Metair Investments Limited · JSE:MTA
Metair Investments — FY2014 Earnings Presentation
71 slides from Metair Investments's earnings presentation, Mar 26, 2015
Slide 1: 2014 Year-End Results, Strategic & Operational Review
2014 YEAR-END RESULTS, STRATEGIC & OPERATIONAL REVIEW 1 | 26TH March 2015
Slide 2: Agenda
AGENDA • Reflection PART 1 • Start/Stop Battery Development Update • Metair’s Redesign, Vision & Strategy • Operational Review PART 2 • Financial Overview • Prospects 2 |
Slide 3: Reflection
REFLECTION 3 |
Slide 4: Integrated Annual Report
INTEGRATED ANNUAL REPORT Metair’s integrated annual reports are always presented against the backdrop of a theme that aims to reflect the position of the company at that specific time. 4 |
Slide 5: Image: Brand Wall
IMAGE: BRAND WALL METAIR INVESTMENTS LIMITED automotive | industrial | retail 2014 INTEGRATED ANNUAL REPORT 5 | METAIR
Slide 6: Image: Brand Wall - 2014 Theme
IMAGE: BRAND WALL The theme chosen for 2014 is that of brand excellence, focusing on the group’s brands, brand value and customer’s brand loyalty. 6 |
Slide 7: Image: Brand Wall - VIN plates
IMAGE: BRAND WALL The brands on our cover are presented as VIN (vehicle identification number) plates – the unique identifiers carried by every vehicle. Each VIN combines a sequence of digits that confirm the vehicle’s manufacturer, the vehicle’s general characteristics, model year and place of manu
Slide 8: 9-Year Annual Report Themes
9-YEAR ANNUAL REPORT THEMES 2006 Growth, Gain, Enrichment 2007 Transformation 2008 Transparency 2009 Crossroads – Back to Basics 2010 Balance 2011 Human Focus, Measurement and Adjustment 2012 Reflection – Road Ahead 2013 Growing our International Footprint 2014 Brand Wall 8 |
Slide 9: 2006 Growth
2006 Growth • New era for Metair and Toyota • Toyota targeting 220 000 vehicle production • Huge investments to support Toyota production volumes • Significant increase in indirect exports • Multinational company partnerships 9 |
Slide 10: 2007 Transformation
2007 Transformation • Transformation represented by an origami butterfly • New shareholders • More focus on aftermarket and non-auto • Multi-customer OE strategy 10 |
Slide 11: 2008 Transparency
2008 Transparency • 2008 world economic crisis required more transparency • Substantial decline in worldwide demand • OE local production declined from 527 079 to 354 158 vehicles • Metair predicts that Toyota SA will experience the biggest percentage decline in the world 11 |
Slide 12: 2009 Crossroads
2009 Crossroads • Back to basics • Restructured group to take into account economic reality • Consolidated loss-making businesses • Cash flow and working capital focus • Costs and efficiencies • Create new vision 12 |
Slide 13: 2010 Balance
2010 Balance • Group finds balance after executing dramatic deep-cutting, cost-saving interventions • Cost-competitiveness requirements and shareholder expectations • Realisation that continuous small adjustments will be required • New group vision 13 |
Slide 14: 2011 Human Focus, Measurement and Adjustment
2011 Human Focus, Measurement and Adjustment • Focus on implementing group vision • Obtain approval for new technologies in our green battery product range • Nurture our corporate capacity and ability to improve and adjust • Intently focus on cost- competitiveness • Secure OE replacement model busin
Slide 15: 2012 Reflection – Road Ahead
2012 Reflection – Road Ahead • Reflection on the past • Rombat Acquisition • Re-branded Metair • Embedded Vision • 3 X 50% = 100% Strategy • Marikana Effect 15 |
Slide 16: 2013 Growing our International Footprint
2013 Growing our International Footprint • Rombat integration • Start/Stop facility Rombat • Mutlu acquisition • 3rd battery player EMEA • Delivered on 3 X 50% strategy • Successful capital raising • First international Start/Stop enquiry 16 |
Slide 17: 2014 Brand Wall
2014 Brand Wall • Deliver on 3 X 50% strategy • Major customer dependence down to 28% • Aftermarket & non-auto businesses grew to 54% • Export aftermarket products to 46 countries • Mutlu Aku now owned 100% • Metair International Batteries marketing structure established (MIB) 17 |
Slide 18: Start/Stop Battery Development Update
START/STOP BATTERY DEVELOPMENT UPDATE 18 |
Slide 19: Metair International Batteries
METAIR INTERNATIONAL BATTERIES 19 |
Slide 20: MIB Objectives
METAIR INTERNATIONAL BATTERIES MIB OBJECTIVES • Establishment of MIB brand • Management of battery R & D center • International OE, OES battery sales • Battery product and process development plus standardisation and industrialisation 20 |
Slide 21: Metair International Batteries
METAIR INTERNATIONAL BATTERIES 21 |
Slide 22: Metair International Batteries
METAIR INTERNATIONAL BATTERIES 22 |
Slide 23: Metair International Batteries
METAIR INTERNATIONAL BATTERIES 23 |
Slide 24: Start/Stop Contract Status
START/STOP CONTRACT STATUS Turkey Europe South Africa Contracts • Renault International aftermarket • MBSA awarded • Toyota distribution agreement • BMW • Ford Contracts • Ford Europe • VW SA awaiting award • Land Rover Potential • Daimler Europe new • BMW Europe • VW contracts • Toyota Europe 24 |
Slide 25: Start/Stop Development Update
START/STOP DEVELOPMENT UPDATE New AGM Start/Stop specifications Technical • Focus on durability update • Tighter tolerances • Resultant reduction in manufacturing capacity • Overall capacity dropped from 11,7 million to 10,9 million • AGM vs EFB Technology • Entry level vehicles and certain car manu
Slide 26: Automotive Battery Production & Capacity Utilisation
AUTOMOTIVE BATTERY PRODUCTION & CAPACITY UTILISATION 2014 Production in units 2014 Capacity in units 6.0 5.7 5.0 R’million 4.0 3.4 3.0 2.8 2.4 2.1 2.0 2.0 1.0 0.0 MUTLU FNB ROMBAT 26 |
Slide 27: Automotive Battery Production & Capacity Type
AUTOMOTIVE BATTERY PRODUCTION & CAPACITY TYPE 12.0 11.0 Start/Stop 10.0 1,6 million 9.0 1,8 million Conventional 8.0 7,5 million 7.0 Units in millions 6.0 5.0 69% 7,5 million 4.0 Utilisation 3.0 12,9% 2.0 1.0 0.0 Total production Total capacity 27 |
Slide 28: Market Segments in Which Metair Operates
MARKET SEGMENTS IN WHICH METAIR OPERATES • ORIGINAL EQUIPMENT (OE) – Parts sold used in the assembly of new vehicles (South Africa, Romania, Turkey, Slovakia & Russia) • AFTERMARKET – Annuity income generated from vehicles sold as they require replacement parts (Africa, Russia, Europe, Middle East a
Slide 29: Metair's Redesign, Vision & Strategy
METAIR’S REDESIGN, VISION & STRATEGY 29 |
Slide 30: Metair's Redesign
METAIR’S REDESIGN 30 |
Slide 31: Metair Redesign – Redesign Started 2008
METAIR REDESIGN – REDESIGN STARTED 2008 31 |
Slide 32: Metair Redesign – Four Phase Redesign
METAIR REDESIGN – FOUR PHASE REDESIGN 32 |
Slide 33: Redesign – Single Customer Dependency (Phase 1)
METAIR REDESIGN – SINGLE CUSTOMER DEPENDENCY (PHASE 1) 33 |
Slide 34: Redesign – Product & Customer Diversification (Phase 2)
METAIR REDESIGN – PRODUCT & CUSTOMER DIVERSIFICATION (PHASE 2) 34 |
Slide 35: Redesign – Geographical Aftermarket Diversification (Phase 3)
METAIR REDESIGN – GEOGRAPHICAL AFTERMARKET DIVERSIFICATION (PHASE 3) 35 |
Slide 36: Redesign – Globalisation (Phase 4)
METAIR REDESIGN – GLOBALISATION (PHASE 4) 36 |
Slide 37: Redesign – Headline Earnings Per Share (HEPS)
METAIR REDESIGN – HEADLINE EARNINGS PER SHARE (HEPS) During our redesign phase, earnings may fluctuate as we “borrow” from shareholders to complete the redesign 37 |
Slide 38: Vision & Strategy
38 | METAIR ‘atom ral aT
Slide 39: Vision & Strategy
VISION & STRATEGY • “To generate value for all our stakeholders by managing and Vision controlling businesses that through manufacturing and/or logistical excellence, deliver quality, cost-competitive products to our customers in a sustainable manner” • Continue to target balance in the business • N
Slide 40: Performance Against 3 X 50 Strategy
PERFORMANCE AGAINST 3 X 50 STRATEGY Dec-13 Dec-14 OE Market 54% OE 46% 42% 44% 46% 48% 50% 52% 54% 56% 58% Aftermarket 46% AF & 54% Non-Automotive 42% 44% 46% 48% 50% 52% 54% 56% 58% 45% Batteries 57% Batteries 42% 44% 46% 48% 50% 52% 54% 56% 58% 40 |
Slide 41: Segmental Analysis – Largest Single Customer Contribution to Revenue
SEGMENTAL ANALYSIS – LARGEST SINGLE CUSTOMER CONTRIBUTION TO REVENUE 100% 90% 88% (57%) 80% (45%) 70% 60% 50% 46% 46% 43% 43% 40% 37% 30% 28% 20% 10% 0% Pre-2008 2009 2010 2011 2012 2013 2014 41 |
Slide 42: Operational Review
OPERATIONAL REVIEW 42 |
Slide 43: Vehicle Production per OEM in South Africa (NAAMSA)
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA (NAAMSA) OEM 2010 2011 2012 2013 2014 BMW 49 243 52 908 44 229 66 087 71 004 MBSA 53 646 50 939 61 439 47 189 45 584 FMCSA 34 822 28 716 51 006 56 923 76 179 GM 27 234 32 530 38 199 40 019 41 491 NISSAN 40 184 43 743 54 657 46 443 43 268 VW SA 120 577 137 8
Slide 44: Automotive Manufacturing Efficiency and Competitiveness
AUTOMOTIVE MANUFACTURING EFFICIENCY AND COMPETITIVENESS Stable (Pull) Unstable (Chaos) Detecting any structural volume changes is very difficult in an unstable environment. 44 |
Slide 45: Vehicle Production per OEM in Turkey
VEHICLE PRODUCTION PER OEM IN TURKEY OEM 2010 2011 2012 2013 2014 OYAK RENAULT 307 083 330 994 310 602 331 694 318 246 FORD 242 070 295 850 272 097 281 287 244 682 312 245 307 788 256 428 244 614 222 807 HYUNDAI 77 000 90 231 86 976 102 020 203 157 TOYOTA 83 286 91 639 76 925 102 260 131 504 TURK TR
Slide 46: Mutlu Volumes
MUTLU VOLUMES Actual Actual Original Automotive Units FY 2013 FY 2014 Equipment Original Equipment Market - Local 710 469 611 002 Actual Actual Automotive Units FY 2013 FY 2014 Aftermarket Aftermarket - Local 1 347 653 1 319 838 - Export 1 370 416 1 264 796 Total Volume 3 428 538 3 195 636 OE • Volu
Slide 47: Vehicle Production per OEM in Romania
VEHICLE PRODUCTION PER OEM IN ROMANIA OEM 2010 2011 2012 2013 2014 Renault Dacia 327 609 327 394 284 392 342 856 338 593 Ford 9 558 7 547 30 591 68 339 52 829 TOTAL 337 167 334 941 314 983 411 195 391 422 47 |
Slide 48: 2015 Capital Expenditure Commitments
2015 CAPITAL EXPENDITURE COMMITMENTS* GROUP - Approved Sector Expansion Maintenance Total R’000 Efficiency OE 40 302 135 661 175 962 Aftermarket/Non-auto * 169 408 ** 111 369 280 777 Property 2 345 2 644 4 989 Total 212 055 249 674 461 729 Includes authorised and committed capex * Relocation of Plas
Slide 49: Financial Review
FINANCIAL REVIEW 49 |
Slide 50: Financial Highlights
FINANCIAL HIGHLIGHTS ITEM Dec 2013 Dec 2014 Mvt. R’million R’million Revenue 5 227 7 279 39% EBITDA (Excl. transaction costs) 729 1 158 Income 59% Statement Operating profit 446 829 86% Operating profit margin 8.5% 11.4% 2,9ppt Profit after tax 374 632 69% ITEM Dec 2013 Dec 2014 Mvt. R’million R’mil
Slide 51: Operating Profit
OPERATING PROFIT 900 20% 829 800 18% 16% 700 Operating 600 549 14% Profit 500 11,4% 12% R’million Margin % 446 10,5% 10% 400 8,5% 8% 300 6% 200 4% 100 2% 0 0% Reported Dec 2013 Excl. once-off Dec 2013 Reported Dec 2014 OPERATING PROFIT OPERATING INCOME MARGIN Main • Earnings improved but also the qu
Slide 52: Operating Profit: Like-for-Like Excluding Mutlu
OPERATING PROFIT: LIKE-FOR-LIKE EXCLUDING MUTLU 900 800 700 103 (62) 600 R’million 446 487 500 2013 400 Operating 300 Profit 200 100 0 2013 Reported Once off costs Consolidated Mutlu 2013 Excl. Mutlu • 2013 Operating profit excluding Mutlu and transaction cost was 9,9% 829 (311) 900 800 700 R’millio
Slide 53: Headline Earnings Per Share (HEPS)
HEADLINE EARNINGS PER SHARE (HEPS) 700 593 600 500 441 R’million 368 Headline 400 266 327 300 Earnings 200 100 0 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 350 310 303 300 260 250 189 219 Cents 200 HEPS 150 100 50 0 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 • HEPS largely in line with 2012 incr
Slide 54: Balance Sheet - Assets
BALANCE SHEET - ASSETS Dec 2013 Dec 2014 ITEMS R’million R’million Non-Current assets 4 323 4 394 Non-Current Property, plant and equipment 2 845 2 855 Assets Intangible assets 1 267 1 270 Other non-current assets 211 268 Dec 2013 Dec 2014 ITEMS R’million R’million Current assets 3 150 3 541 Current
Slide 55: Balance Sheet - Equity and Liabilities
BALANCE SHEET - EQUITY AND LIABILITIES Dec 2013 Dec 2014 ITEMS R’million R’million Total equity 3 789 4 239 Equity & Non- Non-current liabilities 1 649 2 323 Current Borrowings 1 022 1 671 Liabilities Post employment benefits 108 110 Deferred taxation 373 375 Deferred grant income 125 108 Provisions
Slide 56: Working Capital
WORKING CAPITAL ITEM (R’million) Dec 2013 Dec 2014 Inventory 1 264 1 508 Trade & other receivables 1 274 1 402 Trade & other payables (excluding Mutlu minority liability) (860) (989) Total 1 678 1 921 DAYS Dec 2013 Dec 2014 Inventory 65 76 Trade & other receivables 65 70 Trade & other payables (44)
Slide 57: Income Statement
INCOME STATEMENT Dec 2013 Dec 2014 ITEMS R’million R’million Revenue 5 227 7 279 Operating Gross Profit 1 049 1 583 Profit Other Operating Income 98 163 Distribution, Administrative & Other Expenses 701 917 Operating Profit 446 829 Dec 2013 Dec 2014 ITEMS R’million R’million Net interest expense (12
Slide 58: Overall Segmental Review (Incl. Managed Associate)
OVERALL SEGMENTAL REVIEW (INCL. MANAGED ASSOCIATE) Dec-13 Dec-14 Margin % 4,000 3,746 3,682 3,500 3,249 3,000 2,500 2,212 R’milion Segmental 2,000 Revenue 1,500 1,000 671 531 500 - Original Equipment Aftermarket Non-auto 600 560 80% 70% 500 60% R’million 400 50% 285 300 40% Segmental 218 240 30% PBI
Slide 59: Overall Segmental Review - Export
OVERALL SEGMENTAL REVIEW (INCL. MANAGED ASSOCIATE) Dec-13 Dec-14 Margin % 1,500 1,336 1,000 R’milion 772 Export Revenue 500 105 109 69 45 - Original Equipment Aftermarket Non-auto 160 20% 139 140 18% 120 16% 14% 100 12% R’million 80 10,4% 11,5% 61 10% Export 60 7,9% 8% PBIT 40 9,2% 6% 6% 9,2% 20 7 1
Slide 60: Overall Segmental Review - Local
OVERALL SEGMENTAL REVIEW (INCL. MANAGED ASSOCIATE) Dec-13 Dec-14 Margin % 4,000 3,637 3,500 3,144 Local PBIT 3,000 & Margins 2,500 2,346 R’milion 2,000 1,440 1,500 1,000 601 486 500 - Original Equipment Aftermarket Non-auto 450 421 20% 400 18% 17,9% 350 16% Local OE margin contraction 15,6% 14% 300
Slide 61: Segmental Analysis – Additional Information
SEGMENTAL ANALYSIS – ADDITIONAL INFORMATION (INCL. MANAGED ASSOCIATE) Auto parts Battery 9,000 8 099 8,000 7,000 5 993 6,000 R’million 4,595 Product 5,000 (57%) Split 2,716 4,000 (45%) 3,000 2,000 3,243 3,480 1,000 (54%) (43%) - 2013 2014 International South Africa 9,000 8 099 8,000 7,000 5 993 Geog
Slide 62: Mutlu Income Statement – Stand Alone Pre-Consolidation
MUTLU INCOME STATEMENT – STAND ALONE PRE-CONSOLIDATION ITEMS FY 2013 FY 2014 R’million R’million Sales Revenue 2 217 2 281 Cost of sales (1 692) (1 714) EBITDA Gross margin 525 567 Gross margin % 23.7% 24.8% Operating expenses (334) (343) Other operating income (incl. 58 76 forex) EBITDA 323 376 EBI
Slide 63: Mutlu Income Statement
MUTLU INCOME STATEMENT ITEMS Dec 2013 Dec 2014 R’million R’million EBITDA 323 376 Depreciation & Amortisation (74) (76) Profit After EBIT (Operating Profit) 249 300 Tax Operating profit % 11,23% 13,2% Net finance cost (incl. forex losses on (63) (15) borrowings) Non-operating items * 56 (51) Profit
Slide 64: Reconciliation of Mutlu Stand Alone Profit to Consolidated Profit
RECONCILIATION OF MUTLU STAND ALONE PROFIT TO CONSOLIDATED PROFIT ITEMS Dec 2014 R’million Reported Profit after tax (ZAR) Mutlu Aku 179 + Other entities 26 Reconciliation + Reversal of LSA provision (already incl. in PPA) 18 + Reversal of Impairment (already incl. in PPA) 48 + Other consolidation a
Slide 65: Refinancing
REFINANCING Bridge facility Bridging facility ZAR in m illions Margin to JIBAR Acquisition ABSA 1 350 150bps Phase 1 Cleared 1 350 150bps (Bridge facility) Refinance outcome Preference share allocation ZAR in m illions Rate of prime SBSA 1 400 Acquisition Cleared 1 400 69% Phase 2 RCF allocation (Re
Slide 66: Capital and Debt Structure
CAPITAL AND DEBT STRUCTURE ITEM 2012 2013 2014 Capital Debt*:equity 13% 33% 42% Structure Net debt**:equity 2% 22% 31% ITEM 2012 2013 2014 Debt Net debt** 34.8 795.3 1 267.4 Levels Net debt**:EBITDA 0.05 1.09 1.09 • Over time our target structure is c. 25% debt:equity • May fluctuate short term espe
Slide 67: Prospects
PROSPECTS 67 |
Slide 68: Prospects Depend On …
PROSPECTS DEPEND ON … • Model changes and successful launch of new vehicle models • Effectiveness of cost saving progress to contain destabilisation effect Original • Stabilisation of labour environment Equipment (OE) • Europe and other export market vehicle demand • Exchange rate volatility • Europ
Slide 69: Prospects Depend On …
PROSPECTS DEPEND ON … • Integration progress • Synergy extraction Mutlu Aku • Commodity price movement • Exchange rate movements and volatility Performance • OE, Aftermarket and export demand • Geo-political environment • Labour relations • Successful launch of new vehicle models Stabilisation of •
Slide 70: Q & A
METAIR INVESTMENTS LIMITED automotive | industrial | retail WWW.METAIR.CO.ZA
Slide 71: Disclaimer
DISCLAIMER The information supplied herewith is believed to be correct but the accuracy thereof at the time of going to print is not guaranteed. The company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data does