Brambles Limited · ASX:BXB
Brambles — FY2015 Earnings Presentation
52 slides from Brambles's earnings presentation, Aug 20, 2015
Slide 1: Financial Year 2015 Results
Financial Year 2015 Results 20 August 2015
Slide 2: Overview and Results Highlights
Overview and Results Highlights Tom Gorman, CEO 2
Slide 3: Key points: FY15 result
Key points: FY15 result In line with guidance amid challenging conditions Sales revenue up 8% and Underlying Profit up 10% at constant FX Pallets result reflects strong Europe profit but US cost pressures remain Strong sales and profit growth delivered in RPCs Solid contribution from Ferguson since
Slide 4: Key points: outlook
Key points: outlook Reflects increased scope of investment opportunity FY16 sales revenue and Underlying Profit growth expected at 6-8% at constant FX FY16 Underlying Profit guidance range: US$1,000-1,020M at 30 June 2015 FX FY16 ROCI will reflect short-term impact of increased investment FY19 objec
Slide 5: Group safety performance
Group safety performance Continued positive trend in injury frequency rate Brambles Injury Frequency Rate (per million man hours) 25 20 15 10 5 0 FY11 FY12 FY13 FY14 FY15 Continuing businesses 1 Reported 2 1 Operations owned continuously throughout FY11 to FY15, excluding businesses acquired or dive
Slide 6: Financial highlights
Financial highlights Efficiencies deliver leverage to bottom line (Continuing operations, US$M) FY15 result Change vs. FY14 Actual FX Constant FX Sales revenue 5,465 1% 8% Operating profit 939 1% 8% Profit after tax 586 - 7% Underlying Profit 986 3% 10% Return on Capital Invested (ROCI) 15.7% (0.6)p
Slide 7: Delivery scorecard
Delivery scorecard Key FY15 objectives met despite challenging conditions FY15 Guidance FY15 Outcome Constant FX sales revenue growth of 8-9% Achieved 8% US$34M delivered in FY15 Delivery of Global Supply Chain efficiencies Full US$100M program achieved Underlying Profit: US$1,055-1,085M FY15 result
Slide 8: Key 2H15 actions
Key 2H15 actions Short-term priorities to drive long-term value What we said – Feb 2015 What we did… Mitigate transport inflation; deploy - US transport surcharge Feb 2015 1 Cost pallet durability actions in CHEP USA - US pallet durability actions underway Refresh brand in CHEP Pallets; roll-out - “
Slide 9: Pallets segment result summary
Pallets segment result summary Strong Europe result more than offsets US cost challenges FY15 Change vs. FY14 Net new business, like-for-like volumes and price/mix broadly equal (US$M) Actual Constant contributors to sales growth FX FX Emerging markets constant FX sales Americas 2,358 2% 5% growth o
Slide 10: RPCs segment result summary
RPCs segment result summary Improved margins reflect scale benefits on European growth FY15 Change vs. FY14 Strong sales revenue growth in all regions driven by conversions with Actual Constant (US$M) FX FX existing and new retailers Europe 582 - 12% Profit and ROCI improvements Scale-related networ
Slide 11: Containers segment result summary
Containers segment result summary Diverse result reflects broadly positive 2H15 trends FY15 Change vs. FY14 Ongoing challenges in European Ex- and Australian automotive (US$M) Actual Constant acquisitions businesses weighs on growth FX FX (constant FX) Continued solid growth in IBCs Automotive 147 (
Slide 12: Financial Analysis
Financial Analysis Zlatko Todorcevski, CFO 12
Slide 13: Continued sales growth momentum
Continued sales growth momentum Key drivers of sales revenue growth (US$M) Reflects solid result from Translation impacts reflect Ferguson despite oil and gas strong US dollar against Contribution from largest sector challenges other operating currencies operations ahead of underlying industry growt
Slide 14: Group profit analysis (US$M)
Group profit analysis (US$M) Delivery of margin growth despite US cost challenges Primarily Primarily Ferguson RPCs depreciation 34 24 (74) (10) (10) 134 (72) Reflects moderation in 2H15 vs. 1H15 1,058 960 Operating leverage and 986 modest pricing benefits FY14 Volume, Acqui- Global Pallets Other Di
Slide 15: Key transport cost trends
Key transport cost trends Strong EMEA broadly offsets spike in US carrier rates Pallets: net transport costs/ EMEA FY15 reduction reflects logistics sales revenue efficiencies and some benefit of lower fuel costs 20% Americas carrier rates reflect 8% inflation in third-party freight rates 18% throug
Slide 16: Key plant cost trends
Key plant cost trends Divergent trends in Americas and EMEA continue Pallets: net plant costs/sales revenue Americas challenges continue 44% to reflect: Improved asset recovery practices 40% Commitment to meeting customer repair quality requirements 36% Positive EMEA trend continues to reflect: 32%
Slide 17: Indirect cost reduction update
Indirect cost reduction update One Better program underway and delivering benefits Overhead costs/sales revenue US$11M cost-outs delivered from quick wins 18% in FY15 On track to deliver US$30M total reduction by end FY16 On track to deliver FY19 targets 17% US$100M total cost-out At least 2 percent
Slide 18: Reconciliation to statutory profit
Reconciliation to statutory profit Small increase in Significant Items and tax expense (US$M, continuing operations) FY15 FY14 Change Actual FX Constant FX Underlying Profit 986 960 3% 10% Significant Items (47) (31) Operating profit 939 930 1% 8% Net finance costs (112) (113) 1% (7)% Tax expense (2
Slide 19: Cash flow reconciliation
Cash flow reconciliation Higher capital expenditure to support growth (US$M) FY15 FY14 Change EBITDA 1,535 1,488 47 Capital expenditure (984) (854) (130) Proceeds from sale of property, plant and equipment 78 78 - Working capital movement 5 11 (6) IPEP expense 80 88 (8) Other 15 17 (2) Cash Flow fro
Slide 20: Group capital expenditure analysis
Group capital expenditure analysis Gradual increase driven by acquisitions and customer growth Capital expenditure on pooling equipment (US$M) 1,100 Containers demand driven by investment in acquired 1,000 Investment in RPCs growth businesses post IFCO acquisition 900 800 700 600 500 Gradual supply-
Slide 21: US inventories and pallet demand
US inventories and pallet demand Increased inventories are a key short-term capex driver US retail trade inventories1/sales vs. CHEP USA plant stock 1.28 14 Inventories are now at their highest 1.27 ratio since the Financial Crisis 12 1.26 10 1.25 8 1.24 6 1.23 4 1.22 Efficient plant stock managemen
Slide 22: Balance sheet position
Balance sheet position Within key ratios despite use of debt to fund acquisition June 2015 June 2014 Net debt (US$M) 2,689 2,362 Average term of committed facilities (years) 3.9 4.1 FY15 FY14 EBITDA/net finance costs (x) 13.7 13.2 Net debt/EBITDA (x) 1.75 1.59 22
Slide 23: Summary and Outlook
Summary and Outlook Tom Gorman, CEO 23
Slide 24: Investment proposition unchanged
Investment proposition unchanged We are driven by our focus on the customer …which drives superior rates of economic return (i.e. high quality of opportunity)… Objectives Annual percentage sales revenue Our customer value growth in the high single digits proposition enables a (constant FX) strong an
Slide 25: What has changed since December 2013?
What has changed since December 2013? Increased investment opportunity despite challenges Assumptions – December 2013 Additional assumptions – August 2015 Macro - Flat growth in major economies - Impacts of improved US pallet pool management - Challenging environment for political leadership and sup
Slide 26: More investment to drive value
More investment to drive value Organic growth capex opportunity to FY19 of US$1.5B Approximate organic growth capex Key FY16-FY19 organic growth expectations by year (US$M) investment focus areas: 600 Expansion and replenishment of US 500 pallet pool to support supply-chain restocking Differentiatio
Slide 27: Disciplined capital allocation focus
Disciplined capital allocation focus Managing the portfolio for maximisation of value Asia-Pacific Auto Legend AIME CHEP Europe IFCO Return on Capital Invested Containers North America Latin America Europe IBCs South America LeanLogistics Oil & Gas Aerospace North America Average Capital Invested gr
Slide 28: Guidance and outlook summary
Guidance and outlook summary Increased investment to support long-term objectives FY19 objectives Commitment remains to 20% ROCI target, prior to acquisition impacts Average Capital Invested CAGR likely to exceed original 5% expectation Organic growth investment now anticipated at US$1.5B from FY16
Slide 29: Q&A
Q&A
Slide 30: Full-Year Results
Full-Year Results 20 August 2015
Slide 31: Appendices
Appendices Brambles
Slide 32: Glossary of terms and measures
Appendix 1 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period. Average Capital Investe
Slide 33: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: DIN The sum in a period of: - Depreciation expense; - Irrecoverable Pooling Equipment Provision expense; and - Net book value of compens
Slide 34: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Net new business The sales revenue impact in the reporting period from business won or lost in that period and over the previous financi
Slide 35: Underlying Profit currency reconciliation
Appendix 2 Underlying Profit currency reconciliation (US$M) FY15 guidance FY15 reported FY16 guidance 1,000 – 1,020 Growth: Growth: Growth: 3% 10% 6-8% 1,065 986 965 960 943 FY14 result FY15 result FY14 result FY15 result FY15 result FY16 guidance (30 June (30 June (actual FX) (actual FX) (30 June (
Slide 36: Return on Capital Invested (ROCI)
Appendix 3 Return on Capital Invested (ROCI) 25% 20% 15% 10% 5% FY11 FY12 FY13 FY14 FY15 Pallets RPCs Containers Group 36
Slide 37: FY15 currency mix
Appendix 4 FY15 currency mix (US$M) Total USD EUR GBP AUD CAD MXN ZAR CHF BRL Other1 Pallets 4,082 1,818 761 349 264 274 155 112 11 66 271 RPCs 918 192 426 74 80 - - 23 55 13 55 Containers 466 69 145 86 66 14 - 12 22 2 50 Sales revenue 5,465 2,079 1,332 509 410 288 155 147 88 81 376 Share 100% 38.0%
Slide 38: Major currency exchange rates
Appendix 5 Major currency exchange rates1 USD exchange rate: USD EUR GBP AUD CAD MXN ZAR CHF BRL FY15 1.0000 1.1946 1.5734 0.8301 0.8505 0.0697 0.0876 1.0605 0.3748 Average FY14 1.0000 1.3587 1.6331 0.9142 0.9334 0.0765 0.0961 1.1089 0.4373 30 Jun 15 1.0000 1.1220 1.5729 0.7673 0.8056 0.0637 0.0816
Slide 39: Credit facilities and debt profile
Appendix 6 Credit facilities and debt profile Committed Uncommitted Maturity Type Debt drawn Headroom facilities facilities (US$B at 30 June 2015) <12 months Bank/USPP1/Other 0.1 0.2 0.1 0.2 1 to 2 years Bank/USPP1/Other 0.8 - 0.4 0.4 2 to 3 years Bank/EMTN2/Other 1.0 - 0.8 0.2 3 to 4 years Bank/USP
Slide 40: Pallets: net new business wins
Appendix 7 Pallets: net new business wins Composition of Pallets’ constant Forward contribution FX sales revenue growth of prior year (US$M) 7% 60 6% 50 5% 40 4% 30 3% 20 2% 1% 10 0% 0 FY13 FY14 FY15 FY14 FY15 FY16 (estimate) Organic volume/price/mix Net new business wins Americas (excluding Recycle
Slide 41: Pallets sales revenue/Average Capital Invested
Appendix 8 Pallets sales revenue/Average Capital Invested 120% 110% 100% 90% 80% FY11 FY12 FY13 FY14 FY15 Americas EMEA Asia-Pacific Total 41
Slide 42: Pallets capital expenditure: growth vs. replacement
Appendix 9 Pallets capital expenditure: growth vs. replacement 800 14% 700 12% 600 10% 500 8% 400 6% 300 200 4% 100 2% 0 0% FY11 FY12 FY13 FY14 FY15 Replacement capex (US$M, LHS) Growth capex (US$M, LHS) DIN/sales revenue (RHS) Note: data excluded USA recycled pallet operations 42
Slide 43: CHEP USA pallet productivity trends
Appendix 10a CHEP USA pallet productivity trends (B4840) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 8% 98% 6% 96% 4% 94% 2% 92% 0% FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 43
Slide 44: CHEP Europe pallet productivity trends
Appendix 10b CHEP Europe pallet productivity trends (B1210 and B1208) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 8% 98% 6% 96% 4% 94% 2% 92% 0% FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 44
Slide 45: Pallets Americas: Underlying Profit analysis
Appendix 11a Pallets Americas: Underlying Profit analysis (US$M) 16 51 (74) 2 (13) 435 430 417 FY14 Volume, Global Direct Other FY15 FX FY15 price, mix Supply costs (constant FX) Chain 45
Slide 46: Pallets EMEA: Underlying Profit analysis
Appendix 11b Pallets EMEA: Underlying Profit analysis (US$M) 15 3 (10) (34) 44 378 344 326 FY14 Volume, Global Direct Other FY15 FX FY15 price, mix Supply costs (constant FX) Chain 46
Slide 47: Pallets Asia-Pacific: Underlying Profit analysis
Appendix 11c Pallets Asia-Pacific: Underlying Profit analysis (US$M) 3 (3) (5) 8 (7) 79 76 72 FY14 Volume, Global Direct Other FY15 FX FY15 price, mix Supply costs (constant FX) Chain 47
Slide 48: RPCs: Underlying Profit analysis
Appendix 11d RPCs: Underlying Profit analysis (US$M) (10) 30 (12) 144 132 124 FY14 Volume, Direct FY15 FX FY15 price, mix costs (constant FX) 48
Slide 49: Containers: Underlying Profit analysis
Appendix 11e Containers: Underlying Profit analysis (US$M) (6) 24 2 1 65 59 38 FY14 Volume, Other Acquisitions FY15 FX FY15 price, mix (constant FX) 49
Slide 50: 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 51: Investor Relations contacts
Investor Relations contacts James Hall Vice President, Investor Relations & Corporate Affairs james.hall@brambles.com +61 2 9256 5262 +61 401 524 645 Raluca Chiriacescu Manager, Investor Relations raluca.chiriacescu@brambles.com +61 2 9256 5211 +61 427 791 189 51
Slide 52: Full-Year Results
Full-Year Results 20 August 2015