Brambles Limited · ASX:BXB
Brambles — FY2014 Earnings Presentation
47 slides from Brambles's earnings presentation, Aug 20, 2014
Slide 1: Full-year results
Full-year results 20 August 2014
Slide 2: Overview & Results Highlights
Overview & Results Highlights Tom Gorman, CEO 2
Slide 3: Key messages
Key messages Strategy on track and positive outlook for FY15 Sales revenue growth and Underlying Profit delivered in line with guidance Pallets: constant-currency sales and profit growth across all regions with strong operational efficiencies delivered in Europe; on track for further growth and effi
Slide 4: Key financials
Key financials Solid underlying performance (Continuing operations) FY14 result Change vs. FY13 (Actual FX) (Constant FX) Sales revenue US$5,405M 6% 7% Operating profit US$930M 5% 5% Profit after tax US$585M 5% 4% Underlying Profit US$960M 5% 6% Underlying basic earnings per share US 38.7¢ 5% 5% Ret
Slide 5: Delivery scorecard
Delivery scorecard Performance consistent with five-year targets Objective Progress FY14 constant-currency sales revenue growth of 7% Delivered US$66M delivered to FY14 (below target); US$100M of Pallets efficiencies and IFCO synergies by FY15 remainder to be delivered in FY15 Pallets EMEA Underlyin
Slide 6: Group sales revenue growth analysis
Group sales revenue growth analysis Solid contribution from all segments (US$M) 39 (31) 22 77 143 72 5,436 5,405 5,083 FY13 Pallets: Pallets: RPCs Containers Acquisitions FY14 FX FY14 net new organic volume, (excluding (constant FX) business price, mix acquisitions) 6
Slide 7: Constant-currency growth / Net new business wins (Pallets)
Net new business wins (Pallets) Momentum improving for FY15 Composition of Pallets’ sales revenue growth Implied forward contribution of prior year rollover (US$M) 7% 70 6% 60 Constant-currency growth 5% 50 4% 40 3% 30 2% 20 1% 10 0% 0 FY12 FY13 FY14 FY13 FY14 FY15 estimate Organic volume, price, mi
Slide 8: Pallets segment result summary
Pallets segment result summary ROCI improvement and strong Europe performance FY14 Change vs FY13 Improved North America and Europe underlying conditions Actual Constant US$M FX FX Net new business wins contribution Americas 2,302 4% 6% of 2% sales revenue growth EMEA 1,447 7% 5% Emerging markets co
Slide 9: RPCs segment results summary
RPCs segment results summary Sales growth improving; one-offs and short-term profit impacts FY14 Change vs FY13 Improved second-half sales momentum Actual Constant in North America US$M FX FX Strong growth contribution from all Europe 581 14% 9% other regions North America 174 7% 7% One-off impacts
Slide 10: Containers segment result summary
Containers segment result summary Improved margins with stronger sales growth outlook for FY15 FY14 Change vs FY13 7% constant-currency sales revenue Actual Constant growth without acquisitions US$M FX FX Strong full-year growth performance Automotive Solutions 162 8% 8% from CCC Pallecon Solutions
Slide 11: Financial Analysis
Financial Analysis Zlatko Todorcevski, CFO 11
Slide 12: Group operating profit growth analysis
Group operating profit growth analysis Positive performance but cost challenges remain (US$M) 25 (81) 7 141 (39) (11) 1 929 930 887 FY13 Volume, Acquisitions Operational Direct costs Other Significant FY14 FX FY14 price, mix efficiencies Items (constant FX) 12
Slide 13: Pallets asset efficiency metrics
Pallets asset efficiency metrics Improving replacement capex trend sustained Replacement/growth capex (left-hand side) and DIN ratio (right-hand side) 800 16% 14% 700 Total pooling equipment capex (US$M) 12% 600 DIN/sales revenue 10% 500 8% 6% 400 4% 300 2% 200 0% FY10 FY11 FY12 FY13 FY14 Replacemen
Slide 14: Pallets plant cost ratio
Pallets plant cost ratio Efficiencies in Europe offset by high US repair costs Plant costs to sales revenue 44% 40% 36% 32% 28% 24% FY10 FY11 FY12 FY13 FY14 Americas Americas ex. PMS EMEA Asia-Pacific Total 14
Slide 15: Pallets Americas operating profit analysis
Pallets Americas operating profit analysis Asset management improvement driving higher repair costs (US$M) 13 (45) Reduced IPEP expense 48 9 (12) (9) Higher repair intensity Transport and depreciation 428 415 419 Profitable sales growth in CHEP Margin contraction in PMS FY13 Volume, Operational Dire
Slide 16: Pallets EMEA operating profit analysis
Pallets EMEA operating profit analysis Strong result; positive operating leverage (US$M) Ahead of target with supply-chain efficiencies 7 15 8 (1) (8) 41 Impairments to enable introduction of German quarter pallet 330 323 Positive operating leverage 268 Stronger organic conditions Pricing and mix be
Slide 17: RPCs operating profit analysis
RPCs operating profit analysis Second-half rebound in sales growth (US$M) Increased depreciation Higher plant and transport costs 26 (20) (19) <1 (1) IFCO CEO/CFO retirement Higher marketing costs South America impairment 138 Investment for growth 125 124 Organic volume growth in all regions Strong
Slide 18: Improved operating cash flow
Improved operating cash flow Solid result driven by EBITDA and working capital movement (US$M) FY14 FY13 Change EBITDA 1,488 1,409 79 Capital expenditure (854) (846) (8) Proceeds from sale of PP&E 78 100 (22) Working capital movement 11 (49) 60 IPEP expense 88 102 (14) Provisions/other 17 (19) 36 Ca
Slide 19: Strong balance sheet position
Strong balance sheet position Supported by recent €500M European medium-term note issue June 2014 June 2013 Net debt (US$) 2,362 2,714 Average term of committed facilities (years) 4.1 3.6 FY141 FY132 EBITDA/net finance costs (x) 13.2 14.6 Net debt/EBITDA (x) 1.59 1.68 1 For FY14, based on continuing
Slide 20: One Better program execution
One Better program execution Three key streams driving a more sustainable business ~30% of US$100M cost-outs cost-outs delivered delivered vs. FY14 At least 2 percentage point reduction in Aligning procurement activities overheads to sales Better Buying revenue ratio Focus on both direct and indirec
Slide 21: Strategy & Outlook
Strategy & Outlook Tom Gorman, CEO 21
Slide 22: A long-term perspective
A long-term perspective Driving performance beyond the current horizon 1 2 3 Embedded investment proposition and five-year plan: One Better enablement - Maintain network advantage Reinvigorated approach - High single digit constant-currency to strategy globally percentage sales revenue growth - ROCI
Slide 23: Assessing the portfolio
Assessing the portfolio Ongoing emphasis on execution to create value IFCO South America CHEP Latin America CHEP Middle East RPCs ANZ & & Africa (Pallets) South Africa IFCO Europe CHEP Asia FY14 sales revenue growth CHEP Catalyst & Automotive (Pallets) Chemical Containers CHEP Pallecon Solutions IFC
Slide 24: Outlook for FY15
Outlook for FY151 Strong profitable growth with leverage to bottom line Sales revenue in line with five-year target High single digit percentage growth, at constant currency Underlying Profit of US$1,030M to US$1,060M (30 June 2014 FX rates) Equates to growth of 7% to 10% 2 Incremental improvement i
Slide 25: Q&A
Q&A
Slide 26: Disclaimer
Disclaimer The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. This
Slide 27: Investor Relations contacts
Investor Relations contacts James Hall Vice President, Investor Relations & Corporate Affairs james.hall@brambles.com +61 2 9256 5262 +61 401 524 645 Raluca Chiriacescu Manager, Investor Relations raluca.chiriacescu@brambles.com +61 2 9256 5211 +61 427 791 189 27
Slide 28: Appendices
Appendices Brambles
Slide 29: Glossary of terms and measures
Appendix 1 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period. Average Capital Investe
Slide 30: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: DIN The sum in a period of: - Depreciation expense; - Irrecoverable Pooling Equipment Provision expense; and - Net book value of compens
Slide 31: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Operating profit Profit before finance costs and tax, as shown in the statutory financial statements. Organic growth The change in sales
Slide 32: Group safety performance
Appendix 2 Group safety performance 25 1 Continuing businesses 2 Reported BIFR 20 15 10 5 0 FY10 FY11 FY12 FY13 FY14 1 Represents operations owned continuously throughout FY10 to FY14 and excludes businesses acquired during that period and the Recall operations. 2 Reported BIFR included restatements
Slide 33: FY14 currency mix (continuing operations)
Appendix 3 FY14 currency mix (continuing operations) (US$M) Total USD EUR GBP AUD Other Pallets 4,123.4 1,748.4 838.8 360.7 282.7 892.8 RPCs 895.8 173.8 437.2 57.0 81.8 146.0 Containers 385.3 65.2 148.7 39.5 56.9 75.0 Sales revenue 5,404.5 1,987.4 1,424.7 457.2 421.4 1,113.8 Net debt 2,361.7 1,311.2
Slide 34: Major currency exchange rates
Appendix 4 Major currency exchange rates (continuing operations) USD exchange rate: USD EUR GBP AUD CAD MXN ZAR FY14 1.0000 1.3587 1.6331 0.9142 0.9334 0.0765 0.0961 Average FY13 1.0000 1.2939 1.5667 1.0212 0.9919 0.0779 0.1124 30 June 14 1.0000 1.3643 1.7033 0.9415 0.9375 0.0771 0.0943 As at 30 Jun
Slide 35: Effective tax rate
Appendix 5 Effective tax rate FY14 FY13 Continuing operations (US$M) Statutory Underlying Statutory Underlying Profit before tax 816.5 847.1 776.3 802.2 Tax expense 232.0 242.4 220.0 228.9 Effective tax rate 28.4% 28.6% 28.3% 28.5% 35
Slide 36: Statutory profit reconciliation
Appendix 6 Statutory profit reconciliation (US$M) FY14 FY13 Profit after tax – continuing operations 584.5 556.3 Discontinued operations: Operating profit 54.3 125.5 Net finance costs (0.5) (0.1) Profit on demerger 663.7 - Profit before tax 717.5 125.4 Tax expense (34.3) (41.1) Profit after tax from
Slide 37: Pallets Asia-Pacific operating profit analysis
Appendix 7 Pallets Asia-Pacific operating profit analysis (US$M) 4 (11) 11 (2) 1 (7) 80 77 73 FY13 Volume, Operational Direct Other Significant FY14 FX FY14 price, mix efficiencies costs Items (constant FX) 37
Slide 38: Containers operating profit analysis
Appendix 8 Containers operating profit analysis (US$M) 15 (4) (7) 7 (2) (1) 37 36 28 FY13 Volume, Direct Other Acquisitions Significant FY14 FX FY14 price, mix costs Items (constant FX) 38
Slide 39: Underlying Profit currency reconciliation
Appendix 9 Underlying Profit currency reconciliation (US$M) 1,030 to 1,060 Growth: 7-10% 965 Growth: 6% Growth: 5% 960 947 913 895 FY13 result FY14 result FY13 result FY14 result FY14 result FY15 guidance (30 June (30 June (actual FX) (actual FX) (30 June (30 June 2013 FX) 2013 FX) 2014 FX) 2014 FX)
Slide 40: Pallets sales revenue to Average Capital Invested
Appendix 10 Pallets sales revenue to Average Capital Invested 1.2 1.1 1.0 0.9 0.8 FY10 FY11 FY12 FY13 FY14 Americas EMEA Asia-Pacific Total 40
Slide 41: Pallets transport costs ratio
Appendix 11 Pallets transport costs ratio 22% Net transport costs to sales revenue 20% 18% 16% 14% 12% FY10 FY11 FY12 FY13 FY14 Americas EMEA Asia-Pacific Total 41
Slide 42: Return on Capital Invested
Appendix 12 Return on Capital Invested 25% 20% 15% 10% 5% FY10 FY11 FY12 FY13 FY14 Pallets RPCs Containers Group 42
Slide 43: CHEP USA pallet productivity trends
Appendix 13 CHEP USA pallet productivity trends (B4840) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 6% 98% 4% 96% 2% 94% 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 43
Slide 44: CHEP Europe pallet productivity trends
Appendix 14 CHEP Europe pallet productivity trends (B1210 and B1208) Control ratio New equipment issue ratio (Returns + recoveries/total issues) (Pallets purchased/total issues) 100% 6% 98% 4% 96% 2% 94% 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY1
Slide 45: Credit facilities and debt profile
Appendix 15 Credit facilities and debt profile US$B at 30 June 2014 Committed Uncommitted Maturity Type Debt drawn Headroom facilities facilities <12 months Bank/USPP1/144A2/Other 0.4 0.3 0.5 0.2 1 to 2 years Bank/USPP1/Other 0.9 - 0.1 0.8 2 to 3 years Bank/USPP1/Other 0.8 - 0.1 0.7 3 to 4 years Ban
Slide 46: Capital expenditure breakdown by nature
Appendix 16 Capital expenditure breakdown by nature (accruals basis) FY13: total US$866M FY14: total US$908M 81 80 29 50 183 162 573 616 Pallets RPCs Containers Other PP&E Pallets RPCs Containers Other PP&E 46
Slide 47: www.brambles.com
Brambles ne one business one team www.brambles.com