Hudaco Industries Limited · JSE:HDC
Hudaco Industries — FY2024 Earnings Presentation
61 slides from Hudaco Industries's earnings presentation, November 2024
Slide 1: Results Presentation Year End 2024
RESULTS PRESENTATION YEAR END 2024
Slide 2: Agenda
AGENDA General business environment and overview Hudaco in the general business environment Exchange rates Business model Reporting segments Operating profit and margins Financial review Outlook 2
Slide 3: General Business Environment
GENERAL BUSINESS ENVIRONMENT Pleasing year-end results after a difficult year - at half year, earnings were down 15% - managed to claw back to 6% down at year-end - meaningful signs of improvement in activity and demand A state of flux in the months leading up to the elections and establishment
Slide 4: Overview
OVERVIEW There is talk in the market of improved consumer spending Management have performed well focusing on the things within their control - day-to-day basis: margins, expenses and working capital - medium term: capital allocation - long term: finding new growth areas, e.g. Isotec Eternity'
Slide 5: Hudaco in the General Business Environment
HUDACO IN THE GENERAL BUSINESS ENVIRONMENT 5
Slide 6: Hudaco in This Environment
HUDACO IN THIS ENVIRONMENT Performance in last 5 months since GNU formation lifted uncertainty – profits up in 2024 HEPS and CEPS clawed back to 6% down for full-year from 15% in H1 Stock reduction, especially solar – R240m Borrowings reduction – R424m Dividends maintained Successfully b
Slide 7: Results Summary 2024
RESULTS SUMMARY 2024 Turnover 5,8% to R8,4bn Gross profit margin 1,7% points to 37,7% Operating profit 6,0% to R1,0bn Attributable earnings 17,2% to R506m Headline and comparable earnings per share 6,3% to 2012 cents Total dividend per share Unchanged at 1025 cents Cash generated from operations 71%
Slide 8: Major Shareholders / Fund Managers
MAJOR SHAREHOLDERS / FUND MANAGERS Government Employees Pension Fund 15% PSG Asset Management 10% Nintey One 8% Aylett & Co 7% Citigroup (custodian) 5% Abax Investments 5% Bateleur Capital 4% Invesco Advisers 4% Sanlam Investments 3% Nedbank 3% Old Mutual Investments 3% 67% 8
Slide 9: Exchange Rates
Hudaco EXCHANGE RATES
Slide 10: Exchange Rate Environment
EXCHANGE RATE ENVIRONMENT We import directly approximately 70% of the group cost of sales On average, these cost the same in 2024 as in 2023, with 13% between high and low We don’t take a house view on exchange rates We hedge all liabilities and on average, 30% of orders Import currencies
Slide 11: Exchange Rate vs US$
R17,0 R17,5 R18,0 R18,5 R19,0 R19,5 2023-12-01 2023-12-10 2023-12-19 2023-12-28 2024-01-06 2024-01-15 2024-01-24 2024-02-02 2024-02-11 EXCHANGE RATE VS US$ 2024-02-20 2024-02-29 2024-03-09 2024-03-18 2024-03-27 2024-04-05 2024-04-14 2024-04-23 2024-05-02 2024-05-11 2024-05-20 2024-05-29 2024-06-07 2
Slide 12: Business Model
Hudaco BUSINESS MODEL
Slide 13: 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 14: Features of Value-Added Distribution
FEATURES OF VALUE-ADDED DISTRIBUTION Focused business units Inventories R2 461m Receivables R1 329m with application advice Instant availability 30 000 active Technical customers 29 warehouses specification and Generally low-value product knowledge 800 international transactions – low
Slide 15: 2024 Sales by Market Sector (%)
2024 SALES BY MARKET SECTOR (%) Wholesale and retail 29 29 Automotive 17 17 17 Mining 15 15 Manufacturing 15 9 Exports 9 6 Security 6 3 Alternative energy 5 2 Construction 2 2 Agriculture 2 2024 2023 15
Slide 16: Reporting Segments
Hudaco REPORTING SEGMENTS
Slide 17: Contribution by Segment
CONTRIBUTION BY SEGMENT 2023 Contribution to 2024 operating profit 50% (before shared services and head office) 50% 57% 43% Consumer-related products Engineering consumables 17
Slide 18: Consumer-Related Products
CONSUMER-RELATED PRODUCTS The 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
Slide 19: 2024 Consumer-Related Products Sales by Market Sector
2024 CONSUMER-RELATED PRODUCTS SALES BY MARKET SECTOR (%) Wholesale and retail 38 41 Automotive 31 27 Security 12 12 Alternative energy 5 9 Exports 8 7 Manufacturing 3 3 Mining 1 1 Agriculture 1 0 Construction 1 0 2024 2023 19
Slide 20: Consumer-Related Products: Automotive Aftermarket
CONSUMER-RELATED PRODUCTS AUTOMOTIVE AFTERMARKET Principal businesses Principal brands Principal brands Main markets Used for Automotive aftermarket Automotive oil seals Automotive alloy and steel wheels Ignition leads Automotive parts and accessories Light duty clutch kits Constructio
Slide 21: Consumer-Related Products: Power Tools and Fasteners
CONSUMER-RELATED PRODUCTS POWER TOOLS AND FASTENERS Principal businesses Principal brands Principal brands Main markets Used for Agriculture Building D.I.Y. D.I.Y. Commercial marine Fastening in all industries Construction Installations Manufacturing Propulsions of boats Mining
Slide 22: Consumer-Related Products: Data Networking Equipment
CONSUMER-RELATED PRODUCTS DATA NETWORKING EQUIPMENT Principal businesses Principal brands Principal brands Main markets Used for Security Data solutions Technology resellers Fibre optic networks Telecommunications operations Network Infrastructure Transport Outdoor wireless network
Slide 23: Consumer-Related Products: Batteries and Alternative Energy
CONSUMER-RELATED PRODUCTS BATTERIES AND ALTERNATIVE ENERGY Principal businesses Principal brands Principal brands Main markets Used for Alternative energy Back-up power (UPS, inverters, alarms) Battery bays Distribution centres Mining Energy load shifting Motor industry Generator sta
Slide 24: Consumer-Related Products: Security and Communication Equipment
CONSUMER-RELATED PRODUCTS SECURITY AND COMMUNICATION EQUIPMENT Principal businesses Principal brands Principal brands Main markets Used for Commercial security Access control Military and police Control centres Mining Fire detection Municipal Intrusion detection Residential securit
Slide 25: Consumer-Related Products: Gas and Outdoor
CONSUMER-RELATED PRODUCTS GAS AND OUTDOOR Principal businesses Principal brands Principal brands Main markets Used for Camping and outdoor living Cooking Alternative energy Lighting Household and residential Heating Catering Braaiing Hiking and outdoor recreation Coolers Campin
Slide 26: Segment Results for Consumer-Related Products
SEGMENT RESULTS FOR CONSUMER-RELATED PRODUCTS Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Operations 24+ 3 881 (12,3) 4 426 12,2 13,4 474 (19,9) 592 months in group Acquisitions after Dec 2022 Segment total 3 881 (12,3) 4 426 12,2 13,4 474 (19,9) 592 The automoti
Slide 27: Engineering Consumables
CONTRIBUTION BY SEGMENT The engineering consumables segment imports and distributes branded products that are generally used to repair and maintain machines. Engineering consumables (19 businesses) Bearings, belting and power transmission Diesel engines and spares Electrical power transmission
Slide 28: 2024 Engineering Consumables Sales by Market Sector
2024 ENGINEERING CONSUMABLES SALES BY MARKET SECTOR (%) 30 Mining 29 25 Manufacturing 27 21 Wholesale and retail 17 10 Exports 12 5 Automotive 6 Construction 4 3 4 Agriculture 4 1 2024 2023 Other 2 28
Slide 29: Engineering Consumables: Bearings, Belting & Power Transmission
ENGINEERING CONSUMABLES BEARINGS, BELTING & POWER TRANSMISSION Principal businesses Principal brands Principal brands Main markets Used for Food processing plant Breweries Industrial Fluid conveyance and control Manufacturing Industrial automation Mining Mining equipment Process au
Slide 30: Engineering Consumables: Hydraulics and Pneumatics
ENGINEERING CONSUMABLES HYDRAULICS AND PNEUMATICS Principal businesses Principal brands Principal brands Main markets Used for Automotive OEM’s Automotive OE supply Construction Conveyor systems Food processing General machinery and equipment General industry Maintenance Manufactur
Slide 31: Engineering Consumables: Electrical Power Transmission
ENGINEERING CONSUMABLES ELECTRICAL POWER TRANSMISSION Principal businesses Principal brands Principal brands Main markets Used for Automation Automation and control of electric Manufacturing motors Materials handling Connection of electrical power in industry Mining Electrical panel bu
Slide 32: Engineering Consumables: Specialised Steel
ENGINEERING CONSUMABLES SPECIALISED STEEL Principal businesses Principal brands Principal brands Main markets Used for General industry Aerators and mixing Manufacturing Conveyor systems Mining Fabrication Pressure vessels General steel applications Road tankers Mining equipment
Slide 33: Engineering Consumables: Fire Suppression, Detection & Containment
ENGINEERING CONSUMABLES FIRE SUPPRESSION, DETECTION & CONTAINMENT Principal businesses Principal brands Principal brands Main markets Used for Mining Fire detection Data centres Fire suppression Commercial properties Fire containment Industrial Fire education Warehouses 33
Slide 34: Engineering Consumables: Other
ENGINEERING CONSUMABLES OTHER Principal businesses Principal brands Principal brands Main markets Used for Agri equipment Condensate drain management Construction and mining Industrial air filtration Earthmoving equipment Generator sets Irrigation Materials handling On and off-road
Slide 35: Segment Results for Engineering Consumables
SEGMENT RESULTS FOR ENGINEERING CONSUMABLES Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Operations 24+ 4 176 (5,8) 4 434 12,9 12,8 540 (5,0) 569 months in group Acquisitions after 337 54 25,1 22,9 85 12 Dec 2022 Segment total 4 513 0,6 4 488 13,9 12,9 625 7,6 581
Slide 36: Combined Segment Results
COMBINED SEGMENT RESULTS Turnover Op Margin Operating Profit Rm 2024 % ch 2023 2024 2023 2024 % ch 2023 Consumer- 3 881 (12,3) 4 426 12,2 13,4 474 (19,9) 592 related products Engineering 4 513 0,6 4 488 13,9 12,9 625 7,6 581 consumables Head office, shared services (15) (17) (92) (102) and eliminati
Slide 37: Operating Profit and Margins
OPERATING PROFIT AND MARGINS 37
Slide 38: Turnover
TURNOVER R billion 4,6 4,6 4,1 4,4 4,3 4,4 3,9 4,0 3,6 3,8 3,5 3,6 3,1 3,4 3,2 2,6 2,6 2,1 1,6 1,1 0,6 0,1 -0,4 2019 2020 2021 2022 2023 2024 H1 H2 38
Slide 39: Operating Profit Margin
OPERATING PROFIT MARGIN 2024 2023 Margin (%) Turnover 100% 100% Gross profit 37,7% 36,0% Operating expenses (25,7%) (24,0%) Operating profit 12,0% 12,0% 39
Slide 40: Operating Expenses to Turnover
OPERATING EXPENSES TO TURNOVER % 30,0 25,0 26,0 26,6 25,6 25,7 24,5 24,0 20,0 15,0 10,0 5,0 0,0 2019 2020 2021 2022 2023 2024 40
Slide 41: Operating Profit Margin
OPERATING PROFIT MARGIN % 14,0 13,5 13,0 13,0 12,0 11,9 12,1 12,0 11,4 10,0 10,6 10,9 10,4 9,3 8,0 6,0 4,0 3,0 2,0 0,0 2019 2020 2021 2022 2023 2024 H1 H2 41
Slide 42: Financial Review
Hudaco FINANCIAL REVIEW BEARINGS INTERNATIONAL
Slide 43: Profit
PROFIT Rm 2024 % ch 2023 Turnover 8 379 (5,8) 8 897 Operations 24+ months in group 8 042 (9,1) 8 843 Acquisitions after Dec 2022 337 54 Gross profit 3 163 (1,2) 3 203 Operating expenses (2 156) 1,1 (2 132) Operations 24+ months in group (2 081) (1,9) (2 116) Acquisitions after Dec 2022 (75) (16) Ope
Slide 44: Profit
PROFIT Rm 2024 % ch 2023 Operating profit 1 007 (6,0) 1 071 Fair value adjustments (12) (4) Impairment of goodwill (77) Loss of disposal of business (3) Net interest on funding (115) (112) Imputed interest on leases (38) (38) Profit before taxation 765 (16,4) 914 Taxation (219) (245) (Rate 2024:28,6
Slide 45: Profit Restructured for Goodwill Impairment
PROFIT RESTRUCTURED FOR GOODWILL IMPAIRMENT Rm 2024 % ch 2023 Operating profit 1 007 (6,0) 1 071 Fair value adjustments (12) (4) Loss of disposal of business (3) Net interest on funding (115) (112) Imputed interest on leases (38) (38) Profit before tax and goodwill impairment 842 (7,9) 914 Taxation
Slide 46: Comparable Earnings
COMPARABLE EARNINGS Rm 2024 % ch 2023 Attributable earnings 506 (17,2) 611 Impairment of goodwill 77 Non-controlling interest (12) Net loss on disposal of PPE and business 2 Headline and comparable earnings 571 (6,8) 613 46
Slide 47: Comparable Earnings
COMPARABLE EARNINGS R million 350 348 348 300 322 280 250 265 257 227 230 223 200 210 150 165 100 50 22 0 2019 2020 2021 2022 2023 2024 H1 H2 47
Slide 48: Earnings per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS Cents 2024 % ch 2023 Earnings per share Comparable 2 012 (6,3) 2 148 Headline 2 012 (6,3) 2 148 Basic 1 782 (16,8) 2 142 Dividends per share - Interim 325 325 - Final 700 700 Total 1 025 1 025 Dividend cover (times) 2,0 2,1 48
Slide 49: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm 2024 2023 Working capital 2 615 2 904 - Inventories 2 461 2 693 - Receivables 1 329 1 490 - Payables (1 175) (1 279) Property, plant and equipment 377 363 Right-of-use assets 361 406 Goodwill and intangibles 1 372 1 417 Tax 59 43 Net assets 4 784 5 133 49
Slide 50: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm 2024 2023 Equity 3 611 3 481 Net borrowings 589 1 013 Lease liabilities 428 470 Due to vendors 86 136 Tax 70 33 Total equity and liabilities 4 784 5 133 50
Slide 51: Working Capital Elements
WORKING CAPITAL ELEMENTS In months of sales 4 3 2 1 0 H2 18 H2 19 H2 20 H2 21 H2 22 H2 23 H2 24 -1 -2 Inventory Payables Receivables Net W Cap One month of sales 2023 = R774m (H2) 2024 = R733m (H2) 51
Slide 52: Inventory
INVENTORY In month of sales 5 4,4 4 3,8 3,9 3,6 3,5 3,3 3,4 3 3,2 3,1 3,1 3,1 2,7 2 1 0 2019 2020 2021 2022 2023 2024 H1 H2 52
Slide 53: Cash Flow
CASH FLOW Rm 2024 2023 Cash from trading 1 241 1 294 Decrease (increase) in working capital 298 (392) Cash from operations 1 539 902 Tax paid (205) (260) Cash from operating activities 1 334 642 Invested in new businesses (112) (171) Invested in software and ppe (76) (104) Cash flow after investing
Slide 54: Cash Flow
CASH FLOW Rm 2024 2023 Cash flow after investing activities 1 146 367 Share-based payments (125) (101) Repurchase of shares (112) Lease payments (rent) (150) (144) Finance costs paid (115) (112) Dividends paid (324) (290) Net movement 432 (392) Foreign exchange translation loss (8) Opening borrowing
Slide 55: Key Financial Points
KEY FINANCIAL POINTS Economy kept turnover under pressure Strong cash generation Improved gross margin Operating margin remains healthy Expenses tightly managed Borrowings well down, which reduces interest bill Have ample capacity for Isotec acquisition Likely capital allocation: - p
Slide 56: Outlook
Hudaco OUTLOOK UVE THE BRAAI LIFE y ss |
Slide 57: Acquisition (Agreement Signed)
ACQUISITION (AGREEMENT SIGNED) Isotec Group sale of business signed and likely effective date 1 April 2025 (subject to conditions precedent) Manufacturer and distributor of thermal and electrical insulation material used in the manufacture and repair of transformers and electrical motors Opera
Slide 58: Outlook for 2025
OUTLOOK FOR 2025 We hope for a year of genuine action on our ports, rail and other infrastructure and that policy decisions enhance our country and economy to uplift all South Africans We encourage the GNU to grasp the opportunity in front of it Losses incurred at Bosworth, Deltec and Eternity
Slide 59: 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 59
Slide 60: 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
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