Metair Investments Limited · JSE:MTA
Metair Investments — FY2008 Earnings Presentation
45 slides from Metair Investments's earnings presentation, 2009
Slide 1: Metair Investments Limited Year-end results 2008
METAIR INVESTMENTS LIMITED Year-end results for the 12-months ended 31 December 2008
Slide 2: Cover image
COVER IMAGE: A 3-D rendering of a prototype vehicle serves two purposes for this report. Firstly, our stakeholders get a bird’s-eye view of the range of components that Metair companies produce. Secondly, the image underscores the transparency that accompanies this year’s reporting. Bad news does no
Slide 3: Agenda
AGENDA Overview of Metair Financial Review Industry Review Operational Review Strategy
Slide 4: Overview of Metair
OVERVIEW OF METAIR Registered in 1948 – 60th Anniversary 2008 Listed on the main board of the JSE Market capitalisation of approximately R760 million Portfolio of companies manufacturing and distributing products primarily to: OEM’s Replacement market Export market Variety of products
Slide 5: G@OQGO C8000
G@OQGO C8000
Slide 6: 2008 Financial Results – Salient Features
OVERVIEW OF METAIR 2008 Financial Results – Salient Features Group turnover increased by 40% to R4 180 million (2007: R2 984 million) Attributable loss to ordinary shareholders after tax decreased to R13 million (2007: R175 million profit) Impairment charge of R123 million HEPS decreased by 40% to 7
Slide 7: Impairment Calculation
OVERVIEW OF METAIR Impairment Calculation Value in use or fair value less costs to sell (IAS36) Value in use Discounted cash flow Growth rates between 3% - 5% Discount rates between 16% - 20% company specific
Slide 8: Impairment Charge
OVERVIEW OF METAIR Impairment Charge Smiths Plastics (Pty) Limited R61 million PPE Hella South Africa (Pty) Limited R39 million PPE Automould (Pty) Limited R7 million Goodwill Alfred Teves Brake Systems (Pty) Limited R16 million Goodwill
Slide 9: HEPS
OVERVIEW OF METAIR HEPS 140 133 120 124 111 100 104 80 74 60 40 20 0 2004 2005 2006 2007 2008
Slide 10: EPS
OVERVIEW OF METAIR EPS 140 134 120 123 100 109 106 80 60 40 20 0 -9 -20 2004 2005 2006 2007 2008
Slide 11: DPS
OVERVIEW OF METAIR DPS 40 40 40 35 34 34 30 28 25 20 15 10 5 NIL 0 2004 2005 2006 2007 2008 2009
Slide 12: Cash generated by operations before working capital
OVERVIEW OF METAIR Cash generated by operations before Working Capital 400 350 362 358 300 327 250 274 280 200 150 100 50 0 2004 2005 2006 2007 2008
Slide 13: ROE
OVERVIEW OF METAIR ROE 35 30 31.9 27.6 25 26.3 25.2 20 15 10 10.9 5 0 2004 2005 2006 2007 2008
Slide 14: Financial Review
FINANCIAL REVIEW
Slide 15: Abridged Group Income Statement
FINANCIAL REVIEW Abridged Group Income Statement R'm 2008 2007 % Revenue 4180 2984 40% Gross Profit 684 593 15% Operating Profit 94 282 -67% Profit Before taxation 75 287 -74% Profit After Taxation 3 195 -98% Attributable To : Equity Holders -13 175 -107% Minority Interests 16 20 -20% Impairment Cha
Slide 16: Turnover Analysis
FINANCIAL REVIEW Turnover Analysis 2008 8.70% 23.60% Turnover Segmentation 51.20% 16.50% Non auto - Local Export Aftermarket - Local Original Equipment - Local 2007 10.40% 20.90% 51.80% 16.90%
Slide 17: Abridged Group Balance Sheet
FINANCIAL REVIEW Abridged Group Balance Sheet R'm 2008 2007 % Assets NonCurrent Asets 843 827 2% Current Assets 1290 1080 19% Inventory 769 608 26% T rade and Other Receivables 398 356 12% Derivative Financial Assets 0 1 - Cash and Cash Equilavents 123 115 7% T otal Assets 2133 1907 12%
Slide 18: Abridged Group Balance Sheet
FINANCIAL REVIEW Abridged Group Balance Sheet R'm 2008 2007 % Equity And Liabilities Ordinary Shareholders Equity 1020 1101 -7% Minority Interest 94 89 6% T otal Equity 1114 1190 -6% Non Current Liabilities 298 242 23% Current Liabilities 721 475 52% T rade and Other payables 538 357 51% Borrowings
Slide 19: Abridged Group Cash Flow Statement
FINANCIAL REVIEW Abridged Group Cash Flow Statement R'm 2008 2007 % Cash Flow Cash Generated From Operations 369 240 54% Finance Charges -52 -17 206% Taxation Paid -97 -94 3% Dividends paid -65 -69 -6% Dividend Income from Associate 0 7 - Cash Inflow From Operating Activities 155 67 131% Cash Outflo
Slide 20: Financial Management
FINANCIAL REVIEW Financial Management Each subsidiary is run on an autonomous basis with broad guide lines set by group Annual financial directors conferences are held where global parameters are agreed for budgeting purposes as well as financial parameters developed and group standards set Key focu
Slide 21: Financial Management continued
FINANCIAL REVIEW Financial Management continued … Negotiations with OEM’s include pricing adjustments for: Commodity price movements Negotiated movement in operational expenses Negotiated effect of volume movement 100% of capital imports are covered forward at the time of signing the capital request
Slide 22: Foreign Exchange Policy
FINANCIAL REVIEW Financial Management continued … Foreign Exchange Policy Change in major customer policy May affect forex neutrality Requires a change in Metair’s view on foreign exchange risk.
Slide 23: Industry Review
INDUSTRY REVIEW
Slide 24: Vehicle Production Volume per OEM: Passenger Vehicles
METAIR VEHICLE PRODUCTION Volume per OEM Passenger Vehicles February 2009 Sold Forecast Passenger Vehicles 2008 2009 2010 2011 2012 2013 BMW 55 235 45 426 45 426 47 243 43 237 47 243 MBSA 52 806 46 200 46 200 48 048 43 974 48 048 FMCSA 22 326 18 164 18 164 12 468 - - GM SA 16 260 3 411 3 411 3 548 3
Slide 25: Vehicle Production Volume per OEM: Light Commercial Vehicles
METAIR VEHICLE PRODUCTION Volume per OEM Light Commercial Vehicles February 2009 Sold Forecast Light Commercial Vehicles 2008 2009 2010 2011 2012 2013 MBSA 5 385 2 160 2 246 2 336 2 430 2527 FMCSA 35 783 22 858 23 772 23 522 88 299 93 911 GM SA 40 749 32 023 33 304 32 816 34 128 35 494 NISSAN 24 893
Slide 26: Toyota Installed Capacity vs Sales & Forecast
METAIR VEHICLE PRODUCTION Volume Forecast Toyota Installed Capacity vs Sales & Forecast Sold Forecast 2008 2009 2010 2011 2012 Corolla 81 129 43 448 48 096 50 020 45 778 IMV (Hilux) 107 414 68 569 77 424 80 521 83 742 Total 188 543 112 017 125 520 130 541 129 520 Capacity 220 000 220 000 220 000 220
Slide 27: South African Vehicle Sales Figures History
SOUTH AFRICAN VEHICLESALES FIGURES (PER NAAMSA) HISTORY … Category 2005 2006 2007 2008 Passenger Vehicles Local 210 976 215 311 169 558 125 454 Import 208 892 266 247 265 095 203 808 Total 419 868 481 558 434 653 329 262 Light Commercial Vehicles Local 146 933 159 469 156 626 118 641 Import 23 199 4
Slide 28: South African Vehicle Sales Figures Projection 2009-2011
SOUTH AFRICAN VEHICLESALES FIGURES (PER NAAMSA) PROJECTION 2009 - 2011 Category 2009 2010 2011 Passenger Vehicles Local 100 000 125 000 146 000 Import 170 000 200 000 225 000 Total 270 000 325 000 371 000 Light Commercial Vehicles Local 100 000 115 000 125 000 Import 45 000 55 000 68 000 Total 145 0
Slide 29: The MIDP Review introducing the APDP
The MIDP Review introducing the Automotive Production Development Programme (APDP)
Slide 30: Introduction to the Automotive Production and Development Programme
INTRODUCTION TO: AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME Announced – September 2008 Stimulate expansion of automotive vehicle production to 1.2 million vehicles per annum by 2020 Provide appropriate levels of support for these ambitious targets Achieve better balance between domestic and exp
Slide 31: APDP Key Features
INTRODUCTION TO: AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME Key Features Three-pronged tariff-based export architecture Allowances Local Assembly Allowance (LAA) Production Incentive Allowance (PIA) Automotive Investment Allowance (AIA) The APDP shifts the emphasis from an export-based support
Slide 32: APDP: Work Areas
AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME: WORK AREAS Monitoring and Review Stronger monitoring mechanisms More frequent reviews: every two to three years Catalytic converters and other material-intensive components Subject to later announcement after more detailed industry consultation and fi
Slide 33: APDP: Implementation Plan
AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME: IMPLEMENTATION PLAN AMENDMENT DATE 1. Regulatory amendments June 2009 2. Automotive Investment Allowance (AIA) June 2009 3. Production Incentive (PI) January 2013 4. Local Assembly Allowance (LAA) January 2013 5. Tariff stability January 2013
Slide 34: Operational Review
OPERATIONAL REVIEW | 7 > | a .. ale LY ‘ " Sp ~ in ee ae) Fo
Slide 35: Operational Review: Subsidiary Comparison
OPERATIONAL REVIEW Smiths Smiths Subsidiary FNB Supreme ATE Hella Hesto Manufacturing Plastics Element Company Size Large + Small √ Small Large Medium* Small Medium Metair 100% 100% 100% 75% 100% 100% 74,9% Ownership Other 25% Denso 25,1% Yazaki Local Content 66% 90%+ 15% < 50% 80%+ 70% <50% Market
Slide 36: Smiths Plastics Outlook / Challenges
OPERATIONAL REVIEW Smiths Plastics (Pty) Limited Outlook / Challenges Declining demand Reduction in overheads in line with reduced volumes Short term liquidity
Slide 37: Hella South Africa Outlook / Challenges
OPERATIONAL REVIEW Hella South Africa (Pty) Limited Outlook / Challenges Declining demand Production efficiencies Additional business opportunities
Slide 38: Strategic Review
STRATEGIC REVIEW
Slide 39: Metair Vehicle Production Volume Forecast
METAIR VEHICLE PRODUCTION Volume Forecast Actual Forecast 2008 2009 2010 2011 2012 2013 Passenger 321 124 231 445 236 093 239 114 217 577 230 072 Vehicles LCV 205 955 143 320 155 403 158 597 228 778 230 359 TOTAL 527 079 374 765 391 496 397 711 446 355 460 431 Year on Year -28% 4.5% 1.6% 12.2% 3.2%
Slide 40: Short-term Strategy: Liquidity
METAIR SHORT-TERM STRATEGY Short term liquidity (Re-emphasise Cash is King) Structural reset to new forecasted volumes Possible responsible exit strategy for certain companies
Slide 41: Reset
METAIR SHORT-TERM STRATEGY Reset Relationship with customers Company cost structure Cash flow
Slide 42: Reset relationships with customers
METAIR SHORT-TERM STRATEGY Reset relationships with customers Fair and equitable Acceptable gross margins No absorption of economics increase No loss leaders No subsidisation
Slide 43: Fair and equitable relationship with customers
METAIR SHORT-TERM STRATEGY Fair and equitable relationship with Customers Biggest Challenge Unreasonable expectation Issue of cost competitiveness
Slide 44: Cost Competitiveness
METAIR SHORT-TERM STRATEGY Cost Competitiveness CIM (Cost In Manufacture) Measurement Cost base reset All costs must be 100% variable over time. 3 – 5 year period is time.
Slide 45: Thank you
Thank you