Imperial Logistics — Imperial Holdings — FY2014 Earnings Presentation
65 slides from Imperial Logistics's earnings presentation, 2014
Slide 1: Leaders in Mobility: Results Presentation for the Year Ended 30 June 2014
LEADERS IN MOBILITY RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2014
Slide 2: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 2
Slide 3: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 3
Slide 4: Highlights
HIGHLIGHTS REVENUE OPERATING PROFIT DILUTED CORE EPS EPS¹ +12% +2% unchanged g R103 567 million R6 185 million 1 790 cps FULL YEAR DIVIDEND DILUTED HEPS ROE PER SHARE² ‐7% 1 606 820 cps 19% > ROIC 13.0% vs WACC of 9.1% (target of 4% above WACC through the cycle) > Net debt:equity ratio of 63% (excl.
Slide 5: Highlights
HIGHLIGHTS > Revenues exceed R100 billion for the first time > R5.2 billion ‐ 5.7% acquisitions (businesses not owned 1st July 2012) > Good operating profit growth from four divisions • Logistics Africa + 38%; • Logistics International + 4.5% in Euros +27% in Rands; • Vehicle Retail Retail, Rental &
Slide 6: Growth Trend in Foreign Operations
GROWTH TREND IN FOREIGN OPERATIONS Revenue Operating profit (Rm) (Rm) 3 year 3 year 35 129 CAGR CAGR 1 639 =35% =39% 27 969 1 263 21 519 969 37 14 33 604 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 June 14 > Positive growth trend in revenue & operating profit outside South Africa > Foreign oper
Slide 7: Highlights
HIGHLIGHTS > Revenues exceed R100 billion for the first time > R5.2 billion ‐ 5.7% acquisitions (businesses not owned 1st July 2012) > Good operating profit growth from four divisions • Logistics Africa + 38%; • Logistics International + 4.5% in Euros +27% in Rands; • Vehicle Retail Retail, Rental &
Slide 8: Growth Trend in Non Vehicle Operations
GROWTH TREND IN NON VEHICLE OPERATIONS Revenue Operating profit (Rm) (Rm) 3 year 3 year 45 479 3 322 CAGR CAGR =24% =21% 830 37 8 2 627 7 31 703 2 283 1 896 24 045 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 June 14 > Positive growth trend in revenue & operating profit in businesses not dependa
Slide 9: Highlights
HIGHLIGHTS > Revenues exceed R100 billion for the first time > R5.2 billion ‐ 5.7% acquisitions (businesses not owned 1st July 2012) > Good operating profit growth from four divisions • Logistics Africa + 38%; • Logistics International + 4.5% in Euros +27% in Rands; • Vehicle Retail Retail, Rental &
Slide 10: Imperial's Three Lines of Mobility
IMPERIAL’S THREE LINES OF MOBILITY LOGISTICS VEHICLES FINANCIAL SERVICES REVENUE +23% +6% ‐2% 2% R41.3 billion R61.1 billion R4.1 billion 39% contribution 57% contribution 4% contribution O P E R AT I N G P R O F I T +33% ‐14% 14% R2.2 billion R3.1 billion R1.1 billion 35% contribution 4
Slide 11: Organisation Changes in These Results
ORGANISATION CHANGES IN THESE RESULTS Manage & report on five divisions based on strategic drivers, management expertise, business models, intra‐divisional value creation & geography in three major lines of mobility FINANCIAL LOGISTICS VEHICLES SERVICES VEHICLE IMPORT, VEHICLE RETAIL, LEVERAGE IMPER
Slide 12: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 12
Slide 13: Context – Challenging Environment
CONTEXT – CHALLENGING ENVIRONMENT > South Africa • Low L & slowing l i economic i growth th • Volatile & steadily depreciating currency • High & rising unemployment • Excessive consumer debt • Violent social & labour unrest g debt downgrading • Sovereign g g • Consumer & business confidence at 10 &
Slide 14: Context – Heritage
CONTEXT – HERITAGE > Significant asset base & market positions in logistics, vehicles & motor related fi financial i l services i > Leadership legacy of entrepreneurship & financial control > Drive to decouple Imperial’s performance from cyclical, or Rand induced, vehicle import volatility 14
Slide 15: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 15
Slide 16: Divisional Review: Logistics Africa
DIVISIONAL REVIEW > Three regional hubs – SADC, East Africa, West Africa LOGISTICS AFRICA > Developed market & infrastructure in SA with sophisticated supply chains & formal routes to market > Logistics challenging with underdeveloped route to market channels in the Rest of Africa > Provider of logi
Slide 17: Imperial Logistics Africa
IMPERIAL LOGISTICS AFRICA West Africa > Imperial Health Sciences – pharma logistics, supply chain management, warehousing > MDS Logistics – transport, distribution, warehousing (FMCG pharma (FMCG, pharma, telecoms) MALI NIGER NORTH > Eco Health – distribution, sales, marketing of pharma SUDAN produc
Slide 18: Integrated Supply Chain Partner in RSA
INTEGRATED SUPPLY CHAIN PARTNER IN RSA FREIGHT & WAREHOUSING DISTRIBUTION DEMAND INTEGRATION TRANSPORT & STORAGE & FULFILMENT MANAGEMENT SERVICES SUPPLY CHAIN OUTSOURCING PARTNER > Ability to reduce client’s costs – consolidation of transport & distribution facilities; economies of scale > Ability t
Slide 19: Accessing Undeveloped Markets for Our Principals
ACCESSING UNDEVELOPED MARKETS FOR OUR PRINCIPALS Get me there… Sell my product Establish my brand > Exclusive E l i relationships l i hi with our principals > Bring products to market in a trading environment where logistics are challenging & sales & marketing channels are relatively underdeveloped
Slide 20: Our Clients
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Slide 21: Growth Trend Logistics ex RSA
GROWTH TREND LOGISTICS EX RSA Revenue Operating profit (Rm) (Rm) 334 3 year 3 year 6 319 CAGR CAGR =37% =33% 4 565 224 3 716 154 142 55 1 2 45 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 Jun 14 > Operating profit up 49% to R334m > Contributed 26% to Logistics Africa operating profit (5% of Grou
Slide 22: 2014 Logistics Africa
2014 LOGISTICS AFRICA Revenue Operating profit Operating margins (Rm) (Rm) (%) +23% +38% 1 270 22 090 6.0% 5.7% 5.5% 1% 18 018 2 920 0 5.1 5 13 14 13 14 2013 2014 H1 2014 H2 2014 > Subdued & declining volumes in most sectors served in South Africa > Strong revenue re en e growth gro th & margin impr
Slide 23: Growth Trend Logistics Africa
GROWTH TREND LOGISTICS AFRICA Revenue Operating profit (Rm) (Rm) 3 year 3 year CAGR CAGR 22 090 =17.0% =17.3% 1 270 2 18 018 8 16 457 920 910 13 788 786 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 Jun 14 Key organic & acquisitive growth vector for Imperial – conscious of obligation to achieve r
Slide 24: Divisional Review: Logistics International
DIVISIONAL REVIEW > Highly developed market & infrastructure LOGISTICS INTERNATIONAL > Assets: • more than 700 inland vessels > Europe (mainly Germany) • 2 million m² of storage capacity (including > Recent entry into South America 20 hazardous ggoods warehouses)) • 100 million tonnes handled per ye
Slide 25: Logistics International
LOGISTICS INTERNATIONAL Presence in Europe > Germany is the base > Strategy S to follow f ll customers/products / d to new markets > Recently entered the South American market • profitable greenfield operation • further investment allocated > China entry 25
Slide 26: How We Are Differentiated
HOW WE ARE DIFFERENTIATED INLAND PANOPA LEHNKERING NESKA SHIPPING > Leading inland shipping > Contract Logistics > Logistics services & > Leading player in inland company • automotive manufacturing (synthesis / terminal operations > Transport iron ore, coal, • machinery & equipment formulation) for
Slide 27: 2014 Logistics International (Euro)
2014 LOGISTICS INTERNATIONAL (EURO) ( ) Revenue Operating profit Operating margins (€m) (€m) (%) +0.4% +4.5% 69 5.5% 1 368 1 363 66 5.0% 4.8% 4.6% 4 13 14 13 14 2013 2014 H1 2014 H2 2014 > Fragile recovery of the European economy; depressed German activity levels > Inland shipping volumes ol mes dec
Slide 28: 2014 Logistics International (ZAR)
2014 LOGISTICS INTERNATIONAL (ZAR) ( ) Revenue Operating profit Operating margins (Rm) (Rm) (%) +24% +27% 971 19 249 5.5% 5.0% 4.9% 15 574 762 4..5% 7 13 14 13 14 2013 2014 H1 2014 H2 2014 > Translation effect of weak Rand assisted growth in Rands > 2014 aaverage erage R/€: R/€ 14.07 14 07 vss 2013
Slide 29: Growth Logistics International
GROWTH LOGISTICS INTERNATIONAL Revenue Operating profit (Rm) (Rm) 971 19 249 3 year 3 year CAGR CAGR =41.1% =40.5% 574 762 15 5 7 598 11 247 50 6 848 8 35 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 Jun 14 > Key strategic area of growth & investment > Remain in current niches > Follow customer
Slide 30: Growth Imperial Group: Logistics
GROWTH IMPERIAL GROUP LOGISTICS Revenue Operating profit (Rm) (Rm) 3 year 3 year 2 241 CAGR CAGR =26% 41 339 =25% 1 682 33 592 1 508 27 704 1 136 636 20 6 2011 2012 2013 2014 2011 2012 2013 2014 > Solid revenue & operating profit growth trend in Imperial’s logistics businesses > Contributed R2 R2.2
Slide 31: Divisional Review: Vehicle Import, Distribution & Dealerships
DIVISIONAL REVIEW > Low vehicles sales penetration, as in other emerging VEHICLE IMPORT,, DISTRIBUTION markets & DEALERSHIPS > Direct imported brands represent approximately 15% of the passenger car market in SA > Passenger vehicle market tracks economic & consumption growth; 4% ‐ 5% down (circa 610
Slide 32: South African New Vehicle Prices
SOUTH AFRICAN NEW VEHICLE PRICES Vehicle price increases (yoy growth) New & Pre owned Exchange rate impact on imported brands (units) (%) 1.67 160 1.53 1.25 140 120 100 0.8 0.6 0 3.0 4.1 5.6 6.6 7.0 80 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Jun Sep Dec Mar Jun Sep Dec Mar Jun 2012 2013 2014 New veh
Slide 33: Growing Car Parc of Imported Brands
GROWING CAR PARC OF IMPORTED BRANDS 0 041 680 910 865 6 769 295 669 785 6 155 487 701 1 576 431 580 373 473 107 363 290 550 0 227 34 192 33 60 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 > Car parc doubled over past 5 years > Parts & services continue to grow strongly > Provides an u
Slide 34: 2014 Vehicle Import, Distribution & Dealerships
2014 VEHICLE IMPORT, DISTRIBUTION & DEALERSHIPS Revenue Operating profit Operating margins (Rm) (Rm) (%) +6% ‐32% 27 100 2 228 8.7% 25 682 0% 2 7.0 1 518 5.6% 4.3% 13 14 13 14 2013 2014 H1 2014 H2 2014 > Currency weakness – required price increases impacted negatively on pricing, margins, volumes, i
Slide 35: Divisional Review: Vehicle Retail, Rental & Aftermarket Parts
DIVISIONAL REVIEW > New vehicle sales in SA expected to slow in tighter VEHICLE RETAIL,, RENTAL economic conditions & AFTERMARKET PARTS > Commercial vehicle market achieved a post‐2008 record of 30 900 units; expected to perform better than passenger vehicles in current cycle > Car rental ‐ mature m
Slide 36: Divisional Overview: Vehicle Retail, Rental, Aftermarket Parts
DIVISIONAL OVERVIEW AFTERMARKET VEHICLE RETAIL RENTAL PARTS > 86 passenger car dealerships > Car Rental (Europcar and > Distributor, wholesaler ‐ 14 locally based OEMs Tempest) & retailer through > Extensive dealer footprint > 65 dedicated Pre‐owned approximately 450 owned owning 85% of properties r
Slide 37: 2014 Vehicle Retail, Rental & Aftermarket Parts
2014 VEHICLE RETAIL, RENTAL & AFTERMARKET PARTS Revenue Operating profit Operating margins (Rm) (Rm) (%) +7% +16% 5.0% 33 997 4.6% 31 895 1 559 4.2% 4.2% 350 3 13 13 14 13 14 2013 2014 H1 2014 H2 2014 > Strong revenue growth; improved operating margin despite subdued passenger volume > Commercial ve
Slide 38: Imperial Group Revenue Capture
IMPERIAL GROUP REVENUE CAPTURE 6. Pre Owned vehicle sales 1. Vehicle import & distribution > ±70 000 units p.a. pa > Represent 18 exclusive Automotive & Industrial brands > Strong after sales & service capability 2. Vehicle retail 5. Aftermarket parts > Major local & imported brands > Parts, oils &
Slide 39: Growth Imperial Group: Vehicles
GROWTH IMPERIAL GROUP VEHICLES Revenue Operating profit (Rm) (Rm) 3 year 3 year 3 578 CAGR CAGR 61 097 3 409 7 577 =16% =10% 077 79 57 51 67 30 2 341 39 097 2011 2012 2013 2014 2011 2012 2013 2014 > Represents 46% of group operating profit > Number of vehicles sold • New • Preowned – Passenger: 125
Slide 40: Divisional Review: Financial Services
DIVISIONAL REVIEW FINANCIAL SERVICES > Specialised & cost‐effective motor related financial services & products (insurance finance & FML through banking alliances (insurance, alliances, service & maintenance plans & warranties) > Value proposition centred on responsive engagement at all stages of th
Slide 41: Financial Services
FINANCIAL SERVICES Revenue Operating profit (Rm) (Rm) ‐2% +14% 1 081 4 238 4 140 945 13 14 13 14 Operating profit split Net underwriting margin (R000) (%) 1 081 945 276 12.8% 251 1.0% 328 9.2% % 259 11 7.9% 435 477 13 14 2013 2014 H1 2014 H2 2014 Motor related financial services and products Underwr
Slide 42: Basis for Imperial's Leadership in Motor Related Financial Services
BASIS FOR IMPERIAL’S LEADERSHIP IN MOTOR RELATED FINANCIAL SERVICES Insurance & motor related financial products & services Finance > Extensive retail network Insurance provides scale & points of sale Maintenance and for the group’s financial service plans services business Warranties > Market intel
Slide 43: Growth Imperial Group: Financial Services
GROWTH IMPERIAL GROUP FINANCIAL SERVICES Revenue Operating profit (Rm) (Rm) 3 year 3 year 1 081 CAGR CAGR =7% =12% 945 238 4 140 99 42 3 99 775 760 3 409 Jun 11 Jun 12 Jun 13 Jun 14 Jun 11 Jun 12 Jun 13 Jun 14 > Positive growth trend in revenue & operating profit > Operating profit now >R1 billion >
Slide 44: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 44
Slide 45: Income Statement
INCOME STATEMENT 2013 2014 Rm Rm Rm % change Revenue 92 382 103 567 12% LOGISTICS +23% new contract gains, gains strong growth in Rest of Africa, acquisitions, REVENUE CONTRIBUTION PER weak currency 4 4 DIVISION 19 21 (%) 33 32 VEHICLES +6% 2013 2014 16 price increases in new vehicle 18 sales; growt
Slide 46: Income Statement
INCOME STATEMENT 2013 2014 Rm Rm Rm % change Revenue 92 382 103 567 12% Operating profit 6 090 6 185 2% Operating profit margin 6.6% 6.0% LOGISTICS +33% OPERATING PROFIT CONTRIBUTION PER rationalisation, contract gains, 15 15 DIVISION 17 20 acquisitions, currency weakness (%) 12 VEHICLES ‐14% 22 201
Slide 47: Divisional Statistics
DIVISIONAL STATISTICS Operating margin (%) 26.1% % 22.3% 8.7% % 5.7% 5.6% 5.1% 5.0% 4.9% 4.6% 4.2% Logistics Africa Logistics International Vehicle import, import distribution Vehicle retail, retail rental Financial Services & dealerships & aftermarket parts 2013 2014 Return on invested capital ( )
Slide 48: Income Statement
INCOME STATEMENT 2013 2014 Rm Rm Rm % change Revenue 92 382 103 567 12% Operating profit 6 090 6 185 2% Amortisation of intangible assets (254) (336) 32% Foreign exchange (losses)/gains 103 (3) Fair value losses on foreign exchange derivatives (79) (28) Business acquisition costs (15) (22) Recoupmen
Slide 49: Income Statement
INCOME STATEMENT 2013 2014 Rm Rm Rm % change Net financing costs (744) (926) 24% Income from associates 86 76 Tax (1 405) (1 330) Net profit for the year 3 688 3 627 (2%) Attributable to Imperial shareholders 3 296 3 272 Attributable to minorities 392 355 (9%) > Net finance costs increased as a resu
Slide 50: Highlights
HIGHLIGHTS REVENUE OPERATING PROFIT DILUTED CORE EPS EPS¹ +12% +2% unchanged g R103 567 million R6 185 million 1 790 cps FULL YEAR DIVIDEND DILUTED HEPS ROE PER SHARE² ‐7% 1 606 820 cps 19% > ROIC 13.0% vs WACC of 9.1% (target of 4% above WACC through the cycle) > Net debt:equity ratio of 63% (excl.
Slide 51: Balance Sheet
BALANCE SHEET 2013 2014 Rm Rm Rm % change Property, plant and equipment 9 257 10 469 13% Transport fleet 4 626 5 322 15% Vehicles for hire 2 465 2 303 Goodwill and intangible assets 5 206 6 766 30% Investments and loans 4 535 3 886 (14%) Other assets 1 854 1 516 Net working capital 6 158 8 675 41% C
Slide 52: Balance Sheet
BALANCE SHEET 2013 2014 Rm Rm Rm % change Total shareholders’ interest 17 536 18 109 3% Interest bearing borrowings 10 568 14 544 38% Other liabilities 7 841 9 387 20% Equity and liabilities 35 945 42 040 > Shareholder interest impacted by: • gains on foreign currency translation of R521m • dividend
Slide 53: Cash Flow – Operating Activities
CASH FLOW – OPERATING ACTIVITIES 2013 2014 Rm Rm Rm % change Cash generated by operations 8 795 8 568 Net working capital movements (1 604) (2 879) 79% Cash generated by operations 7 191 5 689 Net finance costs and tax paid (2 138) (2 193) Cash flow from operating activities before rental assets cap
Slide 54: Cash Flow – Investing Activities
CASH FLOW – INVESTING ACTIVITIES 2013 2014 Rm Rm Rm % change Net acquisition of subsidiaries and businesses (539) (297) Capital expenditure (2 161) (2 788) 29% Expansion (1 350) (1 626) Replacement (811) (1 162) Net movement in associates and JVs (321) (144) Net movement in investments, loans and no
Slide 55: Cash Flow – Summary
CASH FLOW – SUMMARY 2013 2014 Rm Rm Rm Cash flow from operating activities (pre capex) 4 137 2 969 Net acquisition of subsidiaries and businesses (539) (297) Capital expenditure (excl Car Rental) (2 161) (2 788) Net movement in associates and JVs (321) (144) Net movement in equities, loans and other
Slide 56: Target Gearing of 60-80%
GEARING Gearing (%) > New bonds (IPL 8, 9 and 10) issued in South Africa ‐ R3bn > Registered a Domestic Treasury Management Company ‐ major addition to our treasury capabilities 62% 63% > Higher net debt to fund: 52% • acquisitions 48% 50% 39% 39% 39% • higher working capital 31% • expansion capex 1
Slide 57: Returns
RETURNS ROE ROIC vs WACC (Rbn) (%) 16.5 16.3 16.2 22.4 22.2 21.3 13.0 19..4 19.3 2 11.5 12 2 12.2 15.7 10.9 10.5 10.1 9.7 8.8 9.1 09 10 11 12 13 14 09 10 11 12 13 14 ROIC WACC ROE is healthy Objective: average ROIC > than WACC + 4% > impacted i t dbby: through the cycles • lower returns from Vehicle
Slide 58: Acquisitions
ACQUISITIONS Eco Health lh > purchase price USD100 million – 68% shareholding > pharmaceutical distributor in Nigeria > extensive distribution network; ability to add new products A i iti criteria Acquisition it i > adds sales and marketing capabilities to our offering > Favour logistics > complemen
Slide 59: Acquisitions
ACQUISITIONS Pharmed – after 30 June 2014 A i iti criteria Acquisition it i > purchase price – R148 million for 62.5% shareholding > Favour logistics > pharmaceutical wholesaler based in Durban and Johannesburg > Asset light preferred > purchases product from pharmaceutical companies > Earnings enha
Slide 60: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 60
Slide 61: Strategy
STRATEGY > Today’s VUCCA (volatile, uncertain, complex, chaotic, ambiguous) environment & the th size i & complexity l it off IImperial i lddemands d strategic t t i clarity l it att two t levels: l l • Corporate strategy as a Group – more expansive & precise as to the value added & the parenting ad
Slide 62: Capital Allocation for Growth
CAPITAL ALLOCATION FOR GROWTH LOGISTICS Expansion, organic growth & acquisitions VEHICLES FINANCIAL SERVICES Enrich value chain & cash generation Growth & cash generation C A S H F L O W F R O M M OTO R VA L U E C H A I N TO F U N D G R O W T H I N L O G I S T I C S 62
Slide 63: Agenda
AGENDA OPERATIONAL FINANCIAL HIGHLIGHTS CONTEXT REVIEW REVIEW & STRATEGY OUTLOOK ACQUISITIONS 63
Slide 64: Outlook
OUTLOOK “….confident that our strategic positioning & operating practices will result in a continued growth of revenue, earnings & value in the medium term. term.” “….we expect earnings in the first half of the 2015 financial year to decline on the prior period as the currency impact on the Vehicle
Slide 65: Leaders in Mobility: Thank You
LEADERS IN MOBILITY THANK YOU