Hudaco Industries Limited · JSE:HDC
Hudaco Industries — H1 2024 Earnings Presentation
39 slides from Hudaco Industries's earnings presentation, May 31, 2024
Slide 1: Unaudited Interim Results for the six months ended 31 May 2024
Hudaco UNAUDITED INTERIM RESULTS For the six months ended 31 May 2024 1
Slide 2: Agenda
AGENDA ❑ General business environment ❑ Hudaco in the general business environment ❑ Business model ❑ Reporting segments ❑ Operating profit and margins ❑ Financial review ❑ Outlook 2
Slide 3: General Business Environment
GENERAL BUSINESS ENVIRONMENT ❑ Another challenging six months ❑ Reduced load-shedding ❑ Trading environment is weak due to business inertia arising from apprehension around the May elections ❑ Financial constraints on disposable income ❑ Consumers and businesses under pressure ❑ Inefficiency at port
Slide 4: Hudaco in the General Business Environment
HUDACO IN THE GENERAL BUSINESS ENVIRONMENT 4
Slide 5: Hudaco in This Environment
HUDACO IN THIS ENVIRONMENT ❑ CADAC and the battery and energy businesses performed poorly ❑ The rest of Hudaco’s portfolio of businesses delivered an acceptable result under difficult circumstances ❑ Acquisitions Brigit Fire and Plasti-Weld performed well 5
Slide 6: Hudaco in This Environment
HUDACO IN THIS ENVIRONMENT Turnover 6,3% to R4,0bn Gross profit margin 35,2% to 37,0% Operating profit 11,0% to R414m Attributable earnings 16,0% to R223m Headline and comparable earnings per share 15,3% to 785 cents Interim dividend per share 325 cents Cash generated from operations 133% to R573m 6
Slide 7: Business Model
Hudaco elveY Security Technologies BUSINESS MODEL
Slide 8: The Hudaco Business Model
THE HUDACO BUSINESS MODEL ❑ Hudaco’s main business is the importation and distribution of high-quality branded automotive, industrial and electronic consumable products ❑ The concept of “value-added distribution” is key to our business model ❑ Agency agreements generally restrict our activities to A
Slide 9: Features of Value-Added Distribution
FEATURES OF VALUE-ADDED DISTRIBUTION ❑ Focused business units Inventories R2 647m Receivables R1 341m with application advice ❑ Instant availability ❑ 30 000 active ❑ Technical customers ❑ 29 warehouses specification and ❑ Generally low-value product knowledge ❑ 800 international transactions – low
Slide 10: Reporting Segments
Hudaco REPORTING SEGMENTS
Slide 11: Contribution by Segment
CONTRIBUTION BY SEGMENT H1 2023 Contribution to H1 2024 operating profit 41% (before shared services and head office) 59% 57% 43% Consumer-related products Engineering consumables 11
Slide 12: Consumer-Related Products
CONSUMER-RELATED PRODUCTS The consumer-related products segment imports and distributes branded products driven by consumer spending and generally sold to installers. Consumer-related products (12 businesses) ❑ Automotive aftermarket products ❑ Power tools and fasteners ❑ Data networking equipment ❑
Slide 13: Segment Results for Consumer-Related Products
SEGMENT RESULTS FOR CONSUMER-RELATED PRODUCTS Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Ongoing 1 890 (15,7) 2 242 9,9 13,1 187 (36,2) 294 operations Acquisitions Segment total 1 890 (15,7) 2 242 9,9 13,1 187 (36,2) 294 ❑ CADAC and our battery and energy business
Slide 14: Engineering Consumables
ENGINEERING CONSUMABLES The engineering consumer products are generally used in the maintenance of machines and sold mainly to mining and manufacturing customers. Engineering consumables (19 businesses) ❑ Bearings, belting and power transmission ❑ Diesel engines and spares ❑ Electrical power transmi
Slide 15: Segment Results for Engineering Consumables
SEGMENT RESULTS FOR ENGINEERING CONSUMABLES Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Ongoing 1 945 (3,8) 2 023 10,4 10,1 203 (0,5) 204 operations Acquisitions 157 26,0 41 Segment total 2 102 3,9 2 023 11,6 10,1 244 19,5 204 ❑ This segment continues to show its r
Slide 16: Combined Segment Results
COMBINED SEGMENT RESULTS Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Consumer-related 1 890 (15,7) 2 242 9,9 13,1 187 (36,2) 294 products Engineering 2 102 3,9 2 023 11,6 10,1 244 19,5 204 consumables Head office, shared services (9) (15) (17) (33) and eliminations
Slide 17: Effect of Acquisitions and Problematic Businesses
EFFECT OF ACQUISITIONS AND PROBLEMATIC BUSINESSES Rm Operating profit H1 2024 414 Less: Contribution from acquisitions in 2024 (41) Add: Swing in CADAC and Battery/Energy businesses 93 Adjusted operating profit H1 2024 466 Operating profit H1 2023 465 The operating profit of the rest of the portfoli
Slide 18: Operating Profit and Margins
OPERATING PROFIT AND MARGINS 18
Slide 19: Turnover
TURNOVER R billion 4,6 4,6 4,1 4,4 4,3 3,9 4,0 3,6 3,8 3,5 3,6 3,1 3,4 3,2 2,6 2,6 2,1 1,6 1,1 0,6 0,1 -0,4 2019 2020 2021 2022 2023 2024 H1 H2 19
Slide 20: Operating Profit Margin
OPERATING PROFIT MARGIN 2024 2023 Margin (%) Turnover 100% 100% Gross profit 37,0% 35,2% Operating expenses 26,6% 24,3% Operating profit 10,4% 10,9% 20
Slide 21: Operating Profit Margin
OPERATING PROFIT MARGIN % 14,0 13,0 13,0 12,0 11,9 12,1 12,0 11,4 10,0 10,6 10,9 10,4 9,3 8,0 6,0 4,0 3,0 2,0 0,0 2019 2020 2021 2022 2023 2024 H1 H2 21
Slide 22: Financial Review
FINANCIAL REVIEW 22
Slide 23: Profit
PROFIT Rm 2024 % ch 2023 Turnover 3 983 (6,3) 4 250 Ongoing operations 3 826 (10,0) 4 250 Acquisitions 157 Gross profit 1 474 (1,7) 1 499 Operating expenses 1 060 2,6 1 034 Ongoing operations 1 025 (0,9) 1 034 Acquisitions 35 Operating profit 414 (11,0) 465 Ongoing operations 373 (19,8) 465 Acquisit
Slide 24: Profit
PROFIT Rm 2024 % ch 2023 Operating profit 414 (11,0) 465 Fair value adjustments – time value of money (7) Net interest on funding (64) (50) Imputed interest on leases (18) (12) Profit before taxation 325 (19,4) 403 Taxation (Rate 2024: 27,0% 2023: 27,3%) (87) (110) Profit after taxation 238 (18,8) 2
Slide 25: Comparable Earnings
COMPARABLE EARNINGS Rm 2024 % ch 2023 Attributable earnings 223 (16,0) 265 Headline earnings 223 (16,0) 265 Comparable earnings 223 (16,0) 265 25
Slide 26: Comparable Earnings
COMPARABLE EARNINGS R million 350 348 300 322 280 250 265 257 227 230 223 200 210 150 165 100 50 22 0 2019 2020 2021 2022 2023 2024 H1 H2 26
Slide 27: Earnings per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS Cents 2024 % ch 2023 Earnings per share Comparable 785 (15,3) 926 Basic 785 (15,3) 926 Headline 785 (15,3) 926 Dividends per share - Interim 325 325 - Final 700 Total 1 025 Dividend cover H1 (times) 2,42 2,85 27
Slide 28: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm 2024 2023 Working capital 2 865 2 758 - Inventories 2 647 2 665 - Receivables 1 341 1 528 - Payables (1 123) (1 435) Property, plant and equipment 373 348 Right-of-use assets 347 325 Goodwill and intangibles 1 453 1 226 Tax 33 72 Net assets 5 071 4 729 28
Slide 29: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm 2024 2023 Equity 3 433 3 241 Net borrowings 1 076 1 094 Lease liabilities 412 383 Due to vendors 147 6 Tax 3 5 Total equity and liabilities 5 071 4 729 29
Slide 30: Working Capital Elements
WORKING CAPITAL ELEMENTS In months of sales 5 4 3 2 1 0 H2 19 H2 20 H2 21 H1 22 H2 22 H1 23 H2 23 H1 24 -1 -2 Inventory Payables Receivables Net W Cap One month of sales 2022 = R630m (H1) 2023 = R708m (H1) 2024 = R664m (H1) 2022 = R728m (H2) 2023 = R774m (H2) 30
Slide 31: Inventory
INVENTORY In month of sales 5 4,4 4 4,0 3,8 3,6 3,5 3 3,3 3,2 3,1 3,1 3,1 2,7 2 1 0 2019 2020 2021 2022 2023 2024 H1 H2 31
Slide 32: Cash Flow
CASH FLOW Rm 2024 2023 Cash from trading 529 581 Decrease (increase) in working capital 44 (335) Cash from operations 573 246 Tax paid (112) (154) Cash from operating activities 461 92 Invested in new businesses (45) (24) Invested in ppe (41) (70) Cash flow after investing activities 375 (2) 32
Slide 33: Cash Flow
CASH FLOW Rm 2024 2023 Cash flow after investing activities 375 (2) Share-based payments (73) (51) Repurchase of shares (112) Lease payments (76) (70) Finance costs paid (64) (50) Dividends paid (221) (196) Net movement (59) (481) Foreign exchange translation (loss) gain (4) 8 Opening borrowings (1
Slide 34: Key Financial Points
KEY FINANCIAL POINTS ❑ Stock levels are up for busier H2 ❑ The operating margin in most businesses is healthy; fixing batteries, energy and CADAC ❑ H2 operating margins are always higher than H1 ❑ Expenses are tightly managed ❑ Any decrease in interest rates will be a boost ❑ Businesses remain cash-
Slide 35: Outlook
Hudaco OUTLOOK
Slide 36: Outlook for H2 2024
OUTLOOK FOR H2 2024 ❑ Interest rates coming down in H2 (CRP historically perform better) ❑ Reduced load-shedding is good for the economy ❑ Brigit Fire and Plasti-Weld in full six months H2 results ❑ Maintain judicious capital allocation ❑ The profit in the battery and energy businesses in H2 2024 wi
Slide 37: Contact Details
CONTACT DETAILS Graham Dunford Clifford Amoils Chief executive Financial director Tel +27 11 657 5004 Tel +27 11 657 5002 grahamd@hudaco.co.za camoils@hudaco.co.za www.hudaco.co.za 37
Slide 38: Disclaimer
DISCLAIMER The preceding presentation contains forward-looking statements about the Hudaco Group’s operations and financial position. They are prepared in good faith and are based on Hudaco’s best estimates and information at the time of preparing the presentation. They are nonetheless subject to si
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