Brambles Limited · ASX:BXB
Brambles — H1 2022 Earnings Presentation
48 slides from Brambles's earnings presentation, Feb 25, 2022
Slide 1: Half-Year 2022 Results presentation
Half-Year 2022 Results Pioneering presentation Regenerative 25 February 2022 Supply Chains
Slide 2: Results highlights
1 Results highlights GRAHAM CHIPCHASE, CEO
Slide 3: 1H22 highlights
3 1H22 highlights Sales revenue +8% and Underlying Profit +4% at constant FX Earnings and profit • Price growth in all regions to recover cost-to-serve, including inflation growth ahead of FY22 • Volume growth impacted by strong COVID-19 related demand in 1H21 and pallet guidance despite availabilit
Slide 4: 1H22 operating environment
4 1H22 operating environment Extraordinary input cost inflation and disruption across global supply chains Brambles’ response • Working with retailers, manufacturers and other supply chain participants to • Shipping delays and severe trucking capacity issues improve pallet availability • Increasing
Slide 5: Outlook
5 Outlook FY22 Sales and Underlying Profit guidance upgraded, Free Cash Flow impacted by extraordinary lumber inflation • Sales revenue growth of 6-8% at constant currency (previous guidance of 5-7%) Upgraded FY22 Sales and Underlying Profit • Underlying Profit growth 3-5% at constant currency (prev
Slide 6: Dividends and capital management
6 Dividends and capital management Increased dividend and share buy-back to recommence Dividends • Declared an increased interim dividend of US10.75 cents (1H21: US10.0 cents), converted and paid as A15.06 cents, franked at 30% • FY22 interim dividend payout ratio of 50% is within our targeted payou
Slide 7: Financial overview
2 Financial overview NESSA O’SULLIVAN, CFO
Slide 8: 1H22 results
8 1H22 results Summary (US$m) 1H22 Change vs. 1H21 • Sales revenue +8% reflecting pricing actions to recover Actual Constant higher cost-to-serve. Volumes in line with prior year as Continuing operations net new business growth offset by like-for-like volume FX FX declines Sales revenue 2,766.4 8% 8
Slide 9: 1H22 Group sales revenue
9 1H22 Group sales revenue Growth in all regions primarily reflecting pricing actions to recover inflation and other cost-to-serve increases Growth across all segments Price realisation, volumes in line with prior year 1H22 Sales revenue growth (US$m) Price/mix and volume contribution to growth +8%
Slide 10: Group profit analysis (US$m)
10 Group profit analysis (US$m) Pricing, surcharge income and supply chain efficiencies offset higher operating costs and investment in transformation initiatives to support future growth Impact of inflation across the Group of US$(85)m and pallet heat treatment costs Higher losses/lower returns of
Slide 11: Inflation and supply chain disruptions driving increase in operating costs and capex
11 Inflation and supply chain disruptions driving material increase in operating costs and capex. Effective recovery of P&L costs through pricing and surcharge mechanisms P&L Balance sheet 2H22 considerations Net cost recovery Incremental inflation • Pricing and surcharge of US$22m reflected in 1H22
Slide 12: Lumber inflation
12 Lumber inflation Unprecedented levels of lumber inflation driven by both supply and demand challenges, impacting P&L repair costs, the capital cost of pallets and the availability of lumber to produce new pallets Extraordinary lumber market dynamics and inflation Brambles impact weighted to capex
Slide 13: Asset efficiency
13 Asset efficiency Lumber inflation added 10pts to pooling capex to sales ratio; excluding lumber inflation and FY21 pallet deferrals, pooling capex to sales was 17.6% Lumber inflation in 1H22 was 1H22 pooling capex of US$838m increased US$367m at 7pts higher than the FY22 guidance constant currenc
Slide 14: CHEP Americas
14 CHEP Americas Double-digit sales and earnings growth despite supply-chain challenges and inflationary pressures 1H22 performance 1H22 Change vs. 1H21 • Pallets revenue +10% largely driven by pricing actions in the Actual Constant US and Latin America to recover increased cost-to-serve. Segment (U
Slide 15: CHEP Americas profit analysis (US$m)
15 CHEP Americas profit analysis (US$m) Pricing and surcharge mechanism offset supply-chain cost inflation and other cost-to-serve increases Cost inflation of US$(58)m, primarily driven North American lumber, by lumber and inefficiencies due to supply fuel and transport chain disruptions, partly off
Slide 16: US pallets revenue
16 US pallets revenue Rollover pricing and additional actions to recover extraordinary levels of inflation; volumes impacted by strong growth in prior year and pallet availability constraints US pallets revenue growth breakdown 1H22 revenue growth components • Price/mix growth of 13% reflecting roll
Slide 17: CHEP EMEA
17 CHEP EMEA Volume growth, increased pricing and operating efficiencies in a challenging and high inflationary environment supporting earnings growth 1H22 Change vs. 1H21 1H22 performance • Pallets revenue +6%: pricing growth of +4pts and net new Actual Constant wins of +3pts in Central, Eastern an
Slide 18: EMEA sales growth
18 EMEA sales growth Continued volume momentum with customer wins in Europe and pricing to recover increased cost-to-serve across the region CHEP EMEA revenue growth breakdown 1H22 revenue growth components • Price/mix growth +4% largely reflecting contractual price +7% +6% indexation across the reg
Slide 19: CHEP Asia-Pacific
19 CHEP Asia-Pacific Revenue growth driven by RPCs, pallets revenue partly constrained by pallet availability. Earnings growth reflects longer pallet cycle times and cost timing benefits due to lower pallet returns 1H22 Change vs. 1H21 1H22 performance Actual Constant • Pallets revenue +3%: Price re
Slide 20: Corporate Segment
20 Corporate Segment Increase in corporate segment largely driven by short-term transformation costs and ongoing investments in Shaping Our Future initiatives 1H22 Change vs. 1H21 1H22 performance Actual Constant • Shaping Our Future investments increased US$(34.4)m in (US$m) FX FX constant currency
Slide 21: Cash flow
21 Cash flow Free Cash Outflow includes higher capex due to lumber inflation and partial reversal of FY21 timing benefits (US$m, actual FX) 1H22 1H21 Change Free Cash Outflow after dividends of US$(147.9)m includes pallet price inflation of ~US$270m and increased pallet purchases, partly EBITDA1 951
Slide 22: Balance sheet
22 Balance sheet Continued strong balance sheet and liquidity position Dec 21 Jun 21 1H22 performance Net debt1 US$2,480m US$2,055m • Increase in net debt of US$425m reflects A$374m (US$273m) of 1H22 share buy-backs and increased pooling capital expenditure Average term of 3.2 years 3.7 years commit
Slide 23: Shaping Our Future transformation
3 Shaping Our Future transformation GRAHAM CHIPCHASE, CEO
Slide 24: Investing to accelerate transformation
24 Investing to accelerate transformation Optimising the existing • Transform the customer experience businesses and building the to deliver unrivalled value and exceptional service, drive Brambles of the future to growth and strengthen competitive advantage unlock value for customers and shareholde
Slide 25: Good progress on Shaping Our Future
25 Good progress on Shaping Our Future Asset Efficiency & Sustainability & ESG Digital Transformation Customer Business Excellence Network Productivity Outcomes Transform information and digital Deliver unrivalled value and Improve productivity and Reinvent the organisation, Pioneer regenerative sup
Slide 26: Our customer experience ambition
26 Our customer experience ambition Customer North Star • Our customers benefit from the visibility, insights and solutions they need to lead and grow • Our teams are enabled to deliver an effortless customer experience • Together, we power smarter and more sustainable supply chains across the world
Slide 27: Progress on customer experience transformation
27 Progress on customer experience transformation Actively collaborating with customers to improve interactions and deliver more value Objectives 1H22 progress Effortless customer Improve the day-to-day customer • Completed multiple customer pilots, including: experience experience by systematically
Slide 28: Our digital transformation value and enablers
28 Our digital transformation value and enablers Value Enablers Harness the power of data to optimise Put data at the heart of the supply chains business Better for Better for Better for the Data culture & Smart assets Brambles Customers planet capability • Asset • Effortless • Smarter, more • Data
Slide 29: Progress on digital transformation
29 Progress on digital transformation Early stages of programme showing promising results Scorecard metric 1H22 progress Better for Deploy asset productivity analytics solutions across • Targeted diagnostics deployed in 12 markets and Brambles 20 markets by end FY22 and 30 markets by end FY23 on tra
Slide 30: Smart assets
30 Smart assets Status of initiatives Technology Execution Value Scale A Targeted Diagnostics: targeted injection and A monitoring of batches of Targeted Smart Pallets to test a Diagnostics specific hypothesis B B Continuous Diagnostics: monitoring of a large Continuous Diagnostics volume of smart p
Slide 31: Continuous diagnostics
31 Continuous diagnostics Progress Established the key building blocks required to capture data, turn it into insights and take actions that deliver value: UK case study • Operations: standard operating procedures for key operational tasks, including smart pallet instrumentation, deployment, handlin
Slide 32: Asset efficiency
32 Asset efficiency Accelerating initiatives to overcome headwinds and meet FY25 targets Asset Control & Productivity Digitising Assets • Small trucks deployed across North America and • Targeted smart asset deployments by Europe enabling efficient low volume collections: channel/customer 230,000+ p
Slide 33: Sustainability & ESG
33 Sustainability & ESG Brambles continues top ratings in key indices Progressing towards our ambitious 2025 Ranked #10 regenerative Targets in 2022 Strong focus on further business integration: • Customer Centric: ‘Step into the positive’ campaign elevates our brand with our accounts • Supply Chain
Slide 34: Pioneering Regenerative Supply Chains
Half-Year 2022 Results Pioneering presentation Regenerative 25 February 2022 Supply Chains
Slide 35: Appendix
@) Appendix Brambles
Slide 36: Sales revenue by region and sector
36 Appendix 1 Brambles: Sales revenue by region and sector 1H22 sales revenue by region 1H22 sales revenue by sector Eastern India, Middle East, Europe Packaging Asia Auto 3.6% Turkey, Africa 3.7% 2.5% Other 1.2% 4.9% 12.2% General Latin retail America 1.4% 7.2% USA & Storage & ANZ Distribution Cana
Slide 37: Major currency exchange rates
37 Appendix 2 Major currency exchange rates1 USD EUR AUD GBP CAD MXN ZAR PLN NZD BRL 1H22 1.0000 1.1602 0.7318 1.3669 0.7948 0.0490 0.0659 0.2519 0.6989 0.1853 Average 1H21 1.0000 1.1870 0.7260 1.3161 0.7596 0.0471 0.0621 0.2636 0.6787 0.1848 31 Dec 21 1.0000 1.1328 0.7258 1.3506 0.7852 0.0488 0.062
Slide 38: 1H22 currency mix
38 Appendix 3 1H22 currency mix (US$m) Total USD EUR AUD GBP CAD MXN ZAR PLN NZD BRL Other1 Sales revenue 2,766.4 1,075.5 600.6 205.7 200.1 177.0 129.0 97.5 51.6 29.5 32.9 167.0 1H22 share 100% 39% 22% 7% 7% 6% 5% 4% 2% 1% 1% 6% 1H21 share 100% 39% 23% 7% 7% 6% 4% 3% 2% 1% 1% 7% Net debt2 2,480 1,10
Slide 39: Credit facilities and debt profile
39 Appendix 4 Credit facilities and debt profile Committed Uncommitted Maturity Type1 Debt drawn Headroom facilities facilities (US$bn at 31 December 2021) <12 months Bank 0.2 0.3 - 0.5 1 to 2 years Bank 0.6 - 0.1 0.5 2 to 3 years Bank/EMTN2 0.8 - 0.6 0.2 3 to 4 years Bank/144A3 0.7 - 0.6 0.1 4 to 5
Slide 40: Net plant and transport costs/sales revenue
40 Appendix 5 Net plant and transport costs/sales revenue Net plant cost/sales revenue Net transport cost/sales revenue (before NA lumber surcharge1) (Net of transport & fuel surcharges) 1H22 1H212 1H22 1H213 CHEP Americas 37.3% 38.5% 23.6% 22.6% CHEP EMEA 25.0% 23.4% 21.8% 21.0% CHEP Asia-Pacific 3
Slide 41: CHEP EMEA: Underlying Profit analysis (US$m)
41 Appendix 6a CHEP EMEA: Underlying Profit analysis (US$m) (24) (3) 46 (3) (3) 9 (16) 242 251 248 1H21 Volume, Plant Transport Depreciation IPEP Other 1H22 FX 1H22 1 Underlying price, mix costs costs Underlying Underlying Profit Profit Profit (constant FX) 1 Sales growth net of volume-related costs
Slide 42: CHEP Asia-Pacific: Underlying Profit analysis (US$m)
42 Appendix 6b CHEP Asia-Pacific: Underlying Profit analysis (US$m) 4 (2) (1) 6 (8) 11 78 68 1H21 Volume, Plant Transport Depreciation Other 1H21 1H22 1 Underlying Profit price, mix costs costs Compensation Underlying Profit (constant & actual FX) 1 Sales growth net of volume-related costs (excludin
Slide 43: Capital expenditure on Property, Plant and Equipment
43 Appendix 7a Capital expenditure on Property, Plant and Equipment1 (Accruals basis, US$m) 1,219 1,042 Lumber 993 968 150 inflation 114 885 280 140 Other reflects lumber 302 inflation US$270m and 350 FY21 deferred capex 535 US$80m. 809 679 109 53 639 603 369 435 88 123 149 146 47 57 FY18 FY19 FY20
Slide 44: Capital expenditure bridge 1H21-1H22
44 Appendix 7b Capital expenditure bridge 1H21-1H22 Change vs. 1H21 Accruals basis 1H22 (constant FX) Pooling capex: sales ratio of 30.3% in 1H22 Pooling Capex US$838m US$367m ~12pt increase over prior year (1H21: 18.7%) Lumber inflation +US$270m • Higher per unit pallet costs reflecting lumber infl
Slide 45: Glossary of terms and measures
45 Appendix 8 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period Average Capital Inves
Slide 46: Glossary of terms and measures
46 Appendix 8 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: FIFO First In First Out Like-for-like revenue Sales revenue in the reporting period relating to volume performance of the same products with the
Slide 47: Disclaimer
47 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. T
Slide 48: Investor Relations & media contacts
48 Investor Relations & media contacts Investors: Raluca Chiriacescu Vice President, Investor Relations +44 7810 658044 raluca.chiriacescu@brambles.com Media: Sarah Pellegrini Chief Communications Officer +61 429 819 005 sarah.pellegrini@brambles.com