Melrose Industries Plc · LSE:MRO
Melrose Industries — H1 2013 Earnings Presentation
29 slides from Melrose Industries's earnings presentation, August 2013
Slide 1: Melrose Industries PLC Half Year Results Announcement
Buy Improve Sell Strictly private and confidential Melrose Industries PLC Half Year Results Announcement Six months to 30 June 2013 August 2013
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Elster 5 Energy 6 Lifting 7 Other Industrial 8 Questions 9 Appendices Buy Improve Sell 2
Slide 3: Highlights
Buy Improve Sell Highlights 3
Slide 4: Highlights in H1 2013
Highlights in H1 2013 Group2 revenue down 3% but headline1 operating profit up 15% (Elster +39%, FKI +1%, pre central costs) Elster acquisition performing very well ‒ Headline1 operating profit of £91.2 million up by over one third on last year ‒ Headline1 operating margin of 16.0% (2012: 11.1%)
Slide 5: Summary financial results
Buy Improve Sell Summary financial results 5
Slide 6: Summary financial results: Income performance
Buy Improve Sell Summary financial results Income performance 6
Slide 7: Income Statement
Income Statement Proforma H1 2013 statutory format £m H1 2013 growth2 3 Continuing operations Revenue 1,022.2 -3% £m Headline¹ Other Total Headline¹ operating profit 165.0 +15% Revenue 1,022.2 - 1,022.2 Headline¹ operating margin % 16.1% +2.6ppts Operating profit/(loss) 165.0 (46.9) 118.1 Headline¹
Slide 8: Melrose Group by division
Melrose Group by division Elster Energy Lifting Other Industrial Central Total H1 2013 £m costs (Gas, Electricity, Water) (Brush) (Acco, Bridon, Crosby) (Harris) Revenue 569.2 167.4 266.7 18.9 - 1,022.2 Headline¹ operating profit 91.2 35.8 50.4 0.7 (13.1) 165.0 Headline¹ operating margin % 16.0% 21.
Slide 9: Revenue
Revenue Proforma £m H1 2013 growth2 3 Revenue growth – by division2 3 (compared to H1 2012) Revenue Revenue 1,022.2 -3% Headline¹ operating profit 165.0 +15% Headline¹ operating margin % 16.1% +2.6ppts -3% -3% -5% -2% Headline¹ profit before tax 139.4 Group Elster Energy Lifting Headline¹ tax (39.0)
Slide 10: Headline operating profit and margin
Headline operating profit and margin 1 Proforma Headline1 operating margin £m H1 2013 growth2 3 Revenue 1,022.2 -3% 16.1% 16.0% 21.4% 18.9% Headline¹ operating profit 165.0 +15% Group Elster Energy Lifting Headline¹ operatingmargin Headline¹ operating margin%% 16.1% 16.1% +2.6ppts Headline¹ profit b
Slide 11: Headline earnings per share (EPS)
Headline earnings per share (EPS) 1 Proforma Headline1 diluted EPS £m H1 2013 growth2 3 (continuing and discontinued operations) Revenue 1,022.2 -3% Headline¹ operating profit 165.0 +15% Headline¹ operating margin % 16.1% +2.6ppts 8.6p +5% 8.2p Headline¹ profit before tax 139.4 Headline¹ tax (39.0)
Slide 12: Order intake
Order intake Proforma Order intake growth2 5 £m H1 2013 growth2 3 Revenue 1,022.2 -3% Headline¹ operating profit 165.0 +15% -6% +1% Headline¹ operating margin % 16.1% +2.6ppts Headline¹ profit before tax 139.4 H1 v last Q2 2013 v Headline¹ tax (39.0) year Q1 2013 Headline¹ profit after tax 100.4 Hea
Slide 13: Summary financial results: Cash performance
Buy Improve Sell Summary financial results Cash performance 13
Slide 14: Profit conversion to cash and investment
Profit conversion to cash and investment Cash generated from trading (after all costs including tax) H1 £m 2013 H1 2013 headline¹ profit conversion to cash Headline¹ operating profit 165.0 Depreciation2 23.6 Working capital movement (25.5) 86% 93% 105% 70% Headline¹ operating cash flow (pre capex) 1
Slide 15: Summary financial results: Balance Sheet
Buy Improve Sell Summary financial results Balance Sheet 15
Slide 16: Balance Sheet – working capital, pensions, leverage
Balance Sheet – working capital, pensions, leverage June 2013 Balance Sheet position 30 June 31 Dec £m 2013 2012 Working capital as a percentage of revenue Fixed assets, intangible assets and goodwill 3,386 3,367 Net Networking capital working capital 205 205 218 218 10.0% 9.6% Pensions and retireme
Slide 17: Summary of operating divisions
Buy Improve Sell Summary of operating divisions Elster Energy Lifting Other Industrial 17
Slide 18: Elster
Elster Elster 56% of Melrose1 61% of Elster “Best-in-class products and solutions for 34% of Melrose1 Gas measurement, regulation and the safe control and application of gases” www.elster.com/en/gas 21% of Elster “Meeting the expanding needs of utilities Electricity by providing advanced metering pr
Slide 19: Elster division
Elster division Elster – headline¹ results Elster5 Gas Electricity Water Proforma Proforma Proforma Proforma H1 2013 H1 2013 H1 2013 H1 2013 £m growth3 4 growth3 4 growth3 4 growth3 4 Revenue 569.2 -3% 348.1 +4% 117.9 -12% 103.2 -13% Headline¹ EBITDA² 104.6 +28% 83.7 +9% 9.6 +11% 12.9 +55% Headline¹
Slide 20: Energy
Energy Energy division 16% of Melrose1 100% of Energy “World number one independent 16% of Melrose1 supplier of turbogenerators” www.brush.eu 20 1. Based on 1 Jan 2013 – 30 Jun 2013 revenue for continuing businesses
Slide 21: Energy division
Energy division Energy – headline¹ results Revenue by end market (H1 2013) £m H1 2013 Growth3 Revenue 167.4 -5% 4 3 1 Energy 78% Headline¹ EBITDA² 38.8 -1% 2 Oil & Gas 13% 2 3 Industrials 4% Headline¹ EBITDA² margin % 23.2% +0.9ppts 4 Other 5% Headline¹ operating profit 35.8 -1% Total £167.4m Headli
Slide 22: Lifting
Lifting Lifting division 26% of Melrose1 51% of Lifting “Global technology leaders in the 13% of Melrose1 manufacture of wire and wire rope” www.bridon.com 45% of Lifting “World leading manufacturer of lifting 12% of Melrose1 products” www.thecrosbygroup.com 4% of Lifting “Industry leader in materia
Slide 23: Lifting division
Lifting division Lifting – headline¹ results Revenue by end market (H1 2013) £m H1 2013 Growth3 Revenue 266.7 -2% 1 Energy 6% 5 1 2 Oil & Gas 35% Headline¹ EBITDA² 56.8 +7% 3 Mining 14% Headline¹ EBITDA² margin % 21.3% +1.7ppts 4 Industrials 38% 2 5 Other 7% Headline¹ operating profit 50.4 +5% 4 Tot
Slide 24: Other Industrial
Other Industrial Other Industrial division 2% of Melrose1 100% of Other Industrial “World class leader in the manufacturing of ferrous processing 2% of Melrose1 equipment” www.harrisequip.com 24 1. Based on 1 Jan 2013 – 30 Jun 2013 revenue for continuing businesses
Slide 25: Other Industrial division
Other Industrial division Other Industrial – headline¹ results Revenue by end market (H1 2013) £m H1 2013 Growth3 Revenue 18.9 -27% 1 Scrap processing 86% 2 Headline¹ EBITDA² 1.2 -56% 2 Other 14% Headline¹ EBITDA² margin % 6.3% -4.1ppts Total £18.9m Headline¹ operating profit 0.7 -67% Headline¹ oper
Slide 26: Questions
Buy Improve Sell Questions 26
Slide 27: Appendices
Buy Improve Sell Appendices 27
Slide 28: Foreign exchange
Foreign exchange H1 2013 H1 2012 US Dollar Euro US Dollar Euro 6 month average rates 1.54 1.18 1.58 1.22 Closing rates 1.52 1.17 1.57 1.24 On-going sensitivity of profit to translation and unhedged transaction exchange rate risk Full year increase in headline1 £m operating profit For every 10 cent s
Slide 29: Global leader in gas solutions…
Gas Global leader in gas solutions… Golden age of gas usage c.80% of profit driven by gas sector Products supplied to many parts of the gas chain… <75% of gas sector in Elster >25% of gas sector in Elster Upstream Midstream Downstream Utilisation Production Meters and Processing regulators for: Liqu