Mahindra & Mahindra Ltd. · NSE:M&M
Mahindra & Mahindra — FY2020 Earnings Presentation
43 slides from Mahindra & Mahindra's earnings presentation, Jun 12, 2020
Slide 1: Cover letter to stock exchanges
Mahindra & Mahindra Ltd. Mahindra Towers, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 India Tel: +91 22 24901441 Fax: +91 22 24975081 REF:NS:SEC: 12th June, 2020 National Stock Exchange of India Limited BSE Limited "Exchange Plaza", 5th Floor, Phiroze Jeejeebhoy Towers, Plot No.C/1, G Block Dalal
Slide 2: Press Meet F20 Automotive & Farm Sectors
Press Meet F20 Automotive & Farm Sectors RAJESH JEJURIKAR 12th June 2020 1
Slide 3: FES Awards – Being Consumer Focused Is What Inspires Us
FES AWARDS – “BEING CONSUMER FOCUSED IS WHAT INSPIRES US” M&M 1ST IN THE TRA’S MOST TRUSTED CSI #1 FOR MAHINDRA WORLD TO WIN TPM AND MOST TRACTORS AND ADVANCED CONSUMER FOCUSED #2 FOR SWARAJ TRACTORS SPECIAL AWARD TRACTOR BRAND 2019 (JD POWER) 2
Slide 4: FES Highlights F20
FES HIGHLIGHTS F20 CONTINUED DOMESTIC LEADERSHIP, CONSISTENT PROFITABILITY – WITH 1% MARKET SHARE GAIN PBIT OF INR 2926 CRORES 41.2% PBIT 19% Industry down by 9.9% LAUNCH OF NEW PLUS SERIES MAgNA BILLING GROWTH 9.3% ERKUNT MARKET SHARE GAIN OF WITH 1ST IN INDUSTRY 6YR WARRANTY WITH VOLUMES AT 0.9% T
Slide 5: FES COVID19 Impact
FES COVID19 IMPACT Volume : Loss in Domestic Sale of 13.7K tractors and Export Sale of 1K 73,509 14,692 COVID Impact 60,242 58,817 -2.4% (actual) Q4 F19 Q4 F20 Actual Actual COVID-19 Impact on PBIT ~194 Crs 4
Slide 6: Resilience in Performance
RESILIENCE IN PERFORMANCE Stability in Volatility Continued Domestic Leadership 21.9% 20.5% 19.7% 19.3% 19.0% 17.3% 15.7% 15.5% 19.9% 14.9% 18.0% 11.4% 17.1% 8.0% 41.7% 41.7% 41.2% -1.7% 40.6% 41.0% 40.4% 40.0% 40.2% F12 F13 F14 F15 F16 F17 F18 F19 F20 -9.9% -10.4% -13.1% PBIT (%) Industry Growth (%
Slide 7: AS Highlights F20
AS HIGHLIGHTS F20 CV* MARKET SHARE RESILIENT MARGIN PERFORMANCE^ COMPLETE READINESS OF 27.7% CV MS 3.1% pts OPM 13% BSVI UV MS 19.0% M. ELECTRIC RETAIL BETTER THAN BILLING #2 IN SSI; #3 IN CSI EBITDA BREAKEVEN IN F20 BIC IQS SCORE FOR MARAZZO Dealer stock Treo crosses 4K nos only 10K nos 70+ cities
Slide 8: AS Q4 Volume Walk
AS Q4 VOLUME WALK -37,925 -15,813 -6,498 1,74,137 -23,420 90,481 Q4 F19 Industry COVID19 Fire at India Q4 F20 Actual Slowdown Global Key Lockdown Actual & BSVI Supply Supplier Transition COVID-19 Impact on PBIT ~471 Crs 7
Slide 9: AS Financial Highlights F20
AS FINANCIAL HIGHLIGHTS F20 Resilient OPM performance for Auto Sector despite volatility in volume / revenue 12.6% 12.5% 13.6% 12.9% 13.7% 12.8% 13.0% 8.3% 6.3% 2.5% 10.8% -8.3% -10.0% -21.8% F14 F15 F16 F17 F18 F19 F20 Volumes OPM 8
Slide 10: Mahindra Ford
MAHINDRA FORD Progress so far… Potential benefits.. Agreements signed Development of C-Segment SUV for Ford Potential Benefits of Alliance Joint development of connected vehicle Co-Sharing of investments & technology solutions Supply of BS-VI compliant engines and Economies of Scale in Joi
Slide 11: Future Direction: Farm Equipment Sector
FUTURE DIRECTION FARM EQUIPMENT SECTOR 10
Slide 12: Domestic Business – Current Status
DOMESTIC BUSINESS – CURRENT STATUS Leverage strong rural opportunity Strengthen by domestic core Managing ramp up: - >90% dealer started - Plants operating at > 80% capacity - Aligning financiers Leveraging new products Mechanisation opportunity eg Rice transplantors , harvesters 11
Slide 13: Farm Equipment Sector – Key Priorities
FARM EQUIPMENT SECTOR – KEY PRIORITIES Strengthen Core Build Farm Machinery Turnaround Domestic Business India Business Global Businesses Build a Moat through K2 Project Farming as a Service(FaaS) 12
Slide 14: Krish-e: Farming as a Service
“Krish-e” : FARMING as a SERVICE Krish-e provides progressive interventions across the crop cycle that help improve farmer outcomes and are affordable and accessible. 13
Slide 15: Project K2
PROJECT K2 4 Geographies, 4 Platforms, 38 Models Light Weight Compact Global Tractor Project Large Utility - 11 Models 41 – 70 HP Small Utility - 11 Models 25 – 40 HP Compact - 10 Models 18 – 35 HP SE Asia & India USA Sub Compact - 6 Models 13 – 26 HP Japan 14
Slide 16: MAgNA – Turnaround Actions
MAgNA – TURNAROUND ACTIONS Break even in F22 by Price and Value proposition Cost structure optimization: More digital marketing 15
Slide 17: Future Direction: Automotive Sector
FUTURE DIRECTION AUTOMOTIVE SECTOR A WALK – RUN – FLY APPROACH 16
Slide 18: Walk (April – August)
WALK (April – August) Conserve Cash Ramp up operations with safety first Segment Focus – rural, goods mobility, B2B Manufacturing at ~30% capacity Dealer and Supplier financial health 100% Suppliers operational Dealers Operational >80% 17
Slide 19: Run (September – March)
RUN (September – March) Launch of New Thar Strategic re-prioritization of capex Bolero, XUV300 to be volume drivers Aggressive cost optimisation Dealer business model redefined Synergy Projects with Ford JV 18
Slide 20: Fly (F22…)
FLY (F22…) Build distinctive SUV brand Path to profitability for Global subsidiaries Digital transformation of customer experience Platform synergy to optimize capex Leverage: - 2 new models W601, Z101 Improve Margin of Safety - New Pick up and Supro focus - EV Portfolio 19
Slide 21: Walk Run Fly
AUTOMOTIVE AND FARM SECTORS WALK RUN FLY April - August Sept - March F22 & beyond… PROTECT THE BUSINESS TODAY RAMP UP WITH FOCUS DIFFERENTIATED & PROFITABLE GROWTH Manage Cash Focus on Domestic Core SUV Core brand differentiation Manage Margin Capex and Investment prioritization Launch N
Slide 22: Thank You
THANK YOU 21
Slide 23: Reigniting Value Creation
Reigniting Value Creation Press Meet Dr Anish Shah | 12th June 2020 22 22
Slide 24: Key Messages
KEY MESSAGES • Resilient performance of Domestic Auto & Farm in a tough year • Ssangyong and other International subsidiaries drive significant reduction in profits • Strong cash position to tackle COVID • Tough actions underway to re-ignite value creation 23 23
Slide 25: F20 Results
(HN Lu T Le F20 Results
Slide 26: Resilient Operating Performance – F20
RESILIENT OPERATING PERF – F20 Rs Cr F20 Vs F19 Excl COVID, BSVI Revenue 44,866 -15% -8% EBITDA 6,351 -16% -5% PBT (before EI) 5,402 -23% -12% Operating margins maintained at 14.2% Cash Generated Rs 3,946 cr Farm Market Share up 1% Auto LCV < 3.5T Market Share up 1.2% Standalone M&M + MVML 2
Slide 27: PAT (After EI) Standalone
PAT (AFTER EI) Standalone Rs Cr Q4 F19 to Q4 F20 F19 to F20 Standalone M&M + MVML 26
Slide 28: PAT (After NCI & EI): F20 Consolidated
PAT (AFTER NCI & EI): F20 Consolidated Rs Cr -4% Consolidated basis 27 PMTC and Genze are included in International Auto and Farm
Slide 29: Revenue Walk
REVENUE WALK Standalone Rs Cr Q4 F19 to Q4 F20 F19 to F20 -9% -8% -15% 13,808 -35% 52,848 12,571 3,566 48,432 3,566 44,866 9,005 Q4 F19 REVENUE Q4 F20 REVENUE COVID, BSVI Q4 F20 REVENUE F19 REVENUE F20 REVENUE COVID, BSVI F20 REVENUE NORMAL IMPACT ACTUAL NORMAL IMPACT ACTUAL Standalone M&M + MVML 28
Slide 30: Operating Profit Margin
OPERATING PROFIT MARGIN Standalone Rs Cr Q4 Full Year OPM +10 bps OPM = 14.2% 14.2% 13.5% 13.6% Q4 F19 Q4 F20 F19 F20 Standalone M&M + MVML 29
Slide 31: PBT Walk: F20
PBT WALK: F20 Standalone Rs Cr * *-12% * -23% Standalone M&M + MVML 30
Slide 32: Cash Inflows & Outflows: F20
CASH INFLOWS & OUTFLOWS: F20 Standalone Rs Cr Standalone M&M + MVML PMTC is included in Auto & Farm related 31
Slide 33: Summary
SUMMARY • Resilient performance of Domestic Auto & Farm in a tough year • Market share gains: Farm up 1%, Auto LCV<3.5T up 1.2% • Operating Margins maintained for both Farm and Auto • Profits lower due to BSVI transition & COVID impact • Ssangyong and other International subsidiaries drive significa
Slide 34: Actions to Reignite Value Creation
Actions to Reignite Value Creation 33 33
Slide 35: Not Long Ago…
NOT LONG AGO… M&M Share Price (Rs) *Aug 2018: NIFTY scales new high and M&M leads the Year 2002 NIFTY pack with highest returns @ 31% CAGR YEAR 2002 YEAR 2018 M&M highest performer in NIFTY since its inception…till Aug 2018 * Motilal Oswal Ltd Research Report 34
Slide 36: Legacy of Value Creation
LEGACY OF VALUE CREATION M&M Closing Share Price Aug 2018 1200 1000 800 INR 600 400 200 CAGR: 31% CAGR: -54% 0 Year 2002 to 2018 2018-20 F02-F18 F18-F20 Operating Cash Flow pre Capex (Rs Cr) 2,433 5,210 EPS CAGR 34% (87%) Avg RoE 22% 12% EPS and RoE on consolidated basis Cash Flow is Average per ann
Slide 37: Losses of International Subs
LOSSES OF INTERNATIONAL SUBS Rs Cr F17 F18 F19 F20 (53) (1,102) (2,003) (5,257) % of PAT 1% 12% 25% 107% (before NCI) 36
Slide 38: Action on Loss-Making Subs
ACTION ON LOSS-MAKING SUBS Tighter Capital Allocation Norms Loss-making businesses/entities to be closely scrutinized & put under 3 categories, viz. A, B and C Category A B C Delayed or unclear Entities with clear path to profitability Unclear path to Logic path to 18% RoE but quantifiable profitabi
Slide 39: Value Creation in Listed Companies
VALUE CREATION IN LISTED COMPANIES Rs Cr Tech MMFSL Mahindra Swaraj Mahindra Engines Holidays Returns include dividends, sale & market value of the holding on 31st Mar, 2020. Investment include both original cost and subsequent investments 38
Slide 40: Harness Value from Potential Billion $ Candidates
HARNESS VALUE FROM POTENTIAL BILLION $ CANDIDATES Powerol Aftermarket Mahindra Rural Housing Finance Make in India… Mahindra Susten Supply to the World Agri Mahindra Mobility Accelo Mahindra: A gateway to Mahindra the largest and fastest Classic Legends Electric growing themes in India 39
Slide 41: Governance Is Our Bedrock
GOVERNANCE IS OUR BEDROCK M&M: AAA rating for 6 years in a row, Promoting Stakeholder from four key Credit Rating Agencies Interest People & Compliance Diversity Board of The Sustainable Directors & Mahindra Growth Committees Way Growth, Governance & Social Focus Business Vision Award M&M: ‘Best M&M
Slide 42: Path Forward
PATH FORWARD • Tightened Capital Allocation norms • Act on all loss making subsidiaries • Define clear narrative for Auto • Harness value from unlisted gems On track to Re-Ignite Value Creation 41 41
Slide 43: #FUTURise
#FUTURise _