Metair Investments Limited · JSE:MTA
Metair Investments — H1 2016 Earnings Presentation
52 slides from Metair Investments's earnings presentation, Aug 18, 2016
Slide 1: Interim Results for the Six Months Ended 30 June 2016
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 18TH AUGUST 2016
Slide 2: Agenda
AGENDA • Commentary & results overview • Completion of strategic redesign and renewal • Financial review • Operational overview • Prospects 22
Slide 3: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW
Slide 4: Commentary & Results Overview: Energy Storage
COMMENTARY & RESULTS OVERVIEW Solid performance from energy storage vertical • Operating profit improved by R20m to R234m Main trading Observations: • Good performance from Rombat and Mutlu Energy Storage • Secured multi-year supply contract with Daimler for EFB start-stop batteries - complete EMEA
Slide 5: Commentary & Results Overview: Automotive Components
COMMENTARY & RESULTS OVERVIEW Challenged performance from automotive components vertical Main trading • Launch of new model from major OEM customer Observations: Automotive Components • Metair renewed all targeted replacement business for this model • Launch support cost put the local OE segment int
Slide 6: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW • Interim results largely in line with prospect statement and trading update • Good performance from Energy Storage Vertical arrested the decline in Automotive Components Financials • Combined result still positive with R108m attributable profit • HEPS of 54cps down 51%
Slide 7: Completion of Strategic Redesign & Renewal
COMPLETION OF STRATEGIC REDESIGN & RENEWAL
Slide 8: Completion of Strategic Redesign and Renewal
COMPLETION OF STRATEGIC REDESIGN AND RENEWAL • First 3 X 5 strategy Phase 1 • 2005 – 2010 Local • R5 billion turnover DELIVERED relevance • R500 million PBIT • Second 3 X 5 strategy • 2011 - 2014 Phase 2 Interna- • 50% Aftermarket DELIVERED tionalisation • 50% OE • 50% Batteries • Third 3 X 5 strate
Slide 9: Completion of Strategic Redesign and Renewal
COMPLETION OF STRATEGIC REDESIGN AND RENEWAL • Energy Storage vertical generated 57% of interim segmental revenue Redesign • Energy Storage vertical generated 91% of interim PBIT completed • Secured significant multi-year start-stop contract with Daimler • Strategic acquisition of ABMEAL in Kenya •
Slide 10: African Expansion – Acquisition of 25% of ABM Kenya Group
AFRICAN EXPANSION – ACQUISITION OF 25% OF ABM KENYA GROUP Acquisition rationale • Key African acquisition provide access to growth markets: • ABM owns the Chloride and Exide brands for the Tanzanian, Zambian, Ugandan and Kenyan markets. Battery sales of over 900,000 per annum. • Vertically integrate
Slide 11: African Expansion – Acquisition of ABM Kenya
AFRICAN EXPANSION – ACQUISITION OF ABM KENYA • Strong Solar business: Solinc (Pty) Ltd Acquisition • 8-10 Mega Watt Solar Voltaic cell manufacturing capacity per annum rationale • Affordable, quality assured solar kit solutions to light homes, charge phones and TVs • Solar panels are generally sold
Slide 12: African Expansion – Acquisition of ABM Kenya
AFRICAN EXPANSION – ACQUISITION OF ABM KENYA • ABM Group EBITDA in 2016: $6.5m Deal • Net Debt: $2m valuation • Acquired 25% for effectively $8.1m • Valuation multiple: 4.5x EBITDA, below Metair trading multiple • Expected to be accretive in first year of acquisition 12
Slide 13: Financial Overview
NM lla! R INVESTMENTS LIMITED FINANCIAL OVERVIEW ¥ oo aa cc
Slide 14: Financial Highlights
FINANCIAL HIGHLIGHTS Dec-15 Jun-15 Jun-16 ITEMS Mvt. R’million R’million R’million Revenue 7 732 3 543 4 030 14% Income EBITDA 1 092 502 390 (22%) Statement Operating profit 790 346 260 (25%) Operating profit margin 10.2% 9.8% 6.5% (3%) Profit after tax 555 236 116 (51%) • Revenue increase of R487m
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS Dec-15 Jun-15 Jun-16 ITEMS Mvt. R’million R’million R’million Attributable profit 527 220 108 (51%) Earnings per share 267 112 54 (52%) Shareholder Weighted avg. number of shares (‘000) 197 216 197 066 198 121 0.54% Performance Headline earnings per share 248 111 54 (51%) Net De
Slide 16: Income Statement
INCOME STATEMENT Dec-15 Jun-15 Jun-16 ITEMS R’million R’million R’million Revenue 7 732 3 543 4 030 Operating Gross Profit 1 548 738 713 Profit Other Operating Income 188 58 47 Distribution, Administrative & Other Expenses 947 450 500 Operating Profit 790 346 260 Dec-15 Jun-15 Jun-16 ITEMS R’million
Slide 17: Operating Profit
OPERATING PROFIT 12.0% 600.1 10.0% 500.1 9.8% 8.0% R’million Operating 400.1 Margin % Profit 6.0% 300.1 6.5% 346 4.0% 200.1 260 100.1 2.0% 0.1 0.0% Jun-15 Jun-16 Operating Profit Operating Profit Margin • Operating profit decreased 25% to R260m and group operating margin declined to 6.5% (2015: 9.8%
Slide 18: Balance Sheet – Assets
BALANCE SHEET – ASSETS Dec-15 Jun-15 Jun-16 ITEMS R’million R’million R’million Non-Current assets 4 926 4 145 4 936 Non-current Assets Property, plant and equipment 3 327 2 746 3 280 Intangible assets 1 357 1 148 1 315 Other non-current assets 242 251 341 Current assets 4 115 3 563 4 029 Inventory
Slide 19: Balance Sheet – Equity & Liabilities
BALANCE SHEET – EQUITY & LIABILITIES Dec-15 Jun-15 Jun-16 ITEMS R’million R’million R’million Total equity 4 975 3 988 4 773 Equity & Non-current liabilities 2 579 2 360 2 759 Non-Current Borrowings 1 836 1 752 2 026 Liabilities Post employment benefits 114 106 121 Deferred taxation 401 339 387 Defe
Slide 20: Capital & Debt Structure
CAPITAL & DEBT STRUCTURE ITEMS Dec-15 Jun-15 Jun-16 Capital Debt*:equity 40% 47% 46% Structure Net debt**:equity 29% 43% 37% ITEMS Dec-15 Jun-15 Jun-16 Debt Net debt** (R’million) 1 398 1 684 1 747 Levels Net debt**:EBITDA 1.28 1.43 1.78 (LTM for interim) • Over time our target structure is c. 25% d
Slide 21: Working Capital
WORKING CAPITAL Dec-15 Jun-15 Jun-16 ITEMS (R’million) R’million R’million R’million Inventory 1 735 1 648 1 777 Trade & other receivables 1 575 1 455 1 547 Trade & other payables (1 006) (869) (919) Total 2 304 2 234 2 405 DAYS Dec-15 Jun-15 Jun-16 Inventory 82 84 80 Trade & other receivables 74 74
Slide 22: Vertical Performance at a Glance
VERTICAL PERFORMANCE AT A GLANCE ENERGY STORAGE AUTOMOTIVE COMPONENTS REVENUE REVENUE 21% 6% R2.6 BILLION R1.9 BILLION 57% Contribution 43% Contribution OPERATING PROFIT OPERATING PROFIT 9% 88% R234 MILLION R23 MILLION 91% Contribution 9% Contribution PBIT : 9.1% PBIT : 1.2% 22
Slide 23: Overall Segmental Review: Energy Storage Vertical
OVERALL SEGMENTAL REVIEW ENERGY STORAGE VERTICAL 3,000 2 582 2,500 2 134 Energy R’million 2,000 Storage Revenue 1,500 1,000 500 0 Jun-15 Jun-16 300 12% 10.1% 250 9.1% 10% R’million Energy 200 8% Storage 215 234 150 6% PBIT 100 4% 50 2% 0 0% Jun-15 Jun-16 23
Slide 24: Overall Segmental Review: Energy Storage Vertical
OVERALL SEGMENTAL REVIEW ENERGY STORAGE VERTICAL • Good contractual volumes, a slightly increased lead price and weaker ZAR contributed to improved results for Mutlu and Rombat Summary of performance • Competition for market share intensified in the South African aftermarket and First National Batte
Slide 25: Energy Storage – Automotive (Selected Information)
ENERGY STORAGE – AUTOMOTIVE (SELECTED INFORMATION) 2,500 2 262 2,000 1 736 Energy R’million Storage 1,500 Revenue 1,000 500 398 319 0 Jun-15 Jun-16 250 194 (8.6%) 200 161 (9.3%) R’million Energy 150 Storage PBIT 100 54 (13.6%) 50 40 (12.6%) 0 Jun-15 Jun-16 Automotive Industrial 25
Slide 26: Energy Storage – Automotive (Selected Information)
ENERGY STORAGE – AUTOMOTIVE (SELECTED INFORMATION) 250 240 8 (6) 230 (24) 18 220 Rombat 210 3 (11) Rombat 26 9 export recycling (3) 194 200 margin volumes 190 Mutlu Rombat incr 82k FNB local Dynamic: export units at auto: 4.7% 180 Mutlu Rombat local AM flat margin Loss for 161 13 volume R&D currency
Slide 27: Energy Storage – Industrial (Selected Information)
ENERGY STORAGE – INDUSTRIAL (SELECTED INFORMATION) 80 70 60 54 (14) 50 R’million 40 40 (Mutlu timing of contracts and FBN lower 30 demand) 20 10 0 2015 H1 Standby/Contractual 2016 H1 27
Slide 28: Lead Pricing Fluctuated Significantly
LEAD PRICING FLUCTUATED SIGNIFICANTLY 28
Slide 29: Overall Segmental Review: Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) 2,500 1 922 2,000 1 814 Automotive R’million Components 1,500 Revenue 1,000 500 0 Jun-15 Jun-16 225 10.7% 12.0% 200 10.0% 175 R’million Automotive 150 8.0% 125 Components 6.0% 100 194 PBIT 75 4.0% 50 1.2% 2.0% 25 23 0
Slide 30: Overall Segmental Review: Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) • The Automotive Component Vertical underwent its most disruptive phase since 2009 with the launch of our major customer’s new model • Overall, the component vertical achieved a PBIT of R23m, compared to R194m in 2015.
Slide 31: Ramp-up Production Levels
RAMP-UP PRODUCTION LEVELS Daily volumes Normalised Start of production Production level 31
Slide 32: Overall Segmental Review: Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) 2000 1 883 1 745 1800 1600 1400 Local 1200 R’million Automotive 1000 Components 800 Revenue 600 400 200 69 39 0 Jun-15 Jun-16 200 181 (10.4%) 180 160 140 R’million Local 120 100 Automotive 80 Components 60 PBIT 40 20 1
Slide 33: Automotive Components PBIT Overview
AUTOMOTIVE COMPONENTS PBIT OVERVIEW (SELECTED INFORMATION) 220 210 194 (26) 200 190 180 170 Auto (34) 160 volume Hesto & 150 harness margin 140 import (17) loss 130 airfreight 120 Hesto (85) R’million 110 training & Hesto Auto AM 100 overtime margin & Non- 90 costs loss auto 80 margin & 70 volume Au
Slide 34: Overall Analysis – Additional Information
OVERALL ANALYSIS – ADDITIONAL INFORMATION (INCL. MANAGED ASSOCIATE) Auto parts Battery 5,000 4 504 3 947 4,000 R’million Product 2 582 3,000 2 099 (57%) Split (53%) 2,000 1,000 1 848 1 922 (47%) (43%) - (57%) Jun-15 Jun-16 International South Africa 5,000 4 504 4,500 3 947 4,000 Geographical R’milli
Slide 35: Associate Acquisition – ABMEAL
ASSOCIATE ACQUISITION – ASSOCIATED BATTERY MANUFACTURERS (EAST AFRICA) GROUP ‘ABMEAL’ Investment - ZAR’ million June 2016 Total consideration for 25% equity (including shareholders loan) 122 Acquisition Consideration for loan and shares (USD 7.3m) 108 Summary Purchase price adjustment (USD 0.8m) 12
Slide 36: Operational Overview
NM lla! R INVESTMENTS LIMITED OPERATIONAL OVERVIEW
Slide 37: Automotive Battery Production & Capacity Type
AUTOMOTIVE BATTERY PRODUCTION & CAPACITY TYPE 10.9 10.9 12.0 11.0 0.4 10.0 1.6 1.2 9.0 1.2 2.1 Units in millions 8.0 0.9 7.0 6.0 5.0 9.3 4.0 7.2 7.2 7.2 3.0 2.0 1.0 Total production 2015 Total capacity 2015 Additional contractually sold Illustrative remaining capacity capacity June 2016 Capacity Uti
Slide 38: 2015 & 2016 Contractually Sold Capacity – Timing & Annual Volumes
2015 & 2016 CONTRACTUALLY SOLD CAPACITY – TIMING & ANNUAL VOLUMES 2.5 Conventional capacity Start/Stop capacity 2.0 1.5 Pre-Diesel gate 1.2 Pre-Turkish Coup Units in millions 0.7 1.0 0.5 0.9 0.9 0.8 0.5 0.2 0.0 -0.3 -0.5 2015 2016 2016 - Volume 2017 2018 uncertainty 38
Slide 39: Combined Battery Volumes
COMBINED BATTERY VOLUMES (FNB, MUTLU & ROMBAT) Actual YTD YTD Automotive Units Variance Dec-15 Jun-15 Jun-16 Original Equipment Original Equipment - Local 1 609 159 860 726 944 513 10% Market - Export 264 808 66 720 112 357 76% Total OE 1 873 967 927 446 1 056 870 14% Actual YTD YTD Automotive Units
Slide 40: FNB Volumes
FNB VOLUMES Actual YTD YTD Automotive Units Variance Original Dec-15 Jun-15 Jun-16 Equipment Original Equipment - Local 517 285 248 002 230 873 (7%) Market Total OE 517 285 248 002 230 873 (7%) Actual YTD YTD Automotive Units Variance Dec-15 Jun-15 Jun-16 Aftermarket Aftermarket - Local 1 088 741 58
Slide 41: Mutlu Volumes
MUTLU VOLUMES Actual YTD YTD Automotive Units Variance Original Dec-15 Jun-15 Jun-16 Equipment Original Equipment - Local 907 814 416 495 520 858 25% Market Total OE 907 814 416 495 520 858 25% Actual YTD YTD Automotive Units Variance Dec-15 Jun-15 Jun-16 Aftermarket Aftermarket - Local 1 505 701 53
Slide 42: Rombat Volumes
ROMBAT VOLUMES Actual YTD YTD Automotive Units Variance Original Dec-15 Jun-15 Jun-16 Equipment Original Equipment - Local 303 608 196 229 192 782 (2%) Market - Export 145 260 66 720 112 357 68% Total OE 448 868 262 949 305 139 16% Actual YTD YTD Automotive Units Variance Dec-15 Jun-15 Jun-16 Afterm
Slide 43: Vehicle Production per OEM in South Africa
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA (NAAMSA) YTD YTD OEM 2011 2012 2013 2014 Dec-15 Jun-15 Jun-16 BMW 52 908 44 229 66 087 71 004 72 165 37 149 34 885 MBSA 50 939 61 439 47 189 45 584 105 473 49 152 55 592 FMCSA 28 716 51 006 56 923 76 179 73 735 40 029 42 234 GM 32 530 38 199 40 019 41 491 4
Slide 44: Vehicle Production per OEM in Turkey
VEHICLE PRODUCTION PER OEM IN TURKEY YTD YTD OEM 2011 2012 2013 2014 2015 Jun-15 Jun-16 OYAK RENAULT 330 994 310 602 331 694 318 246 339 240 167 341 180 769 FORD 295 850 272 097 281 287 244 682 334 622 159 441 173 996 TOFAŞ 307 788 256 428 244 614 222 807 278 254 136 748 181 962 HYUNDAI 90 231 86 97
Slide 45: Vehicle Production per OEM in Romania
VEHICLE PRODUCTION PER OEM IN ROMANIA YTD YTD OEM 2010 2011 2012 2013 2014 Dec-15 Jun-15 Jun-16 Renault Dacia 327 609 327 394 284 392 342 856 338 593 339 198 186 107 144 336 Ford 9 558 7 547 30 591 68 339 52 829 47 967 23 326 21 034 TOTAL 337 167 334 941 314 983 411 195 391 422 387 165 212 433 165 3
Slide 46: 2016 Capital Expenditure Commitments
2016 CAPITAL EXPENDITURE COMMITMENTS Group - Approved Sector Maintenance Expansion Efficiency Total R’000 Original Equipment 23 249 48 556 71 805 Aftermarket / Non-auto 37 293 54 037 91 330 Property 12 403 8 378 20 781 Total 72 945 110 971 183 916 Includes authorised and committed capex 46
Slide 47: Prospects
PROSPECTS a rn eR 2 NM lla! R INVESTMENTS LIMITED
Slide 48: General Prospects Statement – Y/E 2015
GENERAL PROSPECTS STATEMENT – Y/E 2015 Metair expects the international and local business environment to continue to be volatile and challenging, but the group remains committed to making further progress in its strategic redesign. Metair continues to seek acquisitions, however such acquisitions wi
Slide 49: Prospects: Energy Storage Vertical
PROSPECTS ENERGY STORAGE VERTICAL • Combination of : Energy • stronger seasonal demand in our winter markets (Mutlu and Rombat); and Storage • geo-political stability vertical could support continued good performance in second half of 2016 • In South Africa we expect continued local market competiti
Slide 50: Prospects: Automotive Components Vertical
PROSPECTS ENERGY STORAGE VERTICAL • Challenge relates to production volumes and margins for next 5-7 years for new model Automotive • Currently expect single digit revenue growth in the short term, with technology Components advancements, product expansion and weaker ZAR offsetting potential volume
Slide 51: Q&A
METAIR INVESTMENTS LIMITED automotive | industrial | retail Q&A WWW.METAIR.CO.ZA
Slide 52: Disclaimer
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 thi