Interim results presentation For the six months ended 31 December 2012
Agenda » Highlights » Divisional performance » Financial Review » Group prospects and strategy » Questions » Appendix 2
Highlights Revenue R45 262m 18% Operating profit R2 939m 12% HEPS 829 cps 14% Core EPS * 872 cps 15% Interim dividend per share 380 cps 27% Good result overall - varied across the group *Core EPS mainly excludes : l d • amortisation of intangibles on acquisitions in the current period • business acquisition costs (mainly in the prior period) Dividend pay out ratio of approximately 44% of Core EPS; rolling dividend yield of 3,8% based on 22/2/2013 price of R200 per share 3
Business conditions in key markets » Trading conditions challenging in SA and Europe » Industrial action in SA and Korea impacted the group » Slower growth in the SA motor vehicle market » Increasing demand for affordable vehicles » Volumes and pricing under pressure in SA Logistics • Especially in manufacturing industry » German economy slowing » Competition in car rental industry remains fierce » Insurance underwriting conditions in short term industry were more challenging; equity markets were favourable » Current cycle in the motor industry favours our Financial Services division 4
Imperial’s performance during the period » Good first half result » Good portfolio effect » Retail cluster of businesses performed well » Strong growth was achieved in annuity revenue streams generated from after-sales parts, service and financial services » Aftermarket parts, components and industrial equipment businesses continue to grow » SA Logistics and International Logistics were under pressure • Strike and volume pressure in SA; Slowing German economy » Excellent growth in rest of Africa logistics; operating profit up 22% » Acquisition of RTT Health Sciences will contribute significantly to our distribution footprint in Africa » Strong cashflow, cash generated by operations up 111% » Balance sheet strong – net debt/equity ratio of 52% (excl. prefs) » Excellent returns : ROE = 22% (annualised) 5
Performance of the three business pillars Distribution, Retail & Logistics Car Rental & Tourism Financial Services Revenue = R15,9 bn Revenue = R1,9 bn Revenue = R28,9 bn -1% 27% 14% Operating profit = R707m Operating profit = R183m Operating profit = R2,1 bn -1% -13% 19% The Three Pillars of Imperial 6
Group profit trend Revenue (LHS) Operating Profit (RHS) 3.0 2.9 60 3 2.6 2.4 2.1 1.8 40 45.3 2 42.4 Rbn 1.4 38.4 1.3 33.3 31.4 27.8 25.7 20 1 23.6 0 0 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 Jun 12 Dec 12 Core EPS HEPS 872 867 839 900 829 756 725 727 653 645 581 533 600 503 cps 472 431 283 269 300 0 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 Jun12 Dec 12 7
Southern Africa logistics
Southern Africa logistics Revenue (Rm) Operating profit (Rm) Operating Margins +4% -22% 6.2% 4.9% 4.6% 8,677 8,311 513 400 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Challenging trading conditions in SA, Rest of Africa strong » Strike had a material impact across all South African businesses » Volumes and rates, especially in manufacturing were depressed » Rest of Africa business performed well and continues to grow – operating profit up 22% » RTT health sciences will contribute significantly to distribution footprint in Africa 9
Southern Africa logistics Revenue by activity Revenue by sector 49% 36% 38% 17% 10% 8% Steel and Metals 2% 15% 26% Consumer Goods & Retail Freight & Transport Industrial Products Warehousing & Distribution Construction Supply Chain Management Chemicals, Fuel & Gas Mining & Agriculture 10
Revenue split between SA and ROA » Rest of Africa expansion gaining momentum » Revenue up 24%; Operating profit up 22% » RTT Health Sciences acquisition will contribute further – approximately R240m p.a of revenue generated in rest of Africa 4% 5% 5% 18% 23% 26% 96% 95% 95% 82% 77% 74% Rest of Africa South Africa F2008 F2009 F2010 F2011 F2012 H1 2013 11
International logistics
International logistics (EURO) Revenue ( € m) Operating profit ( € m) Operating Margins +69% +45% 5.7% 5.0% 669 4.3% 29 397 20 H1 2013 H2 2012 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 Slowing German economy » Tougher trading conditions; contribution of Lehnkering assisted growth » Volumes depressed across most industries – inland shipping industry volumes down 6% » Lehnkering experienced normal seasonally low activity levels » Contract gains and renewals in parts distribution and in-plant logistics services contributed positively 13
International logistics (ZAR) Revenue (Rm) Operating profit (Rm) Operating Margins +74% +52% 5.6% 7,211 4.9% 307 4.3% 202 4,159 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Exchange rate benefit » 2012 Average R/ € : 10.79 vs 2011 Average R/ € : 10.47 14
International logistics Revenue by sector 18% 29% 11% 2% 2% 4% 16% 5% 12% Chemicals Steel Automotive Energy Paper/Packaging Agricultural Imperial Shipping Group Food Other Lehnkering Panopa Services Neska Brouwer Shipping 15
German chemical production LEHNKERING Production Index (2005 = 100) Specialised chemical and liquid food warehousing, distribution and contract manufacturing business. Shipping and Steel have been incorporated into Imperial 125 Shipping and Panopa 126 » Strong footprint in chemical industry 118 » Combination of logistics, value added 115 services & outsource manufacturing 112 113 » Approximately 76% of revenue in 104 contract manufacturing from 109 106 104 Agrochemicals industry 105 102 » Agrochemicals industry historically 102 resilient to economic downturns 97 95 87 85 2005 2006 2007 2008 2009 2010 2011 Total Chemicals mkt Agrochemicals Source: VCI Chemical Industries Association
Car rental and tourism
Car Rental and Tourism Revenue (Rm) Operating profit (Rm) Operating Margins -0.8% -13 % 10.8% 9.5% 9.1% 1,939 1,924 210 183 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Performance below expectation » Margin improvement vs H2 2012 due to turnaround at Auto Pedigree & Panelshops » Revenue flat - impacted by growth of lower rate insurance replacement business » Utilisation reduced from 70% to 69% - impact of hail storms and higher accident levels » Tourism performance was disappointing 18
Distributorships
Distributorships Revenue (Rm) Operating profit (Rm) Operating Margins +17% +13% 8.8% 8.6% 8.3% 1 316 15,843 1,162 13,590 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Performed well » Excellent revenue growth mainly due to improved after sales » Impacted by supply disruptions due to strike experienced by our principals in Korea • Lower inventories • Sub-optimal supply mix, which impacted margins » Strong growth in used car sales » Margins also impacted by weaker currency » NAC disposal concluded on 15 February 2013 – R433m capital released 20
Drivers of SA vehicle market
South African new vehicle sales » Fundamentals continue to be good • Good levels of credit availability • Low interest rates • Still below peak of 2006 • Underpenetrated market relative to developed world – in line with emerging market peers Passenger car sales Vehicle penetration in SA (units) (units per 1 000 people) (000’s) 500 700 600 400 500 300 400 In-line with World (ex.China) 300 200 20% premium to world 200 100 100 0 0 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 New Zealand Italy Spain France Australia Germany UK Poland Japan Czech Republic US Hungary Malaysia South Korea Argentina Taiwan Russia South Africa Mexico Ukraine Turkey Chile Brazil Thailand Indonesia India China World World (ex China) Source: NCR, SBG Securities Source: NCR, SBG Securities 22
Vehicle affordability good » Debt servicing costs have declined » Consumers are changing their cars much earlier » Will support demand Debt service cost as a percent of Replacement cycles getting shorter disposable income (loan duration) 50 14% 12% 45 10% 40 8% 35 6% 30 4% Used 25 2% New 0% 20 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Debt service cost as % of disposable income Source: NCR,UBSe Source: Wesbank,UBSe 23
Vehicle affordability good » New car prices have lagged inflation » Weaker currency poses a risk but low interest rates will assist New Car Pricing vs Used Car Pricing vs CPI (Jan 2002 = 100) 190 ― New Car Pr Index Jan 2002 = 100 180 ― Used Car Pr Index Jan 2002 = 100 ― CPI Jan 2002 = 100 170 160 Index 150 140 130 120 110 100 90 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Source: NAAMSA, Stats SA, I-Net Bridge, SBG Securities 24
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