Slide 1: Investor Information Pack cover letter
Brambles Limited ABN 89 118 896 021 Level 40 Gateway 1 Macquarie Place Sydney NSW 2000 Australia GPO Box 4173 Sydney NSW 2001 Tel +61 2 9256 5222 Fax +61 2 9256 5299 www.brambles.com For personal use only 16 February 2011 The Manager - Listings Australian Stock Exchange Limited Exchange Centre 20 Br
Slide 2: Investor Information Pack – Contents
For personal use only Investor Information Pack February 2011 Contents Company overview CHEP Recall Growth 1H11 results Contacts 2 1
Slide 3: Brambles overview
For personal use only Brambles overview Company profile Leading global provider of supply chain and information management solutions Primary businesses CHEP and Recall Operating in 47 countries Over 12,000 employees Listed on the Australian Securities Exchange Total assets of US$4.9 bill
Slide 4: Two primary businesses
Two primary businesses For personal use only • CHEP is the leader in pallet and • Recall is a leader in the management container pooling services of information throughout its life cycle • Partners with customers to develop • One stop, end to end, information pooling solutions that ensure reduced ma
Slide 5: 2010 sales revenue by business unit and service
2010 sales revenue – by business unit For personal use only Business Sales (US$M) 17% 18% CHEP 3,407 9% 36% 37% 9% Recall 740 TOTAL 4,147 38% 36% CHEP Americas CHEP EMEA *all numbers are at actual exchange rates CHEP Asia-Pacific Recall 7 2010 sales revenue – by service *all numbers are at actual ex
Slide 6: Product offering
For personal use only Product offering Intermediate Reusable plastic Automotive Pallets bulk containers containers containers 10 5
Slide 7: Customer value proposition
Customer value proposition For personal use only Consistent quality pallets and containers Availability Reduced product damage Eliminate pallet purchases, exchange and repair Reduced transportation and handling Competitive pricing Improved employee and customer safety Environmental sustainability 11
Slide 8: How pallet pooling works
How pallet pooling works For personal use only Service centre Manufacturer Retailer Service centre Service Centre Manufacturer / emitter Retailer / distributor Service centre 1. CHEP issues ready-for-use 2. Upon receipt of CHEP 3. At the end of the supply chain, 4. CHEP inspects and repairs all pall
Slide 9: Pallet pricing architecture
Pallet pricing architecture For personal use only Transfer One way Exchange hire 9 9 9 Fee for issue of a quality Issue fee assured pallet from a CHEP service centre Fee for each day that a Daily hire fee customer uses or remains responsible for a pallet 9 9 9 9 9 8 Fee for use as pallet Transfer fe
Slide 10: Exchange and transfer hire models
Exchange (e.g. UK) For personal use only Movement fees are the prime 1 sources of revenue Manufacturer Number of movements and average volume of pallets in the field are proxies for revenue 2 3 Primarily manufacturers and CHEP transporters pay Transporter Plant “Managed Recovery” variation 2
Slide 11: Total Pallet Management
Total Pallet Management (TPM) For personal use only Optimising transport activity and 1 equipment moves within the Manufacturer network ETPM Possibility to reduce empty hauls between specific manufacturer and retailer CHEP Improved communication and 2 coordination between customer Plant and CH
Slide 12: Pallet numbers
Pallet numbers For personal use only 300 251 251 (13)M 250 230 237 242 18 +0M 18 238 16 +5M 16 +9M 18 16 +7M Pallets (millions) 200 126 132 130 128 126 150 127 100 50 93 100 101 103 94 87 0 FY05 FY06 FY07 FY08 FY09 FY10 CHEP Americas CHEP EMEA CHEP Asia-Pacific Pallet numbers are shown gross,
Slide 13: Information management (Recall)
Information management For personal use only Global leader in document and information management Operations in over 300 facilities in 23 countries Approximately 5,000 employees working for nearly 80,000 customers Effectively manages customers’ information throughout its lifecycle Headquar
Slide 14: Specialised logistics processes
Specialised logistics processes For personal use only STORAGE Documents placed Cartons coded Transport to in cartons according to contents Information Center Storage Physical Inventory Delivery Internet Inventory TRANSFER INVENTORY TRANSPORT ENTRANCE TO INFORMATON CENTER SEARCH & RETRIEVAL Search Tr
Slide 15: Brambles' key strengths
For personal use only Growth Brambles’ key strengths Global footprint Local networks Intellectual property • Expertise in equipment pooling • Expertise in information management Customer franchises Financial position 28 14
Slide 16: Current initiatives
Current initiatives For personal use only Geographic expansion • Emerging markets CHEP USA continuous improvement • Small and mid-sized company opportunity Product scope expansion Global growth platforms • Automotive • LeanLogistics Recall growth 29 Geographic expansion Emerging markets 15
Slide 17: Focus on emerging economies
Focus on emerging economies For personal use only Accounts for ~US$450M of Emerging regions' share of group sales revenue (FY10) Brambles’ sales revenue Growth rate of ~20% Emerging Regions 11% • Latin America • Central & Eastern Europe • Middle East & Africa Developed • Asia 89% Opportuniti
Slide 18: China and India
China For personal use only CHEP sales revenue up 76% over Grocery retail market structure by format (top 10 retailers) 1H10 10,000 Strong FMCG pallets growth 9,000 8,000 • Retailer advocacy: CRV, Wumart, 1,031 7,000 Tesco, Walmart 875 6,000 # of stores 711 4,080 • P&G, Walmart study supports 5,
Slide 19: Poland and Turkey
Poland For personal use only CHEP delivering strong sales CHEP Poland pallet opportunity revenue growth • 1H11 sales revenue up 15% • Strong link to Western Europe Other Foundation of support from FMCG 32M issues Immediate sector per year opportunity 43M issues • Global and local customers per y
Slide 20: CHEP USA continuous improvement – SMEs
For personal use only CHEP USA continuous improvement Small and mid-sized enterprise opportunities Why focus on the SME sector? CHEP uniquely positioned to win business in the sector • Extensive network • Responsiveness/just-in-time inventories • Retailer advocacy relationships Favorable margins
Slide 21: Sales revenue by customer size
Sales revenue by customer size For personal use only CHEP Americas CHEP Australia CHEP Europe 11% 15% 22% 10% 12% 59% 55% 20% 37% 18% 18% 23% Top 5 #6 - 20 #21 - 100 Other Diluting dependence on the “mega” customer 39 CHEP USA pallet opportunity Source: Brambles internal estimates, June 2010 40 20
Slide 22: Product scope expansion
For personal use only Product scope expansion Expanding product scope Outside of full-size pallets, CHEP is under-penetrated in other pooled platforms in all regions • Alternative pallet sizes • Reusable plastic containers • Intermediate bulk containers • Automotive • Other services The opportun
Slide 23: Served sectors – USA and Australia
Served sectors – USA For personal use only Opportunity and penetration estimate ~US$12BN ~US$1.1BN ~US$12BN ~US$1.1BN Transport (1%) 5% Auto 13% Other 16% Industrial 13% Auto 11% FMCG 25% 60% IBCs 19% 100% Plastic bins 11% RPCs 23% Fresh 48% 33% Pallets 20% Market CHEP Market CHEP Source: Brambles i
Slide 24: Global growth platforms – Automotive
For personal use only Global growth platforms Automotive Automotive opportunity Industry restructuring driving outsourcing • CHEP’s core value proposition: help customers lower total supply chain costs through the use of returnable packaging Unique intellectual property in design of packaging an
Slide 25: Automotive model and CHEP advantage
Automotive model For personal use only Service center Supplier CHEP delivers empty containers to Parts are shipped in CHEP containers Service center CHEP picks up empty containers from OEM Original Equipment Service center Supplier Service center Manufacturer 1. CHEP issues ready-for-use, 2. Upon re
Slide 26: The CHEP advantage
The CHEP advantage For personal use only Large global footprint First mover advantages – we are already in this space Existing systems, networks and processes Scale that is difficult to replicate Strong domestic and HQ automotive relationships Independence allows broader pooling and limi
Slide 27: About LeanLogistics
About LeanLogistics For personal use only Established:1999 and acquired by Brambles: 2008 North American leader in Transportation Management Systems (TMS) delivered as Software-as-a-Service (SaaS) Processes over US$5BN in transportation expense annually Customer value proposition: reduce cos
Slide 28: Recall growth
For personal use only Recall growth Myth of the “paperless office” Six key growth drivers: Global physical document • Regulation and oversight management opportunity*** • Outsourcing 6% • Identity theft and privacy concerns • Corporate sustainability 28% • Globalisation • Digitisation 1975: Xero
Slide 29: The bridge between paper and digital
The bridge between paper and digital For personal use only Explosion of data presents opportunities: • Specialised business Digital process outsourcing Size is not measurable; Physical • Emerging technology new solutions come to 67% unvended to augment existing market every day services • Other co
Slide 30: 2011 first-half results – Discussion topics
Discussion topics For personal use only Business update and result overview Tom Gorman, CEO Result analysis Greg Hayes, CFO Outlook Growth initiatives update Tom Gorman, CEO • Emerging economies focus Summary 57 Business update and result overview Tom Gorman, CEO 29
Slide 31: Result highlights
Result highlights For personal use only Sales revenue up 3% • Uneven economic recovery in Brambles’ key regions • Customer retention and new business wins • Strengthening customer relationships Operating profit up 8% • Improvement in all business units • Defending the business and investing for
Slide 32: Strong new business wins
Strong new business wins For personal use only US$M Net new business* 1H11 annualised** CHEP Americas 10 22 CHEP EMEA 14 5 CHEP Asia-Pacific 2 8 Recall 8 19 Brambles 34 54 * Net new business = change in sales revenue in the period resulting from business won or lost in the period and the previous 12
Slide 33: CHEP USA sales growth and CHEP EMEA highlights
1H11 sales growth in CHEP USA For personal use only 20% increase compared with 1H10 Annualised sales revenue Annual issue volumes impact (US$M) Contracts (#) <100K 13 588 100K-500K 3 4 500K+ 6 2 Total wins 22 594 Losses (12) (16) Net 10 578 63 Business highlights – CHEP EMEA Sales revenue down 2%
Slide 34: Business highlights – CHEP Asia-Pacific and Recall
Business highlights – CHEP Asia-Pacific For personal use only Sales revenue up 13% • Positive impact from currency • Australia performance in line with slower economy in Dec quarter • RPC and auto growth Emerging economies • China and India sales revenue up 91% • Partnerships in FMCG and auto •
Slide 35: IFCO update
IFCO update For personal use only CY10 result in line with Brambles expectations Acquisition timetable on track • Regulatory approval received in all required European countries • Clearance process in USA progressing as expected Public tender offer launched Dec ‘10 on track A$110M raised in
Slide 36: Result overview
Result overview For personal use only Actual FX Constant FX US$M 1H11 1H11 1H10 Growth % Sales revenue 2,147.2 2,164.4 2,086.1 4 Underlying profit 372.5 373.1 340.2 10 Operating profit 366.1 365.9 338.1 8 Profit before tax 308.9 309.0 284.1 9 Profit after tax 219.8 221.5 206.7 7 Statutory EPS* (cent
Slide 37: CHEP overview and Americas sales revenue
CHEP overview For personal use only Actual FX Constant FX US$M 1H11 1H11 1H10 Growth % Americas 791.2 782.2 756.9 3 EMEA 751.3 798.4 770.1 4 Asia-Pacific 220.0 203.8 195.0 5 Sales revenue 1,762.5 1,784.4 1,722.0 4 Operating profit 331.0 331.7 300.4 10 Profit margin (%) 19 19 17 71 Americas – sales r
Slide 38: Americas operating profit and EMEA sales revenue
Americas – operating profit For personal use only US$M, constant currency basis 14 (13) 13 123 109 1H10 Vol, price, mix Quality initiatives Direct costs 1H11 73 EMEA – sales revenue US$M, constant currency basis 6 798 14 3 5 770 1H10 Price, mix Organic volume Net new Unitpool 1H11 business 74 37
Slide 39: EMEA operating profit and Asia-Pacific sales revenue
EMEA – operating profit For personal use only US$M, constant currency basis 16 (10) 3 173 5 159 1H10 Vol, price, mix Quality initiatives Direct costs Other 1H11 75 Asia-Pacific – sales revenue US$M, constant currency basis 2 204 5 2 195 1H10 Price, mix Organic volume Net new business 1H11 76 38
Slide 40: Asia-Pacific operating profit
Asia-Pacific – operating profit For personal use only US$M, constant currency basis 6 (4) 1 36 33 1H10 Vol, price, mix Direct costs Other 1H11 77 Recall 39
Slide 41: Recall overview
Recall overview For personal use only Actual FX Constant FX US$M 1H11 1H11 1H10 Growth % Americas 174.2 172.0 161.9 6 Europe 93.8 100.0 95.3 5 Rest of world 116.7 108.0 106.9 1 Sales revenue 384.7 380.0 364.1 4 Operating profit 59.3 57.3 52.5 9 Profit margin (%) 15 15 14 79 Recall – sales revenue US
Slide 42: Recall operating profit
Recall – operating profit For personal use only US$M, constant currency basis 12 (3) (5) 57 53 1H10 Vol, price, mix Direct costs Other 1H11 81 Cash flow and finance 41
Slide 43: Cash flow and financial position
Cash flow For personal use only US$M actual rates 1H11 1H10 Change EBITDA 596.0 562.1 33.9 Capital expenditure (338.6) (254.6) (84.0) Proceeds from disposals 39.8 43.6 (3.8) Working capital movement (34.3) (21.4) (12.9) IPEP expense 52.7 60.2 (7.5) Provisions / other (25.5) 10.4 (35.9) Cash flow fro
Slide 44: Outlook
For personal use only Outlook Outlook On track for FY11 result in line with Aug ’10 guidance • Sales revenue growth in all business units at constant currency • Operating profit before finance costs and tax of US$740M to US$780M* – June 2010 foreign exchange rates – Excludes any contribution or ac
Slide 45: Summary
For personal use only Summary Tom Gorman, CEO Summary Sales revenue and profit up against uneven economic backdrop Defending the business while investing in quality and growth Emerging economies performing strongly Growth initiatives on track Outlook in line with Aug ‘10 guidance 88 44
Slide 46: Disclaimer statement
For personal use only 2011 first-half results 15 February 2011 Disclaimer statement The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distr
Slide 47: Glossary of terms and measures
For personal use only Appendices Appendix 1 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual rates In the statutory financial statements, foreign currency results are translated into US dollars at the
Slide 48: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) For personal use only Except where noted, common terms and measures used in this document are based upon the following definitions: Continuing Continuing operations refers to CHEP, Recall and Brambles HQ. operations EPS Profit after tax, minority
Slide 49: Currency mix and credit facilities
Appendix 3 Currency mix For personal use only 1H11 currency mix at actual FX rates US$M Total USD EUR GBP AUD Other Sales revenue 2,147.2 691.1 507.9 203.6 274.3 470.3 Operating profit 366.1 63.0 79.1 50.2 46.4 127.4 Net debt* 1,720.5 1,597.7 176.0 (101.6) 24.9 23.5 * Net debt shown after adjustment
Slide 50: Capital expenditure breakdown and CHEP sales by service line
Appendix 5 Capital expenditure breakdown For personal use only US$M actual rates Pallets 18% Containers Other 6% 76% 20 359 44 339 21 294 21 273 1H11 cash Accrual 1H11 Recall Land and P&E Pooling Containers Pallets movement additions 97 Appendix 6 CHEP – sales revenue by service line US$M, actual ra
Slide 51: Americas sales revenue by service line and region
Appendix 7A Americas – sales revenue by service line For personal use only US$M, actual rates 2 27 762 Pallets RPC Automotive Other 96% <1% <1% 3% Growth % calculated on constant currency basis 99 Appendix 7B Americas – sales revenue by region US$M, actual rates Growth vs. 1H10 25 100 USA 1% Canada
Slide 52: CHEP USA quality costs and rejections
Appendix 8 CHEP USA quality costs For personal use only US$M Actual Forecast Ongoing Component FY10 1H11 2H11 FY11 FY12 (per year) Pre-Better Everyday 37 - - - - - Better Everyday 72 51 44 95 55 25 Total 109 51 44 95 55 25 101 Appendix 9 CHEP USA rejections accumulated Rejections as a percentage of
Slide 53: CHEP USA plant operations and productivity trends
Appendix 10A CHEP USA – plant operations and transportation trends For personal use only Plant cost ratio* Transportation cost ratio (Plant costs / Sales) (Transportation costs / Sales) 45% 33% 40% 35% 28% 30% 23% 25% 20% 18% 02 03 04 05 06 07 08 09 10 11 2 3 4 5 06 07 08 09 10 11 0 0 0 0 FY FY FY F
Slide 54: EMEA sales revenue by service line and region
Appendix 11A EMEA – sales revenue by service line For personal use only US$M, actual rates Growth vs. 1H10 10 Pallets 4% 52 RPC 12% 47 Automotive 11% Other 94% 642 Pallets RPC Automotive Other 86% 6% 7% 1% Growth % calculated on constant currency basis 105 Appendix 11B EMEA – sales revenue by region
Slide 55: CHEP Europe plant operations and productivity trends
Appendix 12A CHEP Europe – plant operations and transportation trends For personal use only Plant cost ratio Transportation cost ratio (Plant costs / sales) (Transportation costs / sales) 35% 30% 30% 26% 25% 22% 20% 18% 2 3 4 5 6 7 8 9 0 02 03 04 05 06 07 08 09 10 11 11 0 0 0 0 0 0 0 0 1 FY FY FY FY
Slide 56: Asia-Pacific sales revenue by service line and region
Appendix 13A Asia-Pacific – sales revenue by service line For personal use only US$M, actual rates Growth vs. 1H10 18 Pallets 5% 15 RPC 7% Automotive 6% 36 Other 2% 151 Pallets RPC Automotive Other 69% 16% 7% 8% Growth % calculated on constant currency basis 109 Appendix 13B Asia-Pacific – sales rev
Slide 57: Recall sales revenue by service line; paper prices
Appendix 14 Recall – sales revenue by service line For personal use only US$M, actual rates Growth vs. 1H10 39 DMS 4% SDS 6% 74 DPS 2% 272 DMS SDS DPS 71% 19% 10% Growth % calculated on constant currency basis 111 Appendix 15 Paper prices – North America US$ actual rates 250 210 Price per ton 170 13
Slide 58: Contacts
For personal use only Contacts Contact details For additional information, contact: Cathy Press Group Vice President, Capital Markets cathy.press@brambles.com +61 (2) 9256 5241 +61 (0) 419 290 745 (mobile) James Hall Director, Investor Relations & External Communications james.hall@brambles.com +61