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Toll Group Level 7, 380 St Kilda Road Melbourne VIC 3004 Australia T +61 3 9694 2888 F +61 3 9694 2880 www.tollgroup.com Toll Holdings Limited ABN 25 006 592 089
20 June 2012 The Manager Australian Stock Exchange Company Announcement Office Level 4 20 Bridge Street Sydney NSW 2000
Lodged Through ASX On Line Total No. of Pages: 24
Dear Sir Toll Investor Presentations: TGL China – Day 3 Please find attached additional Presentation Slides for Day 3 of Toll Investor Visit in Shanghai relating to Toll Global Logistics China, for release to the market. Yours faithfully TOLL HOLDINGS LIMITED Bernard McInerney Company Secretary
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TOLL GLOBAL LOGISTICS
China
Toll Investor Tour, Shanghai – 20 June 2012
Victor Tan - Regional Director, North Asia, TGL
Xu Bao - Deputy Country General Manager, Greater China, TGL
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Agenda
Toll China overview
Milestones 1995 – 2012
Organisation structure
The business today
Strategy going forward
What are the challenges and opportunities of doing business in China?
Opportunities
Challenges
How Toll is overcoming such challenges.
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Toll China overview
Leadership Victor Tan, Regional Director North Asia
Personnel 2,100
Service
Offerings
Warehousing, inventory management, freight management, inter-modal
distribution, returns management, co-packing and other value added
services, nationwide point-to-point delivery, customs clearance, quarantine
inspection, application of quotas for restricted goods.
Minhang
-Warehousing
-Value Added
Hong Kong
Shanghai
Shenyang
Beijing
Xi’an
Chengdu
Urumqi
Kunming
Zhengzhou
Nanning
Changsha
Nanjing
Nanchang
Jinan
Chongqing
Zhongshan
Wuhan
Qingdao
Yangzhou
Harbin
Guangzhou
Songjiang
Waigaoqiao
Tianjing
Toll Global Logistics was awarded for Supply Chain Innovation at 2011 Supply Chain Asia Logistics Awards! Recognizes that our supply chain processes have lead to major cost
savings, efficiency gains and improved customer service.
“The logistics service provided of Toll China has been very well
to our high satisfaction. Walter Chan, Manufacturing Director,
Hawley & Hazel, China
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Milestones (1995 – 2012)
Strategic growth path
1995 1997
2005
2007
2008
2006
2003
2010
Set up 7 strategic
RDC in turn and
operate.
Profit in early
1999
New WMS
upgrade in
all RDCs.
Finish
Olympic
Projects
smoothly
Start Fixed
Schedule
Delivery
(FSD)
services by
owned-truck
among
Beijing &
Shanghai &
Guangzhou
GZRDC moves
to new
customized w/h
with area of
80,000 m2;
Parent company
- Semblog is
acquired by Toll
Group, biggest
logistics
company in
Australia
>100 Customers
Start bonded
warehousing
services in
Shenzhen
Futian
NVOCC License-
start international
freight forwarding
business.
SHRDC moves to
new W/House
with area of
60000 m2
Incorporated as a JV in
Shenzhen on Dec 20,
with Capital of
US$10M. The total
investment is over
US$25M.
2011
Toll acquires
100%
ownership of
ST-Anda
Rebrands as
Toll Global
Logistics
Wins Asia
3PL award
Relocates SZ
HQ
function to
SHA
2012
Restructured
Mgmt team,
Regional
P&L
ownership &
accountability
Toll wins
Supply
Chain Asia
most
innovative
3PL player
award
Toll secures
Tesco relief
aid to
Thailand
work
Foundation
Phase
Strengthening & Expansion
Phase
Strategic Positioning
Phase
Embracing One Toll
Going Forward
Toll wins J&J
Best Logistics
Provider Award
Toll obtains
license for
transportation
and warehousing
of medical
devices
Toll introduces
5S and Lean
Management
SembCorp / China Merchants Group JV Toll / China Merchants
Group JV Toll owned entity
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Victor Tan
Regional Director
North Asia
AC MGMT COM & FINANCE HR & ADMIN
Eva Peng
Director
HR & Admin
Wang EnHui
Director
IT
CIP & SOLUTION
Tian Xing Kai
Director
CIP, Solution & Imp
Ingrid Wee
Director
AC Management
Caryn Sim
GM
Com & Finance
IT
Xu Bao
Deputy Country GM
China
Tony Ruan
Country Manager
TAIWAN
Regions
James Tan
Director
South Region
Yeo Chong Hwei
Director
North Region
Zhou Sheng Zu
GM
Transport & Ops
Selina Zou
Director
East Region
BD
Eddie Bookoh
GM
BD
Dennis Lim
Country GM
Greater China
Organisation Structure
Toll Global Logistics - Greater China
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Our point of difference Toll China operates a comprehensive Pan-China network
Shenyang RDC
Chengdu RDC
Beijing RDC
Shanghai RDC Wuhan RDC
Guangzhou RDC
• 2,100 employees
• 23 logistics facilities
• >400,000 sq.m logistics facilities
• Manage a fleet of 1,200 trucks of which we own >120
• Live SKU’s: 788,205
• Monthly PO’s Handled: >125,000
• Average Monthly Inventory >360,000 cbm
• Cities served: 1,685
• Live Drop Points Served: 38,000
• Green Lane Status (retail stores)
Key statistics • Beijing Shenyang
• Urumqui Qingdao
• Jinan Xian
• Tianjin Harbin
North Region
• Shanghai Baoshan
• Wuhan Zhengzhou
• Yangzhou Nanjing
• Nanchang Changsha
• Minhang Songjiang
East Region
• Guangzhou1 Zhongshan
• Guangzhou3 Chongqing
• HuangPu Chengdu
• Nanning Kunming
South Region
Population: 8.1M
Population: 20.2M
Population: 23.5M
Population: 9.8M
Population: 14.0M
Population: 12.7M
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Road transportation capability
Guangzhou-Xian (via Wuhan)
4 Prime Mover +5 Trailer
Guangzhou-Chengdu
(via Chongqing)
3 Prime Mover + 4 Trailer
Guangzhou-Beijing
(via Wuhan)
4 Prime Mover +
6 Trailer
Guangzhou-Shanghai
11 Prime Mover + 27
Trailer
Beijing Intra-city Delivery
Fleet 10 Trucks
Shanghai Intra-
city Delivery Fleet
16 Trucks
Pearl river delta region Fleet
20 Prime mover+35 Trailer +
15 Trucks (Intra-city Delivery) Guangzhou-Wuhan
3 Prime Mover +6
Trailer
Company Fleet with GPS
24 hours
<200 km
24-48 hours
200 – 600 km
48-72 hours
>600 – 1000
>72 hours
> 1000 km
Toll China provides
daily access to 1,685
cities
25% 44%
19% 12%
• GPS real time monitoring on all vehicles
• Electronic Automatic Dispatch system
usage on last mile deliveries
Transport Network
Fleet Size: More than 1200 available on daily basis
throughout China with 120 company fleet
No. of dedicated sub-contractors: 170
Annual volume (FY10/11) of goods transported:
Approx. 5M m3 or 1M tons
Line-haul network operations
Domestic last mile distribution
Contract Logistics
ISO-compliant transport management procedures
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Our customers in China
Li Ning
Hi-tech Consumer
Retail & Fashion
Industrial
Automotive Healthcare
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Group OH&S
Standards
Focus on Identifying
OH&S Risks
Incident Investigation
Training
Driver Fatigue
Management
Training to Improve
Attitude and Behaviour
Occupational Health and Safety Initiatives
Our safety belief: Safety First, Safety is everyone's responsibility, All injuries can be avoidable, Return home safe.
Safety Policies Safety Management System Safety Induction for new staff, regular Safety training for all workers
Defensive driving training and appraisal towards new and unsophisticated truck drivers in a constant way
Daily safety Inspection; Semi-annual safety audit; Regular safety meeting; Monthly safety performance evaluation for RDC/DC
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Toll China wins various logistics service awards
Toll China wins multiple J&J logistics
service awards in March 2012 and a host
of other customer awards in earlier years
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Toll Global Logistics
China strategy
1 Grow 2 New Verticals - leveraging on current FMCG
strength. Target - Cold Chain and DG
2 Journey South – Build a overland cross border
capability from CN -> TH -> MY -> SG
3 Go West - Expand footprint into Western China to
support customer’s growth path
4 Up Scale Service Level Std – 1up & 3down approach
driven by RD owned by CGM, RGM, DC Mgr
5 Know How Exchange - Expose and train key person
in the business to best practice and best in class
6 Cost to Serve - Develop a better understanding –
deliver better margins, enhance competitiveness
7 Strengthen 15 yr Leadership Position in FMCG
Verticals – build relationship via C-BD, R-BD & G-BD
8 TGL target Customers – Expand and grow with them
9
Leadership Planting - Build an effective culturally
balanced and responsive China management team
Lead
Grow
TGL 2015
Improve
GROW
Lead
Grow
TGL 2015
Improve
IMPROVE
Lead
Grow
TGL 2015
Improve
LEAD
Target Vertical Markets
FMCG Raw material and finish product –
domestic and export
Retail Retail logistics – Hypermarts,
Supermarts, C-stores, E-commerce
Industrial Steel, Mining, Machinery
Key Product Offerings
Transport Domestic fleet with strong
national cross dock network
Multi-modal transport mgmt
(Road, Air, Rail and Barge)
Warehousing Inventory management
Ambient, & Temp control
Value-added
services
• Quality check, Co-packing,
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China – opportunities
Opportunities
Near Term
Market potential, GDP growth forecast for 2012 is 8.7% - every business wants to be in China,
online retailer expect sales to triple.
Western China largely untapped presenting opportunities – most FMCG looking west to
achieve double digit growth.
Cold Chain logistics is emerging – specialised asset, high entry banner, higher margin, less
competition, government legislation is tightening – opportunity for Toll as a niche provider, i.e.
‘National Development and Reform Commission of China which formulates policies for
economic and social development, has targeted this specialist logistics sector for improvement
in an effort to slash the huge amount of food that goes rotten or is wasted before it reaches
consumers’.
Longer Term
Healthcare sector – high digit growth as China’s population ages.
Dangerous goods – lucrative market, stricter compliance catching up.
Overland cross border road network across 7 countries China – Laos – Vietnam – Cambodia –
Thailand – Malaysia – Singapore.
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The game has changed - impact on our business
o Wages have doubled in five years
o Social and insurance benefits
o Housing allowance benefits
o High temperature allowance
o Payload and vehicle dimension limitations
o Increasing population unrest
Rental inflation – government reluctant to release land for logistics,
pushing demand over supply, and rental hike by double digit.
Customers are increasingly looking towards 3PL owning such asset to
contain warehousing cost. However commitment is still one way – non
mutual as long term contract beyond three years are still hard to come by.
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Customers are price sensitive – often, it is still a ‘How much per tonne’ rather than ‘What is
my total supply chain cost’
Multi-dimensional Market – The market has significant differences in customer needs and
wants between regions. MNCs terms and conditions based on global contract framework.
Changing consumer demand – Customers are forced to change their distribution profile
and strategy frequently, resulting in short response times for 3PLs.
Regional differences – All provinces in China are different and have differing operating cost
base and challenges, e.g differences in government policy, wages, property costs, VAT vs
business tax.
Rising costs – Property, fuel and labor costs are rising.
Legislative environment – A lot of grey areas in legal legislature.
Frequent changes to regulations – VAT, truck pay load limitations, vehicle dimensions,
health + welfare benefits, minimum wage (mostly without prior industry consultation).
Customers behaviour – encourage competing customers to recognise the benefits of
logistics collaboration vs competitive threat.
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Opportunities for Toll in China
Outsource trend still very low at 2.7% versus 30% in developed markets. Explosive
growth expected as government pushes for higher focus on domestic consumption;
which will come from tier 2 and 3 cities, particularly western part of China. Toll China
is well positioned to support our customer growth.
Alignment to markets requiring a need to develop sophisticated Supply Chain
solutions (3PL & 4PL) with subsequent contract longevity and improved supply chain
efficiencies. E.g. our regional BD strategy.
Target MNCs and sophisticated local customers that recognise Toll can add value
along the full supply chain, and who share common corporate values. E.g.
differentiate by our ‘One Toll’ global connectivity.
In-country capability - can leverage the knowledge and skillsets of regional and
global expertise (something SOEs struggle with).
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Property strategy
consolidate, upgrade to modern warehouse space; Back-to-back leases with
mid-term ‘get out’ clauses. Consider landbanking and owned properties where
strategic.
People development - exchange program established – continue career planning
and cross fertilisation to ensure strive to best practice and ‘employer of choice’
Investment – continue to invest in own fleet for line haul and distribution where
appropriate.
Differentiate
technology (GPS, Auto Dispatch, RF… RFID)
continue to invest in CIP projects to drive productivity that supports long term
growth, competitiveness and improved shareholder returns.
Opportunities for Toll in China F
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20
Shenyang
RDC
Chengdu
RDC
Beijing
RDC
Shanghai
RDC
Wuhan
RDC
Guangzhou
RDC
Urumqi DC
Harbin DC
Zhengzhou
DC
Qingdao DC
Jinan DC
Hong Kong DC
Nanning DC Kunming DC
Xi’an DC
Yangzhou DC
Nanjing
DC
Zhongshan DC
Chongqing DC
Nanchang
DC
Changsha DC
Regional Distribution Centre
Distribution Centre
• West
• Xi’an
• Chengdu
• Kuming
• North
• Harbin
• Shenyang
Ready network to
support next phase
growth in China
Build and expand on our existing
established network with our target
customers, developing a scheduled
full multi-modal service offering as
water and rail infrastructure
becomes more readily available.
Growth is going
Toll is well positioned to support our customers in their next growth surge
Opportunities for Toll in China F
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For investor related information please contact:
David Shirer – Group General Manager Investor Relations - Toll Group
Phone: +61 3 8689 3226
Mobile: +61 407 512 521
Email: [email protected]
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This presentation includes “forward-looking statements.” These can be identified by words such as “may”, “should”, “anticipate”, “believe”, “intend”, “estimate” and “expect”. Statements which are not based on historic or current facts may be forward-looking statements.
Forward-looking statements are based on assumptions regarding Toll’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which Toll will operate.
Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed and which are subject to various risks and uncertainties. Actual results, performance or achievements of Toll could be materially different from those expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this presentation are not guarantees or assurances of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Toll, which may cause the actual results, performance or achievements of Toll to differ materially from those expressed or implied by the forward-looking statements. For example, the factors that are likely to affect the results of Toll include general economic conditions in Australia and Globally; exchange rates; competition in the markets in which Toll does and will operate; weather and climate conditions; and the inherent regulatory risks in the businesses of Toll. The forward-looking statements contained in this presentation should not be taken as implying that the assumptions on which the projections have been prepared are correct or exhaustive.
Toll disclaims any responsibility for the accuracy or completeness of any forward-looking statement. Toll disclaims any responsibility to update or revise any forward-looking statement to reflect any change in Toll’s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based, except as required by law.
The projections or forecasts included in this presentation have not been audited, examined or otherwise reviewed by the independent auditors of Toll. Unless otherwise stated, all amounts are based on A-IFRS and are in Australian Dollars. Certain figures may be subject to rounding differences. Any market share information in this presentation is based on management estimates based on internally available information unless otherwise indicated.
You must not place undue reliance on these forward-looking statements.
This presentation is not an offer or invitation for subscription or purchase of, or a recommendation of securities. The securities referred to in these materials have not been and will not be registered under the United States Securities Act of 1933 (as amended) and may not be offered or sold in the United States absent registration or an exemption from registration.
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