Metair Investments Limited · JSE:MTA
Metair Investments — FY2015 Earnings Presentation
61 slides from Metair Investments's earnings presentation, 2016
Slide 1: 2015 Results Presentation
INVESTMENTS LIMITED automot ve | industral | retail STAKEHO LDER Rl Ee eae ELATIONSHIPS VISIGN LEGAGY—, : \ ~ INNOVATIVE ; —_? i
Slide 2: Agenda
AGENDA • Metair’s strategic redesign journey & delivery • Metair’s Image 2015 • Strategic delivery and vision • New business verticals & segments • Commentary & Results Overview • Financial Overview • Operational Overview • Reconfirmation of vision • Globalisation progress • Prospects 22
Slide 3: Metair's Strategic Redesign Journey & Delivery
METAIR’S STRATEGIC REDESIGN JOURNEY & DELIVERY 3
Slide 4: Integrated Annual Report Journey Travelled
INTEGRATED ANNUAL REPORT JOURNEY TRAVELLED Metair’s integrated annual reports are always presented against the backdrop of a theme that aims to reflect the position of the company at that specific time. 4
Slide 5: 10-Year Integrated Annual Report Themes
10-YEAR INTEGRATED ANNUAL REPORT THEMES 2006 Growth, Gain, Enrichment 2007 Transformation 2008 Transparency 2009 Crossroads – Back to Basics 2010 Balance 2011 Human Focus, Measurement and Adjustment 2012 Reflection – Road Ahead 2013 Growing our International Footprint 2014 Brand Wall 2015 Creativity
Slide 6: Metair Image 2015
MaMeM Rg INVESTMENTS LIMITED METAIR IMAGE 2015 + - = Sie
Slide 7: Image for 2015
IMAGE FOR 2015 CREATIVITY & INNOVATION This year’s image of a painting on an easel in a factory stands in recognition of the spirit of creativity and innovation of the founder of Metair Dr Albert Wessels. As the artist had to create the painting from a blank canvas putting together ideas and materia
Slide 8: Image for 2015
IMAGE FOR 2015 METAIR INVESTMENTS LIMITED ‘automotive | industrial | retail METAIR TRV ES TM ENTS —tPMtTeD | CORPORATE GOVERNANCE — Brieteg se : SEDER HEATIONSHIPS {VISION ee CSHUMAN caPiTaL
Slide 9: Strategic Delivery & Vision
STRATEGIC DELIVERY & VISION 9
Slide 10: Strategic Delivery
STRATEGIC DELIVERY • First 3 X 5 strategy Phase 1 • 2005 – 2010 Local • R 5 Billion turnover DELIVERED relevance • R 500 Million PBIT • Second 3 X 5 strategy • 2011 - 2014 Phase 2 Internat- • 50% Aftermarket DELIVERED ionalisation • 50% OE • 50% Batteries • Third 3 X 5 strategy Phase 3 • 5 Continent
Slide 11: New Business Verticals & Segments
NEW BUSINESS VERTICALS & SEGMENTS 11
Slide 12: Segmental Analysis – Largest Single Customer Contribution to Revenue
SEGMENTAL ANALYSIS – LARGEST SINGLE CUSTOMER CONTRIBUTION TO REVENUE 100% 88% 90% 80% 70% 60% 50% 46% 46% 43% 43% 40% 37% 29% 30% 26% 20% 10% 0% Pre-2008 2009 2010 2011 2012 2013 2014 2015 12
Slide 13: Performance Against Strategy
PERFORMANCE AGAINST STRATEGY Dec-13 Dec-14 Dec-15 54% OE 46% 47% 46% Aftermarket 54% 53% 45% Batteries 57% 58% 40% 42% 44% 46% 48% 50% 52% 54% 56% 58% 60% REVENUE 13
Slide 14: New Business Verticals & Segments
NEW BUSINESS VERTICALS & SEGMENTS • Second year in a row that balance is achieved with more than 50% business being Balance in delivered from energy storage sector the business • Automotive components business continue to grow with lessor dependency on dominant customer • The energy storage vertical
Slide 15: Redesign Outcome – Two Distinct Business Verticals
REDESIGN OUTCOME - TWO DISTINCT BUSINESS VERTICALS 15
Slide 16: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW 16
Slide 17: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW • Good performance from energy storage vertical • Good performance from FNB in SA Main trading • Turkey OE and Aftermarket increased observations • Stand-by energy business in SA performed well • Good performance from Romania Aftermarket volumes • Exports to CIS countri
Slide 18: Commentary & Results Overview
COMMENTARY & RESULTS OVERVIEW • Considering the challenges, good operating performance of R 790 million • Increase shareholding in Mutlu to 100% Financials • Delisted Mutlu from Istanbul stock exchange • Net interest expense up only R 6.6 million • Earning per share 267 cents, HEPS 248 cents 18
Slide 19: Financial Overview
MaMeM Rg INVESTMENTS LIMITED FINANCIAL OVERVIEW
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS Dec 2014 Dec 2015 ITEM Mvt. R’million R’million Revenue 7 279 7 732 6% Income EBITDA 1 158 1 092 (6%) Statement Operating profit 829 (5%) 790 Operating profit margin 11.4% 10.2% (1.2%) Profit after tax 632 (12%) 555 Dec 2014 Dec 2015 ITEM Mvt. R’million R’million ROA 12.7% 10.9%
Slide 21: Financial Highlights
FINANCIAL HIGHLIGHTS Dec 2014 Dec 2015 ITEM Mvt. R’million R’million Attributable profit 601 (12%) 527 Shareholder Earnings per share 308 267 (13%) Performance 195 197 Weighted avg. number of shares (‘000) 1% 434 216 Headline earnings per share 303 (18%) 248 (1 Net Debt (1 398) 10% 267) Dividend per
Slide 22: Income Statement
INCOME STATEMENT Dec 2014 Dec 2015 ITEMS R’million R’million Revenue 7 279 7 732 Operating Gross Profit 1 583 1 548 Profit Other Operating Income 163 188 Distribution, Administrative & Other Expenses 917 947 Operating Profit 829 790 Dec 2014 Dec 2015 ITEMS R’million R’million Net interest expense 96
Slide 23: Operating Profit
OPERATING PROFIT 14% 900 829 790 12% 800 11,40% 700 10% 10,20% Operating 600 R’million 8% 500 Profit Margin % 400 6% 300 4% 200 2% 100 0 0% 2014 2015 Operating Profit Operating Profit Margin Operating profit decreased 4.7% to R790 million and group operating margin declined to 10.2% (2014: 11.4%) as
Slide 24: Balance Sheet – Assets
BALANCE SHEET – ASSETS Dec 2014 Dec 2015 ITEMS R’million R’million Non-Current assets 4 394 4 926 Non-current Property, plant and equipment 2 855 3 327 Assets Intangible assets 1 270 1 357 Other non-current assets 268 242 Dec 2014 Dec 2015 ITEMS R’million R’million Current assets 3 541 4 115 Current
Slide 25: Balance Sheet – Equity & Liabilities
BALANCE SHEET – EQUITY & LIABILITIES Dec 2014 Dec 2015 ITEMS R’million R’million Total equity 4 239 4 975 Equity & Non-current liabilities 2 323 2 579 Non-Current Borrowings 1 671 1 836 Liabilities Post employment benefits 110 114 Deferred taxation 375 401 Deferred grant income 108 172 Provisions fo
Slide 26: Capital & Debt Structure
CAPITAL & DEBT STRUCTURE ITEM 2012 2013 2014 2015 Capital Debt*:equity 13% 33% 41% 40% Structure Net debt**:equity 2% 22% 30% 29% ITEM 2012 2013 2014 2015 Debt Net debt** 34.8 795.3 1 267.4 1 398.3 Levels Net 0.05 1.09 1.09 1.28 debt**:EBITDA • Over time our target remains c.25% D:E • May fluctuate
Slide 27: Working Capital
WORKING CAPITAL ITEM (R’million) Dec 2014 Dec 2015 Inventory 1 508 1 735 Trade & other receivables 1 402 1 575 Trade & other payables (excluding Mutlu minority (989) (1 006) liability) Total 1 921 2 304 DAYS Dec 2014 Dec 2015 Inventory 76 82 Trade & other receivables 70 74 Trade & other payables (50
Slide 28: Vertical Performance at a Glance
VERTICAL PERFORMANCE AT A GLANCE ENERGY STORAGE AUTOMOTIVE COMPONENTS REVENUE REVENUE 7% 4% R4.9 BILLION R3.6 BILLION 58% Contribution 42% Contribution OPERATING PROFIT OPERATING PROFIT 11% 9% R546 MILLION R345 MILLION 61% Contribution 39% Contribution PBIT : 11.1% PBIT : 9.5% ROIC: 14.0%* ROIC: 28.
Slide 29: Overall Segmental Review – Energy Storage Vertical
OVERALL SEGMENTAL REVIEW ENERGY STORAGE VERTICAL 6 000 4 928 4 602 5 000 Energy 4 000 R’million Storage 3 000 Revenue 2 000 1 000 0 2014 2015 2014 2015 700 615 (13.9%) 600 546 (11.1%) 500 R’million Energy 400 Storage 300 PBIT 200 100 0 2014 2015 2014 2015 29
Slide 30: Overall Segmental Review – Energy Storage Vertical
OVERALL SEGMENTAL REVIEW ENERGY STORAGE VERTICAL 5 000 3 948 4 128 4 000 Energy R’million 3 000 Storage 2 000 Revenue 654 799 1 000 0 2014 2015 Automotive Industrial 700 600 550 (13.9%) 500 446 (10.8%) R’million Energy 400 Storage 300 PBIT 200 65 (9.9%) 100 (12.5%) 100 0 2014 2015 Automotive Industr
Slide 31: Energy Storage – Automotive (Selected Information)
ENERGY STORAGE – AUTOMOTIVE (SELECTED INFORMATION) 600 550 (20) 550 (15) (55) 500 Loss of 20 (15) recycling Mutlu (5) (14) 446 margin: increased 450 Rombat spend due to with New Mutlu Cost for 400 lower Group Mainly OE & relocation - Marketing Mutlu lead R& D Mutlu AM of stock: - Rebranding currency
Slide 32: Energy Storage – Industrial (Selected Information)
ENERGY STORAGE – INDUSTRIAL (SELECTED INFORMATION) 150 130 110 20 100 90 15 R’million 65 70 (FNB) (Mutlu & FNB) 50 30 10 2014 Traction & SMP Standby 2015 -10 32
Slide 33: Lead Pricing Fluctuated Significantly Over the Past 24 Months
LEAD PRICING FLUCTUATED SIGNIFICANTLY OVER THE PAST 24-MONTHS Average Lead price (R) FY 14 FY 15 26 000 25 000 Average Lead price (USD) 24 000 R (Rand) FY 14 FY 15 23 000 2 300 2 200 22 000 2 100 21 000 2 000 2014 Avg =R22 731 2015 Avg =R22 677 $ (USD) 20 000 1 900 1 800 1 700 1 600 2014 Avg = $2 09
Slide 34: Overall Segmental Review – Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) 4 000 3 497 3 625 3 000 Automotive R’million Components 2 000 Revenue 1 000 0 2014 2015 2014 2015 700 600 500 R’million Automotive 400 378 (10.8%) 345 (9.5%) Components 300 PBIT 200 100 0 2014 2015 2014 2015 34
Slide 35: Overall Segmental Review – Automotive Components Vertical
OVERALL SEGMENTAL REVIEW AUTOMOTIVE COMPONENTS VERTICAL (INCL. MANAGED ASSOCIATE) 4 000 3 375 3 479 3 000 Automotive R’million Components 2 000 Revenue 1 000 121 146 0 2014 2015 Local Direct Exports 700 600 500 359 (10.6%) R’million Automotive 400 322 (9.3%) Components 300 PBIT 200 100 19 23 0 2014
Slide 36: Automotive Components Local PBIT Overview
AUTOMOTIVE COMPONENTS LOCAL PBIT OVERVIEW (SELECTED INFORMATION) 500 450 400 359 (20) (17) 350 322 In preparation 300 Mainly due to model for new model R’million launch preparation and volume drop due 250 to old model run-out 200 150 100 50 0 2014 Project Costs Inefficiency & Volume 2015 36
Slide 37: Overall Analysis – Additional Information
OVERALL ANALYSIS – ADDITIONAL INFORMATION (INCL. MANAGED ASSOCIATE) Auto parts Battery 9 000 8 552 8 099 8 000 7 000 R’million 6 000 4 927 Product 4 602 (58%) 5 000 (57%) Split 4 000 3 000 2 000 3 497 3 625 1 000 (43%) (42%) - (57%) 2014 2015 International South Africa 9 000 8 8 552 099 8 000 7 000
Slide 38: Dynamic Acquisition
DYNAMIC ACQUISITION R’million Dec 2015 Total consideration for 100% equity (including shareholders loan) 31 Acquisition Total identifiable net assets acquired 60 Summary Property, plant & equipment 1 Inventory 14 Trade & other receivables 32 Cash 15 Trade & Other liabilities (2) Bargain purchase gai
Slide 39: Operational Overview
MaMeM Rg INVESTMENTS LIMITED “OPERATIONAL OVERVIEW
Slide 40: Combined Battery Volumes (FNB, Mutlu & Rombat)
COMBINED BATTERY VOLUMES (FNB, MUTLU & ROMBAT) Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Original Original Equipment Equipment - Local 1 236 314 1 609 159 30% Market - Export 213 173 264 808 24% Total OE 1 449 487 1 873 967 29% Actual Actual Automotive Units Variance Dec 2014 Dec 201
Slide 41: FNB Volumes
FNB VOLUMES Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Original Original Equipment Equipment - Local 440 071 517 285 18% Market Total OE 440 071 517 285 18% Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Aftermarket Aftermarket - Local 1 178 718 1 088 741 (8%) - Export 305
Slide 42: Mutlu Volumes
MUTLU VOLUMES Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Original Equipment Original Equipment - Local 603 583 907 814 50% Market Total OE 603 583 907 814 50% Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Aftermarket Aftermarket - Local 1 365 339 1 505 701 10% - Export 1 2
Slide 43: Rombat Volumes
ROMBAT VOLUMES Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Original Original Equipment Equipment - Local 345 553 303 608 (12%) Market 60 330 145 260 141% - Export Total OE 405 883 448 868 11% Actual Actual Automotive Units Variance Dec 2014 Dec 2015 Aftermarket Aftermarket - Local 361
Slide 44: Vehicle Production per OEM in South Africa (NAAMSA)
VEHICLE PRODUCTION PER OEM IN SOUTH AFRICA (NAAMSA) OEM 2010 2011 2012 2013 2014 2015 BMW 49 243 52 908 44 229 66 087 71 004 72 165 MBSA 53 646 50 939 61 439 47 189 45 584 105 473 FMCSA 34 822 28 716 51 006 56 923 76 179 73 735 GM 27 234 32 530 38 199 40 019 41 491 41 209 NISSAN 40 184 43 743 54 657
Slide 45: Vehicle Production per OEM in Turkey
VEHICLE PRODUCTION PER OEM IN TURKEY OEM 2010 2011 2012 2013 2014 2015 OYAK RENAULT 307 083 330 994 310 602 331 694 318 246 339 240 FORD 242 070 295 850 272 097 281 287 244 682 334 622 TOFAŞ 312 245 307 788 256 428 244 614 222 807 278 254 HYUNDAI 77 000 90 231 86 976 102 020 203 157 226 500 TOYOTA 8
Slide 46: Vehicle Production per OEM in Romania
VEHICLE PRODUCTION PER OEM IN ROMANIA OEM 2010 2011 2012 2013 2014 2015 Renault Dacia 327 609 327 394 284 392 342 856 338 593 339 198 Ford 9 558 7 547 30 591 68 339 52 829 47 967 TOTAL 337 167 334 941 314 983 411 195 391 422 387 165 46
Slide 47: 2016 Capital Expenditure Commitments
2016 CAPITAL EXPENDITURE COMMITMENTS Capital Commitments – Dec 2015 Sector Maintenance Expansion Efficiency Total R’000 Automotive components 35 198 58 696 93 894 Energy storage 62 949 222 066 285 015 Total 98 147 280 762 378 909 Capex Spend – Dec 2015 Sector Maintenance Expansion Efficiency Total R
Slide 48: Reconfirmation of Vision
MaMeM Rg INVESTMENTS LIMITED RECONFIRMATION OF VISION.
Slide 49: Vision
VISION “To generate value for all our stakeholders by managing and controlling businesses that through manufacturing and/or logistical excellence, deliver quality, cost-competitive products to our customers in a sustainable manner.” 4949
Slide 50: Strategy
STRATEGY • Continue to target balance in the business • Nurture Original Equipment (OE) business and expand Original Equipment Manufacturer (OEM) customer base • Focus intently on cost • Secure and grow aftermarket product range • Grow Africa footprint • Focus on transfer of battery technologies to
Slide 51: Globalisation Progress
MaMeM Rg INVESTMENTS LIMITED GLOBALISATION PROGRESS
Slide 52: Performance Against 3x5 Strategy (Globalisation)
PERFORMANCE AGAINST 3 X 5 STRATEGY (GLOBALISATION) • Established R & D Centre in Turkey • Established Metair International Battery (MIB) structure Sale of spare • Met 2nd generation specification for AGM Start/Stop batteries capacity • Sold ⅓ of spare capacity (Renault, Honda, Ford, Toyota, Fiat) in
Slide 53: Automotive Battery Production & Capacity Utilisation
AUTOMOTIVE BATTERY PRODUCTION & CAPACITY UTILISATION 2015 Production in Units 2015 Capacity in Units 7 6 5,7 5 4 Millions 3,2 3 2,8 2,4 2,1 1,9 2 1 0 Mutlu FNB Rombat 53
Slide 54: Automotive Battery Production & Capacity Type
AUTOMOTIVE BATTERY PRODUCTION & CAPACITY TYPE 12 11 0,9 10 1,6 1,2 9 2,1 0,7 Units in millions 8 0,9 7 6 5 8,8 4 7,2 7,2 7,2 3 2 1 Total production 2015 Total capacity 2015 Additional contractually sold Illustrative remaining capacity capacity Capacity Utilised Conventional capacity Start/Stop capac
Slide 55: 2014 & 2015 Contractually Sold Capacity – Timing & Annual Volumes
2014 & 2015 CONTRACTUALLY SOLD CAPACITY – TIMING & ANNUAL VOLUMES 2 Units in millions 0,7 0,5 1 0,9 0,8 0,2 - 2015 2016 2017 Conventional capacity Start/Stop capacity 55
Slide 56: Prospects
— PROSPECTS METAIR INVESTMENTS LIMITED automotive | industrial | retail
Slide 57: General Prospects Statement
GENERAL PROSPECTS STATEMENT Metair expects the international and local business environment to continue to be volatile and challenging, but the group remains committed to making further progress in its strategic redesign. Metair continues to seek acquisitions, however such acquisitions will only be
Slide 58: Prospects – Energy Storage Vertical
PROSPECTS ENERGY STORAGE VERTICAL • Successful sale of spare battery capacity • Expansion of green release to multiple international OEM’s Local • Continued expansion of local vehicle production Automotive • Continued aftermarket share growth • Stable labour environment • Stable health and safety en
Slide 59: Prospects – Automotive Components Vertical
PROSPECTS AUTOMOTIVE COMPONENTS VERTICAL • Successful launch of new vehicle models supported by strong market demand Local • Effectiveness of cost saving during launch phase of new models Automotive • Stable labour environment • Stable socio political environment with no disruptions to service deliv
Slide 60: Q&A
METAIR INVESTMENTS LIMITED automotive | industrial | retail Q&A WWW.METAIR.CO.ZA
Slide 61: Disclaimer
DISCLAIMER DISCLAIMER The information supplied herewith is believed to be correct but the accuracy thereof at the time of going to print is not guaranteed. The company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of thi