Barloworld Limited
Merrill Lynch Conference – Sun City
29th March 2012
2
Revenue up 22% to R49 823m (2010: R40 830m)
EBITDA up 20% to R3 993m (2010: R3 318m)
Operating profit up 51% to R2 289m (2010: R1 518m)
HEPS from continuing operations up 120% to 465 cents (2010: 212 cents)
Total dividend up 107% to 155 cents
Net debt to equity declines to 36% from 47%
Net debt of R4 489m (2010: R5 049m) decreased by R560m
A+ credit rating maintained, outlook stabilised
Debt maturity profile improved
2011 Financial highlights
3
2012 Group update
Group • Maintained A+ Fitch rating in February 2012
• Funding for the acquisition of the Bucyrus distribution business secured
• Group celebrates 110th Anniversary in 2012
Equipment
• Strong overall performance on back of mining sector demand
• Russian dealership acquisition continues to deliver well
• Market leadership gains in key product segments
• Sizeable investments in facility expansion across southern Africa and Russia
• In Iberia, restructuring executed in 1st quarter to realign cost base
• Global power systems strategy gains traction
Automotive
and Logistics
• Pleasing overall performance in competitive trading environment
• Avis coach charter and Dreamworks fuel management businesses acquired
• Opened Soweto Toyota and Soweto Volkswagen in December 2012
• Automotive and Logistics integration progressing well
• Logistics awarded 10 year Meadow Feeds national transport contract
• Ellerines logistics contract now fully operational
Handling
• Turnaround in trading profitability continues
• SEM performance strong with products introduced into Russia and Mozambique
• Roadmap agreed with AGCO to expand into Western Russia and extend territory in Siberia
• Potential sale of Handling business in US. Due diligence in progress
4
Strategic focus area – Profitable growth
Mining Infrastructure Power
Chinese demand and global
economic recovery to drive
commodity prices and
increased levels of mining
investment
Geography
Southern Africa
Russia
Infrastructure backlogs and
rapid urbanisation in emerging
markets to drive infrastructure
investment
Geography
Southern Africa
Iberia, Russia
Capacity constraints and
increasing electrification
requirements provide
opportunities in electric power
Marine and petroleum
segments also have significant
potential
Geography
Southern Africa
Iberia, Russia
5
Geography
US, UK, Europe, Siberia
Southern Africa
Growth opportunity in providing
integrated fleet solutions
Demand for food and bio-fuels
likely to significantly increase
agricultural equipment
opportunity in emerging markets
Strategic focus area – Profitable growth
Automotive Logistics Handling
Tourism potential, growing
corporate demand for
outsourced vehicle fleets, and
other solutions platforms
related to vehicle usage
Geography
Southern Africa
Australia
On-going trend to outsource
supply chain management
activities and recovery in world
trade
Geography
Southern Africa
Middle East, Europe, China
6
Divisional overview Equipment
7
Operational update
• Firm back orders up from R5.2bn at Sept ‘11 to R6.2bn at Dec ‘11
• Strong results expected in 2012 on emerging market driven commodity-backed mining activity
• Flat year expected in construction with prospects for rail and port infrastructure
• CRC expansion projected to double throughput and improve efficiencies
• Mozambique, Botswana and Zambia to continue delivering pleasing results
• Angola good recovery
Equipment – southern Africa
0 2 000 4 000 6 000 8 000
SouthernAfrica
Order book (Rm)
Dec 2011 Sep 2011 Sep 2010
8
Global mining capex – Vale, BHP, Rio and Anglo
Source: BofA Merrill Lynch Global Research, US$bn, Big4=VALE,BHP, Rio, Anglo
9
Sustaining mining capex – Repairs, replacement and growth
Installed population drives replacement cycle
and annuity aftermarket revenue streams
Source: BofA Merrill Lynch Global Research, Metso CMD 2011, McKinsey 2011
10
Market outlook – Southern Africa
* Constant Rand 2008 value
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Rbn*
34%
52% 58%
Heavy construction
Contract mining
Mining
Building construction
11
Progress on projects in Mozambique
Vale
• US$116m new units; US$72m MARC over 5 year period
• Currently 29 x 793 OHTs operating
• 1 x 797 OHTs mega mining trucks 100% complete
• 7 x 797 OHT currently on site to be assembled
• Last 2 x 797 left the factory 1 March 2012
• First CAT 6090 shovel arrived in Mozambique and assembly
started 8 March 2012
Rio Tinto
• Potential 20m tons coal/year for 25 years (US$1bn mining project)
• Currently 14 x 793 OHTs operating
• 30 x 777F currently operating with the 793’s
• Rio Tinto acquire 100% of Riversdale and are operating as Rio
Tinto in Tete
12
• Caterpillar Inc. acquisition completed on 8th July 2011
• Caterpillar now participates in 75% of mining equipment value
chain versus 25% pre- acquisition
• Discussions with Caterpillar are progressing well in relation to the
acquisition of Bucyrus distribution rights in our territories
• We are targeting a close in Southern Africa in final quarter of
FY’12
• Our transaction will be funded by releasing capital, vendor finance
and bridge funding
Caterpillar Inc. acquisition of Bucyrus International
13
Caterpillar’s previously limited product range
23% of surface and underground mobile equipment
14
The expanded Caterpillar product line
Caterpillar meeting the challenge of providing expanded value chain solutions
15
Surface Mining Equipment
Underground Mining Equipment
Do
zers
& G
rad
ers
Wh
eel
Load
ers
M
inin
g
Tru
cks
H
ydra
ulic
Sh
ove
ls
H
igh
wal
l M
iner
s
Surf
ace
D
rills
R
op
e
Sho
vels
Dra
glin
es
Surf
ace
Bel
t Sy
stem
s
Komatsu
Hitachi
Joy Global
Liebherr
Caterpillar
Bel
t
Syst
ems
Ro
of
Su
pp
ort
s
Arm
ore
d F
ace
C
on
veyo
rs
Shea
rers
Dri
lls
Co
nti
nu
ou
s M
iner
s
Die
sel
Tran
spo
rt
Tru
ck s
&
Company
Caterpillar and Bucyrus combined
16
Bucyrus product line overview
Hydraulic Excavators
and Rope Shovels Drills Draglines
Highwall Miner Longwall Room and Pillar
Belt Systems Consumables Trucks
17
Global mining capex breakdown
The combined Caterpillar-Bucyrus offering competes in all key segments
Source: BofA Merrill Lynch Global Research
18
Major opportunities – Surface
Extract Resources –
Swakop Husab
Bannerman Resources –
Etango Uranium
Townlands -
Eloff
Rio Tinto
Madagascar
Anglo - Kumba
Vale - Moatize
FQM - Kalumbila
Anglo – New Largo
Barrick - Lumwana
19
Major opportunities – Underground
Total Forzando
West
Mabila Ermelo
project
Anglo –
Goodehoop
Anglo –
New Denmark
Debswana Morupule
Hwange Zimbabwe
Exxaro Matla 1
Sasol
Bossjespruit
Sasol Impumulelo
20
Equipment Iberia
21
Operational update
• Challenging macro economic environment with further market contraction expected for 2012
• Power activity steady
• Order book, boosted by large package deals, delivers largely in 2013
• Continued focus on growing market share while maintaining margins
• Further rationalisation - Spain, Portugal and Rental (€7.6m cost) will impact H1’12 profitability
• Restructuring will position the business to achieve acceptable returns as market recovers
• Continued focus on cash generation and asset efficiency
Equipment – Iberia
0 100 200 300
Iberia
Order book (€m)
Dec 2011 Sep 2011 Sep 2010
22
Recent large deals awarded in Spain – machines
¹ Victorino Alonso and EPSA deals both extended since March 2011
² Closed in October 2011
Delivery Timing of Iberian delivery
US$m Deal
value
Outside
Iberia
Inside
Iberia 2011 2012 2013 2014
Victorino Alonso¹ 285 - 285 - 61 199 25
EPSA¹ 286 264 22 11 11 - -
Transportes Peal² 131 98 33 - 7 14 12
23
Iberian new machine market in units
• Contraction in machine market in Iberia remains in double digits for fourth consecutive year,
accelerating when compared to 2010;
• All segments affected during 2011 year, with no individual segment showing year on year growth
0
5 000
10 000
15 000
20 000
25 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(56%)
(54%)
(14%) (26%) (2%) F/C
24
Iberia market leadership trends
2006 2007 2008 2009 2010 2011
Monetary
Value Market
Share
Units
Market
Share
• Strong market share gains in 2011 as customer relationship and support strategies deliver
• Monetary value market share is now 4 times that of nearest competitor
25
Equipment
Russia
26
Operational update
• Record result achieved in 2011 – US$374m (80% growth) in revenue – US$33m operating
profit
• Good growth expected in 2012 FY over 2011 result – on target to achieve
• Order book remains strong – Dec ‘11 US$78m (Sept ‘11 US$63m)
• Further diversification of customer base – inroads into smaller mining Customers
• Continue with facility development programme (Irkutsk, Magadan and Krasnoyarsk)
• Bucyrus integration – underground and shovels opportunity
Equipment – Russia
0 50 100
Russia
Order book (US$m)
Dec 2011 Sep 2011 Sep 2010
27
Russian territory coverage map
Owned facility
Bucyrus facility
Planned facility
28
New service and component rebuild facility – Novosibirsk
29
Russia key mining customers
30
Russia Power Systems opportunities (2012 – 2015)
31
Power growth strategy
32
Strategic framework – Profitable growth: Power
Electric Power Generation
Industrial Marine
Oil and Gas
33
Electric power – Nampower project
Radiator
Farm
Power
House Transformer
Room
Main HFO
Tank
Water Treatment
House
Day tanks HFO Treatment
House
34
Electric power – Gas engines (MWM)
• CAT has acquired MWM
• Enhances the range and efficiency of gas
products, including cogeneration and special
gases
• Barloworld has secured the rights as a 1st
wave dealer for Russia and Southern Africa
• Significant growth opportunity in gas and
cogeneration in these territories
35
Divisional overview Automotive and Logistics
36
Overview: Automotive and Logistics
Barloworld Automotive and Logistics
• Inter- and intra-business unit synergies
• Market leadership
• Complementary components
• Balanced portfolio
Car Rental
• Short-term vehicle
usage
Motor Retail
• Franchised motor
retail
• Coachworks
• Used vehicles and
disposal solutions
Fleet Services
• Long term rental and
fleet management
Logistics
• Supply chain
management
• Freight management
and services
• Software
• Southern Africa • Southern Africa
• Australia • Southern Africa • Southern Africa
• EMEA
37
Overview: Automotive and Logistics
General Information
Employees 9 243
Countries 14
Automotive Principals
Avis, BMW, Chrysler ,Daimler, Ford, General Motors, Subaru, Suzuki,
Toyota, VW
Car Rental locations >190
Wholly owned Motor Retail dealerships (SnA & Oz) 41
Key Indicators FY Sep ‘10 FY Sep ‘11
Rental Days 5.02m 5.14m
New & Used retail units sold 80 305 85 092
Total vehicles under management 162 098 195 788
New vehicles sold per dealership per month 62 71
Average km’s travelled per month FY’11 1.41m
Average tons shipped per month (SAT) FY’11 2.378t
Sense of Scale
38
• Continue with yield strategy/ cost reduction
• Stable used retail and wholesale margins
• Productivity improvements
• Settle coach charter acquisition
Overview: Automotive and Logistics
-10
-5
0
5
10
15
20
Rental Days Rate Per Day Fleet Utilisation Fleet Size People Productivity
% G
row
th
Leading Indicators Jan '12 YTD Sep '11 YTD
Car Rental
39
Overview: Automotive and Logistics
Motor Retail
• Fewer, Bigger, Better” Strategy continues
- 71 new vehicles sold per dealership per month (Sep’10: 62)
- Appropriate dealership footprint
• Southern Africa
- Focused brand strategy aligned to overall Automotive business model
- Opened Soweto Toyota and Soweto Volkswagen
- Finance and insurance improved contribution
• Australia
- Portfolio performing well
84.0
-5
-
5
10
15
20
25
30
New Units Service Hours Parts Revenue F & I Net Profit
% G
row
th
Leading Indicators SA - Jan '12 YTD AUS - Jan'12 YTD
40
• Business model continues to deliver value
• Sustained used vehicle contribution
• Targeted growth
• Phakisaworld 100% owned
• Opening Fleet Services in Ghana
• Acquired small fuel management company
Overview: Automotive and Logistics
0
10
20
30
Maintenance Fleet Finance Fleet Total Fleet
% G
row
th
Leading Indicators Jan '12 YTD Sep '11 YTD
Fleet Services
41
• Integrated approach centrally managed
• Comprehensive Automotive systems continue to deliver value
• Maximise use of virtual channels across all business units
• YTD used retail units = 15 623 (prior period = 16 602)
• Service offering to our major business units in South Africa with on-going innovation
• Telematics and lead management projects across the division
Overview: Automotive and Logistics
-20
-10
0
10
20
Used Units - SA Used Units - Aus
% G
row
th
Leading Indicators Jan '12 YTD Sep '11 YTD
Used vehicles & Disposal Solutions
42
• Southern Africa
- Ellerine’s contract settling well; improved volumes in supply chain management
- Higher volumes through Barloworld Equipment
- Awarded 10 year contract for dedicated transport services to Meadow Feeds from
1 October 2011
• Europe, Middle East and Asia
- Rationalisation and cost control taking effect, however lower volumes continue
- Renegotiated contract in SAT supported the result
- Focusing on growing contractual revenue
• Targeted growth opportunities
• Good improvement in profitability
Overview: Automotive and Logistics
Logistics
43
Divisional overview Handling
44
Handling overview
United Kingdom
• Market is recovering (25 365 units) but still off
peak of 29 841 units in 2007
• Growing maintenance work which is higher margin
• Order book at £16.5m is 3 year high
• Short term rental remains good with a fleet 11%
larger than LY
• Both MOD contracts extended to 2013
United States
• Market is recovering (38 001 units) but still off
peak of 40 265 units
• Order book good
• Short term rental revenue and margins continue to
grow
• Balance sheet in good shape
• Potential sale of US business announced in
January; due diligence started
European Union
• Market in Belgium recovering (8 187units) vs peak
of 10 322 units in 2008
• Market in Netherlands weak (12 098 units) vs peak
of 16 435 units in 2008
• Order book in Belgium record high €16.4m
• Short term rental utilisation flat but fleets larger in
both countries
• Good success in big trucks in Belgium
South Africa – Handling
• Market is recovering – 8 692 units
• Renewed focus on major accounts
• New SAP system installed
• Used stock levels reduced
• Expansion into Angola and Mozambique gaining
momentum
45
Global markets for agriculture equipment have grown strongly
• Industry tractor sales in SA up by 18% over LY and our share grown by 3 points
• Low cost tractor ranges from CLAAS and MF helping
• Industry baler sales up 16% on LY and our share up in balers up 1.5 points
• Industry combine sales up 25% but our share down 4 points (timing of sales)
Excellent growth prospects in Africa
• Mozambique progressing well
• Two retail outlets opened
Growing in Russia
• Expanding footprint in Siberia and Western Russia
Agriculture
46
Moscow
Growth in Siberia
Agro machinery Territories (Novosibirsk, Omsk & Altay)
Nizhniy Novgorod Region
Republic of Chuvashia
Vologda Region
Republic of Udmurtia
Perm Region
Kirov region
Kemerovo
Khakassia
Krasnoyarsk
47
Outlook
Division
Equipment
• Commodity prices are at levels that should continue to be favourable for mining investment
• Strong performance to continue in southern Africa and Russia on the back of mining demand
• Iberian industry to remain depressed on general Eurozone weakness, 2013 better year
• Restructure implemented and a strong order book in Iberia will position business for future
profitability
• Expected growth in Power Systems
• Strong order book in all our regions
Automotive
and Logistics
• Car Rental: Current positive momentum to continue despite competitive trading environment
• Motor Retail: A good performance expected in southern Africa and Australia
• Fleet Services: Continued growth expected across all product offerings
• Logistics: Integration benefits as well as improving volumes and margins expected
Handling
• Sales-led recovery to continue in Handling operations on back of stronger order books
• Expansion of agriculture footprint to yield medium term benefits
• Strong growth expected in SEM product line
• Sale of US business planned for completion in next few months
48
Barloworld Contacts
• Clive Thomson – Barloworld CEO – [email protected]
• Don Wilson – Barloworld Finance director – [email protected]
• Jacey de Gidts – Head: Group Communication and Marketing – [email protected]
Thank you
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