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CONGRESS September 2013 Agenda 1. Introduction 2. Company - PDF document

CONGRESS September 2013 Agenda 1. Introduction 2. Company Profile 3. 2013 H1 Results 4. Growth Strategy 5. Tools & Maintenance 1. Market Research 2. Opportunity 3. Customer Value Proposition Philippe Hervieux Joined


  1. CONGRESS – September 2013 Agenda 1. Introduction 2. Company Profile 3. 2013 H1 Results 4. Growth Strategy 5. Tools & Maintenance 1. Market Research 2. Opportunity 3. Customer Value Proposition

  2. Philippe Hervieux Joined Brammer in 1992 • Finance • Sales • General Management • Creation of the Tools & Maintenance division Company Profile

  3. About Brammer • European market leader - with a 2% market share • Focused product range in mechanical MRO components - a €40 billion + market • Bearings • Mechanical Power Transmission • Fluid Power • Tools and General Maintenance • Added value services About Brammer • Leading the process of consolidation in a highly fragmented market • Diverse customer base of over 100,000 customers • Customer risk is low • Largest European customer of our main strategic suppliers

  4. Brammer footprint • Over 350 locations across 16 countries • 3,200+ employees • 3.5 million product lines • More than 100,000 customers • Robust fundamental growth drivers 2 2013 H1 Results

  5. 2013 H1 Highlights (£m) Total sales Operating profit Operating margin Growth Track Record 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013 Total Revenue 270.8 287.4 314.3 379.6 478.4 426.1 468.4 571.5 639.6 328.4 GP % 30.1% 30.9% 30.5% 30.4% 30.0% 30.1% 30.1% 30.3% 30.5% 30.7% Operating profit 9.8 12.5 15.1 19.9 26.2 18.4 23.0 31.8 37.2 17.2 211.1 TP % 3.6% 4.4% 4.8% 5.2% 5.5% 4.3% 4.9% 5.6% 5.8% 5.2% Operating cash flow 18.7 15.7 11.9 16.7 29.2 33.3 27.5 28.9 28.6 13.1 223.6 Net Debt (€ equiv) 80.7 73.7 80.4 80.9 86.8 44.9 42.8 42.1 66.3 66.4 Total Customer Signed 0.4 2.6 8.8 15.1 15.0 25.8 30.0 34.9 51.5 28.5 off Cost Savings £m

  6. Sales per working day - Europe Deseasonalized Brammer SPWD Index vs Seasonally Adjusted European Production Index (EU27 - 3 month moving average) Brammer EPI 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Sales per working day - Europe Deseasonalized Brammer SPWD Index vs Seasonally Adjusted European Production Index (EU27 - 3 month moving average) Brammer EPI 180% Since 2007: 160% -European Production Index is down 10% 140% -Brammer is up 51% (25% excluding Buck & 120% Hickman) 100% 80% 60% 40% 20% 0% Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13

  7. Growth Strategy Brammer – Growth Strategy Growth Capability Costs Synergies Geographical development Key Accounts development Business Skills Development European Buying Systems Integration Insites TM Distributed Learning IT and Other Cost Brand Development expansion Programme Development Reductions Internal Communications and Capital Employed Supplier Relationship Product range extension Involvement Management Management Country organic growth People Development Supplier Rationalisation Business Best Practice Bearings MPT Fluid Power Tools & General 12% share of 3% share of 1% share of Maintenance €2bn market €5 bn market €10 bn market 1% share of €25 bn market

  8. Key Accounts Key Account Sales Performance Multi-site Status Scope Sales Growth Tier 1 EU contract Part EU Group €57.3m 12.5% €64.5m Tier 2 National Part EU Group €77.5m 3.7% contract €80.4m Tier 3 No contract Part EU Group €20.9m 12.5% €23.5m Tier 4 National National Group €42.5m 2.0% contract €43.3m €198.2m 6.8% €211.7m Pan-European Supply Agreements Experience at scale 50 • More than 500 people serving 54 Pan-EU Key Accounts (June ’13) • Key Account support provided in 16 40 countries No. of key • 14 Key Accounts are in Accounts the Global Fortune 500 30 list — 1 of these in the top 100 20 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Key Milestones Investment in First ever EKAM Central support KA Tools Sector Focus on Account Major Investments in KA & Investments European KA Employed team established Management resilient Development infrastructure Team established established sectors Managers

  9. Key Accounts Update Case Study • Key Accounts SPWD grew by 7.8% • Roll-out of successful Outsourced Storeroom Management solutions in • Now represents 53% of group sales Iceland & Norway which delivered • SPWD growth rates accelerating from record savings in 2012 (> € 900k) 2.0% in January to 10.3% in June • 65 staff deployed across 22 EU • 4 new pan-European contracts won production sites • Pipeline is at record levels • H1 sales growth € 3.4m (46.1%) • Well positioned for double digit growth in the second half Insites ™ Update Case Study • H1 Total 372 Insite ™ • Insite ™ from contract inception to accelerate revenue transfer – 133 full time; 239 part time • Staff deployed across 11 EU • Increased by 45 production sites • Continued strong sales growth of 8.6% – 7 full time; 4 part time • H1 sales share Insite ™ as 46% of total • H1 sales growth €1.5m (448%) KA business • H1 cost savings €192k • Currently in direct negotiation with 65 customer locations

  10. Product Extension Update Case Study – Catalogue • Bearing SPWD declined 10.3% • 17,369 SKUs from 50 brands reflecting market conditions • 60,000 copies printed in 10 languages. • Key bearing suppliers report bottoming • Annualised catalogue sales now >£6m out of market • Centralised in-house team of 7 • Non-bearing SPWD up 1.3% driven by dedicated catalogue specialists product range extension through Europe • Growth rates improving throughout H1 Product Extension Tools & Health and Maintenance Safety Fluid Power Seals Mechanical Power Transmission – Chains & Sprockets Linear Motion - Mechanical Motors Industrial Gearboxes Power Automation Fluid Bearings Transmission - Power Belts & Pulleys

  11. European Product Division Update Case Study • Turnover grew 5.0% overall, and • Tools & Maintenance sales to pan 24.5% on the continent European Tier 1 accounts up 34% • Growth rate accelerating throughout • Successful range extension at major the first half European Accounts • Successful rollout of European • PepsiCo Tools & Maintenance sales catalogue to over 30,500 customers up 9 times Market Segmentation Update Case Study • Focus on defensive segments • Segment specific marketing material continues adds value to win sales • Utilities 13.6% and Food & Drink up – Soft drinks 4.0% – Baking – Brewing • Growth in other sectors, with – Confectionary Consumer Goods up 43% • Segmentation approach co-ordinated • Market focus is increasing resilience with Key Account strategy and is winning market share

  12. Market Segmentation Continued investment in growth drivers • At constant currency, Sales, distribution and administrative costs increased 2.8% to £83.6 million • Underlying operating costs are flat year on year, remaining tightly controlled • Investment in excess of £1.8 million on growth driver projects – Tools and General Maintenance – Key Alcoa contract implementation – Vending • Project teams co-ordinated centrally to maximise synergies and share expertise

  13. Market Research Spontaneous Word Association

  14. Product Usage And Purchasing Vs. 2012 Purchase From Products Used Brammer Bearings 89% 80% Belts & pulleys 77% 60% Seals 70% 44% Chains & sprockets 66% 47% Maintenance products 66% 30% Clutches & couplings 63% 39% Tools 61% 23% Pneumatics & Vacuum 59% 28% Hoses, tubes & ducting 57% 20% Hydraulics 54% 21% Motors 54% 17% Gearboxes 48% 15% Process products 47% 12% Health & Safety products 47% 8% Instrumentation 45% 13% Filtration products 40% 10% Control gear & switch gear 39% 12% Drives & starters 34% 7% Motion control 31% 7% Key Drivers of Satisfaction 0.75 Product Offering 0.81 Ordering & Customer Service 0.73 Product Availability And Delivery Customer Sales Reps 0.66 Technical Support 0.70 Invoices And Payment 0.57 0.88 Business Relationship

  15. When Is Brand Important? What Keeps You Awake At Night? • Improve Supply (29%) - Reliability of suppliers; Reduce the number of suppliers; Location of suppliers; Closer contact with suppliers; On time and faster deliveries; More proactive suppliers; • Improve Equipment (12%) - Improved machinery; Better maintenance; More reliable equipment; More automation; Less deterioration/depreciation; More standardised/uniform components. • Resolve Internal Issues (12%) - Delayer company hierarchy; Improve internal communications; More organisation; More structure; Change company culture; Faster decision making; Engage more staff. • Price Issues (8%) - Stabilise prices; Better credit terms; Reduce costs of raw materials & labour. • Production Issues(8%) - Increase production capacity; Reduce lead time; Reduce operational costs. • Staffing (7%)

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