Brambles Limited · ASX:BXB
Brambles — FY2011 Earnings Presentation
56 slides from Brambles's earnings presentation, Aug 17, 2011
Slide 1: Expanding the Global Pooling Business
Expanding the Global Pooling Business 17 August 2011
Slide 2: Agenda
Agenda Business Update & FY11 Highlights Tom Gorman, CEO Result Analysis & Outlook Greg Hayes, CFO Strategy & Growth Tom Gorman, CEO 2
Slide 3: Business Update & FY11 Highlights
Business Update & FY11 Highlights Tom Gorman, CEO
Slide 4: Key discussion points
Business Update & FY11 Highlights Key discussion points Business update • Focus on expanding in global pooling solutions • Decision to divest Recall and organise pooling by three product categories • US$550m forecast growth capex in RPCs, containers and emerging markets pallets over FY12 and FY13 co
Slide 5: Business Update
Brambles Business Update
Slide 6: Delivering our strategy
Business Update & FY11 Highlights Delivering our strategy Launch CHEP growth strategy: product Recall diversification & divestment geographic expansion decision Global pooling 2009 2010 2011 2012 solutions company Address challenges Completion in CHEP USA: Better of IFCO Everyday acquisition 6
Slide 7: Focus on pooling: Recall divestment
Business Update & FY11 Highlights Focus on pooling: Recall divestment • Appropriate time to divest – Robust growth profile in physical and digital storage – Sales growth; improving margins and returns – Delivery of three-year turnaround program – Strong outlook for growth and further efficiencies •
Slide 8: Global pooling solutions company
Business Update & FY11 Highlights Global pooling solutions company Customer and product matrix Three RPCs Pallets Containers product streams Auto IBCs ULDs CCCs crates Customer Consumer products and Fresh food Auto Air Refining groups general manufacturing Global expertise and solutions delivery 8
Slide 9: US$100m cost efficiencies
Business Update & FY11 Highlights US$100m cost efficiencies Cumulative annualised saving (US$m) June 2011 FX FY12 FY13 FY14 FY15+ European RPC network optimisation and rationalisation 5 5 5 5 CHEP USA and IFCO PMS network optimisation 5 15 35 35 and logistics efficiencies IFCO integration 10 20 40 4
Slide 10: FY11 Highlights
Brambles FY11 Highlights
Slide 11: Key financial outcomes
Business Update & FY11 Highlights Key financial outcomes Sales revenue 13% US$4,672m Underlying profit 17% US$857m Operating profit 12% US$809m Earnings per share 3% 32.9 US cents (US cents) Dividends per share 4% 26.0 Australian cents (Australian cents) 11
Slide 12: Strong sales momentum
Business Update & FY11 Highlights Strong sales momentum Net annualised (US$m) Net new business1 new business2 CHEP Americas 37 75 CHEP EMEA 21 32 CHEP Asia-Pacific 11 18 Recall 41 38 Sub total 110 163 IFCO3 63 76 Brambles3 173 239 1 Brambles defines net new business wins as the change in sales reven
Slide 13: CHEP Americas: solid turnaround
Business Update & FY11 Highlights CHEP Americas: solid turnaround • Sales revenue up 5% to US$1,617m • Growth in USA, Canada, Latin America • New contracts with small-to-medium enterprises up 34% to 1,387 • Better Everyday delivering for customers • Underlying profit up 17% to US$278m • Key customer
Slide 14: CHEP EMEA: resilient results
Business Update & FY11 Highlights CHEP EMEA: resilient results • Sales revenue up 4% to US$1,546m • Growth in most countries offsets weakness in Spain, France • Resilience of UK business: sales revenue up • Increased penetration in Germany, Italy, Nordics, Benelux • Strong growth in Central & Easter
Slide 15: CHEP Asia-Pacific: continued growth
Business Update & FY11 Highlights CHEP Asia-Pacific: continued growth • Sales revenue up 19% to US$464m • Continued pallets and auto penetration in emerging Asia – Sales revenue up 71% in China; 200% in India; 25% in South-East Asia • Modest pallet sales volume growth in Australia, New Zealand • RPC
Slide 16: IFCO: integration update
Business Update & FY11 Highlights IFCO: integration update 12 October 2011: 31 July 2011: IFCO scheduled 31 March 2011: integration to delist from control of IFCO planning Frankfurt Stock effective complete Exchange 2011 2012 30 June 2011: 1 October 2011: Minority IFCO high- IFCO to manage all buy-o
Slide 17: IFCO: strong contribution
Business Update & FY11 Highlights IFCO: strong contribution • Three-month sales revenue: US$230m1 • Pro forma2 FY11 sales revenue up 10% to US$838m – RPCs up 17% to US$503m – Pallet Management Services flat at US$335m • Pro forma2 FY11 Underlying profit up 22% to US$123m • Increased RPC penetration
Slide 18: Recall: sales and margins up
Business Update & FY11 Highlights Recall: sales and margins up • Sales revenue up 10% to US$815m • Ongoing growth in demand for physical and digital storage • Carton growth of 5% in Document Management Solutions • Continued cost and operational efficiencies • Underlying profit up 17% to US$145m • Im
Slide 19: Results Analysis & Outlook
Results Analysis & Outlook Greg Hayes, CFO
Slide 20: Group results summary
Results Analysis & Outlook Group results summary Actual FX Constant FX (US$m) FY11 FY11 FY10 Change (%) Sales revenue 4,672.2 4,532.7 4,146.8 9 EBITDA 1,337.0 1,290.1 1,177.4 10 Underlying profit 857.2 823.3 733.4 12 Significant items (48.0) (43.2) (8.9) Operating profit 809.2 780.1 724.5 8 Profit b
Slide 21: Group sales revenue growth
Results Analysis & Outlook Group sales revenue growth (US$m)1 233 4,533 110 31 4,147 12 FY10 Price/mix Organic Net new wins Acquired FY11 growth businesses 1 Constant FX basis. 21
Slide 22: CHEP Results
Brambles CHEP Results
Slide 23: CHEP: results summary
Results Analysis & Outlook CHEP: results summary Actual FX Constant FX (US$m) FY11 FY11 FY10 Change (%) Americas 1,617.2 1,590.9 1,533.6 4 EMEA 1,545.9 1,533.2 1,482.6 3 Asia-Pacific 463.7 414.4 390.9 6 Sales revenue 3,626.8 3,538.5 3,407.1 4 EBITDA 1,123.0 1,087.2 1,036.8 5 Underlying profit 713.4
Slide 24: Americas: operating profit reconciliation
Results Analysis & Outlook Americas: operating profit reconciliation (US$m)1 25 (8) (8) 271 25 2 235 FY10 Vol, Better Direct Other Significant FY11 price, Everyday costs items mix 1 Constant FX basis. 24
Slide 25: EMEA: operating profit reconciliation
Results Analysis & Outlook EMEA: operating profit reconciliation (US$m)1 (22) 20 7 (3) 325 (18) 309 2 FY10 Vol, price, Quality Direct Other Significant FY11 mix costs items 1 Constant FX basis. 2 Quality spend excludes efficiencies. 25
Slide 26: Asia Pacific: operating profit reconciliation
Results Analysis & Outlook Asia Pacific: operating profit reconciliation (US$m)1 15 (9) 84 78 FY10 Vol, Direct FY11 price, costs mix 1 Constant FX basis. 26
Slide 27: IFCO Results
Brambles IFCO Results
Slide 28: IFCO: pro forma results summary
Results Analysis & Outlook IFCO: pro forma results summary 12 months pro forma1 3 months ended (US$m) Actual FX FY11 FY10 Change (%) 30 June 2011 RPC 140.4 503.3 429.3 17 Pallet Management 89.7 335.0 335.5 - Services Sales revenue 230.1 838.3 764.8 10 EBITDA 51.3 169.2 142.8 18 Underlying profit 33.
Slide 29: Recall Results
Brambles Recall Results
Slide 30: Recall: results summary
Results Analysis & Outlook Recall: results summary Actual FX Constant FX (US$m) FY11 FY11 FY10 Change (%) Americas 361.9 354.6 335.3 6 Europe 208.5 205.0 188.7 9 Rest of World 244.9 218.9 215.7 1 Sales revenue 815.3 778.5 739.7 5 EBITDA 196.6 184.7 172.5 7 Underlying profit 145.3 135.2 124.6 9 Margi
Slide 31: Recall: operating profit reconciliation
Results Analysis & Outlook Recall: operating profit reconciliation (US$m)1 24 (7) (6) 2 136 123 FY10 Vol, Direct Other Significant FY11 price, costs items mix 1 Constant FX basis. 31
Slide 32: Cash Flow & Financing
Brambles Cash Flow & Financing
Slide 33: Reconciliation: EBITDA to cash flow
Results Analysis & Outlook Reconciliation: EBITDA to cash flow (US$m) FY11 FY10 Change EBITDA 1,337.0 1,177.4 159.6 Capital expenditure (764.7) (496.5) (268.2) Proceeds from disposals 100.8 88.0 12.8 Working capital movement (14.8) 14.7 (29.5) IPEP expense 104.9 111.2 (6.3) Provisions / other (38.1)
Slide 34: Financial position
Results Analysis & Outlook Financial position (Actual rates) June 11 June 10 Net debt (US$m) 2,998.8 1,759.3 Gearing1 (%) 55.0 51.9 (Actual rates) FY11 FY10 Covenants EBITDA2/ net finance costs (x) 10.5 10.7 3.5 (min) Net debt/ EBITDA (x) 2.2 1.5 3.5 (max) • Undrawn committed credit facilities of US
Slide 35: Use of Recall proceeds
Results Analysis & Outlook Use of Recall proceeds • Significant pooling investment opportunities – US$550m in growth capex identified for RPCs, Containers and emerging markets pallets over FY12 and FY131 – Expect to identify further opportunities • Suspension of Dividend Reinvestment Plan • Repaymen
Slide 36: Outlook
Brambles Outlook
Slide 37: Guidance for FY12
Results Analysis & Outlook Guidance for FY12 • Subject to unforeseen circumstances and economic uncertainty • Sales revenue growth in constant FX from all business units • Underlying profit1 range US$1,040m to US$1,100m – 30 June 2011 FX rates2 – Assumes full-year contribution from Recall of US$180m
Slide 38: Strategy & Growth
Strategy & Growth Tom Gorman, CEO
Slide 39: Global pooling solutions company
Strategy & Growth Global pooling solutions company Customer and product matrix Three RPCs Pallets Containers product streams Auto IBCs ULDs CCCs crates Customer Consumer products and Fresh food Auto Air Refining groups general manufacturing Global expertise and solutions delivery 39
Slide 40: Forecast growth capex program
Strategy & Growth Forecast growth capex program • US$550m1 growth capex program Growth capex (US$m)1 for RPCs, containers and emerging markets pallets over Forecast FY12 and FY13 FY12/13 Product FY11 FY12 FY13 total • Long-term return on capital invested for organic growth of RPCs 302 120 110 230 >2
Slide 41: Pallets
Brambles Pallets
Slide 42: Pallets – creating a global business
Strategy & Growth Pallets – creating a global business • Anticipated US$200m1 of growth Global pallets efficiencies by FY151 (US$m) capex in emerging markets over FY12, FY13 Standardised automation 20 implementation • US$95m of cost savings to USA plant operations 15 deliver by FY15 efficiencies – U
Slide 43: Pallets – USA revenue opportunity
Strategy & Growth Pallets – USA revenue opportunity (US$bn) 6.0 9.5 Includes half-size pallets All pallets: 9.5 and other opportunities All 48x40: 3.5 IFCO PMS revenue split between poolable and Poolable 48x40: 2.3 non-poolable space 0.2 1.0 3.5 CHEP: 1.1 0.2 0.9 2.3 0.1 1.1 CHEP IFCO Other Propriet
Slide 44: RPCs
Brambles RPCs
Slide 45: RPCs – Americas/Europe revenue opportunity
Strategy & Growth RPCs – Americas/Europe revenue opportunity Europe: US$3.44bn USA: US$1.88bn South America: US$0.41bn 0.12 0.07 0.43 0.02 0.02 0.31 1.69 0.37 2.70 Existing Brambles business Other poolers Net addressable opportunity Source: Brambles estimates 45
Slide 46: RPCs – investing in profitable growth
Strategy & Growth RPCs – investing in profitable growth • Anticipated US$230m1 of growth capex over FY12 and FY13 • RPC sales revenue growth forecast to be at least 15%1 in each of FY12 and FY13 • Expansion of USA, Central & Eastern Europe, South America • Continued growth in Australia, New Zealand
Slide 47: Containers
Brambles Containers
Slide 48: Containers – business expansion
Strategy & Growth Containers – business expansion • Three focus areas for growth capex – Continued investment in building US auto business – Expansion of US IBC business – Global expansion of aviation business • Anticipated US$120m1 growth capex over FY12 and FY13 • Combined sales revenue to double
Slide 49: Containers – automotive expansion
Strategy & Growth Containers – automotive expansion • Solid performance in auto business Addressable North American auto opportunity, light passenger vehicles outside the USA – FY11 sales up 15% to US$147m 10% – Continued growth in emerging markets – Contract wins/extensions: General Motors 50% Tota
Slide 50: Containers – aviation expansion
Strategy & Growth Containers – aviation expansion • Unitpool acquired August 2010 Global ULD pooling opportunity 3% • JMI Enterprises acquisition announced 6% August 2011 for US$14.1m • Creation of end-to-end pooling services business including repair Total: • New contracts signed with SAS, Corsair,
Slide 51: Containers – IBC expansion
Strategy & Growth Containers – IBC expansion Addressable IBC opportunity in USA • Non-US IBC business sales revenue currently US$59m • US-based CAPS acquired January 2011 20% 2% 34% – Pro forma1 FY11 sales revenue growth of US$10m, up 37% 4% Total: – Integration of pre-existing CHEP Americas IBC 2%
Slide 52: Emerging Markets
Brambles Emerging Markets
Slide 53: Emerging markets expansion
Strategy & Growth Emerging markets expansion • Sales revenue up 26% to US$563m in FY11 – Latin America up 21% to US$279m – Middle East & Africa up 27% to US$169m – Emerging Asia up 43% to US$69m – Central & Eastern Europe up 28% to US$46m • Sales revenue growth forecast of about 15%1 in each of FY12
Slide 54: Summary
Brambles Summary
Slide 55: Summary
Strategy & Growth Summary FY11 key outcomes • Sales and profit guidance delivered despite challenging economic conditions • Strong new business growth across key operations • IFCO and other acquisitions completed Key FY12 targets • Strong Underlying profit growth1 • Deliver synergies from IFCO and g
Slide 56: Expanding the Global Pooling Business
Expanding the Global Pooling Business 17 August 2011