Hudaco Industries Limited · JSE:HDC
Hudaco Industries — H1 2022 Earnings Presentation
32 slides from Hudaco Industries's earnings presentation, May 31, 2022
Slide 1: Unaudited Interim Results for the Six Months Ended 31 May 2022
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2022
Slide 2: Agenda
AGENDA § Operating environment § Results summary § Business model and operating segments § Financial review § Outlook 2
Slide 3: Operating Environment
y 4 Hudaco 4a OPERATING ENVIRONMENT
Slide 4: Operating Environment
OPERATING ENVIRONMENT § Challenges in the supply chain continue – global and local • Global – Unpredictable supply of stock, Russia-Ukraine war, Covid lockdowns in China, shipping container shortage • Local – Durban port, KZN floods, N3 blockades, load-shedding § Cost-push inflation adds pressure to
Slide 5: Results Summary
RESULTS SUMMARY Against Against 2019 2022 2021 (pre-Covid) Turnover R3,8bn 12% 19% Operating profit R452m 27% 52% Profit for period R292m 25% 65% Comparable earnings per share 857cps 25% 65% Headline and basic earnings per share 857cps 25% 61% Interim dividend per share 300cps 25% 58% Cash from trad
Slide 6: Business Model and Segments
BUSINESS MODEL AND SEGMENTS 6
Slide 7: The Hudaco Business Model
THE HUDACO BUSINESS MODEL § Hudaco’s main business is the importation and distribution of high-quality branded automotive, industrial and electronic consumable products § The concept of “value-added distribution” is key to our business model § Agency agreements generally restrict our activities to A
Slide 8: Reporting Segments
REPORTING SEGMENTS Consumer-related products segment imports and distributes branded products driven by consumer spending and generally sold to installers. Consumer-related products (12 businesses) § Automotive aftermarket products § Power tools and fasteners § Data networking equipment § Batteries
Slide 9: Reporting Segments
REPORTING SEGMENTS Engineering consumables segment imports and distributes branded products generally used in the repair and maintenance of machines. Engineering consumables (18 businesses) § Bearings and belting § Diesel engines and spares § Electrical power transmission § Filtration § Hydraulics a
Slide 10: Contribution by Segment
CONTRIBUTION BY SEGMENT Contribution to H1 2022 operating profit (before shared services and head office) 37% 63% H1 2021 39% 61% Consumer-related products Engineering consumables 10
Slide 11: Segment Results for Consumer-Related Products
SEGMENT RESULTS FOR CONSUMER-RELATED PRODUCTS Turnover Op Margin Operating Profit Rm 2022 % ch 2021 2022 2021 2022 % ch 2021 Ongoing 1 886 6,3 1 773 15,4 13,8 290 18,4 245 operations Acquisition 95 12,6 12 Segment total 1 981 11,7 1 773 15,2 13,8 302 23,4 245 § Increase in automotive and alternative
Slide 12: Acquisition
ACQUISITION § CADAC acquired from 28 February 2022 § Distributor of a wide range of outdoor cooking and heating products including gas cylinders, stoves, cookers, braais, skottels, heaters, lamps, blowtorches and accessories in southern Africa. § No exposure to Cadac pension fund § Estimated price R
Slide 13: Segment Results Engineering Consumables
SEGMENT RESULTS ENGINEERING CONSUMABLES Turnover Op Margin Operating Profit Rm 2022 % ch 2021 2022 2021 2022 % ch 2021 Ongoing 1 810 12,0 1 616 10,8 8,9 196 36,7 143 operations Acquisition Segment total 1 810 12,0 1 616 10,8 8,9 196 36,7 143 § Increase in mining and manufacturing sectors 13
Slide 14: Segment Results
SEGMENT RESULTS Turnover Op Margin Operating Profit Rm 2022 % ch 2021 2022 2021 2022 % ch 2021 Consumer- related 1 981 11,7 1 773 15,2 13,8 302 23,4 245 products Engineering 1 810 12,0 1 616 10,8 8,9 196 36,7 143 consumables Head office, shared (9) (6) (46) (31) services and eliminations Total group
Slide 15: Operating Margin
OPERATING MARGIN 2022 2021 Margin (%) Turnover 100% 100% Gross profit 36,7% 36,9% Operating expenses 24,7% 26,3% Operating profit 12,0% 10,6% 15
Slide 16: Operating Margin
OPERATING MARGIN % 12 12,5 11,9 12,1 12,0 11,4 10 10,7 10,6 10,1 9,8 9,3 8 6 4 2 3,0 0 2017 2018 2019 2020 2021 2022 H1 H2 16
Slide 17: Turnover
TURNOVER R billion 4,0 3,9 3,8 3,5 3,6 3,4 3,5 3,4 3,0 3,2 3,2 3,0 2,5 2,7 2,6 2,0 1,5 1,0 0,5 0,0 2017 2018 2019 2020 2021 2022 H1 H2 17
Slide 18: Financial Review
Fes Hudaco 0 a FINANCIAL REVIEW
Slide 19: Profit
PROFIT Rm 2022 % ch 2021 Turnover 3 782 11,8 3 383 Ongoing operations 3 687 9,0 3 383 Acquisition 95 Gross profit 1 385 11,1 1 247 Operating expenses 933 4,9 890 Operating profit 452 26,5 357 Ongoing operations 440 23,1 357 Acquisition 12 19
Slide 20: Profit
PROFIT Rm 2022 % ch 2021 Operating profit 452 26,5 357 Net interest on funding (27) (19) Imputed interest on leases (14) (15) Profit before taxation 411 27,1 323 Taxation (119) (90) (Rate 2022: 28,9% 2021: 27,9%) Profit after taxation 292 25,3 233 Non-controlling interest (35) (23) Attributable earn
Slide 21: Comparable Earnings
COMPARABLE EARNINGS R million 280 280 240 257 243 227 230 200 215 210 160 165 164 153 120 80 40 22 0 2017 2018 2019 2020 2021 2022 H1 H2 21
Slide 22: Earnings per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS Cents 2022 % ch 2021 Earnings per share Comparable 857 25,1 686 Basic 857 25,1 686 Headline 857 25,1 686 Dividends per share - Interim 300 25,0 240 - Final 520 Total 760 Dividend cover H1 (times) 2,86 2,86 22
Slide 23: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm May 22 May 21 Working capital 2 515 1 915 Property, plant and equipment 294 266 Right-of-use assets 382 362 Goodwill and intangibles 1 222 1 195 Tax 55 38 Net assets 4 468 3 776 Equity 3 082 2 737 Bank borrowings 860 594 Lease liabilities 438 407 Due to vendors 28
Slide 24: Working Capital Elements
WORKING CAPITAL ELEMENTS In months of sales 5 4 3 2 1 0 H2 17 H2 18 H2 19 H2 20 H1 21 H2 21 H1 22 -1 -2 Inventory Payables Receivables Net W Cap One month of sales 2017 = R538m 2020 = R439m 2022 = R630m (H1) 2018 = R571m 2021 = R564m (H1) 2019 = R559m 2021 = R646m 24
Slide 25: Inventory
INVENTORY In months of sales 4,4 4 3,5 3,6 3,4 3,3 3 3,2 3,1 3,1 3,1 2,9 2,7 2 1 0 2017 2018 2019 2020 2021 2022 H1 H2 25
Slide 26: Cash Flow
CASH FLOW Rm 2022 2021 Cash from trading 558 458 Increase in working capital (459) (65) Cash from operations 99 393 Tax paid (77) (62) Cash from operating activities 22 331 Invested in new business (75) Invested in software and plant & equipment (33) (23) Cash flow after investing activities (86) 30
Slide 27: Key Financial Points
KEY FINANCIAL POINTS § Operating margin up § Expenses tightly managed § Strategic increase in inventories § Businesses remain cash generative § Borrowings well within capacity § All capital allocation options are still considered 27
Slide 28: Outlook
y 4 Hudaco 4a OUTLOOK
Slide 29: Outlook for H2 2022
OUTLOOK FOR H2 2022 § Inevitably, more supply chain difficulties, minor stock-outs, load-shedding and the usual challenges of doing business in South Africa § Optimistic that the momentum of the last 18 months is sustainable § Supplier order confirmations for H2 are reassuring § Alternative energy,
Slide 30: Contact Details and Disclaimer
CONTACT DETAILS AND DISCLAIMER
Slide 31: Contact Details
CONTACT DETAILS Graham Dunford Clifford Amoils Chief executive Financial director Tel +27 11 657 5004 Tel +27 11 657 5002 grahamd@hudaco.co.za camoils@hudaco.co.za www.hudaco.co.za 31
Slide 32: Disclaimer
DISCLAIMER The preceding presentation contains forward looking statements about the Hudaco Group’s operations and financial position. They are prepared in good faith and are based on Hudaco’s best estimates and information at the time of preparing the presentation. They are nonetheless subject to si