Melrose Industries Plc · LSE:MRO
Melrose Industries — H1 2012 Earnings Presentation
27 slides from Melrose Industries's earnings presentation, August 2012
Slide 1: Melrose PLC Half Year Results Announcement
Buy Improve Sell Strictly private and confidential Melrose PLC Half Year Results Announcement Six months to 30 June 2012 August 2012
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Energy 5 Lifting 6 Other Industrial 7 Questions 8 Appendices Buy Improve Sell 2
Slide 3: Highlights
Buy Improve Sell Highlights 3
Slide 4: Highlights in H1 2012
Highlights in H1 2012 Continued strong performance from the Group − Margin progression − Revenue, orders, headline profits all increased Final Dynacast/McKechnie business sold − c.£800 million of shareholder value from c.£240 million equity investment Elster transaction and Rights Issue succes
Slide 5: Summary financial results
Buy Improve Sell Summary financial results 5
Slide 6: Summary financial results: Income performance
Buy Improve Sell Summary financial results Income performance 6
Slide 7: Income Statement further year on year growth
Income Statement further year on year growth H1 2012 headline¹ growth H1 2012 statutory format Reported At constant H1 12 H1 11² growth currency Continuing operations Headline¹ Other Total Revenue (£m) 564.6 516.6 +9% +10% Revenue (£m) 564.6 - 564.6 Order intake (£m) 574.1 547.2 n/a +5% Operating
Slide 8: Revenue growth in all divisions
Revenue growth in all divisions H1 2012 summary performance Revenue growth – year on year Reported At constant H1 12 growth currency +12% Revenue Revenue (£m) (£m) 564.6 546.6 +9% +9% +10% +9% Order intake (£m) 574.1 n/a +5% +8% Headline¹ operating profit (£m) 90.7 +11% +13% Headline¹ operating ma
Slide 9: Order intake higher than revenue
Order intake higher than revenue H1 2012 summary performance Reported At constant H1 12 growth currency Months of revenue in order book Revenue (£m) 564.6 +9% +10% Order Order intake intake(£m) (£m) 574.1 573.0 n/a +5% +5%+5% 4.5 7.6 2.4 1.6 Headline¹ operating profit (£m) 90.7 +11% +13% months mo
Slide 10: Headline operating margin record first half margin
Headline¹ operating margin record first half margin H1 2012 summary performance Reported At constant Headline¹ operating margin H1 12 growth currency Revenue (£m) 564.6 +9% +10% 15.8% 16.1% Order intake (£m) 574.1 n/a +5% Headline¹ operating profit (£m) 90.7 +11% +13% Headline¹1 operating Headline
Slide 11: Earnings per share (EPS) a further increase year over year
Earnings per share (EPS) – a further increase year over year H1 2012 summary performance Reported At constant H1 12 growth currency Proforma3 headline1 EPS Diluted for LTIP2 Revenue (£m) 564.6 +9% +10% Order intake (£m) 574.1 n/a +5% Excluding Rights Issue Headline¹ operating profit (£m) 90.7 +11% +
Slide 12: Summary financial results: Cash performance
Buy Improve Sell Summary financial results Cash performance 12
Slide 13: Cash flow marginally stronger cash conversion than H1 2011
Cash flow – marginally stronger cash conversion than H1 2011 Cash generated from trading (after all costs including tax) Headline¹ EBITDA³ conversion to cash H1 12 H1 11 (pre capex) (£m) (£m) Headline¹ operating profit 90.7 81.5 78% 75% Depreciation² 11.2 11.4 Working capital movement (22.1) (23.0)
Slide 14: Investing in the future capex equal to twice depreciation
Investing in the future capex equal to twice depreciation Cash generated from trading (after all costs including tax) H1 12 H1 11 Increasing investment ratios (£m) (£m) (capex to depreciation²) Headline¹ operating profit 90.7 81.5 2.0x Depreciation² 11.2 11.4 Working capital movement (22.1) (23.0)
Slide 15: Summary of operating divisions
Buy Improve Sell Summary of operating divisions Energy Current strong end markets (half year ended 30 June 2012) Lifting Other Industrial 6 57% Energy, Oil & Gas, Mining 1 1 Energy 32% 2 Oil & Gas 18% 5 3 Mining 7% 4 Industrials 24% 5 Hardware 7% 6 Other 12% 4 2 3 15
Slide 16: Energy
Energy 75% of Energy “World number one independent supplier of turbogenerators” 31% of www.brush.eu Melrose 25% of Energy “Global manufacturer of electrical rotating machines, always a step ahead” 10% of www.marellimotori.com Melrose 16
Slide 17: Energy division
Energy division 75% 25% Energy – headline¹ results Year on year At constant (£m) FY 2011 H1 2011 H1 2012 trend currency Revenue 461.6 215.8 233.7 +8% +11% Order intake at constant currency 509.8 238.1 221.6 n/a -7% Headline¹ EBITDA² 99.0 45.7 47.3 +4% +8% Headline¹ EBITDA² margin 21.4% 21.2% 20.2% -
Slide 18: Lifting
Lifting 50% of Lifting “Global technology leaders in the manufacture of wire and wire rope” 24% of www.bridon.com Melrose 46% of Lifting “World leading manufacturer of lifting products” 22% of www.thecrosbygroup.com Melrose 4% of Lifting “Industry leader in material handling” 2% of www.accomhs.com M
Slide 19: Lifting division
Lifting division 50% 46% 4% Lifting – headline¹ results Year on year At constant (£m) FY 2011 H1 2011 H1 2012 trend currency Revenue 484.4 237.9 266.3 +12% +11% Order intake at constant currency 505.1 243.2 285.5 n/a +17% Headline¹ EBITDA² 91.4 44.8 52.3 +17% +16% Headline¹ EBITDA² margin 18.9% 18.8
Slide 20: Other Industrial
Other Industrial 61% of Other Industrial “Industry leader in the design and manufacture of quality operating hardware” 7% of Melrose www.truth.com 34% of Other Industrial “World class leader in the manufacturing of ferrous processing equipment” 4% of www.harrisequip.com Melrose 20
Slide 21: Other Industrial division
Other Industrial division 61% 34% Other Industrial – headline¹ results Year on year At constant (£m) FY 20113 H1 20114 H1 2012 trend currency Revenue 134.4 62.9 64.6 +3% +1% Order intake at constant currency 130.6 65.9 67.0 n/a +2% Headline¹ EBITDA² 20.8 9.9 10.8 +9% +7% Headline¹ EBITDA² margin 15.
Slide 22: Questions
Buy Improve Sell Questions 22
Slide 23: Appendices
Buy Improve Sell Appendices 23
Slide 24: Balance Sheet stable but with a pensions deficit increase
Balance Sheet stable but with a pensions deficit increase H1 2012 Balance Sheet position Jun 2012 Dec 2011 Pensions – (UK and US DB schemes all closed) (£m) (£m) Fixed assets, intangible assets and goodwill 1,087 1,121 Annual cash1 Jun 2012 payments (£m) Assets Liabilities Deficit Net working capi
Slide 25: Net exceptional items
Net exceptional items Net exceptional costs and intangible asset amortisation Non cash Total Half year 2012 (£m) Cash costs costs Total Tax net of tax Restructuring costs (1.9) - (1.9) - (1.9) Acquisition costs (12.9) - (12.9) - (12.9) Refinancing costs (9.0) - (9.0) 2.2 (6.8) Total exceptional cost
Slide 26: Exchange rates
Exchange rates Half year 2012 Full year 2011 Half year 2011 US Dollar Euro US Dollar Euro US Dollar Euro Average rates 1.58 1.22 1.60 1.15 1.62 1.15 Closing rates 1.57 1.24 1.55 1.20 1.61 1.11 Buy Improve Sell 26
Slide 27: Disposal of businesses
Disposal of businesses Disposal of MPC Acquired as part of the McKechnie/Dynacast acquisition Sale proceeds of £30.7 million (5 x 2011 EBIT1) £6 million cash contribution to McKechnie UK Pension Plan from sale proceeds Represents completion on Dynacast & McKechnie, buy, improve, sell process