Coventry Group Limited · ASX:CYG
Coventry — FY2003 Earnings Presentation
21 slides from Coventry's earnings presentation, August 2003
Slide 1: Results for Year Ended 30 June 2003
ABN 37 008 670 102 Results for Year Ended 30 June 2003 Presentation by Chris Glenn, Managing Director and Stephen Cooper, Chief Financial Officer 1
Slide 2: Result Highlights
Result Highlights Ø Net profit before tax and significant items up $2.4 million to $16.8 million. Ø EBIT* up 15% to $18.6 million. Ø EPS up from 13.4 cents to 31.5 cents. Ø Consolidated EBITA/sales margin* up from 4.5% to 5.0%. Ø Sales revenue up 5% to $415.5 million. Ø Net interest cover* up to 11.
Slide 3: Financial Overview
Financial Overview FY02 FY03 $M FY01 H1 H2 TOTAL H1 H2 TOTAL Working Capital 110.7 112.2 111.5 111.5 109.3 110.7 110.7 Non-current assets 98.6 98.0 94.8 94.8 91.9 86.7 86.7 Capital employed 158.4 156.6 155.9 155.9 161.3* 162.8* 162.8* Sales 359.5 194.1 200.4 394.5 211.3 204.2 415.5 EBITDA 16.1 10.1
Slide 4: Financial Overview
Financial Overview Ø Sales growth continues. Ø Reduction in non-current assets due to sale of property (used to retire debt). Ø Effective tax rate has reduced from 65% to 36% as CAP losses are now grouped. Ø $5.7 million of future tax benefits (not booked) to be realised over several years, arising
Slide 5: Key Ratios
Key Ratios FY02 FY03 FY01 H1 H2 TOTAL H1 H2 TOTAL Profitability ratios * EBITDA/Sales 4.5% 5.2% 7.1% 6.2% 6.3% 6.5% 6.4% EBITA/Sales 2.8% 3.5% 5.5% 4.5% 4.9% 5.0% 5.0% EBIT/Sales 2.4% 3.1% 5.1% 4.1% 4.4% 4.6% 4.5% EBITA/Net interest expense (times) 11.9 8.2 11.0 9.7 10.4 11.7 11.1 Return ratios * Re
Slide 6: Dividends
Dividends FY02 FY03 FY01 H1 H2 TOTAL H1 H2 TOTAL EPS – cents 21.9 2.8 10.6 13.4 14.7 16.8 31.5 Dividend per share – 30.0 8.0 12.0 20.0 14.0 16.0 30.0 cents Franking % 100% 100% 100% 100% 100% 100% 100% Ø High final dividend payout, fully covered by earnings. Ø Current policy is to distribute high pr
Slide 7: Automotive Parts Distribution
Automotive Parts Distribution FY02 FY03 $M FY01 H1 H2 TOTAL H1 H2 TOTAL Working Capital 58.4 60.6 56.5 56.5 55.6 52.0 52.0 Non-current assets 48.7 47.3 45.9 45.9 45.3 39.4 39.4 Capital employed 105.9 106.7 100.9 100.9 99.3 90.0 90.0 Sales 202.9 105.9 108.5 214.4 113.9 113.7 227.6 EBITDA * 1.4 1.7 4.
Slide 8: Automotive Parts Distribution
Automotive Parts Distribution Ø EBIT up strongly, but ongoing losses of CAP are still having an impact. Ø Sales up 6%, and EBIT up 14% for the year, in established WA and SA businesses. Ø Marginally lower second half sales in SA, as Holden parts distribution changes take effect. Ø Opened new branch
Slide 9: Industrial Products Distribution
Industrial Products Distribution FY02 FY03 $M FY01 H1 H2 TOTAL H1 H2 TOTAL Working Capital 41.9 42.8 42.7 42.7 43.3 42.9 42.9 Non-current assets 33.7 33.2 32.4 32.4 31.2 29.8 29.8 Capital employed 74.8 75.2 74.2 74.2 73.6 71.8 71.8 Sales 128.7 75.7 77.1 152.8 85.5 79.8 165.3 EBITDA 11.4 7.6 8.3 15.9
Slide 10: Industrial Products Distribution
Industrial Products Distribution Ø 8% sales growth for the year, driven by demand from infrastructure projects in WA and QLD. Ø Second half net profit margin was impacted by increase in provision for slow moving stock. Ø Construction fastener business, Infix, continues to grow with opening of first
Slide 11: Bitumen Products
Bitumen Products FY02 FY03 $M FY01 H1 H2 TOTAL H1 H2 TOTAL Working Capital 1.8 2.1 1.7 1.7 1.7 1.0 1.0 Non-current assets 2.7 3.1 2.8 2.8 3.1 5.1 5.1 Capital employed 4.4 5.1 4.4 4.4 4.8 6.0 6.0 Sales 16.4 6.4 8.4 14.8 6.9 6.7 13.6 EBITDA 3.2 1.0 1.8 2.8 1.0 1.0 2.0 Depreciation 0.5 0.2 0.3 0.5 0.2
Slide 12: Bitumen Products
Bitumen Products Ø Reduced performance in a competitive market with less government funding for WA roads – Federal 19%, State 15%. Ø Production cost savings to flow from new asphalt plant commissioned in June 2003 (joint facility with Emoleum). 12
Slide 13: Gasket Manufacturing
Gasket Manufacturing FY02 FY03 $M FY01 H1 H2 TOTAL H1 H2 TOTAL Working Capital 6.6 7.1 7.1 7.1 5.9 5.2 5.2 Non-current assets 3.4 3.5 3.5 3.5 3.5 3.5 3.5 Capital employed 10.0 10.6 10.3 10.3 9.4 8.6 8.6 Sales 14.1 7.1 7.7 14.8 6.7 5.8 12.5 EBITDA 2.4 1.0 1.4 2.4 0.9 0.8 1.7 Depreciation 0.4 0.2 0.2
Slide 14: Gasket Manufacturing
Gasket Manufacturing Ø Revenue down due to loss of Repco contract in July 2002. Ø Net profit margin affected by restructuring costs associated with the above, and additional marketing costs. Ø A significant proportion of lost revenue has now been replaced. Ø Margins should improve as stronger Austra
Slide 15: Business Strategy
Business Strategy Ø Industrial and automotive markets. Ø Focus on Australia and New Zealand market. Ø Minimum 12% after tax return on shareholder funds. 15
Slide 16: Business Strategy – Existing Businesses
Business Strategy – Existing Businesses Ø Process improvement with a focus on cost reductions. Ø Customer service delivery improvement. Ø Supply chain management. Ø Distribution centre and logistics operations. Ø Information technology strategy. 16
Slide 17: Business Strategy – Coventry Auto Parts
Business Strategy – Coventry Auto Parts Ø Cost management. Ø Sales programmes. Ø Customer Service. Ø Targeted acquisitions. 17
Slide 18: Business Strategy – Sales and Marketing
Business Strategy – Sales and Marketing Ø Sales management system. Ø Training programme. Ø Commission programme. Ø Targeted marketing. 18
Slide 19: Business Strategy – Acquisitions
Business Strategy – Acquisitions Ø Rule 1 – Must meet ROI hurdle. Ø Bolt-on opportunities – New geographical areas – Market rationalisation Ø Strategic new business opportunities – Minimum returns – Industrial/automotive markets – Leverage current business competencies. 19
Slide 20: Outlook
Outlook Ø Steady growth in the automotive market. Ø Positive outlook for industrial business, with ongoing demand from infrastructure developments. Ø Little growth expected in the WA bitumen market, but production cost savings will assist profitability. Ø Further work required to grow market share b
Slide 21: Trading Names
Trading Names Automotive Industrial Bitumen Gaskets Coventrys Coventry Fasteners Hot Mix AA Gaskets Motor Traders Infix Bitumen Emulsions NZ Gaskets Coventry Auto Parts Queensland Fasteners Sweetman Fasteners Top End Fasteners Universal Fasteners Associated World Bearings Cooper Fluid Systems Covent