Brambles Limited · ASX:BXB
Brambles — H1 2012 Earnings Presentation
66 slides from Brambles's earnings presentation, Feb 16, 2012
Slide 1: First-Half Results Presentation
First-Half Results Presentation 16 February 2012
Slide 2: Agenda
Agenda Business Update & Results Highlights Tom Gorman, CEO Results Analysis & Outlook Greg Hayes, CFO Strategy Implementation Tom Gorman, CEO 2
Slide 3: Business Update & Results Highlights
Business Update & Results Highlights Tom Gorman, CEO
Slide 4: Key discussion points
Business Update & Results Highlights Key discussion points Business update • Organisation restructure completed successfully • Delivering on growth and efficiency programs • FY12 Group Underlying profit guidance tightened: US$1,050 million to US$1,080 million1 • Recall divestment process outcome exp
Slide 5: Business Update
Brambles Business Update
Slide 6: Strategy scorecard
Business Update & Results Highlights Strategy scorecard KEY INITIATIVE PROGRESS Business expansion in RPCs, Containers and emerging markets Delivering sales growth targets communicated at FY11 results 9 US$550M1 growth capex program over FY12 and FY13 US$160M of capex in 1H12 reflects growth momentu
Slide 7: Recall update
Business Update & Results Highlights Recall update • Robust operating performance – Strong first-half result delivered – Annualised first-half net new business US$45M – On track for FY12 guidance • Divestment process – Strong bidder interest – Shortlist in place – Outcome expected by 31 March 2012 7
Slide 8: Results Highlights
Brambles Results Highlights
Slide 9: Key financial outcomes
Business Update & Results Highlights Key financial outcomes Continuing operations Sales revenue US$2,366M 34% Operating profit US$372M 21% Underlying profit US$385M 23% Basic EPS 14.2 US¢ 14% Sales revenue up 9% and Underlying profit up 8% on a pro forma basis1 Dividends per share unchanged at 13.0
Slide 10: Continued market-share growth
Business Update & Results Highlights Continued market-share growth Net annualised (US$M) Net new business1 new business Pallets – Americas 20 46 Pallets – EMEA 15 26 Pallets - Asia-Pacific 5 6 Total Pallets 40 78 RPCs 15 13 Containers 1 14 Total Pooling Solutions 56 105 1 Net new business wins based
Slide 11: Pallets – Americas: turnaround continues
Business Update & Results Highlights Pallets – Americas: turnaround continues • Integration of IFCO Pallet Management Services • Paramount Pallet acquisition in Canada • Sales revenue up 28% to US$984M (pro forma1 up 6%) • Growth in all CHEP regions, especially strong in Latin America • Key customer
Slide 12: Pallets – EMEA: resilient sales, cost pressure
Business Update & Results Highlights Pallets – EMEA: resilient sales, cost pressure • Sales revenue up 5% to US$673M • Market weakness in Iberia, UK & Ireland and France • Continued growth elsewhere in Western Europe, Middle East & Africa and Central & Eastern Europe • Key customer wins/extensions:
Slide 13: Measures to address EMEA cost
Business Update & Results Highlights Measures to address EMEA cost 1H12 CHALLENGE & IMPACT ACTIONS High general inflation, fuel US$14M • Increased plant and and lumber costs logistics efficiencies identified • Improved pricing to start to Development costs/sales mix US$4M flow through in 2H12 impact
Slide 14: Pallets Asia-Pacific: solid result
Business Update & Results Highlights Pallets Asia-Pacific: solid result • Sales revenue up 15% to US$187M • Increased sales volumes in Australia & New Zealand • Strong new business growth in Asia • Key customer wins: Colgate-Palmolive, Murray-Goulburn and Pacific Brands (Australia); Danone Waters an
Slide 15: RPCs: delivering strong growth
Business Update & Results Highlights RPCs: delivering strong growth • IFCO performing well; integration of CHEP Europe business • Pro forma1 sales revenue up 18% to US$387M • Growth in all regions from business expansion • Increased penetration, new customers, new products • Key retailer wins/extens
Slide 16: Containers: investing in growth
Business Update & Results Highlights Containers: investing in growth • Sales revenue up 30% to US$135M • New business wins driving growth • Key wins/extensions: Automotive – Brilliance and CFMA (China), Continental, Valeo and Cummins (India); IBCs - Unilever Food Solutions, Dr Pepper Snapple Group a
Slide 17: Recall: strong first-half performance
Business Update & Results Highlights Recall: strong first-half performance • Sales revenue up 9% to US$418M • Robust volume increase in Document Management Solutions • Carton volumes now in excess of 100 million • Strong new business wins in Americas and Europe • Operating profit excluding Significa
Slide 18: Results Analysis & Outlook
Results Analysis & Outlook Greg Hayes, CFO
Slide 19: First-half 2012: summary profit reconciliation
Results Analysis & Outlook First-half 2012: summary profit reconciliation (US$M) 18 67 13 453 471 372 385 Operating Significiant Underlying Discontinued Group FX adustment Group profit from items from profit operations ex. Underlying Underlying Continuing Continuing Significant profit profit at 30 o
Slide 20: First-half 2012 result
Results Analysis & Outlook First-half 2012 result Actual FX Constant FX (US$M) 1H12 1H12 1H11 Change (%) Continuing operations Sales revenue 2,365.5 2,328.8 1,762.5 32% Underlying EBITDA 636.1 628.6 511.5 23% Underlying profit 385.1 382.1 313.7 22% Operating profit 371.7 367.5 306.8 20% Profit befor
Slide 21: Sales revenue growth: continuing operations
Results Analysis & Outlook Sales revenue growth: continuing operations (US$M)1 56 2,329 67 26 2,180 Pro 417 forma2 1,763 1H11 Price/mix Organic growth Net new wins 1H12 1 Constant FX basis 2 Pro forma figures assume Brambles had owned businesses acquired since 1 July 2010 for all of the prior corres
Slide 22: Pallets: results summary
Results Analysis & Outlook Pallets: results summary Actual FX Constant FX 1H11 pro (US$M) 1H12 1H12 1H11 Change (%) forma1 Americas 983.8 984.6 770.0 929.0 6 EMEA 672.8 662.7 642.1 642.1 3 Asia-Pacific 187.0 173.7 162.3 162.3 7 Sales revenue 1,843.6 1,821.0 1,574.4 1,733.4 5 Underlying EBITDA 518.3
Slide 23: Pallets Americas: operating profit reconciliation
Results Analysis & Outlook Pallets Americas: operating profit reconciliation (US$M)1 24 (20) (7) 32 (3) 155 129 Pro 6 forma2 123 1H11 Vol, Better Direct Other Significant 1H12 price, Everyday costs items mix 1 Constant FX basis 2 Pro forma profit reflects the EBIT reported by Pallet Management Servi
Slide 24: Pallets EMEA: operating profit reconciliation
Results Analysis & Outlook Pallets EMEA: operating profit reconciliation (US$M)1 13 (5) 148 (14) (4) (3) (7) 128 1H11 Vol, price, Quality Cost Emerging Other Significant 1H12 mix inflation market items expansion 1 Constant FX basis 24
Slide 25: Pallets Asia-Pacific: operating profit reconciliation
Results Analysis & Outlook Pallets Asia-Pacific: operating profit reconciliation (US$M)1 (2) 7 (3) 33 31 1H11 Vol, Direct Other 1H12 price, costs mix 1 Constant FX basis 25
Slide 26: RPCs: results summary
Results Analysis & Outlook RPCs: results summary Actual FX Constant FX 1H11 pro (US$M) 1H12 1H12 1H11 Change (%) forma1 Europe 252.2 244.6 37.3 211.0 16 North America 70.1 70.1 - 59.5 18 South America 12.6 12.4 0.8 10.4 19 ANZ & South Africa 51.8 49.6 45.8 45.8 8 Sales revenue 386.7 376.7 83.9 326.7
Slide 27: RPCs: operating profit reconciliation
Results Analysis & Outlook RPCs: operating profit reconciliation (US$M)1 10 (5) (2) (5) 49 47 Pro 36 forma2 13 1H11 Vol, Direct Other Significant 1H12 price, costs items mix 1 Constant FX basis 2 Pro forma profit reflects the EBIT reported by IFCO RPCs in 1H11 adjusted for amortisation expense arisi
Slide 28: Containers: results summary
Results Analysis & Outlook Containers: results summary Actual FX Constant FX (US$M) 1H12 1H12 1H11 Change (%) Automotive 78.7 77.1 68.0 13 CCC 19.6 19.2 17.1 12 IBCs 19.3 18.7 14.0 33 Aerospace Solutions 17.6 16.1 5.1 216 Sales revenue 135.2 131.1 104.2 26 EBITDA 31.0 30.5 28.5 7 Operating profit 16
Slide 29: Containers: operating profit reconciliation
Results Analysis & Outlook Containers: operating profit reconciliation (US$M)1 5 (2) (3) 16 16 1H11 Vol, Direct Expansion 1H12 price, costs investment mix 1 Constant FX basis 29
Slide 30: Recall: results summary
Results Analysis & Outlook Recall: results summary Actual FX Constant FX (US$M) 1H12 1H12 1H11 Change (%) Americas 181.9 181.8 174.2 4 Europe 109.1 105.9 93.8 13 Rest of World 126.5 117.9 116.7 1 Sales revenue 417.5 405.6 384.7 5 Underlying EBITDA1 102.4 98.1 84.5 16 Underlying profit1 71.2 67.6 58.
Slide 31: Recall: operating profit reconciliation
Results Analysis & Outlook Recall: operating profit reconciliation (US$M)1 13 (5) (3) 1 (19) 59 49 1H11 Vol, Direct Other Significant 1H12 price, costs items mix 1 Constant FX basis 31
Slide 32: Cash Flow & Financing
Brambles Cash Flow & Financing
Slide 33: Reconciliation: EBITDA to cash flow
Results Analysis & Outlook Reconciliation: EBITDA to cash flow (US$M) Actual FX 1H12 1H11 Change EBITDA 636.1 511.5 124.6 Capital expenditure (478.1) (305.5) (172.6) Proceeds from disposals 36.2 39.2 (3.0) Working capital movement (75.7) (6.2) (69.5) IPEP expense 55.2 52.7 2.5 Provisions/other (41.5
Slide 34: Capital expenditure trend
Results Analysis & Outlook Capital expenditure trend (US$M) Actual FX 461 425 70 160 315 70 355 301 230 245 214 1H10 2H10 1H11 2H11 1H12 Other Growth projects Note: Capital expenditure on property, plant and equipment (accruals basis) for Continuing operations 34
Slide 35: Financial metrics
Results Analysis & Outlook Financial metrics (Actual FX) December 11 June 11 Net debt (US$M) 3,173.9 2,998.8 Gearing1 (%) 57.6% 55.0% (Actual FX) 1H12 1H11 Covenants EBITDA2/net finance costs (x) 8.8 10.4 3.5 (min) Net debt/EBITDA2 (x) 2.2 1.4 3.5 (max) • Undrawn committed credit facilities: US$873M
Slide 36: Outlook
Brambles Outlook
Slide 37: Guidance for FY12
Results Analysis & Outlook Guidance for FY12 • Subject to unforeseen circumstances and economic uncertainty • Sales revenue growth in constant FX from all segments • Group Underlying profit1 guidance confirmed within tighter range: US$1,050M to US$1,080M – 30 June 2011 FX2 – Assumes full-year contri
Slide 38: Strategy Implementation
Strategy Implementation Tom Gorman, CEO
Slide 39: Strategy scorecard
Strategy implementation Strategy scorecard KEY INITIATIVE PROGRESS Business expansion in RPCs, Containers and emerging markets Delivering sales growth targets communicated at FY11 results 9 US$550M1 growth capex program over FY12 and FY13 US$160M of capex in 1H12 reflects growth momentum 9 US$100M1
Slide 40: Scorecard: synergies and efficiencies
Strategy implementation Scorecard: synergies and efficiencies PROJECT AREA FY12 TARGET PROGRESS FULL TARGET European RPC network Complete US$5M optimisation in FY12 USA Pallets network and On track for US$35M by US$5M delivery logistics FY14 optimisation Global Pallets operations & US$60M by US$10M
Slide 41: Scorecard: sales revenue expansion
Strategy implementation Scorecard: sales revenue expansion GROWTH AREA AUG 11 TARGET1 1H12 RESULT1 Pallets - emerging markets At least 15% in each of FY12, FY13 9 Up 20% to US$225M About 15% (pro RPCs forma) in each of FY12, FY13 9 Up 15% to US$387M Containers - new markets (US Auto, US IBC, Aerospa
Slide 42: Scorecard: Growth capex program
Strategy implementation Scorecard: Growth capex program Actual Forecast Actual FX 30 June 2011 FX Total Initiatives FY11 1H12 FY12 FY13 FY12/13 RPCs – new business 301 80 120 110 230 Containers – US Auto/IBC, Aerospace 101 10 40 80 120 Solutions Pallets - emerging markets growth 100 70 90 110 200 To
Slide 43: Summary
Brambles
Slide 44: Key discussion points
Summary Key discussion points Business update • Organisation restructure completed successfully • Delivering on growth and efficiency programs • FY12 Group Underlying profit guidance tightened: US$1,050 million to US$1,080 million1 • Recall divestment process outcome expected by 31 March 2012 1H12 h
Slide 45: First-Half Results Presentation
First-Half Results Presentation 16 February 2012
Slide 46: Disclaimer
Disclaimer The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. This
Slide 47: Investor Relations contacts
Investor Relations contacts Cathy Press Group Vice President, Capital Markets cathy.press@brambles.com +61 2 9256 5241 +61 419 290 745 James Hall Senior Director, Investor Relations & Corporate Affairs james.hall@brambles.com +61 2 9256 5262 +61 401 524 645 47
Slide 48: Appendices
Appendices
Slide 49: Appendix 1: Glossary of terms and measures
Appendices Appendix 1: Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual rates In the statutory financial statements, Brambles translates foreign currency results into US dollars at the applicable actua
Slide 50: Appendix 1: Glossary of terms and measures (continued)
Appendices Appendix 1: Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Free cash flow Cash flow generated after net capital expenditure, finance costs and tax, but excluding the net cost of acqui
Slide 51: Appendix 2: Currency mix – Continuing operations
Appendices Appendix 2: Currency mix – Continuing operations 1H12 currency mix at actual FX (US$M) Total USD EUR GBP AUD Other Sales revenue 2,365.5 838.8 643.6 202.4 203.2 477.5 Operating profit 371.7 103.0 102.2 46.2 20.1 100.2 Net debt1 3,173.9 1,753.5 1,328.6 43.1 101.5 (52.8) 1 Net debt shown af
Slide 52: Appendix 3: Effective tax rate - Continuing operations
Appendices Appendix 3: Effective tax rate - Continuing operations 1H12 1H11 (US$M) Actual FX Statutory Underlying Statutory Underlying Profit before tax 287.9 301.3 249.6 256.5 Tax expense 78.1 83.1 72.0 73.0 Effective tax rate 27.1% 27.6% 28.8% 28.5% 52
Slide 53: Appendix 4: Significant items – Continuing operations
Appendices Appendix 4: Significant items – Continuing operations (US$M) Actual FX 1H12 1H11 Underlying profit 385.1 313.7 Significant items: Acquisition-related costs (1.4) (6.9) Restructuring & IFCO integration costs (7.9) - Pension costs (5.8) - Foreign exchange gain on capital repatriation 1.7 -
Slide 54: Appendix 5: Discontinued operations
Appendices Appendix 5: Discontinued operations (US$M) Actual FX 1H12 1H11 Profit before tax and significant items: Recall 71.2 58.8 Other Discontinued operations (3.8) - Subtotal 67.4 58.8 Significant items (19.5) 0.3 Profit before tax from Discontinued operations 47.9 59.1 54
Slide 55: Appendix 6: Credit facilities and debt profile
Appendices Appendix 6: Credit facilities and debt profile (US$B) at 31 December 2011 Committed Uncommitted Maturity Type Debt drawn Headroom facilities facilities < 12 months Bank/Other - 0.2 0.1 0.1 1 – 2 years Bank/Other 0.6 - 0.2 0.4 2 – 3 years Bank/USPP¹/Other 1.0 - 0.8 0.2 3 – 4 years Bank/144
Slide 56: Appendix 7: Capital expenditure breakdown
Appendices Appendix 7: Capital expenditure breakdown (accruals basis) - Continuing operations (US$M) 1H11 1H12 15 26 13 21 8 126 294 273 Pallets RPCs Containers Land and Property & Equipment Note: Property, plant and equipment cash capex for Continuing operations in 1H12 was US$478M compared with US
Slide 57: Appendix 8: Pooling Solutions 1H12 sales revenue by segment
Appendices Appendix 8: Pooling Solutions 1H12 sales revenue by segment (US$M) Growth vs. 1H11 135 Pallets – Americas1 6% 387 Pallets – EMEA 3% Pallets - Asia-Pacific 7% Americas, 984 Asia-Pacific, 187 RPCs1 15% Containers 26% EMEA, 673 1 Pro forma assumes Brambles owned businesses acquired since 1 J
Slide 58: Appendix 9: Pallets 1H12 sales revenue by Customer Business Unit
Appendices Appendix 9: Pallets 1H12 sales revenue by Customer Business Unit (US$M) Growth vs 1H11 USA 3% 19 Canada 6% 168 Latin America 18% 68 26 LeanLogistics 6% 571 Other Western Pallet Management Services1 9% Europe, 184 Western Europe 1% UK & Ireland 1% France, 84 Iberia (4)% France 0% Iberia, 1
Slide 59: Appendix 10: Analysis of PMS 1H12 impact on Pallets - Americas
Appendices Appendix 10: Analysis of PMS 1H12 impact on Pallets - Americas Pallets -Americas Pallets - (US$M) Actual FX PMS (excluding PMS) Americas Sales 811.1 172.7 983.8 Underlying profit 149.8 8.5 158.3 Underlying profit margin 18% 5% 16% Average capital invested 1,759.7 326.4 2,086.1 Return on c
Slide 60: Appendix 11: CHEP USA pallet rejections
Appendices Appendix 11: CHEP USA pallet rejections 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 60
Slide 61: Appendix 12a: CHEP USA pallet plant operations and transportation trends
Appendices Appendix 12a: CHEP USA pallet plant operations and transportation trends Plant cost ratio Transportation cost ratio (Plant costs/sales) (Transportation costs/sales) 45% 32% 40% 28% 35% 24% 30% 20% 25% 20% 16% FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 1H12 FY 02 FY 03 FY
Slide 62: Appendix 12b: CHEP USA pallet productivity trends
Appendices Appendix 12b: CHEP USA pallet productivity trends Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 105% 10% 8% 100% 6% 4% 95% 2% 90% 0% FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 1H12 FY 02 FY 03 FY 04 FY 05 FY 0
Slide 63: Appendix 13a: CHEP Europe pallet plant operations and transportation trends
Appendices Appendix 13a: CHEP Europe pallet plant operations and transportation trends Plant cost ratio Transportation cost ratio (Plant costs/sales) (Transportation costs/sales) 32% 30% 30% 28% 28% 26% 26% 24% 24% 22% 22% 20% 20% FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 1H12 FY 0
Slide 64: Appendix 13b: CHEP Europe pallet productivity trends
Appendices Appendix 13b: CHEP Europe pallet productivity trends Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 10% 98% 8% 96% 6% 94% 4% 92% 2% 90% 0% FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 1H12 FY 02 FY 03 FY 04
Slide 65: Appendix 14: RPCs 1H12 sales revenue by region
Appendices Appendix 14: RPCs 1H12 sales revenue by region (US$M) 52 Pro forma growth1 vs 1H11 13 Europe 16% North America 18% 70 South America 19% 252 ANZ & South Africa 8% 1 Pro forma assumes Brambles owned businesses acquired since 1 July 2010 for all of the prior corresponding period; constant FX
Slide 66: Appendix 15: Containers 1H12 sales revenue by sector
Appendices Appendix 15: Containers 1H12 sales revenue by sector (US$M) 20 Growth1 vs 1H11 Automotive 13% 19 Aerospace 216% 79 IBCs 33% 18 CCC 12% 1 Growth is at constantFX 66