Slide 1: Capral 2007 Results Presentation
For personal use only Capral 2007 Results Presentation February 2008 1
Slide 2: Results Overview
For personal use only 2 Results Overview
Slide 3: 2007 performance
2007 performance For personal use only • Capral’s performance in 2007 has fallen short of expectations and this is attributable to: – Sales recovery slow – Margin impact of LME movements – High costs, particularly in first half • Also, major projects progressed well, but caused business interruption
Slide 4: Key Stats
4 For personal use only Key Stats
Slide 5: Safety
Safety For personal use only In 2007, there were 60 workplace injuries where medical treatment was required (2006: 74), a 19% reduction on 2006. Injuries Frequency rate* 15 35 13 30 11 25 9 20 7 15 5 3 10 1 5 -1 0 Jan-07 May-07 Jun-07 Feb-07 Mar-07 Jul-06 Aug-06 Sep-06 Dec-06 Apr-07 Jul-07 Aug-07 Se
Slide 6: Sales recovery
Sales recovery For personal use only • Sales recovery did not occur until Q4: – Customer confidence took longer to win back than expected and transfer of new business was gradual • Customer transition from import model to local (Capral) supply takes time: – Time to cut new dies and approve samples –
Slide 7: LME fall resulted in devaluation of raw material stocks in the 2nd Half
LME fall resulted in devaluation of raw material stocks in the 2nd Half For personal use only 4000 LONDON METAL EXCHANGE 4000 3 Month Contract - 99.7% Aluminium (5-day avge) Inventory gains Inventory losses in H1 2006 as in H2 2007 as 3500 3500 LME rose LME fell A$666/t A$778/t 3000 3000 2500 2500 A
Slide 8: Overheads
Overheads For personal use only • Overheads increased in H1 2007 as additional sales resources were deployed to win volume – This approach did not deliver expected sales – Sales force was reduced in Q3 • There were transitional factors that contributed to higher labour costs in 2007 including: – War
Slide 9: Distribution Restructure
Distribution Restructure For personal use only 2006 Structure Combination of Crane residential 2007 Structure systems, Capral Commercial systems, and security products of Crane Aluminium Systems both businesses Building Systems 6 RDCs Residential windows and doors Security products Commercial window
Slide 10: Bremer: Backbone Project
Bremer: Backbone Project For personal use only • $8m project to improve materials handling and packing – Capital costs on plan • Increase automation and reduce manual materials handling: – Automatic crane system installed – Relocation of packing adjacent to ageing ovens • Key benefits are lower cost
Slide 11: SAP Implementation
SAP Implementation For personal use only • Version upgrade from 4.6d to ECC6 – Upgrade implemented in July 2007 to existing user base – Progressive roll-out across former Crane Aluminium Systems and Smart Aluminium sites between August and December 2007 – Further HR management and logistics function
Slide 12: Financial Performance
Financial Performance For personal use only 12
Slide 13: Underlying Performance
Underlying Performance For personal use only 13
Slide 14: EBITDA Comparison
EBITDA Comparison For personal use only * In H1 2006, Capral benefited from implementation of 3 price increases which temporarily increased margin as inventories were cleared (Impact $4.0m). 14
Slide 15: Significant Initiatives H2 2007
For personal use only Significant Initiatives H2 2007 15
Slide 16: Response to performance in H1 2007: Accelerate Key Initiatives
Response to performance in H1 2007: Accelerate Key Initiatives For personal use only • A number of initiatives were accelerated: – Sales Programs • Mill key accounts • Every Day Counts (Trade Centre growth) • Import Replacement programs – Middle Market – Excelerate – Breakthrough – Cost programs • B
Slide 17: Sales programs
Sales programs For personal use only • Increased sales volume delivered in Q4 2007: – In the first 9 months sales volume in 2007 was lower than in 2006 – In Q4 2007, sales volume 13% higher than in 2006 – Business gained from key accounts, middle market customers, security and commercial building cu
Slide 18: Cost initiatives
Cost initiatives For personal use only • Rationalisation of sales force and management structure delivered $3m in savings on in H2 2007 over H1 – Payroll and related costs down by $2.2m following a reduction in personnel – Other cash costs down $0.8m – Full year annual savings from this initiative a
Slide 19: $9m turnaround in EBITDA H1 v H2
$9m turnaround in EBITDA H1 v H2 For personal use only EBITDA 2007 H1 to H2 + 1.6 + 1.6 - 0.5 + 5.7 + 3.0 - 0.9 3.5 - 1.7 (5.3) 19
Slide 20: 2007 Sales Volume Movement H1 v H2
2007 Sales Volume Movement H1 v H2 For personal use only Sales Volume Movement H1 v H2 40 38 0.2 0.4 1.3 36.3 36 1.1 (0.5) 1.2 34 32.5 32 30 28 20
Slide 21: Operations
For personal use only 21 Operations
Slide 22: Operational Capability
Capral Aluminium Limited Operational Capability For personal use only Capral is the largest and most diversified manufacturer and distributor of Aluminium extrusions in Australia Capral: 2007 Revenue $510m, FE $325m Extrusion Finishing Distribution Bremer (QLD) 2 x 7” presses Bremer (QLD) 2 x 8” pre
Slide 23: Operations Overview
Operations Overview For personal use only • Distribution • Campbellfield – Realignment to core market segments – Increased demand for large press – Trade centre rationalisation capability – Rationalisation of sales force in H2, – Increased productivity delivering improved effectiveness in – Lower co
Slide 24: Bremer
Bremer For personal use only • 2007 is second full year of operation post commissioning • A further year of ramp-up in production – 27kt in 2007, up from 23kt in 2006 – Production already at > 675t/wk based on output in Q4. • Production rates and delivery performance are improving – Delivery in full
Slide 25: Liquidity
For personal use only 25 Liquidity
Slide 26: Bank Facilities
Bank Facilities For personal use only • Total Facilities $158m – Core Debt Facility (ANZ) $90m • Maturing September 2009 – Convertible Notes $50m • Maturing March 2012 – Bremer Equipment Finance (ECA Facilities) $19m • Progressive repayments until late 2009 • Core Debt Facility – $15m unutilised at
Slide 27: Cash Flow
27 For personal use only Cash Flow
Slide 28: Cash
Cash For personal use only • Large capital expenditure in 2007: – Backbone $6m – SAP $7m • Cash performance in 2007 was in line with plan, other than higher than plan operating losses. – Movement in 2006 to 2007 Cash Operating out-flow was impacted by reductions in 2006 Working Capital especially in
Slide 29: Financial Position
29 For personal use only Financial Position
Slide 30: Working Capital Management
For personal use only Working Capital Management 30
Slide 31: Working Capital
31 For personal use only Working Capital
Slide 32: Working Capital initiatives
Working Capital initiatives For personal use only • LME prices placed significant upward pressure on working capital in 2006 with some easing in the second half of 2007. • Raw material inventory reductions delivered in 2007. • Current initiatives into 2008 include: – Finished goods inventory reducti
Slide 33: Market Dynamics
For personal use only 33 Market Dynamics
Slide 34: Building market expected to be flat
Building market expected to be flat For personal use only •Assuming a continuing strong correlation, building activity forecasts suggest a flat market for aluminium extrusions through 2009. Aluminium Market Projections (BIS Shrapnel, HIA & ABS Forecasts) 250,000 80 70 200,000 60 Building Activity ($
Slide 35: Import prices not expected to fall
Import prices not expected to fall For personal use only • Majority of imports are from China • Factors affecting Chinese cost and therefore price include: – $A / RMB cross-currency relativity FX Trend 0.9500 8.0000 0.9000 7.0000 0.8500 6.0000 0.8000 5.0000 0.7500 4.0000 0.7000 0.6500 3.0000 0.6000
Slide 36: Outlook
For personal use only 36 Outlook
Slide 37: Capral's growth credentials
Capral’s growth credentials For personal use only • Manufacturing market offer – Raising the bar in service delivery (>90% DIFOT) – Short lead times – Implementing best practice in quality – Service offer to meet customers needs • Keen pricing • Streamlined supply chain • Optimal order quantities •
Slide 38: 2008 Imperatives
2008 Imperatives For personal use only • Maintain momentum of sales programs: – Improve market share further on back of 2007 programs • Margin improvements – Price increases implemented 1 January 2008 – Focus on margin management to ensure benefits of price increases are realised – Address pricing a
Slide 39: H1 2008 Outlook
H1 2008 Outlook For personal use only • 2008 sales should benefit from full year impact of sales growth delivered in Q4 2007 – January 2008 volumes have continued to support trend – Increased intensity in sales programs will deliver additional volume • Benefits from cost programs • Benefit of Januar