Hudaco Industries Limited · JSE:HDC
Hudaco Industries — H1 2011 Earnings Presentation
17 slides from Hudaco Industries's earnings presentation, July 2011
Slide 1: Interim results for the six months ended 31 May 2011
Interim results For the six months ended 31 May 2011 Agenda Introduction Results summary Segment information Financial statements Outlook and conclusion 2 PAGE 1
Slide 2: General business environment
General business environment Trading conditions still tough – country is not able to take advantage of attractive commodity prices Rand 6% stronger than last year – for an importing business this means lower prices In management’s presentation you will hear how: Cash has been deployed succes
Slide 3: Results summary
Results summary Turnover 26% to R 1 406m Operating profit 24% to R 149m Headline earnings 11% to R 119m HEPS 11% to 377 cps Dividends per share 13% to 130 cps Cash balance to R101m 5 Operating background to the results Trading conditions remain difficult Volume sales flat overall but mixed Acq
Slide 4: Segment information
Segment information 7 Operating segments Largest segment imports and distributes branded engineering consumables generally used in the repair and maintenance of machines About one third of our business is distribution of consumer related products generally sold to installers Concept of “value
Slide 5: Operating segments and acquisitions
Operating segments Engineering consumables Bearings Power transmission products Diesel engines and spares Consumer related products Power tools Security equipment Automotive aftermarket products Professional communication equipment 9 Acquisitions Engineering consumables Filter and Hose Solutio
Slide 6: Filter and Hose Solutions; Global Communications
Filter and Hose Solutions Distribution of filters for earth-moving equipment and industrial hose Brands: Donaldson, Malcorp IFRS acquisition date – September 2010 2010 turnover - R229m Expected price – R306m Earn out period – 3 years Stand alone business 11 Global Communications Dist
Slide 7: Pentagon Distribution; Midrand Special Steels
Pentagon Distribution Distribution of electronic security products, specialising in video IP Brands: Bosch, Arecont, Dell IFRS acquisition date – March 2011 2010 turnover – R57m Expected price – R59m Earn-out period – 3 years “Bolt-on” to Elvey 13 Midrand Special Steels Distribution
Slide 8: Underperformers in H1; 2010 segment sales by market sector
Underperformers in H1 Bearings International Distributor of bearings and power transmission products Moved to new central warehouse in Q2 Resulted in unplanned lost sales and lower gross margins Improvement evident in June month Bosworth Drive pulley manufacturer Delays in obtaining customer sig
Slide 9: Segment contributions and results
Segment contributions Contribution to operating profit (before shared services and head office) 17 Segment results Turnover Op Margin(%) Operating Profit 2011 % ch 2010 2011 2010 2011 % ch 2010 Rm Engineering 977 24% 785 10.0% 10.3% 98 21% 81 consumables Consumer 432 29% 335 15.0% 14.3% 65 35% 48 re
Slide 10: Profit for H1
Profit for H1 Rm 2011 % Ch 2010 Turnover 1 406 26 1 116 - Existing businesses 1 166 4 1 116 - New businesses 240 Gross profit 549 23 447 Operating expenses (400) 22 (327) Operating profit 149 24 120 - Existing businesses 101 -16 120 - New businesses 48 Margin (%) Turnover 100.0 100.0 Gross profit 39
Slide 11: Profit for H1; Earnings per share and dividends
Profit for H1 Rm 2011 % Ch 2010 Operating profit 149 24% 120 Net interest on working capital 3 9 Interest paid to vendors (7) (imputed) Interest paid on sub. debentures (116) (115) Preference dividend received 100 99 Profit before taxation 129 14% 113 Taxation (Rate ’11:7% ’10:6%) (9) (7) Profit aft
Slide 12: Statement of financial position; Working capital
Statement of financial position Rm May 11 Oper Div Acq Nov 10 Working capital 786 84 36 666 Property plant equipment 173 32 10 131 Goodwill and intangibles 570 (6) 211 365 Tax 17 11 (11) 17 Net operating assets 1 546 121 246 1 179 Cash 101 (74) (87) 262 Investment in pref shares 2 181 2 181 Net asse
Slide 13: Cash flow for the six months; Taxation Laws Amendment Bill
Cash flow – for the six months 25 Rm May 11 May 10 Cash from trading 171 134 (Increase) decrease in working capital (79) 2 Cash from operating activities 92 136 Net finance costs (13) (7) Tax paid (20) (24) Cash flow from operations 59 105 Dividends paid (90) (79) Invested in new businesses and prop
Slide 14: Outlook & conclusion: Reminders
Outlook & conclusion Reminders Hudaco sales are predominantly driven by GDP activity GDFI adds cream (and adds capacity for future GDP activity) Rand exchange rate has a big impact on pricing Hudaco has immediate balance sheet investment capacity of about R400m 28 PAGE 14
Slide 15: Key markets - outlook
Key markets - outlook Engineering consumables Signs that mining investment in neighbouring countries is picking up in response to higher commodity prices But shortage of electricity and rail capacity in South Africa constrains expansion Manufacturing activity follows mining activity, particula
Slide 16: Business outlook in short term; Contact details
Business outlook in short term Weak economic recovery to continue Will only gain momentum across a broad front once employment picks up and the mines are able expand Underperforming businesses confident of recovery in H2 Internal funding still available for acquisitions We are confident ab
Slide 17: Disclaimer
Disclaimer The preceding presentation contains forward looking statements about the Hudaco Group’s operations and financial condition. 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 s