Continued progress in difficult markets Delivered 60 million of - - PowerPoint PPT Presentation

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Continued progress in difficult markets Delivered 60 million of - - PowerPoint PPT Presentation

Sep 19, 2023 517 likes •897 views

2013 Preliminary Results For the year ended 31 December 2013 Continued progress in difficult markets Delivered 60 million of validated cost savings to our customers Agenda Overview Financial highlights Market drivers Growth

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SLIDE 1

2013 Preliminary Results For the year ended 31 December 2013 Continued progress in difficult markets Delivered £60 million of validated cost savings to

  • ur customers
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SLIDE 2
  • Overview
  • Financial highlights
  • Market drivers
  • Growth Strategy

– Key Accounts – InsitesTM – Product range extension – Market segmentation

  • Current trading and outlook

Agenda

2

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SLIDE 3

Overview

  • Group revenue up 1.9% to £651.9 million with an improving trend
  • Gross margin up 100 basis points to 31.5%
  • Profit before tax up 4.4% to £35.4 million
  • Strong operating cash generation of £45.5 million
  • $100 million of additional long term funding
  • Organic growth strategy delivering market share gains
  • Acquisition of Lönne Holding AS post year end
  • Full year dividend up 8.5%

3

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SLIDE 4

Customer validated cost savings

0.4 2.6 8.8 15.1 15.0 25.8 30.0 34.9 51.5 60.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Over 6,380 separate cost savings provided to our customers in 2013

£m

4

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SLIDE 5

Brammer well positioned to outperform market

  • Growth rates are improving in most key

segments

  • Group SPWD growth in Q4 - 6.0 ppt

improved over Q1

  • Bearing sales decline has bottomed out

with growth of 2.6% in Q4

  • Non-bearing sales growth continues to

accelerate

  • T&GM grew 7.1%
  • Key Accounts growth accelerated to

12.9% in Q4

  • Continuing market uncertainty

Business area at 2013 constant currency rates (€1.25:£1) Q1 Q2 Q3 Q4 FY Growth rates (%) £m SPWD Total group

  • 2.5
  • 0.9
  • 0.6

3.5 633.3 Revenue Bearings

  • 14.0
  • 7.8
  • 4.6

2.6 148.5 Non-bearings

  • 2.4

4.1

3.6 2.3 484.8 Tools & General Maintenance

1.4 8.6

3.7 14.9 167.5 Key Accounts

1.9 11.3

8.9 12.9 345.5 Base business

  • 12.7
  • 8.9
  • 5.6
  • 9.6

287.8

5

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SLIDE 6

Financial highlights

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SLIDE 7

19.8 21.5 22.1 2011 2012 2013 572 640 652 2011 2012 2013

Highlights

Total sales

Statutory 1.9% Constant currency

  • 0.2%

FX 2.1% Statutory 6.7% Constant currency 1.3% FX 5.4%

Operating profit

5.6% 5.8% 6.1% 2011 2012 2013

Operating margin

DPS +8.5% 8.4 9.4 10.2 2011 2012 2013

Earnings Dividend

65.4 75.3 69.5 2011 2012 2013

2012 2013 Receivables 52.9 50.4 Inventories 83.0 85.0 Payables (60.6) (65.9) Total 75.3 69.5

Working capital days

Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional

  • items. Prior periods’ results are restated to reflect retrospective application of IAS19R- Revised

31.8 37.3 39.8 2011 2012 2013 EPS +2.8%

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SLIDE 8

2013 Turnover 651.9 Gross margin 205.3 Gross % 31.5% Sales, Distribution and Administrative Costs (165.5) Underlying operating profit 39.8 % 6.1% Interest (4.4) Underlying profit after interest 35.4 2012 Reported Change 639.6 1.9% 194.8

  • 30.5%
  • (157.6)
  • 37.2

7.0% 5.8%

  • (2.7)
  • 34.5

2.6%

Profit & Loss

2013 2012 2013FX IAS 19R Restatement 2012 Reported Change Turnover 651.9 653.5 13.9

  • 639.6

1.9% Gross margin 205.3 199.5 4.7

  • 194.8
  • Gross %

31.5% 30.5%

  • 30.5%
  • Sales, Distribution and

Administrative Costs (165.5) (161.4) (3.9) 0.1 (157.6)

  • Underlying operating profit

39.8 38.1 0.8 0.1 37.2 7.0% % 6.1% 5.8%

  • 5.8%
  • Interest

(4.4) (3.6) (0.2) (0.7) (2.7)

  • Underlying profit after

interest 35.4 34.5 0.6 (0.6) 34.5 2.6%

£m Note: Results are stated before amortisation of acquired intangibles, acquisition related costs and exceptional

  • items. Prior periods’ results are restated to reflect retrospective application of IAS19R- Revised
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SLIDE 9

2012 Reported Change

639.6

1.9%

37.2

7.0%

5.8%

  • 208.6
  • 34.3%
  • 17.8%
  • 2013

Turnover 651.9 Underlying operating profit 39.8 Return on Sales 6.1% Closing operating capital^ 215.1 Return on operating capital employed** 34.7% Return on investment*** 18.5%

Ratios

^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 ^

2013 2012 2013FX IAS 19R Restatement 2012 Reported Change Turnover 651.9 653.5 13.9

  • 639.6

1.9% Underlying operating profit 39.8 38.1 0.8 0.1

37.2

7.0% Return on Sales 6.1% 5.8%

  • 5.8%
  • Closing operating capital^

215.1 211.8 3.2

  • 208.6
  • Return on operating capital

employed** 34.8% 34.6%

  • 34.3%
  • Return on investment***

18.5% 18.0%

  • 17.8%
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SLIDE 10

Sales* contribution by growth driver - FY

634.7 28.1 19.0 21.6 (70.1) 633.3 500 550 600 650 700 750 800 Key Accounts InsitesTM Market segmentation & Product extension Eliminations+ & Base business decline 2012 2013

*At constant currency – management rates €1.25: £1

+Eliminating sales included in more than one category

Base business (29.4) Eliminations (40.7)

10

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SLIDE 11

Sales* contribution by growth driver – H2

308.5 17.3 12.8 16.9 (40.9) 314.6 250 270 290 310 330 350 370 390 Key Accounts InsitesTM Market segmentation & Product extension Eliminations+ & Base business decline H2 2012 H2 2013

*At constant currency – management rates €1.25: £1

+Eliminating sales included in more than one category

Base business (11.2) Eliminations (29.7)

11

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SLIDE 12

Capital expenditure

  • Infrastructure investment in two new distribution centres
  • Continued IT investment delivering enhanced data management and trading

platforms

  • Continued investment in growth drivers

£m

Land & Buildings Equipment Intangible assets Total New National Distribution centres

1.7

  • 1.7

Alcoa InsitesTM

  • 0.4

0.4

Tools & General Maintenance Division

  • 1.7

2.3 4.0

Information Technology

  • 0.6

4.0 4.6

Vehicles

  • 0.6
  • 0.6

Branch investment and other

0.9 1.5

  • 2.4

Total 2.6 4.4 6.7 13.7

12

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SLIDE 13

Cash generation

39.8 6.1 2.7 (9.7) (2.1) 11.6 (2.9) 45.5 10 20 30 40 50 60 Inventories Depreciation and amortisation Operating profit (before amortisation, acquisition costs and exceptionals) Operating Cash Flow Payables Receivables Share option charges

£m

Exceptional and acquisition

13

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SLIDE 14

45.5 (13.5) (4.9) (7.5) (2.3) (4.2) (11.5)

Acquisitions Dividends

1.6

Movement in net debt

£m

Movement in net debt Opening (53.8) Exchange (0.7) Movement 1.6) Closing (52.9)

Capital expenditure (net) Operating Cash Flow Tax Interest and pension funding Purchase of

  • wn shares

(net) Net cash inflow

14

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SLIDE 15

Growth strategy

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SLIDE 16

Growth Strategy

Growth Capability Costs Synergies Geographical development 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

16

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SLIDE 17

Update

  • Key Accounts SPWD grew by 8.7%
  • Now represents 54.6% of group sales
  • SPWD growth rates accelerating from

1.9% in Q1

  • 12 new pan-European contracts won
  • Strong growth in defensive segments

– up 12.0%

  • Pipeline is at record levels

Case study

  • Brammer was awarded an External

Business Partner Excellence Award/Excellence Award from P&G

  • Recognition for going above and

beyond in 2013

  • Brammer was among the 80 carefully

selected external parties

  • Brammer saved P&G £0.7m over 12

months

Key Accounts

* Sales per working day 17

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SLIDE 18

Key Accounts

Key Account Sales Performance Multi-site Status Scope Sales Growth Tier 1 EU contract Part EU Group €118.4m 15.5% €136.9m Tier 2 National contract Part EU Group €152.7m 7.5% €164.1m Tier 3 No contract Part EU Group €41.6m 4.6% €43.5m Tier 4 National contract National Group €84.2m 3.9% €87.5m €396.9m 8.7% €432.0m

18

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SLIDE 19

2006 2007 2003 2008 2009 2010 2004 2005 2011 2012

  • No. of key Accounts

60 40 30 20 10

2013 First ever EKAM Employed

Key Milestones & Investments

Investment in European KA Team Central support team established Account Development Managers Major Investments in KA infrastructure Focus on resilient sectors Sector Management established KA Tools established

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

Pan-European Supply Agreements

19

100 80 60 40 20 EU KA Revenues (M€)

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SLIDE 20

Update

  • Total 383 InsitesTM

– 144 full time; 239 part time – 46 new full time; 78 new part time

  • Increased by 56 overall*
  • Continued strong sales growth of

13.0%

  • InsiteTM sales 48% of total key

accounts business

  • EU InsiteTM pipeline strong with 336
  • pportunities
  • Currently in direct negotiation with

100 customer locations Case study – Food and Drink

  • Master Supply Agreement for EU
  • perations for global food & drinks

manufacturer; total opportunity £4.8m

  • Turnover growth in 2013 of 113%
  • InsiteTM sales £2.6m, 83% of total sales
  • 14 InsitesTM 5 full time; 9 part time
  • Agreement covers all product groups
  • Total number of cost savings: 98
  • Cost savings achieved were 195% of

target

InsitesTM

*Net, including Buck & Hickman 20

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SLIDE 21

Update

  • Bearing SPWD declined 6.3%

reflecting market conditions

  • Key bearing suppliers report

bottoming out of market

  • Non-bearing SPWD up 1.7% driven

by product range extension through Europe

  • Further market share gains secured
  • Growth rates improving

Case study - Catalogues

  • First edition of the Brammer Tools &

General Maintenance catalogue generated £7.2m run rate

  • Successful launch of 2014 catalogue
  • Further sales growth expected from:

– EU rollout of Roebuck brand and related product catalogue – EU-wide distribution of new MRO catalogue, now expanded to reflect full non-T&GM product portfolio

Product Extension

21

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SLIDE 22

22

Mechanical Power Transmission –

Chains & Sprockets

Seals Tools & Maintenance Health and Safety Gearboxes Linear Motion -

Industrial Automation

Motors Bearings Fluid Power Mechanical Power Transmission -

Belts & Pulleys

Fluid Power

£m like for like at constant currency

Product Extension

140.3 156.4 167.5 2011 2012 2013 Tools & Maintenance +7.1% 73.1 71.9 70.8 2011 2012 2013 Mechanical Power Transmission -1.6% 447.9 476.1 484.8 2011 2012 2013 Non-Bearings +1.8% (SPWD +1.7%) 171.8 158.6 148.5 2011 2012 2013 Bearings -6.4% (SPWD -6.3%) 88.5 95.3 99.1 2011 2012 2013 Fluid Power +4.0%

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SLIDE 23

Update

  • Turnover grew 7.1% overall and

35.7% on the continent

  • Growth rate accelerating throughout

the year

  • Successful rollout of European

catalogue to over 30,500 customers

  • Continued investment in European

Product Division, now comprising 30 professionals Expansion driving Key Accounts sales

  • Growing T&GM European presence

delivered new Key Account customers

  • Nine contract extensions with existing

Key Account customers

  • Sales to prior year Key Account wins up

by 47%

European Product Division

23

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SLIDE 24

Update

  • Focus on defensive segments

continues

  • Utilities up 4.5% and Food & Drink up

8.8%

  • Growth in other sectors, with

Consumer Goods up 35.9%

  • Market focus is increasing resilience

and market share

  • Expanded range of segment specific

material Case study – Food & Drink

  • Good growth in a difficult market
  • Segment specific marketing material

adds value to win sales – Soft drinks – Baking – Brewing – Confectionary

  • Segmentation approach co-ordinated

with Key Account strategy

Market Segmentation

24

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SLIDE 25

Market Segmentation

22.4 26.3 26.3

2011 2012 2013 Pulp, Paper & Packaging

61.9 64.7 68.6

2011 2012 2013 Automotive +5.9%

65.4 69.9 76.0

2011 2012 2013 Food and Drink +8.8%

35.7 34.4 31.5

2011 2012 2013 Construction & Aggregates

  • 8.3%

1.8 2.6 2.6

2011 2012 2013 Recycling

  • 3.0%

71.2 74.8 77.0

2011 2012 2013 Metals 2.8%

23.6 26.2 27.4

2011 2012 2013 Utilities +4.5%

25 £m

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SLIDE 26

CURRENT TRADING & OUTLOOK

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SLIDE 27

Sales per working day - Overview

27

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SLIDE 28

Sales per working day - Europe

Since 2007:

  • European Production Index is down 7.9%
  • Brammer is up 55.4% (27.1% excluding Buck & Hickman)

28

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SLIDE 29

Sales per working day - Growth

2008 2009 2010 2011 2012 Q1-13 Q2-13 Q3-13 Q4-13 2013 UK* 8.3% (0.4)% 8.0% 16.8% 7.6%

  • 0.1

3.3% 0.4% 5.0% 2.2% Germany 8.1% (30.8)% 13.6% 16.1% 0.6%

  • 7.5%
  • 1.7%
  • 0.8%

1.8%

  • 2.4%

France 9.4% (14.6)% 11.1% 14.2% 3.5%

  • 1.9%
  • 2.7%
  • 7.0%
  • 6.3%
  • 4.7%

Spain 8.3% (22.3)% 9.5% 12.3%

  • 0.3%
  • 3.3%
  • 3.8%

8.5% 15.8% 3.8% Netherlands 11.4% (16.6)% 10.3% 17.2% 8.5% 4.6%

  • 4.9%

2.2% 9.0% 2.8% Poland

  • 18.6%

24.1% 3.0%

  • 1.5%

3.1% 0.7% 6.1% 1.9% Total 12.0% (16.1)% 11.6% 21.8% 17.1%

  • 2.9%
  • 0.3%
  • 0.6%

3.4%

  • 0.2%

Organic 8.5% (16.1)% 11.6% 15.9% 2.9%

  • 2.9%
  • 0.3%
  • 0.6%

3.4%

  • 0.2%

29

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SLIDE 30

Growth Track Record

£m

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Revenue 270.8 287.4 314.3 379.6 478.4 426.1 468.4 571.5 639.6 651.9 GP % 30.1% 30.9% 30.5% 30.4% 30.0% 30.1% 30.1% 30.3% 30.5% 31.5% Operating profit 9.8 12.5 15.1 19.9 26.2 18.4 23.0 31.8 37.2 39.8 233.7 TP % 3.6% 4.4% 4.8% 5.2% 5.5% 4.3% 4.9% 5.6% 5.8% 6.1% Operating cash flow 18.7 15.7 11.9 16.7 29.2 33.3 27.5 28.9 28.6 48.4 258.9 Net Debt (€ equiv) 80.7 73.7 80.4 80.9 86.8 44.9 42.8 42.1 66.3 63.6 Total Customer Signed off Cost Savings 0.4 2.6 8.8 15.1 15.0 25.8 30.0 34.9 51.5 60.0 244.1

30

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SLIDE 31
  • Acquisition of Lönne Holding AS, a

leading distributor of OEM and MRO industrial products

  • A leading presence in the Nordic

market;

  • A number of cross-selling
  • pportunities to Lönne’s customer

base particularly in Tools and General Maintenance;

  • A significant incremental opportunity

to service existing key accounts

Lönne Holding AS

31

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SLIDE 32

Outlook

  • Investment made in growth projects expected to drive revenue and profit growth
  • Some tentative signs of improvements in our key markets but outlook still

uncertain

  • Brammer growth rates improving into 2014
  • Key Accounts pipeline at record levels
  • Continued successful execution of organic growth strategy
  • Focus on growth drivers continues to gain market share

32

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SLIDE 33

Appendices

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SLIDE 34

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 16 countries
  • 4.8 million product lines
  • More than 100,000 customers
  • Robust fundamental growth drivers

34

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SLIDE 35

Segments*

UK Germany France Spain Benelux Eastern Europe & Other Total Turnover 293.3 118.5 84.1 45.2 53.2 57.6 651.9 Sales per working day growth (Like for like) 2.2%

  • 2.4%
  • 4.7%

3.8%

  • 3.7%
  • 3.1%
  • 0.2%

Underlying operating profit 21.0 6.8 4.3 5.0 2.7

  • 39.8

Return on sales 7.2% 5.7% 5.1% 11.1% 5.1%

  • 6.1%

Return on sales 2012 6.3% 6.6% 5.0% 10.0% 5.2% 1.2% 5.8% Operating capital employed* 34.2 24.9 14.3 7.7 11.9 21.6 114.6 Return on operating capital employed 61.4% 27.3% 30.0% 64.6% 22.7%

  • 34.8%

Return on operating capital employed 2012 63.7% 32.5% 46.7% 67.7% 25.7% 4.7% 34.3%

£m * At actual rates. Changes in reportable segments have been reflected in all periods presented – explained further in note 2 in the annual report ** Segmental assets excluding goodwill and acquired intangibles less liabilities, before current & deferred tax, dividends, cash, loans, deferred consideration & pension liability 35

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SLIDE 36

Exchange rates

2013 2012 2011 Average €1.182 €1.230 €1.152 Closing €1.202 €1.233 €1.192

£m As at December close 36

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SLIDE 37

2012 Reported (157.6) (1.3)

  • (6.4)

(165.3) 2013 2012 2013FX 2012 Restated IAS 19R Restatement 2012 Reported Sales, Distribution and Administrative Costs (165.5) (161.4) (3.9) (157.5) 0.1 (157.6) Intangible amortisation (1.2) (1.3)

  • (1.3)
  • (1.3)

Acquisition related (1.3)

  • Exceptional item
  • (6.4)
  • (6.4)
  • (6.4)

Total Costs (168.0) (169.1) (3.9) (165.2) 0.1 (165.3)

Costs

£m

2013 Sales, Distribution and Administrative Costs (165.5) Intangible amortisation (1.2) Acquisition related (1.3) Exceptional item

  • Total Costs

(168.0)

Total costs down £1.1m at constant currency Total costs increased by £2.8m Underlying costs up 2.5% at constant currency

37