Brambles Limited · ASX:BXB
Brambles — H1 2015 Earnings Presentation
49 slides from Brambles's earnings presentation, Feb 23, 2015
Slide 1: Half-year results
Half-year results 23 February 2015
Slide 2: Overview & Results Highlights
Overview & Results Highlights Tom Gorman, CEO 2
Slide 3: Key 1H15 result messages
Key 1H15 result messages Solid result with full-year guidance maintained On track to deliver FY15 guidance Underlying Profit expected to be US$1,055-1,085M (30 June 2014 FX) Improved Pallets result, with leverage to bottom line Strong profit performance in Europe: supply-chain efficiencies and impro
Slide 4: Group safety performance
Group safety performance Improving overall but one fatality in 1H15 25 20 15 10 5 0 FY10 FY11 FY12 FY13 FY14 1H15 BIFR: continuing businesses1 BIFR: reported 2 Note: BIFR stands for Brambles Injury Frequency Rate, recorded per per million man hours; see slide 26 for full definition. 1 Operations own
Slide 5: Financial highlights
Financial highlights Solid growth with leverage from sales to Underlying Profit (Continuing operations) 1H15 result Change vs. 1H14 Actual FX Constant FX Sales revenue US$2,795M 5% 8% Operating profit US$466M 3% 7% Profit after tax US$286M 2% 6% Underlying Profit US$485M 6% 10% Return on Capital Inv
Slide 6: Delivery scorecard
Delivery scorecard On track for FY15 guidance and FY19 targets FY15 Guidance 1H15 Progress Constant FX sales revenue growth of 8-9% On track US$12M delivered in 1H15 Delivery of Global Supply Chain efficiencies US$22M to deliver in 2H15 Underlying Profit: US$1,055-1,085M (30 June 2014 FX – On track
Slide 7: Continued momentum
Continued momentum Sales revenue: constant FX growth of 8% in 1H15 (US$M) Solid, resilient performance USD appreciation vs. despite economic and other major operating competitive pressures and currencies below-trend contribution from emerging markets 50 51 4 (81) 61 41 Ferguson, Transpac and Airworl
Slide 8: Pallets segment result summary
Pallets segment result summary Solid sales growth with bottom-line leverage 1H15 Change vs. 1H14 Solid contribution to sales growth Actual Constant from net new business wins, pricing (US$M) FX FX and organic volume growth Americas 1,181 3% 5% Global Supply Chain efficiencies and EMEA 729 1% 5% mode
Slide 9: RPCs segment results summary
RPCs segment results summary Strong sales growth and improved profitability 1H15 Change vs. 1H14 All regions contribute strongly to Actual Constant sales growth, led by Europe, as (US$M) FX FX adoption of RPCs continues Europe 305 6% 11% Modest costs growth compared with North America 94 11% 11% 1H1
Slide 10: Containers segment result summary
Containers segment result summary Result reflects diverse portfolio of businesses 1H15 Change vs. 1H14 Sales growth primarily driven by (US$M) Actual FX Constant FX acquisitions of Ferguson, Transpac and Airworld Including Excluding acquisitions acquisitions Subdued ex-acquisitions growth Automotive
Slide 11: Ferguson and the oil industry cycle
Ferguson and the oil industry cycle Well-positioned to weather currently challenging conditions >70% Sales revenue from mature, producing assets Attractive fundamentals <5% Sales revenue share of largest single customer <1% Sales revenue from non-conventional oil fields Growth during previous downtu
Slide 12: Ferguson: cost curve exposure
Ferguson: cost curve exposure Customer activities focused on lower cost resources Ferguson sales revenue vs. estimated marginal cost of new production, by region 120 90 US$ per barrel 60 30 31% Asia-Pacific 4% Other 6% 3% 5% 8% 43% 0 Middle East Former Central & West Africa North Sea Deepwater US sh
Slide 13: Financial Analysis
Financial Analysis Zlatko Todorcevski, CFO 13
Slide 14: Operating profit analysis (US$M)
Operating profit analysis (US$M) Continued growth offsets cost challenges and enables investment Includes US$10M Positive pricing and sales mix corporate cost benefits throughout Pallets, allocated to Recall growth in RPCs 12 in 1H14 12 (44) (7) (21) 75 (19) North America North America freight rate
Slide 15: Pallets cost trends and outlook
Pallets cost trends and outlook Outlook improving but headwinds remain 1H15 performance and drivers 2H15 considerations Asset utilisation impacts in US Finalize plan for durability improvement Plant costs Global Supply Chain efficiencies Final Global Supply Chain efficiencies Transport Sha
Slide 16: Profit reconciliation
Profit reconciliation Modest increases in non-operating expenses (US$M, continuing operations) 1H15 1H14 Change Actual FX Constant FX Underlying Profit 485 458 6% 10% Significant Items (19) (5) Operating profit 466 453 3% 7% Net finance costs (59) (57) Tax expense (121) (116) Profit after tax 286 28
Slide 17: Cash flow reconciliation
Cash flow reconciliation Increased capital expenditure to support growth (US$M) 1H15 1H14 Change EBITDA 763 719 45 Capital expenditure (521) (433) (88) Proceeds from sale of property, plant and equipment 38 34 4 Working capital movement (27) 27 (54) IPEP expense 42 50 (8) Other (27) (21) (6) Cash Fl
Slide 18: Balance sheet position
Balance sheet position Reflects debt-funding of Ferguson acquisition December 2014 June 2014 Net debt (US$M) 2,846 2,362 Average term of committed facilities (years) 4.2 4.1 1H15 1H14 EBITDA/net finance costs (x) 12.9 12.6 Net debt/EBITDA (x) 1.86 1.66 18
Slide 19: Summary & Outlook
Summary & Outlook Tom Gorman, CEO 19
Slide 20: Key 2H15 focus areas
Key 2H15 focus areas Short-term priorities to drive long-term value Cost – mitigate transport inflation; deploy pallet durability actions in 1 CHEP USA Brand – refresh brand in CHEP Pallets; roll-out of new customer solution 2 strategy to begin in USA Innovation – deploy new technologies/leverage da
Slide 21: FY15 guidance summary
FY15 guidance1 summary Strong sales growth with positive leverage to Underlying Profit Constant FX sales revenue growth expected to be 8% to 9% Underlying Profit of US$1,055-1,085M (30 June 2014 FX rates) Equates to growth of 9-12% compared with FY142 Includes ~US$25M forecast contribution from Ferg
Slide 22: Q&A
Q&A
Slide 23: 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 24: Investor Relations contacts
Investor Relations contacts James Hall Vice President, Investor Relations & Corporate Affairs james.hall@brambles.com +61 2 9256 5262 +61 401 524 645 Raluca Chiriacescu Manager, Investor Relations raluca.chiriacescu@brambles.com +61 2 9256 5211 +61 427 791 189 24
Slide 25: Appendices
Appendices Brambles
Slide 26: Glossary of terms and measures
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 currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period. Average Capital Investe
Slide 27: Glossary of terms and measures (continued)
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: DIN The sum in a period of: - Depreciation expense; - Irrecoverable Pooling Equipment Provision expense; and - Net book value of compens
Slide 28: Glossary of terms and measures (continued)
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: Net new business The sales revenue impact in the reporting period from business won or lost in that period and over the previous financi
Slide 29: 1H15 sales revenue by segment and industry sector
Appendix 2 1H15 sales revenue by segment and industry sector Pallets - emerging RPCs, 17% markets, 10% Automotive, 3% IBCs, 2% Oil & Gas, 2% Aerospace, 1% Pallets - developed markets, 65% 29
Slide 30: Return on Capital Invested (ROCI)
Appendix 3 Return on Capital Invested (ROCI) 25% 20% 15% 10% 5% FY10 FY11 FY12 FY13 FY14 1H14 1H15 Pallets RPCs Containers Group 30
Slide 31: Overhead costs/sales revenue
Appendix 4 Overhead costs/sales revenue 20% 18% 16% 14% 12% FY10 FY11 FY12 FY13 FY14 1H14 1H15 31
Slide 32: 1H15 currency mix
Appendix 5 1H15 currency mix (US$M) Total USD EUR GBP AUD Other Pallets 2,091 901 406 184 141 459 RPCs 471 94 223 37 42 75 Containers 233 34 73 58 29 39 Sales revenue 2,795 1,029 702 279 212 573 Share of total 37% 25% 10% 8% 20% Net debt1 2,846 1,341 1,137 378 (151) 141 1 Net debt shown after adjust
Slide 33: Major currency exchange rates
Appendix 6 Major currency exchange rates USD exchange rate: USD EUR GBP AUD CAD MXN ZAR 1H15 1.0000 1.2759 1.6180 0.8832 0.8959 0.0736 0.0911 Average 1H14 1.0000 1.3488 1.5923 0.9115 0.9546 0.0765 0.0984 31 Dec 14 1.0000 1.2157 1.5559 0.8182 0.8616 0.0679 0.0864 As at 30 Jun 14 1.0000 1.3643 1.7033
Slide 34: Effective tax rate
Appendix 7 Effective tax rate (US$M) 1H15 1H14 Continuing operations Statutory Underlying Statutory Underlying Profit before tax 407.0 426.1 396.0 401.2 Tax expense (120.9) (124.8) (115.6) (117.1) Effective tax rate 29.7% 29.3% 29.2% 29.2% 34
Slide 35: Credit facilities and debt profile
Appendix 8 Credit facilities and debt profile Committed Uncommitted Maturity Type Debt drawn Headroom facilities facilities (US$B at 31 Dec 2014) <12 months Bank/144A2/Other 0.3 0.3 0.3 0.3 1 to 2 years Bank/USPP1/Other 0.5 - 0.4 0.1 2 to 3 years Bank/Other 0.9 - 0.3 0.6 3 to 4 years Bank/EMTN3 0.8
Slide 36: Pallets: net new business wins
Appendix 9 Pallets: net new business wins Composition of Pallets’ constant FX sales Contribution from net new business wins revenue growth by half-year period to Pallets’ 1H15 sales revenue (US$M) 7% 25 6% 20 5% 4% 15 3% 10 2% 5 1% 0% 0 1H13 2H13 1H14 2H14 1H15 Americas EMEA Asia-Pacific Organic vol
Slide 37: Pallets: net plant costs/sales revenue
Appendix 10 Pallets: net plant costs/sales revenue 43% 38% 33% 28% 23% FY10 FY11 FY12 FY13 FY14 1H14 1H15 Americas EMEA Asia-Pacific Total 37
Slide 38: Pallets: net transport costs/sales revenue
Appendix 11 Pallets: net transport costs/sales revenue 21% 19% 17% 15% 13% 11% FY10 FY11 FY12 FY13 FY14 1H14 1H15 Americas EMEA Asia-Pacific Total 38
Slide 39: Pallets: replacement capex vs. maintenance capex %
Appendix 12 Pallets: replacement capex vs. maintenance capex 800 14% 700 12% 600 10% 500 8% 400 300 6% 200 4% 100 2% 0 0% FY10 FY11 FY12 FY13 FY14 1H14 1H15 Replacement capex (US$M, LHS) Growth capex (US$M, LHS) DIN/sales revenue (RHS) Note: data excludes USA recycled pallet operations. 39
Slide 40: Pallets: sales revenue/Average Capital Invested
Appendix 13 Pallets: sales revenue/Average Capital Invested 1.2 1.1 1.0 0.9 0.8 FY10 FY11 FY12 FY13 FY14 1H14 1H15 Americas EMEA Asia-Pacific Total 40
Slide 41: CHEP USA pallet productivity trends
Appendix 14a CHEP USA pallet productivity trends (B4840) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 8% 6% 98% 4% 96% 2% 94% 0% FY10 FY11 FY12 FY13 FY14 1H15 FY10 FY11 FY12 FY13 FY14 1H15 41
Slide 42: CHEP Europe pallet productivity trends
Appendix 14b CHEP Europe pallet productivity trends (B1210 and B1208) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 8% 6% 98% 4% 96% 2% 94% 0% FY10 FY11 FY12 FY13 FY14 1H15 FY10 FY11 FY12 FY13 FY14 1H15 42
Slide 43: Pallets Americas: Underlying Profit analysis
Appendix 15a Pallets Americas: Underlying Profit analysis (US$M) 3 27 (41) (5) Asset recovery and utilisation impacts (pallet damage, 206 transport costs) Freight inflation (capacity 195 constraints) 190 Higher depreciation 1H14 Volume, Global Direct 1H15 FX 1H15 price, mix Supply costs (constant FX
Slide 44: Pallets EMEA: Underlying Profit analysis
Appendix 15b Pallets EMEA: Underlying Profit analysis (US$M) 2 (2) 8 (9) 28 Strong execution Benefit of lower inflation environment 192 Strong sales mix 183 performance 156 1H14 Volume, Global Direct Other 1H15 FX 1H15 price, mix Supply costs (constant FX) Chain 44
Slide 45: Pallets Asia-Pacific: Underlying Profit analysis
Appendix 15c Pallets Asia-Pacific: Underlying Profit analysis (US$M) 1 (1) (1) (1) 4 37 36 34 1H14 Volume, Global Direct Other 1H15 FX 1H15 price, mix Supply costs (constant FX) Chain 45
Slide 46: RPCs: Underlying Profit analysis
Appendix 15d RPCs: Underlying Profit analysis (US$M) (3) (1) (2) 15 69 67 58 1H14 Volume, Direct Other 1H15 FX 1H15 price, mix costs (constant FX) 46
Slide 47: Containers: Underlying Profit analysis
Appendix 15e Containers: Underlying Profit analysis (US$M) (1) 12 32 31 1 (1) 2 18 1H14 Volume, Direct Other Acquisitions 1H15 FX 1H15 price, mix costs (constant FX) 47
Slide 48: Ferguson Group historical results vs. oil price
Appendix 16 Ferguson Group historical results (right axis) vs. oil price (left axis) 160 120 140 100 Sales revenue and EBITDA (US$M) 120 80 Brent (US$ per barrel) 100 80 60 60 40 40 20 20 0 0 2007 2008 2009 2010 2011 2012 2013 2014 Sales revenue (right axis) EBITDA (right axis) Brent (US$ per barrel
Slide 49: Half-year results
Half-year results www.brambles.com