Brambles Limited · ASX:BXB
Brambles — Shareholder Meeting (November 2002)
28 slides from Brambles's shareholder meeting presentation, Nov 26, 2002
Slide 1: Annual General Meeting
Brambles ANNUAL GENERAL MEETING
Slide 2: Changes in Brambles Price/Equity Ratio
Changes in Brambles Price/Equity Ratio Spread Between High & Low PER Stocks: ASX 100 Industrials (Ex Banks & Prop. Trusts) BIL PER 70.0 35.0 BIL PER 60.0 30.0 50.0 25.0 40.0 20.0 30.0 Average PE for top 10 15.0 rated companies 20.0 10.0 10.0 5.0 Average PE for bottom 10 rated companies 0.0 0.0 Dec-9
Slide 3: Analysis of Share Price Movement: August 2001 – November 2002 (UK)
Analysis of Share Price Movement: August 2001 – November 2002 Brambles Industries plc (49) UK market UK Support £3.85 down 13 % Services Index down 21% Brambles (0.48) specific issues 29% (0.82) £1.44 (1.11) August November 2001 2002 Source: Thomson Financial Datastream
Slide 4: Analysis of Share Price Movement: August 2001 – November 2002 (ASX)
Analysis of Share Price Movement: August 2001 – November 2002 Brambles Industries Limited ASX market $11.26 down 7% High rated stocks down 36% (0.81) Brambles specific issues down 17% (4.05) $4.50 $4.50 (1.90) August 2001 November 2002 Source: Thomson Financial Datastream
Slide 5: CK Chow, CEO
Brambles CK Chow, CEO
Slide 6: Our strategy
Our strategy • Maximise growth of CHEP • Grow Cleanaway and Recall by organic investments and selective acquisitions • Manage other businesses for performance, to be • Number 1 or 2 in chosen market • Most profitable in sector • Strong cash generator • BVA positive (BVA = Profit – Cost of Capital)
Slide 7: In the first 12 months, we said we would:
In the first 12 months, we said we would: 1. Create global CHEP and Cleanaway ? under single ownership 2. Integrate under one unified management team ? 3. Undertake thorough review of businesses ? in progress – review strategy and operations – implement necessary changes – improve organisational str
Slide 8: Brambles – FY2002
Brambles – FY2002 • Strong sales growth maintained in CHEP, Cleanaway & Recall • CHEP profit lower than previous year – Significant issues identified – New management team appointed – Improvement programme put in place • Strong profit growth in Recall and Cleanaway • Successful restructuring of Bram
Slide 9: Victor Mendes, Chief Executive, CHEP
Victor Mendes, Chief Executive, CHEP
Slide 10: The global leader in pallet & container pooling
The global leader in pallet & container pooling Revenue growth 1999 – 2002 Revenue by region 2002 A$3,326m / £1,202m Rest of World * = 15 % 10% R CAG Americas 49% Europe 41% 1999 2000 2001 2002 * Compound Annual Growth Rate
Slide 11: When we reviewed CHEP we found:
When we reviewed CHEP we found: • Unique global business • Strong market leadership • Exciting growth prospects • Strong customer partnerships BUT • Overemphasis on revenue growth • Declining asset productivity • Increasing capital expenditure • Declining profit margins • Corrective actions required
Slide 12: USA
USA Issues identified Action –“the Magnificent Five” • Large growth investments • New Wal*Mart contract not yet producing return • New NPD programme • Uneconomical deliveries to • New pricing model NPDs • Asset control • Inefficient operational network • Service Centre network reconfiguration • High
Slide 13: USA – positive results
USA – positive results • Strong revenue growth maintained in FY 2002 • Profit growth and margin improvement in second half of FY 2002 • Successful implementation of “The Magnificent Five” • Capex reduced by 32% • Further significant improvement expected in 2003
Slide 14: Europe
Europe Issues identified • Country based organisation had led to inefficiency as the European single market evolved • Insufficient collection & repair of pallets in past years • Excessive pallets in the exchange pool have led to sub- optimal revenue generation • High cost structure due to lack of co
Slide 15: Europe
Europe Actions • New management appointed and pan European organisation in place • Corrective action to recover and relocate pallets throughout Europe • Standardisation of business processes across Europe to improve efficiency • Reconfiguration of service centres and transport system to lower the co
Slide 16: Europe
Europe Restructuring • One-off Exceptional costs of £85m / A$238m to be taken - 18 month cash payback • Collection and Relocation of Pallets - One-off cost of £45m / A$126m - Capital expenditure benefit exceeding £100M / A$280m • Restructuring of organisation and operation - One-off cost of £40m / A
Slide 17: Global Initiatives
Global Initiatives • Increased penetration into pallet markets • Container business growth: global leadership • Global standardisation: 1 CHEP • Product innovation: plastic pallet • Technological enhancements: RFID • Total quality and customer satisfaction: “Perfect Trip”
Slide 18: CK Chow, CEO
Brambles CK Chow, CEO
Slide 19: Trading in FY 2002 (Cleanaway)
Trading in FY 2002 • Revenue and profit growth • Strong performance in the UK • German market flat due to slow GDP growth Expansion • New recycling centre in Rainham, UK • PET (plastic) bottle recycling plant in Rostock, Germany • New contracts won in Australia • New landfill gas to energy plant in
Slide 20: Trading in FY 2002 (Recall)
Trading in FY 2002 • Strong revenue growth • Record profit margin Expansion • Increased information centres from 180 to 203 • New mega centres in Toronto, Milan and Sao Paolo • 14 acquisitions • Entry into Hong Kong, Mexico and India
Slide 21: Brambles Industrial Services – Successful Restructuring
Brambles Industrial Services – Successful Restructuring Trading in FY 2002 • Revenues slightly down – Business rationalisation in Australia – Cessation of iron and steel making in Llanwern (Corus) • Profit up by nearly 50% Expansion • Successful start up of PCI plant for BHP Steel • Won three signif
Slide 22: Management Priorities for the next three years
Management Priorities for the next three years Strategic Imperatives Performance Measures 1. Complete business improvement • Successful completion of the “Magnificent Five” programme in CHEP USA • Significant improvement in margin starting this year • Maintain growth momentum 2. Return CHEP Europe t
Slide 23: Management Priorities for the next three years
Management Priorities for the next three years Strategic Imperatives Performance Measures 1. Complete business • Successful completion of the improvement “Magnificent Five” programme in • Significant improvement in CHEP USA margin starting this year • Maintain growth momentum
Slide 24: Management Priorities for the next three years
Management Priorities for the next three years Strategic Imperatives Performance Measures 2. Return CHEP • Recovery of excessive pallets to Europe to profitable reduce capex in excess of growth A$280m / £100m • Reduce cost base by A$210m / £ 75m through organisational and operational restructuring •
Slide 25: Management Priorities for the next three years
Management Priorities for the next three years Strategic Imperatives Performance Measures 3. Pursue value • Value creation through growth creation strategies and BVA improvement for the Group • ROCI of 16% by 2006 (a) • Gearing to improve to 46% - 50% (b) (a)ROCI = EBITA/Average Capital Invested Cap
Slide 26: Management Priorities for the next three years
Management Priorities for the next three years Strategic Imperatives Performance Measures 4. Become a customer • Total Quality Management in all centric service operations and improvement in company customer satisfaction measures
Slide 27: Summary
Summary • Brambles has strong, profitable businesses with good growth prospects • Issues identified in CHEP USA and Europe - CHEP USA already turned around - Restructuring programme underway in Europe • Cleanaway, Recall and Industrial Services performing steadily in challenging market environment •
Slide 28: Executive remuneration
Executive remuneration • Significant part of remuneration at risk • Tied to performance hurdles • Specific hurdles may include – Operational goals – Performance against most valuable companies in Australia and UK – Earnings per share growth • All executives have ‘Brambles Value Added’ hurdle