Imperial Logistics — H1 F2019 Earnings Presentation
48 slides from Imperial Logistics's earnings presentation, February 2019
Slide 1: Investment Community Presentation: Results for the six months ended 31 December 2018
Investment Community Presentation Results for the six months ended 31 December 2018
Slide 2: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 2
Slide 3: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 3
Slide 4: Group highlights
Group highlights Continuing revenue* Continuing operating profit* Continuing HEPS +6% R1.3 billion +24% R26.6 billion in line with H1 F2018 300 cents per share Continuing EPS Net debt : equity ratio Final dividend +57% 52% 45% of HEPS 295 cents per share Improved significantly from 114% 135 cents pe
Slide 5: Overview
Overview • Satisfactory performance in mixed trading conditions • Excellent performance from Logistics African Regions • Unsatisfactory performance of Consumer Packaged Goods (CPG) business in Logistics South Africa • Automotive & express palletised distribution businesses in Logistics International
Slide 6: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 6
Slide 7: Leading market positions in South Africa, selected industries in African Regions & Europe
Leading market positions in South Africa, selected industries in African Regions & certain specialised capabilities in Europe International Revenue by industry¹ Sweden Finland • Established international contract logistics platform with Netherlands specialised capabilities & leading positions in Aut
Slide 8: Vision & strategy
Vision & strategy Strategy focused on sustainable revenue growth, enhanced returns & improved competitiveness To be an internationally acclaimed Tier One provider of outsourced value-add logistics, supply chain management & route-to-market solutions - customised to ensure relevance & competitiveness
Slide 9: Strategic initiatives to drive growth
Strategic initiatives to drive growth Logistics South Africa Logistics African Regions Logistics International Regional initiatives • Retain & expand contracts • Leverage unique ability to provide brand • Leverage specialised capabilities • Leverage B-BBEE credentials owners with access to fragmente
Slide 10: Growth trend in operations outside South Africa
Growth trend in operations outside South Africa Revenue Operating profit R million R million 4 year 10% 4 year 4% CAGR= CAGR= 6% 7% 835 867 18 751 779 791 16 977 16 138 677 14 787 14 366 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec 18 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 • Revenue outsi
Slide 11: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 11
Slide 12: Operating context
Operating context South Africa (30% revenue; 35% operating profit) • Despite marginal economic growth, lower consumer affordability due to high unemployment, VAT & fuel price increases & economic uncertainty ahead of the elections persists • Depressed volumes & ongoing competitor & client pressures
Slide 13: Operating context
Operating context Eurozone & United Kingdom (46% revenue; 30% operating profit) • Economic conditions in Europe were largely positive • Continuing economic expansion in the EU has resulted in unemployment rate improving • Certain sectors in which we operate - such as steel - remain under pressure •
Slide 14: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 14
Slide 15: Divisional overview
Divisional overview Imperial Logistics is an integrated outsourced logistics service provider with a diversified presence across Africa & Europe. With its strong regional growth platforms, specialist capabilities customised to serve multi-national clients in attractive industry verticals, & “asset-r
Slide 16: Growth trend: Logistics South Africa
Growth trend: Logistics South Africa Revenue Operating profit R million R million 4 year -2% 4 year -9% CAGR= CAGR= 0% -2% 8 265 8 361 8 153 511 504 504 8 073 7 440 457 416 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec 18 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 Unsatisfactory performance in
Slide 17: Growth trend: Logistics African Regions
Growth trend: Logistics African Regions Revenue Operating profit R million R million 4 year +18% 4 year +16% CAGR= CAGR= +7% +14% 465 6 339 395 385 401 5 192 5 341 5 385 4 728 291 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec 18 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 Delivered an excellent
Slide 18: Growth trend: Logistics International
Growth trend: Logistics International Revenue Operating profit R million R million 4 year +7% 4 year -7% CAGR= CAGR= +5% +3% 12 412 11 410 11 592 434 406 402 386 384 9 595 9 025 Dec 14 Dec 15 Dec 16 Dec Dec 17* 17* Dec 18 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 Satisfactory performan
Slide 19: Logistics International (Euro)
Logistics International (Euro) Revenue Operating profit Operating margins € million € million % 4.3% +4% -10% 29.3 3.7% 3.7% 27.0 25.7 3.2% 795 24.4 733 760 602 Dec 15 Dec 16 Dec Dec 17* 17 Dec 18 Dec 18 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 Dec 15 Dec 16 Dec 17 Dec 17 Dec Dec 18 18 • Revenue in
Slide 20: Divisional statistics
Divisional statistics Operating margin* Return on invested capital Weighted average cost of capital % % % 7.4% 7.3% 20.8% 14.2% 17.8% 6.0% 11.1% 10.9% 5.6% 5.3% 9.8% 5.0% 13.4% 12.2% 11.7%12.2% 8.2% 8.2% 7.3% 3.7% 9.8% 3.2% 8.3% 5.4% South Africa African International Group South Africa African Inte
Slide 21: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 21
Slide 22: Income statement
Income statement Dec 2018 Dec 2017 Rm Rm % Change Revenue 26 637 26 320 1 Operating profit (note 1) 1 325 1 376 (4) Amortisation of intangible assets arising on business combinations (note 2) (196) (220) (11) Profit on disposal of properties, net of impairments 4 (3) >100 Impairments of goodwill & d
Slide 23: Income statement
Income statement Dec 2018 Dec 2017 Rm Rm % Change Net financing costs (note 1) (223) (355) (37) Income from associates 32 28 14 Tax (note 2) (272) (227) 20 Net profit for the year – before discontinued operations 641 451 42 Discontinued operations (note 3) 5 240 916 Attributable to minorities (66) (
Slide 24: Financial position
Financial position Dec 2018 Jun 2018 Rm Rm % Change Property, plant & equipment (note 1) 3 192 3 042 5 Transport fleet (note 2) 5 777 5 358 8 Goodwill & intangible assets 8 554 8 575 Investments in associates, other investments & other financial assets (note 3) 814 958 (15) Net working capital (note
Slide 25: Financial position
Financial position Dec 2018 Jun 2018 Rm Rm % Change Net interest bearing borrowings (note 1) 6 230 5 721 9 Other liabilities 2 779 2 651 5 Liabilities held for distribution to owners of Imperial 24 954 Total shareholders equity (note 2) 11 892 23 125 (49) 1. Mainly impacted by: • increase in working
Slide 26: Cash flow operating activities (total operations)
Cash flow operating activities (total operations) Dec 2018 Dec 2017 Rm Rm % Change Cash generated by operations 3 622 4 231 (14) Net working capital movements (excludes currency movements & net acquisitions) (note 1) (2 040) (208) 771 Interest & tax paid (note 2) (933) (1 320) (29) Cash flow from op
Slide 27: Cash flow summary (total operations)
Cash flow summary (total operations) Dec 2018 Dec2017 Rm Rm Cash flow from operating activities (523) 1 542 Investing activities: (723) (1 823) Net disposals / (acquisitions) of subsidiaries & businesses (1 042) Capital expenditure – non-rental assets (note 1) (879) (265) Net movement in associates,
Slide 28: Gearing
Gearing • Significant improvement in net debt to NET DEBT TO EQUITY equity was supported by: • recapitalisation of Imperial Logistics 11 454 in F2018; 9 941 • proceeds from the sale of Schirm 9 426 9 204 9 295 & properties in F2018 167% • partially offset by higher working capital 142% 6 391 • The G
Slide 29: Returns: Imperial Logistics
Returns: Imperial Logistics ROE ROIC vs WACC % % 17.0 12.2 12.1 11.5 11.7 11.7 11.4 10.1 9.8 8.4 8.2 8.0 H1 2016 H1 2017 H1 2018 H1 2018 H1 2019 2019 H1 2016 H1 2017 H1 H1 2018 2018 H1 H1 2019 2019 Imperial Holdings, Imperial Logistics ROIC WACC pre-unbundling of Motus ROE improved due to: ROIC impr
Slide 30: Agenda
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 30
Slide 31: Prospects for H2 F2019
Prospects for H2 F2019 Logistics South Africa to deliver performance below the prior period due to lower consumer demand impacting the CPG business, the low-growth economic environment in South Africa & costs associated with the business rationalisation & restructure Growth from Logistics Africa
Slide 32: Prospects for F2019
Prospects for F2019 For the financial year to 30 June 2019, subject to stable currencies in the economies in which we operate, we expect Imperial Logistics, excluding businesses held for sale, to deliver: Higher revenue than the prior year Lower operating profit than the prior year HEPS in lin
Slide 33: Medium term guidance
Medium term guidance H1 F2019 (%) Medium term guidance over 3 years ILSA & ILI¹: 2x GDP growth + inflation Revenue 6% growth rate ILAR¹: Low double digit growth Cash conversion 44% Targeted cash conversion of 70 - 75% Debt capacity ZAR3bn ZAR3bn - 5bn Net debt / equity 52% 60% - 80% ILSA & ILAR: WAC
Slide 34: In conclusion: our key investment highlights
In conclusion: our key investment highlights 1 Leading positions in regional markets & selected industries 2 Competitive differentiation centred on agility & customisation 3 Trusted partner to multinational clients in attractive industries 4 “Asset-right” business model supports robust financial pro
Slide 35: We thank all of our stakeholders for their continued support
We thank all of our stakeholders for their continued support
Slide 36: Annexures
Imperial’ logistics Annexures f Pe? > a
Slide 37: Scale & operational agility
Scale & operational agility Significant mover of products & people Logistics South Africa Logistics African Regions Logistics International • >2.5 million CPG deliveries annually • Provide point of care & retailer level • 60 million tons of goods moved by to more than 50 000 points deliveries to >60
Slide 38: Our footprint
Our footprint Pharma and healthcare logistics and supply chain management Pharma distributors (full RTM solution, including sales function) Pharma and medical supplies (wholesaling) (project work across multiple territories) Managed Solutions in East and West Africa, SA and SADC Logistics and supply
Slide 39: Industry perspective: Healthcare
Industry perspective: Healthcare Why healthcare in Africa? Growth opportunities Growing population & middle class has seen Strengthened relationships with brand principals the demand for pharmaceuticals & related through direct channel development, demand Fast facts – our positioning healthcare prod
Slide 40: End-to-end value chain in Healthcare
End-to-end value chain in Healthcare Providing end-to-end services across the healthcare value chain (between regional markets and continents) Driving patients’ access to affordable, quality assured medicines Representative office 2 & Quality control Table top vendor 10 Control tower 3a Consolidatio
Slide 41: Industry perspective: Consumer Packaged Goods
Industry perspective: Consumer Packaged Goods Why consumer packaged goods? Growth opportunities Rapidly urbanising population across Africa; Strengthened relationships with brand principals offers strong growth potential & increasing through direct channel development, demand Fast facts – our positi
Slide 42: End-to-end value chain in Consumer Packaged Goods
End-to-end value chain in Consumer Packaged Goods Raw materials 1a Exports 5a Traditional retail Retail services Demand 2 Manufacturing 3 Finished goods 4 Wholesale 6 generation 7 Consumer 5b Informal retail Packaging 1b Imports 42
Slide 43: Industry perspective: Automotive
Industry perspective: Automotive Why automotive? Growth opportunities Automotive industry is the largest revenue Expansion into new specialised service offerings contributor to the German economy; continues in contract logistics, e.g. VW CKD contract Fast facts – our positioning to grow awarded rece
Slide 44: End-to-end value chain in Automotive
End-to-end value chain in Automotive Tier 2 Tier 1 Auto dealerships OEM OEM OEM 1+2+3 1+2+3 1+2+3 7 Consumer OEM OEM After- 1+2+3 market 1+2+3 PCs Aftermarket parts retail 44
Slide 45: Industry perspective: Chemicals
Industry perspective: Chemicals Why chemicals? Growth opportunities Transportation, warehousing & distribution of South Africa: Leveraging opportunities through chemical products requires highly specialised the creation of Imperial Logistics Advance (B- Fast facts – our positioning skills, processes
Slide 46: End-to-end value chain in chemicals
End-to-end value chain in chemicals Raw material 1 supplier 3 Retail Manufacturers 2 3 Wholesale 3 Commercial 3 Industrial Raw material 1 supplier 46
Slide 47: Highly differentiated digitisation & innovation strategy underpins competitive advantage
Highly differentiated digitisation & innovation strategy underpins competitive advantage Digital vision: Create a culture where digitalisation enables people, clients & partners to innovate & continuously improve to achieve competitiveness & differentiation Imperial Logistics’ key digital objectives
Slide 48: Disclaimer
Disclaimer Certain statements made in this presentation constitute forward-looking statements. Forward-looking statements are typically identified by the use of forward-looking terminology such as ‘believes’, ‘expects’, ‘may’, ‘will’, ‘could’, ‘should’, ‘intends’, ‘estimates’, ‘plans’, ‘assumes’ or