48
Barloworld Limited Results For the year ended 30 September 2013 18 November 2013
Barloworld Limited Results For the year ended 30 September 2013
18 November 2013
Business overview CliveThomson
CEO, Barloworld Limited
3 3
● Revenue up by 11% to R65.1bn
● Operating profit up by 18% to R3 527m
● Profit before exceptional items up 20% to R2 538m
● HEPS up by 26% to 860 cents
● Cash generated from operations of R4 263m (2012: R43m utilised)
● Total dividend per share up 27% to 291 cents
Salient features
4 4
Key developments
Equipment and
Handling
Equipment southern Africa
• Bucyrus southern Africa successfully integrated and acquisition was earnings accretive in first full financial year
Equipment Iberia
• Substantial turnaround achieved as cost savings results in close to breakeven result and €28m positive cash generation
Equipment Russia
• Bucyrus Russia acquired 3 Dec 2012 for $49m (R420m) and performed in line with expectations
Power Systems
• Power business shows solid growth in all regions. MWM distribution rights acquired for gas engines in southern Africa, Iberia and Russia
Handling • Disposal of Belgian Handling business for €7.5m in May 2013 and good progress on sale of Handling Netherlands
Automotive and
Logistics
Car Rental • Enhanced level of financial return through operating efficiencies and exited loss making Coach Charter operation
Motor Retail • Sold Ferntree Gully dealership in Australia effective 31 Oct 2013 and acquired the remaining 49% share in Toyota Stellenbosch
Fleet Services • Successfully implemented the City of Johannesburg outsource fleet management contract and expansion into Ghana progressing well
Logistics • Finalised buyout of 25% minority in Logistics Africa • Formed Barloworld Transport Solutions in merger with Manline Logistics • Formed Manline Mega through niche acquisition of abnormal load transport
business • Acquired 25% stake in re- waste management solutions business • Despite industry leading safety practices, tragically 3 fatalities in vehicle
accidents
Group Corporate • Maintained Level 2 B-BBEE rating and most empowered company in
General Industrial sector (Mail and Guardian) • Member of Dow Jones Sustainability Emerging Markets Index (Sept 2013)
Financial overview Don Wilson
Finance Director
6
Income statement highlights
(Rm) FY’13 FY’12 % chg
Revenue 65 102 58 554 11
EBITDA 5 623 4 905 15
Operating profit 3 527 2 988 18 Fair value adjustments on financial instruments (47) (93)
Net finance costs (942) (776) 21
Profit before exceptional items 2 538 2 119 20
Exceptional items (119) 190
Taxation (804) (789)
Secondary Tax on Companies 0 (26)
Income from associates 185 141 31
Net profit 1 800 1 635
HEPS (cents) 860 680 26
7
Income statement highlights
(Rm) FY’13 FY’12 % chg
Revenue 65 102 58 554 11
Equipment and Handling 30 682 29 047 6
Southern Africa 19 126 16 326 17
Europe 4 377 4 180 5
Russia 4 645 3 767 23
Handling 2 534 4 774 -47
Automotive and Logistics 34 410 29 490 17
Corporate 10 17
Average exchange rates (Rands) FY’13 FY’12 % chg
United States Dollar 9.28 8.02 16
Euro 12.18 10.45 17
British Sterling 14.48 12.69 14
8
Income statement highlights
(Rm) FY’13 FY’12 % chg
Revenue 65 102 58 554 11
EBITDA 5 623 4 905 15
Operating profit 3 527 2 988 18 Fair value adjustments on financial instruments (47) (93)
Net finance costs (942) (776) 21
Profit before exceptional items 2 538 2 119 20
Exceptional items (119) 190
Taxation (804) (789)
Secondary Tax on Companies 0 (26)
Income from associates 185 141 31
Net profit 1 800 1 635
HEPS (cents) 860 680 26
9
Income statement highlights
(Rm) FY’13 FY’12 % chg
Revenue 65 102 58 554 11
EBITDA 5 623 4 905 15
Operating profit 3 527 2 988 18
Equipment and Handling 2 123 1 778 19
Southern Africa 1 678 1 535 9
Europe (16) (139)
Russia 407 344 18
Handling 54 38 42
Automotive and Logistics 1 479 1 152 28
Corporate (75) 58
10
Income statement highlights
(Rm) FY’13 FY’12 % chg
Revenue 65 102 58 554 11
EBITDA 5 623 4 905 15
Operating profit 3 527 2 988 18 Fair value adjustments on financial instruments (47) (93)
Net finance costs (942) (776) 21
Profit before exceptional items 2 538 2 119 20
Exceptional items (119) 190
Taxation (804) (789)
Secondary Tax on Companies 0 (26)
Income from associates 185 141 31
Net profit 1 800 1 635
HEPS (cents) 860 680 26
11
Statement of financial position
(Rm) FY’13 FY’12
Non-current assets 15 997 13 470
Current assets (excluding cash) 21 529 19 716
Cash and cash equivalents 2 836 2 624
Assets classified as held for sale 371 0
Total assets 40 733 35 810
Interest of all shareholders 15 839 13 167
Total debt 10 253 10 088
Other liabilities 14 535 12 555
Liabilities classified as held for sale 106 0
Total equity and liabilities 40 733 35 810
Net debt 7 417 7 464
12
Summarised statement of cash flows
(Rm) FY’13 FY’12
Operating cash flows before working capital 5 936 5 199
Decrease/(increase) in working capital 535 (3 128)
Net investment in leasing assets and vehicle rental fleet (2 208) (2 114)
Cash generated from/(utilised in) operations 4 263 (43)
Other net cash flows (1 663) (1 311)
Dividends paid (598) (443) Net cash generated from/(applied to) operating activities 2 002 (1 797)
Net cash used in investing activities (1 349) (1 120)
Net cash inflow/(outflow) 653 (2 917)
13
Investment in working capital
(Rm) FY’13 FY’12
Inventories – decrease/(increase) 17 (3 147)
Receivables – (increase) (178) (937)
Payables – increase 696 956
Total working capital – decrease/(increase) 535 (3 128)
(Rm) FY’13 FY’12
Equipment southern Africa 265 (1 879)
Equipment Europe 32 212
Equipment Russia (32) (791)
Automotive and Logistics 163 (211)
Handling and other 107 (459)
Total working capital – decrease/(increase) 535 (3 128)
14
Capital structure remains strong
Group segmental gearing ratios within target ranges:
Debt to equity (%) Trading Leasing Car Rental Total group
Target range 30 - 50 600 - 800 200 - 300 Gross Net
Ratio at 30 Sept 2013 39 666 224 65 47 Ratio at 30 Sept 2012 50 472 217 77 57
● Net debt of R7 417m (Sept 2012: R7 464m) decreased by R47m ● EBITDA interest cover 5.7 x (Sept 2012: 5.9 x) ● Fitch AA- rating maintained with stable outlook
15
Debt maturity profile
Interest bearing debt Redemption
(Rm) Total Short-term Long-term
South Africa 9 117 2 033 7 084
Offshore 1 136 935 201
Total debt September 2013 10 253 2 968 7 285
Total debt September 2012 10 088 3 040 7 048
● Ratio of long-term to short-term debt 71:29 (Sept 2012 – 70:30) ● R1bn 18 month note to fund Bucyrus southern Africa acquisition extended
to Jan 2015 ● R700m term loan extended to 2019 ● R8.0bn unutilised bank facilities at Sept 2013 ● Cash and cash equivalents R2 836m (Sept 2012 – R2 624m)
Business overview Equipment southern Africa
17 17
● Revenue up by 17% despite slowdown in mining activity due to EMPR contribution and strong after-sales performance
● Operating profit 9% up to R1 678m
● Better than expected operating margin due to operating efficiencies and cost controls
● Generated net cash inflow of R1.4bn
● Construction activity exceeded expectation off a low base
● Congo equipment JV profit of R185m, up 33%
Operational review – Equipment southern Africa
Margin
8.8%
9.4%
0 1 000 2 000
SouthernAfrica
Operating profit (Rm)
Sept 2013 Sept 2012
18 18
Xstrata – Tweefontein (2013-)
Major surface mining opportunities 2013 - 2018
Copper/Nickel Iron ore
Extract Resources – Husab
B2 Gold (2013-)
Exxaro Medupi Exp (2013-)
Jindal (2015)
Kumba – Sishen (2013-)
Exxaro – Belfast Project (2015)
FQM – Kalumbila (2014) Vedanta – KCM (2013-14)
CoAL – Makhado (2016)
ResGen – Boikarabelo (2015)
Nippon Steel- Revuboè (2015)
Vale/Rio Tinto –Tete (2013-)
Zonnebloem Xstrata (2016)
Anglo – New Largo (2017)
Coal Uranium Gold
19 19
Major infrastructure opportunities 2013 - 2018
Potential
Various Road Rehab Neckartal Dam
To commence short term
17 Strategic Integrated Projects (SIPs) developed
and approved in South Africa
Awarded and in progress
Dams, Rail, Ports, Roads Refinery
North South Water Pipeline
Mine Infrastructure and Provincial and Municipal
Infrastructure
Mine Infrastructure Infrastructure Backlogs
Power, Ports, Roads and Railways
Mine Infrastructure Rail and Dams
20
Zambia | FQM Kalumbila
● Order of R1.1bn placed in 2011 for three Cat 7495 rope shovels and seven Cat MD 6640 drills
● July 2013, saw the arrival of the components for the first Cat 7495 electric rope shovel
● 39 local employees on site for the assembly of the ten machines
The assembly team with Barloworld Equipment site management First Cat electric rope shovel to be delivered in Zambia
21
Namibia | Swakop Uranium – Husab Project
● Total order of R1.2bn is for the supply, assembly & commissioning of hydraulic face shovels, electric rope shovels, rotary blasthole drill rigs and diesel engine motivators
● First machine, Cat 6060FS hydraulic shovel arrived in Walvis Bay in Sept and is being assembled on site
● The whole fleet is expected to be commissioned by Nov 2014
22
Namibia | Gold – Otjikoto Project
● Gold mine situated 300km north of Windhoek
● Caterpillar fleet will include mining trucks, wheel loaders, and support equipment
● First 47 Cat machines, valued at R294m have been delivered and assembled, balance to follow during 2014 and 2015
● Key partnership between client and Barloworld Namibia to deliver the best cost per ton
Total contract value R500 million
23
Kumba | Electric Drive truck trial update
● Six Cat 795 AC trucks placed at Sishen (R250m)
● Performance is measured on
• Fleet availability
• Mean Time Between Failure
• Life Cycle Costing
● Fleet performance is above contractual KPI targets to date
● Exceptional parts and component availability
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● Firm back orders lower at R3.5bn (Sept 2012: R5.3bn) due to slow down in mining
● EMPR machine deliveries and after-sales activity expected to remain strong
● Continued growth in construction with solid prospects for the medium term
● Positive outlook for Rental activity
● Continued growth in aftermarket revenues
● Capitalise on growing opportunities in Power
Equipment southern Africa – outlook
0 2 000 4 000 6 000
SouthernAfrica
Order book (Rm)
Sept 2013 Sept 2012
Business overview Equipment Iberia
26 26
● Revenue down 5% in Euro terms as construction market remains depressed
● Operating cost savings of €17.2m (€9.7m relates to non re-occurrence of restructuring costs)
● Product support capability maintained
● Positive cash flows of €28m through strong working capital management
● Power Systems performs well
● Retained market leadership position
Operational review – Equipment Iberia
- 150 - 100 - 50 0
Operating profit (Rm)
Sept 2013 Sept 2012
Margin
-0.3%
-3.3% Iberia
27 27
1 649 1 708
5 433
6 832
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 2018
Equipment industry trend – Iberia (units)
28 28
Power Systems opportunities
Rail • Major Spanish based customers continue to look for international opportunities
• Opportunities in Europe, Asia and Africa being pursued
Marine • Opportunities increase as favourable ship-building tax incentives are approved by the EU
• Caterpillar acquisition of Berg Propulsion drives move to marine systems integration
Petroleum • New Las Palmas branch provides access to North African petroleum customers
• Ongoing success in signing Master Service Agreements with major oil-rig owners
29 29
● Macro economic environment shows first signs of recovery but 2014 growth expected to remain muted
● Order books lower following delivery of prior year package deals and partial order cancellation
● Power system orders remain strong
● Focus on expanding market share while maintaining margins
● Continued focus on cost control, cash generation and asset efficiency
Equipment Iberia – outlook
0 50 100 150
Iberia
Order book (€m)
Sept 2013 Sept 2012
Business overview Equipment Russia
31 31
● Successful year with US Dollar operating profit exceeding 2012 level despite significant slow-down in coal mining
● Healthy operating margin of 8.8% driven by growth in aftermarket activity
● Bucyrus acquisition completed – profitability in line with expectations
● Investment in facilities in Novosibirsk, Irkutsk, Magadan and Norilsk
● Continued growth in market share
Operational review – Equipment Russia
Margin
8.8%
9.1%
0 200 400 600
Russia
Operating Profit (Rm)
Sep 2013 Sep 2012
32 32
Extensive territory coverage
33 33
World-class facilities development
Irkutsk Facility Irkutsk Service Centre
Improvement of Novosibirsk campus Magadan – Opening in 2014
34 34
Product support revenue growth
2005 2006 2007 2008 2009 2010 2011 2012 2013
Product support New equipment
Product support provides more stable annuity revenue stream
35 35
● Order book down, however a number of significant projects are under discussion
● Growth in aftermarket revenues based on EMPR and higher machine population
● Continued investment into regional facilities in RFE and Kuzbass
● Key skill retention with attention to remote regions
● Expand EMPR surface business and deliver on underground project pipeline
● Significant long-term Power rental opportunities
Equipment Russia – outlook
0 50 100
Russia
Order book (US$m)
Sept 2013 Sept 2012
Business overview Handling
37 37
● Overall 42% rise in operating profit
● Agriculture SA volumes impacted by drought but favourable currency movements and strong parts sales lift profits
● SEM growth continues
● Russian losses marginally lower
● Hyster operations in Netherlands and SA benefit from volume, margin and cost improvements
Operational review – Handling
0 20 40 60
Handling
Operating Profit (Rm)
Sep 2013 Sep 2012
Margin
2.1%
0.8%
38 38
● Netherlands held for sale at year-end; will complete exit from Europe and US lift truck businesses
● Order book down but improved trend in SA operations over last quarter
● Further growth in agricultural footprint in southern Africa being explored
● Recovery in demand anticipated in agriculture SA and Russia
Handling – outlook
0 200 400
Handling
Order book (Rm)
Sep 2013 Sep 2012
Business overview Automotive and Logistics
40 40
● Strong overall result in a demanding trading environment
● Revenue: R34.4bn (FY’12: R29.5bn) – up 17%
● Record operating profit R1 479m (FY’12: R1 152m) – up 28%
● Operating margin for the year 4.3% (FY’12: 3.9%)
● All business segments performed well
Operational review – Automotive and Logistics
+38%
+39%
+20%
+26%
0 150 300 450 600
Logistics
Fleet Services
Motor Retail
Car Rental
Operating profit (Rm)
2013 2012
7.7% 7.1% 2.5% 2.4%
16.7% 15.2% 2.3% 2.1%
Margin
41 41
● Revenue CAGR = 14%
● Operating profit CAGR = 27%
● Operating margins improved from 3.4% to 4.3%
● Balanced mix of businesses delivers value through synergies
Integrated business model delivers value
2.0%
3.0%
4.0%
5.0%
0
10
20
30
40
2011 2012 2013
Margin Rbn Revenue and Margin
Revenue Margin
0200400600800
1 0001 2001 4001 600
2011 2012 2013
Rm Operating profit
42 42
● Good operating profit growth – up 26%
● Sustained growth in rental days
● Pleasing revenue per day increase in a competitive environment
● Operating costs well contained
● Fleet utilisation at a good 75%
● Strong used vehicle profit contribution
● Exited coach charter operations
● Sustained customer satisfaction above 90%
Car Rental
Car Rental – southern Africa FY’13 (growth)
Rental days +6.0%
Rental revenue per day +2.4%
43 43
Southern Africa delivered a good result
● Revenue up 15%
● Improved operating profit by 22% and operating margin to 2.5%
● Gross margin expansion and cost containment
● Strong finance and insurance contribution
Australia continued to perform well
● Improved after-sales activity levels
● Sale of Ferntree Gully dealership – effective 31 Oct 2013
Motor Retail
Motor retail FY’13 (growth) Southern Africa Australia
New unit sales (Oct 2012 – Sept 2013) +10% -2%
Parts revenue +13% +22%
Service hours +3.4% +0.6%
44 44
● Excellent operating profit growth – up 39%
● Strong finance fleet growth secured through recently awarded contracts
● Sustained growth in fleets under maintenance
● Maintained good used vehicle profits
● New business in Ghana progressing well
Fleet Services
Fleet Services FY’13 (growth)
Finance fleet +12%
Under maintenance +22%
Total vehicles under management +25%
45 45
● Improved operating profit by 38% to R101m
● Manline contributed strongly to the newly formed Barloworld Transport Solutions from 1 Feb 2013
● Niche acquisition effective 5 Jun 2013, rebranded Manline Mega, is well positioned in the abnormal load transport market
● Successfully renewed all expiring contracts in Supply Chain Management and Dedicated Transport
● International operations continue to face difficult trading conditions
• Restructured Spanish operations
• Exited Far East business effective 1 Nov 2013
Logistics
46 46
Outlook
Equipment and
Handling
Equipment southern Africa
• A challenging mining environment but continued aftermarket growth and delivery of EMPR back orders
• Continued improvement in construction activity in southern Africa, particularly Angola
Equipment Iberia
• Industry to remain at current low levels but with growth in aftermarket activity expected
Equipment Russia
• Challenging mining environment but improving infrastructure spend and continued aftermarket growth
Power Systems • Electric power, marine and petroleum to drive growth in all regions
Handling • Improvement in SA agriculture
Automotive and
Logistics
Car Rental • Volume growth expected in a competitive trading environment
Motor Retail • Stable performance with first quarter volumes in SA impacted by industrial action in vehicle industry
Fleet Services • Continued growth from new and existing customer base
Logistics • Continue positive momentum and well positioned for growth
47 47
Outlook
Clive Thomson, CEO of Barloworld, said
“The group performed strongly in the current financial year with headline earnings per share up by 26%.
The Equipment results were boosted by the recent acquisitions of the Bucyrus distribution businesses in Southern Africa and Russia which performed ahead of expectation, despite facing a difficult external environment as global mining companies reduced capital expenditure.
The Automotive and Logistics division delivered a strong result with all business units performing well ahead of the prior year.
We continued our strategy of allocating capital to higher returning businesses and were successful in concluding a number of important acquisitions and disposals in the period. These will position us well for the future and we expect to make further progress in the year ahead.”
18 November 2013
Barloworld Limited Results For the year ended 30 September 2013
