Underground mining opportunities 2015 - 2020

ARM/Vale - Lubambe

Glencore Mopani

Glencore Rosh Pinah

De Beers Venetia

Hebei iron/IDC – Palabora (lift 2)

Ivanhoe Platinum

Cheyenne Mining

Vaalbult – Highwall Mine

Kangra – Kusiponga

Anglo – New Denmark

Continental – De Wittekrans

Sasol Bossjespruit

Lonmin – Boabab

PGM- Waterberg

Coal Iron ore Diamonds Platinum Copper

25


● EMPR deliveries and shorter lead times from CAT contribute to lower levels of firm

back orders at R1.9bn (Sept 2013: R3.5bn)

● Replacement orders for new mining equipment only expected from H2 2015

● Deferral of mining capex sustains growth in rental and aftersales

● Infrastructure development in southern Africa bodes well for construction demand

● 2015 revenue outlook range of R20.0bn to R22.0bn (2014: R20.9bn)

Equipment southern Africa – outlook

0 2 000 4 000

SouthernAfrica

Order book (Rm)

Sept 2014 Sept 2013


Divisional overview

Equipment Russia

27


● Pleasing result under difficult economic and political circumstances

● Operating profit up 5% to R429m at 10.7% margin

● Sustained aftermarket activity continued to support result

● Tight cost control and efficiency improvements

● EMPR performing well supported by aftermarket growth

● Expansion in power rental fleet to oil & gas customers

Operational review – Equipment Russia

0 200 400 600

Russia

Operating Profit (Rm)

Sep 2014 Sep 2013

Margin

10.7%

8.8%

28


Russia sales history

25%

24%

25%

29% 36%

28%

27% 33%

46%

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011 2012 2013 2014

US$m


29


Russia revenue profile – Sept 2014

48%

46%

1% 5%




60%

17%

10%

3%

10%


Mining Construction Power

Oil and gas Other

30


Surface mining – green field projects

Opportunity 2015 2016 2017

Units 50 87 110

Dollars US$57m US$184m US$280m

31


Power of Siberia opportunity

Total length – 4000 km

Length on VT territory – 2100 km

- Phase 1 ~ 3200 km

- Phase 2 ~ 800 km

Project costs – $55 bn

Estimated opportunity over 3 year period:

Pipe-laying machines = 90 units

Construction and Forestry = 320 units

32


● Order book significantly lower, driven by downturn in mining industry

● Ukraine crisis and US/EU sanctions continue to create uncertainty

● Gold mining relatively active while coal market remains depressed

● A number of promising green field mining sites are close to development stage

● Significant pipeline opportunities

● Focus remains on growing aftermarket revenues

● 2015 revenue outlook range of US$350m to US$400m (2014: US$382m)

Equipment Russia – outlook

0 20 40 60

Russia

Order book (US$m)

Sept 2014 Sept 2013


Divisional overview

Equipment Iberia

34


● Revenue down 21% in Euro terms as large package deals not repeated

● Improving macro economic conditions but construction market remains subdued

● Operating loss in Spain necessitated further headcount reduction

● Restructuring costs of €6.2m (R88.5m) – will generate 2015 savings of €7.4m

● Power Systems activity continues to underpin revenues

● Market leadership position maintained

Operational review – Equipment Iberia

- 400 - 200 0

Operating profit (Rm)

Sept 2014 Sept 2013

Margin

-4.1%

-0.3%

35


Machine industry – Spain

0

5 000

10 000

15 000

20 000

25 000

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Actual Outlook

Units

36


Iberia sales history

32%

30% 30%

34%

40% 37% 33% 35%

41%

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014

EURm


37


Iberia revenue profile – Sept 2014

39%

41%

17%

3%




8%

37%

7%

48%


Mining Construction

Other Power

38


Cost savings – Iberia

Headcount Payroll costs Other operating costs

2008 2 382 €114.5m €43.2m

2014 1 373 €67.8m €19.1m

2015

estimate 1 211 €61.0m €17.6m

● €53.5m reduction in payroll costs from 2008 to 2015

● €25.6m reduction in other operating costs from 2008 to 2015

● Total saving of €79.1m

39


● Macro economic environment expected to show continued improvement

● Industry recovery to date limited to smaller general construction machines

● Power marine and oil & gas segments to deliver steady growth

● Continued drive to capture customer aftermarket revenue opportunity

● Spain restructuring will deliver €7.4m savings in 2015

● Portugal restructure will cost €900k in Q1 2015 with 12 month payback

● 2015 revenue outlook range of €290m to €315m (2014: €290m)

Equipment Iberia – outlook

0 20 40 60

Iberia

Order book (€m)

Sept 2014 Sept 2013


Divisional overview

Power systems

41


Strong project pipeline in Power

Major projects

Southern Africa Russia Iberia

•Large EP & mining projects

(Letseng Diamond, Morupule

power station and Centralities)

•Mozambique LNG Plant

•Angola Sonaref refinery

•South African marine shipyards

•Power of Siberia pipeline

•Oil & gas rental

•Mining projects

(Polus, Rus. Platina)

•Data centres (Telefonica, PT)

• International oil & gas EPC

projects

•Marine engine and propulsion

system opportunities

• Industrial and rail opportunities

42


● Recently awarded Transnet tug tender

● Revenue ~US$17.5m prime product sales

● After sales opportunity ~US$14.6m

● Deliveries to take place during next

3 years

● Scope of supply for 8 tug vessels

• 2 main engines per vessel

• 2 auxiliary engines per vessel

● New tender for 5 more vessels to be

issued shortly

Marine – Transnet tug vessels (South Africa)

43


● Power represents a significant medium term growth opportunity

● Dedicated organisation structure established and specialist skills recruited

● Strategic plan (2015-2018) agreed with Caterpillar covering all power segments

● Order book increased from US$69m to US$78m with strong projects pipeline

● Growing international service opportunities in marine and oil & gas

● 2015 revenue outlook range of US$350m to US$410m (2014: US$344m)

Power systems – outlook

0 50 100

Power

Order book* (US$m)

Sept 2014 Sept 2013

* Included with Equipment order books by geography


Divisional overview

Handling

45


● Operating profit up 2% – remaining operations up 20%

● Agriculture SA delivers record sales with strong growth in higher tech sectors

● Sales double and breakeven established in Mozambique agriculture

● Market share growth in very difficult Russian agriculture market

● Hyster operation in SA grows profits on improved after market performance

● 2015 revenue outlook range of R2.0bn to R2.4bn (2014: R1.93bn)

Operational review – Handling

0 20 40 60

Handling


Sept 2014 Sept 2013

Margin

2.9%

2.1%


Divisional overview


47


● Strong result in a demanding trading environment

● Revenue: R31.1bn (FY’12: R28.8bn) – up 8.1%

● Record operating profit R1 644m (FY’13: R1 322m) – up 24%

● Operating margin for the year 5.3% (FY’13: 4.6%)

● All business segments performed well

Operational review – Automotive and Logistics

0 100 200 300 400 500 600

Logistics

Fleet Services

Motor Retail

Car Rental


2014 2013

9.3% 7.8%

2.8% 2.4%

18.1% 16.7%

2.8% 2.3%

Margin

+33%

+29%

+16%

+22%

48


● Well balanced Automotive portfolio and

stable platform to grow logistics

● Revenue CAGR of 11.2% delivers

operating profit CAGR of 26.6% over

period

● Operating margins improved from 3.6%

(FY2011) to 5.3%

● Targeted capital allocation supports

sustained long term value creation

● The divisional platform and collective

approach provides various inter-business

unit synergies

Integrated business model delivers sustained value

0

300

600

900

1200

1500

1800

2011 2012 2013 2014

Rm Operating profit

Operating profit 1H Operating profit 2H

0

300

600

900

1200

1500

1800

2011 2012 2013 2014

Rm Operating profit by BU

Car Rental Motor Retail Fleet Services Logistics

49


Car Rental

Car Rental – southern Africa FY’14 (growth)

Rental days +9.9%

Rental revenue per day +2.7%

● Excellent operating profit growth – up 33%

● Sustained growth in rental days

● Pleasing revenue per day increase in a

competitive environment

• Average Rate increase of 4.8% in Q4

● Operating costs well contained

● Fleet utilisation at 76%

● Strong used vehicle profit contribution

● Sustained customer satisfaction above 90%

50


Motor Retail

Motor Retail FY’14 (growth)

New unit sales (Oct 2013 – Sept 2014) -1.1%

Parts revenue +15%

Service hours +0.8%

● Delivered a good result in a declining market

● Revenue up 9.8%

● Improved operating profit by 29% and operating

margin to 2.8%

● Gross margin expansion and cost containment

● Aftersales revenues continued to support the result

● Recently acquired dealerships complement the

overall automotive business model

51


Fleet Services

Fleet Services FY’14 (growth)

Finance fleet -1%

Under maintenance +16%

Total vehicles under management (307 000) +11%

● Sustained operating profit growth – up 16%

● Maintained finance fleet

● Solid growth in fleets under maintenance

● Maintained good used vehicle profits

● Progressing growth opportunities in select African

territories

• Acquired a fleet leasing company in Tanzania

effective 4 Nov 2014

52


Logistics

● Improved operating profit by 22% to R122m

● Barloworld Transport provided good operating

profit contribution

● Extra heavy transport acquisition 5 Sept 2014

enhances capability in the abnormal load transport

business

● Supply chain management operations impacted by

Ellerines receivable provision of R20m

• Other Ellerines exposure fully provided

● International operations continue to face difficult

trading conditions – actions taken to restore

profitability

● Exited loss making Far East airfreight business

53


Automotive and Logistics outlook

Car Rental • Volume and revenue per day increases expected to deliver top line revenue growth into 2015

• Productivity, fleet utilisation and cost focus will maintain return on equity above hurdle rates

• Market leadership position to be maintained

Motor Retail • Solid performance expected in difficult market with some resilience in premium brands

• Targeted dealership acquisitions made will deliver incremental profitability in the year ahead

• Opportunities for growth being explored within broader automotive value chain

Fleet Services • Well positioned for continued organic growth

• Market leadership position and strong return on equity expected to be sustained

• Tanzania acquisition establishes medium term platform for growth in East Africa

Logistics • Recent acquisitions and fleet investments to deliver benefits into 2015

• Continued organic growth with solid opportunity pipeline in southern Africa

• Steps taken to turnaround performance of international businesses

• Operating margin and return on capital expected to improve in the year ahead

Division • Revenue outlook range of R33.0bn to R35.0bn (2014: R31.1bn)


Group outlook


55

Group outlook

Clive Thomson, CEO of Barloworld, said:

“The group delivered a solid performance for the year with operating profits up 16% and headline

earnings per share from continuing operations up 10%.

While a number of geopolitical risks and economic uncertainties exist globally, our focus will remain

on executing our strategy, driving operational efficiencies and maintaining strong cash flows. We

expect to continue to make good progress into 2015 and are well placed to benefit once the

infrastructure and mining cycles move into a recovery phase across our key geographies.”

17 November 2014

Barloworld Limited Results

for the year ended 30 September 2014

Barloworld Limited Results · 2015-10-02 · Barloworld Limited Results for the year ended 30...

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