Metair Investments Limited · JSE:MTA
Metair Investments — H1 2018 Earnings Presentation
31 slides from Metair Investments's earnings presentation, Jun 30, 2018
Slide 1: Interim Results for the Six Months Ended 30 June 2018
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
Slide 2: Agenda
AGENDA • Welcoming & Opening Observations • Interim Results Statement • Strategy Statement • Acquisition Statement • Governance Statement • Factual Corrective Statement • Financial & Operational Overview • Prospects Statement • Q&A 2
Slide 3: Welcome & Opening Observation
WELCOME & OPENING OBSERVATION
Slide 4: Interim Results Statement: Salient Features
INTERIM RESULTS STATEMENT SALIENT FEATURES • Turnover up 10% to R4.5 billion • HEPS up 16% to 132 cents per share • Energy Storage Vertical up 10% • Automotive Components Vertical up 31% • Turkey – Mutlu Aku up 25% (Exports and industrial business up) • FNB maintain performance even with • Support t
Slide 5: Interim Results Statement: Salient Features by Vertical
INTERIM RESULTS STATEMENT SALIENT FEATURES ENERGY STORAGE AUTOMOTIVE COMPONENTS H1’17 H1’18 H1’17 H1’18 REVENUE REVENUE REVENUE REVENUE 8% 12% R2.5 billion R2.7 billion R2.1 billion R2.4 billion 54% Contribution 53% Contribution 46% Contribution 47% Contribution OPERATING PROFIT OPERATING PROFIT OPE
Slide 6: Strategy Statement
STRATEGY STATEMENT • Key drivers of long-term sustainability • Ability to follow market • Ability to breathe with the market • Ability to adjust to technology shifts • Requires local, international and global relevance • 50 million battery strategy aim to secure the relevance and support customers •
Slide 7: Acquisition Statement
ACQUISITION STATEMENT • TAB acquisition • Confidentiality breach unfortunate • Recent, and potentially protracted, emerging market volatility • Board prioritised operational stability in Turkey • Terminate negotiations and due diligence process • Withdraw cautionary announcement 7
Slide 8: Governance Statement
GOVERNANCE STATEMENT • Speaks to the system we designed to direct, grow and control our business • We continuously challenge our approach, design and application in this area • Require balanced focus on performance and conformance, keeping all stakeholders interest in mind Design Principles • Collec
Slide 9: Governance Statement
GOVERNANCE STATEMENT • Autonomous Subsidiaries • KPI’s • Budgets • Forecasts • Annual MD’s Conference • All MD’s • Metair Board • Specialists 9
Slide 10: Governance Statement
GOVERNANCE STATEMENT • Inputs • Shareholder Expectations • Operational Overviews • Strategic Overviews • Technology Trends • Proposed Budget • Proposed KPI’s • Proposed Capital Expenditure • Proposed Return Matrix • Outputs • Final KPI’s • Budgets • Targets • Capital Expenditure • Group Objectives •
Slide 11: Factual Corrective Statement
FACTUAL CORRECTIVE STATEMENT • Earnings declined because of acquisitions • ROE declined because of acquisitions • ROIC introduction 11
Slide 12: Factual Corrective Statement: HEPS Evolution
FACTUAL CORRECTIVE STATEMENT HEPS EVOLUTION Earnings improved because of acquisitions 12
Slide 13: Factual Corrective Statement: 2012 Change Point
FACTUAL CORRECTIVE STATEMENT 2012 CHANGE POINT Earnings improved because of Mutlu/Rombat • There is a fundamental incorrect assumption in the market that it is Metair’s overseas acquisitions that has led to the decline in earnings from our highest position in 2014 • The fact is that 2017 HEPS was at
Slide 14: Factual Corrective Statement: ROE 2007 vs 2017
FACTUAL CORRECTIVE STATEMENT ROE: 2007 VS 2017 Current ROE improved because of acquisitions 14
Slide 15: Factual Corrective Statement: ROE / ROIC Comments
FACTUAL CORRECTIVE STATEMENT ROE / ROIC COMMENTS ROE improved over time (2007 – 2012) • We believe our return matrix is still good with a ROIC of 32.4% in Automotive Components Vertical, 16.7% in Energy Vertical and 12.9% at group level • Yes, it has changed over the last years. It all has to do wit
Slide 16: Financial & Operational Overview
FINANCIAL & OPERATIONAL OVERVIEW
Slide 17: H1 2018 Main Trading Highlights
H1 2018 MAIN TRADING HIGHLIGHTS Metair Group turnover increase of 10% for H1 to R4.5bn from R4.1bn, as both energy and automotive businesses performed well in the period >16% HEPS improvement from 114cps in H1’17 to 132cps in H1’18 Considering currency translation impact (TRY/ZAR down 17%), pl
Slide 18: Financial Highlights: Income Statement
FINANCIAL HIGHLIGHTS INCOME STATEMENT 1. Revenue up 10% due to good volume growth. ROA, ROE 2. EPS and HEPS up 17% and 16% respectively. Net debt of 3. Other operating income analysis and ROIC improved. Operating margins improved to 9.2% R1.5bn, represents net debt : EBITDA ratio of 1.2. Dec 17 Jun
Slide 19: Financial Highlights: Balance Sheet
FINANCIAL HIGHLIGHTS BALANCE SHEET 1. Balance sheet stable, with the exception of currency 2. Equity stable, with earnings offset by R216m FCTR mvt 3. Debt and capital structure remains stable while debt translation impact. Inventory up on Dec 17 position with Item Dec 17 Jun 17 Jun 18 ratios improv
Slide 20: Energy Storage Vertical
ENERGY STORAGE VERTICAL MAIN TRADING OBSERVATIONS ENERGY STORAGE at a glance REVENUE Auto battery Var Industrial Var units in '000 s Dec-17 Jun-17 Jun-18 (units) OEM volume decline in MwH sold Jun-17 Jun-18 (units) 8% Mutlu 4 043 1 463 1 399 (64) Turkey offset by higher Mutlu 53 97 44 Rombat 2 205 9
Slide 21: Energy Storage Results
ENERGY STORAGE RESULTS 1. Mutlu contributed > 42% of total vertical revenue 2. Mutlu PBIT increased > R23m, FNB and Rombat flat 3. Energy Storage Vertical PBIT grew over the past 18 months despite TRY currency depreciation against the USD and ZAR, H1’18 much higher lead input cost 4. Automotive volu
Slide 22: Automotive Components Vertical
AUTOMOTIVE COMPONENTS VERTICAL MAIN TRADING OBSERVATIONS AUTOMOTIVE COMPONENTS at a glance Var OEM Dec-17 Jun-17 Jun-18 (units) Market production volumes REVENUE MBSA 118 277 51 987 44 190 (7 797) 1.9% (5.3k units) FMCSA 93 817 45 143 47 850 2 707 VWSA 108 156 61 103 65 783 4 680 12% TSAM 128 578 61
Slide 23: Automotive Components Results
AUTOMOTIVE COMPONENTS RESULTS 1. Direct revenue by major OEM customers shows improving 2. Automotive Components Vertical PBIT & margin of 10.9% 3. SA vehicle production volumes (NAAMSA) remains largely trend of growing our customer base and positioning to shows a strong recovery after model launch f
Slide 24: Prospect Statement
PROSPECT STATEMENT
Slide 25: Prospect Statement: 2018 Prospects and Turkey
PROSPECT STATEMENT 2018 Prospects • The prospect statement in the IAR of Metair for 2017 indicated that the group had a positive outlook for 2018 • The good first half performance is supportive of this statement • Unfortunately Turkish Lira volatility could negatively impact this, however annualised
Slide 26: Prospect Statement: Turkish Lira Devaluation
PROSPECT STATEMENT TURKISH LIRA DEVALUATION • Emerging market experience is key • Rand experience good schooling • Exports becomes a focus • 80% - 85% of vehicles manufactured is for export market • Non discretionary product • Strong winter demand required • Lead recycling and balance big focus • Re
Slide 27: Supplementary Information
SUPPLEMENTARY INFORMATION
Slide 28: Financial Highlights
FINANCIAL HIGHLIGHTS June’18 (LTM) June’18 (LTM) HEPS Revenue (6months) R9.9 bn 132 cps PBIT Net debt R1.0 bn R1.5 bn Attribut. Net Debt: PAT EBITDA R594 m 1.2 PBIT % EBITDA 9.1% R1.3 bn 28
Slide 29: Energy Storage Volumes
ENERGY STORAGE VOLUMES (*ROUNDED) 1. Total automotive volumes by operation (including 2. Warm winter conditions restricted growth to 2.5%. 3. Export automotive volumes grew c.28%. Local aftermarket industrial). and OEM volumes softer. 4. Rombat automotive volumes grew 9% with strong 5. FNB – auto ba
Slide 30: Q & A
TAIR INVESTMENTS LIMITED ‘automotive | Industriel | retall > (i = r ~ —— WWW.METAIR.CO.ZA
Slide 31: 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