Brambles Limited · ASX:BXB
Brambles — H1 2005 Earnings Presentation
26 slides from Brambles's earnings presentation, Feb 23, 2005
Slide 1: 2005 Interim Results
2005 Interim Results (£ figures) 23 February 2005 2005 Interim Results David Turner Chief Executive Officer 1
Slide 2: Further momentum in first half 2005
Further momentum in first half 2005 Significantly improved performance ¾ Sales were up 9% ¾ PBTA was up 36% to £172m, £41m higher than 1H04 ¾ CHEP USA continued to trade very strongly ¾ CHEP Europe recovery gaining momentum ¾ Recall turning around ¾ Cleanaway trading challenging Net cash flow £5
Slide 3: Solid sales, profit momentum & strong cash
2005 Interim Results Mike Ihlein Chief Financial Officer Solid sales, profit momentum & strong cash Actual Fx Effect Constant Dec 04 Dec 04 Dec 04 Dec 03 Growth UK GAAP, 6 months ending £m £m £m £m % Sales 1,629 (55) 1,684 1,549 9 EBITA 211 (7) 218 170 28 PBTA 172 (6) 178 131 36 PATA 116 (4) 120 91
Slide 4: Solid sales growth continues, with CHEP driving EBITA growth
Solid sales growth continues … Actual Fx Effect Constant Dec 04 Dec 04 Dec 04 Dec 03 Growth UK GAAP, 6 months ending £m £m £m £m % Continuing businesses CHEP 732 (33) 765 694 10 Cleanaway 544 (6) 550 518 6 Recall 143 (7) 150 137 9 Industrial Services 146 (4) 150 144 4 Regional Businesses 64 (5) 69 5
Slide 5: Strong Free Cash Flow
Strong Free Cash Flow £m Half Year 500 407 Other 250 426 376 330 Cash Flow from 258 195 146 Operations (54) 124 - 54 Capital (214) (222) (176) (210) Expenditure (242) (75) Interest and Tax (250) (96) (76) (72) (94) Free Cash Flow (500) 1H03 2H03 1H04 2H04 1H05 1H03 “Interest and Tax” excludes £(21)M
Slide 6: Cash flow from operations by business and CHEP region
…particularly CHEP £m Cash flow from operations after gross capex 200 1H03 1H04 1H05 150 119 100 65 50 39 32 38 22 16 15 12 1 0 3 0 2 0 (50) (37) CHEP Cleanaway Recall Industrial Regional Services Businesses Cash flow from operations is based on EBITDA, working capital movements, provision/other mov
Slide 7: Sustained falls in capex
Sustained falls in capex … £m Capital expenditure 400 2002 2003 2004 2005 291 300 239 240 222 210 213 200 175 100 0 1H 2H Continuing businesses (pre Corporate) 13 …. with CHEP Europe showing a large decline £m Capital expenditure 150 2002 2003 2004 2005 106 99 98 100 94 80 74 77 69 63 50 52 54 50 43
Slide 8: Capex to Sales; financial coverage ratios strengthen
Capex to Sales by half % 40 30 20 10 1H02 1H03 1H04 1H05 — Americas — Europe — RoW — Total 15 Financial coverage ratios strengthen further Dec 04 Dec 03 Dec 02 Facilities/ UK GAAP, 6 months ending £m £m £m Covenants Opening net debt - June (1,395) (1,607) (1,581) Movements in Net Debt 50 49 (107) Cl
Slide 9: CHEP sales and EBITA growth by region
Strong Sales and EBITA growth Actual Fx Effect Constant Dec 04 Dec 04 Dec 04 Dec 03 Growth UK GAAP, 6 months ending £m £m £m £m % Americas 314 (29) 343 307 12 Europe 327 (2) 329 304 8 RoW 91 (2) 93 83 12 CHEP Sales 732 (33) 765 694 10 CHEP EBITA 137 (5) 142 96 48 CHEP Margin (%) 19 19 14 5 pp Growth
Slide 10: Americas and Europe EBITA bridges
Americas – led by sales & efficiencies EBITA UK GAAP, 6 months £m 1H04 27 Volume, Price & Mix 12 Transportation costs 17 Plant costs & other 1 1H05 57 All numbers are calculated at constant currency as defined in the Glossary 19 Europe – restructuring benefits starting to emerge EBITA UK GAAP, 6 mon
Slide 11: Cleanaway and Recall results
Sales growth but margins under some pressure Actual Fx Effect Constant Dec 04 Dec 04 Dec 04 Dec 03 Growth UK GAAP, 6 months ending £m £m £m £m % Sales UK 245 1 244 225 8 Germany 185 (2) 187 176 6 RoW 114 (5) 119 117 2 Total Sales 544 (6) 550 518 6 EBITA 37 - 37 43 (14) EBITA Margin (%) 7 7 8 (1)pp G
Slide 12: Industrial Services results and tax rate
Steady performance continues Actual Fx Effect Constant Dec 04 Dec 04 Dec 04 Dec 03 Growth UK GAAP, 6 months £m £m £m £m % ending Sales 146 (4) 150 144 4 EBITA 17 (1) 18 17 6 EBITA Margin (%) 12 12 12 - Growth % calculated on £ constant currency basis 23 Tax rate rises on strong CHEP USA performance
Slide 13: Key objectives and progress
2005 Interim Results David Turner Chief Executive Officer Key objectives and progress Americas Continue USA recovery 9 Implement productivity measures 9 Enhance customer focus 9 Europe Consolidate performance in new organisation 9 Change pricing model to reflect CHEP’s costs underway Ach
Slide 14: Americas – Performance Summary
Americas – Performance Summary USA recovery well on track Good volume growth, sales +12% Improved margins to 17% ¾ From 9% 1H04 and 15% 2H04 Six Sigma approach ¾ Direct cost improvements ¾ Improved customer satisfaction Strong performance in Canada and Mexico Growth % calculated on £ const
Slide 15: Americas – transport challenges
Americas – meeting focus onthe transport challenges USA - Reduction in transport costs since FY02 Transport costs as % sales compared to FY02 % points 2% 0% -2% -4% -6% -8% FY02 FY03 FY04 1H05 29 Americas – meeting the objectives Sales Growth +12% ¾ National Accounts ¾ New Customers ¾ TPM conversi
Slide 16: Americas new pallet ratio; Europe Performance Summary
Americas – meeting the objectives USA - New Pallet Ratio(1) 6% 4% 2% 0% (2) FY02 FY03 FY04 1H05 (1) New pallet ratio measures the number of new pallets purchased as a percentage of all pallets issued (2) Includes “B” stock reduction benefit of £25m 31 Europe – Performance Summary New structure bed
Slide 17: Europe – focus on pricing
Europe – focus on pricing UK Continental Europe Headline fees: progressively through 2005 Headline fees: progressively through 2005 NCD: April 2004 NCD: November 2003 LVD: August 2004 LVD: November 2003 LDC: December 2003 LDC: November 2003 Charges are: NCD: Non cooperating distributor LVD: Low volu
Slide 18: Europe looking forward; Rest of the world summary
Europe – Looking forward Complete roll out of new pricing architecture by December 2005 Deliver sustainable volume growth Perfect Trip - Six Sigma approach to improving customer satisfaction and operating efficiencies Continue to implement responsibility transfer 35 Rest of the world – Perfo
Slide 19: Cleanaway Performance Summary; Focus on Germany
Performance Summary Global headquarters now closed UK ¾ Municipal, new contracts and additional work ¾ Restructuring in C&I ¾ Landfill volumes grew ¾ Greenwich MRF now operational Germany ¾ New DSD and municipal waste paper contracts affected margins ¾ PET and C&I business both improved Australia
Slide 20: Focus on UK; Recall performance summary
Focus on UK Municipal order book remains strong at £828 million C&I cost reductions and focus on BVA positive contracts Access to landfill remains important UK Government still seeking 25% waste recycling by end 05/06; 03/04 achieved 17%, up 3pp 39 Performance summary Recovery from 2004 un
Slide 21: Recall – meeting the challenges, further growth
Meeting the challenges SDS – ongoing pricing pressure in USA from new market entrants Cost base must be competitive Balancing storage capacity to allow for growth without carrying excess space 41 Further opportunities for growth DMS expanding in all markets driven by outsourcing SDS growin
Slide 22: Industrial Services Performance Summary
Performance Summary Sales up 4% ¾ Northern Hemisphere strong (higher volumes, short term work) ¾ Australia flat (contract completion) Profits up 6% ¾ Despite short term lower volumes through PCI plant in Australia Investment to support new and renewed contracts in Australia ¾ Capital expenditu
Slide 23: Summary and Outlook for the Full Year
Summary To summarise: We have had a strong first half CHEP is trading very well Recall is growing in line with our plan Cleanaway is facing challenges but is performing well in a changed market in Germany Industrial Services is producing solid results 45 Outlook for the Full Year CHEP ¾
Slide 24: Forward-looking statements
This presentation may contain certain “forward-looking statements” with respect to certain of Brambles’ plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty becau
Slide 25: Glossary of Terms & Measures
Glossary of Terms & Measures Appendix 1a Except where noted, common terms and measures used in this presentation are based upon the following definitions: Sales Includes Associates’ revenues but excludes non trading revenue Comparable EBITA Operating Profit EBITA Profit before interest, tax, goodwil
Slide 26: Glossary of Terms & Measures
Glossary of Terms & Measures Appendix 1c Except where noted, common terms and measures used in this presentation are based upon the following definitions: Unallocated Costs Head Office costs which are not allocated back to the divisions. These are excluded from the segmental analyses. Associates 50%