year-end results - barloworld-reports.co.za · year-end results managing for value. ... operating...

For the year ended 30 September 2017

YEAR-END RESULTS

Managingfor

VALUE

Dominic SewelaGroup chief executive

HIGHLIGHTS

Barloworld Limited Results for the year ended 30 September 2017 3

FINANCIAL HIGHLIGHTS

Revenue(from continuing operations)

R62bn(2016: R62bn)

Operating profit(from continuing operations)

R4.1bn(2016: R4.1bn)

Cash inflow beforefinancing activities

R2.6bn(2016: R3.5bn)

Total dividend per share

390 centsup 13 %

(2016: 345 cents)

Net debt to Equity

27.6%(2016: 40.7%)

Return on equity(from continuing operations)

10.5%(2016: 9.3%)

Headline earnings per share(from continuing operations)

975 centsup 16%

(2016: 841 cents)


7.8%

18.1%

12.8%

6.0%

9.4%

12.8%

18.4%

13.1%

2.5%

10.3%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

ROIC SEGMENTAL

Equipment southern Africa

Equipment Russia

Automotive Logistics Group

Average invested capital

FY16 R11.5bn R2.8bn R9.8bn R2.6bn R29.4bn

FY17 R10.2bn R2.6bn R10.1bn R2.4bn R27.1bn

WACC 12.3%

Don WilsonFinance director

FINANCIAL OVERVIEW


INCOME STATEMENT HIGHLIGHTS

(Rm) FY’17 FY’16 % chg

Continuing operations

Revenue 61 959 62 074 0

EBITDA 6 694 6 486

Operating profit 4 082 4 087 0

Fair value adjustments on financial instruments (209) (209)

Net finance costs (1 220) (1 220)

Profit before non-operating and capital items 2 653 2 658 0

Non-operating and capital items (155) 85

Taxation (565) (796)

Profit after tax 1 933 1 947 (1)

Income from associates & joint ventures 93 3

Profit for the year from continuing operations 2 026 1 950 4

Discontinued operation

(Loss) / profit from discontinued operation (269) 29

Profit for the year 1 757 1 979 (11)

HEPS continuing operations (cents) 974.5 840.9 16

HEPS (cents) 883.4 838.1 5


INCOME STATEMENT HIGHLIGHTS – REVENUE



Revenue 61 959 62 074 0

Equipment 24 193 24 889 (3)

Southern Africa 18 287 18 547 (1)

Russia 5 141 4 838 6

Handling 765 1 505 (49)

Automotive and Logistics 37 764 37 183 2

Automotive 31 593 31 427 1

Logistics 6 171 5 756 7

Corporate 2 2

Average exchange rates (Rands) FY’17 FY’16 % chg

United States Dollar 13.39 14.75 9

Euro 14.83 16.32 9

British Sterling 17.03 20.99 19





Revenue 61 959 62 074 0

EBITDA 6 694 6 486














HEPS (cents) 883.4 838.1 5


INCOME STATEMENT HIGHLIGHTS – OPERATING PROFIT



Revenue 61 959 62 074 0

EBITDA 6 694 6 486


Equipment 2 362 2 216 7

Southern Africa 1 785 1 585 13

Europe 7

Russia 582 599 (3)

Handling (5) 25

Automotive and Logistics 1 848 1 877 (2)

Automotive 1 747 1 654 6

Logistics 101 223 (55)

Corporate (128) (6)





Revenue 61 959 62 074 0

EBITDA 6 694 6 486














HEPS (cents) 883.4 838.1 5


STATEMENT OF FINANCIAL POSITION

(Rm) FY’17 FY’16

Non-current assets 18 613 20 179

Current assets (excluding cash) 20 443 21 987

Cash and cash equivalents 3 925 3 028

Assets held for sale 3 343 828

Total assets 46 324 46 022

Interest of all shareholders 20 877 19 679

Total debt 9 678 11 044

Other liabilities 14 972 15 232

Liabilities held for sale 797 67

Total equity and liabilities 46 324 46 022

Net debt 5 753 8 016


SUMMARISED STATEMENT OF CASH FLOWS

(Rm) FY’17 FY’16

Operating cash flows before working capital 7 307 7 161

Movement in working capital 1 539 2 119

Net investment in leasing assets and vehicle rental fleet (2 881) (1 453)

Cash generated by operations 5 965 7 827

Other net cash flows (2 231) (2 112)

Dividends paid (803) (772)

Net cash retained operating activities 2 931 4 943

Net cash used in investing activities (329) (1 436)

Net cash inflow 2 602 3 507


INVESTMENT IN WORKING CAPITAL

(Rm) FY’17 FY’16

Inventories – movement 719 2 668

Receivables – movement (500) 797

Payables – movement 1 320 (1 346)

Total working capital – decrease 1 539 2 119

(Rm) FY’17 FY’16

Equipment southern Africa 1 019 1 666

Equipment Europe 385 221

Equipment Russia (138) 406

Handling 180 27

Automotive 167 94

Logistics (8) (104)

Corporate (66) (191)

Total working capital – decrease 1 539 2 119


SUMMARISED STATEMENT OF CASH FLOWS

(Rm) FY’17 FY’16

Operating cash flows before working capital 7 307 7 161

Movement in working capital 1 539 2 119

Net investment in leasing assets and vehicle rental fleet (2 881) (1 453)

Cash generated by operations 5 965 7 827

Other net cash flows (2 231) (2 112)

Dividends paid (803) (772)

Net cash retained operating activities 2 931 4 943

Net cash used in investing activities (329) (1 436)

Net cash inflow 2 602 3 507


DEBT MATURITY PROFILE

Total interest bearing debt Redemption

(Rm) Total Short-term Long-term

South Africa 8 884 1 512 7 372

Offshore 794 543 251

Total debt Sept 2017 9 678 2 055 7 623

Total debt Sept 2016 11 044 2 665 8 379

Ratio of long-term to short-term debt 79:21 (Sept 2016 – 76:24)

R1.6bn long-term bonds issued in current financial year

R950m bonds repaid in current year (further R425m repaid early Oct)

R10.7bn (committed R8.0bn) unutilised bank facilities at Sept 2017

Cash and cash equivalents R3 925m (Sept 2016 – R3 028m)


CAPITAL STRUCTURE REMAINS STRONG

Group segmental gearing ratios within target ranges:

Debt to equity (%) Trading Leasing Car Rental Total group

Target range 30 - 50 600 - 800 200 - 300 Gross Net

Ratio at 30 Sept 2017

21 560 203 46 28

Ratio at 30 Sept 2016

29 720 216 56 41

Net debt of R5 753m (2016: R8 016m)

Below target ranges due to strong cash inflows in second half

EBITDA interest cover 5.0 x (2016: 4.9 x)

Net debt to EBITDA 0.9 x (2016: 1.2 x)

Moody’s confirmed Global Scale Rating of Baa3 (negative outlook) and National Scale Rating of Aa3.za (stable outlook)

Peter Bulterman

DIVISIONAL OVERVIEW EQUIPMENT SOUTHERN AFRICA


Revenue slightly down at R18.3bn

Operating profit up 13% to R1.8bn with significant improvement in operating margin

Strong net cash generation of R1.4bn

Recovery from the Bartrac JV in the DRC Katanga region driven by improved commodity prices

Return on equity up from 9.1% to 15.2%

OPERATIONAL REVIEW – EQUIPMENT SOUTHERN AFRICA

0 500 1 000 1 500 2 000

SouthernAfrica

Operating profit (Rm)

Sept 2017 Sept 2016

Margin

13%

Rest of Africa31%

Revenue by Territory

South Africa69%

9.8%

8.5%


30%

28%34%

46%

36%

33%

41%

46%

50%

56% 57%

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Equipment sales Product support

SOUTHERN AFRICA SALES HISTORY

Rbn


29%

57%

10%

4%

2017

31%

56%

8%

5%

2016

REVENUE PROFILE BY LINE OF BUSINESS - SEPTEMBER

New equipment Product support Used equipment Rental


30%

40%

14%

16%

2017

29%

52%

15%

4%

2016

SOUTHERN AFRICA NEW EQUIPMENT SALES BY INDUSTRY - SEPTEMBER

Mining Construction Energy & Transportation Power Contract mining


Performance improved on the back of stronger copper and cobalt prices

Increased machine utilisation driving strong aftersales

Attributable profit contribution increased to R97m from R13m in 2016

IMPROVEMENT FROM OUR BARTRAC JOINT VENTURE IN THE DRC


ANGOLA

BOTSWANA

MALAWI

NAMIBIA

ZAMBIA

ZIMBABWE

LESOTHO

SWAZILAND

SOUTH AFRICA

ANGOLA

MINING OPPORTUNITIES

4 units R142m

ROSH PINAH

R8.5m R38m

47 units

R806m R3 032m

1 unit R52m

Benga

33 units R850m

Mota Engel

35 units R1 351m

2 units R28m

4 units R28m

22 units R85m

R156m R170m

Boikarabelo

24 units R1 598m

7 units R397m

Hwange

12 units R850m

Makhado

17 units R1 105m

Other

Greenfields/Major Proj.Firm orderDelivered

Coal

PGM/Zinc/ManganesePhosphate/PlatinumChrome

Gold

Diamonds

2 units 25 units

R37m R482m

3 units 13 units

R14m R 1 414m


Global economic outlook remains positive

Commodity prices are improving notwithstanding mining policy and political uncertainties

Firm order book increased to R1.5bn from R1.3bn in 2016, secured additional order post year-end

Continue with operational transformation and efficiency drive

Focus to drive aftermarket growth

EQUIPMENT SOUTHERN AFRICA – OUTLOOK

1.3

1.5 1.4

2016

2017

Order book (Rbn)

+15.4%

Peter Bulterman

DIVISIONAL OVERVIEW EQUIPMENT RUSSIA


Revenue of $385m, up 17% on the prior year

Operating profit of R582m (in US Dollar terms up by 7% to $43.7m from $40.9m)

Mining segment demonstrated solid performance on an improvement in the coal sector and strong machine deliveries into other commodities

Improved aftermarket growth driven by direct parts sales and component and machine rebuilds

Positive cash generation of $17.6m and return on equity of 20.1%

OPERATIONAL REVIEW – RUSSIA

0 250 500 750

Russia


Sept 2017 Sept 2016

Margin

11.3%

12.4%

-3%


24%

25%

29%36%

28%

27% 33%

46%

61%

51%

51%

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Equipment sales Product support

RUSSIA SALES HISTORY

$m


46%

51%

1% 2%

2017

43%

51%

1%4%

2016

RUSSIA REVENUE PROFILE BY LINE OF BUSINESS – SEPTEMBER

New equipment Product support Used equipment Rental


77%

9%

7%1%

1% 5%

2017

68%

7%

8%

4%

9%4%

2016

RUSSIA NEW EQUIPMENT SALES BY INDUSTRY – SEPTEMBER

Mining Construction Energy & Transportation Oil & Gas Dealer Other including SEM


Norilsk

Mirniy Yakutsk

Nerungry

Omsk

Barnaul

Novosibirsk

TomskAchinsk

KemerovoKrasnoyarsk

Chita

Ulan-UdeIrkutsk

Magadan

Anadyr

Petropavloysk-Kamchatskiy

KRU

11 units

$23m

IMM

1 unit 1 unit 9 units

$0.3m $0.3m $4.1m

MINING OPPORTUNITIES

Greenfields Firm order Delivered

Polyus

11 units 38 units 14 units

$20.4m $106.3m $9.2m

Norilsk Nickel

6 units 27 units

$11m $38.4m

KRU

11 units

$23m

Stroyservice

46 units

$43m

Zadubrovskiy Noviy


$47.8m $4.2m $11.2m

Alrosa


$2.4m $7.3m $6.6m

Mining Service


$3.5m $2.4m $5.7m

IMM

1 unit 1 unit 9 units

$0.3m $0.3m $4.1m

Service Integrator

27 units 7 units

$23.6m $4.2m

NordGold


$7.6m $38.5m $3.1m


Positive GDP growth driven by stronger oil prices

Further commodity price improvement anticipated

Significant growth in order book driven by new greenfield projects

Growth based on improving market penetration and defending market share

Aftermarket revenues remain key to profitability

EQUIPMENT RUSSIA – OUTLOOK

21

202

2016

2017

Order book ($m)

+861.9%

Keith Rankin

DIVISIONAL OVERVIEW AUTOMOTIVE


Revenue R31.6bn (2016: R31.4bn) – up 0.5%

Record operating profit for the division at R1.75bn (2016: R1.65bn) – up 5.6%

Improved operating margin achieved for the period at 5.5% (2016: 5.3%)

Continued strong used vehicle profit contribution

Achieved ROE and ROIC above Group hurdle rates

Strong positive cash flow generated

OPERATIONAL REVIEW – AUTOMOTIVE

0 500 1 000 1 500 2 000

BarloworldAutomotive


FY 2017 FY 2016

Margin

5.5%

5.3%5.6%


Well balanced Automotive portfolio provides resilience in a challenging trading environment

Revenue CAGR of 8.6% delivers operating profit CAGR of 14%

Inter-business unit synergies continue to deliver value

Recently acquired businesses performing in line with expectation

Continued focus to improve returns in underperforming businesses

INTEGRATED BUSINESS MODEL DELIVERS VALUE

0

500

1,000

1,500

2,000

2011 2012 2013 2014 2015 2016 2017

Rm Operating profit by BU

Car Rental Avis Fleet Motor Trading

0

300

600

900

1,200

1,500

1,800

2011 2012 2013 2014 2015 2016 2017

Rm Operating profit

Operating profit 1H Operating profit 2H


CAR RENTAL

Car Rental FY’17 FY’16 % chg

Revenue 6.45bn 5.97bn +8.0

Operating profit 561m 536m +4.7

Operating margin 8.7% 9.0% -0.3bps

Pleasing operating profit growth of 4.7%

SAVRALA car rental market grew by 3.6% in rental days

The Avis brand remains the market leader, supported by growth in the Budget brand

Margins impacted by increased vehicle damage expenses and vehicle and parts price increases

Achieved fleet utilisation at 76%

Strong used vehicle profit contribution


AVIS FLEET

Avis Fleet FY’17 FY’16 % chg

Revenue 3.57bn 3.64bn -1.9

Operating profit 621m 560m +11

Operating margin 17.4% 15.4% +2.0bps

Strong operating profit growth of 11%

Finance fleet reduced marginally due to the non-renewal of SANParks and ADT contracts

Customer retention rates remain high

Improved used vehicle contribution

Macro economic environment continues to impact certain African territories

Strong ROE achieved


MOTOR TRADING

Motor Trading FY’17 FY’16 % chg

Revenue 21.58bn 21.82bn -1.1

Operating profit 565m 558m +1.3

Operating margin 2.6% 2.6% -

Revenue declined by 1.1%

Total dealer market down 4.0%

New units sold down 7.4%

Increased operating profit by 1.3%

Positive contribution from aftermarket revenues

Headcount reduced by 12%

Continued focus on cost alignment


AUTOMOTIVE – OUTLOOK

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

supported by the dual brand strategy and continued growth in inbound tourism

Continued positive contribution from used vehicle disposals

Leverage technology to drive efficiencies and improve customer service and offerings

Motor Trading New vehicle market will continue to be under pressure due to low consumer confidence

Cost alignment and portfolio management to improve returns

Targeted acquisitions to grow footprint and positively contribute to returns

Avis Fleet Well positioned for continued organic growth

Maintain market leadership position and continue to achieve strong return on equity

Continued focus to improve returns in African territories

Automotive

Division

Balanced portfolio will continue to provide resilience throughout the cycle

Continued focus on achieving optimal returns above Group hurdle rates

Explore value enhancing growth opportunities

Kamogelo Mmutlana

DIVISIONAL OVERVIEW LOGISTICS


OPERATIONAL OVERVIEW

145%

84%

Sept 2016 Sept 2017

Net debt / equity

86

260

Sept 2016 Sept 2017

Cash flow before financing (Rm)

+204%

• Revenue up 7.2%

• Operating profit down by R122m (54.7%)

• Barloworld Transport minority interest acquired

• Positive cash flow generated

• Reduced debt levels

-42%


DIVERSE BLUE CHIP CUSTOMER BASE


TURNAROUND FOCUS

Stabalise and turnaround financial and operational performance

Simplify operating model

Reduce operating assets

Cash generative business

Improve returns


LOGISTICS OUTLOOK

• Key drivers of the turnaround strategy:

Fit-for-purpose SG&A

Optimal operational performance

Procurement

New lean and customer-focused operating model to support future growth

GROUP STRATEGY AND OUTLOOK


GROUP STRATEGY PROGRESS AND OUTLOOK

Completed comprehensive strategic review

Board approved new Group strategy in Mar 2017

Key initiatives include:

• Fix and address underperforming businesses

Iberia / Middle-East – exit in progress

• Logistics – turnaround in progress

• Optimise returns from the existing portfolio

Motor retail – addressed

Equipment southern Africa – in progress and started to realise benefit

• Look at high growth opportunities based on existing capabilities

• Number of opportunities have been identified

For the year ended 30 September 2017

YEAR-END RESULTS

Managingfor

VALUE

year-end results - barloworld-reports.co.za · year-end results managing for value. ... operating...

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