Deutsche GEMS Conference - Home | Barloworld GEMS Conference 16 ARMSCOR project commenced during the...

7-8 September 2016

Deutsche GEMS Conference


2

46%

54%

Revenue

54%

46%

Operating profit

Group revenue and operating profit split – March 2016

Automotive and Logistics Equipment and Handling


3

Income statement highlights – March 2016

(Rm) 1H’16 1H’15 % chg

Revenue 31 947 30 668 4

EBITDA 2 978 2 991

Operating profit 1 756 1 744 1

Fair value adjustments on financial instruments (55) (158)

Net finance costs (614) (559)

Profit before exceptional items 1 087 1 027 6

Exceptional items 85 (12)

Taxation (318) (321)

(Loss) / income from associates (41) 132

Net profit 813 826 (2)

EPS (cents) 368 353 4

HEPS (cents) 335 367 (9)


4

Income statement highlights – Revenue – March 2016

(Rm) 1H’16 1H’15 % chg

Revenue 31 947 30 668 4

Equipment and Handling 14 552 14 254 2

Southern Africa 9 238 9 927 (7)

Europe 2 248 1 861 21

Russia 2 347 1 484 58

Handling 719 982 (27)

Automotive and Logistics 17 395 16 414 6

Automotive 14 757 14 168 4

Logistics 2 638 2 246 17

Average exchange rates (Rands) 1H’16 1H’15 % chg

United States Dollar 14.94 11.44 31

Euro 16.29 13.57 20

British Sterling 21.91 17.77 23


5

Income statement highlights – Operating profit – March 2016

(Rm) 1H’16 1H’15 % chg

Revenue 31 947 30 668 4

EBITDA 2 978 2 991

Operating profit 1 756 1 744 1

Equipment and Handling 963 940 2

Southern Africa 701 826 (15)

Europe 25 10 150

Russia 234 101 131

Handling 3 3

Automotive and Logistics 819 836 (2)

Automotive 757 780 (3)

Logistics 62 56 11

Corporate (26) (32)


6

Statement of financial position – March 2016

(Rm) Mar’16 Sept’15

Non-current assets 19 987 19 906

Current assets (excluding cash) 27 458 25 877

Cash and cash equivalents 2 318 2 372

Total assets 49 763 48 155

Interest of all shareholders 20 952 20 042

Total debt 14 231 13 425

Other liabilities 14 580 14 688

Total equity and liabilities 49 763 48 155

Net debt 11 913 11 053


7

Summarised statement of cash flows – March 2016

(Rm) 1H’16 1H’15

Operating cash flows before working capital 2 899 3 214

Increase in working capital (895) (3 944)

Net investment in leasing assets and vehicle rental fleet (777) (1 421)

Cash generated from / (utilised in) operations 1 227 (2 151)

Other net cash flows (832) (1 005)

Dividends paid (499) (531)

Net cash applied to operating activities (104) (3 687)

Net cash applied to investing activities (453) (503)

Net cash outflow (557) (4 190)


8

Divisional overview

Equipment southern Africa


9

● Operating profit of R701m down 15% – continued weakness in the mining sector

● Aftermarket held up well despite certain customers delaying equipment maintenance

● Cost reduction and tight credit control contributed to 6% lower expense base

● Angola continued to be affected by lower oil price and currency shortages

● Strong cash generation of R1 128m (1H’15: R1 565m outflow)

● Income from associates adversely impacted by a major customer temporarily suspending

mining activity in DRC

Operational update – Equipment southern Africa – March 2016

0 500 1 000

SouthernAfrica

Operating profit (Rm)

1H'16 1H'15

Margin

7.6%

8.3%

-15%


10

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015 1H'16

Rbn

Equipment sales Product support

Southern Africa sales history – robust business model

30%

28%34%

46%

36%

33%

41%

46%

50%

53%


11

35%

53%

7%5%

2016

36%

51%

8%5%

2015

Southern Africa revenue profile by line of business – March

New equipment Product support Used equipment Rental


12

31%

50%

4%

2016

41%

43%

11%

5%

2015

Southern Africa new equipment sales by industry – March

15%

Mining Construction Power Contract mining


13

DRC

Geographic coverage

Total Facilities: 73

o Rented Facilities: 38

o Owned Facilities: 35

Countries: 10

Total headcount: 5 164

Recent development

Existing Facility

Dedicated Parts Site

Headcount

423

204

439

268

69

259

3 502


14

COMMODITY CUSTOMERS

COALGlencore

South 32

Exxaro

Vale

COPPER

Mopani Copper

Vedanta

Barrick

Palabora Copper

DML

FQM

DIAMONDSDeBeers

Debswana

Namdeb

Petra

Catoca

GOLD B2Gold Gold One

IRON ORESishen

KolomelaKhumani

MANGANESE South 32

PLATINUMPGM

Anglo PlatinumImpala

URANIUM Rossing Uranium Swakop Uranium

ZINCSkorpion

Rosh Pinah

Coal25%

Contractors13%

Copper13%

Diamonds13%

Gold4%

Iron Ore5%

Manganese2% Other

6%

Platinum2%

Rental14%

Uranium2%Zinc1%

Equipment southern Africa – commodity exposure

2015 share of equipment mining sales


15

Mining projects – opportunity pipeline

Diamonds Coal Zinc/Manganese Copper Chrome Platinum

Vale – Moatize Expansion (2017)

Venetia Underground Mine (2020–2021)

Coal of Africa – Makhado (2018)

Platreef Project (2020)

Hernic Ferrochrome (2017–2019)

Glencore – Zonnebloem (2018)

Sasol Longwall (2020)

Glencore Mopani (2017–2020)

Chitotolo / Catoca (2017)

Palabora Copper (PMC) (2016–2020)

PGM Maseve (2016–2018)

Assmang Black Rock (2017)

Transhex – Namakwa Diamonds (2017)

Vedanta Gamsberg (2017)


16

● ARMSCOR project commenced during the

beginning of 2016

• Total fleet of 36 units including

• Wheeled loaders

• Wheeled dozers

• Tracked dozers

• Various support equipment

• Total value of fleet is R131m

● Gauteng Department of Roads and

Transport – 35 units awarded in Mar


● Roshcon (Eskom) deal total fleet 36 units

awarded in Apr


Infrastructure projects – contracts awarded


17

● Firm back orders as at July 2016 of R1.6bn (Mar 2016: R1.2bn)

● Selected significant mining projects in the pipeline for 2017/2018

● Timing of component rebuild cycle expected to underpin aftersales activity in 2017/2018

● The need for Infrastructure development will support construction demand

● Continued focus on working capital reduction to drive positive cash generation

Equipment southern Africa – outlook

0 1 000 2 000

SouthernAfrica

Order book (Rm)

July 2016 March 2016


18

Divisional overview

Equipment Russia


19

● Operating profits of R234m up 82% in Dollar terms, despite contracting economy

● Mining segment improvement driven by gold and base metals with coal remaining depressed

● Sustained aftermarket activity continued to support operating result

● Tight cost control and efficiency improvements across business

● Positive cash generation and improved financial returns

Operational update – Equipment Russia – March 2016

0 100 200 300

Russia

Operating Profit (Rm)

1H'16 1H'15

+131%

Margin

10.0%

6.8%


20

Russia sales history – growing aftermarket

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015 1H'16

$m


24%

25%

29%

36%

28%

27%33%

46%

61%

50%


21

43%

50%

2% 5%

2016

34%

60%

2% 4%

2015

Russia revenue by line of business – March



22

57%

5%

7%

5%

26%

2016

64%

6%

16%

9%

5%

2015

Russia new equipment sales by industry – March

Mining Construction Used equipment Oil and gas Other


23

Norilsk MagadanIrkutskKrasnoyarsk

Kemerovo

Novokuznetsk

Novosibirsk

Russia facilities footprint

Territory 2

Population – 5,3 m

Machine Pop – 1931

Power units – 918

Territory 1

Population – 14,9 m

Machine Pop – 1877

Power units – 1076

7 Owned facilities

20 Rented facilities

$64m Investments


24

Norilsk Nickel

3xR1700G 4xR1700

2xR1600

1xR1300

1x972HL

1xPM102

$2.9m $6m

Polyus

5x785C

$10.1m

Sovrudnik

2xD9R

$1.6m

SUEK

AFC/BSL

$9.8m

RUSAL

4x777D 2x773E

$4m $1.1m

AS Siyaniye (Kupol)

3xD10T 1xD11

1x428 2x745

1xCS533

$2.7m $2.2m

ZDK Pavlik

8x777D

1xD10T

$9.5m

GV Gold Ugakhan

2x6018FSD 1x6018

7x777G 8x777G

1xD9R 2xD9R

3xD6R 1xD6R

$13.8m $12.8m

Bystrinsky

12x789

3x6040FS

$42m - tender in

progress

Muna

37 units

$47m

Surface mining current opportunities

Gross

3x6030FS 1x993K

1x6015BH 4xMD6290

21x785C 4xD10T2

1x16M3 1x854K

$65m

Kekura

37 units

$21m

Firm orders Delivered Greenfields/ Major projects


25

● Due to significant deliveries in the period the order book as at July 2016 has decreased to

$39.6m (March 2016: $48m)

● Slow recovery off historic low base in oil and commodity prices expected in 2017

● Gold and nickel mining to remain active whilst coal market remains depressed

● Growth in aftermarket revenues expected to be maintained

Equipment Russia – outlook

0 20 40 60

Russia

Order book ($m)



26

Divisional overview

Equipment Europe


27

● Operating profit of R25m up 106% in Euro terms

● Growth in new equipment and aftermarket revenues offset by weak international

used equipment market

● Macro economic conditions continue to improve but construction sector lagging

● Operating cost savings from prior year restructuring continue to benefit

● Market leadership position maintained

Operational update – Equipment Europe – March 2016

0 10 20 30


1H'16 1H'15

Margin

1.1%

0.5%

+150%


28

Iberia sales history

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014 2015 1H'16

€m


30%

30%

34%

40%37%

33% 35%

41% 44%

45%


29

43%

45%

9%

3%

2016

36%

44%

17%

3%

2015

Iberia revenue by line of business – March



30

6%

43%

51%

2016

1%

51%

48%

2015

Iberia new equipment sales by industry – March

Mining Construction Power


31

Machine industry – Spain

-

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

20

21

Units

ForecastActual


32

Power systems - Marine segment

• Capability to couple all of the products

available with engineering services that

produce a single integrated solution

• Customers are demanding a one stop

propulsion solution from a trusted supplier

• Capability to significantly increase the value

of the offers and meet customer expectation


33

● Order book of €29m as at July 2016 has remained at the same levels as March 2016

● Spanish economy continues on positive trajectory despite two inconclusive election results

● Growth in new equipment sales to be complemented by continued growth in aftermarket

Equipment Europe – outlook

0 20 40

Iberia

Order book (€m)



34

Divisional overview

Handling


35

● Agriculture in Russia exited

● Severe drought continues to impact sales in Southern Africa

● Long term weather forecast is for better rainfall this coming summer

● New tractor ranges from AGCO will enable us to cover more of the market in 2017

● Trading in the lift truck business in SA is challenging due to the slow down in mining and the

SA economy in general

● New XT lift truck range from Hyster will enable us to cover more of the market in 2017

● The business was restructured in December to reduce headcount and costs to better match

the new forecast revenue levels. The full benefit of this will be realised next year

Operational update – Handling


36

Divisional overview

Power Systems


37

Long term prospects in Power remain positive

Major projects

Southern Africa Russia Iberia

• EP gas projects opportunities in

southern Africa (except Angola)

• Solar PV opportunities southern

Africa

• EP diesel project opportunities

in Angola ($ constraints)

• Aftermarket growth in gas and

marine.

•Growth in used equipment Sales

•Medium speed crude oil project

opportunities

• Industrial projects

•Gas compressor aftermarket

growth

•EP Medium speed opportunities

• International oil & gas EPC

projects

• Complete propulsion packages:

Armon-Armas Ferry and Freire-

Kuwait Oceanographic vessel

•Stadler C175 IIIB Loco prototype

● Sentiment affected by oil price decline, Russia recession and consolidation in marine activity


38

Divisional overview

Automotive


39

Business perspective

Strategic positioning

• Inter-business unit synergies and

cost efficiencies

• Apply Collective Wisdom

• Leveraging Automotive infrastructure to achieve critical mass for

growth

• Retain strategic focus on each business unit

Communication, HR, IT, Legal, Finance, Sustainable Development, Strategy,

Diversity and Inclusion, Risk Management, Business Development and Sales, Governance, Ethics and

Compliance

Customers

Barloworld Automotive (Automotive Business model)

Car Rental

Southern Africa

Avis Fleet

Southern AfricaGhana

Tanzania

Motor Retail

South Africa

Botswana

Digital Disposal Solutions

South Africa


40

Sense of scale

* July 2016

General Information

Employees* 8 194

Countries 9

Automotive Principals

Avis Budget Group, BMW, Fiat Chrysler, Ford, General Motors, GWM, Jaguar Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Subaru,

Toyota, Volkswagen Group, Volvo

Car Rental locations >190

Wholly owned Motor Retail dealerships (SnA)* 47

Key Indicators YTD Mar ’16 YTD Mar ’15 FY Sep ’15

Rental Days 3.84m 3.64m 7.05m

New & Used retail units sold 41 640 43 851 86 884

Total vehicles under management 285 357 295 965 280 703

New vehicles sold per dealership per month 63 71 69


41

● Well balanced Automotive portfolio provides resilience

● Revenue (1H) CAGR of 10% delivers operating profit (1H) CAGR of 16%

● Operating margins improve from 3.9% to 5.1% (1H’11 – 1H’16)

● Inter-business unit synergies continue to deliver value

Integrated business model delivers value

0

300

600

900

1200

1500

1800

2011 2012 2013 2014 2015 1H'16

RmOperating profit

Operating profit 1H Operating profit 2H

0

300

600

900

1200

1500

1800

2011 2012 2013 2014 2015 1H'16

Rm Operating profit by BU

Car Rental Motor Trading Avis Fleet


42

Division overview

• Leadership continuity

• Maintain return on equity above hurdle rates

• Continued cash focus

• Targeted capital allocation

• Growing market share

• Optimising vehicle fleets (utilisation)

• Managing working capital levels

• Improving asset turn

• Expense management

• Controlling interest costs

• Settle recent acquisitions

• Exceeding customer expectations

• Further develop natural synergies across business units

• Enhanced divisional offerings


43

• Sustained growth in rental days in a flat market

• Maintained market leadership

• Dual brand strategy aligned to Principal

• Pleasing revenue per day increase

• Fleet utilisation remains well controlled at 75%

• Strong used vehicle profit contribution

• Customer satisfaction remains above 90%

Car Rental

-2

0

2

4

6

8

Rental Days Rental revenue p/day Fleet Utilisation Fleet Size

% G

row

th

Leading IndicatorsJul '16 YTD Sep '15 FY


44

Avis Fleet

• Finance fleet growth impacted by non-renewal of large

contract

• Balanced exposure to long term contracts

• Sustained growth in fleets under maintenance

• Customer retention rates remain high

• Settling recently added African countries

• Change in competitive environment

• Used vehicle units down due to contract extensions

-6

-4

-2

0

2

4

6

Maintenance Fleet Finance Fleet

% G

row

th



45

0

100

200

300

400

500

600

700

800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total South African Vehicle Market

Passenger LCV M&HCV

Motor Retail

Source: Forecasts and information by Dr. Neal Bruton

Total vehicle market: 2016 – 555 222 (2015: 617 691)

Forecast decline in market (2016)

Passenger: -10.3% and Commercial: -10.4%


46

• Focused dealership footprint – “Fewer, Bigger, Better” Strategy

continues

• Brand strategy aligned to overall Automotive business model

• Continued strong OEM alignment

• Ongoing portfolio optimisation

• 63 new vehicles sold per dealership per month (Sep’15: 69)

• Aftermarket revenues continue to support the result

• Acquisition of two Mercedes Benz dealerships effective March

2016

Motor Retail

-10

-5

-

5

10

15

New Units Service Hours Parts Revenue F & I Net Profit

% G

row

th



47

• Established as a stand alone unit focussed on asset

disposal

• >80 000 units (annualised) sold through online auction

platforms

• Strong emphasis on technology enabled and e-business

solutions

• Acquired a majority share in SMD, a leading salvage

company in SA, effective May 2016

• Enhances disposal offering

• Primarily sourced from corporate and insurance

markets

• Strong customer overlap and synergies with other

Automotive business units

• Asset light business and value enhancing

Digital Disposal Solutions


48

Divisional overview

Logistics


49

Divisional structure

Barloworld Logistics

Africa

Barloworld Transport

(BWT)

Integrated Customer Solutions (ICS)

Integrated Freight Solutions (IFS) &

Freight Forwarding

SmartMatta (SM)

Supply Chain Planning Solutions & Advisory

Middle East

UAE

KSA

Shared services

Finance & Admin

Marketing

Business Development

Human Resources

Information Technology

Sustainability

Legal

Operational Excellence


50

Operational update – Logistics – March 2016

● All under-performing units sold or right-sized

● Well positioned for organic and acquisitive growth

● Acquired multi-party, multi-temperature distribution network (KLL) and complementary

refrigerated transport business (Aspen)

● Technology platforms being updated to ensure sustainable and leading customer solutions

● Disposed of supply chain software business, to Llamasoft, partnered with them in the

regions in which we operate

● Acquired further stake in Barloworld Transport to 78.81%

● Over R1bn of new contract revenue secured in 2016

0 50 100

Logistics


1H'16 1H'15

Margin

2.3%

2.5%


51

Divisional overview – growth in revenue, operating profit and margin

0

1000

2000

3000

4000

5000

6000

2010 2011 2012 2013 2014 2015

Revenue

Europe, Middle East and AsiaSouthern Africa

-100

-50

0

50

100

150

200

2010 2011 2012 2013 2014 2015

Operating Profit

Southern AfricaEurope, Middle East and Asia

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2010 2011 2012 2013 2014 2015

Operating margins


52

Overview of major business units and revenue streams

Three main

revenue models

Asset based Margin Financing

Integrated Customer

Solutions

Integrated Freight Solutions

Middle East

SCPS and Advisory

Barloworld Transport

SmartMatta

Freight Forwarding

7-8 September 2016


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