Metair Investments Limited · JSE:MTA
Metair Investments — FY2016 Earnings Presentation
67 slides from Metair Investments's earnings presentation, 2017
Slide 1: 2016 Results Presentation
METAIR INVESTMENTS LIMITED automotive | industrial | retail
Slide 2: Agenda
AGENDA • Reflection on Metair’s redesign journey • Metair’s image 2016 • Strategic redesign & renewal update • Commentary & results overview • Turkey update • Technological advancement drivers and response • Financial overview • Operational overview • Prospects 2
Slide 3: Reflection of Metair's Redesign Journey
REFLECTION OF METAIR’S REDESIGN JOURNEY 3
Slide 4: Integrated Annual Report Journey Travelled
INTEGRATED ANNUAL REPORT JOURNEY TRAVELLED Metair’s integrated annual reports are always presented against the backdrop of a theme that aims to reflect the position of the company at that specific time. 4
Slide 5: 11-Year Integrated Annual Report Themes
11-YEAR INTEGRATED ANNUAL REPORT THEMES 2006 Growth, Gain, Enrichment 2007 Transformation 2008 Transparency 2009 Crossroads – Back to Basics 2010 Balance 2011 Human Focus, Measurement and Adjustment 2012 Reflection – Road Ahead 2013 Growing our International Footprint 2014 Brand Wall 2015 Creativity
Slide 6: Metair Image 2016
M ETA! R INVESTMENTS LIMITED METAIR IMAGE 2016
Slide 7: Image for 2016
IMAGE FOR 2016 The mosaic of photographs on the front cover represents the quality, highly motivated and dedicated people who make up Metair and that deliver on the strategy. At the top of the image are pictures of the group board and leadership, who set the strategy and the ethical tone for the com
Slide 8: Image for 2016
IMAGE FOR 2016 INVESTMENTS LIMITED ‘automotive | industrial | retail ‘automotive [Industrial | retall METAIR
Slide 9: Strategic Redesign & Renewal Update
STRATEGIC REDESIGN & RENEWAL UPDATE 9 9
Slide 10: Strategic Delivery
STRATEGIC DELIVERY • First 3 X 5 strategy Phase 1 • 2005 - 2010 Local Relevance • R5 billion turnover DELIVERED • R500 million PBIT • Second 3 X 5 strategy Phase 2 • 2011 - 2014 Internationalisation • 50% Aftermarket DELIVERED • 50% OE • 50% Batteries • Third 3 X 5 strategy Two distinct business ver
Slide 11: Performance Against 3 x 5 Strategy (Globalisation)
PERFORMANCE AGAINST 3 X 5 STRATEGY (GLOBALISATION) • Established R & D Centre in Turkey, Li Ion battery development • Established Metair International Battery (MIB) structure Sale of spare • Met 2nd generation specification for AGM Start/Stop batteries Capacity initiatives • Sold 2/3 of spare capaci
Slide 12: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW 16 12
Slide 13: Main Trading Observations: Energy Storage
MAIN TRADING OBSERVATIONS ENERGY STORAGE at a glance Revenue Volumes Auto battery FY15 FY16 Var units in mil Actual Actual (units) 19% Mutlu 3.1 3.7 0.53 9% Rombat 2.2 2.3 0.11 R5.9 Bn FNB 1.9 1.9 0.00 7.8m auto units 59% Contribution TOTAL 7.2 7.8 0.63 Mutlu grew c. 17% • Automotive volume growth o
Slide 14: Main Trading Observations: Automotive Components
MAIN TRADING OBSERVATIONS AUTOMOTIVE COMPONENTS at a glance Main trading observations Vehicles in FY15 FY16 Var Market production Revenue units Actual Actual (units) vols MBSA 105 473 116 783 11 310 2.3% (13.6k units) 14% FMCSA 73 735 86 496 12 761 VWSA 121 583 120 799 (784) TSAM 133 497 122 115 (11
Slide 15: Commentary & Results Overview – Main Trading Observations
COMMENTARY & RESULTS OVERVIEW – MAIN TRADING OBSERVATIONS • Group PAT decline of 16% to R468m mainly as a result of Hesto (equity earnings) and FNB • EPS of 227c, HEPS 229c – strong returns from Mutlu and Rombat compensating • Considering the challenges, group operating performance of R731m, decline
Slide 16: Turkey Update
M ETA! R INVESTMENTS LIMITED TURKEY UPDATE 16
Slide 17: Acquisition Design Filter
ACQUISITION DESIGN FILTER 17
Slide 18: Industrial Logic for Mutlu Acquisition
INDUSTRIAL LOGIC FOR MUTLU ACQUISITION 1 Scarce strategic asset with 2 Becoming a key player in the 3 Geographic diversification strong market position EMEA battery market and access to growth markets Top markets South Africa and Turkey Transformative transaction Market leader in Turkey with l
Slide 19: Industrial Reasons for Investing in Mutlu Akü Remain Sound
ALTHOUGH THE INDUSTRIAL REASONS FOR INVESTING IN MUTLU AKÜ REMAIN VERY SOUND • Attempted coup in July resulted in socio-economic instability • Fortunate that none of our employees nor our business was directly negatively Geo-political impacted during the failed coup situation • Turkish Government sh
Slide 20: Long Term TRY Devaluation Impact on Translation of Profits
BUT A LONG TERM DEVALUATION OF THE TRY WILL HAVE A MAJOR IMPACT ON THE TRANSLATION OF PROFITS TRY / ZAR Avg 5,5 5,0 Currency impact 4,5 4,0 3,5 3,0 Mar-15 Sep-15 Dec-16 Oct-16 Feb-16 Aug-16 May-15 Apr-16 Jun-16 Nov-15 Dec-15 Y/E Jan-15 Jan-17 Jul-15 TRY / ZAR YEAR END TRY / ZAR YEARLY AVG 2015 : 5.3
Slide 21: Technological Advancement Drivers & Response
TECHNOLOGICAL ADVANCEMENT DRIVERS & RESPONSE 19 21
Slide 22: Automotive Mobility Megatrends
AUTOMOTIVE MOBILITY MEGATRENDS C Connectivity Increased electrical A Autonomous driving demand that will use a combination of S Shared or flexible use high capacity lead acid and lithium-ion batteries xxx E Electric drive systems Source: CASE, Daimler AG 22
Slide 23: Product Response
PRODUCT RESPONSE Industrial Automotive (48V) Energy 12V Micro Hybrid Storage Li-Ion Li-Ion Mutlu Power Wall 48V Mild Traction Hybrid Battery Li-Ion & Lead Lead Acid AGM Acid 23
Slide 24: Lithium-Ion Battery Overview
LITHIUM-ION BATTERY OVERVIEW 19 24
Slide 25: Comparison of Lithium Business Models
COMPARISON OF LITHIUM BUSINESS MODELS Business Lithium Component Cell Formation Solution, BMS Comments Models Chemistry manuf & Assy Packaging Electrode and BMS Coating BM1 High R&D cost BM2 High capital investment BM3 The best for cell manufacturing kick off BM4 Less initial investment BM5 Good sta
Slide 26: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 3 26
Slide 27: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 27
Slide 28: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT Lithium-ion Cell: 3.2V LiFePO4 2.6Ah 28
Slide 29: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 29
Slide 30: 12V Lithium-Ion Battery Management System
12V LITHIUM-ION BATTERY MANAGEMENT SYSTEM 30
Slide 31: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 31
Slide 32: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 32
Slide 33: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 33
Slide 34: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 34
Slide 35: 12V Lithium-Ion Battery Development
12V LITHIUM-ION BATTERY DEVELOPMENT 35
Slide 36: 48V Lithium-Ion Battery Development
48V LITHIUM-ION BATTERY DEVELOPMENT 3 36
Slide 37: 48V Lithium-Ion Battery Development
48V LITHIUM-ION BATTERY DEVELOPMENT 37
Slide 38: 48V Lithium-Ion Battery Development
48V LITHIUM-ION BATTERY DEVELOPMENT 38
Slide 39: Financial Overview
M ETA! R INVESTMENTS LIMITED FINANCIAL OVERVIEW 39
Slide 40: Financial Highlights
FINANCIAL HIGHLIGHTS FY15 FY16 ITEM Mvt. R’million R’million Revenue 7 732 8 954 16% EBITDA 1 092 1 034 (5%) Income Statement Operating profit 731 (7%) 790 Operating profit margin 10.2% 8.2% (2ppt) Profit after tax / effective tax rate 555 / 26% 468 / 23% (16%) FY15 FY16 ITEM Mvt. R’million R’millio
Slide 41: Financial Highlights
FINANCIAL HIGHLIGHTS FY15 FY16 ITEM Mvt. R’million R’million Revenue 7 732 8 954 16% EBITDA 1 092 1 034 (5%) Income Statement Operating profit 731 (7%) 790 Operating profit margin 10.2% 8.2% (2ppt) Profit after tax / effective tax rate 555 / 26% 468 / 23% (16%) FY15 FY16 ITEM Mvt. R’million R’millio
Slide 42: Financial Highlights
FINANCIAL HIGHLIGHTS FY15 FY16 ITEM Mvt. R’million R’million Shareholder Attributable profit 527 448 (15%) Performance Earnings per share 267 227 (15%) Weighted avg. number of shares (‘000) 197 216 198 699 0% Headline earnings per share 229 (8%) 248 (1 Net Debt (1 281) (8%) 398) Dividend per share d
Slide 43: Income Statement
INCOME STATEMENT FY15 FY16 ITEMS R’million R’million Operating Revenue 7 732 8 954 Profit Gross Profit 1 548 1 601 Other Operating Income 188 111 Distribution, Administrative & Other Expenses 947 981 Operating Profit 790 731 FY15 FY16 ITEMS R’million R’million Net interest expense 103 155 Profit for
Slide 44: Income Statement
INCOME STATEMENT FY15 FY16 ITEMS R’million R’million Revenue 7 732 8 954 Gross Profit 1 548 1 601 Operating Profit Other Operating Income 188 111 Distribution, Administrative & Other Expenses 947 981 Operating Profit 790 731 FY15 FY16 ITEMS R’million R’million Net interest expense 103 155 Profit for
Slide 45: Operating Profit
OPERATING PROFIT 14% 900 790 12% 800 731 700 10% 10,20% 600 R’million 8% Operating 500 8,20% Margin % Profit 400 6% 300 4% 200 2% 100 0 0% 2015 2016 Operating Profit Operating Profit Margin Operating profit decreased 7.4% to R731 million and group operating margin declined to 8.2% (2015: 10.2%) as a
Slide 46: Balance Sheet – Assets
BALANCE SHEET – ASSETS Dec 2015 Dec 2016 ITEMS R’million R’million Non-Current assets 4 926 4 251 Non-current Assets Property, plant and equipment 3 327 2 857 Intangible assets 1 357 1 001 Other non-current assets 242 392 Dec 2015 Dec 2016 ITEMS R’million R’million Current assets 4 115 3 780 Invento
Slide 47: Balance Sheet – Equity & Liabilities
BALANCE SHEET – EQUITY & LIABILITIES Dec 2015 Dec 2016 ITEMS R’million R’million Total equity 4 975 4 180 Non-current liabilities 2 579 1 608 Equity & Non- Borrowings 1 836 987 Current Liabilities Post employment benefits 114 89 Deferred taxation 401 336 Deferred grant income 172 148 Provisions for
Slide 48: Capital & Debt Structure
CAPITAL & DEBT STRUCTURE ITEM 2013 2014 2015 2016 Capital Structure Debt*:equity 33% 41% 40% 46% Net 22% 30% 29% 31% debt**:equity ITEM 2013 2014 2015 2016 Debt Levels Net debt** 795.3 1 267.4 1 398.3 1 280.6 Net 1.09 1.09 1.28 1.24 debt**:EBITDA • Over time our target remains c.25% debt:equity Targ
Slide 49: Working Capital
WORKING CAPITAL ITEM (R’million) Dec 2015 Dec 2016 Inventory 1 735 1 609 Trade & other receivables 1 575 1 395 Trade & other payables (1 006) (1 065) Total 2 304 1 939 DAYS Dec 2015 Dec 2016 Inventory 82 65 Trade & other receivables 74 57 Trade & other payables (47) (43) Total 109 79 All days calcul
Slide 50: Main Trading Observations: Energy Storage
MAIN TRADING OBSERVATIONS ENERGY STORAGE at a glance Revenue Volumes Auto battery FY15 FY16 Var units in mil Actual Actual (units) 19% Mutlu 3.1 3.7 0.53 9% Rombat 2.2 2.3 0.11 R5.9 Bn FNB 1.9 1.9 0.00 7.8m auto units 59% Contribution TOTAL 7.2 7.8 0.63 Mutlu grew c. 17% •Automotive volume growth of
Slide 51: Overall Segmental Review: Energy Storage Vertical
OVERALL SEGMENTAL REVIEW ENERGY STORAGE VERTICAL 6 000 5 115 5 000 4 128 4 000 R’million Energy Storage 3 000 Revenue 2 000 799 736 1 000 0 2015 2016 Automotive Industrial Export PBIT 600 R40m 466 (10.8%) 480 (9.4%) 500 Russian vols >300k units 9 new export countries 400 R’million Energy Storage 300
Slide 52: Main Trading Observations: Automotive Components
MAIN TRADING OBSERVATIONS AUTOMOTIVE COMPONENTS at a glance Main trading observations Vehicles in FY15 FY16 Var Market production Revenue units Actual Actual (units) vols MBSA 105 473 116 783 11 310 2.3% (13.6k units) 14% FMCSA 73 735 86 496 12 761 VWSA 121 583 120 799 (784) TSAM 133 497 122 115 (11
Slide 53: Overall Segmental Review: Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) 5 000 4 090 4 000 3 479 Automotive 3 000 R’million Components 2 000 Revenue 1 000 146 53 0 2015 2016 Local Direct Exports 350 322 (9.3%) 300 240 (5.9%) 250 R’million Automotive 200 Components PBIT 150 100 50 23 (15.7%)
Slide 54: Automotive Components Local PBIT Overview
AUTOMOTIVE COMPONENTS LOCAL PBIT OVERVIEW (SELECTED INFORMATION) 400 380 360 345 -26 340 -34 320 -1 300 -14 -8 280 -15 260 247 240 220 200 R’million 180 160 140 120 100 80 60 40 20 0 2015 FY Hesto airfreight costs Hesto premium Hesto margin loss Auto volume and AM margin loss Loss of direct exports
Slide 55: Overall Analysis – Additional Information
OVERALL ANALYSIS – ADDITIONAL INFORMATION (INCL. MANAGED ASSOCIATE) Auto parts Battery 12 000 8 552 9 994 10 000 R’million Product 8 000 Product Split Split 6 000 4 927 5 851 (59%) (57%) 4 000 2 000 3 625 4 143 (43%) (41%) - (57%) 2015 2016 South Africa 12 000 8 552 9 994 Geographical 10 000 R’milli
Slide 56: Operational Overview
M ETA! R INVESTMENTS LIMITED OPERATIONAL OVERVIEW 56
Slide 57: Combined Battery Volumes (FNB, Mutlu & Rombat)
COMBINED BATTERY VOLUMES (FNB, MUTLU & ROMBAT) Actual Actual Automotive Units Variance Dec 2015 Dec 2016 Original Equipment Original Equipment Market - Local 1 728 707 1 890 133 9% - Export 145 260 179 472 24% Total OE 1 873 967 2 069 605 10% Actual Actual Automotive Units Variance Dec 2015 Dec 2016
Slide 58: Vehicle Production per OEM in South Africa (NAAMSA)
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA (NAAMSA) OEM 2010 2011 2012 2013 2014 2015 2016 BMW 49 243 52 908 44 229 66 087 71 004 72 165 63 473 MBSA 53 646 50 939 61 439 47 189 45 584 105 473 116 783 FMCSA 34 822 28 716 51 006 56 923 76 179 73 735 86 496 GM 27 234 32 530 38 199 40 019 41 491 41 209
Slide 59: Vehicle Production per OEM in Turkey
VEHICLE PRODUCTION PER OEM IN TURKEY OEM 2010 2011 2012 2013 2014 2015 2016 OYAK RENAULT 307 083 330 994 310 602 331 694 318 246 339 240 339 950 FORD 242 070 295 850 272 097 281 287 244 682 334 622 333 765 TOFAŞ 312 245 307 788 256 428 244 614 222 807 278 254 383 495 HYUNDAI 77 000 90 231 86 976 102
Slide 60: Vehicle Production per OEM in Romania
VEHICLE PRODUCTION PER OEM IN ROMANIA OEM 2010 2011 2012 2013 2014 2015 2016 320 327 609 327 394 284 392 342 856 338 593 339 198 Renault Dacia 457 Ford 9 558 7 547 30 591 68 339 52 829 47 967 38 748 359 TOTAL 337 167 334 941 314 983 411 195 391 422 387 165 205 60
Slide 61: 2016 Capital Expenditure Commitments Reduce After Large Investments
2016 CAPITAL EXPENDITURE COMMITMENTS REDUCE AFTER LARGE INVESTMENTS IN PRIOR YEARS Health, safety Sector Expansion Maintenance & Total R’000 Efficiency environmental Capital Automotive components 27 474 64 965 6 148 98 587 Commitments Energy storage 46 744 39 451 2 556 88 751 Total 74 218 104 416 8
Slide 62: Prospects
M ETA! R INVESTMENTS LIMITED PROSPECTS 62
Slide 63: General Prospects Statement
GENERAL PROSPECTS STATEMENT Considering the shift in the automotive component business to a lower production ceiling in 2017, together with significantly increased complexity and variability, we will focus on strengthening our adaptability and flexibility to meet our customers’ requirements without
Slide 64: Prospects: Energy Storage Vertical
PROSPECTS ENERGY STORAGE VERTICAL • Turkish geo-political stability • Successful sale of spare battery capacity Local • Expansion of green release to multiple international OEM’s • Continued expansion of local vehicle production Automotive • Continued aftermarket share growth • Stable labour environ
Slide 65: Prospects: Automotive Components Vertical
PROSPECTS AUTOMOTIVE COMPONENTS VERTICAL • Market demand locally and internationally in export destinations • Efficiency and cost saving during phases of variable production and demand Local • Operational improvement of wiring harness business Automotive • Stable labour environment • Stable socio po
Slide 66: Q & A
METAIR INVESTMENTS LIMITED automotive | industrial | retail WWW.METAIR.CO.ZA
Slide 67: 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