Metair Investments Limited · JSE:MTA
Metair Investments — H1 2020 Earnings Presentation
50 slides from Metair Investments's earnings presentation, August 2020
Slide 1: Metair Interim Results Presentation August 2020
METAIR INTERIM RESULTS PRESENTATION AUGUST 2020
Slide 2: Metair Investments Limited
Mi ETA! R INVESTMENTS LIMITED
Slide 3: Agenda
Welcome, opening observations Salient features H1 2020 Metair Covid-19 response strategy Financial and operational review Recovery plan and outlook Strategic review Q&A 3
Slide 4: Welcome, opening observations
Welcome, opening observations 4
Slide 5: Opening observations
Opening observations Globally, companies’ results commentaries for any period of 2020 are going to be dominated by the impact of the Covid-19 pandemic as the world faces unprecedented disruptions to business. These disruptions, brought on by governments’ measures to contain the virus such as extende
Slide 6: Salient features H1 2020
Mi ETA! R INVESTMENTS LIMITED Salient features H1 2020
Slide 7: Salient features at group level
Salient features at group level Operating NET DEBT REVENUE EBITDA* Increase limited to POSITIVE FREE CASH FLOW decreased 27% to reduced by 80% profit R60m R3.9bn R139m for the period (excl Moll receivable) R1 378m R70m Strategic CEO 2019 DIVIDEND search ongoing, Lithium-ion No interim review: cell p
Slide 8: Revenue as percentage of pre-Covid expectations and impact on cost base
Revenue* as percentage of pre-Covid expectations and impact on cost base April 2020 | May 2020 | June 2020 | Q2 2020 Unavoidable cost drivers Non-recurring: Group 27% 55% 91% 62% • Staff welfare costs • Fixed and semi-fixed labour (net of government support) • Plant inefficiencies during lockdown an
Slide 9: Metair Covid-19 response strategy
Metair Covid-19 response strategy 9
Slide 10: Response strategy: approach and principles
Response strategy: approach and principles Immediately Impact of Covid-19 considered potential taken very seriously duration of the crisis, from the onset up to 18 months until there is a vaccine Fine-tune for each APPROACH Covid-19 required a region and vertical, AND well-structured agility of the
Slide 11: Structured 6 pillar Covid-19 response strategy
Metair Covid-19 response strategy Medium to long-term sustainability and Vision 2022 Structured 6 pillar Covid-19 response strategy welfare and communication Governance and leadership Employee health, safety, Government interaction Covid-19 recovery plan Solvency and liquidity Covid-19 exit plan Res
Slide 12: Employee health, safety, welfare and communication
Employee health, safety, welfare and communication The welfare, health and safety of our employees is both a priority and a key concern Following the announcement of the lockdown we ensured that: › Our factories were locked down safely That, combined with government support, aimed to 50%-90% › Our e
Slide 13: Employee health, safety, welfare and communication cont.
Employee health, safety, welfare and communication cont. In Inline linewith withour ourinitial initialview viewthat thatthe theLevel Level55stage stage All Metair subsidiaries have drafted policies to of ofthe thelockdown lockdowncouldcouldpotentially potentiallylast lastfor for33 ensure a safe work
Slide 14: Employee health, safety, welfare and communication cont.
Employee health, safety, welfare and communication cont. In South Africa, support was at 38% of pay, up to a SOUTH maximum of R17 000 per month limiting the maximum In Germany government support is at 100% but AFRICA support for any individual employees at about R6 900 businesses are already dealing
Slide 15: Solvency and liquidity
Solvency and liquidity Solvency and liquidity met, R750m RCF facilities renewed, and dividend deferred The board also reviewed the projections and Our business design proved to be robust since financial model for our outlook position, taking we own all our major factories and have no into considerat
Slide 16: Increased government interaction and economic participation level
Increased government interaction and economic participation level It is very important to structurally achieve the best possible economic participation approval level, if one takes the view that the Covid-19 challenge could be with us for a long time, with potential oscillation between various risk
Slide 17: Covid-19 exit and return to work plan
Covid-19 exit and return to work plan From the onset we identified the need for a well-structured Covid-19 exit plan, and set out to design best practice return to work standard operating manuals and training programs We approved standard operating manuals to begin manufacturing › concluded internal
Slide 18: Governance and leadership
Governance and leadership A special thank you to Brand, our Chairman, We believe it was important to lead and set the for always being available during this period example from the front during this period and for his positive encouragement and support I would like to thank the Metair team, subsidia
Slide 19: Operational status review
Operational status review Lockdown level 5 : 27 March – 30 April (no production) The UK continued to operate as an essential SOUTH Lockdown level 4: 1 May – 31 May (up to 50%) UK service but also had to adjust to market AFRICA Lockdown level 3: 1 June – 17 Aug (up to 100%) demand But operations stil
Slide 20: Operational status review – Automotive components volumes
Operational status review – Automotive components volumes OEM H1 2019 H1 2020 % mvt Var (units) SOUTH TSAM 72 009 41 076 (43%) (30 933) AFRICA FMCSA 43 151 22 343 (48%) (20 808) VW SA 74 147 51 949 (30%) (22 198) MBSA 39 257 19 230 (51%) (20 027) • OEM demand has been very weak, in line with BMW 34
Slide 21: Operational status review – Energy storage volumes
Operational status review – Energy storage volumes • FNB was closed during level 5 of the national lockdown % Sales channel Jun 19 Jun 20 mvt • Was classified as an essential service from 1 May SOUTH First National Battery 1 061 330 786 078 (26%) • Post lockdown aftermarket demand has been strong AF
Slide 22: Financial and operational review
Financial and operational review 22
Slide 23: Known material financial impacts of the Covid-19 pandemic on the results
Known material financial impacts of the Covid-19 pandemic on the results The Covid-19 pandemic is having, and will continue to have, an impact across all landscapes of our business A 27% decline in revenue for the first 6 months compared with the same period in 2019, R1.5b down. Welfare (salary) sup
Slide 24: Vertical performance at a glance
Vertical performance at a glance Energy Automotive Storage vertical Components vertical H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 Revenue R3,0bn R2,5bn R3,0bn R1,9bn R5,3bn R3,9bn 51% 57% 49% 43% contribution 19% contribution contribution 38% contribution 27% Operating profit R289m R74m R302m
Slide 25: H1 2020 results at a glance
H1 2020 results at a glance Vertical EBITDA PBIT HEPS ES: R178m (- 53%) - 104% - 135% AC: R21m (- 94%) -R18m -56cps PBIT % ROIC - 9.8ppt - 7.3ppt -0.5% 6.4% • Lockdown measures to curb the virus world-wide had • Various measures implemented to conserve cash (costs), unintentionally disconnected busi
Slide 26: Financial highlights: Income statement
Financial highlights: Income statement Dec 19 Jun 19 Jun 20 Dec 19 Jun 19 Jun 20 Item Mvt. Item R'million R'million R'million R'million R'million R'million Revenue 11 238 5 344 3 880 (27%) Government grants and similar 105 53 40 EBITDA (incl. share of assoc.) 1 394 699 31 (96%) Derivatives* (24) (12
Slide 27: Financial highlights: Income statement
Financial highlights: Income statement Dec 19 Jun 19 Jun 20 Item Mvt. R'million R'million R'million Attributable profit/(loss) 624 309 (216) (170%) Headline earnings/(loss) 644 308 (107) (135%) Earnings/(loss) per share (cents per 325 161 (112) (170%) share) Weighted avg. number of shares ('000) 191
Slide 28: Financial highlights: Balance sheet
Financial highlights: Balance sheet Dec 19 Jun 19 Jun 20 • Balance sheet integrity, debt levels and limiting cash burn Item R'million R'million R'million prioritised Non-current assets 4 061 3 993 4 154 Property, plant and equipment 2 707 2 634 2 861 • Initially drew down on additional liquidity to
Slide 29: Financial highlights: Balance sheet
Financial highlights: Balance sheet Dec 19 Jun 19 Jun 20 • Restricted net debt increased to only R60m Item R'million R'million R'million Total equity 4 311 4 073 4 215 • Total borrowings up R400m due to: Short term increase on Non-current liabilities 1 843 1 787 2 162 liquidity, RCF draw-downs and l
Slide 30: Financial highlights: Balance sheet
Financial highlights: Balance sheet Dec 19 Jun 19 Jun 20 • Working capital was well managed, very good recovery of Item R'million R'million R'million debtors and at 30 June all creditors payments up to date Inventory 1 736 1 996 2 034 Trade and other receivables 1 700 1 753 1 292 • Across all compan
Slide 31: Financial highlights: Capital and debt structure
Financial highlights: Capital and debt structure Item Dec 19 Jun 19 Jun 20 • Coming into Covid-19 crisis, balance sheet was strong with Net debt (R'm)** 1 318 1 881 1 378 relatively low debt and healthy cash balance Net debt** : EBITDA 0,9 1,3 1,9 • During H1’20, cash generation was good and we Net
Slide 32: H1 2020 results at a glance: Automotive Components vertical
H1 2020 results at a glance: Automotive Components vertical Revenue EBITDA FCF Var - 38% - 93% - 325% OEM Dec 2019 Jun 2019 Jun 2020 (units) TSAM 138 781 72 009 41 076 (30 933) R1,9bn R21m -R344m FMCSA 94 756 43 151 22 343 (20 808) VWSA 157 961 74 147 51 949 (22 198) MBSA 86 475 39 257 19 230 (20 02
Slide 33: H1 2020 results at a glance: Automotive Components vertical
H1 2020 results at a glance: Automotive Components vertical • PBIT margins retracted by 12.7ppt for the six month period • ROIC declined to 11% from 33.4%, consequence of pandemic ended June 2020 on operating profit for the first half of 2020 • Overheads mainly ‘fixed’ in the short term as we were •
Slide 34: H1 2020 results at a glance: Energy Storage vertical
H1 2020 results at a glance: Energy Storage vertical Revenue EBITDA FCF - 19% - 53% + 199% R2,5bn R178m R339m PBIT PBIT % ROIC - 74% - 6.5ppt - 8.2ppt R74m 3.0% 11.0% • Relatively lower drop in revenue of 19%, the vertical achieved • Lower average LME lead prices also resulted in lower recycling an
Slide 35: H1 2020 results at a glance: Energy Storage vertical margins
H1 2020 results at a glance: Energy Storage vertical margins • Total Auto battery margins decreased from 9.4% to 4.6% Auto Exports 3 000 2 726 2 232 • Auto exports PBIT decreased 68% (R63m) 2 000 R’million Local AM Revenue 1 000 • Local auto PBIT declined 62% (R101m) 318 237 0 Industrial H1 2019 H1
Slide 36: H1 2020 results at a glance: Energy Storage
H1 2020 results at a glance: Energy Storage • FNB’s EBIT declined from R104m to R13m, R91m or 87.5% down from prior period comparative • FNB managed to obtain essential service status in May • The general economic down-turn in our developing markets had a knock-on impact on FNB industrial product po
Slide 37: Recovery plan and outlook
Mi ETA! R INVESTMENTS LIMITED Recovery plan and outlook 37
Slide 38: Covid-19 recovery plan and Vision 2022
Covid-19 recovery plan and Vision 2022 In addition to executing all the activities currently required to manage the Covid-19 risks, we also created our future vision: Vision 2022, which will shape our designed recovery Our focus is on a multi-stepped U-shaped The Energy Vertical recovery is based on
Slide 39: Covid-19 scenario planning
Covid-19 scenario planning Three scenarios appear possible for the automotive industry The “U” shape is currently considered as the most probable development The V-Shape: Quick Recovery What it means: V What you believe: • Firm reaction across countries leads to • Short-term business disturbance wit
Slide 40: Forecasted global automotive sales (indexed, base year 2019 = 100% volume)
Forecasted global automotive sales (indexed, base year 2019 = 100% volume) We forecast a significant decline of vehicle sales from -16% down to -33%, driven by severity and duration of crisis impact V U L The V-Shape: Quick Recovery The U-Shape: 2020 is gone, The L-Shape: but it will be fine Lasting
Slide 41: The U-Shape: Expected light vehicle volumes by region (million)
The U-Shape: Expected light vehicle volumes by region (million) Longer period of downturn results in market decline of up to -29% in North America and -24% in Europe in 2020 – volume decline vs. 2019 expected for 2021 as well EUROPE NORTH AMERICA CHINA -16% -3% -24% -16% -29% -18% 20 20.1 25.3 24.5
Slide 42: Energy Vertical: Potential U-shaped recovery
Energy Vertical: Potential U-shaped recovery A full recovery for this vertical is anticipated to be achieved step-by-step by 2022 110% - 130% Traditional market and customer return to 100% normality, Li-Ion production 95% - 100% Increased aftermarket share, industrial demand, standby, Li-ion trade 7
Slide 43: Automotive Components Vertical: Potential U-shaped recovery
Automotive Components Vertical: Potential U-shaped recovery A full recovery for this vertical is anticipated to be achieved step-by-step by 2021/2022 160% - 180% New projects and vehicle launches: 100% Ford T6, Isuzu, Toyota NPV, VW, C Class, Nissan 90-100% Metair major customer volumes Current mode
Slide 44: New Ford contracts: Investment and production planning
New Ford contracts: Investment and production planning Metair companies have been awarded new Ford contracts, with production planned to start in 2022. The investment will be the largest to date, for a single customer, with total funding requirements estimated at c. R1.3bn Model life revenue is esti
Slide 45: Key factors expected to impact H2'20 outlook
Key factors expected to impact H2’20 outlook Metair expects the second half of 2020 to show a significant improvement, with a return to profitability in line with our U-shape recovery • We expect SA local market continued demand side weakness • But recovery in demand from exports: 60% of local produ
Slide 46: Key factors expected to impact H2 2020 outlook
Key factors expected to impact H2 2020 outlook Automotive Energy Storage Components • H2 2020 improvement in local automotive manufacturing • This vertical’s recovery is based on AM demand (local and of c. 60k – 70k units (35% - 40%) compared to H1 2020 export), and OEM production in Turkey and Roma
Slide 47: Strategic review
Mi ETA! R INVESTMENTS LIMITED Strategic review a7
Slide 48: How to achieve our winning aspirations
How to achieve our winning aspirations • Investigate separating the two verticals • Shareholder presentation, decision and choice Indicative • 5 stage process: Old timing timing Stage 1 Market teaser testing interest (Stage-Gate) Completed Completed Stage 2 Preparation phase In progress In progress
Slide 49: Metair Investments Limited
Mi ETA! R INVESTMENTS LIMITED 49
Slide 50: Disclaimer
Disclaimer The information supplied herewith is believed to be correct but the accuracy thereof at the time of going to print is not guaranteed. The company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data does