Imperial Logistics — Imperial Holdings — BOAML Sun City Conference 2012
38 slides from Imperial Logistics's conference presentation, March 2012
Slide 1: Imperial Holdings – BOAML Sun City Conference, Mar 2012
Imperial Holdings BOAML Sun City Conference - Mar 2012
Slide 2: Agenda
Agenda • Overview of Imperial • Organisational Structure • Brief history • Key financial highlights - Interim Results 2012 • Recent track record • Divisional performance and outlooks • Group prospects and strategy 2
Slide 3: Organisational structure
Organisational structure Imperial Holdings Logistics Distribution, Retail and Financial Car Rental and Tourism Services Southern Automotive Financial International Europcar, Distributorships Services Africa retail coach touring and charter, used car sales Regent Hyundai, Kia and Insurance Car and Tr
Slide 4: Who is Imperial?
Who is Imperial? • An integrated transport, logistics and vehicle retailer and distributor with a market capitalisation of more than $4 billion • South Africa and Africa – 12th largest company by turnover – Largest privately held logistics company in South Africa – Largest auto distributor – Largest
Slide 5: Financial review
Financial review
Slide 6: Highlights
Highlights Revenue 22% R38 385m Operating profit 23% R2 621m (Margin maintained at 6,8%) HEPS 0% 727c Core EPS* 30% 756c Interim dividend^ per share 36% 300c * Core EPS excludes once-off non-operational items, the most significant being: − 148cps income from the Lereko BEE structure in the prior per
Slide 7: Key financial ratios
Key financial ratios Ratios H1 F2012 H1 F2011 F2011 Targets Group operating margin 6,8% 6,8% 7,0% -* Net D:E ratio (excl. prefs) 39% 48% 30% 60-80% Interest cover 8.4x 7.2x 8.2x Net debt : EBITDA 0.8x 1.0x 0.8x ROIC WACC (annualised) 15,9% 16,0% 16,5% +4%^ ROE# (annualised) 22,5% 19,9% 20,3% * Group
Slide 8: Divisional statistics
Divisional statistics Revenue Operating Profit SA logistics 4% 13% 21% 20% International Logistics 25% 10% Car Rental and Tourism 7% 11% Distributorships 8% 5% Automotive Retail 34% 43% Financial Services Operating Margin 25 20 15 10.8 11.9 8.6 7.4 9.0 * 7.9 10 6.2 6.7 4.9 4.9 5 2.6 2.5 0 SA Logisti
Slide 9: Improving profit trend
Improving profit trend Excl. businesses sold or unbundled Revenue (LHS) Operating Profit (RHS) 2.6 60 2.4 2.1 1.8 40 2 1.3 1.4 Rbn 1.2 38.4 31.4 33.3 20 25.7 27.8 1 28.6 23.6 0 0 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 Core EPS HEPS 900 725 756 727 653 645 533 581 600 503 472 432 431 cps
Slide 10: Gearing
Gearing NOTE: Further breakdown in appendix 1 % Net debt : equity (excl. prefs) 90 • Excludes R441m of perpetual 81 60-80% net D:E target preference shares 60 • Net D:E after Lehnkering acquisition 50 = 59% 30 39 39 • Short term debt as % of gross debt 30 = 18% 0 • 48% of Group’s debt subject to fix
Slide 11: Improving returns
Improving returns ROE# ROIC vs WACC 22.5 16.5 15.9 24 20.3 20 17.1 10-yr 15 12.2 16 11.2 11.5 12.0 avg. of 11 12 9.4 18.8% 9.6 10.9 10.5 10.1 10.1 8 7 4 0 3 F2008 F2009 F2010 F2011 (annualised) F2008 F2009 F2010 F2011 (annualised) 2012 2012 # based on core earnings • Improving ROE over the past 4 ye
Slide 12: Strategy and prospects
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Slide 13: Strategic intentions
Strategic intentions • Emphasis on businesses which generate higher returns and have annuity income streams • In pursuit of this strategy, the majority of expansion capital will be applied to: – Expanding logistics business into Africa – Growing European & southern African logistics businesses – Acq
Slide 14: Current footprint and potential future markets
Current footprint and potential future markets Tunisia Morocco Algeria Libya Western Egypt Sahara Cape Verde Mauritania Mali Niger Chad Eritrea Senegal The Gambia- Burkina Sudan Guinea-Bissau- Faso -Djibouti Guinea Benin Nigeria Ethiopia Sierra Leone- Cote Central Liberia D’Ivoire Ghana African Repu
Slide 15: Improvement in household finances and credit extension
Improvement in household finances and credit extension- a vital ingredient for car sales Interest on household debt as % of personal disposable income 200 000 35.00 180 000 30.00 Retail credit excl. 160 000 25.00 mortgages 140 000 20.00 120 000 • Retail credit 15.00 100 000 growth still 10.00 80 000
Slide 16: Motor vehicle penetration rates
Vehicle Penetration in SA 900.0 R 2 = 0.7855 800.0 USA Motor vehicle penetration rates 700.0 Italy France Canada 600.0 Spain Portugal Japan Norway 500.0 Netherlands Czech Republic Hungary Poland Denmark 400.0 Portugal South Korea Malaysia UK 300.0 Mexico Russia Taiwan 200.0 South Africa 100.0 Brazil
Slide 17: Integrated Motor Business value chain
Integrated Motor Business value chain should compensate to some extent against potentially weaker new vehicle market Vehicle Purchase • Insurance • Finance Group retailed appr. • Vehicle tracking device Financial Services contribute 50 000 – 60 000 used • Warrantees 13% to operating profit cars p.a.
Slide 18: Automotive parts and industrial products
Automotive parts and industrial products • The group pursued a strategy to add aftermarket vehicle parts, components, industrial equipment and new areas of distribution to its portfolio • Recent acquisitions of Midas, Turbo Exchange, Goscor, E-Z-GO, Datadot and Segway are part of this strategy • In
Slide 19: Prospects
Prospects • Positioned to continue performing well in most markets – Increasing contribution from annuity-type income – Strong positioning of brands • Rate of growth in vehicle sales likely to slow down • Economic environment will continue to be challenging in some areas • Balance sheet is strong –
Slide 20: Lehnkering acquisition
Lehnkering acquisition 2 700 employees Shipping Road Distribution Chemical Manufacturing Logistics & Services Logistics & Services Logistics & Services Services 2010 Revenue: 2010 EBITDA: Enterprise value: EV/EBITDA ROIC €506m €44m €270m multiple: 6.1x (incl. goodwill): 7.3% Materially earnings enha
Slide 21: Rationale for Lehnkering acquisition
Rationale for Lehnkering acquisition • Expansion in inland waterway shipping − Inland waterway fleet to grow by 140 vessels – especially in liquid cargo shipping • Leadership in hazardous goods warehousing − Distribution network of 18 warehouses for chemicals • Diversification of product portfolio −
Slide 22: Divisional performance
Divisional performance
Slide 23: Southern Africa logistics
Southern Africa logistics Revenue (Rm) Operating profit (Rm) Operating Margins 6.7% +28% +18% 6.2% 513 8,311 4.8% 437 6,502 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Good growth, with acquisitions contributing well 23
Slide 24: Southern Africa logistics
Southern Africa logistics Revenue by activity H1 F2012 H1 F2011 22% 37% 31% Distribution Logistics 40% 4 PL Warehousing Transport 26% 9% 24% 11% Revenue by sector 5% 5% FMCG/ Retail 6% Petrochemicals 7% Paper/Packaging 46% Mining and Minerals 8% Construction Agriculture 10% Chemicals 13% Other 24
Slide 25: Southern Africa logistics
Southern Africa logistics Prospects • Year on year growth will benefit partly from low base in H2 F2011 • Current transport volumes are under pressure • Trend to outsourcing − 60-70% of all transport in SA still performed in-house • Leading private sector transport and warehousing operation − Econom
Slide 26: International logistics (EURO)
International logistics (EURO) Revenue (€m) Operating profit (€m) Operating Margins 5.8% 5.0% +17% +25% 4.7% 397 339 20 16 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Results exceeded expectations 26
Slide 27: International logistics (ZAR)
International logistics (ZAR) Revenue (Rm) Operating profit (Rm) Operating Margins 5.3% 4.9% 4.9% +30% +30% 4,159 203 3,209 156 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Exchange rate benefit R/€ exchange rates: H1 F2012 average: R10.78 vs H1 F2011 average: R9.06 27
Slide 28: International logistics
International logistics Foodtankers Karlshamn Revenue by sector 14% Pohl Hamburg 6% 36% 3% Alcotrans Zwijndrecht Pohl Berlin Laabs 13% RRT Duisburg Hildesheim RBT Duisburg KCT Krefeld dbt Duisburg Danes Krefeld neska Düsseldorf 28% DCH Düsseldorf Pohl Dresden uct Dormagen/ neska Cologne Neuss CTS Co
Slide 29: International logistics
International logistics Prospects • Lehnkering will make a positive impact • Despite debt crisis in Europe, German economy appears to be steady − Conditions in sectors and industries in which we operate are still good − Initial signs of a slowdown in the steel industry Strategic objectives • Maximis
Slide 30: Car Rental and Tourism
Car Rental and Tourism Revenue (Rm) Operating profit (Rm) Operating Margins 11.9% +16% +6% 10.8% 9.3% 210 198 1,939 1,667 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Difficult trading conditions but satisfactory result 30
Slide 31: Car Rental and Tourism
Car Rental and Tourism Prospects • Car rental industry will continue to be fiercely competitive • Lower volumes in international and local leisure segments persist • New vehicle price increases could relieve pressure on used car sales • Challenging conditions are expected to continue in Tourism Stra
Slide 32: Distributorships
Distributorships Revenue (Rm) Operating profit (Rm) Operating Margins 9.4% 8.6% +23% +42% 7.4% 13,590 1,162 11,043 816 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Strong growth continues 32
Slide 33: Distributorships
Distributorships Prospects • Slowing rate of growth expected for new vehicle sales • Largely offset by − Strong positioning of our products − Significantly improved product supply − Benefits flowing from parts and service revenue streams as car parc grows strongly • Medium to longer term potential h
Slide 34: Automotive parts and industrial products
Automotive parts and industrial products • The group pursued a strategy to add aftermarket vehicle parts, components, industrial equipment and new areas of distribution to its portfolio • Recent acquisitions of Midas, Turbo Exchange, Goscor, E-Z-GO, Datadot and Segway are part of this strategy • In
Slide 35: Automotive Retail
Automotive Retail Revenue (Rm) Operating profit (Rm) Operating Margins 3.2% 2.6% +16% +20% 2.5% 9,877 261 8,522 217 H1 2012 H1 2011 H1 2012 H1 2011 H1 2012 H1 2011 H2 2011 Good growth in operating profit 35
Slide 36: Automotive Retail
Automotive Retail Prospects • Rate of growth in new vehicle market likely to moderate • Streamlined network of dealerships & well-balanced portfolio • Well positioned to take advantage of any growth opportunities presented • Growing annuity-type income will compensate to some extent Strategic object
Slide 37: Financial Services
Financial Services Revenue (Rm) Performed Operating profit (Rm) satisfactorily 1,833 +12% 0% 1,639 344 345 H1 2012 H1 2011 H1 2012 H1 2011 Operating profit split Net Underwriting Margins Investment income, including fair value adjustments Underwriting result 14.6% Other Financial Services 63 80 9.0%
Slide 38: Financial Services
Financial Services Prospects • Whilst underwriting conditions are unpredictable, earnings in Financial Services should be robust in H2 • Investment portfolio continues to be conservatively managed • Maintenance & service plans written during the strong new vehicle market provide valuable annuity und