barloworld limited results...barloworld limited merrill lynch conference – sun city 29th march...

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


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


-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


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


0

10

20

30

Maintenance Fleet Finance Fleet Total Fleet

% G

row

th


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


-20

-10

0

10

20

Used Units - SA Used Units - Aus

% G

row

th


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


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

barloworld limited results...barloworld limited merrill lynch conference – sun city 29th march...

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