Summarised unaudited consolidated results for the six months ended 31 December 2018
Disclaimer Forward-looking statements This presentation which sets out ARB’s results for the six months ended 31 December 2018 contains 'forward-looking statements‘ with respect to, inter alia , ARB’s financial condition, results of operations and certain of its plans, strategies and objectives, which have not been reviewed or reported on by ARB’s auditors. By their nature, forward-looking statements are not guarantees of future performance but are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future, involve known and unknown risks, uncertainties and other facts or factors which may cause ARB’s actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements.
Agenda ▪ Group financial review ▪ Divisional reviews • Electrical • Lighting • Corporate ▪ Strategy and outlook ▪ Q&A
1 FINANCIAL REVIEW
Six month review Lack of business Perilous state of confidence construction industry Power cable supply More stable Rand challenges Copper Price Lack of consumer ZAR exchange rate confidence remained volatile
Group financial review Operating Profit Revenue 125 1 357 1 342 R'm 107 1 274 105 105 R'm 1 236 1 250 94 100 92 1 100 1 000 75 750 50 500 25 250 0 0 HY2015 HY 2016 HY 2017 HY 2018 HY 2019 '14 '15 '16 '17 '18 Cash HEPS Cents R’m 250 000 40 37,62 226 562 35 190 877 200 000 174 762 28,07 27,79 30 24,22 23,17 147 775 25 150 000 131 099 20 100 000 15 10 50 000 5 0 0 HY2015 HY 2016 HY 2017 HY 2018 HY 2019 HY2015 HY 2016 HY 2017 HY 2018 HY 2019
Key drivers of revenue ▪ General maintenance spend ✓ Ongoing repairs and maintenance “Annuity income” ▪ GDFI ✓ Government infrastructure spend ✓ Private infrastructure spend ✓ Domestic DIY spend ▪ Confidence ✓ Business confidence – ✓ private infrastructure spend ✓ Consumer confidence – retail DIY spend ▪ Government Electrification ✓ Eskom ✓ Municipalities
Key drivers of costs Product category Cost drivers Source Customers Cable & wire Copper / Aluminium Mainly local Cable - large Steel / PVC contractors & projects (can be imported) Labour Wire - Small OHL Steel / Wire Mainly local Eskom Silicone Municipalities Overhead line "designated products" labour Import some Mines / exports Low voltage Copper / Steel Local manufacture All customers Forex Local agents of international brands Lighting Forex Imported All customers
Group financial review ‘000 % change Six months ended Six months ended Year ended 31 December 2018 31 December 2017 30 June 2018 Revenue 1,1% 1,356,730 1,342,403 2,590,150 Gross profit 2,0% 318,784 312,537 615,186 Gross profit margin 23,5% 23,3% 23,8% Operating Profit (14.7)% 91,609 107,430 204,326 Operating profit margin 6,8% 8,0% 7,9% Profit for the year (36,8)% 63,696 100,802 191,647
Normalised earnings ‘000 % Six months ended Six months ended Year ended change 31 December 2018 31 December 2017 30 June 2018 Normal earnings attributed to (6,1)% 63,851 67,990 137,633 ordinary share holders Net effect of IFRS adjustments (9,204) 20 600 30,914 - Change in Put Option valuation (10,121) 13,828 26,000 assumptions - Dividends paid no Non- (3,600) (4,800) (4,800) Controlling Interests (NCI’s) - Net present value reversal of Put (1,586) - (1,558) Liability - NCI’s share of the results 6,103 6,772 11,272 Earnings attributed to ordinary (38,3)% 54,647 88,590 168,496 shareholders as reported in terms of IFRS
Group financial review Sales by customer type H1 '19 Sales by Customer type H1 '18 8% 6% Cash 7% Contractors 17% 10% 19% Government Industry 14% 15% Mining Wholesale 13% 39% 34% 9% Retail Export 2% 10% 4% 2% 2% Other 6%
Group financial review Sales by Product H1 '19 Sales by product H1 '18 8% 8% 16% 34% 39% 24% 24% 12% 22% 13% Cable OHL Lighting Low Voltage Buy outs Cable OHL Lighting Low Voltage Buy outs
Group financial review RCP (Kg) 1st half comparison 105,00 101,2 98,34 100,00 96,31 92,80 95,00 91,68 90,74 90,19 89,30 87,30 90,00 85,72 85,44 83,56 85,00 79,15 78,68 80,00 75,00 70,00 65,00 60,00 June July Aug Sept Oct Nov Dec RCP '19 RCP '18
Group financial review Average R/$ 1st half comparison 16,00 US$ '19 US$ 18 14,81 15,00 14,49 14,14 14,15 14,10 14,06 13,93 13,73 14,00 13,41 13,33 13,24 13,17 13,17 12,93 13,00 12,00 11,00 10,00 June July Aug Sept Oct Nov Dec
Group financial review Working Capital trend - Mid year Working capital as a % of revenue 550 000 25,0% 24,3% 24,0% 500 000 22,8% 23,0% 450 000 22,0% 21,6% 21,3% 20,9% 21,0% 400 000 20,0% 350 000 19,0% 300 000 18,0% 17,0% 250 000 16,0% 200 000 Inventory Receivables Payables 15,0% 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Group financial review Cash generated by operations 140 000 120 239 120 000 100 000 80 196 77 699 80 000 56 398 60 000 49 613 40 000 20 000 - 1H 15 1H 16 1H 17 1h 18 1h 19
2 DIVISIONAL REVIEW
Divisional contribution Contribution to revenue 1H 19 Contribution to revenue 1H '18 2,2% 2,1% 18,3% 20,5% 79,7% 77,3% Electrical Lighting Corporate Electrical Lighting Corporate Contribution to operating profit 1H 19 Contribution to operating profit 1H 18 14,4 17,1 26,9 54,4 28,5 70,9 Electrical Eurolux Corporate Electrical Eurolux Corporate
3 ELECTRICAL
Electrical division Increase in revenue Copper supply from CraigCor challenges Lack of infrastructure Entry of direct and development competitor into the projects cable market Continued reduction in Eskom spend
Electrical division Operating profit ( R’m ) Revenue ( R’m ) 160 2 500 140 135 134 129 2 120 123 2 006 1 996 120 2 000 1 876 1 013 100 58 71 71 1 007 978 64 1 500 848 80 60 1 000 40 1 107 71 1 087 1 018 64 63 999 59 500 892 52 20 - - '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 1st half 2nd half 1st half 2nd half
Electrical division Six months ended Six months ended Year ended ‘000 % 31 December 2018 31 December 2017 30 June 2018 change Revenue (1,8)% 1,087,614 1,107,263 2,119,913 Operating profit (26,8)% 51,870 70,875 129,036 Profit margin 4,8% 6,4% 6,1% • Craigcor contributes positively to this division • Cable supplier challenges with: • copper supply shortage locally with fire at Phalaborwa • major supplier continues direct to market strategy • smaller manufacturers not as reliable to date • Low Voltage cable in short supply for period • Low Voltage sales flat, impact of LV cable supply shortage
Electrical division • OHL sales still impacted by ESKOM challenges • Bad debts remain a challenge, despite debtors insurance • ESKOM Contractors now severely cash strapped • Municipalities slow at paying/VBS effect • Key focus placed on streamlining existing operations and gaining better efficiencies
4 LIGHTING
Lighting division Increased inventory to Inclusion of Crabtree meet customer retail sales requirements Reduced consumer “Hardware” revenue confidence decline in Retail
Lighting division Revenue ( R’m ) Operating profit ( R’m ) 600 70 60 511 507 60 502 500 57 426 50 46 400 240 30 43 251 25 248 40 212 20 300 20 30 200 20 288 32 271 256 30 254 27 26 214 100 23 10 - - '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 1st half 2nd half 1st half 2nd half
Lighting division ‘000 % Six months ended Six months ended Year ended 31 December 2018 31 December 2017 30 June 2018 change Revenue 13,4% 288,350 254,180 501,876 Operating profit 1,1% 27,225 26,942 45,882 Profit margin 9,4% 10,6% 9,1% • Crabtree product sales continue to grow and are included in revenue • Increased stock levels improve fill rate to retailers • Rechargeable stock significantly reduced and fully provided against • Packaging plant now operational and performing • Challenges with consistent supply of Low Voltage cables
5 CORPORATE
Corporate division Six months ended Six months ended Year ended ‘000 % 31 December 2018 31 December 2017 30 June 2018 change Revenue 7,0% 30,581 28,579 45,882 Operating profit 13,3% 16,317 14,397 33,698 • This division always in line with expectations • Property portfolio - 16 properties valued at R331 million, completely ungeared • Given beneficial occupation of Lords View site from 12 December 2018
6 STRATEGY AND OUTLOOK
Outlook Electrical division • Little to no improvement in trading environment • Low economic growth forecast • Trading margins to remain under pressure • Lords View completed and operational as a DC • ESKOM with national elections • Proposed changes to LAP list
Outlook and strategy Lighting division • Expand product offering to existing customers • Consolidation of the Radiant acquisition
Recommend
More recommend
