Ppc Limited · JSE:PPC
Ppc — FY2012 Earnings Presentation
34 slides from Ppc's earnings presentation, Nov 13, 2012
Slide 1: Audited Results for the 2012 Financial Year
Audited Results for the 2012 Financial Year Presented by Paul Stuiver – CEO 13 November 2012 1
Slide 2: Agenda
Agenda Introducing incoming CEO – Ketso Gordhan Highlights & Context Financial Overview Segmental Overview Progress with Strategy Outlook Questions 2
Slide 3: Incoming CEO – Ketso Gordhan
Incoming CEO – Ketso Gordhan Current CEO, Paul Stuiver retires 31 December 2012 Ketso Gordhan Ketso appointed to the PPC board 1 November 2012 CEO designate during November & December 2012 Assumes full CEO responsibilities from 1 January 2013 3
Slide 4: Highlights – 2012 Financial year
Highlights – 2012 Financial year • CEO succession finalised • R1.1 bn BEE phase 2 for SA mining rights completed • 1 out of 10 mining rights converted to date • 27% equity stake in Habesha Cement of Ethiopia • Acquired Quarries of Botswana for US$ 6.8 m • Acquired Pronto Holdings for 5.6 x EBITDA •
Slide 5: Context – 2012 Financial results
Context – 2012 Financial results • SA industry cement sales for last quarter of our financial year not available • Market intelligence suggests SA cement sales lost momentum during this last quarter due to labour unrest in mining and transportation sectors • Negative impact of 1%-2% on PPC’s 2012 ea
Slide 6: Financial Overview
Financial Overview BOTCEM
Slide 7: 2012 Financial overview
2012 Financial overview • Revenue R7.35bn 8% [R6.83bn] • EBITDA R2.33bn 8% [R2.15bn] • EBITDA margin 31.7% [31.4%] • Cash generated from ops. R2.28bn 8% [R2.10bn] • Operating profit* R1.87bn 9% [R1.71bn] • Headline earnings per share* 185 cps 11% [167 cps] • Final dividend 108 cps 14% [95 cps] • Tot
Slide 8: 2012 Summary income statement
2012 Summary income statement 2012 2011 % R million R million Change Revenue 7 346 6 826 8 Cost of sales 4 809 4 500 (7) Gross profit 2 537 2 326 9 Includes: • R41m IFRS charges on share Administration and other operating expenditure 671 616 (9) 1 incentive schemes Operating profit before item liste
Slide 9: 2012 Effective tax rate
2012 Effective tax rate • In March 2012 we guided that tax rate would be ~36.5% • The difference is due to BEE IFRS charge not being tax deductible 2012 2011 Rm Rm Profit before tax 1 403 1 385 Tax 557 520 Effective tax rate 39.7% 37.6% Add back BEE IFRS 2 charges 123 11 Adjusted profit before tax 1
Slide 10: 2012 Summary balance sheet
2012 Summary balance sheet 2012 2011 R million R million ASSETS Non-current assets • Mainly Western Cape Property, plant and equipment 4 483 4 287 3 modernisation Phase I Intangibles 139 94 Other non-current assets 376 204 4 Acquisitions: • R70m Pronto Holdings Current assets • R102m Habesha Ethiopi
Slide 11: 2012 Summary cash flow statement
2012 Summary cash flow statement 2012 2011 R million R million Cash flow from operating activities Operating cash flows before movement in working capital 2 317 2 127 Net investment in working capital (33) (25) Net finance costs paid (216) (226) • R102m equity in Habesha Taxation paid (417) (441) Ce
Slide 12: 2012 Capital expenditure
2012 Capital expenditure March 2012 2012 Actual guidance R million R million Western Cape modernisation – phase 1 (De Hoek) 159 150 Western Cape modernisation – phase 2 (Riebeeck) 4 20 PPC Zimbabwe 43 70 Operational capex 403 300-400 Total capital expenditure 609 540-640 • Estimated capital expendit
Slide 13: 2012 Debt profile and dividend cover
2012 Debt profile and dividend cover Debt profile • Year-end Net debt to EBITDA ratio is 1.4 times • Net debt ratio similar to last year • Net debt ratio has been below 1.7 since the 2008 BEE transaction Dividend cover • Dividend cover for 2012 is 1.26 times (2011: 1.26) • As communicated previously
Slide 14: Segmental Overview
BOTCEM Segmental Overview 14
Slide 15: Segmental analysis
Segmental analysis Revenue split per region Revenue split per division 21% 11% 4% 79% 85% South Africa International Cement Aggregates Lime EBITDA EBITDA 2012 2011 % Margin Margin Revenue Revenue Change 2012 2011 (Rm) (Rm) Cement 33.4% 33.4% Cement 6 246 5 814 7.3% Aggregates 18.7% 20.7% Aggregates
Slide 16: South Africa - Cement cost control
South Africa - Cement cost control Key cost Proportion % • Cost contained through optimal sourcing components for of cost of Movement and logistics despite cost of diesel increasing 26% F2012 sales 1 Distribution (R/t) 29% +5% •Wages increased 6.5% during 2012 but 2 Salaries (R) 10% +4% headcount re
Slide 17: Regional cement demand
Regional cement demand Cement demand surged since dollarisation in Zimbabwe (2009) Slowdown in demand for diamonds has negatively impacted economic growth. However revival of infrastructure spending is on the horizon. Demand in the WC is starting to show some improvement – immediate benefit for PPC
Slide 18: South Africa – Cement demand
South Africa – Cement demand • In South Africa, sales of locally produced cement grew by 6.9% for the first nine months of our financial year • Due to labour unrest, industry growth is estimated at ~4% for our full financial year • No growth in demand from government infrastructure projects • We hav
Slide 19: Regional cement pricing
Regional cement pricing Prices under pressure due to low demand and fierce competition Prices under pressure due to imports Prices under pressure due to imports PPC prices and price increases sticking 19
Slide 20: South Africa – Cement imports
South Africa – Cement imports Monthly cement imports (ton) based on SARS data 100 000 2% of total SA cement sales 4% of total SA cement sales 6% of SA cement sales 80 000 60 000 40 000 20 000 - Dec-10 Dec-11 Jul-10 Jul-11 Jul-12 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Jun-10 Aug-10 Jun-11 Jun-
Slide 21: PPC product strategy
PPC product strategy • South Africa • Leveraged our brand and positioned products in the higher 42.5 and 52.5 MPa strength categories attracting premium prices • The 32.5 MPa class of cement very competitive with more than 20 brands available in this class in central South Africa • PPC competes in t
Slide 22: South Africa – Western Cape modernisation
South Africa – Western Cape modernisation • Phase 1 – De Hoek Kiln 6 upgrade • Kiln successfully restarted July 2012 • Within R280m budget • Improved thermal efficiency • Improved output • Significant reduction in dust emissions • Reduced noise levels • Future Phase 2 – New Riebeeck Kiln 3 • Environ
Slide 23: PPC Zimbabwe - Cement
PPC Zimbabwe - Cement • Production problems in H1 tempered the results • 6 week interruption due to major transformer failure Feb/March 2012 • Required clinker imports from SA at high transport cost • Third consecutive year of strong demand growth • Another year of double digit sales growth • Increa
Slide 24: Lime, Aggregates and Readymix
Lime, Aggregates and Readymix • Lime • Sales volumes declined significantly in H2 due to steel industry operational issues and weak local/global demand • EBITDA increased 23% due to contractual selling price increases and improved operating efficiencies • 10% of burnt product sales exported to Zambi
Slide 25: Progress with Strategy
SUREBUILD BOTCEM Progress with Strategy 25
Slide 26: Strategy
Strategy As we grow into the rest of Africa it is crucial that we do not lose focus on the company’s performance in its historical markets. Hence two strategies: 1. Enhance our industry leader position in southern Africa (“Keeping the home fires burning”) 2. Expand our operational footprint into oth
Slide 27: Keeping the home fires burning 2012
Keeping the home fires burning 2012 1. Improved customer focus • Quality products • Enhanced product range – SureRoad • Implemented a number of new customer-centric initiatives 2. Efficient operations and optimised logistics • SA operating costs only increased 3% per ton • Increased utilisation of m
Slide 28: Rest of Africa strategy
Rest of Africa strategy Tunisia Morocco Algeria Libya Western Egypt Sahara Mauritania Mali Eritrea Niger Chad Sudan Senegal Djibouti Gambia Guinea Burkina Faso Nigeria Ethiopia Sierra Leone Central AR South Liberia Cameroon Sudan Somalia E Guinea Kenya Uganda GDP Congo Cement 2011 Cement 2016 Rwanda
Slide 29: Rest of Africa strategy (continued)
Rest of Africa strategy (continued) • On record to increase non-South African revenue to >40% • Lost the CINAT project in the DRC • Secured a 27% equity stake in Habesha Cement (Ethiopia) • Phase 1 will increase our non-South African revenue from 21% to ~26% from 2014 • Phase 2 would increase non-So
Slide 30: Outlook
BOTCEM Outlook 30
Slide 31: Outlook
Outlook • SA economic growth is forecasted to slow during Q4 2012 and current conditions point to low growth in 2013 • Unlikely that SA retail demand will continue growing at same rate • Potential upside remains the SA government’s infrastructure plans • New competitors will not impact our next fina
Slide 32: Questions?
BOTCEM Questions? 32
Slide 33: Investor contacts
Investor contacts Kevin Odendaal [email protected] Azola Lowan [email protected] Tel. +27 11 386 9000 www.ppc.co.za 33
Slide 34: Disclaimer
Disclaimer This document including, without limitation, those statements concerning the demand outlook, PPC’s expansion projects and its capital resources and expenditure, contain certain forward- looking statements and views. By their nature, forward-looking statements involve risk and uncertainty