Metair Investments Limited · JSE:MTA
Metair Investments — FY2012 Earnings Presentation
81 slides from Metair Investments's earnings presentation, 2013
Slide 1: Integrated Annual Report – Metair Investments Limited
INTEGRATED ANNUAL REPORT METAIR INVESTMENTS LIMITED MedoUrney we have travelled defines our road ahead
Slide 2: Agenda
AGENDA • Reflection • Vision & Strategy • Mega-Trends • Electric Vehicle • Integrated Report • Prospects • Q&A 2
Slide 3: Agenda
AGENDA • Reflection • Vision & Strategy • Mega-Trends • Electric Vehicle • Integrated Report • Prospects • Q&A 3
Slide 4: Agenda – Integrated Report
AGENDA • Integrated Report – Financial Review – Rombat Acquisition – Operational Review – Marikana Effect – Statement on Integrated Report • Prospects • Q&A 4
Slide 5: Reflection
REFLECTION 5
Slide 6: Annual Integrated Report theme
ANNUAL INTEGRATED HEADING TO GO HERE REPORT Metair’s annual integrated reports are always presented against the backdrop of a theme that aims to reflect the position of the company at that specific time. 6
Slide 7: Image: The journey we have travelled defines our road ahead
IMAGE Mesourmney we have travelled Gefines our road ahead
Slide 8: Cover image: Reflection
IMAGE: REFLECTION HEADING TO GO HERE • This year's cover image is of a vehicle, with a prominent rear-view mirror, moving past a row of billboards reflecting Metair's Integrated Report covers of the last five years. These images are mirrored on the side of the vehicle and portray: – Reflection – Roa
Slide 9: The journey we have travelled defines our road ahead
IMAGE: REFLECTION HEADING TO GO HERE The journey we have travelled defines our road ahead 9
Slide 10: In 2012 we reflect and identify the road ahead
IMAGE: REFLECTION HEADING TO GO HERE In 2012 as we reflect we are confident that we have identified the road ahead. While it is in blueprint stage, we are ready to embark on it. A significant step was our first cross-border acquisition – of Rombat, the largest lead-acid battery manufacturer in Roman
Slide 11: Shift to aftermarket and new logo
IMAGE: REFLECTION HEADING TO GO HERE This indicated a marked shift in our focus on the aftermarket sector combined with a platform to inject our leading technology in Start/Stop batteries into the European market which has enormous potential for this type of technology. This bold step is also reflec
Slide 12: 7-year annual financial report themes
7-YEAR HEADINGANNUAL FINANCIAL REPORT THEMES TO GO HERE • 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 12
Slide 13: 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 13
Slide 14: 2007 Transformation
2007 Transformation • Transformation represented by an origami butterfly • New shareholders • More focus on aftermarket and non-auto • Multi-customer OE strategy 14
Slide 15: 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 15
Slide 16: 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 16
Slide 17: 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 17
Slide 18: 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 19: 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 19
Slide 20: Market segments in which Metair operates
MARKET SEGMENTS HEADING TO GO HERE IN WHICH METAIR OPERATES • ORIGINAL EQUIPMENT (OE) – Parts sold used in the assembly of new vehicles (South Africa, Romania, Slovakia & Russia) • AFTERMARKET – Annuity income generated from vehicles sold as they require replacement parts (Africa & Europe) • NON-AUT
Slide 21: Vision & Strategy
VISION & STRATEGY 21
Slide 22: Vision
VISION HEADING TO GO HERE “To generate value for all our stakeholders by managing and controlling businesses that through manufacturing and/or logistical excellence, deliver quality, cost- competitive products to our customers in a sustainable manner.” 22
Slide 23: Strategy
STRATEGY HEADING TO GO HERE • Continue to target balance in the business • Nurture Original Equipment (OE) business and expand Original Equipment Manufacturer (OEM) customer base • Focus intently on cost • Secure and grow aftermarket product range • Pursue the acquisition of a complementary business
Slide 24: Metair Rebranding
METAIR REBRANDING 24
Slide 25: Metair Rebranding
METAIR REBRANDING a ME T ir utomotive ndustrial etail A X E N C C U E H F L N A L O C E L T N O U C G R E Y I N G 25
Slide 26: Newly Branded Metair
NEWLY BRANDED METAIR METAIR INVESTMENTS LIMITED automotive | industrial | retail 26
Slide 27: Newly Branded Metair – Manufacturing and Marketing Excellence
NEWLY HEADINGBRANDED TO GO HEREMETAIR The ME of Metair is how we sustain ourselves and we take pride in our Manufacturing Excellence that is core to our sustainability. We are also acutely aware that the future ME of Metair must be our Marketing Excellence. 27
Slide 28: 3 X 50% = 100% Strategy
3 X 50% = 100% STRATEGY 28
Slide 29: 3 X 50% = 100% Strategy
3HEADING X 50% TO = 100% STRATEGY GO HERE • 50% of business in OE sector • 50% of business in Aftermarket, Non-auto and exports and • 50% of overall business in batteries 29
Slide 30: Performance against strategy
PERFORMANCE AGAINST STRATEGY 70% 60% 58% 50% 42% 40% 38% 30% 20% 10% 0% OE Aftermarket * Batteries Actual * Relates to aftermarket, non-automotive and exports 30
Slide 31: Battery footprint – Rombat
BATTERY FOOTPRINT - Rombat iv XV = CA a SST AN REDE hy _
Slide 32: Africa Battery Footprint – FNB & Rombat
AFRICA BATTERY FOOTPRINT – FNB & ROMBAT 32
Slide 33: Africa Battery Dream Map
AFRICA BATTERY DREAM MAP TUNISIA CAPEVERDE [Bonnar > ISLANDS pune, Reonan'® 4 ALGERIA somsat Roronsar wesyérn SAMARA, HOITANIA ROMBAT Ny BURKIN: FASO i} NIGERIA TOGO GHANA EQUATORIAL GUINEA® sao TOME * DEMOCRATIC ‘AND PRINCIPE EMOCRATI OF CONGO RWANDA LESOTHO 33
Slide 34: Group Structure
GROUP STRUCTURE 34
Slide 35: Group Structure
GROUP STRUCTURE Valeo Systems First National Supreme Springs South Africa Battery & ATE (Pty) Ltd 49% 100% 100% Japanese Shareholders • Denso 25% of Smiths Manufacturing (Pty) Ltd 35 • Yazaki 25,1% of Hesto Harnesses (Pty) Ltd
Slide 36: Group Structure
GROUP STRUCTURE Lumotech Tenneco Smiths Automotive Manufacturing Holdings SA 100% 25,1% 75% 36
Slide 37: Group Structure
GROUP STRUCTURE Smiths Plastics, Unitrade Hesto Harnesses Rombat SA Automould & Toyoda Gosei 100% 100% 74,9% 99,4% 37
Slide 38: Mega-Trends That Will Shape Our Industry
MEGA-TRENDS THAT WILL SHAPE OUR INDUSTRY 38
Slide 39: Mega-Trends
MEGA-TRENDS HEADING TO GO HERE 1. New patterns of mobility 2. Convergence of new technology 3. New patterns of consumption 4. Resource scarcity 5. Climate change/green movement 6. Urbanisation 7. Demographic change 8. Quality health care 9. Globalisation 39
Slide 40: Mega-Trends
MEGA-TRENDS HEADING TO GO HERE 1. New patterns of mobility 2. Convergence of new technology 3. New patterns of consumption 4. Resource scarcity 5. Climate change/green movement 6. Urbanisation 7. Demographic change 8. Quality health care 9. Globalisation 40
Slide 41: Electric Vehicle Project
ELECTRIC VEHICLE PROJECT 41
Slide 42: Electric Vehicle Project
ELECTRIC VEHICLE HEADING TO GO HERE PROJECT • Met-Elec R60 • Awareness of Mega-Trends • Showcasing of group’s technical expertise • Start/Stop battery technology • Fun project 42
Slide 43: Vehicle 1
VEHICLE 1 GO HERE HEADING TO 43
Slide 44: Vehicle 2
VEHICLE 2 L” i FEZ ET EET ESTO
Slide 45: Met-Elec R60
MET-ELEC R60 45
Slide 46: Integrated Report
INTEGRATED REPORT 46
Slide 47: Financial Review
FINANCIAL REVIEW 47
Slide 48: Financial Highlights
FINANCIAL HEADING TO HIGHLIGHTS GO HERE 2012 2011 ITEM R’000 R’000 Revenue 5 273 370 4 294 152 EBITDA excluding PPE fire effect 823 605 643 220 Operating Profit 668 432 576 223 Operating Profit excluding PPE fire effect & impairment 668 579 534 731 Operating Income Margin excluding PPE fire effect &
Slide 49: Group Revenue
GROUP REVENUE 6 000 5 273 5 000 4 180 4 294 4 000 3 753 Million 3 342 2 984 3 000 2 642 2 151 2 000 1 000 - 49
Slide 50: Operating Profit
OPERATING PROFIT 800 700 669 600 535 500 Million 383 400 311 282 300 247 217 189 200 100 0 Excluding impact of fire & impairment 50
Slide 51: Headline Earnings Per Share (HEPS)
HEADLINE EARNINGS PER SHARE (HEPS) 350 310 300 260 CPS (Cents per Share) 250 200 189 150 133 124 104 100 74 67 50 0 2005 2006 2007 2008 2009 2010 2011 2012 51
Slide 52: Segmental Reporting
SEGMENTAL REPORTING Revenue Profit before interest and tax Year ended December Year ended December R’000 2012 2011 2012 2011 Local Original equipment 3 046 190 2 697 984 313 241 276 631 Aftermarket 1 162 136 893 159 202 786 194 157 Non-auto 462 957 441 385 59 141 58 956 4 671 283 4 032 528 575 168 5
Slide 53: Reconciliation of EBITDA to Profit
RECONCILIATION OF EBITDA TO PROFIT 1000 900 796 (127) 800 700 (6) (198) 600 Million 28 493 500 400 300 200 100 0 EBITDA before Depreciation & Net financing costs Tax expense Associates Profit Associates Amortisation 53
Slide 54: Movement in Cash
MOVEMENT IN CASH 1200 750 (182) 1000 (301) 800 (443) Million 600 397 345 (179) 400 13 (145) 255 200 0 54
Slide 55: Working Capital
WORKING CAPITAL R’000 Dec Dec ITEM 2012 2011 Inventory 870 694 Trade & receivables 707 519 Trade & payables (669) (533) Total 908 680 DAYS Inventory 60 59 Trade & receivables 49 44 Trade & payables (46) (45) Total 63 58 All days calculations based on turnover 55
Slide 56: Rombat Result
ROMBAT RESULT 56
Slide 57: Rombat Result
ROMBAT RESULT 9½ Months 12 Months 12 Months R’000 2012 2012 2011 * Turnover 576,2 713,2 760,6 PAT 39,8 45,5 34,2 EBITDA 63,1 79,3 56,6 * Applying the same exchange rate for comparative purposes. Includes batteries sold to FNB in 2011. 57
Slide 58: Post Balance Sheet Event
POST BALANCE SHEET EVENT 58
Slide 59: Post Balance Sheet Event – Fire at Supreme Spring
POST BALANCE SHEET EVENT Fire at Supreme Spring • Production recommenced • Insurance on PPE and Business Interruption estimated at R35 million 59
Slide 60: Operational Review
OPERATIONAL REVIEW 60
Slide 61: Vehicle Production per OEM in South Africa
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA OEM 2008 2009 2010 2011 2012 BMW 47 830 46 602 49 243 52 908 44 229 MBSA 56 404 44 526 53 646 50 939 61 439 FMCSA 58 366 34 926 34 822 28 716 51 006 GM 52 415 26 412 27 234 32 530 38 199 NISSAN 32 535 32 700 40 184 43 743 54 657 VW SA 93 460 62 341 120 577
Slide 62: Rombat OEM Production in Romania & Export Market
ROMBAT OEM PRODUCTION IN ROMANIA & EXPORT MARKET COUNTRY OEM 2008 2009 2010 2011 2012 Romania Dacia–Renault 257 332 299 640 341 866 331 018 304 994 Slovakia Peugeot 8 880 83 566 121 309 137 942 68 160 Russia Renault Nissan - - - - 38 868 Total 266 212 383 206 463 175 468 960 412 022 62
Slide 63: Rombat Integration
ROMBAT INTEGRATION • Excellent • Management well adapted • 2% increase in volumes (Europe) • 33% increase in Profitability • Lead Recycling improved • Health and Safety improved • Start/Stop facility installed • Start/Stop technology transfer started (early stage) 63
Slide 64: Rombat Integration
ROMBAT INTEGRATION 64
Slide 65: Rombat Integration
—- y, is ROMBAT INTEGRATION
Slide 66: Rombat Integration
ROMBAT INTEGRATION 66
Slide 67: Original Equipment (OE)
ORIGINAL EQUIPMENT (OE) Strengths / Nature Risks / Threats • Predictable Opportunities • Lower growth • New model sourcing • 2 new customers • Cash generative • OE volume • Improved customer diversification • Volume sensitive • Rand volatility • Localisation • Licensed & owned • Low-cost manufacturi
Slide 68: Aftermarket / Non-Automotive
AFTERMARKET / NON-AUTOMOTIVE Strengths / Nature Risks / Threats Opportunities • Reasonable margins • Maintenance of lead • Size of vehicle parc growing balance • High level of vehicle imports • Own technology food for generic aftermarket • Higher capex products • Distribution and marketing important
Slide 69: 2012 Capital Expenditure
2012 CAPITAL EXPENDITURE Sector Expansion Maintenance Total R’000 Efficiency OE 24 473 37 112 61 584 Aftermarket/Non-auto 14 434 198 721 213 155 Property 15 794 7 997 23 791 Total 54 701 243 829 298 530 69
Slide 70: 2013 Capital Expenditure Commitments
2013 CAPITAL EXPENDITURE COMMITMENTS* Approved Sector Expansion Maintenance Total R’000 Efficiency OE 30 736 194 164 224 900 Aftermarket/Non-auto 36 086 25 709 61 794 Property 7 430 10 469 17 900 Total 74 252 230 342 304 594 * Includes authorised but not contracted for and committed capex 70
Slide 71: Marikana Effect
MARIKANA EFFECT 71
Slide 72: Marikana Effect
MARIKANA EFFECT • Tragic Event • Taught us to focus on: – Human Capital – Transformation – Employee expectations – Effective communication – Safe and healthy work environment – Structured work environment – Human dignity – Good labour relations 72
Slide 73: Marikana Effect – Loss of sales
MARIKANA EFFECT • Loss of sales – Mining Sector R120 million – OE Sector R150 million 73
Slide 74: Statement on Integrated Report
STATEMENT HEADING TO GOON INTEGRATED REPORT HERE In today’s operating environment it is not possible to bring results to the market and not caution stakeholders to study results in conjunction with studying the integrated report. 74
Slide 75: Prospects
PROSPECTS 75
Slide 76: Prospect Statement
PROSPECT STATEMENT Maintaining ourselves in the coming period is going to be challenging and would require continued demand for local vehicle production and aftermarket products, supported by increased product offering and market penetration. A stable and non-disruptive labour environment, combined
Slide 77: Potential Intervening Factors
POTENTIAL INTERVENING FACTORS Prospects depend on: • Rand exchange rate • New Romanian Lei exchange rate • OE volumes and continued aftermarket growth • World debt effect on global economic activity • Delivery on new Metair vision, including: § Progress on Start/Stop Battery Programme § Geographical
Slide 78: Potential Intervening Factors
POTENTIAL INTERVENING FACTORS • Sustain local and export market vehicle demand • Continued improvement in cost-competiveness and manufacturing excellence • Good historical vehicle sales have created platform for growth in aftermarket sector • Market penetration and timing of Start/Stop product range
Slide 79: Potential Intervening Factors
POTENTIAL INTERVENING FACTORS • Consolidating and rationalising plastics business • Aggressively target growth in aftermarket products, namely: § Brakes § Filters § Sparkplugs § Air-conditioning products § Other products • Execution of acquisition programme in annuity income aftermarket products 79
Slide 80: Q & A Thank You
Q &A THANK YOU WWW.METAIR.CO.ZA 80
Slide 81: 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