heistopdenberg

2014 Interim Results
For the six months ended 30 June 2014
Continued market share gains through organic
growth and strategic acquisitions
Agenda
• Overview
• Financial highlights
• Market drivers
• Growth Strategy
– Key Accounts
– InsitesTM
– Product range extension
– Market segmentation
• Current trading and outlook
2
Overview
•
Group revenue up 10.9% to £364.1 million with an improving trend
•
Gross margin up 60 basis points on H1 2013 to 31.3%
•
Operating profit* up 19.8% to £20.6 million
•
Organic growth strategy delivering market share gains
•
Seven acquisitions completed to June with pipeline remaining strong
•
Successful share placing raising net £52.4 million to support acquisition strategy
•
Strong presence established in Scandinavian markets
•
Interim dividend up 5.9%
*Before amortisation of acquired intangibles, acquisition related costs and exceptional items
3
Growth continues
• Organic group SPWD growth
rate now improving for six
consecutive quarters
• Bearing sales growth of 0.7%
in H1
• Non-bearing sales showing
significant growth
• Continental T&GM growth at
50.9%
• Continuing market uncertainty
+Including
incremental growth of Lönne
Business area at constant currency rates (€1.25:£1)
Q1
Q2
2014
2014
Growth rates (%)
SPWD
Total group
13.1
15.4
HY
2014
Revenue
H1 2014
£m
14.1
360.6
6.7
5.4
335.4
2.9
-1.5
0.7
74.3
Non-bearings
15.9
17.9
16.9
286.3
T&GM – Total
8.1
1.5
4.7
86.9
47.0
54.4
50.9
17.4
Key Accounts
10.7
8.6
9.6
190.7
Base business - Total
15.4
19.5
17.4
169.9
Base business - excl. Lönne
-3.7
2.5
-0.7
143.7
Organic+
5.0
Revenue
Bearings
– Continental
4
Financial highlights
Highlights
Total sales
Working capital days
Operating profit
364
328
324
22.6
20.6
H2 2013
H1 2014
17.2
H1 2013
H2 2013
H1 2014
H1 2013
69.5
H1 2013
H2 2013
Statutory
10.9%
Statutory
19.8%
Receivables
Constant currency
13.1%
Constant currency
21.6%
Inventories
FX
-2.2%
FX
-1.8%
Payables
Organic+
5.4%
Operating margin
7.0%
5.2%
Earnings
5.7%
EPS +10.2%
12.3
9.8
80.9
67.0
H1 2014
51.7
55.3
70.0
84.0
(54.7)
(58.4)
Total
67.0
80.9
Dividend
DPS +5.9%
6.8
10.8
3.6
3.4
H1 2013
H2 2013
H1 2014
H1 2013
H2 2013
H1 2014
Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items.
+Including incremental growth of Lönne
H1 2014
H1 2013
H1 2013
H2 2013
H1 2014
Profit & Loss
H1 2014
H1 2013
Lönne
Reported
Organic
Change
H1 2013
2013FX
H1 2013
Reported
Change
Turnover
364.1
25.8
328.4
338.3
10.9%
322.2
(6.2)
328.4
10.9%
Gross margin
114.0
8.7
100.8
105.3
-
99.1
(1.7)
100.8
-
Gross %
31.3%
33.7%
30.7%
31.1%
-
30.7%
-
30.7%
-
(93.4)
(83.6)
(7.1)
(86.3)
(82.1)
1.5
(83.6)
-
20.6
17.2
1.6
19.8%
19.0
17.0
(0.2)
17.2
19.8%
5.7%
5.2%
6.2%
5.6%
5.3%
-
5.2%
-
Interest
(3.1)
(2.0)
(0.6)
(2.5)
(2.0)
-
(2.0)
-
Underlying profit after
interest
17.5
15.2
1.0
15.1%
16.5
15.0
(0.2)
15.2
15.1%
Sales, Distribution and
Administrative Costs
Underlying operating
profit
%
£m
Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional items.
Ratios
H1 2014
H1 2013
Lönne
Reported
Change
Organic
H1 2013
2013FX
H1 2013
Reported
Change
Turnover
364.1
328.4
25.8
10.9%
338.3
322.2
(6.2)
328.4
10.9%
Underlying operating
profit
20.6
17.2
1.6
20.0%
19.0
17.0
(0.2)
17.2
19.8%
Return on Sales
5.7%
5.2%
6.2%
5.6%
-
5.3%
-
5.2%
-
Closing operating
capital^
294.9
222.0
-
243.9
-
217.8
(4.2)
222.0
-
Return on operating
capital employed**
26.6%
28.9%
-
26.0%
-
26.6%
-
28.9%
-
Return on investment***
14.0%
15.5%
-
15.6%
-
15.6%
-
15.5%
-
^Segmental assets including goodwill less liabilities, before current and deferred tax, dividends, cash, loans, deferred consideration & pension liability at
constant currency
**Underlying operating profit as a percentage of operating capital as defined in ^ but excluding goodwill and acquired intangibles
***Underlying operating profit as a percentage of operating capital as defined in ^
Sales* contribution by growth driver
500.0
450.0
400.0
(42.7)
31.2
350.0
10.4
26.3
300.0
318.7
250.0
16.7
Key
Accounts
InsitesTM
Lönne
Eliminations+
& Base
business
Base business (1.0)
Eliminations (41.7)
H1 2013
*At constant currency – management rates €1.25: £1
+Eliminating sales included in more than one category
Market
segmentation
& Product
extension
360.6
H1 2014
9
Cash generation
Working Capital
45.0
Days
40.0
35.0
H1 2013
H1 2014
Receivables
51.7
55.3
Inventories
70.0
84.0
(54.7)
(58.4)
67.0
80.9
Payables
30.0
4.4
Depreciation
and
amortisation
25.0
20.0
1.2
Share option
charges
7.5
Total
Inventories
Cash flow
7.8
H2 2013
-8.0
(20.8)
15.0
H1 2013
Receivables
-29.8
H1 2014
10.0
5.0
20.6
(16.5)
0.0 Operating profit
(before amortisation,
acquisition costs and
exceptionals)
£m
Payables
10
(3.4)
Exceptional and
acquisition costs
(7.0)
Operating Cash
Outflow
Movement in net debt
Movement in net debt
70.0
Opening
60.0
50.0
(52.9)
Exchange
2.0
Movement
(18.3)
Closing
(69.2)
40.0
30.0
20.0
10.0
0.0
£m
(7.0)
Operating
Cash Outflow
52.4
Proceeds from
share placing
(46.8)
(8.1)
Acquisitions
(3.6)
Capital
expenditure
(net)
Interest and
pension
funding
11
(4.5)
(0.7)
(18.3)
Tax
Purchase of
own shares
(net)
Net cash
outflow
Capital expenditure
•
•
Continued IT investment
Continued investment in growth drivers, notably Tools & General Maintenance
Land &
Buildings
Tools & General Maintenance Division
Information Technology
Vehicles
Branch investment and other
Capital expenditure
£m
0.1
0.1
12
Equipment
2.7
0.3
0.1
2.8
5.9
Intangible
assets
0.9
1.5
2.4
Total
3.6
1.8
0.1
2.9
8.4
Growth strategy
Growth Strategy
Growth
Capability
Costs
Synergies
Key Accounts development
Business Skills
Development
European Buying
Systems Integration
InsitesTM expansion
Distributed Learning
Programme Development
IT and Other Cost
Reductions
Brand Development
Product range extension
Internal Communications
and Involvement
Capital Employed
Management
Supplier Relationship
Management
Country organic growth
People Development
Supplier Rationalisation
Business Best Practice
Bearings
c.10% share of
€2bn market
MPT
3% share of
€5 bn market
Fluid Power
1% share of
€10 bn market
Tools & General
Maintenance
1% share of
€50 bn market
Geographical development
14
Key Accounts
Case study
• Global leader in Food and Ingredients,
Key Accounts grew by 9.6%
with > 24,000 people worldwide
Now represents 53% of group sales,
• Successful implementation and roll out in
57% excluding Lönne
Ireland and UK in 2013
Pan-European Key Accounts growth
• Pan-European rollout in June 2014 with
accelerated, up 28.2%
expectations of revenue > £5m in Year 1
Some national Key Accounts have
• 30 locations across 9 Brammer
delayed maintenance programmes in H1
geographies
4 new pan-European contracts won
• Senior sponsorship to deliver full range
Pipeline remains strong
of Brammer products and services
• Opportunity to deliver stores
management solutions
Update
•
•
•
•
•
•
15
Key Accounts
Key Account Sales Performance
Multi-site
Status
Scope
Sales
€67.0m
Tier 1
EU contract
Part EU Group
Tier 2
National contract
Part EU Group
Tier 3
No contract
Part EU Group
Tier 4
National contract
National Group
€85.9m
€81.5m
€81.0m
€23.5m
€24.6m
€45.4m
€46.8m
€217.4m
€238.3m
16
Growth
28.2%
-0.6%
4.8%
3.1%
9.6%
Pan-European Supply Agreements
No. of key Accounts
40
Experience at scale
• More than 500 people serving 60 Pan-EU Key Accounts
• Key Account support provided in 16 countries
• 14 Key Accounts are in the Global Fortune 500 list
100
80
30
60
20
40
10
20
0
Key Milestones
& Investments
2003
First ever EKAM
Employed
2004
2005
Investment in
European KA
Team
2006
Central support
team
established
2007
2008
KA Tools
established
Sector
Management
established
17
2009
Focus on
resilient
sectors
2010
2011
Account
Development
Managers
2012
Major
Investments in
KA infrastructure
2013
0
EU KA Revenues (M€)
60
InsitesTM
Update
• Total 396 InsitesTM
– 165 full time; 231 part time
• Increased by 13 overall
• Continued strong sales growth of
12.3%
• InsiteTM sales 48.7% of total Key
Accounts business
• EU InsiteTM pipeline strong with 366
opportunities
• Currently in direct negotiation with 94
customer locations
Case study
• Global tobacco manufacturer adopts
pan-European InsiteTM programme
• Turnover growth of 105% in the period
• 7 Insites™ in 5 countries
• Insite™ sales of £0.6m account for 96%
of total sales
• Growth potential approaching £4.5m
supporting future InsiteTM growth
18
Product Range Extension
Update
•
•
•
•
•
Case study
Bearing sales grew 0.7% reflecting • Roebuck tools brand introduced in 2013
market conditions
• Successful launch with encouraging
sales to c.2,600 customers
Key bearing suppliers report
bottoming out of market
• Roebuck products are now available
across Europe
Non-bearing sales up 16.9% driven
by product range extension through • Significant product range expansion in
development for 2014 following initial
Europe
success
Further market share gains secured
• Roebuck catalogue will support further
Growth rates improving
sales growth from H2
19
Product Range Extension
Bearings 0.7%
(SPWD 1.0%)
74.7
73.8
H1 2013
H2 2013
74.3
38.5
244.9
239.9
H1 2013
H2 2013
286.3
H1 2014
86.9
H1 2013
H1 2013
34.8
H1 2013
Tools &
Maintenance
H2 2013
H1 2014
Health and
Safety
84.6
Fluid Power
Seals
H2 2013
H1 2014
Fluid Power +10.1%
49.5
36.0
H1 2014
Tools & Maintenance +4.7%
82.9
Mechanical Power
Transmission 6.9%
Non-Bearings +16.9%
(SPWD +18.1%)
Mechanical
Power
Transmission –
Chains & Sprockets
54.5
49.6
H2 2013
£m like for like at constant currency
H1 2014
Bearings
Fluid
Power
Motors
Gearboxes
Mechanical
Power
Transmission Belts & Pulleys
20
Linear
Motion Industrial
Automation
European Product Division – Tools & General Maintenance
Update
European MRO catalogue
•
Turnover grew 4.7% overall and
50.9% on the continent
• Single MRO publication across
continental Europe
•
Growth in continental T&GM
accelerating to 54.4% in Q2
• First Europe-wide publication
•
Successful recent launch of MRO
catalogue Europe-wide
• Features >800 pages of Fluid Power
products
•
Continued investment in European • Driving product range extension in all our
Product Division, now comprising 30 regions
professionals
• 50,000 copies distributed in 19 countries
21
Market Segmentation
Update
•
•
•
•
Case study
• Successful Europe-wide contract with
Focus on defensive segments
Alcoa, a global aluminium processor
continues
Utilities up 9.3% and Food & Drink up • Relationship developed to supply one of
the worlds largest vertically integrated
12.1%
aluminium complexes, Alcoa Ma’aden
Growth in other sectors, with
• Delivering significant cost savings and
Consumer Goods up 19.1% and
service delivery to support future growth
Metals up 28.1%
Market focus is increasing resilience • Strong sales growth
and market share
22
Market Segmentation
Food and Drink
+12.1%
37.3
38.7
H1 2013
H2 2013
13.7
H1 2013
15.0
13.1
H2 2013
H1 2014
Recycling
+92.3%
H1 2014
Utilities
+9.3%
Pulp, Paper & Packaging
+3.8%
13.2
41.8
H1 2013
12.4
H2 2013
Automotive
+10.6%
H2 2014
2.5
£m
1.3
H1 2013
H2 2013
34.0
34.6
H1 2013
H2 2013
Metals
+28.1%
Construction & Aggregates
+13.4%
17.8
1.3
37.6
16.4
H1 2014
15.7
H1 2013
37.0
40.0
H1 2013
H2 2013
H1 2014
47.4
15.8
H2 2013
23
H1 2014
H1 2014
CURRENT TRADING & OUTLOOK
Sales per working day - Europe
Deseasonalized Brammer SPWD Index vs Seasonally Adjusted European Production Index (EU28 - 3 month moving average)
Brammer
180%
160%
140%
EPI
Since 2007:
Since 2007:
ProductionIndex
Index
is down
-- European
European Production
is down
8% x%
is up
up57%
x% (31%
(x% excluding
Buck& &Hickman)
Hickman)
-- Brammer
Brammer is
excluding Buck
120%
100%
80%
60%
40%
20%
25
May-14
Jan-14
Mar-14
Sep-13
Nov-13
Jul-13
May-13
Jan-13
Mar-13
Sep-12
Nov-12
Jul-12
May-12
Jan-12
Mar-12
Sep-11
Nov-11
Jul-11
Mar-11
May-11
Jan-11
Nov-10
Jul-10
Sep-10
Mar-10
May-10
Jan-10
Nov-09
Jul-09
Sep-09
Mar-09
May-09
Jan-09
Sep-08
Nov-08
Jul-08
May-08
Jan-08
Mar-08
Sep-07
*Graph excludes Lönne group
Nov-07
Jul-07
May-07
Jan-07
Mar-07
0%
Sales per working day - Growth
2009
2010
2011
2012
Q1-13
Q2-13
Q3-13
Q4-13
2013
Q1-14
Q2-14
UK
(0.4)%
8.0%
16.8%
7.6%
(0.1)%
3.3%
0.4%
5.0%
2.2%
0.1%
(3.0)%
Germany
(30.8)%
13.6%
16.1%
0.6%
(7.5)%
(1.7)%
(0.8)%
1.8%
(2.4)%
6.9%
8.7%
France
(14.6)%
11.1%
14.2%
3.5%
(1.9)%
(2.7)%
(7.0)%
(6.3)%
(4.7)%
(0.7)%
8.4%
Spain
(22.3)%
9.5%
12.3%
(0.3)%
(3.3)%
(3.8)%
8.5%
15.8%
3.8%
12.4%
15.7%
Netherlands
(16.6)%
10.3%
17.2%
8.5%
4.6%
(4.9)%
2.2%
9.0%
2.8%
7.1%
8.4%
-
18.6%
24.1%
3.0%
(1.5)%
3.1%
0.7%
6.1%
1.9%
13.7%
9.6%
Total
(16.1)%
11.6%
21.8%
17.1%
(2.9)%
(0.3)%
(0.6)%
3.4%
(0.2)%
13.1%
15.4%
Organic
(16.1)%
11.6%
15.9%
2.9%
(2.9)%
(0.3)%
(0.6)%
3.4%
(0.2)%
5.0%
6.7%
Poland
26
Growth Track Record
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
H1
2014
Revenue
270.8
287.4
314.3
379.6
478.4
426.1
468.4
571.5
639.6
651.9
364.1
GP %
30.1%
30.9%
30.5%
30.4%
30.0%
30.1%
30.1%
30.3%
30.5%
31.5%
31.3%
9.8
12.5
15.1
19.9
26.2
18.4
23.0
31.8
37.2
39.8
20.6
TP %
3.6%
4.4%
4.8%
5.2%
5.5%
4.3%
4.9%
5.6%
5.8%
6.1%
5.7%
Operating cash
flow
18.7
15.7
11.9
16.7
29.2
33.3
27.5
28.9
28.6
48.4
(3.6)
Net Debt (€ equiv)
80.7
73.7
80.4
80.9
86.8
44.9
42.8
42.1
66.3
63.6
86.4
Total Customer
Signed off Cost
Savings
0.4
2.6
8.8
15.1
15.0
25.8
30.0
34.9
51.5
60.0
25.9
Operating profit
£m
27
Total
254.3
255.3
Customer validated cost savings
Over 3,300 separate cost savings provided to our customers so far in 2014
60.0
51.5
34.9
30.0
25.9
25.8
15.1
15.0
2007
2008
8.8
0.4
2004
£m
2.6
2005
2006
2009
28
2010
2011
2012
2013
H1 2014
Acquisitions
•
Lönne group acquisition gives a major presence in Scandinavia
•
Key account opportunities already identified and several InsitesTM opened
•
Seven acquisitions completed to June, including six bolt on acquisitions with
total annualised revenues of €31m for a total consideration of €9.5m
•
Pipeline remains strong as competitors find market conditions challenging with
two further bolt on acquisitions made in the second half so far
•
Share placing, raising a net £52.4 million supports ongoing acquisition strategy
29
Outlook
•
Continued successful execution of organic growth strategy in challenging markets
•
Organic growth rates improving for six consecutive quarters
•
Acquisitions strategy expands our European footprint, gains market share and
provides profit enhancing synergy opportunities
•
Continued investment in growth projects including vending drives market share
gains
•
Additional 107 FTEs solely dedicated to vending
•
Self-help becoming ever more important in difficult market conditions
30
Appendices
Brammer
• Europe’s leading distributor of industrial maintenance, repair and overhaul
products (“MRO”)
– Bearings
– Mechanical Power Transmission
– Fluid Power
– Tools & General Maintenance
– Added value service
• A fragmented €65 billion + market
• Over 350 locations across 19 countries
• 4.8 million product lines
• More than 100,000 customers
• Robust fundamental growth drivers
32
Segments - HY
Eastern
Benelux Scandinavia Europe &
Other
UK
Germany
France
Spain
Turnover
143.8
61.3
42.8
23.7
26.6
26.3
36.1
360.6
Sales per working day growth
(Like for like)
-1.4%
7.7%
3.9%
14.0%
7.7%
n/a
27.7%
14.1%
8.2
3.7
1.7
2.3
1.3
1.5
1.6
20.3
Return on sales
5.7%
6.0%
4.0%
9.7%
4.9%
5.7%
4.4%
5.6%
Return on sales 2013
5.8%
5.1%
3.4%
8.6%
4.5%
n/a
3.4%
5.2%
Operating capital employed*
42.6
23.1
14.1
10.3
10.8
10.5
41.5
152.9
38.5%
32.0%
24.1%
44.7%
24.1%
28.6%
7.7%
26.6%
48.5%
28.3%
25.8%
60.8%
20.0%
n/a
6.6%
28.9%
Underlying operating profit
Return on operating capital
employed
Return on operating capital
employed 2013
£m
At constant currency £1:€1.25
* Segmental assets excluding goodwill and acquired intangibles less liabilities, before current & deferred tax, dividends, cash, loans, deferred consideration &
33
pension liability
Total
Costs
2014
2013
Lönne
Reported
Organic
2013
2013FX
2013
Reported
Sales, Distribution and
Administrative Costs
(93.4)
(7.1)
(83.6)
(86.3)
(82.1)
1.5
(83.6)
Intangible amortisation
(0.6)
(0.6)
(0.6)
(0.6)
-
(0.6)
Acquisition related
(1.6)
(0.4)
-
(1.2)
-
-
-
Exceptional item
(3.7)
--
(3.7)
-
-
-
Total Costs
(99.3)
(7.5)
(84.2)
(91.8)
(82.7)
1.5
(84.2)
Acquisition related costs
and exceptional
restructuring costs in 2014
£m
Underlying costs up 5.1%
at constant currency
34
Total reported costs
increased by £15.1m
Exchange rates - HY
June 2014
December 2013
June 2013
Average
€1.22
€1.182
€1.181
Closing
€1.249
€1.202
€1.167
35
Disclaimer
This document contains statements about Brammer plc that are or may be forward-looking statements.
These forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Brammer plc. They involve
known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person to be
materially different from any results, performance or achievements expressed or implied by such statements. They are based on numerous assumptions
regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or
written forward-looking statements attributable to Brammer plc or any of its shareholders or any persons acting on its behalf are expressly qualified in
their entirety by the cautionary statement above. All forward-looking statements included in this document speak only as of the date they were made and
are based on information then available to Brammer plc. Investors should not place undue reliance on such forward-looking statements, and Brammer
plc does not undertake any obligation to update publicly or revise any forward-looking statements.
No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no
liability is accepted by Brammer plc or any of its directors, members, officers, employees, agents or advisers for any such information or opinions.
This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it
does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities.
The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this
document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a
violation of laws of any such other jurisdiction.
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