Finning International Inc. · TSX:FTT
Finning International — Investor Day (December 2004)
16 slides from Finning International's investor day presentation, Dec 14, 2004
Slide 1: Investor Day
Investor Day December 14, 2004 Brian Bell President Finning South America
Slide 2: Finning South America (FINSA)
Finning South America (FINSA) 1993 - acquired CAT dealer in Chile Bolivia 2003 - acquired CAT dealers in Santa Cruz Argentina, Bolivia & Uruguay Key sectors: mining, oil & gas, construction, agriculture, Chile forestry, fishing Argentina Employees: 3,200 Santiago Uruguay Branches: 25 Bueno
Slide 3: FINSA Objective
FINSA Objective Capitalize on the current business cycle and lay the foundations for the future by investing in people, infrastructure and customer relationships
Slide 4: Excellent Earnings Growth
Excellent Earnings Growth EBIT C$ millions 90 85 80 70 60 60 50 45 39 40 29 30 20 10 0 2000 2001 2002 2003 2004 Fcst
Slide 5: 2004 Accomplishments
2004 Accomplishments Integrated Argentina, Bolivia & Uruguay acquisitions into a market-focused structure – Mining, Machinery & Power Systems Dramatic revenue growth: +60% over 2003 Significant market share gains in all businesses Major investment in product support capability: hired and tra
Slide 6: Business Outlook
Business Outlook 2004 / 2005 Mix shift to lower margin new equipment sales (mining dominates) Major product support opportunity - but investment is required 7 to 9% EBIT business through 2005 - generates record EBIT 2006 / 2007 Potential fleet replacement cycle starting Replacement MARCs
Slide 7: Machinery & Power Systems - Business Drivers
Machinery & Power Systems - Business Drivers Chilean GDP growing at 5% - many infrastructure projects underway Argentina shows continuing economic strength in the near term Regional stability and growth support construction spending Spillover effect from mining activity Development of gas
Slide 8: Machinery and Power Systems - Opportunities
Machinery and Power Systems - Opportunities Road construction projects - Chile, Argentina, Bolivia US$2B works plan over next 3 years in Argentina Increased mining activity - positive impact on general and heavy construction contractors Product support growth with implementation of new Custo
Slide 9: Mining Business Drivers
Mining Business Drivers Copper Global economic growth fuels demand, China in particular Cost of production – Chile is lowest-cost producer Gold Global uncertainty US$ outlook
Slide 10: Mining Opportunities
Mining Opportunities 20+ major mining opportunities over the period 2005 - 2008 Greenfield, expansion & fleet replacement Total potential equipment sales = US$750M Associated service contracts may add over 10 years = US$1.5B The peak of the commodity cycle is not the peak of our profitabil
Slide 11: Mining Opportunities
Mining Opportunities Mine Mining Company Type of project Timing Spence BHPB green field Jun-05 Escondida BHPB fleet replacement 2005 Candelaria Phelps Dodge expansion 2005 El Abra Phelps Dodge expansion 2005 Cerro Casale Placer Dome green field 2007 Pascua Lam Barrick green field 2006 Veladero Barri
Slide 12: Product Support Opportunities
Product Support Opportunities Sales of new equipment in ’04 and ’05 will be New Equipment Sales far above sales in ’03 US$ millions 350 Current base of 321 approximately 300 20,000 units will grow 250 significantly over 200 ’04 & ’05 150 134 Will generate 100 significantly higher 50 product su
Slide 13: Product Support Investment
Product Support Investment Three major areas of investment: people, tools, infrastructure People investment: Salaries and training for new mechanics – to date have hired 690 mechanics, of which 300 have been through our major internal training program Location Mechanics Infrastructure: Ref
Slide 14: Growing Product Support Revenue
Growing Product Support Revenue Larger fleets and more MARC contracts will continue to grow high margin parts and service revenues – includes both internal and external activity 500 450 US $millions 400 365 350 302 300 250 200 2003 2004 (f) 2005 * 2006 * * Estimated
Slide 15: Cost Saving Initiatives
Cost Saving Initiatives “$60 million by ’06” Over 20 Six Sigma projects currently underway (30 further projects being investigated to commence in 2005) Anticipated ongoing cost savings = US$6.75M A few of the projects we are working on: Reduce Days Sales Outstanding by 15% - projected saving
Slide 16: Summary
Summary Very favourable business cycle expected to last through 2006 Peak of the commodity cycle is not the peak of our profitability – the best is yet to come! Current high rates of new equipment sales will provide a product support annuity for the next 10 years Record revenue and EBIT in s