Brambles Limited · ASX:BXB
Brambles — FY2022 Earnings Presentation
46 slides from Brambles's earnings presentation, Aug 17, 2022
Slide 1: Full-Year 2022 Results Presentation
Full-Year 2022 Results Step into presentation the future 17 August 2022
Slide 2: Results highlights
1 Results highlights GRAHAM CHIPCHASE, CEO
Slide 3: FY22 result summary
3 FY22 result Financial highlights summary • FY22 result ahead of guidance with stronger than expected fourth quarter performance providing good momentum into FY23 • Profit growth of +10% and operating leverage with price realisation and supply chain efficiencies offsetting cost-to-serve increases a
Slide 4: FY22 operating environment
4 FY22 operating environment Brambles’ response Unprecedented disruptions to global • Additional ~8 million pallet purchases in FY22 supply chains from ongoing impact of across the globe to support customers COVID-19 pandemic and heightened • Ongoing automation investments to deliver geopolitical te
Slide 5: Defensive characteristics
5 Defensive characteristics Well positioned to deliver value through all stages of the economic cycle Customers primarily in the Market leading position with attractive growth ‘consumer staples’ sector opportunities • Significant addressable opportunities and new Other Auto 3.7% business pipeline in
Slide 6: Shaping Our Future transformation
6 Shaping Building business capabilities, establishing new ways of working and Our Future technological foundations to support transformation transformation • Migration to the cloud and best in class CRM/Salesforce • Enhanced project management and digital capabilities across the organisation Accele
Slide 7: Shaping Our Future scorecard
7 Shaping Our Future scorecard Asset Efficiency & Sustainability & ESG Digital Transformation Customer Business Excellence Network Productivity Outcomes Transform information and digital Deliver unrivalled value and Improve productivity and Reinvent the organisation, Pioneer regenerative supply insi
Slide 8: FY25 pathways
8 FY25 pathways Market conditions impacting some scorecard targets Reduce uncompensated pallet losses1 Reduce pallets scrapped2 Rollout fully automated end-to-end repair by 30% by end of FY25 by ~15% by end of FY25 process to 70 plants by end of FY24 100 Indexed to FY21 baseline Indexed to FY21 base
Slide 9: Asset efficiency
9 Asset efficiency Accelerating initiatives to overcome headwinds with encouraging improvements in asset productivity in FY22 Improve pallet collections | FY22 recoveries Improve visibility of our assets • Small trucks deployed across North America • Targeted smart asset deployments by channel/custo
Slide 10: Smart assets rollout
10 Smart assets rollout Clear roadmap to continue building smart asset capabilities FY22 FY23 Progress Informed value examples Priorities Targeted • 20+ markets with foundations of • Helped to enable benefits in the • Scale to 30+ markets diagnostics hardware, software including US of ~US$50m1, incl
Slide 11: Customer value
11 Customer value Initiatives to improve customer experience and pallet availability INITIATIVES Improving the customer experience Simplifying Designing proof- Enhancing commercial of-concepts for Simplifying the myCHEP for Improving pallet models for smaller Piloting proactive new customer customer
Slide 12: Sustainability & ESG
12 Sustainability & ESG 10th most Progressing towards our ambitious 2025 sustainable company of 7,000 analysed regenerative targets Progress in FY22 AAA rating, top 8% of • Committed to achieving net-zero greenhouse gas companies assessed emissions across our whole supply chain by 2040 (previous com
Slide 13: FY23 Outlook
13 FY23 Outlook Earnings momentum and cash flow improvement Brambles expects the challenging macroeconomic and operating conditions experienced in FY22 to continue into FY23, with ongoing supply chain disruptions, inflationary pressures and geopolitical unrest leading to increased market uncertainty
Slide 14: Financial overview
2 Financial overview NESSA O’SULLIVAN, CFO
Slide 15: FY22 results summary
15 FY22 results Summary US$m FY22 Change vs. FY21 • Sales revenue +9% reflecting pricing to recover cost-to- Actual Constant serve increases across all regions. Volumes in line with Continuing operations prior year as pallet availability challenges moderated FX FX volume growth Sales revenue 5,558.9
Slide 16: FY22 Group sales revenue growth
16 FY22 Group sales revenue growth Pricing to recover cost-to-serve increases; volume growth impacted by pallet availability Growth across all segments Price realisation to recover cost to serve FY22 Sales revenue growth (US$m) Price/mix and volume contribution to growth 27 +9% (141) 139 +7% Pricing
Slide 17: Group profit analysis (US$m)
17 Group profit analysis (US$m) Pricing, surcharges and supply chain efficiencies offset operating cost inflation and increased transformation investments North American surcharge Fuel and transport inflation income to recover lumber, US$(207)m and higher asset fuel and transport cost recovery costs
Slide 18: Effective input-cost inflation recovery
18 Effective input-cost inflation recovery Net P&L over recovery to deliver returns on capital investment in pallets, which have a 10-year asset life and is part of the overall cost-to-serve FY22 P&L impacts Balance sheet FY23 considerations Increased pallet capex Net cost recovery • Cost-to-serve d
Slide 19: Lumber market dynamics
19 Lumber market dynamics Record levels of lumber market volatility impacting price and supply of lumber & pallets Extraordinary lumber market dynamics and inflation Brambles impact weighted to capex Europe market timber price2 (US$) Capital expenditure: Lumber represents US market timber price1 (US
Slide 20: Asset efficiency
20 Asset efficiency Pooling capex to sales up 9pts driven by lumber inflation. Capex investments to support longer cycle times and to replace losses, partly offset by asset recoveries FY22 pooling capex of US$1,669m (accruals basis) increased Pooling capex to sales ratio US$652m at constant currency
Slide 21: CHEP Americas
21 CHEP Americas Margin and ROCI improvement despite significant operating and capital cost headwinds FY22 Change vs. FY21 FY22 performance Actual Constant • Pallets revenue +13% driven by pricing to recover the higher (US$m) FX FX cost-to-serve, partly offset by lower volumes as pallet availability
Slide 22: US pallets revenue
22 US pallets revenue Price growth to recover increase in cost-to-serve, partially offset by volume reductions as pallet availability constraints limited volume growth US pallets revenue growth breakdown +11% FY22 revenue growth components: • Price/mix growth of 15% driven by initiatives to recover
Slide 23: CHEP EMEA
23 CHEP EMEA Resilient margins and strong returns despite accelerating input-cost inflation FY22 Change vs. FY21 FY22 performance Actual Constant • Pallets revenue +7%: Balanced revenue growth with both (US$m) FX FX price realisation across the region and volume growth from Europe 1,577.5 1% 7% net
Slide 24: EMEA sales growth
24 EMEA sales growth Revenue growth of 7% driven by both volume and pricing CHEP EMEA revenue FY22 revenue growth components: growth breakdown • Price/mix growth +4% largely reflecting contractual price indexation across the region and +7% +7% additional pricing to recover inflation and other cost-
Slide 25: CHEP Asia-Pacific
25 CHEP Asia-Pacific Earnings growth reflects higher utilisation and longer pallet cycle times FY22 Change vs. FY21 FY22 performance Actual Constant • Pallets revenue +3%: Pricing actions to recover cost-to- (US$m) FX FX serve increases with pallet availability challenges moderating further volume g
Slide 26: Corporate Segment
26 Corporate Segment Increase in corporate segment largely driven by short-term transformation costs FY22 Change vs. FY21 FY22 performance Actual Constant (US$m) FX FX • Shaping Our Future investments increased US$53.2m at constant currency Shaping Our Future – Short-term transformation costs1 of US
Slide 27: Cash flow
27 Cash flow Lumber inflation impacting cash generation across the Group despite strong earnings growth (US$m, actual FX) FY22 FY21 Change EBITDA1 1,853.9 1,737.2 116.7 • Positive Free Cash flow before dividends despite extraordinary pallet price inflation Capital expenditure (cash basis) (1,652.3)
Slide 28: Balance sheet
28 Balance sheet Significant financial flexibility with over US$1b of committed and undrawn facilities as well as cash balances at June 2022 June 22 June 21 • Net debt increase of US$662m reflects A$610m (US$444m) of share buy-backs to Net debt1 US$2,717m US$2,055m complete A$2.8b capital management
Slide 29: FY23 outlook considerations
29 FY23 outlook considerations • FY23 sales revenue guidance growth of between 7-10% at constant currency − Sales revenue growth weighted to pricing across all regions including increased pricing and indexation in Europe reflecting continued focus on recovery of cost-to-serve. − Net new business win
Slide 30: Summary
30 Summary Strong earnings performance despite challenging operating conditions Continued playing a critical role in global supply chains, overcoming numerous challenges, to support customers and deliver strong financial outcomes while investing for the future FY22 result ahead of revised guidance d
Slide 31: Step into the future
Full-Year 2022 Results Step into presentation the future 17 August 2022
Slide 32: Appendix
3) Appendix \S Brambles
Slide 33: Sales revenue by region and sector
33 Appendix 1 Brambles: Sales revenue by region and sector FY22 sales revenue by region FY22 sales revenue by sector India, Middle East, Eastern Europe Asia Türkiye, Africa 3.6% 1.3% Other Auto 3.7% 5.0% Packaging 11.4% 1.9% Latin General America retail 7.5% 2.2% Storage ANZ USA & & Dist. 8.4% Canad
Slide 34: Major currency exchange rates
34 Appendix 2 Major currency exchange rates1 USD EUR AUD GBP CAD MXN ZAR PLN NZD BRL FY22 1.0000 1.1220 0.7223 1.3264 0.7893 0.0491 0.0651 0.2424 0.6782 0.1920 Average FY21 1.0000 1.1959 0.7477 1.3538 0.7812 0.0482 0.0654 0.2644 0.6982 0.1859 30 Jun 22 1.0000 1.0442 0.6879 1.2124 0.7755 0.0497 0.061
Slide 35: FY22 currency mix
35 Appendix 3 FY22 currency mix (US$m) Total USD EUR AUD GBP CAD MXN ZAR PLN BRL NZD Other1 Sales revenue 5,558.9 2,202.8 1,169.6 407.8 382.2 357.3 273.0 195.5 102.4 67.9 57.5 342.9 FY22 share 100% 40% 21% 7% 7% 6% 5% 4% 2% 1% 1% 6% FY21 share 100% 38% 23% 8% 7% 6% 5% 4% 2% 1% 1% 5% Net debt2 2,717
Slide 36: Credit facilities and debt profile
36 Appendix 4 Credit facilities and debt profile Committed Uncommitted Pro-forma Maturity Type1 Debt drawn Headroom facilities facilities Headroom5 (US$b at 30 June 2022) <12 months Bank - 0.3 0.1 0.2 0.2 1 to 2 years Bank/EMTN2 0.9 - 0.6 0.3 0.3 2 to 3 years Bank 0.6 - 0.2 0.4 0.1 3 to 4 years Bank
Slide 37: Net plant and transport costs/sales revenue
37 Appendix 5 Net plant and transport costs/sales revenue Net plant cost/sales revenue Net transport cost/sales revenue (before NA lumber surcharge1) (Net of transport & fuel surcharges) FY22 FY21 FY22 FY21 CHEP Americas 38.7% 39.0% 23.2% 24.0% CHEP EMEA 25.2% 24.2% 22.7% 21.5% CHEP Asia-Pacific 32.
Slide 38: CHEP Americas: Underlying Profit analysis
38 Appendix 6a CHEP Americas: Underlying Profit analysis (US$m) 76 (137) (127) (19) (38) 357 (15) (1) 483 482 386 FY21 Volume, Nth America Plant costs Transport Depreciation IPEP Other FY22 FX FY22 Underlying price, mix1 surcharge costs Underlying Underlying 2 Profit income Profit Profit (constant F
Slide 39: CHEP EMEA: Underlying Profit analysis
39 Appendix 6b CHEP EMEA: Underlying Profit analysis (US$m) (13) (46) 119 (49) 13 (26) 487 463 461 FY21 Volume, price, Depreciation Plant costs Transport costs Other FY22 FX FY22 Underlying mix1 Underlying Underlying Profit Profit Profit (constant FX) 1 Sales growth net of volume-related costs (excl
Slide 40: CHEP Asia-Pacific: Underlying Profit analysis
40 Appendix 6c CHEP Asia-Pacific: Underlying Profit analysis (US$m) (8) 22 (11) (3) (7) 7 23 176 169 146 FY21 Volume, Depreciation Net Net Other FY21 one-off FY22 FX FY22 Underlying price, mix 1 plant transport compensation Underlying Underlying Profit costs costs Profit Profit (constant FX) 1 Sales
Slide 41: Revised capex methodology
41 Appendix 7a Revised methodology noting significant lumber inflation and changes in cycle times Capital expenditure on Property, Revised methodology Plant and Equipment • ‘Replacement’ capex is calculated as the sum of equipment purchases (Accruals basis, US$m) resulting from asset losses and asse
Slide 42: Regional asset efficiency (pooling capex to sales)
42 Appendix 7b Regional asset efficiency (pooling capex to sales ratio) North America Latin America EMEA 28.6% 32.7% 43.0% 23.1% 39.7% 34.7% 21.8% 17.9% 18.0% 20.9% 16.4% 26.7% 27.0% 17.6% 16.9% FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 • Increase in FY21 relates to
Slide 43: Glossary of terms and measures
43 Appendix 8 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/actual FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period Average Capita
Slide 44: Glossary of terms and measures
44 Appendix 8 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: FIFO First In First Out Like-for-like revenue Sales revenue in the reporting period relating to volume performance of the same products with the
Slide 45: Disclaimer
45 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. T
Slide 46: Investor & media contacts
46 Investor & Investors: media contacts Raluca Chiriacescu Vice President, Investor Relations +44 7810 658044 raluca.chiriacescu@brambles.com Suk Hee Lee Director, Investor Relations +61 433 343 888 sukhee.lee@brambles.com Media: Sandra Tang Senior Manager, Media & Communications +61 404 066 107 san