Merrill Lynch Conference - Barloworld · 2016-03-14 · Merrill Lynch Conference 8 Commodity mix -...

14-16 March 2016

Merrill Lynch Conference


2

47%

53%

Revenue

Equipment and Handling Automotive and Logistics

58%

42%

Operating profit

Equipment and Handling Automotive and Logistics

Group revenue and operating profit split – Sept 2015


3

Divisional overview

Equipment southern Africa


4

● Order book of R1.6bn at end Jan 2016 (Sept 2015: R1.7bn)

● South Africa: Northern Cape iron ore mines under pressure

● Angola: Weak oil price impacts economic activity

● DRC: Major customer suspends mining activity from December 2015

● Other Africa territories trading in line with expectation

● Aftermarket activity remains resilient

Equipment southern Africa – operational update

0 1 000 2 000

SouthernAfrica

Order book (Rm)

Jan 2016 Sept 2015


5

37% 30%28% 34% 46%

36%33%

41%

44%50%

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rbn

Product support Equipment sales

Southern Africa sales history


6

39%

50%

6%

5%

2015

New equipment Product support

Used equipment Rental

47%

43%

6%

4%

2014



Southern Africa revenue profile by line of business


7

26%

43%

14%

13%

4%

2015

Mining Construction EMPR

Power Contract mining

28%

30%

21%

9%

12%

2014

Mining Construction EMPR

Power Contract mining

Southern Africa new equipment sales by industry


8

Commodity mix - mining unit sales by commodity - 2012 – 2015

COALGlencore

South 32

Exxaro

Vale

COPPER

Mopani Copper

Vedanta

Barrick

Palabora Copper

DML

FQM

DIAMONDSDeBeers

Debswana

Namdeb

Petra

Catoca

GOLD B2Gold Gold One

IRON ORESishen

KolomelaKhumani

MANGANESE South 32

PLATINUMPGM

Anglo PlatinumImpala

URANIUM Rossing Uranium Swakop Uranium

ZINCSkorpion

Rosh Pinah

Coal25%

Contractors13%

Copper13%

Diamonds13%

Gold4%

Iron Ore5%

Manganese2% Other

6%

Platinum2%

Rental14%

Uranium2%Zinc1%


9

Surface mining project pipeline

Coal Copper / Zinc / Manganese Diamonds Uranium

Coal of Africa – Makhado (2018)

South 32 – Wwk – VDD (2017)

Sekoko – Waterberg (2017)

ResGen – Boikarabelo (2016)

Glencore – Zonnebloem (2018)

Shanduka - Argent Project (2017)

Vale – Moatize Expansion (2017)

ICVL – Minas Benga (2017)

Chitotolo / Catoca (2017)

Valencia – (Norasa) (2020)

Debswana – Orapa Cut 3 (2019)

Debswana – Jwaneng Cut 9 (2018)

Transhex – Namakwa Diamonds (2017)

Tshipi Borwa (2017 – 2018)

Vedanta Gamsberg (2017)

Exxaro – Belfast Project (2018)


10

Palabora Copper (2016 -2019)

DRC

ANGOLA

NAMIBIA

BOTSWANA

ZAMBIA

ZIMBABWE

MALAWI

MOZAMBIQUE

SOUTH

AFRICA

LESOTHO

Assmang Black Rock (2017)

Venetia Underground Mine

(2020 – 2021)

Platreef Project (2020)

DiamondsCoal Copper/Zinc/Manganese Copper Uranium

Lubambe Mine (2017 - 2018)

Kgalagadi Project (2017 - 2020)

PGM Maseve (2016 - 2018)

Sasol Longwall (2020)

Palabora Copper (2016 - 2020)

Konkola Copper mines) (2016 - 2020)

Glencore Mopani (2017 - 2020)

Underground mining project pipeline


11

DRC

ANGOLA

NAMIBIA

BOTSWANA

ZAMBIA

ZIMBABWE

MALAWI

MOZAMBIQUE

SOUTH

AFRICA

LESOTHO

Angola

Hydro-Electric Projects.

Roads Rehab & New

KZN

Infrastructure Spend,

Roads , Ports Services

Free State

Polihali Dam

Mozambique

Power, Road, Port and Dams

Zambia

Various Road Projects &

New Hydro Electric station

Eastern Cape

Wind Farm Development

Malawi

Various Road Projects &

Electricity Infrastructure

CAPE

N2/N1 & Various

Infrastructure Projects

Namibia

Baines Dam,

Road Projects

Botswana

Infrastructure and

Water Projects

Limpopo

Various Railway

Line Expansions

Construction project pipeline


12

● 8 Cat 793D trucks and 1 Cat 6090

hydraulic mining shovel -approximate

value US$ 42m delivered

● Vale forecast is to have a total of 90 large

mining trucks by 2018 – doubling of the

existing fleet. A large portion of the future

fleet will be through the appointment of a

mining contractor for Moatize II

● On site support structure of 110 people

● Investment of $11m in a new facility, and

$37m in inventory

● The initial fleet is undergoing the first

Planned Component Replacement cycle

over the next 18 months - significant

aftermarket opportunity

Mozambique | Vale Moatize project update

Cat 6090 Hydraulic Mining Shovel loading a Cat 797F truck

Barloworld Equipment Mozambique’s new branch in Tete


13

● Catoca is 4th biggest Kimberlite Mine in

the world and represents 75% of the

diamond exploration in Angola

● 2016 started with delivery of the first CAT

6040 Hydraulic Mining Shovel and also

the first two CAT MD6290 Drilling Rigs

(Geosondas)

● On site support structure of 55 people

● Total CAT fleet on site is 58 units,

including Large Dozers (D11R and D10R);

OHT (777D/G); motor graders (16M and

160K) and others.

● Several machine rebuilds are planned for

2016 - significant aftermarket opportunity

Angola | CATOCA project update

Cat 6040 Hydraulic Mining Shovel

Geosondas MD6290 commissioning and BWE team on site


14

Divisional overview

Equipment Russia


15

● Order book of $58.2m at end Jan 2016 (Sept 2015: $27.7m)

● Trading ahead of prior year in 1st quarter

● Gold and nickel mining still active whilst coal market remains depressed

● Construction and Oil & Gas industries under pressure

● Aftermarket revenues being maintained

● Positive cash generation due to improved working capital utilisation

Equipment Russia – operational update

0 20 40 60 80

Russia

Order book ($m)

Jan 2016 Sept 2015


16

25%24%

25%29%

36%28%

27%

33% 46% 61%

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$m


Russia sales history


17

34%

61%

1% 4%

2015



48%

46%

1% 5%

2014



Russia revenue profile by line of business


18

59%10%

18%

5%

8%

2015

Mining Construction Power Oil and gas Other

60%17%

10%

3%

10%

2014

Mining Construction Power Oil and gas Other

Russia new equipment sales by industry


19

Surface mining – medium term opportunities

Firm orders at 30th Sept Major projects / greenfieldsFirm orders signed after 30th Sept

3xR1700G

$2.9m

2xD9R

$1.4m

5x785C

$10.1m

4x777D

$4m

AFC/BSL

$9.8m

3xD10T

$2.7m

6018FS

$2.2m

8x777D,

D10T, 140M

$9.5m

2x6018FSD,

14x777G, 3xD9R

$23.3m

88 units

$175m


20

● Slow progress – expected commissioning date moving out beyond 2020

● VT sold 13 units, value $6m to the project to date

● Potential opportunity for 2016 difficult to estimate in the current climate

Power of Siberia opportunity


21

Divisional overview

Equipment Iberia


22

● Order book of €37m at end Jan 2016 (Sept 2015: €42m)

● General Elections held in December 2015 have pushed Spain into a period of political

uncertainty which is having an effect on economic activity

● Revenue mix consistent with prior year

● Machine industry growth weighted towards small construction equipment

● Power systems activity remains solid

Equipment Iberia – operational update

0 20 40 60

Iberia

Order book (€m)

Jan 2016 Sept 2015


23

32% 30% 30%

34% 40% 37% 33% 35% 41% 44%

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EURm


Iberia sales history


24

37%

44%

16%

3%

2015



39%

41%

17%

3%

2014



Iberia revenue by line of business


25

2%

46%52%

2015

Mining Construction Power

8%

43%49%

2014

Mining Construction Power

Iberia new equipment sales by industry


26

Machine industry – Spain

PY Forecast Forecast ChangeActual

• Machine industry for 2015 calendar year grows ahead of expectation

• Industry weighted heavily toward small construction equipment

• Despite unit industry growth since 2013, estimated Euro value of industry has remained relatively flat

Units


27

Divisional overview

Power systems


28

Power systems – operational update

* Included with Equipment order books by geography

• Order book of $65m at end Jan 2016 (Sept 2015: $75m)

• Marine business in Iberia is holding up well and has potential to grow in SnA

• Low oil price impacting new activity but resilient aftersales business

• Rental to oil and gas customers in Siberia is lower but used sales stronger

• Electric Power sales in SA lower than last year due to cessation of load shedding but

percentage of revenue from aftersales is growing

• Trading will remain challenging while oil prices and mining commodities stay low

0 50 100

Power

Order book* ($m)

Jan 2016 Sept 2015


29

Divisional overview

Handling


30

● The severe drought continues to impact sales in Southern Africa - some rain in January has

allowed farmers to plant late

● Maize prices at record highs – historically a positive leading indicator of tractor sales

● New tractor ranges from AGCO will enable us to cover more of the market in second half

● Trading in the lift truck business in SA is challenging due to the slow down in mining and the

SA economy in general

● The business was restructured in December to reduce people and costs to better match the

new forecast revenue levels.

Handling - operational update


31

Divisional overview

Automotive


32

Business perspective

Sense of scale

Used Vehicle Units59 050*

*Trade and retail

New Vehicle Units36 360*

*Incl. demos

Leasing Fleet size280 703

Car rental fleet25 600

Barloworld Automotive provides a range

of vehicle usage solutions to

individuals, local and foreign

corporates and governments in select

African markets

As at 30 September 2015


33

Sense of scale

* January 2016

General Information

Employees* 7 563

Countries 8

Automotive Principals

Avis Budget Group, Audi, BMW, Ford, General Motors, Jaguar Land

Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen

Car Rental locations >190

Wholly owned Motor Retail dealerships (SnA)* 45

Key Indicators FY Sep ’15 FY Sep ’14

Rental Days 7.05m 6.66m

New & Used retail units sold 86 884 85 719

Total vehicles under management 280 703 307 456

New vehicles sold per dealership per month 69 73


34

• Well balanced Automotive portfolio

provides resilience

• Revenue CAGR of 11% delivers

operating profit CAGR of 18%

• Operating margin of 5.3% remains

respectable in difficult trading conditions

• Inter-business unit synergies including

• Used vehicle disposal solutions

• New vehicle procurement

• Parts and Service

• Finance and Insurance

• Targeted capital allocation supports value

creation

Integrated business model delivers sustained value

0

300

600

900

1200

1500

1800

2011 2012 2013 2014 2015

Rm Operating profit by BU

Car Rental Motor Retail Avis Fleet

0

300

600

900

1200

1500

1800

2011 2012 2013 2014 2015

RmOperating profit

Operating profit 1H Operating profit 2H


35

-2

0

2

4

6

8

Rental Days Rental revenue p/day Fleet Utilisation Fleet Size

% G

row

th

Leading IndicatorsJan '16 YTD Sep '15 YTD

Car Rental

• Sustained growth in rental days in a flat market

• Improved market share through targeted growth utilising a

dual brand approach

• Pleasing revenue per day increase

• Continued focus on operating costs

• Fleet utilisation remains well controlled at 75%

• Strong used vehicle profit contribution given stock

shortages

• Sustained customer satisfaction above 90%

• Budget brand successfully integrated


36

0

100

200

300

400

500

600

700

800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total South African Vehicle Market

Passenger LCV M&HCV

Motor Retail

Source: Lightstone Auto, adapted management estimates

Total vehicle market: 2016 – 572 348 (2015: 617 691)

Forecast decline in market (2016)

Passenger: -9% and Commercial: -3% to -5%


37

-6

-4

-2

-

2

4

6

8

10

New Units Service Hours Parts Revenue F & I Net Profit

% G

row

th


• Focused dealership footprint – “Fewer, Bigger, Better” Strategy

continues

• 69 new vehicles sold per dealership per month (Sep’14: 73)

• Focused brand strategy aligned to overall Automotive business

model

• Improved operating margin through cost containment and margin

expansion

• Continue strong OEM alignment

• Acquisition of two Mercedes-Benz dealerships - Nelspruit and KZN

South Coast

Motor Retail


38

-10

0

10

Maintenance Fleet Finance Fleet Total Fleet

% G

row

th


Avis Fleet

• Finance fleet impacted by Lesotho contract non-renewal

• Sustained growth in fleets under maintenance

• Good profit contribution from used vehicles

• Progressing growth opportunities in select

African territories

• Tanzania settling

• Zambian start up operations

• Tougher trading conditions

• Competitive pricing

• Customers extending fleet


39

Automotive outlook

Car Rental • Volume and revenue per day increases expected to deliver top line revenue growth,

supported by the Budget brand

• Productivity, fleet utilisation and cost focus will maintain return on equity above hurdle rates

• Market leadership position to be maintained

Motor Retail • Difficult market conditions to continue with some resilience in certain brands

• Targeted dealership acquisitions will deliver incremental profitability

• Opportunities for growth being explored within broader automotive value chain

• Expected decline in 2016 industry sales

Avis Fleet • Well positioned for continued organic growth

• Market leadership position and strong return on equity expected to be sustained

• Tanzania acquisition and Zambian start-up establishes medium term platform for growth in

targeted African regions


40

Divisional overview

Logistics


41

● Logistics trading in line with prior period

● Increased stake in Barloworld Transport

● Addition of new contracts and SmartMatta acquisition supports revenue growth

● Acquired KLL and Aspen Logistics Services multi-temperature foods logistics businesses

● Disposed of Supply Chain Software business and formed strategic partnership with Llamasoft

Operational update – Logistics

14-16 March 2016


Merrill Lynch Conference - Barloworld · 2016-03-14 · Merrill Lynch Conference 8 Commodity mix -...

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Transcript of Merrill Lynch Conference - Barloworld · 2016-03-14 · Merrill Lynch Conference 8 Commodity mix -...