Metair Investments Limited · JSE:MTA
Metair Investments — FY2020 Earnings Presentation
50 slides from Metair Investments's earnings presentation, March 2021
Slide 1: 2020 Year End Results Presentation
2020 YEAR END RESULTS PRESENTATION
Slide 2: Safety Message
SAFETY MESSAGE THINGS THAT I HAVE LEARNT THAT I WOULD LIKE TO SHARE WITH YOU The three prevention measures Limit VIRAL LOAD GET TREATMENT EARLY REALLY WORK if you come in contact if you are diagnosed with a positive person Wear masks always Wash and sanitise hands repeatedly get your bloods done Cre
Slide 3: Agenda
AGENDA Welcome and opening observations Metair Covid-19 response strategy Salient features Operational and financial review Outlook and prospects Q&A Appendices 3
Slide 4: Welcome and Opening Observations
WELCOME AND OPENING OBSERVATIONS 4
Slide 5: Metair Image 2021
METAIR IMAGE 2021 Metair’s Integrated Annual Reports (IAR) are contextualised by a cover image and theme that provide stakeholders with an insight into the major events for the period being reported. The image for our 2020 IAR is that of a relay baton being passed on from a caring hand, from our lea
Slide 6: The Metair Board
THE METAIR BOARD SG PRETORIUS CMD FLEMMING T MGODUSO B MAWASHA S SITHOLE M MÜLL BAcc (Hons), CA(SA), CA(Z), M.Com (Business B.Com, Bachelor of Law, MA (Clinical Psychology) BSc (Eng), ADP, MDP, Program for Leadership Dev. Diplom-Betriebswirt Economics) B Prok, AMP Harvard Appointed in 2016 GCC (Harv
Slide 7: Top of Mind Issues
TOP OF MIND ISSUES • Financial results presentation in March • Site visits to all subsidiaries in spite of Covid restrictions • Meet all the various stakeholders and determine expectations • Review the strategic direction of the group in the current environment by H2 • New project delivery for both
Slide 8: Metair Covid-19 Response Strategy
METAIR COVID-19 RESPONSE STRATEGY 8
Slide 9: Employee Health, Welfare, Safety and Communication
EMPLOYEE HEALTH, WELFARE, SAFETY AND COMMUNICATION THE WELFARE, HEALTH AND SAFETY OF OUR EMPLOYEES IS BOTH A PRIORITY AND A KEY CONCERN Followingthe Following the announcement announcementof ofthe the lockdown lockdownwe we ensuredthat: ensured that: All Metair subsidiaries have policies to ensure a
Slide 10: Employee Health, Welfare, Safety and Communication Cont.
EMPLOYEE HEALTH, WELFARE, SAFETY AND COMMUNICATION CONT. SOUTH TERS support 38% of pay up to a max. of R17 000 p/m AFRICA Max support c.R6 900 p/m each Government support at 100%, but Moll applied for liquidation as shareholders decided not to inject GERMANY more capital into the business Metair has
Slide 11: Increased Government Interaction and Economic Participation
INCREASED GOVERNMENT INTERACTION AND ECONOMIC PARTICIPATION NEEDED TO SECURE THE BEST POSSIBLE ECONOMIC PARTICIPATION LEVEL TO REDUCE POTENTIAL FOR MAJOR FLUCTUATIONS IN PRODUCTION Initially, our business was classified as In addition, FNB managed to be classified as an a Level 3 economic participan
Slide 12: Solvency and Liquidity
SOLVENCY AND LIQUIDITY SOLVENCY AND LIQUIDITY MET, R750M RCF RENEWED, AND DIVIDEND RESUMING The board also reviewed the projections and Our business design proved to be robust since financial model for our outlook position, taking we own all our major factories and have no into consideration: rental
Slide 13: Salient Features
SALIENT FEATURES 13
Slide 14: Salient Features at Group Level
SALIENT FEATURES AT GROUP LEVEL POSITIVE Operating FREE CASH FLOW DIVIDEND REVENUE EBITDA* profit NET DEBT of 75cps declared R687m decreased 9% to reduced by 37% to declined R513m to decreased by 45% to R10.2bn R891m R0.6bn R805m Group Scope 1 and 2 carbon emissions per person hour worked LTIFR decr
Slide 15: Operational and Financial Review
OPERATIONAL AND FINANCIAL REVIEW 15
Slide 16: Post June 2020, Most Companies Operated Without Restriction
POST JUNE 2020, MOST OF OUR COMPANIES OPERATED WITHOUT RESTRICTION WITH DEMAND RETURNING STRONGLY FOR ES AND GRADUALLY FOR AC Lockdown level 5 : 27 Mar – 30 Apr (no production) The UK continued to operate as an essential SOUTH Lockdown level 4: 1 May – 31 May (up to 50%) UK service but also had to a
Slide 17: Demand Returned Gradually for Automotive Components
ALTHOUGH DEMAND RETURNED GRADUALLY FOR AUTOMOTIVE COMPONENTS NORMAL DEMAND WAS ONLY ACHIEVED BY NOVEMBER 2020, AIDED BY EXPORTS SOUTH AFRICA • OEM demand was very weak from March, but by Q4 volumes recovered to normalised levels • Full year production levels were 32% down from FY19, total production
Slide 18: Energy Storage Volumes Recovered to FY19 Levels by July 2020
OVERALL ENERGY STORAGE VOLUMES RECOVERED TO FY19 LEVELS BY JULY 2020 WITH THE EXCEPTION OF EXPORT AND INDUSTRIAL VOLUMES • Was classified as an essential service from 1 May • Post lockdown aftermarket demand was strong SOUTH • OEM volumes remained under pressure AFRICA • Industrial demand very weak,
Slide 19: Material Financial Impacts of the Covid-19 Pandemic on Results
MATERIAL FINANCIAL IMPACTS OF THE COVID-19 PANDEMIC ON RESULTS THE PANDEMIC HAD, AND WILL CONTINUE TO HAVE, AN IMPACT ACROSS ALL AREAS OF OUR BUSINESS A 9% decline in revenue compared with 2019, R1bn down to R10.2bn Moll impairments totalling R140m, R108m relating to the investment carrying value Re
Slide 20: 2020 Group Results at a Glance
2020 GROUP RESULTS AT A GLANCE HEPS PBIT EBITDA (incl. share of assoc. excl. impairment) 148cps R561m R891m 56% 45% 37% (2019: R1 419m) (2019: 336cps) (2019: R1 018m) Free cash flow PBIT % ROIC R687m 5.5% 6.4% 27% 3.6ppt 6.6ppt (2019: R544m) (2019: 9.1%) (2019: 13.0%) • Turnover down 9% to R10.2bn,
Slide 21: ES Delivered a Strong Performance, Contributing 87% of Total EBIT
ES DELIVERED A STRONG PERFORMANCE, CONTRIBUTING 87% OF TOTAL EBIT AC RECOVERED WELL AFTER POSTING A LOSS FOR H1’20 Energy Storage vertical 2019 2020 2019 2020 2019 2020 R6,9bn R6,4bn R5,6bn R4,9bn R11,2bn R10,2bn Revenue 55% 56% 45% 44% contribution contribution contribution contribution 6% 12% 9% O
Slide 22: H2 Performance Was Exceptional for ES
H2 PERFORMANCE WAS EXCEPTIONAL FOR ES, ACHIEVING EBIT MARGIN OF 13% LOWER VOLUMES IN H2 FOR AC CONTINUED TO DEPRESS MARGINS. RAND WEAKNESS RESULTED IN REVENUE GROWTH Energy Storage vertical H2 2019 H2 2020 H2 2019 H2 2020 H2 2019 H2 2020 R3.8bn R3,9bn R2,7bn R3,1bn R5,9bn R6,4bn Revenue 59% 56% 41%
Slide 23: Under-Recoveries in Fixed Production Costs Impacted Profitability
UNDER-RECOVERIES IN FIXED PRODUCTION COSTS IMPACTED PROFITABILITY WITH THE VOLUME DROP IN AC EXPOSING THE VERTICAL MORE THAN ES • Group operating profit decreased by R457m (45%): R'million 2019 2020 % Change › Loss of margin on volume and revenue, combined with Revenue 11 238 10 235 (9%) significant
Slide 24: Cash Position Strong Due to Working Capital Performance
CASH POSITION STRONG DUE TO WORKING CAPITAL PERFORMANCE PLEASING RECEIVABLES PERFORMANCE R'million 2019 2020 • Non-current assets decreased mainly due to a combination of: Non-current assets 4 061 3 760 › Lower capital expenditure, off-set by depreciation Property, plant and equipment 2 707 2 618 ›
Slide 25: Borrowing Increased Temporarily to Protect Liquidity
BORROWING INCREASED TEMPORARILY TO PROTECT LIQUIDITY REVIEW OF FACILITIES DURING FY21 R'million 2019 2020 • Total borrowings up R174m, Mutlu increased borrowings and further RCF draw-downs in SA due to local auto investments Total equity 4 311 4 215 Non-current liabilities 1 843 1 028 • Trade payabl
Slide 26: Working Capital Reduction Largely Temporary
WORKING CAPITAL REDUCTION LARGELY TEMPORARY EXPECT SOME NORMALISATION AS WELL AS INVESTMENT FOR NEW PROJECTS R'million 2019 2020 • Group trade net working capital decreased by c. R313m due to a combination of: Inventory 1 736 1 695 Trade and other receivables 1 700 1 819 › Better trade terms with cr
Slide 27: Strong Support from Our Funders During the Year
WE EXPERIENCED STRONG SUPPORT FROM OUR FUNDERS DURING THE YEAR AND ARE PROGRESSING WELL TO FINALISE FACILITIES FOR INVESTMENTS AND REFINANCING OF MATURING DEBT % 2019 2020 • Coming into Covid-19 crisis, balance sheet was strong with relatively low debt and healthy cash balance Debt* : Equity 52% 58%
Slide 28: Capital Expenditure and Commitments (Including Hesto)
CAPITAL EXPENDITURE AND COMMITMENTS (INCLUDING HESTO) R1.3BN HAS BEEN ALLOCATED MAINLY FOR CUSTOMER NEW MODELS AND EXPANSION FY21 is a significant year of investment in secured new model launches and facelifts for Toyota, Ford, VW and Isuzu Capital expenditure • Majority of committed capex is at Hes
Slide 29: Automotive Components Is Recovering Well
AUTOMOTIVE COMPONENTS IS RECOVERING WELL AND THE OUTLOOK REMAINS VERY POSITIVE Revenue PBIT EBITDA -12% -84% -66% R4.9bn R88m R228m Free cash PBIT % ROIC flow -109% -7.7ppt -28.6ppt -R51m 1.8% 4.8% • Revenue declined by 12%, a result of the direct impact of the • Overall vehicle production volumes i
Slide 30: Energy Storage Results Were Strong Given the Disruptive Year
ENERGY STORAGE RESULTS WERE STRONG GIVEN THE DISRUPTIVE YEAR DRIVEN BY SUSTAINED DEMAND FOR AUTOMOTIVE BATTERIES Revenue PBIT EBITDA -6% -12% -5% R6.4bn R588m R791m Free cash PBIT % ROIC flow +345% -0.5ppt -0.7ppt R739m 9.2% 15.8% • Relatively lower drop in revenue of 6%, the vertical achieved an •
Slide 31: Energy Storage Automotive Margins Remained Resilient
ENERGY STORAGE AUTOMOTIVE MARGINS REMAINED RESILIENT BUT INDUSTRIAL MARGINS MOVED INTO NEGATIVE DUE TO POOR DEMAND 8 000 • Total Auto battery margins increased from 10.2% to 10.5% 6 248 5 887 6 000 Auto Exports R’million 4 000 • Auto exports PBIT margin increased from 9.2% to 10.6% Revenue 2 000 608
Slide 32: Both Mutlu and Rombat Delivered Exceptional Results for FY20
BOTH MUTLU AND ROMBAT DELIVERED EXCEPTIONAL RESULTS FOR FY20 • FNB’s EBIT declined from R163m to R73m or 55% down from prior year • The major impact was the change in industrial profits, while automotive recovery was good • In ZAR terms, Mutlu’s EBIT decreased by only R4m from FY19, delivering R409m
Slide 33: Outlook and Prospects
OUTLOOK AND PROSPECTS 33
Slide 34: Positive Outlook on New Model Launches and Sustained ES Demand
ON THE BACK OF NEW MODEL LAUNCHES IN SA AND SUSTAINED DEMAND IN ES WE EXPECT A POSITIVE OUTLOOK FOR THE GROUP • Our immediate priority is to ensure a smooth leadership transition at all levels and support flawless launches of new models and facelifts • In the year ahead we will continue to drive eff
Slide 35: Covid-19 Recovery Plan and Vision 2022
COVID-19 RECOVERY PLAN AND VISION 2022 IN ADDITION TO EXECUTING ALL THE ACTIVITIES REQUIRED NOW TO MANAGE THE COVID-19 RISKS, WE ALSO CREATED OUR FUTURE VISION: VISION 2022, WHICH WILL SHAPE OUR DESIGNED RECOVERY Our focus is on a multi-stepped U-shaped The Energy Vertical recovery is based on an re
Slide 36: Energy Vertical: Potential V-Shaped Recovery
ENERGY VERTICAL: POTENTIAL V-SHAPED RECOVERY A FULL RECOVERY FOR THIS VERTICAL IS ANTICIPATED TO BE ACHIEVED STEP-BY-STEP BY 2021 115% - 125% Traditional market and customer return to 100% normality, Li-Ion production 100% - 105% Increased aftermarket share, industrial demand, standby, Li-ion trade
Slide 37: Automotive Components Vertical: Potential U-Shaped Recovery
AUTOMOTIVE COMPONENTS VERTICAL: POTENTIAL U-SHAPED RECOVERY A FULL RECOVERY FOR THIS VERTICAL IS ANTICIPATED TO BE ACHIEVED STEP-BY-STEP BY 2021/2022 120-130% (AC revenue potentially up 160 -180% by 2023) New projects and vehicle launches: 100% Ford T6, Isuzu, Toyota 90-100% C-SUV, VW, C Class, Niss
Slide 38: New Ford Investments
NEW FORD INVESTMENTS METAIR COMPANIES WERE AWARDED NEW FORD CONTRACTS, WITH PRODUCTION PLANNED TO START IN 2022. THE INVESTMENT WILL BE LARGEST EVER FOR A SINGLE CUSTOMER, TOTAL FUNDING ESTIMATED AT C. R1.3BN Model life revenue linked to new investments is estimated at R32 – R35bn, of which >90% is
Slide 39: Metair Expects FY21 to Show a Significant Improvement Over FY20
METAIR EXPECTS FY21 TO SHOW A SIGNIFICANT IMPROVEMENT OVER FY20 BASED ON OUR VOLUME OUTLOOK • We expect continued demand side weakness in SA local market, but continued recovery in exports: >60% of local OEM production is exported • Key vehicle export markets (Europe & UK) • Sustained and growing ba
Slide 40: Key Factors Expected to Impact FY21 Outlook
KEY FACTORS EXPECTED TO IMPACT FY21 OUTLOOK • Expecting FY21 local OEM manufacturing levels at >95% of • Expecting automotive battery sales volumes to improve FY19 slightly on FY19 levels • Metair’s share of the market continues to grow compared • Sustained aftermarket and OEM demand and improved to
Slide 41: Q&A
Q&A 41
Slide 42: 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
Slide 43: Appendices
APPENDICES 43
Slide 44: Subsidiary Managing Directors
SUBSIDIARY MANAGING DIRECTORS Automotive components vertical Energy storage vertical S KONAR JR CHANDLER W ROPERTZ ME BARLEY D ŞEKER R BEZUIDENHOUT M LONG Tenure: 34 years Tenure: 18 years Tenure: 33 years Tenure: 40 years Tenure: 5 years Tenure: 28 years Tenure: 2 years WPD HILDITCH YS CHINAPEN GR
Slide 45: New CEO: Riaz Haffejee
NEW CEO: RIAZ HAFFEJEE Mr Haffejee served as the CEO of Sumitomo Rubber South Africa Proprietary Limited ("Sumitomo Dunlop"), a division of the Japanese listed company, Sumitomo Rubber Industries Limited, where he held an Executive Officer position, as well as being the Chairman of its Middle Easter
Slide 46: Incoming Chair: Michael Flemming
INCOMING CHAIR: MICHAEL FLEMMING Mr Flemming joined African Oxygen Limited in the gases division in 1985 as the Financial Systems Manager for the Witwatersrand. He was appointed as the financial executive for the healthcare division of African Oxygen Limited in 1994 and as general business manager i
Slide 47: New Non-Executive Directors (Appointed 1 January 2021)
NEW NON-EXECUTIVE DIRECTORS (APPOINTED 1 JANUARY 2021) Ms Sithebe is a private equity investment professional Ms Mathews is a qualified Chartered Accountant with over a decade of experience in mergers and (South Africa) and holds a postgraduate certificate acquisitions (M&As) and corporate finance f
Slide 48: New Non-Executive Director (With Effect from 1 May 2021)
NEW NON-EXECUTIVE DIRECTOR (WITH EFFECT FROM 1 MAY 2021) Mr Giliam holds a B.Eng (Hons) in Automotive Project Management and a Bachelor in Mechanical Engineering from the University of Pretoria. Mr Giliam is currently the managing director of Robertson and Caine Proprietary Limited and has a wealth
Slide 49: New Managing Directors
NEW MANAGING DIRECTORS Following his promotion from General Manager Mr Ioanes has over 20 years experience in Operations, Mr. Deniz Şeker was appointed as CEO management and leadership in international of Mutlu as of 1st January 2021. Prior to joining Mutlu, businesses, mainly in the production fiel
Slide 50: Energy Storage Volumes (Rounded)
ENERGY STORAGE VOLUMES (ROUNDED) 1. Total volumes by operation (including 2. Automotive volumes by market 3. Mutlu automotive volumes industrial) 4. Rombat automotive volumes 5. FNB automotive volumes 6. Industrial volumes 50