Brambles Limited · ASX:BXB
Brambles — H1 FY2014 Earnings Presentation
28 slides from Brambles's earnings presentation, Feb 19, 2014
Slide 1: Half-Year Results
Half-Year Results 19 February 2014
Slide 2: Results Highlights
Results Highlights Tom Gorman, CEO
Slide 3: Key messages
Results Highlights Key messages • Modest improvement in economic conditions in key markets supports strong sales and profit result • Pallets: return on capital up on efficiency and asset utilisation gains • RPCs: volumes up in all regions; actions underway to drive sales and offset cost impacts in N
Slide 4: We are on track to deliver against our key objectives for the year
Results Highlights We are on track to deliver against our key objectives for the year Objective Progress Annual constant currency percentage sales revenue FY14 growth expected at growth in the high single digits approximately 7% Consistent incremental improvement in Group On track; small improvement
Slide 5: Key financial outcomes for the period reflected a solid Group result
Results Highlights Key financial outcomes for the period reflected a solid Group result (Continuing operations) 1H14 result Change vs. 1H13 Actual FX Constant FX Sales revenue US$2,669M 7% 8% Operating profit US$453M 11% 11% Profit after tax US$280M 11% 9% Basic earnings per share US18.0¢ 10% 8% Und
Slide 6: Diversification and improving operating conditions driving sales revenue
Results Highlights Diversification and improving operating conditions driving sales revenue Components of sales revenue growth (US$M) Sales revenue by operating segment1 (US$M) 33 (26) 18 186 33 (+37%) 81 441 44 (+8%) 2,695 2,669 273 1,769 (+15%) (+5%) 2,486 FX 1H13 RPCs net new wins Acquisitions (e
Slide 7: Economic conditions enabling more selective approach to business growth
Results Highlights Economic conditions enabling more selective approach to business growth Composition of Pallets’ sales revenue growth Contribution from net new business wins by half-year period to Pallets’ 1H14 sales revenue 9% 35 8% Constant currency sales revenue growth 30 7% Gross wins during p
Slide 8: Pallets Americas result reflects sales, profit and ROCI improvements
Results Highlights Pallets Americas result reflects sales, profit and ROCI improvements (US$M) 1H14 Change vs. 1H13 • Organic and price growth and prior year rollover of net new Actual Constant FX FX wins contribute in all regions North America1 1,011 6% 7% • Strong profit growth despite higher CHEP
Slide 9: Strong efficiency improvements amid better organic conditions in Pallets EMEA
Results Highlights Strong efficiency improvements amid better organic conditions in Pallets EMEA (US$M) 1H14 Change vs. 1H13 • Improved organic conditions, expansion in emerging markets, Actual Constant FX FX continued progress in Germany Europe 646 8% 4% • Price and sales mix improvements, plus eff
Slide 10: Pallets Asia-Pacific delivers resilient result amid muted Australian organic conditions
Results Highlights Pallets Asia-Pacific delivers resilient result amid muted Australian organic conditions (US$M) 1H14 Change vs. 1H13 • Strong new platforms (e.g. display pallet, beverage tray) growth in Actual Constant FX FX Australia ANZ 159 (8)% 3% • Asian growth reflects focus on driving dynami
Slide 11: We are seeing positive trends for capex, asset utilisation and ROCI in Pallets
Results Highlights We are seeing positive trends for capex, asset utilisation and ROCI in Pallets Pallets: ratio of annualised sales revenue Pallets: maintenance vs. growth capex to Average Capital Invested 800 16% 1.2 700 14% Total Pallets capex (US$M) 600 12% 1.1 DIN/sales revenue 500 10% 400 8% 1
Slide 12: Mixed RPCs result reflecting strong volumes but increased cost pressures
Results Highlights Mixed RPCs result reflecting strong volumes but increased cost pressures (US$M) 1H14 Change vs. 1H13 • Volume growth in all regions Actual FX Constant FX • Profit decline from not fully offsetting: Europe 289 11% 7% – Higher depreciation costs (US$5M) North America 84 5% 5% – Nort
Slide 13: North American RPCs: mitigating actions underway but short-term challenges remain
Results Highlights North American RPCs: mitigating actions underway but short-term challenges remain IFCO North America sales volume growth • Volume growth remains strong, 200 reflecting increasing penetration 180 versus cardboard 160 • Pricing pressures and pool expansion drove challenging 140 pric
Slide 14: Pallecon contributes strongly to improved Containers sales and profit result
Results Highlights Pallecon contributes strongly to improved Containers sales and profit result (US$M) 1H14 Change vs. 1H13 • Pallecon acquisition drives Actual FX Constant strong sales growth FX CHEP Automotive 79 8% 8% • Improved organic sales and Solutions new wins in CCC, Europe Auto CHEP Pallec
Slide 15: Finance Update
Finance Update Zlatko Todorcevksi, CFO
Slide 16: A solid financial performance, can be built upon with actions on costs
Finance Update A solid financial performance, can be built upon with actions on costs • Strong first-half operating profit despite cost headwinds • Progress shown in line with key initiatives – Continued capital efficiency supporting ROCI growth – Solid cash-flow performance – Detailed planning unde
Slide 17: Strong 11% increase in operating profit vs. prior corresponding period
Finance Update Strong 11% increase in operating profit vs. prior corresponding period Group operating profit bridge (US$M, continuing operations) 6 13 (44) 79 (10) (1) 1 452 453 409 price/mix FX PMS synergies acquisition Direct costs Other 1H14 actual 1H13 Significant efficiencies/ Volume/ 1H14 Pall
Slide 18: Cost headwinds in Pallets largely offset through pricing and efficiencies
Finance Update Cost headwinds in Pallets largely offset through pricing and efficiencies Net transport costs to sales revenue Plant costs to sales revenue 22% 44% 42% 20% 40% 38% 18% 36% 16% 34% 32% 14% 30% 28% 12% 26% 10% 24% FY09 FY10 FY11 FY12 FY13 1H13 1H14 FY09 FY10 FY11 FY12 FY13 1H13 1H14 Ame
Slide 19: Group ROCI improvement consistent with long-term 20% objective
Finance Update Group ROCI improvement consistent with long-term 20% objective ROCI by operating segment Adjusted ROCI (excluding impact of intangibles)1 25% 20% 15% 10% 5% FY09 FY10 FY11 FY12 FY13 1H13 1H14 Pallets RPCs Containers Group Note: FY09 costs includes Significant Items within ordinary act
Slide 20: We are now in the detailed planning phase with our overheads program
Finance Update We are now in the detailed planning phase with our overheads program • Program to be delivered over five-year period to FY19 – Commitment to reduce overhead spending by US$100M from FY14 levels – Additional opportunity for management of currently planned future increases – while suppo
Slide 21: Cash Flow from Operations showed a solid improvement in the half
Finance Update Cash Flow from Operations showed a solid improvement in the half (US$M) 1H14 1H13 Change EBITDA 719 664 55 Capital expenditure (433) (422) (11) Proceeds from sale of PP&E 34 35 (1) Working capital movement 27 (16) 43 IPEP expense 50 54 (4) Provisions/other (21) (20) (1) Cash Flow from
Slide 22: Outlook & Summary
Outlook & Summary Tom Gorman, CEO
Slide 23: We are confirming our FY14 outlook in line with our previous guidance
Outlook & Summary We are confirming our FY14 outlook in line with our previous guidance1 • Continuing operations – Constant-currency sales revenue growth of approximately 7% – Underlying Profit of US$930M to US$965M (30 June 2013 FX)2 • Net finance costs at approximately US$110M (30 June 2013 FX) •
Slide 24: Key messages
Outlook & Summary Key messages • Modest improvement in economic conditions in key markets supports strong sales and profit result • Pallets: return on capital up on efficiency and asset utilisation gains • RPCs: volumes up in all regions; actions underway to drive sales and offset cost impacts in No
Slide 25: Q&A
Brambles Q&A
Slide 26: 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 27: 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 27
Slide 28: Half-Year Results
Half-Year Results 19 February 2014