Brambles Limited · ASX:BXB
Brambles — FY2013 Earnings Presentation
61 slides from Brambles's earnings presentation, Aug 22, 2013
Slide 1: Full-Year Results
Full-Year Results 22 August 2013
Slide 2: Agenda
Agenda Highlights of the Year Tom Gorman, CEO Analysis & Outlook Zlatko Todorcevski, CFO Strategic Context Tom Gorman, CEO 2
Slide 3: Key messages
Key Messages Key messages • Underlying Profit delivered within guidance range • Strong improvement in operating cash flow • Pooling Solutions – Continued sales growth in all regions led by Pallets Americas, RPCs – Improving sales mix and operational efficiencies – Asset efficiency driving improved c
Slide 4: Highlights of the Year
Highlights of the Year Tom Gorman CEO
Slide 5: Key FY13 financial outcomes
Highlights of the Year Key FY13 financial outcomes Sales revenue US$5,890M 5% Operating profit US$1,011M 8% Profit after tax1 US$641M 11% Basic EPS1 US41.2¢ 6% Underlying Profit US$1,057M 5% Free cash flow1 US$509M US$329M Dividends per share A27.0¢ A1.0¢ 1Includes contribution from discontinued ope
Slide 6: Delivery scorecard
Highlights of the Year Delivery scorecard FY13 target Progress Pallets: constant currency sales revenue up at least 19% growth delivered for FY13 15% in emerging markets Operating efficiencies from IFCO integration Delivery on track and global Pallets Underlying Profit: US$1,010-1,070M (30 June 2012
Slide 7: Continued strong sales revenue growth (US$M)
Highlights of the Year Continued strong sales revenue growth (US$M) 54 (25) (98) 88 115 131 5,988 5,890 5,625 FY12 Pallets - net Pallets - RPCs and Acquisitions Recall FY13 FX FY13 actual new wins other Containers Constant currency 7
Slide 8: Ongoing new business momentum: Pallets
Highlights of the Year Ongoing new business momentum: Pallets Contribution of net new business wins Implied forward contribution of to FY13 sales revenue (US$M) prior year rollover (US$M) 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Americas EMEA Asia-Pacific FY12 FY13 FY14 esti
Slide 9: Operational highlights: Pallets – Americas
Highlights of the Year Operational highlights: Pallets – Americas • Sales revenue up 8% to US$2,206M • Strong contribution from all businesses – Led by CHEP USA customer wins – Supported by growth in all other businesses • Underlying Profit up 15% to US$419M – Operational efficiencies/synergies more
Slide 10: Operational highlights: Pallets – EMEA
Highlights of the Year Operational highlights: Pallets – EMEA • Sales revenue up 2% to US$1,347M – Constant currency sales revenue up 5% • Progress in under-penetrated Germany and Italy • Momentum continuing in emerging markets • Underlying Profit up 3% to US$282M – Constant currency Underlying Prof
Slide 11: Operational highlights: Pallets – Asia-Pacific
Highlights of the Year Operational highlights: Pallets – Asia-Pacific • Sales revenue up 4% to US$392M – Constant currency sales revenue up 5% • Modest growth amid subdued economic conditions in ANZ • Operations in Asia continue to grow • Underlying Profit up 3% to US$79M – Constant currency Underly
Slide 12: Operational highlights: RPCs
Highlights of the Year Operational highlights: RPCs • Sales revenue up 7% to US$813M – Constant currency sales revenue up 10% • Strong growth momentum – Displacement of disposable/unvended alternatives – Expansion with existing and new retailers • Underlying Profit up 11% to US$139M – Constant curre
Slide 13: Operational highlights: Containers
Highlights of the Year Operational highlights: Containers • Sales revenue up 18% to US$326M – Constant currency sales revenue up 20% • Pallecon operations acquired in December 2012 • New business wins in CHEP Aerospace Solutions, US IBC • Weak industry conditions in Australian automotive business •
Slide 14: Operational highlights: Recall
Highlights of the Year Operational highlights: Recall • Sales revenue down 4% to US$807M – Constant currency sales revenue down 3% • Carton volumes up 3% with increased carton storage sales revenue • Tough year for customer transactional activity in document management and secure destruction • Under
Slide 15: Analysis & Outlook
Analysis & Outlook Zlatko Todorcevski CFO
Slide 16: Results summary
Analysis & Outlook Results summary Constant Continuing operations Actual FX FX (US$M) FY13 FY12 Change Change Sales revenue 5,889.9 5,625.0 5% 6% Underlying Profit 1,057.2 1,009.7 5% 7% Operating profit 1,011.2 939.2 8% 10% Profit after tax 639.9 574.9 11% 14% 16
Slide 17: Pallets: results summary
Analysis & Outlook Pallets: results summary Actual FX Constant FX (US$M) FY13 FY12 Change Change Americas 2,205.8 2,041.3 8% 8% EMEA 1,346.8 1,326.8 2% 5% Asia-Pacific 391.8 375.8 4% 5% Sales revenue 3,944.4 3,743.9 5% 7% Operating profit 760.0 691.4 10% 12% Significant Items 20.3 23.6 Underlying Pr
Slide 18: Pallets – Americas: operating profit (US$M)
Analysis & Outlook Pallets – Americas: operating profit (US$M) 40 (43) 4 68 (9) 13 (4) 415 346 FY12 Volume/ PMS impacts Efficiencies/ Direct Business Other Significant FY13 price/mix synergies costs development Items 18
Slide 19: Pallets – EMEA: operating profit (US$M)
Analysis & Outlook Pallets – EMEA: operating profit (US$M) 7 (6) 43 (23) (9) (13) 0 281 269 268 FY12 Volume/ Efficiencies Business Other Significant FY13 FX FY13 price/mix development Items actual Constant currency 19
Slide 20: Pallets – Asia-Pacific: operating profit (US$M)
Analysis & Outlook Pallets – Asia-Pacific: operating profit (US$M) 11 (3) (2) (3) (1) (1) 78 77 76 FY12 Volume/ Direct Business Other Significant FY13 FX FY13 price/mix costs development Items actual Constant currency 20
Slide 21: RPCs: results summary
Analysis & Outlook RPCs: results summary Actual FX Constant FX (US$M) FY13 FY12 Change Change Europe 510.9 489.5 4% 8% North America 162.7 138.3 18% 18% South America 21.9 24.1 (9)% 3% ANZ & South Africa 117.3 107.6 9% 12% Sales revenue 812.8 759.5 7% 10% Operating profit 138.4 109.3 27% 30% Signifi
Slide 22: RPCs: operating profit (US$M)
Analysis & Outlook RPCs: operating profit (US$M) 16 (4) 23 (3) (3) 142 138 109 FY12 Volume/ Direct costs Other Significant FY13 FX FY13 actual price/mix Items Constant currency 22
Slide 23: Containers: results summary
Analysis & Outlook Containers: results summary Actual FX Constant FX (US$M) FY13 FY12 Change Change Automotive Solutions 150.2 154.8 (3)% - Pallecon Solutions 78.3 43.1 82% 85% Aerospace Solutions 59.3 40.8 45% 44% Catalyst & Chemical Containers 37.9 37.9 - 1% Sales revenue 325.7 276.6 18% 20% Opera
Slide 24: Containers: operating profit (US$M)
Analysis & Outlook Containers: operating profit (US$M) (1) (2) (9) 8 (1) 33 29 28 FY12 Volume/ Direct costs Business Acquisitions FY13 FX FY13 actual price/mix development Constant currency 24
Slide 25: Recall: results summary
Analysis & Outlook Recall: results summary Actual FX Constant FX (US$M) FY13 FY12 Change Change Americas 349.2 370.7 (6)% (4)% Europe 199.5 218.9 (9)% (7)% Rest of World 258.3 255.4 1% 2% Sales revenue 807.0 845.0 (4)% (3)% Operating profit 128.2 160.1 (20)% (18)% Significant Items 16.0 14.1 Underly
Slide 26: Recall: operating profit (US$M)
Analysis & Outlook Recall: operating profit (US$M) (4) (16) 3 (10) (2) (3) 160 131 128 FY12 SDS Volume/ Direct costs Other Significant FY13 FX FY13 price price/mix Items actual Constant currency 26
Slide 27: Cash flow
Analysis & Outlook Cash flow (US$M) FY13 FY12 Change EBITDA 1,614.2 1,561.9 52.3 Capital expenditure (905.1) (949.4) 44.3 Proceeds from sale of PP&E 110.5 93.5 17.0 Working capital movement (24.8) (107.9) 83.1 IPEP expense 101.5 100.1 1.4 Provisions/other (37.3) (107.0) 69.7 Cash Flow from Operation
Slide 28: Capital expenditure trend by segment
Analysis & Outlook Capital expenditure trend by segment (US$M) actual FX, capex on PP&E, accruals basis 921 928 43 62 822 82 190 240 140 110 499 66 117 54 46 534 521 566 399 FY10 FY11 FY12 FY13 Pallets RPCs, Containers & HQ Growth programs Recall Note: Growth programs defined as growth investments i
Slide 29: Strong balance sheet
Analysis & Outlook Strong balance sheet June 2013 June 2012 Net debt (US$M) 2,714 2,690 Net debt to net debt plus equity (%) 47.3 49.5 FY13 FY12 Covenants EBITDA/net finance costs (x) 14.6 10.3 3.5 (min) Net debt/EBITDA (x) 1.68 1.72 3.5 (max) 29
Slide 30: FY14 outlook
Analysis & Outlook FY14 outlook •Brambles guidance1, excluding Recall – Constant currency sales revenue growth in all Pooling Solutions segments – Underlying Profit in the range of US$930M to US$965M (30 June 2013 FX)2 translates to growth of 4% to 8% – Ongoing emphasis on driving sales growth and i
Slide 31: Strategic Context
Strategic Context Tom Gorman CEO
Slide 32: Recapping our journey
Strategic Context Recapping our journey August 2011 Pooling Solutions 2008 LeanLogistics acquisition focus, new structure and November 2011 bolsters logistics management intention to Canadian pallet capability October 2009 December 2013 divest Recall management Better Everyday expansion Recall demer
Slide 33: Delivering our diversification strategy
Strategic Context Delivering our diversification strategy Pooling Solutions sales revenue composition Pallets emerging markets sales revenue (US$M) 600 6% 6% 5% 9% 16% 500 10% 400 300 80% 68% 200 100 0 FY09 FY13 FY09 FY10 FY11 FY12 FY13 Pallets - developed Pallets - emerging RPCs Containers 1 CAGR (
Slide 34: Pallets: entry into new emerging markets
Strategic Context Pallets: entry into new emerging markets Baltics Balkans Middle East Central America Peru & Colombia Developed markets operations Pre-existing emerging markets operations Countries entered since FY09 34
Slide 35: Pallets: improving capital efficiency
Strategic Context Pallets: improving capital efficiency Return on capital invested Sales revenue/Average Capital Invested 24% 1.1 22% 20% 1.0 18% 16% 0.9 14% 12% 0.8 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Americas EMEA Asia-Pacific Total Americas EMEA Asia-Pacific Total Note: FY09 costs i
Slide 36: Pallets: managing our cost base
Strategic Context Pallets: managing our cost base Net transport costs/sales revenue Plant costs/sales revenue 22% 42% 20% 40% 38% 18% 36% 16% 34% 32% 14% 30% 28% 12% 26% 10% 24% FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Americas Americas excl. PMS EMEA Asia-Pacific Total Note: FY09 costs inc
Slide 37: Global Pooling Solutions agenda
Strategic Context Global Pooling Solutions agenda Allocate capital to Disciplined RPCs and Containers growth high value growth Entry into high potential emerging markets opportunities New pallet offerings in developed businesses Focus areas Emphasise Deliver savings through global Pallets structure
Slide 38: Key messages
Strategic Context Key messages • Underlying Profit delivered within guidance range • Strong improvement in operating cash flow • Pooling Solutions – Continued sales growth in all regions led by Pallets Americas, RPCs – Improving sales mix and operational efficiencies – Asset efficiency driving impro
Slide 39: Q&A
Brambles Q&A
Slide 40: www.brambles.com
Brambles www.brambles.com
Slide 41: Appendices
Brambles LTT ices Append
Slide 42: Appendix 1: Glossary of terms and measures
Appendices Appendix 1: Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual rates/FX In the statutory financial statements, Brambles translates foreign currency results into US dollars at the applicable ac
Slide 43: Appendix 1: Glossary of terms and measures (continued)
Appendices Appendix 1: Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Operating profit Operating profit is profit before finance costs and tax, as shown in the statutory financial statements. Or
Slide 44: Appendix 2: FY13 currency mix
Appendices Appendix 2: FY13 currency mix (US$M, actual FX) Total USD EUR AUD GBP Other Pallets 3,944.4 1,669.6 770.1 304.8 346.3 853.6 RPCs 812.8 162.7 383.7 81.9 53.4 131.1 Containers 325.7 58.8 116.2 49.6 27.5 73.6 Recall 807.0 234.7 103.5 199.5 44.2 225.1 Total sales revenue 5,889.9 2,125.8 1,373
Slide 45: Appendix 3: Major currency exchange rates
Appendices Appendix 3: Major currency exchange rates USD vs. USD EUR AUD GBP CAD ZAR MXN FY13 1.0000 1.2939 1.0212 1.5667 0.9919 0.1124 0.0779 Average FY12 1.0000 1.3325 1.0304 1.5834 0.9944 0.1289 0.0760 30 June 13 1.0000 1.3015 0.9134 1.5206 0.9507 0.1010 0.0772 As at 30 June 12 1.0000 1.2440 1.00
Slide 46: Appendix 4: Effective tax rate
Appendices Appendix 4: Effective tax rate Continuing Operations FY13 FY12 (US$M) actual FX Statutory Underlying Statutory Underlying Profit before tax 900.3 946.3 787.2 857.7 Tax expense 260.4 269.1 212.3 233.2 Effective tax rate 28.9% 28.4% 27.0% 27.2% 46
Slide 47: Appendix 5: Significant Items
Appendices Appendix 5: Significant Items (US$M) actual FX FY13 FY12 Underlying Profit 1,057.2 1,009.7 Significant Items: Acquisition-related costs (4.6) (2.8) Restructuring & integration costs (22.0) (53.2) Recall transaction costs (4.1) (21.2) Impairment of software development costs (15.3) - Pensi
Slide 48: Appendix 6: Credit facilities and debt profile
Appendices Appendix 6: Credit facilities and debt profile US$B at 30 June 2013 Committed Uncommitted Debt Maturity Type Headroom facilities facilities drawn < 12 months Bank/USPP1/Other 0.1 0.2 0.1 0.2 Bank/USPP1/144A2/ 1 – 2 years 0.9 - 0.5 0.4 Other 2 – 3 years Bank/USPP1/Other 0.9 - 0.4 0.5 3 – 4
Slide 49: Appendix 7: Efficiencies and synergies
Appendices Appendix 7: Efficiencies and synergies (US$M) Actual Forecast Incremental year-on-year improvement FY15 total Initiatives FY12 FY13 FY14 FY15 IFCO PMS Integration 5 11 19 - 35 IFCO RPC Integration 5 - - - 5 Operations and logistics 10 10 20 20 60 efficiencies in Pallets Total 20 21 39 20
Slide 50: Appendix 8: Capital expenditure breakdown by nature
Appendices Appendix 8: Capital expenditure breakdown by nature (accruals basis) FY12 FY13 Total US$921M Total US$928M 43 62 69 81 46 29 209 183 554 573 Note: Property, plant and equipment cash capex in FY13 was US$905M compared with US$949M in FY12 50
Slide 51: Appendix 9: Pooling Solutions FY13 sales revenue by segment
Appendices Appendix 9: Pooling Solutions FY13 sales revenue by segment (US$M) 326 813 Constant FX growth vs. FY12 Pallets – Americas 8% Americas, 2,206 Pallets – EMEA 5% Asia-Pacific, 392 Pallets - Asia-Pacific 5% RPCs 10% Containers 20% EMEA, 1,347 51
Slide 52: Appendix 10: Pallets FY13 sales revenue by Customer Business Unit
Appendices Appendix 10: Pallets FY13 sales revenue by Customer Business Unit (US$M) Constant FX growth vs. FY12 52 USA 7% Canada 9% 137 340 Latin America 14% 78 LeanLogistics 14% Other Western 1,248 Europe Pallet Management Services 9% 366 Western Europe 2% UK & Ireland 4% 164 Iberia (3)% France Fra
Slide 53: Appendix 11: CHEP USA pallet productivity trends
Appendices Appendix 11: CHEP USA pallet productivity trends Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 8% 98% 6% 96% 4% 94% 2% 92% 0% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Slide 54: Appendix 12: US lumber prices
Appendices Appendix 12: US lumber prices 500 450 US$ per thousand board feet 400 350 300 250 200 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Source: Random Lengths 54
Slide 55: Appendix 13: CHEP Europe pallet productivity trends
Appendices Appendix 13: CHEP Europe pallet productivity trends Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 10% 98% 8% 96% 6% 94% 4% 92% 2% 90% 0% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY02 FY03 FY04 FY05 FY06
Slide 56: Appendix 14: RPCs FY13 sales revenue by region
Appendices Appendix 14: RPCs FY13 sales revenue by region (US$M) 117 Constant FX growth vs. FY12 22 Europe 8% North America 18% 163 511 South America 3% ANZ & South Africa 12% 56
Slide 57: Appendix 15: Containers FY13 sales revenue by sector
Appendices Appendix 15: Containers FY13 sales revenue by sector (US$M) 38 Constant FX growth vs. FY12 Automotive 0% 78 150 Aerospace 44% IBCs 85% CCC 1% 59 57
Slide 58: Appendix 16: Recall FY13 sales revenue by sector
Appendices Appendix 16: Recall FY13 sales revenue by sector (US$M) 82 Constant FX growth vs. FY12 124 Document Management (1)% Solutions Secure Destruction (15)% Services Data Protections 0% Services 601 58
Slide 59: Appendix 17: paper prices – North America
Appendices Appendix 17: paper prices – North America US$ 290 250 Price per ton 210 170 130 90 50 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 59
Slide 60: Disclaimer
Disclaimer The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. This
Slide 61: Investor Relations contacts
Investor Relations contacts Cathy Press Group Vice President, Capital Markets cathy.press@brambles.com +61 2 9256 5241 +61 419 290 745 James Hall Senior Director, Investor Relations & Corporate Affairs james.hall@brambles.com +61 2 9256 5262 +61 401 524 645 61