FINANCIAL RESULTS PRESENTATION...22 ANALYSIS OF CORPORATE COSTS 23 PROPERTY ›Huntsman Tioxide,...
Transcript of FINANCIAL RESULTS PRESENTATION...22 ANALYSIS OF CORPORATE COSTS 23 PROPERTY ›Huntsman Tioxide,...
FINANCIAL RESULTS PRESENTATION
FOR THE HALF-YEAR ENDED 30 JUNE 2017
26 AND 27 JULY 2017
PERFORMANCE SUMMARY
BUSINESS ENVIRONMENT
RESULTS ANALYSED
SEGMENTAL PERFORMANCE
STRATEGIC PILLAR UPDATE
OUTLOOK
1 4
2 5
3 6
1 PERFORMANCE SUMMARY
PERFORMANCE SUMMARY 3
› Resilient overall performance in extremely difficult environment
› Profit from operations +19%
› HEPS +32% to 386c
› 1H16 profit from operations and HEPS impacted by PRMA settlement cost
› Good cash generation continued
» Disciplined capex management
» Borrowings lower vs 1H16
› Interim ordinary cash dividend of 138cps declared
› Safety performance: TRIR of 0,43
SAFETY: ALL WORKERS TRIR 4
2 BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT: GLOBAL 6
› Growth expected to strengthen to 2,7%
» Pick-up in manufacturing and trade
» Rising confidence
» Favourable global financing conditions
» Commodity prices stabilised
› Oil price firmer vs 1H16
› More robust demand from China
› Mining
» Mining houses remain cautious
» Sustainability of recovery in commodities?
› Protectionist policies in advanced economies
BUSINESS ENVIRONMENT: AFRICA, EXCL. SA 7
› Some recovery after sharp slowdown in ’16
› Growth of 2,6% forecast for sub-Saharan
Africa in ’17
» Strengthening external demand, particularly
from China
» Higher metal prices
› Foreign exchange controls and foreign
currency shortages
› Revival of regulatory consciousness
(tax, compliance)
› Local beneficiation being pursued
› Energy and water shortages a constraint
› Political and socio-economic challenges remain
BUSINESS ENVIRONMENT: SOUTH AFRICA 8
› Low business confidence and consumers
under pressure
› Technical recession
› Sovereign credit rating downgrades
› Political/policy uncertainty
› Stronger ZAR/US$ exchange rate
› Higher commodity prices
» But lower ammonia price
› Higher mining production
› Manufacturing continued to decline
› Recovery in agricultural sector but drought
in Western Cape still critical
BUSINESS ENVIRONMENT 9 HISTORICAL PRICE PERFORMANCE – GOLD, PLATINUM AND COPPER
Source: SNL
BUSINESS ENVIRONMENT 10 HISTORICAL PRICE PERFORMANCE – COAL AND IRON ORE
Source: SNL
BUSINESS ENVIRONMENT 11 BRENT CRUDE OIL
Source: iress
BUSINESS ENVIRONMENT 12 AMMONIA
Source: AEL
BUSINESS ENVIRONMENT 13 ZAR/US$ EXCHANGE RATE
Source: iress
BUSINESS ENVIRONMENT 14 SA MINING VOLUMES
Source: Stats SA
BUSINESS ENVIRONMENT 15 SA MANUFACTURING VOLUMES
Source: Stats SA
3 RESULTS ANALYSED
EARNINGS ANALYSED 17
› Profit from operations +19% to R677m
» Underlying -3%
› EBITDA +9,2% to R980m
› HEPS +32% to 386c
» Underlying +2% to 393c
› Trading margin = 8,0% (’16: 6,3%)
› Tax rate 31% (’16: 31%)
» Foreign withholding tax
› RONA of 14,8% (13,0% in ’16)
» Target >20%
› GCR rating of “A” with stable
outlook retained
GROUP UNDERLYING PERFORMANCE 18
CASH GENERATION AND UTILISATION 19
› Cash of R1 102m generated
› Capex controlled to R261m –
below depreciation and amortisation
» R91m for expansion projects
› NWC to revenue: 18,5%
(17,9% in Jun ’16)
» Customers delayed remittances
» High sales in Jun
» Lower volumes procured
» Lower payables
› Net borrowings: R1 007m
› Gearing at 11% vs 17% in Jun ’16
› Cash interest cover: 14,6x
› Dividend cover for the period: 2,8x
› Interim ordinary cash dividend
of 138c declared
› Good headroom for acquisitions and growth
4 SEGMENTAL PERFORMANCE
PROFIT FROM OPERATIONS BY SEGMENT 21
ANALYSIS OF CORPORATE COSTS 22
PROPERTY 23
› Huntsman Tioxide, major site customer at Umbogintwini, closed late in ’16
› Offset by
» Benefits of lower cost base
» Shanghai Zendai management contract extended, at Modderfontein, to March ’18
» Good occupancy rates maintained at 90% by leasing business
» Good efficiencies in Umbogintwini services business
EXPLOSIVES 24
EXPLOSIVES: PERFORMANCE 25
› Volumes flat overall
› Excellent TP improvement in context of
» Stronger ZAR/US$ rate
~ 60% of revenue generated outside SA
» Lower ammonia price
› Good cost control
› Good product and customer mix
EXPLOSIVES: SOUTH AFRICA 26
› Explosives volumes +1%
» Benefit of market share gains iron ore and uranium mining sectors
» Improved activity in coal mining sector
» Improved offtake also by gold mining customers
› Initiating systems volumes +3%
» Opportunistic sales after competitor declared force majeure
› Customer production losses due to S54 stoppages in line with 1H16
› Major statutory shutdown underway at No. 11 Nitric Acid plant, Modderfontein
EXPLOSIVES: REST OF AFRICA 27
› Volumes -2,4%
› North Africa
» Contract in Egypt lost Dec. ’16 and equipment relocated
› West and East Africa
» Slow start in West Africa
» Five contracts gained
~ Mobilisation in progress
› Central Africa
» Mining operations resumed after extensive care and maintenance
~ Volumes robust
› Southern Africa
» Pleasing results in Botswana, with additional volumes gained
EXPLOSIVES: ASIA PACIFIC 28
› Profitability improvement in region continued
» Overall volumes -1,5%
» Good cost control
› Indonesia
» New contract signed – commencing 2H17
» Renegotiating terms of engagement with explosives licensee
› Australia
» Tropical Cyclone Debbie in Queensland
» New business secured – commencing ’18
SPECIALTY CHEMICALS SEGMENT 29
SPECIALTY CHEMICALS SEGMENT: REVENUE OF R4 909m 30 REVENUE BY MARKET SECTOR (%)
SPECIALTY CHEMICALS: PERFORMANCE 31
› Resilient result in context of
» Strong ZAR
» Effects of severe drought in Western Cape
» Closure of Huntsman Tioxide
» Delayed exports
SPECIALTY CHEMICALS 32
› Overall volumes -2,4%
» Manufactured +4,7%
» Traded -14,2%
› Senmin exports delayed to 2H17
› Noteworthy performance from Experse
» Volume growth (local and export)
› Nulandis hampered by drought effects in
winter rainfall areas
› Solid results from ImproChem
» Growth in Mining and Public Water businesses
(SA and rest of Africa)
› Improvement at Lake Foods
› No acquisitions concluded
5 STRATEGIC PILLAR UPDATE
REVENUE BY STRATEGIC PILLAR 34
MINING 35
MINING: INTERNATIONAL FOOTPRINT 36
GROUP REVENUE BY MINERAL MINED (%)
37
PRE-OPERATIONAL MINING PROJECTS: AFRICA 38
PRE-OPERATIONAL MINING PROJECTS: AUSTRALIA 39
EXPLOSIVES: MAKO MINE – SENEGAL 40 MOBILISING ASSETS. BLASTING SCHEDULED AUG ’17
EXPLOSIVES: MAKO MINE – SENEGAL CONT. 41
EXPLOSIVES: BURKINA FASO – HOUNDÉ GOLD 42
EXPLOSIVES: BURKINA FASO – BOUNGOU NATOUGOU 43
MINING CHEMICALS 44
WATER 45
WATER 46
AGRICULTURE 47
AGRICULTURE 48
FOOD 49
INNOVATION PROJECT 50
› Objective: increase Group revenue and profitability
» Ideation Platform
~ Significant internal adoption and progress made
» Growth office: AECI.GO
~ Growth themes identified
~ Good progress in technology partnerships with universities and research
institutions locally and overseas
~ Early stages of investigating M&A opportunities aligned with growth themes
~ One opportunity actioned regarding “Early adoption in relevant start-ups
and/or disruptors”
51
Market Expansion
Market sector acquisition through geographic and customer segment expansion strategies in pursuit of becoming the developing world leader
Integrated Solutions
Solutions/offerings that spans across more than one business unit area by combining multiple products (new and existing) to create new and differentiated solutions
Green
Innovative solutions that result in improved human well-being over the long term, while protecting the public against significant environmental risks or ecological scarcities
Chemical alternatives, substitutes to chemicals and advanced solutions which have the potential to disrupt other industries and create significant value
Exponential Chemistry
AECI.GO focus area
AECI.GO
FOUR BROAD INNOVATION THEMES
Guides for innovation focus of AECI.GO
US$5m STRATEGIC INVESTMENT: ORIGIN MATERIALS 52 POSITIONS AECI IN RENEWABLE CHEMICALS AS PREFERRED INDUSTRIALISATION AND APPLICATIONS
DEVELOPMENT PARTNER WITH ACCESS TO AFRICA AND THE GLOBE
ma k i n g n e w c h e mi s t r y ma t t e r
› Renewable chemicals start-up
› Entered the commercialisation phase of proprietary technology
› Applications include 100% B-PET and B-PEF plastics
100% B-PET B-PEF
› Can convert multiple input feedstock to platform chemicals
› Can be converted to multiple high value downstream applications - US$200bn+
› Cost-competitive renewable chemicals
› Cost base decoupled from oil
US$45bn
market
› Identified fully committed and invested global commercial partners with equity stake
› Pioneer plant by end ’18
&
And
Renewable Chemistries
6 OUTLOOK
OUTLOOK 54
› Global mining activity gaining momentum
» Positive for Group’s Mining pillar
» New contracts and increased market share
» Footprint expanded
» Good order book for mining chemicals
› No significant improvement in SA manufacturing sector anticipated to year-end.
However
» Good opportunities in Water
» Agriculture and Food businesses seasonal – stronger 2H historically
» Rainfall patterns will affect agricultural sector performance
› Pursue further footprint and market expansion
› Strong pipeline of acquisitions
› Focus on working capital and capex management, and costs
› Accelerate growth through Innovation projects, including AECI.GO
DISCLAIMER 55
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This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Company’s business, financial condition and results of operations. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect”, “forecast” and words of similar meaning, reflect the Directors’ beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.
This document speaks as of the date hereof. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, accuracy or fairness. The financial information included herein is unaudited. The Company, its advisers and each of their respective members, directors, officers and employees are under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions expressed in them are subject to change without notice. No representation or warranty, express or implied, is given by the Company, or any of its subsidiary undertakings or affiliates or Directors, Officers or any other person as to the fairness, accuracy or completeness of the information or opinions contained in this presentation and no liability whatsoever for any loss howsoever arising from any use of this presentation or its contents otherwise arising in connection therewith is accepted by any such person in relation to such information.
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