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Barloworld Limited Results for the year ended 30 September 2016
3
Salient features
Revenue up 6% to R66.5bn
Operating profit up 4% to R4 135m
Profit before non-operating and capital items up 14% to R2 693m
Cash generated from operations of R7 827m (2015: R1 123m)
Headline earnings per share up 3% to 838 cents
Headline earnings per share (excluding B-BBEE charge) down 9%
Total dividend per share of 345 cents maintained
Barloworld Limited Results for the year ended 30 September 2016
4
Overview and key developments
Equipment
and
Handling
Equipment
southern
Africa
• Operating margin resilient at 8.5% despite continued decline in mining equipment sales
• Positive cash generation of R3.0bn compared to cash utilisation of R1.7bn in 2015
Equipment
Russia• Strong performance on the back of gold mining deliveries and solid aftermarket business
Equipment
Iberia• Power systems dominates revenues as construction equipment recovery confined to small
machine market
Handling • Signed agreement post year end to dispose of Handling and Agriculture SA into a 50/50 JV
company with BayWA AG at net asset value
Group
Group • Dominic Sewela appointed CEO-designate effective 1 Oct 2016 as part of a structured
succession plan
• Safety focus continues – tragically, one work-related fatality in a vehicle collision
• Obtained Level 3 B-BBEE rating under the revised Codes
• Constituent of the Dow Jones Sustainability Emerging Markets Index and the
FTSE / JSE Responsible Investment Top 30 Index
Automotive
and
Logistics
Car Rental • Continue to extract value from the Avis and Budget dual brand strategy
Avis Fleet • Solid result achieved and high level of financial returns maintained
Motor Trading • Acquisition of Union Motors and majority stake in Salvage Management and Disposal (SMD)
delivered to expectation and provide platform for future growth
Logistics • Increased our stake in Barloworld Transport to 79%
• Disposed Supply Chain Software business to LLamasoft effective 31 Dec 2015
• Acquired refrigerated network businesses KLL Group and 51% of Aspen Logistics
Barloworld Limited Results for the year ended 30 September 2016
5
44%
56%
Revenue (R66.5bn)
55%
45%
Operating profit (R4.1bn)
Group revenue and operating profit split – September 2016
Automotive and Logistics Equipment and Handling
Barloworld Limited Results for the year ended 30 September 2016
7
Income statement highlights
(Rm) FY’16 FY’15 % chg
Revenue 66 547 62 720 6
EBITDA 6 674 6 479
Operating profit 4 135 3 995 4
B-BBEE charge (251)
Operating profit including B-BBEE charge 4 135 3 744 10
Fair value adjustments on financial instruments (209) (198)
Net finance costs (1 233) (1 185)
Profit before non-operating and capital items 2 693 2 361 14
Non-operating and capital items 120 (6)
Taxation (809) (808)
Profit after tax 2 004 1 547 30
(Loss) / income from associates (25) 287
Net profit 1 979 1 834
HEPS (cents) 838.1 813.8 3
HEPS excl. B-BBEE charge (cents) 838.1 925.5 (9)
Barloworld Limited Results for the year ended 30 September 2016
8
Income statement highlights – Revenue
(Rm) FY’16 FY’15 % chg
Revenue 66 547 62 720 6
Equipment and Handling 29 362 29 506 -
Southern Africa 18 547 20 307 (9)
Europe 4 473 3 793 18
Russia 4 837 3 379 43
Handling 1 505 2 027 (26)
Automotive and Logistics 37 183 33 213 12
Automotive 31 427 28 704 9
Logistics 5 756 4 509 28
Corporate 2 1
Average exchange rates (Rands) FY’16 FY’15 % chg
United States Dollar 14.75 11.98 23
Euro 16.32 13.73 19
British Sterling 20.99 18.52 13
Barloworld Limited Results for the year ended 30 September 2016
9
Income statement highlights
(Rm) FY’16 FY’15 % chg
Revenue 66 547 62 720 6
EBITDA 6 674 6 479
Operating profit 4 135 3 995 4
B-BBEE charge (251)
Operating profit including B-BBEE charge 4 135 3 744 10
Fair value adjustments on financial instruments (209) (198)
Net finance costs (1 233) (1 185)
Profit before non-operating and capital items 2 693 2 361 14
Non-operating and capital items 120 (6)
Taxation (809) (808)
Profit after tax 2 004 1 547 30
(Loss) / income from associates (25) 287
Net profit 1 979 1 834
HEPS (cents) 838.1 813.8 3
HEPS excl. B-BBEE charge (cents) 838.1 925.5 (9)
Barloworld Limited Results for the year ended 30 September 2016
10
Income statement highlights – Operating profit
(Rm) FY’16 FY’15 % chg
Revenue 66 547 62 720 6
EBITDA 6 674 6 479
Operating profit 4 135 3 995 4
Equipment and Handling 2 264 2 368 (4)
Southern Africa 1 585 1 894 (16)
Europe 55 71 (23)
Russia 599 397 51
Handling 25 6
Automotive and Logistics 1 877 1 688 11
Automotive 1 654 1 529 8
Logistics 223 159 40
Corporate (6) * (61)
* Excluding B-BBEE charge of R251 million
Barloworld Limited Results for the year ended 30 September 2016
11
Income statement highlights
(Rm) FY’16 FY’15 % chg
Revenue 66 547 62 720 6
EBITDA 6 674 6 479
Operating profit 4 135 3 995 4
B-BBEE charge (251)
Operating profit including B-BBEE charge 4 135 3 744 10
Fair value adjustments on financial instruments (209) (198)
Net finance costs (1 233) (1 185)
Profit before non-operating and capital items 2 693 2 361 14
Non-operating and capital items 120 (6)
Taxation (809) (808)
Profit after tax 2 004 1 547 30
(Loss) / income from associates (25) 287
Net profit 1 979 1 834
HEPS (cents) 838.1 813.8 3
HEPS excl. B-BBEE charge (cents) 838.1 925.5 (9)
Barloworld Limited Results for the year ended 30 September 2016
12
Statement of financial position
(Rm) FY’16 FY’15
Non-current assets 20 179 19 906
Current assets (excluding cash) 21 987 25 680
Cash and cash equivalents 3 028 2 372
Assets held for sale 828 197
Total assets 46 022 48 155
Interest of all shareholders 19 679 20 042
Total debt 11 044 13 124
Other liabilities 15 232 14 946
Liabilities held for sale 67 43
Total equity and liabilities 46 022 48 155
Net debt 8 016 10 752
Barloworld Limited Results for the year ended 30 September 2016
13
Summarised statement of cash flows
(Rm) FY’16 FY’15
Operating cash flows before working capital 7 161 7 094
Movement in working capital 2 119 (3 370)
Net investment in leasing assets and vehicle rental fleet (1 453) (2 601)
Cash generated by operations 7 827 1 123
Other net cash flows (2 112) (1 947)
Dividends paid (772) (814)
Net cash retained from / (utilised in) operating activities 4 943 (1 638)
Net cash used in investing activities (1 436) (1 826)
Net cash inflow / (outflow) 3 507 (3 464)
Barloworld Limited Results for the year ended 30 September 2016
14
Investment in working capital
(Rm) FY’16 FY’15
Inventories – decrease / (increase) 2 668 (1 558)
Receivables – decrease / (increase) 797 (393)
Payables – decrease (1 346) (1 419)
Total working capital – decrease / (increase) 2 119 (3 370)
(Rm) FY’16 FY’15
Equipment southern Africa 1 666 (2 279)
Equipment Europe 221 (234)
Equipment Russia 406 225
Handling 27 (447)
Automotive 94 (200)
Logistics (104) (133)
Corporate (191) (302)
Total working capital – decrease/(increase) 2 119 (3 370)
Barloworld Limited Results for the year ended 30 September 2016
15
Summarised statement of cash flows
(Rm) FY’16 FY’15
Operating cash flows before working capital 7 161 7 094
Movement in working capital 2 119 (3 370)
Net investment in leasing assets and vehicle rental fleet (1 453) (2 601)
Cash generated by operations 7 827 1 123
Other net cash flows (2 112) (1 947)
Dividends paid (772) (814)
Net cash retained from / (utilised in) operating activities 4 943 (1 638)
Net cash used in investing activities (1 436) (1 826)
Net cash inflow / (outflow) 3 507 (3 464)
Barloworld Limited Results for the year ended 30 September 2016
16
Debt maturity profile
Total interest bearing debt Redemption
(Rm) Total Short-term Long-term
South Africa 10 432 2 303 8 129
Offshore 612 362 250
Total debt Sept 2016 11 044 2 665 8 379
Total debt Sept 2015 13 124 4 050 9 074
Ratio of long-term to short-term debt 76:24 (Sept 2015 – 69:31)
Current year long term bonds issued for R1.2bn
Current year long term bank funding raised for R1.4bn
R9.6bn (committed R7.2bn) unutilised bank facilities at Sept 2016
Cash and cash equivalents R3 028m (Sept 2015 – R2 372m)
Barloworld Limited Results for the year ended 30 September 2016
17
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 2016 29 720 216 56 41
Ratio at 30 Sept 2015 43 688 211 67 55
Net debt of R8 016m (2015: R10 752m)
EBITDA interest cover 5.0 x (2015: 5.2 x)
Net debt to EBITDA 1.2 x (2015: 1.8 x)
Moody’s Global Scale Rating of Baa3 and National Scale Rating of Aa3.za (stable outlook)
Barloworld Limited Results for the year ended 30 September 2016
19
Revenue of R18.5bn is 8.7% down in a difficult trading environment
Operating profit of R1 585m impacted by continued weakness in the mining sector
Aftermarket resilient but demand impacted by production curtailment in certain regions
Active working capital management and cost containment measures paying off
Positive cash generation of R3.0bn (2015: R1.7bn utilised)
Angola impacted by low oil price and hard currency shortages
Geographic and commodity spread provided resilience in a tough climate
Operational review – Equipment southern Africa
0 1 000 2 000
SouthernAfrica
Operating profit (Rm)
Sept 2016 Sept 2015
Margin
8.5%
9.3%
-16%
Barloworld Limited Results for the year ended 30 September 2016
20
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Rbn
Equipment sales Product support
Southern Africa sales history
30%
28%34%
46%
36%
33%
41%
46%
50%
56%
Barloworld Limited Results for the year ended 30 September 2016
21
31%
56%
8%5%
2016
39%
50%
6%5%
2015
Southern Africa revenue profile by line of business – September
New equipment Product support Used equipment Rental
Barloworld Limited Results for the year ended 30 September 2016
22
29%
52%
15%
4%
2016
40%
43%
13%
4%
2015
Southern Africa new equipment sales by industry – September
Mining Construction Power Contract mining
Barloworld Limited Results for the year ended 30 September 2016
23
Income from DRC associate R13m (2015: R265m) impacted by weak copper price
Temporary suspension of mining activity by largest customer following geotechnical (slope) failure
o New copper processing plant expected to be commissioned H2’17
Very low new machines sales in DRC this year
Significant negative aftermarket impact due to parked machine fleets
Ongoing internal restructuring to reduce cost base
Improved performance in H2’16
Long term outlook remains positive
o 2nd largest high quality global copper reserves
Income from associates (DRC joint venture)
Source of copper price graph: www.ifcmarkets.com
Barloworld Limited Results for the year ended 30 September 2016
24
Surface mining project outlook
Coal PGM / Zinc / Manganese Diamonds Uranium
Coal of Africa – Makhado (2018)
South 32 – Wwk – VDD (2017)
Sekoko – Waterberg (2017)
Foskor – Phalaborwa (2017)
Glencore – Zonnebloem (2018)
Shanduka - Argent Project (2017)
Vale – Moatize Expansion (2017-2018)
ICVL – Minas Benga (2017)
Chitotolo / Catoca (2017)
Valencia – (Norasa) (2020)
Debswana – Orapa Cut 3 (2020)
Tshipi Borwa (2019)
Vedanta Gamsberg (2017)
Exxaro – Belfast Project (2019)
Debswana – Jwaneng Cut 9 (2019)
Barloworld Limited Results for the year ended 30 September 2016
25
SA generator sales lower due to reduced power outages
Solar PV presenting growth opportunities – 300kW (peak) power plant installed in Isando
Benefits include
Significant electricity cost savings
Carbon emissions reduction
Intended roll out to other group facilities and external customers
Power Systems – opportunities in Solar PV
Barloworld Limited Results for the year ended 30 September 2016
26
Firm back orders at R1.3bn (2015: R1.7bn)
Certain green shoots are evident in mining sector
Aftermarket activity to improve based on higher average age of mining fleet
The need for infrastructure development will underpin construction demand
Revenue outlook for 2017 range of R18.0bn to R19.0bn (2016: R18.5bn)
Equipment southern Africa – outlook
0 1 000 2 000
SouthernAfrica
Order book (Rm)
Sept 2016 Sept 2015
Barloworld Limited Results for the year ended 30 September 2016
28
Strong result under challenging economic conditions – operating profit of R599m
Operating margin increased to 12.4% from 11.8%
Mining segment improvement driven by gold and base metals with coal remaining depressed
Sustained aftermarket activity continued to support operating result
Tight cost control and efficiency improvements across the business
Strong positive cash generation and financial returns
Operational review – Equipment Russia
0 250 500 750
Russia
Operating profit (Rm)
Sept 2016 Sept 2015
Margin
12.4%
11.8%
+51%
Barloworld Limited Results for the year ended 30 September 2016
29
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$m
Equipment sales Product support
Russia sales history
24%
25%
29%
36%
28%
27%33%
46%
61%
51%
Barloworld Limited Results for the year ended 30 September 2016
30
43%
51%
1% 4%
2016
34%
61%
1% 4%
2015
Russia revenue profile by line of business – September
New equipment Product support Used equipment Rental
Barloworld Limited Results for the year ended 30 September 2016
31
68%
7%
8%
4%
13%
2016
59%10%
18%
5%
8%
2015
Russia new equipment sales by industry – September
Mining Construction Power Oil and gas Other
Barloworld Limited Results for the year ended 30 September 2016
32
Mining opportunities
Polyus
6 units 34 units
$10.1m $103m (2018)
Sovrudnik
4 units 2 units 10 units
$1.6m $0.9m $2.3m
Gross
36 units
$65m (2018)
Muna
37 units
$47m (2018)
Kekura
37 units
$21m (2018)
AS Siyaniye (Kupol)
6 units 2 units
$4.2m $0.9m
ZDK Pavlik
10 units 2 units
$10.0m $1.9m
GV Gold Ugakhan
17 units 8 units 1 unit
$17.8m $8.7m $0.9m
Bystrinsky
17 units
$23.0m
Norilsk Nickel
10 units 4 units 10 units
$8.3m $2.3m $7.8m
Greenfields / major projectsFirm ordersDelivered
Barloworld Limited Results for the year ended 30 September 2016
33
Oil price volatility – creating uncertainty and limiting capital investments
Commodity prices showing signs of recovery – mining tender activity increasing
Plan to capitalise on mining greenfield opportunities
Protect and grow aftermarket revenues through technology solutions
2017 revenue outlook range of $300m to $370m (2016: $329m)
Equipment Russia – outlook
0 10 20 30
Russia
Order book ($m)
Sept 2016 Sept 2015
Barloworld Limited Results for the year ended 30 September 2016
35
Macroeconomic environment in Spain remains positive but uncertainty created by two
inconclusive general elections
Recovery in construction equipment industry confined to small machine market
Solid performance in marine power systems business
Operating profit of R55m impacted by weaker result in Portugal
Operating expenses include R9.7m restructuring costs in Portuguese operation
Operational review – Equipment Europe
0 50 100
Operating profit (Rm)
Sept 2016 Sept 2015
Margin
1.2%
1.9%
-23%
Barloworld Limited Results for the year ended 30 September 2016
36
0
100
200
300
400
500
600
700
800
900
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
€m
Equipment sales Product support
Iberia sales history
30%
30%
34%
40%37%
33% 35%
41% 44% 44%
Barloworld Limited Results for the year ended 30 September 2016
37
41%
44%
12%
3%
2016
37%
44%
16%
3%
2015
Iberia revenue by line of business – September
New equipment Product support Used equipment Rental
Barloworld Limited Results for the year ended 30 September 2016
38
4%
44%
52%
2016
2%
46%
52%
2015
Iberia new equipment sales by industry – September
Mining ConstructionPower
Barloworld Limited Results for the year ended 30 September 2016
39
Offshore vessels (fishing / tug / ferry) make up 66% of vessel construction market in Spain
Capability enhancement to capture opportunity
Complete propulsion system offering
Marine asset intelligence
Expanded aftermarket service capability
Prime product and aftermarket opportunity
Armon / Armas new ferry – €10.4m tender underway for full propulsion package
New tug boat – €2.1m firm order for main propulsion and auxiliary power engines
Balearia repowering – €4.4m firm order
Power Systems – marine evolution and opportunities
Barloworld Limited Results for the year ended 30 September 2016
40
Macroeconomic environment expected to show some improvement in 2017
Machine industry in Spain continues to deliver growth but concentrated in small equipment
Marine aftermarket will underpin operating result
Focus on cost management and improved efficiencies
2017 revenue outlook range of €270m to €300m (2016: €274m)
Equipment Europe – outlook
0 20 40 60
Iberia
Order book (€m)
Sep-16 Sep-15
Barloworld Limited Results for the year ended 30 September 2016
42
Operating profit benefitted from exiting the agriculture business in Russia
Agriculture SA sales impacted by severe drought
Cost base reduced to match the smaller business
Successful inventory reduction in H2’16 improves cash generation
Agreement to dispose of Handling and Agriculture SA assets into 50/50 JV with BayWa at NAV
Joint venture to be equity accounted from completion date
Operational review – Handling
0 10 20 30
Handling
Operating profit (Rm)
Sept 2016 Sept 2015
Margin
1.7%
0.3%
+316%
Barloworld Limited Results for the year ended 30 September 2016
44
Record result in a challenging trading environment
Revenue R31.4bn (2015: R28.7bn) – up 9.5%
Operating profit R1 654m (2015: R1 529m) – up 8.2%
Operating margin for the year maintained at 5.3%
Strong used vehicle profit contribution
Operational review – Automotive
0 100 200 300 400 500 600 700
Car Rental
Avis Fleet
Motor Trading
Sept 2016 Sept 2015
Margin
+14%
-2.1%
+15%
9.0%
9.1%
15.4%
17.0%
2.6%
2.4%
Operating profit (Rm)
Barloworld Limited Results for the year ended 30 September 2016
45
Well balanced Automotive portfolio provides resilience
Revenue CAGR of 11% delivers operating profit CAGR of 16%
Inter-business unit synergies continue to deliver value
Recently acquired businesses performing in line with expectation
Integrated business model delivers value
0
300
600
900
1200
1500
1800
2011 2012 2013 2014 2015 2016
Rm Operating profit by BU
Car Rental Motor Trading Avis Fleet
0
300
600
900
1200
1500
1800
2011 2012 2013 2014 2015 2016
RmOperating profit
Operating profit 1H Operating profit 2H
Barloworld Limited Results for the year ended 30 September 2016
46
Car Rental FY’16 (growth)
Rental days +3.8%
Rental revenue per day +5.4%
Very good operating profit growth of 14%
Sustained growth in rental days
Pleasing revenue per day increase
Fleet utilisation maintained at 75%
Strong used vehicle profit contribution
Customer satisfaction remains above 90%
Car Rental
Barloworld Limited Results for the year ended 30 September 2016
47
Avis Fleet FY’16 (growth)
Finance fleet -2.4%
Under maintenance -2.3%
Operating profit down 2.1%
Financed fleet negatively impacted by the non-renewal
of Lesotho contract
Net reduction in OEM maintenance plans
Reduced fleet terminations impacted used contribution
Customer retention rates remain high
Avis Fleet
Barloworld Limited Results for the year ended 30 September 2016
48
Motor Trading FY’16 (growth)
New unit sales -6.4%
Parts revenue +13%
Service hours +0.6%
Increased operating profit by 15% supported by recent
acquisitions
Two Mercedes-Benz dealerships (1 Mar 2016)
Majority share in SMD (1 May 2016)
Result impacted by weaker new vehicle market
Positive contribution from aftermarket revenues
Improved performance from used vehicles
Market share maintained
Motor Trading
Barloworld Limited Results for the year ended 30 September 2016
49
Automotive – outlook
Car Rental Volume and revenue per day increases expected to deliver top line revenue growth,
supported by the dual brand strategy
Productivity, fleet utilisation and cost focus will maintain strong return on equity
Continued positive contribution from used vehicle disposals
Motor Trading Challenging trading conditions to continue, impacting overall margins
Recent acquisitions to contribute positively to revenue and profitability
Avis Fleet Well positioned for continued organic growth
Maintain market leadership position and continue to achieve strong return on equity
Awaiting outcome of large contract renewals
Automotive
Division
2017 revenue outlook range of R33bn to R34bn (2016: R31.4bn)
Barloworld Limited Results for the year ended 30 September 2016
51
Revenue up 28% and operating profit up 40% on last year
Favourable trading on key supply chain management contracts
Growth in Transport volumes coupled with margin improvements
Record trading within Freight Forwarding South Africa
Addition of new contracts and SmartMatta acquisition during 2015 having full financial impact
Acquisition of the entire equity of KLL Group and 51% of Aspen providing multi-party,
multi-temperature warehousing and distribution capability from 1 Jan 2016
Operational review – Logistics
0 100 200 300
Logistics
Operating profit (Rm)
Sept 2016 Sept 2015
Margin
3.9%
3.5%
+40%
Barloworld Limited Results for the year ended 30 September 2016
53
Remains positive with good growth opportunities through
Annualised work won during 2016 supporting the 2017 financial year
Diversifying and extending service offerings
Leveraging investment in SmartMatta, KLL and Aspen
Tough trading conditions are expected to continue in mining and infrastructure sectors
especially in specialised transport and cross border
2017 revenue outlook range of R6.3bn – R7.0bn (2016: R5.8bn)
Logistics – outlook
Barloworld Limited Results for the year ended 30 September 2016
55
Group outlook
Clive Thomson, CE of Barloworld, said:
“All our businesses have a clear strategic focus and strong market positions.
As a result of positive cash generation the group’s balance sheet is strong and we are well placed to
capitalise on organic and acquisitive growth opportunities as they arise.
We have the right leadership in place in all of our businesses and expect 2017 to be another year of solid
progress for the group.”
21 November 2016