Tongaat Hulett Limited · JSE:TON
Tongaat Hulett — Investor Presentation (February 2003)
54 slides from Tongaat Hulett's investor presentation, February 2003
Slide 1: Investment Analysts Society Presentation February 2003
Tongaat- Hulett Investment Analysts Society Presentatio February 2003
Slide 2: Peter Staude
Tongaat-Hulett Investment Analysts Society Presentation Peter Staude
Slide 3: Earnings
Earnings • Revenue up 22% to R6,1 billion • Operating earnings up 24% to R738 million • Y/E valuation of GBP42 million offshore cash – R151 million of R255 million translation gain reversed • Headline earnings down 35% – Headline earnings excluding translation adjustment up 30% • Unchanged dividend
Slide 4: Cash flow and balance sheet
Cash flow and balance sheet • Net cash position for first time since major investments – Substantial cash flows over past 4 years – No major new investments – After increased dividends • Strong balance sheet provides flexibility
Slide 5: Energising for ongoing growth
Energising for ongoing growth • Re-energised approach to developing growth and investment opportunities • R550 million capex approved over past 2 years – Unlocking value from existing businesses
Slide 6: Flexible balance sheet
Flexible balance sheet • Post Hulamin and Afprod expansions • Investment pace of R1,35 billion p.a. possible over next 3 years • Identified in excess of R5 billion potential investment opportunities
Slide 7: Four categories of growth opportunities
Four categories of growth opportunities • Known acquisitions • Potential acquisitions not in the public domain • Many smaller investments to unlock value in current businesses • Green/brownfield expansions of existing businesses
Slide 8: Closer look at 2003
Closer look at 2003 • Exchange rates • Internal profit actuators – Growing revenues – Managing prices and cost adjustments – Reducing the cost base
Slide 9: Nico Kruger – African Products
African Products Nico Kruger Tongaat-Hulett
Slide 10: 2002 – An exceptional year
2002 – An exceptional year Rmillion 2000 2001 % 2002 % EBIT 100,0 148,1 48% 240,3 62% (Before AC133 adjustments) EBIT 109,3 199,0 82% 220,6 11% (After AC133 adjustments)
Slide 11: 2002 – An exceptional year
2002 – An exceptional year • Domestic volume growth – 9,6% • Value-added volume growth – 17% • ROCE at EBIT level – 19% • Expansion of Kliprivier to 1200 tons per day triggered • Gauteng Exporter of the Year 2002
Slide 12: Capacity utilisation
Capacity utilisation PLANT 2001 2002 Grind (Wetmill) Klip – 800 tpd 73% 77% Klip – 1200 tpd 66% Syrups Enzyme 65% 67% Acid 70% 80% Starch Drying 45% 47% Capacity is also still available on some of the value-added products plants
Slide 13: New Business Developments
New Business Developments • Spray Tower – Capital: R18 million – Additional volume: 4 000 tons/annum – Full production: 2nd quarter 2003 • Dextrose Monohydrate – Capital: R12 million – Additional volume: 2 800 tons/annum – Full production: 1st quarter 2003 • Guar Plant/Mining Chemicals – Capital: R1
Slide 14: New Business Developments
New Business Developments • Extruded Starches (Toll manufacture) – Desiccants (first order taken) – Carboxy Methyl Starch (trials in progress) • Modified Starches – Modified waxy – Cationic – Extruded – Pre-gelatinised • Syrup capacity study
Slide 15: 2003 challenge: Maize
2003 challenge: Maize • Period of extreme volatility • Prices peaked during planting season of 2002. (White peak – early December – R1 995/ton) • Prices now down significantly on R/$ easing in international prices and local crop outlook • Maize largely secured for 2003 • Product pricing will reflect
Slide 16: The 2003 challenge
The 2003 challenge • Commission expanded value-added capacity • Complete local pricing • Maximise export returns • Capitalise on new local market business opportunities • Maximise efficiencies and input material usage • Reduce fixed costs
Slide 17: Alan Fourie – Hulett Aluminium
Hulett Aluminium Alan Fourie investmant Atalyrts Society Presentation
Slide 18: 2002 Results
2002 Results • Revenue – R3,2 billion, up 28% – 3 year CAGR 35% • EBIT – R272 million, up 2% • Cash flow – R321 million operating cash flow
Slide 19: Factors influencing earnings
Factors influencing earnings • Exchange rate volatility • Timing differences arising from valuation of forward exchange contracts on foreign loans • International rolling margins
Slide 20: Rolled products market conditions
Rolled products market conditions • Concentration of ownership in the industry • Results from the major producers • International margins – Recent trends – Expectations of improvement
Slide 21: Growing our market positions
Growing our market positions • Renewed growth in the local market, up 5% • Export volumes up by 24% • Moving up the profitability curve – 6 series plate up by 37% – Painted products up by 70% – TreadBright up by 22% – Can end stock – Other products
Slide 22: Growth opportunities
Growth opportunities • Exploiting our installed capacity – Accelerating the growth in output – Growing our product/market portfolio – Related investments • Platform for growth – Expanding total capacity – Value added investment opportunities
Slide 23: Other operations
Other operations • Hulett Hydro Extrusions – Strong performance in 2002 – USA & UK transport sectors • Hulett Cylinders – 67% growth – More to come!!
Slide 24: 2003 outlook
2003 outlook • External factors • Our controllables – Significant growth in volumes – Improvements to mix and margins – Major drive on costs and efficiencies
Slide 25: Gordon Hibbert – Moreland
Moreland Gordon Hibbert Tongaat-Hulett 47
Slide 26: 2002 performance
2002 performance • Revenue 8,2% up – Record sales in Residential and Resorts • Strong cash generation • Substantial building investment by our customers
Slide 27: Developing the vision
Developing the vision (eee Moreland ty Pr
Slide 28: Project opportunities
Project opportunities RIVERHORSE VALLEY BUSiINess ESTATE Morela nd ty Pe
Slide 29: Project opportunities – Umhlanga Ridge New Town Centre
Project opportunities Umhlanga Ridge New Town Centre
Slide 30: Project opportunities
Project opportunities
Slide 31: Project opportunities – Mhlanga Forest Estate
Project opportunities Mhlanga Forest Estate
Slide 32: Project opportunities Zimbali South and West
Project opportunities Zimbali South and West
Slide 33: Project opportunities
Project opp (Steen Moreland investment Anatytts Society Presentation
Slide 34: Project opportunities Tinley Manor
Project opportunities Tinley Manor
Slide 35: Project opportunities Zinkwazi
Project opportunities Zinkwazi
Slide 36: Outlook for 2003
Outlook for 2003 • Falling interest rates • Solid regional economic growth • Sound foundation established • Strong market interest/dominant market share/achieving price premiums • Exponential increases in prime coastal property prices internationally • Opportune to push prices and volumes
Slide 37: Bruce Dunlop – Tongaat-Hulett Sugar
Tongaat-Hulett Sugar Bruce Dunlop Tongaat-Hulett invectment Anatytts So ety Presentation
Slide 38: The sweetest way to sweeten your day
The sweetest way to sweeten your day
Slide 39: Results
Results • Revenue – R2,9 billion, up 14% • EBIT – R420 million, up 49% • Operating margin – 14,6% • Triangle dividend – R71 million • Xinavane EBITDA – R32 million
Slide 40: THS profile
THS profile • SADC’s leading sugar brands – Huletts voted SA’s 5th most admired food brand in 2002 • Superior operating margins • A world leader in process design and technology
Slide 41: THS profile
THS profile • Core competency in cane growing, sugar milling and refining • Milling capacity for 1,5 million tons sugar – 84% utilised in 2002 (75% - 2001) • 47% of milling capacity under irrigation • Leading animal feeds brand – Voermol Feeds
Slide 42: Update on Zimbabwe
Update on Zimbabwe • Operations – Remains fundamentally a low cost producer • Political landscape – Statutory price control – Land reform – Forex
Slide 43: Update on Mozambique/Swaziland
Update on Mozambique/Swaziland • Mozambique – Production doubled – Domestic producer sales up 77% – Acquisition of Xinavane Estates • Swaziland – Conversion of citrus orchards to cane
Slide 44: Energising for growth
Energising for growth • Move to a task-based organisational structure • SA operations re-organised into a single business unit wef 1st Feb 2003 – Appointment of Martin Mohale as MD THS – SA – New SA team • Capacity to pursue growth plans
Slide 45: Outlook for 2003
Outlook for 2003 • Sugar production • World market prices and exchange rates • Reducing the cost base • Review of Sugar Act and Agreement
Slide 46: Moving forward
Moving forward • Expand low cost sugar production within SADC – Organically – By acquisition • Exploit cross-border marketing synergies within SADC • Continuous and step change improvement in process technology
Slide 47: Embracing a new wave of energy to achieve growth and shareholder value
Embracing a new wave of energy to achieve growth and shareholder value
Slide 48: Results of voting machine questions held at the Cape Town presentation
Results of voting machine questions held at the Cape Town presentation
Slide 49: What are the two most attractive attributes
What are the two most attractive attributes of Tongaat-Hulett from an investment perspective? Current share price Cash generation Rand hedge qualities Quality of management Growth prospects Quality of underlying businesses Dividend yield
Slide 50: Enterprise valuation of Hulamin in US dollars
What is your estimate of an enterprise valuation of 100 % of Hulamin in US dollars? > $700 million 11.5 % [ $600 - 700 million 3.8 % [| $500 - 600 million 36.5 % $400 - 500 million < $400 million
Slide 51: Convert offshore cash resources to rand
Would you convert 42 million pounds of offshore cash resources to rand at R12.90 to the pound?(assuming R/S of 8.10) Yes 25.0 % No 73.3 % Unsure 1.7 %
Slide 52: Will a general share buy back add value
Will a general share buy back at R38 add value to Tongaat-Hulett? No 32.3 % a Unsure 1.6 %
Slide 53: What will drive the Tongaat-Hulett share price in 2003?
What will drive the Tongaat-Hulett share price in 2003? Growth prospects 15.3 % [| Exchange rates World sugar price 5.1 % Dividend yield 18.6 % | P/E ratio 5.1 % [|
Slide 54: Embracing a new wave of energy to achieve growth and shareholder value
Embracing a new wave of energy to achieve growth and shareholder value
Tongaat-Hulett — Investor Presentation (February 2003) on 6ix