Barloworld Limited Results...Barloworld Limited Interim results for the six months to 31 March 2013...
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Barloworld Limited Interim results for the six months to 31 March 2013 20 May 2013
Transcript of Barloworld Limited Results...Barloworld Limited Interim results for the six months to 31 March 2013...
Barloworld Limited
Interim results for the six months to 31 March 2013
20 May 2013
Overview
Clive Thomson CEO, Barloworld Limited
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• 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%
Salient features
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• 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
Salient features – non financial
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• 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
Key developments
Financial Review Don Wilson
Finance Director
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Income statement highlights
(Rm) 1H’13 1H’12 % chg
Revenue 31 310 28 121 11
EBITDA 2 490 2 244
Operating profit 1 463 1 282 14
Fair value adjustments on financial instruments 7 (106)
Net finance costs and dividends received (475) (347)
Profit before exceptional items 995 829 20
Exceptional items (34) (26)
Taxation (333) (343)
Secondary tax on companies - (25)
Income from associates and joint ventures 64 31
Net profit 692 466 48
HEPS (cents) 321 245 31
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Income statement highlights
Average exchange rates (Rands) 1H’13 1H’12
United States Dollar 8.78 7.86
Euro 11.51 10.51
British Sterling 13.91 12.44
(Rm) 1H’13 1H’12 % chg
Revenue 31 310 28 121 11
Equipment 13 672 11 186 22
Southern Africa 9 021 7 548 20
Europe 2 464 1 993 24
Russia 2 187 1 645 33
Handling 1 329 2 790 (52)
Automotive and Logistics 16 299 14 135 15
Corporate 10 10
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Income statement highlights
(Rm) 1H’13 1H’12 % chg
Revenue 31 310 28 121 11
EBITDA 2 490 2 244
Operating profit 1 463 1 282 14
Equipment 806 718 12
Southern Africa 654 689 (5)
Europe (5) (115) 96
Russia 157 144 9
Handling 36 28 29
Automotive and Logistics 673 531 27
Corporate (52) 5
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(Rm) 1H’13 FY’12
Non-current assets 14 882 13 470
Current assets (excluding cash) 22 512 19 716
Cash and cash equivalents 1 709 2 624
Assets classified as held for sale 293 0
Total assets 39 396 35 810
Interest of all shareholders 14 225 13 167
Total debt 12 712 10 088
Other liabilities 12 254 12 555
Liabilities classified as held for sale 205 0
Total equity and liabilities 39 396 35 810
Net debt 11 003 7 464
Statement of financial position
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Summarised statement of cash flows
(Rm) 1H’13 1H’12
Operating cash flows before working capital 2 653 2 348
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)
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Investment in working capital supports revenue growth
(Rm) 1H’13 1H’12
Equipment southern Africa (1 457) (1 779)
Equipment Europe 236 9
Equipment Russia (593) (773)
Handling (275) (385)
Automotive and Logistics (242) (663)
Other (77) (13)
Total working capital – (increase) (2 408) (3 574)
(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)
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Capital structure remains strong
Group segmental gearing ratios are as follows
Debt to equity (%) Trading Leasing Car Rental Total group
Target range 30 - 50 600 - 800 200 - 300 Gross Net
Ratio at 31 Mar 2013 62 579 233 89 77
Ratio at 30 Sept 2012 50 472 217 77 57
Ratio at 31 Mar 2012 42 514 255 73 65
• 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
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Debt maturity profile
Interest bearing debt Redemption
(Rm) Total Short-term Long-term
South Africa 10 816 4 348 6 468
Offshore 1 896 1 414 482
Total debt Mar 2013 12 712 5 762 6 950
Total debt Sept 2012 10 088 3 040 7 048
Total debt Mar 2012 9 109 3 138 5 971
• Debt relating to acquisitions R896m
• Ratio of long-term to short-term debt 55:45 (Mar 2012 – 66:34)
• 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
Business overview
Equipment southern Africa
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0 500 1 000
SouthernAfrica
Operating profit (Rm)
1H'13 1H'12
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
Margin
7.2%
9.1%
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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
• Husab and FQM deals awarded
Dealer Day 1 on the Goedgevonden MARC site
Celebrating Dealer Day 1 in Kuruman
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ANGOLA
BOTSWANA
CAMEROON
COTE D`IVOIRE
GH
AN
A
KENYA
MALAWI
NAMIBIA
NIGERIA
TANZANIA
UGANDA
ZAMBIA
ZIMBABWE
ETHIOPIA
BURKINA FASO
BURUNDI
BE
NIN
DEMOCRATIC REPUBLIC
OF THE CONGO (ZAIRE)
CENTRAL AFRICAN REPUBLIC
DJUBOUTI
ALGERIA EGYPT
GABON
THE GAMBIA
GUINEA GUINEA-BISSAU
LESOTHO
LIBYA
MALI MAURITANIA
NIGER
RWANDA
SUDAN
SIERRA LEONE
SENEGAL
SWAZILAND
CHAD
TO
GO
TUNISIA
SOUTH AFRICA
LIBERIA
WESTERN SAHARA
ERITREA CAPE VERDE
Major mining opportunities – surface
Jindal
Exxaro Medupi Expansion
Extract Resources – Husab
Kumba – Sishen
Exxaro – Belfast Project
Xstrata – Tweefontein
Vale and Rio Tinto –Tete
Nippon Steel- Revuboè
CoAL – Makhado
ResGen – Boikarabelo
Zonnebloem Xstrata
Anglo – New Largo
FQM – Kalumbila Barrick – Lumwana
Coal Copper Iron ore Uranium
BHP Billiton Kipypanya
Gold
B2 Gold
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ANGOLA
BOTSWANA
CAMEROON
COTE D`IVOIRE
GH
AN
A
KENYA
MALAWI
NAMIBIA
NIGERIA
TANZANIA
UGANDA
ZAMBIA
ZIMBABWE
ETHIOPIA
BURKINA FASO
BURUNDI
BE
NIN
DEMOCRATIC REPUBLIC
OF THE CONGO (ZAIRE)
CENTRAL AFRICAN REPUBLIC
DJUBOUTI
ALGERIA EGYPT
GABON
THE GAMBIA
GUINEA GUINEA-BISSAU
LESOTHO
LIBYA
MALI MAURITANIA
NIGER
RWANDA
SUDAN
SIERRA LEONE
SENEGAL
SWAZILAND
CHAD
TO
GO
TUNISIA
SOUTH AFRICA
LIBERIA
WESTERN SAHARA
ERITREA CAPE VERDE
Major mining opportunities – underground
Anglo Elders
Tubalisha Sasol
Petra Diamonds Cullinan
Nkomati Anthracite Sentula
Xstrata – Tweefontein
Anglo – New Denmark
Glencore – Mopani
Palabora Rio Tinto
Sasol Impumelelo
Exxaro – Matla
Sasol Bossjespruit
Anglo – Goedehoop
Coal Copper Diamonds
Platinum Group Metals
Platinum Nickel
Discovery Metals
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ANGOLA
BOTSWANA
CAMEROON
COTE D`IVOIRE
GH
AN
A
KENYA
MALAWI
NAMIBIA
NIGERIA
TANZANIA
UGANDA
ZAMBIA
ZIMBABWE
ETHIOPIA
BURKINA FASO
BURUNDI
BE
NIN
DEMOCRATIC REPUBLIC
OF THE CONGO (ZAIRE)
CENTRAL AFRICAN REPUBLIC
DJUBOUTI
ALGERIA EGYPT
GABON
THE GAMBIA
GUINEA GUINEA-BISSAU
LESOTHO
LIBYA
MALI MAURITANIA
NIGER
RWANDA
SUDAN
SIERRA LEONE
SENEGAL
SWAZILAND
CHAD
TO
GO
TUNISIA
SOUTH AFRICA
LIBERIA
WESTERN SAHARA
ERITREA CAPE VERDE
Major infrastructure projects planned
Awarded and in progress To commence short term Potential
North South Water Pipeline
Various Road Rehab Neckartal Dam
Mine Infrastructure and Provincial and Municipal
Infrastructure
Mine Infrastructure Infrastructure Backlogs
Power, Ports, Roads and railways
Mine Infrastructure Rail and Dams
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
Dams, Rail, Ports, Roads Refinery
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Swakop Uranium – Husab Project
• 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
Total contract value: R1.3bn
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B2 Gold – Otjikoto Project
• 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
Total contract value: R0.5bn
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• 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
Electric Drive Truck introduction – Kumba
Total contract value: R0.3bn
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0 2 000 4 000 6 000
SouthernAfrica
Order book (Rm)
Mar 2013 Sep 2012
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
Business overview
Equipment Iberia
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-6.1%
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
- 150 - 100 - 50 0
Iberia
Operating loss (Rm)
1H'13 1H'12
Margin
-0.2%
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Industry trend – new equipment market
Source: Management estimates / external research
0
5 000
10 000
15 000
20 000
25 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
• Regional austerity measures and weakness of macro economic drivers pushes out new machine market recovery
Units – actual Units – prior forecast Units – New forecast
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Maintaining technical capacity and group synergy
Angola 21 technicians
Congo 1 technician
South Africa 49 technicians
Other Saudi Arabia
Norway Dominican Republic
ANGOLA
BOTSWANA
CAMEROON
COTE D`IVOIRE
GH
AN
A
KENYA
MALAWI
NAMIBIA
NIGERIA
TANZANIA
UGANDA
ZAMBIA
ZIMBABWE
ETHIOPIA
BURKINA FASO
BURUNDI
BE
NIN
DEMOCRATIC REPUBLIC
OF THE CONGO (ZAIRE)
CENTRAL AFRICAN REPUBLIC
DJUBOUTI
ALGERIA EGYPT
GABON
THE GAMBIA
GUINEA
EQUATORIAL GUINEA
GUINEA-BISSAU
LESOTHO
LIBYA
MALI MAURITANIA
MAURITIUS
NIGER
RWANDA
SUDAN
SIERRA LEONE
SENEGAL
SAO TOME AND PRINCIPE
SWAZILAND
CHAD
TO
GO
TUNISIA
SOUTH AFRICA
LIBERIA
WESTERN SAHARA
ERITREA CAPE VERDE
SEYCHELLES
Mozambique 24 technicians
SEYCHELLES
Malawi 7 technicians
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0 50 100 150
Iberia
Order book (€m)
Mar 2013 Sep 2012
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
Business overview
Equipment Russia
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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
0 100 200
Russia
Operating profit (Rm)
1H'13 1H'12
7.2%
Margin
8.8%
32
Territory coverage
Owned facilities – 9 Rented facilities – 20 Investment plan – US$80m (US$48m spent to date)
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World class facilities
Novosibirsk campus expansion
Belovo – Project concept underway
Irkutsk – completed
Novokuznetsk (re-branded)
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‘Power of Siberia’ gas pipeline project
Implem. period – 2011-2013/14 Length – more than 1 500km Project costs – approx. 30bn rub.
Implem. period – 2012 - 2014 Length – more than 4 000km Project costs – more than 700bn rub.
Implem. period – 2012 - 2016 Length – more than 2 100km Project costs – more than 450bn rub.
Implem. period – 2009 - 2015 Length – 3 000km
Implem. period – 2011 - 2015 Length – 1 125km
Gas deposits – 1.24 trillion m³ Oil deposits – 68,4 m t
Gas deposits – 1,9 trillion m³
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0 50 100
Russia
Order book (US$m)
Mar 2013 Sep 2012
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
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 2014
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
0 20 40
Handling
Operating profit (Rm)
1H'13 1H'12
Margin
1.0%
2.7%
38
0 200 400 600
Handling
Order book (Rm)
Mar 2013 Sep 2012
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
Divisional overview
Automotive and Logistics
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0 50 100 150 200 250 300
Logistics
Fleet Services
Motor Retail
Car Rental
Operating profit (Rm)
1H'13 1H'12
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
+13%
+25%
+44%
+19%
Margin 8.1% 8.1% 2.4% 2.1%
15.9% 13.8%
2.1% 2.2%
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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%
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%
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%
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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
Outlook
Clive Thomson CEO, Barloworld Limited
46
Outlook
Equipment and
Handling
• 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
• 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
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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 2013.”
20 May 2013
Outlook
Barloworld Limited
Interim results for the six months to 31 March 2013
20 May 2013
