Barloworld Limited
Year end results 30 September 2012
19 November 2012
Overview
Clive Thomson CEO, Barloworld Limited
3
• Revenue up 18% to R58.6bn
• Operating profit up 31% to R2 988m
• Profit before exceptional items up 38% to R2 119m
• HEPS up 46% to 680 cents (2011: 465 cents)
• Return on net operating assets 18.8% (2011: 17.1%)
• Total dividend of 230 cents per share up 48%
Salient features
4
Key strategic developments
Automotive and Logistics
• Acquired Avis Coach Charter • Opened Soweto Toyota and Soweto VW joint venture dealerships • Acquired fuel management company and remaining 50% of Phakisaworld • Expanded Avis Fleet Services into Ghana • Acquired specialised chemical transporter and formed Manline JV • Acquired 25% Logistics minority
Handling
• Disposed of Handling US for R465m in complex transaction involving split of dealership territory
• Successfully concluded disposal of Handling UK for R626m • Expanded agriculture business in Siberia, western Russia and Mozambique
Equipment
• Bucyrus Africa and Eqstra mining services acquired for R1 381m • Reached agreement to acquire Bucyrus Russia effective 3 December for R436m • Finalised agreement to convert Congo Equipment in the DRC into a 50 year JV • EMD Africa JV with Electromotive Diesel to capture locomotive and rail services
opportunities • MWM distribution rights for gas engines in southern Africa and Russia
Financial Review Don Wilson
Finance Director
6
Income statement highlights
(Rm) FY’12 FY’11 % chg
Revenue 58 554 49 823 18
EBITDA 4 905 3 993
Operating profit 2 988 2 289 31
Fair value adjustments on financial instruments (93) (65)
Net finance costs (776) (693)
Profit before exceptional items 2 119 1 531 38
Exceptional items 190 62
Taxation (789) (566)
Secondary Tax on Companies (26) (18)
Income from associates 141 71
Net profit 1 635 1 080 51
HEPS (cents) 680 465 46
7
Income statement highlights
Average exchange rates (Rands) FY’12 FY’11
United States Dollar 8.02 6.91
Euro 10.45 9.67
British Sterling 12.69 11.12
(Rm) FY’12 FY’11 % chg
Revenue 58 554 49 823 18
Equipment 24 273 18 687 30
Southern Africa 16 326 12 578 30
Europe 4 180 3 574 17
Russia 3 767 2 535 49
Automotive and Logistics 29 490 26 415 12
Handling 4 774 4 709 1
Corporate 17 12
8
Income statement highlights
(Rm) FY’12 FY’11 % chg
Revenue 58 554 49 823 18
EBITDA 4 905 3 993
Operating profit 2 988 2 289 31
Fair value adjustments on financial instruments (93) (65)
Net finance costs (776) (693)
Profit before exceptional items 2 119 1 531 38
Exceptional items 190 62
Taxation (789) (566)
Secondary Tax on Companies (26) (18)
Income from associates 141 71
Net profit 1 635 1 080 51
HEPS (cents) 680 465 46
9
Income statement highlights
(Rm) FY’12 FY’11 % chg
Revenue 58 554 49 823 18
EBITDA 4 905 3 993
Operating profit 2 988 2 289 31
Equipment 1 740 1 352 29
Southern Africa 1 535 1 228 25
Europe (139) (102)
Russia 344 226 52
Automotive and Logistics 1 152 911 26
Handling 38 72
Corporate 58 (46)
10
Income statement highlights
(Rm) FY’12 FY’11 % chg
Revenue 58 554 49 823 18
EBITDA 4 905 3 993
Operating profit 2 988 2 289 31
Fair value adjustments on financial instruments (93) (65)
Net finance costs (776) (693)
Profit before exceptional items 2 119 1 531 38
Exceptional items 190 62
Taxation (789) (566)
Secondary Tax on Companies (26) (18)
Income from associates 141 71
Net profit 1 635 1 080 51
HEPS (cents) 680 465 46
11
Statement of financial position
(Rm) FY’12 FY’11
Non-current assets 13 470 12 667
Current assets (excluding cash) 19 716 15 498
Cash and cash equivalents 2 624 2 754
Assets classified as held for sale 0 13
Total assets 35 810 30 932
Interest of all shareholders 13 167 12 652
Total debt 10 088 7 243
Other liabilities 12 555 11 037
Total equity and liabilities 35 810 30 932
Net debt 7 464 4 489
12
Summarised statement of cash flows
(Rm) FY’12 FY’11
Operating cash flows before working capital 5 199 4 528
Increase in working capital (3 128) (27)
Net investment in leasing assets and vehicle rental fleet (2 114) (1 397)
Cash utilised in operations (43) 3 104
Other net cash flows (1 311) (1 189)
Dividends paid (443) (257)
Net cash applied to operating activities (1 797) 1 658
Net cash used in investing activities (1 120) (712)
Net cash (outflow)/inflow (2 917) 946
13
Investment in working capital supports revenue growth
(Rm) FY’12 FY’11
Equipment southern Africa (1 879) 100
Equipment Europe 212 5
Equipment Russia (791) (135)
Automotive and Logistics (211) (37)
Handling and other (459) 40
Total working capital – (increase) (3 128) (27)
(Rm) FY’12 FY’11
Inventories – (increase) (3 147) (1 359)
Receivables – (increase) (937) (791)
Payables – increase 956 2 123
Total working capital – (increase) (3 128) (27)
14
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 30 Sept 2012 50 472 217 77 57
Ratio at 30 Sept 2011 30 577 196 57 36
• Net debt of R7 464m (Sep 2011: R4 489m) increased by R2 975m • EBITDA interest cover 5.9 x (Sep 2011: 5.3 x) • Fitch A+ rating maintained, stable outlook
15
Debt maturity profile
• Ratio of long-term to short-term debt 70:30 (Sep 2011 – 76:24) • New 3 and 5 year bonds raised in April, R760m to extend maturity profile • R1bn 18 month note to fund Bucyrus southern Africa acquisition • R6.4bn unutilised bank facilities at Sept 2012 • Cash and cash equivalents R2 624m (Sept 2011 – R2 754m)
Interest bearing debt Redemption
(Rm) Total Short-term Long-term
South Africa 8 958 2 138 6 820
Offshore 1 130 902 228
Total debt September 2012 10 088 3 040 7 048
Total debt September 2011 7 243 1 721 5 522
Divisional overview
Equipment southern Africa
17
0 1 000 2 000
SouthernAfrica
Operating profit (Rm)
Sep 2012 Sep 2011
Operational review – Equipment southern Africa
Performance • Revenue up 30% to R16.3bn • Operating profit up 25% to R1 535m • Profit boosted by increased demand for mining machinery in South Africa,
Zambia and Botswana • Angolan recovery continues on back of infrastructure investments • Investments in product support capability underpin parts and service growth • Market leadership position maintained
Margin
9.4%
9.8%
25%
18
Status of Bucyrus transaction
• Acquisition of Bucyrus Africa and Eqstra Mining Services business for US$164m successfully concluded on 2 July 2012
• Bedding down and integrating the business • Focused management team in place • Significant machine sale opportunities being pursued • Plans established to drive up after sales activity • Earnings impact not material in 2012
19
Most extensive mining product range in the industry
Open Pit
Hard Rock
Room and Pillar
Longwall
Underground Mining
Surface Mining
20
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 surface mining opportunities
Jindal
Bannerman – Etango
Extract Resources – Husab
Kumba – Sishen
Exxaro – Belfast Project
Xstrata – Tweefontein
Vale and Rio Tinto –Tete
Anglo Coal- Revuboe
Zonnebloem Xstrata
ResGen – Boikarabelo
CoAL – Makhado
Anglo – New Largo
FQM – Kalumbila Barrick – Lumwana
Coal Copper Iron ore Uranium
21
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 underground mining opportunities
Hwange Zimbabwe
Debswana Morupule
DeBeers Venetia
Total Forzando West
Xstrata – Tweefontein
Anglo – New Denmark
Glencore – Mopani
Mabila Ermelo Project
Sasol Impumelelo
Exxaro – Matla
Sasol Bossjespruit
Anglo – Goedehoop
Coal Copper Diamonds
22
Progress on Bucyrus opportunities in Zambia
Confirmed order from FQM for mining machinery worth US$115m 3 Electric Rope Shovels (Model 7495) • first machine due for delivery during
February 2013
• planned commissioning during July 2013
• second and third machines to follow at roughly three month intervals
7 Rotary Blast hole Drills (Model 6640) • first machine due for delivery during
September 2013
• planned commissioning during January 2014
• final machine to be commissioned mid 2015
23
Congo Equipment JV extension
Joint Venture Extension - Tractafric • Excellent result: equity accounted share of
the JV profits more than doubling from R63m to R138m
• Term of the JV agreement previously scheduled to terminate in 2017, extended 50 years from October 2012
• Major customers include Tenke Fungurume Mining (Freeport) and Katanga Mining (Glencore)
• Strong growth in aftersales
24
0 2 000 4 000 6 000
SouthernAfrica
Order book (Rm)
Sep 2012 Sep 2011
Equipment – southern Africa
Outlook • Expect a challenging 2013 due to softening in commodities following slowdown in
Chinese growth and uncertainty in the SA mining industry • Firm back orders of legacy Cat product in southern Africa lower at R3.9bn
(2011: R5.2bn) • 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 • Modest on-going improvement in construction activity including Angola • Parts and service revenues expected to remain solid
Bucyrus
Divisional overview
Equipment Iberia
26
- 150 - 100 - 50 0
Iberia
Operating profit (Rm)
Sep 2012 Sep 2011
Operational review – Equipment Iberia
Performance • Revenue up 8% in Euro terms based on low margin export sales • Restructuring costs of R102m (€9.7m) in 2012 compared to R73m (€7.5m) in
2011 – headcount reduced by 15% year on year • Positive cash flows through continued strong working capital management • Power Systems provides buffer against weak construction activity • Product support capability maintained • Retained market leadership position
Margin
-3.3%
-2.9%
27
Industry trend – Iberia (units)
22 982
10 059
4 620 3 996
2 964 2 225
6 895
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
28
Power Systems opportunities
Electric power generation • Standby opportunities driven by Data
Centres
• Awarded contracts to provide critical power to the two largest telecoms providers
Rail • International rail customers now utilising
local Spanish manufacturers
• Opportunities in Asia and Africa
Marine • Marine order book has grown due to
opportunities in passenger vessels, fishing, offshore, tug & salvage and patrol boats
29
0 100 200 300
Iberia
Order book (€m)
Sep 2012 Sep 2011
Equipment – Iberia
Outlook • Macro economic environment expected to remain challenging in the coming year • Order books lower due to cancellation of portion of mining package deal • Power systems growth due to activity in marine and other niche markets • Focus on expanding market share while maintaining margins • Continued focus on cost control, cash generation and asset efficiency • Expect to deliver improved operating performance due to lower cost base
Divisional overview
Equipment Russia
31
0 100 200 300 400
Russia
Operating Profit (Rm)
Sep 2012 Sep 2011
Operational review – Equipment Russia
Performance • Another record result with operating profit growing 52% to R344m • Improved operating margin of 9.1% driven by strong aftermarket growth • Significant growth in mining, power, construction and forestry segments • Investment in facilities to support customer base • Growing market share
9.1%
Margin
8.9%
32
Territory Coverage
33
Facilities
Novosibirsk upgrading
Neryungry – Project concept underway
Irkutsk – opening in December 2012
Magadan – opening in 2013
34
Bucyrus Russia transaction overview
Equipment Russia will sell, service and support all the former Bucyrus mining products in Siberia and Russian Far East
Asset based transaction for consideration of US$50m with cash and debt facilities in place to fund the transaction
Estimated FY2013 revenue US$75m
Projected EBIT margin 4% in 2013 with potential to grow to 6% within 2 to 3 years on back of aftermarket growth
100 employees and contractors to be employed by Barloworld, primarily in customer support and field service in Novokuznetsk
35
Current Bucyrus facility in Novokuznetsk
36
0 50 100
Russia
Order book (US$m)
Sep 2012 Sep 2011
Equipment – Russia
Outlook • Mining activity will remain the biggest driver due to the commodity rich territory • The softening in commodity prices will impact mining revenue • Strong growth is expected in power as well as the parts and service business • Branch infrastructure throughout the territory remains key to growing market share • Increased investment to develop high quality technical skills • Bucyrus transaction will supplement revenue growth
Divisional overview
Automotive and Logistics
38
- 200 400 600
Logistics
Fleet Services
Motor Retail
Car Rental
Operating profit (Rm)
Sep 2012 Sep 2011
Operational review – Automotive and Logistics
• Strong overall result in a competitive trading environment
• Revenue: R29.5bn (FY’11: R26.4bn) – up 12%
• Record operating profit R1 152m (FY’11: R911m) – up 26%
• Operating margin for the year 3.9% (FY’11: 3.4%)
• All business segments performed well
2.2%
15.2%
2.4%
7.1%
0.8%
16.0%
2.1%
6.6%
Margin
+14%
+26%
+23%
+170%
39
Car Rental
• Strong growth in rental days • Pleasing revenue per day increase in a competitive
environment • Operating costs well contained • Further improved fleet utilisation to 76% • Continued solid used vehicle profit contribution • Integrating coach charter operations • Sustained customer satisfaction above 90%
Car Rental – southern Africa FY’12 (growth)
Rental days +11%
Rental revenue per day +6.6%
40
Motor Retail
Southern Africa delivered a good result • Revenue up 8% • Improved operating profit by 26% and margin to 2.3% • Cost containment supported the result • Continued strong finance and insurance contribution
Australia continued to perform well • Activity levels improved across all departments
Motor retail FY’12 (growth) Southern Africa Australia
New unit sales (Oct 2011 – Sep 2012) +5.6% +12%
Parts revenue +9.7% +25%
Service hours -1.2% +5.3%
41
Fleet Services
• Pleasing result in low interest rate environment • Strong finance fleet growth supported by Phakisaworld acquisition • Strong growth in fleets under maintenance • Stable used vehicle profits despite lower margins • Acquired fuel management company, enhances offering
Fleet Services FY’12 (growth)
Finance fleet +12%
Under maintenance +15%
Total vehicles under management +17%
42
Logistics
Good turnaround and positioned for growth • Southern Africa
- Ellerines supply chain contract progressing well
- Higher volumes through Barloworld Equipment
- Acquired chemical transport business effective 30 April 2012
- Established Barloworld Manline Logistics JV
• Europe, Middle East and Asia
- Rationalisation and cost control taking effect, stabilising volumes in sea-air market
- Appointed new local management in Spain and Far East
- Secured first significant supply chain management contract in Dubai-Pan Furnishers
• United Kingdom
- Supply chain software selling well and planned upgrades all on schedule
Divisional overview
Handling
44
Operational review – Handling
Performance • Trading profit improvement more than offset by currency impacts in South Africa • Agriculture SA grows strongly but sales impacted by H2 drought • Break-even in Mozambique; robust growth from SEM • Europe and US impacted by business disposals • Strong growth in Belgium but weak demand in Netherlands and UK
4.1% 6.7%
- 0.4% - 0.1%
- 1.4% - 0.1%
Margin
- 20 0 20 40 60 80 100
Southern Africa
Europe
US
Operating profit (Rm)
Sep 2012 Sep 2011
45
Handling
Outlook • The Eurozone debt crisis continues to impact negatively on markets in
Belgium/Holland • Used equipment aside, pressure on margins to continue • End September order book up 9% on Sep 2011 • Further growth in agricultural footprint being explored • Expect modest improvement over last year in lift trucks but higher growth
prospects in Agriculture
* Europe Sept ‘11 O/B excludes UK 0 200 400
Southern Africa
Europe
Order book (Rm)
Sep 2012 Sep 2011 *
Outlook
Clive Thomson CEO, Barloworld Limited
47
Outlook
Automotive and Logistics
• Car Rental: Expected growth despite competitive trading environment • Motor Retail: A stable performance in southern Africa and Australia • Fleet Services: Continued growth from new and existing customers • Logistics: Continue positive momentum and well positioned for growth
Handling
• Lift truck profits expected to show modest improving trend • Expansion of agriculture footprint to yield medium term benefits • Strong performance in Agriculture should continue • Further growth expected in SEM product line
Equipment
• Expect a challenging mining environment due to softening in commodity prices and uncertainty in the SA mining industry
• Continued modest improvement in construction activity in southern Africa, particularly Angola
• Iberian industry to remain depressed however forecast improvement in operating performance on lower cost base
• Solid performance to continue in Russia on the back of mining deliveries and improving infrastructure spend
• Power Systems expected to continue to grow in all regions
48
Outlook
Clive Thomson, CEO of Barloworld, said:
“The group delivered a very pleasing result for 2012 with operating profits up 31% and HEPS increasing by 46%. Our Equipment businesses in southern Africa and Russia achieved record mining deliveries and Automotive and Logistics delivered strong results in all trading segments. We also concluded a number of important strategic transactions. The most significant was the acquisition of the Bucyrus distribution businesses in southern Africa for R1.4 billion which now provides us with the most complete mining equipment product range in the industry. Importantly, we finalised the disposals of our materials handling businesses in the US and UK for R1.1 billion, which continues our redeployment of capital into higher returning opportunities. There is more uncertainty in the global and local economy for the year ahead which has led to some deferment in mining capital expenditure plans. This will impact equipment demand and deliveries but overall we expect the group to continue to make solid progress across most of our businesses”
19th November 2012
Top Related