Capral Limited · ASX:CAA
Capral — H1 2017 Earnings Presentation
20 slides from Capral's earnings presentation, Aug 18, 2017
Slide 1: First Half 2017 Results Presentation
FIRST HALF 2017 RESULTS PRESENTATION 18 AUGUST 2017 CAPRAL LIMITED 1 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 2: About Capral
About Capral Darwin Capral is Australia's leading supplier of Aluminium products and solutions. Cairns Our core business is the manufacture and distribution of Aluminium extrusion. In addition, we distribute other associated products including rolled Townsville Mackay aluminium products (sheet and p
Slide 3: Agenda
Agenda • 1H17 Highlights • Financials • Update on Initiatives and Outlook • Q&A • Appendices 3 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 4: 1H17 Highlights
1H17 Highlights Tony Dragicevich, CEO "Investing in technology to optimise cost structure and improve our long-term competitiveness" 4 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 5: 1H17 Performance Highlights
1H17 Performance Highlights • On track to meet full-year guidance • Trading EBITDA1 of $6.6m (2016: $10.0m), EBITDA of $7.7m (2016: $10.2m) down compared to an unseasonally high 1H16 • Margins impacted by rising Aluminium costs (LME) • Housing market to remain strong, despite slowing from record lev
Slide 6: Volume Breakdown
Volume Breakdown Channels to Market (Volume) Diverse industry exposure Extrusion via Distribution Centres Extrusion Direct 41% ex Mill Residential 44% Industrial Building 41%** 45%* Rolled via Distribution Centres 15% Source: Capral Non Residential Building 14% Volume Seasonality '000t 35 Source: Ca
Slide 7: Residential market is moderating
Residential market is moderating ANNUAL DWELLING MONTHLY COMMENCEMENTS UNITS ‘000 22,000 250 20,000 227 225 216 215 18,000 200 16,000 181 175 175 14,000 163 163 150 12,000 145 10,000 125 8,000 100 6,000 75 4,000 Approvals 50 2,000 Commencements Forecast 25 0 June Dec June Dec June Dec June Dec June
Slide 8: Extrusion demand remains relatively strong
Extrusion demand remains relatively strong ‘000 • The extrusion market grew in 2016 and Tonnes PA ALUMINIUM EXTRUSION MARKET SALES VOLUME is expected to be marginally lower through 200 Forecast 200 2017 due to a slowdown in residential 186 184 construction 175 183 179 • Non-residential building dema
Slide 9: 1H17 Financials
1H17 Financials Tertius Campbell, CFO "Financial fundamentals and cash position remains strong" 9 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 10: First half result down on prior period
First half result down on prior period H1 H1 2017 2016 Sales Volume - External (‘000 tonnes) 29.6 31.5 • 1H17 half Trading EBITDA1 continues historical pattern of $m $m lower first half return Sales Revenue 207.6 210.2 • Volume down 6% against prior period which had benefited from Trading EBITDA¹ 6.
Slide 11: Increased Aluminium cost significantly impacted profit
Increased Aluminium cost significantly impacted profit $’000 12 10.0 (0.9) 10 (2.6) 8 (1.7) 1.8 6.6 • Reduction in extrusion volume - $0.9m 6 • Difficulty in fully recovering higher metal cost - $2.6m 4 • Cost savings were able to offset the inflationary impact 2 0 Sales Overheads 1H16 Volume Metal
Slide 12: Balance Sheet remains strong
Balance Sheet remains strong Jun 17 Jun 16 $m $m Current Assets Inventory 76.0 73.0 Trade Receivables 73.2 70.3 Net Cash & Equivalents 22.4 21.9 • Low risk capital structure with no net debt Other 2.4 2.6 174.0 167.8 • Current ratio better than 1H16 Current Liabilities • Stock holding in tonnes redu
Slide 13: Cash position healthy
Cash position healthy $m $m 6 months to June 17 June 16 EBITDA 7.7 10.2 • Material cost increased in line with LME increases Working Capital (7.8) (5.9) • Higher working capital requirement as a result Finance Cost (0.4) (0.5) • Traditionally cash generation is weighted to second Other 0.5 (0.3) hal
Slide 14: Strategy and Outlook
Strategy and Outlook Tony Dragicevich, CEO "Improve operational efficiency, invest in technology and grow through the development of new products and services” 14 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 15: Improving competitiveness through a number of key initiatives
Improving competitiveness through a number of key initiatives • Invest in automation to reduce cost • Automated product handling projects (~$6m) to streamline processes and deliver cost savings from mid 2018 onwards • Continue investment in value-add and finishing capability • Invest in technology t
Slide 16: Outlook
Outlook • Full year 2017 Trading and Statutory EBITDA1 is forecast, absent any unforeseen events, to be between $15m and $19m • On this basis, Capral would expect to declare a fully franked dividend • Housing commencements are forecast2 to be around 215,300 for the 2017 year, down 8% on the strong 2
Slide 17: Q&A
Q&A 17 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 18: Appendices
Appendices 18 18CAPRAL AUGUST 2017 HALF YEAR RESULTS
Slide 19: ~17% Metal cost rise
~17% Metal cost rise A$/kg 3.00 2.50 • LME (USD) continued its rise in 1H17, increasing 22% 1H17 on 1H16 2.00 • Total Metal Cost (AUD) increased ~17% over the same period 1.50 1.00 0.50 0.00 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 2017 LME MJP Premium (Major Japanese Ports)
Slide 20: Continue to pursue fair trade
Continue to pursue fair trade The impact of the initial • Case won in 2010 but the levels of duties imposed on Chinese imports were low anti-dumping measures • Circumvention activities diminished the impact was modest • A sustained campaign has resulted in reforms to federal legislation and methodol