Brambles Limited · ASX:BXB
Brambles — FY2020 Earnings Presentation
44 slides from Brambles's earnings presentation, Aug 19, 2020
Slide 1: Full-year 2020 Results presentation
Full-year 2020 Results presentation 19 August 2020
Slide 2: Results highlights
1 Results highlights GRAHAM CHIPCHASE, CEO
Slide 3: FY20 highlights
FY20 highlights Resilient revenue growth and strong cash flow generation • FY20 results reflect the efforts of our people, the agility of our network and the resilience of our 'share and reuse' business model • Sales revenue and Underlying Profit in line with guidance: o Sales revenue +6%1 as resili
Slide 4: Leading in sustainability
Leading in sustainability Recognised as a global leader in sustainability: Rated #1 Maximum 96th percentile in Rated A in most sustainable AAA rating industry category Circular Economy international company assessment by the Ellen MacArthur Foundation Ambitious 2020 sustainability goals achieved: Be
Slide 5: Dividends and capital management
Dividends and capital management • Total dividends represents a payout ratio of 53% within our targeted payout ratio range of 45-60%1 o Final dividend of US9.0₵ declared, converted and paid as AU12.54₵ and franked at 30% o Total dividend declared for FY20 of US18.0₵ • A$1.5 billion2 of IFCO sale pro
Slide 6: Covid-19 impact
Covid-19 impact "The invisible backbone of global supply chains" Global pallet businesses • Consumer staples account for ~80% of Brambles’ revenues and underpin the resilience and defensive qualities of the business • In March and April the business experienced strong levels of activity as a surge i
Slide 7: Covid-19 response
Covid-19 response “Connecting people with life’s essentials every day” Our people and communities • Throughout the pandemic the health and safety of our employees and the communities in which we operate has been our highest priority • In our global service centre network we deployed additional hygie
Slide 8: Strategic priorities
Strategic priorities Refined focus to ensure agility in times of uncertainty Brambles’ long-term strategic goal remains unchanged – We seek to be the global leader in platform pooling and insight-based solutions to fast moving supply chains through our circular ‘share and reuse’ business model In re
Slide 9: FY21 outlook
FY21 outlook Key assumptions and inputs for FY21 outlook include: • No further widespread lockdowns due to Covid-19 in key markets of operation; • A U-shaped economic recovery with economic headwinds to persist for the duration of FY21; • A slow recovery in the Automotive and Kegstar businesses; and
Slide 10: Financial overview
2 Financial overview NESSA O’SULLIVAN, CFO
Slide 11: FY20 results
FY20 results Summary US$m FY20 Change vs. FY19 • Sales growth +6% reflecting +3% price and +3% volume growth, driven by global pallet businesses Actual Constant Continuing operations • Underlying Profit +4% includes +3pt benefit from FX FX AASB 16. Excluding this benefit, pallets sales contribution
Slide 12: Covid-19
Covid-19 Operational and financial impact varied across portfolio of businesses FY20 revenue by sector Consumer staples-facing businesses, primarily pallets Revenue • Peak pallet demand in grocery supply chains during March and April 2020 across major markets in North America and Europe, Other Auto
Slide 13: FY20 Group sales growth
FY20 Group sales growth Growth in pallets offset Covid-19 headwinds in Automotive & Kegstar Growth across all segments Strong volume momentum & price realisation FY20 Sales revenue growth (US$m) Price/mix and volume contribution to growth 4 +7% +6% 62 (148) Strong price realisation in 221 3% America
Slide 14: Group profit analysis (US$m)
Group profit analysis (US$m) Sales contribution offset Covid-19 impacts & other cost increases Additional transport miles Growth in asset pool and due to Latin America asset Overhead cost increases to support investment in US supply management programme and new infrastructure and sales tools, chain
Slide 15: CHEP Americas
CHEP Americas Strong sales growth and profit leverage driven by US margin expansion Including AASB 16 FY20 Change vs. FY19 FY20 performance: • Pallets revenue +10% reflecting price realisation in response to Actual Constant the higher cost-to-serve and strong volume growth including (US$m) FX FX ben
Slide 16: CHEP Americas margins
CHEP Americas margins US margin increase partly offset by margin pressure in Canada FY20 weighted contribution Key drivers of to CHEP Americas margin FY20 margin performance +0.9pt increase +1pt margin improvement in line with objective • Improved cost-recovery through contractual pricing and surcha
Slide 17: US automation programme
US automation programme On track to meet automation objectives despite Covid-19 delays Overview of project Progress to date • ~US$170m capital investment • Plant automation project launched in 2H18 from FY19-FY21, ~5-year payback • 28 sites automated to date, with sites • Capital investment to be fu
Slide 18: US pallets revenue
US pallets revenue Strong price realisation and volume growth including demand uplift in 4Q20 US pallets revenue FY20 revenue growth components: growth breakdown • Price/mix growth of 4% reflecting pricing initiatives +9% to recover higher cost-to-serve; • Effective price1 +3% reflecting lower surch
Slide 19: CHEP EMEA
CHEP EMEA Margins and returns remain strong despite Covid-19 headwinds Including AASB 16 FY20 Change vs. FY19 FY20 performance reflected: Actual Constant • Pallets revenue +5% driven by strong net new wins and price realisation. Macroeconomic conditions continue (US$m) FX FX to impact like-for-like
Slide 20: EMEA sales growth
EMEA sales growth Growth in pallets offset Covid-19 impact on Automotive and Kegstar businesses CHEP EMEA revenue FY20 revenue growth components: growth breakdown • Price/mix growth of 2% reflecting contract indexation in the pallets business in line with inflationary cost environment throughout the
Slide 21: CHEP Asia-Pacific
CHEP Asia-Pacific Growth and cost control in pallets offset by lower RPC earnings Including AASB 16 FY20 Change vs. FY19 FY20 performance reflects: • Pallets revenue +5% driven by like-for-like volume Actual Constant growth and price realisation in Australian pallets; and (US$m) FX FX • RPC + Contai
Slide 22: Cash flow
Cash flow Significant increase in Free Cash Flow before special dividend (US$m, actual FX) FY20 FY19 Change Free Cash Flow after ordinary dividends up US$261.1m, including AASB 16 benefit EBITDA1 1,562.9 1,415.1 147.8 of U$114.1m Capital expenditure (cash basis)2 (930.1) (989.4) 59.3 Excluding AASB
Slide 23: Cash flow
Cash flow Normalised positive Free Cash Flow for third consecutive year (US$m, actual FX) FY20 FY19 FY18 Free Cash Flow after ordinary dividends (reported) 171.5 (89.6) 202.4 Normalisation adjustments: Adjustment AASB 16 benefit to reported Free Cash Flow (114.1) - - Proceeds from HFG joint venture
Slide 24: Improvements in asset efficiency
Improvements in asset efficiency Group pooling capex to sales ratio improved by 2.8pts in FY20 Group FY20 pooling capex of US$831.7m is $82m1 lower than FY19 due to: • Asset efficiency improvements across the Group, including in the Latin America pallets business; 20.7% 20.4% • FY19 included additio
Slide 25: Balance sheet
Balance sheet Balance sheet remains strong; Financial policy updated for AASB 16 Conservative net debt position Jun 20 Jun 191 • Increase in net debt at 30 June 2020 reflects Net debt US$1,712m US$98m A$1,426m (US$958m) of capital management Average term of transactions in FY203 and US$704m of lease
Slide 26: Summary
Summary FY20 result reflects defensive nature of business, delivery of operational initiatives and focus on cash flow generation • FY20 sales revenue and Underlying Profit in line with guidance despite Covid-19 headwinds • Significant increase in cash flow generation reflecting disciplined capital a
Slide 27: Full-year 2020 Results presentation
Full-year 2020 Results presentation 19 August 2020
Slide 28: Appendix
@) Appendix
Slide 29: US margin improvement initiatives
Appendix 1 1pt margin improvement delivered in FY20; Initiatives on track to deliver 2-3pt margin improvement1 by FY22 Pressures Mitigating actions Phasing of margin improvement Progress FY20 FY21 FY22 Supply chain • Annual transport and network optimisation Cost inflation cost out exercise undertak
Slide 30: AASB 16: Leases - FY20 pre-tax impact
Appendix 2a AASB 16: Leases - FY20 pre-tax impact Overview • All qualifying leases recognised on balance sheet as lease liability and right-of-use leased assets, effective on 1 July 2019 • Modified retrospective approach adopted, comparative period not restated • AASB 16 has no overall impact on the
Slide 31: FY20 AASB segment impacts
Appendix 2b FY20 AASB 16 segment impacts Underlying Cash Flow from Average Capital (US$m) Profit EBITDA Operations Invested Americas 14.1 74.7 74.7 346.2 EMEA 4.8 45.3 45.3 110.5 Asia-Pacific 5.0 19.1 19.1 76.4 Corporate 0.3 1.5 1.5 7.4 Group 24.2 140.6 140.6 540.5 1 Results highlights 2 Financial o
Slide 32: Sales revenue by region and sector
Appendix 3 Brambles: Sales revenue by region and sector FY20 sales revenue by region FY20 sales revenue by sector Eastern India, Middle Asia Europe East, Turkey, 1.2% Auto 3.9% 3.3% Other Africa Packaging 11.8% 5.4% 2.5% Latin General America retail 7.0% 1.4% ANZ USA & Canada Storage 8.2% & Dist. Fa
Slide 33: Major currency exchange rates
Appendix 4 Major currency exchange rates1 USD exchange rate: USD EUR GBP AUD CAD ZAR MXN BRL PLN NZD FY20 1.0000 1.1064 1.2582 0.6692 0.7445 0.0637 0.0489 0.2239 0.2530 0.6354 Average FY19 1.0000 1.1404 1.2943 0.7145 0.7555 0.0706 0.0517 0.2589 0.2660 0.6712 30 June 20 1.0000 1.1242 1.2305 0.6860 0.
Slide 34: FY20 currency mix
Appendix 5 FY20 currency mix (US$m) Total USD EUR GBP AUD CAD MXN ZAR PLN BRL NZD Other1 Sales revenue 4,734 1,859 1,054 338 331 282 213 173 83 55 55 291 FY20 share 100% 39% 22% 7% 7% 6% 5% 4% 2% 1% 1% 6% FY19 share 100% 37% 23% 8% 8% 6% 4% 4% 2% 1% 1% 6% Net debt2 1,712 1,024 934 (37) (522) 90 121
Slide 35: Credit facilities and debt profile
Appendix 6 Credit facilities and debt profile Committed Uncommitted Maturity Type1 Debt drawn Headroom facilities facilities (US$bn at 30 June 2020) <12 months Bank 0.1 0.3 - 0.4 1 to 2 years Bank 0.4 - - 0.4 2 to 3 years Bank 0.4 - - 0.4 3 to 4 years Bank/EMTN2 0.7 - 0.6 0.1 4 to 5 years Bank 0.4 -
Slide 36: Net plant and transport costs/sales revenue
Appendix 7 Net plant and transport costs/sales revenue Net plant Net transport cost/sales revenue cost/sales revenue FY20 FY20 FY19 FY20 FY19 Ex. AASB 161 CHEP Americas 38.1% 38.7% 38.9% 23.7% 24.0% CHEP EMEA 24.1% 24.4% 23.5% 20.9% 20.9% CHEP Asia-Pacific 33.1% 34.1% 34.7% 12.6% 12.7% Group 32.3% 3
Slide 37: CHEP Americas: Underlying Profit analysis
Appendix 8a CHEP Americas: Underlying Profit analysis (US$m) (9) (9) (27) (25) (24) (8) 131 14 350 342 298 2 FY19 Volume, Depreciation Net Net IPEP Other AASB 16 FY20 FX FY20 1 Underlying price, mix transport plant costs Underlying Underlying Profit costs Profit Profit (constant FX) 1 Sales growth n
Slide 38: CHEP EMEA: Underlying Profit analysis
Appendix 8b CHEP EMEA: Underlying Profit analysis (US$m) (23) (9) (5) (20) 56 (8) (27) (4) 5 442 434 407 FY19 Volume, Automotive Depreciation Net Net IPEP Other AASB 16 FY20 FX FY20 1 Underlying price, mix & Kegstar transport plant costs Underlying Underlying Profit costs Profit Profit (constant FX)
Slide 39: CHEP Asia-Pacific: Underlying Profit analysis
Appendix 8c CHEP Asia-Pacific: Underlying Profit analysis (US$m) (1) (2) (2) 5 (7) 4 3 125 118 118 FY19 Volume, 1 Depreciation Net Net Other AASB 16 FY20 FX FY20 Underlying price, mix transport plant costs Underlying Underlying Profit costs Profit Profit (constant FX) 1 Sales growth net of volume-re
Slide 40: Capital expenditure on Property, Plant and Equipment
Appendix 9 Capital expenditure on Property, Plant and Equipment (Accruals basis, US$m) 1,060 1,013 981 849 823 294 148 317 320 231 684 643 606 538 489 40 90 123 149 54 FY16 FY17 FY18 FY19 FY20 1 2 Other PP&E Replacement (DIN) Growth 1 Replacement capex in a period is the sum of Depreciation expense,
Slide 41: Glossary of terms and measures
Appendix 10 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period Average Capital Investe
Slide 42: Glossary of terms and measures
Appendix 10 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 Net new business The sales revenue impact in the reporting period from business won or lost in that period and over the pre
Slide 43: Disclaimer
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. This
Slide 44: Investor Relations contacts
Investor Relations contacts Sean O’Sullivan Vice President, Investor Relations & Corporate Affairs sean.osullivan@brambles.com +61 2 9256 5262 +61 412 139 711 Raluca Chiriacescu Director, Investor Relations raluca.chiriacescu@brambles.com +44 20 3880 9412 +44 7810 658044 1 Results highlights 2 Finan