Schaffer Corporation Limited · ASX:SFC
Schaffer — FY2004 Earnings Presentation
17 slides from Schaffer's earnings presentation, Aug 18, 2004
Slide 1: Schaffer Corporation Limited Full Year Results – June 2004
Schaffer Corporation Limited Full Year Results – June 2004 1
Slide 2: Corporate Objective
Corporate Objective “To efficiently operate and grow our core business for the benefit of shareholders” Operational Strategy To be number one or number two in each of our markets as measured by profitability. We will achieve this by: Being a world low cost producer Maintaining a leading distribu
Slide 3: Performance Summary
Performance Summary June 01 June 02 June 03 June 04 Revenue (A$m) 47 213 223 192 Net Profit (A$m) 8.0 13.0 17.0 16.6 EPS $0.66 $1.02 $1.25 $1.20 ROCE 18% 21% 28% 27% EBITDA (A$m) 15 29 36 33 Operating Cash Flow 5 44 32 26 Ordinary Dividend $0.17 $0.60 $1.00 $1.00 Special Dividend $0.10 $0.10 $0.20 $
Slide 4: June 2004 EBIT Contribution
June 2004 EBIT Contribution Non-Core 27% Leather 58% Building Products 15% Return on Capital Employed – 27% 4
Slide 5: Operations - Leather
Operations - Leather ($m) June 01 June 02 June 03 June 04 Auto Revenue 186 194 156 128 Furn Revenue 35 25 21 13 EBIT 14.5 15.2 22.3 16.1 EBIT Margin 6.6% 6.9% 12.6% 11.4% June 04 Automotive revenue is reduced due to: Program timing issues Higher $A ($16m) Comparable split is $21m reduction i
Slide 6: Automotive Leather Market
Automotive Leather Market World Leather Growth by Region & Total 10,000,000 9,000,000 8,000,000 7,000,000 North America 6,000,000 5,000,000 Asia 4,000,000 Europe 3,000,000 2,000,000 Total 1,000,000 0 2002 2003 2004 2005 2006 2007 Source: CSM Worldw ide (2003) A$6bn global automotive leather market
Slide 7: Howe Sales by Region
Howe Sales by Region Australia (11%) USA (40%) Asia (26%) Europe (23%) Focus is on the high growth European and Chinese markets. An Eastern European cutting plant should be operational by March 2005. This will reduce costs and strengthen our European market position. Howe is also considering a
Slide 8: Approved Supplier Status
Approved Supplier Status • BMW • Subaru • Audi • Mitsubishi • Porsche • Toyota • General Motors • Honda • Ford • Suzuki • Chrysler • Mazda • Land Rover • Nissan 8
Slide 9: Competitive Advantages
Competitive Advantages Consistent supply of raw materials: Australia has the 4th largest cattle herd globally Secure supply of disease free hides Range of hides to match product requirements Modern, global scale finishing facility: Commissioned 1998 50% operational overcapacity Quali
Slide 10: Building Products
Building Products Urbanstone Premium paving products, Australian distribution network. Delta Pre-cast and pre-stressed concrete floors, beams & wall products. 10
Slide 11: Building Products Performance
Building Products Performance June 01 June 02 June 03 June 04 Sales 30.1 35.3 34.9 34.7 EBIT 6.1 5.3 4.3 4.2 EBIT Margin 20% 15% 12% 12% Margins should be maintained in a highly competitive market. Opportunity exists to increase sales through extending the Urbanstone product range. 11
Slide 12: Competitive Advantages
Competitive Advantages Urbanstone Delta Plant flexibility Cost efficient product Cost control Pre-stressed niche Distribution network Capacity Product innovation Distribution Premium branding 12
Slide 13: Non-Core Investments
Non-Core Investments Investment Property At June 30 SFC had JV interests in 6 commercial and retail properties valued at $21m with $15m of associated debt and generating an annual EBIT of $1.7m. Development Property $3.9m net cash to be generated over the next 4 years (after debt reduction o
Slide 14: June 04 Debt Position
June 04 Debt Position Recourse Non-Recourse Total Debt Operating Businesses 1.1 38.7 39.8 Property 6.4 8.6 15.0 Group Debt 7.5 47.3 54.7 Cash on Deposit 28.5 Net Debt 26.2 The ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. The $38.7m ALH subordinated no
Slide 15: Cash Flow
Cash Flow (A$m) June 01 June 02 June 03 June 04 EBITDA 15.0 28.8 36.1 33.5 Less Net Interest (2.4) (3.9) (3.6) (4.0) Less Tax Paid (3.2) (4.3) (7.4) (8.5) ALH Change in Working Capital - 11.4 5.6 3.4 Other Change in Working Capital (4.5) 6.4 0.8 (0.4) Other (Provisions, Entitlements, Other Debtors)
Slide 16: Outlook – Earnings
Outlook – Earnings Automotive Leather – Low volumes and a strong A$ will impact earnings in the first half. Additional costs associated with new program commencement (Audi & Land Rover) may impact margins initially. However in the medium term Howe is internationally competitive and has established
Slide 17: Outlook – Dividend Certainty
Outlook – Dividend Certainty We expect to maintain a fully franked Ordinary Dividend of $1.00 per share. SFC has declared a Special Dividend of $0.20 (fully franked) payable in September 2004. We expect to pay additional Special Dividends totaling approximately $0.60 per share (fully franked)