Metair Investments Limited · JSE:MTA
Metair Investments — H1 2013 Earnings Presentation
52 slides from Metair Investments's earnings presentation, Aug 29, 2013
Slide 1: Interim Results 6 Months Ending 30 June 2013
INTERIM RESULTS 6 - MONTHS ENDING 30 JUNE 2013 29TH AUGUST 2013
Slide 2: Agenda
AGENDA • Results Overview – Accounting changes – Trading characteristics for the period – Rombat • Vision & Strategy • Financial Review • Operational Review • Start/Stop Battery Development • Prospects 2
Slide 3: Metair Investments Limited
2METAIR INVESTMENTS LIMITED automotive | industrial | retail
Slide 4: Results Overview
RESULTS OVERVIEW 4
Slide 5: Results Overview
RESULTS OVERVIEW • HEPS maintained at 143 cents/share • Profit after tax up to R209 million from R202 million • Net cash improved slightly to (R54 million) from (R56 million) • Operating margin reduced to 11,1% from 12,0% • Strategic decision to increase working capital 5
Slide 6: Results Overview: Accounting Changes
RESULTS OVERVIEW: ACCOUNTING CHANGES • IFRS 10, 11, 12 – International Financial Reporting Standards 10, 11 and 12, (“new IFRS”) govern consolidated financial statements, joint arrangements and disclosure of interests in other entities. • Metair has 4 such entities – Tenneco Automotive Holdings SA (
Slide 7: Accounting Changes: Previous Structure
RESULTS OVERVIEW: ACCOUNTING CHANGES • Previous Account Structure – Consolidated • Hesto • Smiths Manufacturing – Associate Line • Tenneco • Valeo 7
Slide 8: Accounting Changes: Current Structure
RESULTS OVERVIEW: ACCOUNTING CHANGES • Current Accounting Structure – Consolidated • Smiths Manufacturing – Associate Line • Tenneco • Valeo • Hesto 8
Slide 9: Accounting Change Effect
RESULTS OVERVIEW: ACCOUNTING CHANGE EFFECT • No effect – HEPS – NAV • Effected Consolidation – Turnover – EBITDA 9
Slide 10: Accounting Changes: Why the change?
RESULTS OVERVIEW: ACCOUNTING CHANGES • Why the change? The amendment to IFRS 10 now focuses more intently on the assessment of control. Consequently, because of Hesto’s arrangement with its minority shareholder Hesto is no longer consolidated into the Group but equity accounted. 10
Slide 11: Accounting Changes: What arrangements?
RESULTS OVERVIEW: ACCOUNTING CHANGES • What arrangements? – The Call Option to increase shareholding – Certain protection rights 11
Slide 12: Trading Characteristics for the Period
TRADING CHARACTERISTICS FOR THE PERIOD • Continued delivery on our strategy • Sustained local OEM (Original Equipment Manufacturer) demand • Expanded local aftermarket sales • Expanded exports aftermarket sales • Declining non-auto business (mining and utilities) • Margin contraction across all segm
Slide 13: Trading Characteristics for the Period
TRADING CHARACTERISTICS FOR THE PERIOD • Rombat fully integrated into Metair • Start/Stop battery technology in the local OE (Original Equipment) market expanded to second customer • Start/Stop facility installed and commissioned in Romania • Manufacturing Excellence expanded to Marketing Excellence
Slide 14: Margin Contraction
MARGIN CONTRACTION • OE Sector – Lag in recovery of exchange rate fluctuations from customers – Delayed/postponed economic recoveries from customers • Non-automotive Market – Demand pressure in mining sector • Aftermarket – Increase in lead premiums and lead scrap pricing 14
Slide 15: Rombat Integration
ROMBAT INTEGRATION • According to plan • Start/Stop facility installed and commissioned • Planned opening of Start/Stop facility by Romanian Prime Minister – 28 September 2013 • Investment assistance support claim submitted • First test batteries produced 15
Slide 16: Rombat Acquisition Health Check
ROMBAT ACQUISITION HEALTH CHECK • Transfer of Associates Complete • Transfer of Technology In progress • Integration Complete • Change Management Complete • Start/Stop facility Complete • Secure subsidy for Start/Stop facility In progress • Expansion of aftermarket footprint Europe In progress • Ava
Slide 17: Rombat Integration
ROMBAT INTEGRATION Turnover (Lei million) 30 June 2013 30 June 2012 Overall 124 122 Export 63 68 Volume (‘000) Overall 884 911 OE 277 242 • Dacia proved to be a resilient customer in a declining European market • Renault requested Rombat to assist in North Africa 17
Slide 18: Vision & Strategy
VISION & STRATEGY 18
Slide 19: Vision
VISION “To generate value for all our stakeholders by managing and controlling businesses that through manufacturing and/or logistical excellence, deliver quality, cost-competitive products to our customers in a sustainable manner.” 19
Slide 20: Strategy
STRATEGY • Continue to target balance in the business • Nurture Original Equipment (OE) business and expand Original Equipment Manufacturer (OEM) customer base • Focus intently on cost • Secure and grow aftermarket product range • Pursue the acquisition of a complementary business to leverage off ou
Slide 21: Strategy: 50% OE, 50% Aftermarket, 50% Batteries
3HEADING X 50% = TO 100% GO STRATEGY HERE • 50% of business in OE sector • 50% of business in Aftermarket, Non-auto and exports and • 50% of overall business in batteries 21
Slide 22: Performance Against Strategy
PERFORMANCE AGAINST STRATEGY 70,0% 60,7% 60,0% 50,0% 39,3% 39,1% 40,0% 30,0% 20,0% 10,0% 0,0% OE Aftermarket * Batteries Actual * Relates to aftermarket, non-automotive and exports 22
Slide 23: Financial Review
FINANCIAL REVIEW 23
Slide 24: Accounting Change
ACCOUNTING CHANGE • IFRS 10 – Hesto a 74,9% subsidiary will now be equity accounted instead of consolidated. – No effect on HEPS 24
Slide 25: Financial Highlights
FINANCIAL HIGHLIGHTS HEADING TO GO HERE June 2013 June 2012 ITEM R’000 R’000 Revenue 2 459 831 2 218 492 EBITDA 375 087 362 441 Operating Profit 274 169 267 144 Operating Income Margin 11,1% 12,0% Profit After Tax 229 102 222 336 Attributable Profit to Ordinary Shareholders 209 457 202 438 Earnings
Slide 26: Group Revenue / Operating Profit
GROUP REVENUE / OPERATING PROFIT REVENUE OPERATING PROFIT 5 000 600 570 4 603 4 500 500 4 000 3 500 Million 400 3 000 2 460 2 500 2 218 300 267 274 2 000 200 1 500 1 000 100 500 0 0 December 2012 June 2012 June 2013 December 2012 June 2012 June 2013 26
Slide 27: Headline Earnings per Share (HEPS)
HEADLINE EARNINGS PER SHARE (HEPS) HEADLINE EARNINGS HEPS 250 160 143 143 209 140 202 128 200 181 120 Million 100 cps 150 89 126 80 100 60 40 50 20 0 0 June 2010 June 2011 June 2012 June 2013 June 2010 June 2011 June 2012 June 2013 27
Slide 28: Balance Sheet
BALANCE HEADINGSHEET TO GO HERE 30 June 2013 30 June 2012 ITEM R’million R’million ASSETS Non-current assets Property, plant and equipment 1 234 1 006 Intangible assets 84 81 Other non-current assets 202 177 Current assets Inventory 846 677 Trade and other receivables and derivatives 730 679 Cash an
Slide 29: Income Statement
INCOME STATEMENT HEADING TO GO HERE 30 June 2013 30 June 2012 ITEM R’million R’million Revenue 2 460 2 218 Gross Profit 520 504 Other operating profit 24 21 Distribution, administrative and other expenses (270) (258) Operating profit 274 267 Net interest (5) (2) Share of results of associates 38 45
Slide 30: Segmental Analysis: Local
SEGMENTAL ANALYSIS LOCAL REVENUE LOCAL PBIT June 2013 June 2012 June 2013 June 2012 180 175 1 800 1 692 1 658 160 156 1 600 140 1 400 120 Million 1 200 100 92 1 000 84 80 800 596 60 600 519 400 40 30 233 243 200 20 13 9% 11% 15% 16% 6% 12% 0 0 Original Aftermarket Non-auto Original Aftermarket Non-a
Slide 31: Segmental Analysis: Export
SEGMENTAL ANALYSIS EXPORT REVENUE EXPORT PBIT June 2013 June 2012 June 2013 June 2012 50 300 283 45 250 40 35 Million 200 30 25 150 25 150 20 100 15 14 9 54 51 10 7 50 18 5 16 13% 9% 1 1 19% 10% 0 0 5% 7% Original Aftermarket Non-auto Original Aftermarket Non-auto Equipment Equipment 31
Slide 32: Reconciliation of EBITDA to Profit
RECONCILIATION OF EBITDA TO PROFIT 400 337 300 229 200 Million 100 38 0 -5 -63 -100 -78 -200 EBITDA before Depreciation & Net financing costs Tax expense Associates Profit Associates Amortisation 32
Slide 33: Movement in Cash
MOVEMENT IN CASH 300 216 227 200 166 100 Million 25 13 0 -37 -68 -54 -100 -156 -200 33
Slide 34: Operational Review
OPERATIONAL REVIEW 34
Slide 35: Working Capital
WORKING CAPITAL R’million June June Dec ITEM 2013 2012 2012 Inventory 846 677 755 Trade & receivables 718 678 668 Trade & payables (653) (630) (602) Total 911 725 821 DAYS Inventory 63 56 60 Trade & receivables 53 56 53 Trade & payables (48) (52) (48) Total 68 60 65 All days calculations based on tu
Slide 36: Vehicle Production per OEM in South Africa
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA 2013 OEM 2009 2010 2011 2012 Actual (6-months) BMW 46 602 49 243 52 908 44 229 37 340 MBSA 44 526 53 646 50 939 61 439 25 692 FMCSA 34 926 34 822 28 716 51 006 27 513 GM 26 412 27 234 32 530 38 199 19 566 NISSAN 32 700 40 184 43 743 54 657 26 682 VW SA 62 3
Slide 37: Rombat OEM Production in Romania & Export Market
ROMBAT OEM PRODUCTION IN ROMANIA & EXPORT MARKET 2013 COUNTRY OEM 2008 2009 2010 2011 2012 Actual (6-months) Dacia– Romania 257 332 299 640 341 866 331 018 304 994 184 343 Renault Slovakia Peugeot 8 880 83 566 121 309 137 942 68 160 18 118 Renault Russia - - - - 38 868 18 957 Nissan Total 266 212 38
Slide 38: 2013 Capital Expenditure
2013 CAPITAL EXPENDITURE Sector Expansion Maintenance Total R’000 Efficiency OE 8 325 30 433 38 758 Aftermarket/Non-auto 4 471 8 264 12 735 Property 1 607 1 140 2 747 Total 14 403 39 837 54 240 38
Slide 39: 2013 Capital Expenditure Commitments
2013 CAPITAL EXPENDITURE COMMITMENTS* Approved Sector Expansion Maintenance Total R’000 Efficiency OE 38 337 77 895 116 232 Aftermarket/Non-auto 18 067 18 462 36 529 Property 3 374 28 747 32 121 Total 59 778 125 104 184 882 * Includes authorised but not contracted for and committed capex 39
Slide 40: Start/Stop Battery Development
START/STOP BATTERY DEVELOPMENT 40
Slide 41: Start/Stop Battery Development and Commercialisation Program
START/STOP BATTERY DEVELOPMENT AND COMMERCIALISATION PROGRAM 1930 – 1981 Oldham GW flooded battery mining cap lamp 1981 Introduction of VRLA AGM battery mining cap lamp 1981 – 1984 Extensive field testing and warranty analysis 1984 Introduction design improvements on VRLA AGM battery mining cap lamp
Slide 42: Start/Stop Battery Development and Commercialisation Program
START/STOP BATTERY DEVELOPMENT AND COMMERCIALISATION PROGRAM 2008 Design and tested to German Automobile & Industry Association Specification (VDA) 2009 Improved Start/Stop VRLA battery design Additional BMW testing Requested to consider transferring Start/Stop technology to Europe 2010 Start/Stop V
Slide 43: Start/Stop Battery Development and Commercialisation Program
START/STOP BATTERY DEVELOPMENT AND COMMERCIALISATION PROGRAM 2011 Further develop of relationship with Rombat Conditional supply approval on Start/Stop batteries for German Supply Council 2012 Automechanica SA Innovative Gold Award to FNB for VRLA Battery Acquire Rombat Supply first Start/Stop VRLA
Slide 44: Start/Stop Battery Development and Commercialisation Program
START/STOP BATTERY DEVELOPMENT AND COMMERCIALISATION PROGRAM 2013 Installed and commissioned a Start/Stop facility at Rombat Obtained approval for second OE customer in SA for supply of Start/Stop batteries from 2014 First international interest in supply of Start/Stop batteries from 2016 Conceptual
Slide 45: Prospects
PROSPECTS 45
Slide 46: Prospect Statement: Macro Environment APDP
PROSPECT STATEMENT: MACRO ENVIRONMENT APDP Automotive Production and Development Program (APDP) • Finalised and implement • First quarter review proves the program to be MIDP plus • Duty neutral position for most OEM’s • Secure OE production volumes for SA in future • Local component production ince
Slide 47: Prospect Statement: Macro Environment Labour
PROSPECT STATEMENT: MACRO ENVIRONMENT LABOUR • 2nd week in strike period at all OEM’s • Most suppliers on short-time • OEM offer 3-year wage agreement • 10%; 8,5%; 8,5% • Component industry position currently 5% • 2-week strike period envisaged from component manufacturers (2-weeks in Sept) 47
Slide 48: Prospect Statement: Focus on Acquisition and KPIs
PROSPECT STATEMENT – FOCUS ON ACQUISITION AND KPI’S Metair is intently focused to identifying a suitable acquisition that will support our strategy to ensure delivery on our key performance indicators. KPI’s 1. Pursue Metair strategic path 2. Pursue Africa strategy – 10% of turnover needs to come fr
Slide 49: Prospect Statement: Focus on Acquisition
PROSPECT STATEMENT – FOCUS ON ACQUISITION KPI’s continued 6. Expand aftermarket product route to market 7. Ensure forex neutrality 8. Energy strategy – volume adjusted increase in electricity for the group should be less than 15% 9. Employee wellness communication with employees – need to be proacti
Slide 50: Prospect Statement
PROSPECT STATEMENT Maintaining ourselves in the coming period is going to be challenging and would require continued demand for local vehicle production and aftermarket products supported by conclusion of economic recovery negotiations. A reasonably stable labour environment without prolonged strike
Slide 51: Q&A Thank You
Q&A THANK YOU WWW.METAIR.CO.ZA 51
Slide 52: 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