Interim results presentation Emery Severin – Chief Executive Officer Ian Davis – Chief Financial...
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Transcript of Interim results presentation Emery Severin – Chief Executive Officer Ian Davis – Chief Financial...
Interim results presentation
Emery Severin – Chief Executive OfficerIan Davis – Chief Financial Officer
21 February 2013
2013 Financial Year
Disclaimer
This presentation has been prepared by Nuplex Industries Limited. The material that follows contains general background information about Nuplex’s activities as at the date of the presentation 21 February 2013.
The information in this presentation is not an offer or recommendation to purchase or subscribe for securities in Nuplex or to retain any securities currently held. It does not take into account the potential and current individual investment objectives or the financial situation of investors.
Actual results may vary materially either positively or negatively from any forecasts in this presentation. Before making or disposing of any investment in Nuplex securities, investors should consider the appropriateness of that investment in light of their individual investment objectives and financial situation, and seek their own professional advice.
All currencies are in NZD unless stated otherwise.
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Safety Making progress towards our goal of zero harm
3
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1H130
4
8
12
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1H1305
1015202530
Lost time injury frequency rate per million employee hours worked
Total reportable injury frequency rate per million employee hours worked
0
10.2
1 Earnings before interest, tax, depreciation and amortisation 2 Net profit after tax attributable to equity holders of the parent company3 As defined by earnings before interest, tax and unusual items divided by average funds All figures are in NZD unless otherwise stated
1H13 financial overview
4
Sales revenue
$828.7m up 11.0%
EBITDA1
$57.6m steady
NPAT2 after significant items
$11.5m down 52.3%
NPAT before significant items
$24.5m down 9.6%
Earnings per share
5.8 cents down from 12.3 cents
Dividend per share
10 cents unchanged
Return of funds employed3
9.8% down from 12.1%
Working capital to sales ratio
14.8% down from 16.5%
1H13 in review
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1. Defined as a unit margin as a percentage of sales = sales revenue minus raw material costs divided by tonnage All figures in NZD unless otherwise stated
Taking action to improve returns on funds employed
Existing operations steady despite significant weakness in Australia and volatility in Europe in November/ December• Resins segment excluding acquisitions
– Volume growth due to Asia and Americas offsetting ANZ and Europe– Unit margins up 3.4%1
Strengthening Nuplex by reducing costs • Restructuring Australia and New Zealand to adapt to changing markets • Executing NuLEAP I - delivered $6m during 1H13, on track to deliver program target of
$30m net benefits by the end of the FY13• Investing in NuLEAP II - procurement initiative to deliver $5.3m in 2H13, $12m in FY14
Acquisitions successfully integrated – delivering in line with forecast in FY13 and acquisition criteria • Viverso on track to deliver EBITDA of €12m• Nuplex Masterbatch on track to deliver EBITDA of A$5m
1H13 key financial outcomes
EBITDA • Supported by Viverso and Masterbatch
contributions• Impacted by
‒ ANZ restructure and procurement costs‒ Ongoing strength of the New Zealand dollar
Geographic diversity supported existing operations• Weakness in Australia and end-of-year slow down
in EMEA largely mitigated by growth in Asia and Americas
NPAT impacted by write downs • $13m in significant items including
‒ $5.8m write down of obsolete equipment in ANZ‒ $5.5m write down of Fibrelogic investment
Interim dividend maintained at 10 cents per share • Strong cash flows reflecting margin management
and tight cost control • Declared in context of the outlook for the full year
6
1H13 vs 1H121
% growth constant FX
GroupExisting
operations2
Sales revenue 14.8% (2.7)%
EBITDA 4.2% (14.5)%
EBITDA before restructure and procurement costs
14.8% (5.3)%
NPAT after significant items
(50.3)% (53.1)%
NPAT before significant items and restructure and procurement costs
8.9% 2.6%
1 See slide 25 for underlying data, 2. Excluding acquisitions All figures in NZD unless otherwise stated
1H13 earnings drivers
Solid EBITDA despite continued challenging market conditions particularly in Australian coating resins business
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1H13 EBITDA
FXUnit margin*
Resinsvolume*
1H12EBITDA
Spec-ialties
Cost inflation - wages, utilities etc
Other fixed costs
NuLEAP - benefit increase from 1H12 to 1H13
Restruc-ture and procure-ment costs at 1H12 FX rates
Viverso at 1H12 FX rates
Master-batch at 1H12 FX rates
$57.3m $57.6m
*Excluding the impact of NuLEAP initiatives and acquisitions
(3.1)* 1.5*0.5
(7.3)
9.7(4.5)*
(6.1)
(2.1)3.2
8.6
NZ
$ m
illio
n
Meeting challenging market conditions in ANZ with actionRestructuring to improve returns
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1 Timing of expected restructure costs 1H13 $2.8m, 2H13 $4.0m, FY14 $2.8All figures in NZD unless otherwise stated
7sites
4sites
Pre-restructure
Post-restructure
Reducing capacity to meet future demand • Closing 1 site in New Zealand,
2 in Australia• Expected restructure costs $9.6m1
• Closures to occur 1st half FY14
Investing to improve efficiency and further reduce costs • Investing $13m to improve customer
responsiveness and efficiency
Benefits to flow from 2H13• 2H13: $0.5m in cost savings • FY14: $3.7m cost savings, 0.5 cents EPS
uplift • FY15: fully realised $5.6m cost savings,
2 cents EPS uplift
Meeting challenging market conditions with actionImproving procurement and delivering significant cost savings
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All figures in NZD unless otherwise stated
NuLEAP I on track to deliver $30m net benefits by end FY13• 1H13 $6m realised
‒ 40% procurement, 40% sales, 20% operating costs
‒ Resins segment unit margins up 3.4%
NuLEAP II transformative procurement initiative • Adopting a center-led approach
supported by regional hubs• Invested $3.2m in 1H13• Benefits from this initiative to flow from
2H13 ‒ $5.3m in 2H13‒ $12m in FY14
Decentralised Center-led
Country procurement managers
Site buyer
Global category managers
Regional procurement managers
Implementing
• Strategic sourcing processes
• Category management disciplines
Global resins segment
EBITDA including Viverso $45.2m down 3.6% (up 0.6% constant FX)• Includes $6m in costs to restructure ANZ ($2.8m) and upfront costs of procurement
initiative ($3.2m)
EBITDA excluding Viverso, restructure and procurement costs $42.4m down 8.5% (down 6.4% constant FX)
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Asia • 10.3% volume growth
– Growth in China (Auto OEM, Vehicle Refinish), Indonesia (Decorative) & Malaysia (Regional exports)
• EBITDA US$12.1m up 16.3%• Contribution from sale of Viverso products • Vietnam impacted by slowdown in housing market. New
capacity still expected to be filled in 4 years
Australia & New Zealand • Volumes down 11.4% • EBITDA A$3.8m down 56.8% after A$1.6m restructure costs • Cyclical low construction activity impacted demand • Importation of finished goods continued to impact manufacturing customers• Margin management and cost control mitigated some of volume impact
Americas • 3.7% volume growth
– Growth in higher margin High End Metal coatings
• EBITDA US$7.3m up 40.4%• Tight cost control• Contribution from sale of
Viverso products
Europe, Middle East & Africa (EMEA)• 2.5% volume growth ex Viverso
– Growth in powder resins – Decorative, Marine & Protective and Auto OEM
resins segments weaker • EBITDA ex Viverso €9.2m down 3.2%
– Earlier than usual end-of-year slowdown – Increased R&D costs, contribution to employee
fund
Viverso • Integration complete with successful transition of complex IT systems • 1H13 performance in line with management expectations• On track to deliver €12m in FY13• Focus now on operational improvement and leveraging product portfolio
All figures in NZD unless otherwise stated
Resins
Specialties
ANZ specialties segment
EBITDA $12.4m up 19.2% (up 20.2% constant FX)
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Agency and distribution
Defensive sectors growing • Food and nutrition growing due to
chocolate • Pharmaceutical and healthcare • Ongoing weakness in plastics, foam,
paints and coatings
Nuplex Masterbatch
Integration/restructure complete • 2 sites closed • Improved margins • Enhanced customer offering: expanded colour
range, black and performance additives
Delivering in line with acquisition base case • On track to deliver A$5m
EBITDA in FY13
Resins
Specialties
All figures in NZD unless otherwise stated
2. Financial results
Financial results
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NZ$ million 1H13 1H12 % change
Sales 828.7 746.4 11.0%
EBITDA 57.6 57.3 0.5%
Depreciation and amortisation (16.0) (12.2) 30.7%
EBIT 41.6 45.1 (7.7)%
Net financing costs (9.1) (6.5) 38.6%
Share of associates 0.9 (1.3) -
Minority interests (non controlling interests) (1.2) (1.0) 21.8%
Tax on operating profits (7.7) (9.2) (16.5)%
Underlying NPAT 24.5 27.1 (9.6)%
Write downs (13.6) - -
Legal provisions (0.3) (0.4) (17.8)%
Loss on sale of Plaster Systems NZ (0.7) - -
Acquisition related costs (0.8) (2.6) (71.5)%
Income tax credit on non-operating items 2.4 - -
NPAT attributable to equity holders of parent company
11.5 24.1 (52.3)%
Reconciliation: EBITDA to cash flow
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NZ$ million 1H13 1H12 $ change
EBITDA 57.6 57.3 0.3
Financing costs (9.1) (6.5) (2.6)
Provisions/other 1.8 (2.0) 3.8
Loss on business disposal 0.6 - 0.6
Movement in working capital 11.2 (9.9) 21.1
Tax paid (14.3) (15.9) 1.6
Dividends from associates 1.3 1.3 -
Cash-flow from operations before significant items 49.2 24.3 24.9
Cash flow from significant items (1.7) (3.0) 1.3
Cash-flow from operations 47.5 21.3 26.2
Capital expenditure less proceeds of disposal (18.8) (13.0) (5.8)
Cash flow 28.6 8.3 20.3
Dividends paid (18.7) (22.3) 3.6
Free cash flow 9.9 (14.1) 24
15.816.5
14.8
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 June 12 Dec 12
Working capital as a percentage of 12-month rolling sales
Target range 15-17%
Working capital and capital expenditure
Working capital to sales ratio 14.8% Stay in business capex• 1H13: $12.2m, equivalent to 95.4% of
depreciation ‒ $2.9m global ERP project ‒ $2.3m new reactors at Botany, Wacol,
and East St.Louis‒ $1.2m Suzhou Technical Centre
• FY13: expected to be 120% of depreciation
Organic growth capex • 1H13: $6.7m
‒ China new site $4.8m• FY13 forecast approximately $20m• FY14 forecast $25 to $30m
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All figures in NZD unless otherwise stated
0%
10%
20%
30%
40%
50%
60%
Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12
Target range 20-35%
Funding and gearing
$209m net debt as at 31 December 2012• Largely unchanged from $220m as at
30 June 2012
Average cost of debt 6.6%
Completed US$105m US private placement funding • 7 year term, mature 2019• Coupon rate 6.125%• Settled 31 July 2012
NZ$52.6m of Capital Notes redeemed September 2012
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Note: All figures are in NZD unless otherwise stated
Net debt to net debt plus equity ratio
27.4%
3. Strategy and outlook
• Consider acquisitions that
− Strengthen leading market & technology positions
− Leverage capabilities
− Meet disciplined criteria
To achieve superior shareholder returns by delivering high quality products to our customers through pursuing operational excellence, innovation and building market leading positions
Safety People NuLEAPEmerging markets
R&DStrategic
acquisitions
• Build a culture of ‘zero harm’
• Engage and leverage One Global Team
• Introduce global Overlay Teams to leverage products, R&D and procurement across the group
• Improve the way we work through rigorous improvement programs
• Profitably expand capacity and presence in emerging markets
• Grow market share through innovative products
• Pursue market development opportunities
• Leverage technologies across global platform
To be the leading, trusted independent polymer resins manufacturer globally, and leading agency and distribution business in ANZ
Growing through building market leading positions Strengthening through operational excellence
We’re strengthening and growing Nuplex
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Our strategy
Our ambition
FY2013 Execution
• Consolidation of recent acquisitions
− Integration− Improving
operational performance
− Leveraging benefits of product portfolio
• Implementing global common standards relating to processes and policies
• Health & Wellbeing program in ANZ
• Global Senior Management Conference
• Employee survey
• Nuplex Leadership Academy: online development program
• NuLEAP I− Final phase of
execution• NuLEAP II− Planning − Procurement
initiative • Restructure of
Australia and New Zealand
• China: 3rd site progressing US$35m
• Indonesia: cap-acity expansion US$5.4m
• Russia: finalising JV
• Thailand: cap-acity expansion
• Preparing for launch of new products at European Coatings Show in March 2013
• Succession planning for R&D personnel
FY12
44
31
16
9
FY09
58
21
12
9
FY15
37
34
20
9
expected (base case2)
Building leading positions where our markets are developing and growing
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Sales by region1
%
ANZ
EMEA
Asia
Americas
1. FY09 sales retranslated at FY12 exchange rates 2. Forecast subject to unforeseen circumstances and economic uncertainty
100%
China, Changshu • Investing US$35m • Double capacity in China • Delayed 6 months• Commissioning now expected end FY14
Indonesia, Surabaya • Investing US$5.4m• Expanding capacity and adding new
technology• Commissioning expected end FY14
Thailand, Bangkok • Joint venture • Investing US$1.5m • Expanding powder capacity 40%• Funded from cash within JV
Russia, Belgorod • Joint venture negotiations nearing
completion • Expect to be operating 4th quarter FY13• Initial investment of €8m in existing plant
& equipment and working capital – Nuplex equity investment €2.5m
• Working towards starting construction of new site in 2014 – estimated investment €20 million, Nuplex share 50%
100%
100%
FY13 guidance 2013 so far
ANZ • New Zealand: in recovery mode• Australia: bouncing along the bottom?Asia • China: signs of an upturn in China• SE Asia: growing steadily Europe • While activity is volatile, demand steady Americas• Steady growth
FY13 earnings guidance
EBITDA now expected to be between $135m and $140m• Assumes similar market conditions in 2H13 • Is based on 1H13 average exchange rates • Acquisitions on track to deliver EBITDA targets; Viverso €12m, Nuplex Masterbatch $5m • NuLEAP on track to deliver at least $13m• Procurement initiative to deliver benefits of $5.3m in the second half• ANZ restructure costs of $6.8m
Note: All figures are in NZD unless otherwise stated
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FOR FURTHER DETAILS:
Emery Severin
Chief Executive Officer +61 2 8036 0902 [email protected]
Josie Ashton
Investor Relations +61 2 8036 0906 or +61 416 205 234 [email protected]