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Our values live on ...
Barloworld Limited -Merrill Lynch Conference
Sun City 12-13 March 2013
Barloworld is a focused multinational industrial corporation with annual revenues exceeding R58 billion. An aligned strategic approach directs our operations in delivering integrated customer solutions, meeting exacting performance standards and creating sustainable value for all stakeholders.
What we do • Barloworld offers its global customer base flexible, value-adding, integrated business solutions backed by leading international brands through its core divisions:
Equipment – earthmoving and power systems
Automotive and Logistics – car rental, motor retail, fleet services, used vehicles and disposal solutions, logistics management and supply chain optimisation
Handling – forklift truck distribution, agricultural equipment and cost-effective wheel loaders
The brands we represent on behalf of our principals include Caterpillar, Hyster, Avis, Audi, BMW, Ford, General Motors, Mazda, Mercedes-Benz, Toyota, Volkswagen, Massey Ferguson and others.
Barloworld “Our values live on…”
Welcome to Barloworld
Barloworld Limited (Registration number 1918/000095/06)JSE codes: BAW and BAWPISIN codes: ZAE000026639 and ZAE000026647
Registered office and business addressBarloworld Limited, 180 Katherine Street, PO Box 782248, Sandton, 2146, South AfricaTel +27 11 445 1000 Email [email protected]
Transfer secretaries – South AfricaLink Market Services South Africa (Proprietary) Limited, (Registration number 2000/007239/07), 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, Johannesburg 2001, (PO Box 4844, Johannesburg)Tel +27 11 630 0000
Registrars – United KingdomEquiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, EnglandTel +44 190 383 3381
Transfer secretaries – NamibiaTransfer Secretaries (Proprietary) Limited, (Registration number 93/713), Shop 8, Kaiser Krone Centre, Post Street Mall, Windhoek, Namibia (PO Box 2401, Windhoek, Namibia)Tel +264 61 227 647
Enquiries: Jacey de Gidts ABCHead, Group communications and marketing, Barloworld LimitedTel +27 11 445 1000E-mail [email protected]
For background information visit www.barloworld.com
Corporate information
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Strategic developments
Emphasis on driving profitable growth and enhancing financial returns
• Acquired Bucyrus Russia on 3 December 2012 for R436m
• Converted Congo Equipment in the DRC into a 50 year JV
• Acquired 25% Logistics Africa minority• Acquired a 50.1% share in Manline Logistics
Update on corporate activity
Barloworld LimitedMerrill Lynch Conference
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Group revenue
28%
7%
7%
50%
8%
Revenue September 2012
25%
7%
5%53%
10%
Revenue September 2011
Equipment Southern Africa Equipment Europe Equipment Russia Automotive and Logistics Handling
3
Key strategic developments
Automotiveand Logistics
• Secured Lesotho government contract extension in Avis Fleet Services• Secured City of Johannesburg outsourced fleet management contract for 5 years
• Acquired a minority interest in re- environmental solutions and waste management business
• Acquired a 50.1% share in Manline to form Barloworld Transport Solutions
Equipment
• Reached agreement to acquire Bucyrus Russia effective 3 December for R436m• Finalised agreement to convert Congo Equipment in the DRC into a 50 year JV• EMD Africa JV with Electromotive Diesel to capture locomotive and rail services
opportunities• MWM distribution rights for gas engines in southern Africa and Russia
Handling
• Disposed of Handling US and UK in 2012• Reviewing strategic options for Belgium and the Netherlands• Expanded agriculture business in Siberia, western Russia and Mozambique• Grew SEM in Africa and Russia
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Equipment Southern Africa
5
Group operating profit
-10%
0%
10%
20%
30%
40%
50%
60%
Operating Profit September 2012
-10%
0%
10%
20%
30%
40%
50%
60%
Operating Profit September 2011
Equipment Southern Africa Equipment Europe Equipment Russia Automotive and Logistics Handling
Corporate
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Market outlook* suggests continued medium term growth, but short term softening
34% 52%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Building Construction
Heavy Construction
Contract Mining
Mining Houses 34% 52%47%
* Based on traditional Caterpillar industry ex Bucyrus
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Geographical outlook
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Extended mining product range – Bucyrus acquisition
Open Pit
Hard Rock
Room and Pillar
Longwall
Underground Mining
Surface Mining
9
BWE is well positioned to take advantage of the growth in mining in our territories
Source: Caterpillar Inc.
BWE has dealership presence in territories where 32% of mine development will take place in the next 10 years
Mine development in the next 10 years will come from the following areas
Russia/CIS/Mongolia 20%
Africa 12%
Eastern Europe 6%
Western Europe 2%
South America 14%
China 13%
Australia 12%
North America 8%
Rest of Asia 7%
India 6%
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Major surface mining opportunities
Jindal
Bannerman – Etango
Extract Resources – Husab
Kumba – Sishen
Exxaro – Belfast Project
Xstrata – Tweefontein
Vale and Rio Tinto –Tete
Anglo Coal- Revuboe
Zonnebloem Xstrata
ResGen – Boikarabelo
CoAL – Makhado
Anglo – New Largo
FQM – Kalumbila Barrick – Lumwana
Coal Copper Iron ore Uranium
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Bucyrus product line overview
Hydraulic Excavators and Rope Shovels Drills Draglines
Highwall Miner Longwall Room and Pillar
Belt Systems Consumables Trucks
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Major infrastructure projects dependent on governments’ ability to execute and raise finance
Awarded and in progress To commence short term Potential
Dams, Rail, Ports, Roads
North South Water Pipeline
Various Road Rehab Neckartal Dam
Mine Infrastructure and Provincial and Municipal
Infrastructure
Mine Infrastructure Infrastructure Backlogs
Power, Ports, Roads and railways
Mine Infrastructure Rail and Dams
17 SIPS Projects
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Major underground mining opportunities
Hwange Zimbabwe
Debswana Morupule
DeBeers Venetia
Total Forzando West
Xstrata – Tweefontein
Anglo – New Denmark
Glencore – Mopani
Mabila Ermelo Project
Sasol Impumelelo
Exxaro – Matla
Sasol Bossjespruit
Anglo – Goedehoop
Coal Copper Diamonds
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0 2 000 4 000 6 000
SouthernAfrica
Order book (Rm)
Dec 2012 Sep 2012 Sep 2011
Equipment – southern Africa
Outlook• Anticipated reduction in traditional CAT mining deliveries expected to be more
than offset by incremental Bucyrus revenues• Firm back orders at December 2012 (R5.7bn) up 7.5% due to Bucyrus order from
Swakop Uranium Husab project • Focused on growing sales of the Cat electric drive and Unit Rig (ex-Bucyrus)
models – opportunities in the electric drive and ultra-mining truck market• Modest on-going improvement in construction activity including Angola• Parts and service revenues expected to remain solid
Bucyrus
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Roll-out EMPR major deals
First Quantum Minerals• Drilling and loading equipment
• Machines on order: 3 x 7495 electric rope shovels, 7 x MD6640 rotary blast hole drills
• The Sentinel copper deposit is located west of Solwezi in the North Western Province of Zambia
Swakop Uranium• Drilling and Loading equipment
• Machines on order: 3 x 7495 electric rope shovels, 3 x 6060FS hydraulic mining shovels, 2 x MD6640 and 6 x MD6290 rotary blast hole drills
• The Husab Project is regarded as the most important uranium discovery in recent years and will elevate Namibia to the third biggest uranium producer in the world
Contract Value: R1.1bn
Contract Value: R1.2bn
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Industry trend and outlook – Iberia: Total
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Equipment Iberia
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0 100 200 300
Iberia
Order book (€m)
Dec 2012 Sep 2012 Sep 2011
Equipment – Iberia
Outlook• Macro economic environment expected to remain challenging in the coming year• Order books lower due delivery of large portion of mining package deal; portions
of mining package deals cancelled due to additional governmental austerity program
• Power systems growth due to activity in marine and other niche markets• Focus on expanding market share while maintaining margins• Continued focus on cost control, cash generation and asset efficiency• Expect to deliver improved operating performance due to lower cost base
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Headcount evolution – Iberia
Workforce: Number of active employees | Not included: pre-retirement and suspensions.
2,388 2,363
2,1461,954
1,6651,534
1,417 1,396
1,792
1,114
250 0
346 273
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Dec-11 Sep-12 Dec-12
Iberia FSA Short term rental STET
•Headcount across the Iberian region has been reduced by 992 employees or 41%
•Average age of workforce reduced
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Commodities overview – Russia
Oil Copper Coal
Gold Aluminium Platinum
Silver Nickel Diamond
Industry value US$448bn
Industry value US$7bn
Industry value US$33.3bn
Industry value US$13.1bn
Industry value US$8.8bn
Industry value US$1.7bn
Industry value US$1.4bn
Industry value US$4.9bn
Industry value US$4.4bn
Equipment Russia
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Construction – Opportunity
YakutskPetropavlovsk-Kamchatskiy
Magadan
Anadyr
Mirniy
Chita
AchinskOmsk
Kemerovo
Barnaul
Tomsk
Krasnoyarsk
Abakan
Novosibirsk
Region 1Western and
Eastern Siberia
Region 2Yakutia and
Russia Far East
Enisey bridge• Stage: active (2012-2015)
Eastern bypass road • Stage: projecting
Western bypass road • Omsk• 17,4 km• Stage: start 2012
Irtysh dam• Stage: start 2012
Chuisky Trakt broaden• Stage: start 2012
Kyzyl-Kuragino• 411,7 km• Stage: active
Viluy, Federal road• Low-motion, permanently active
Kolyma, Federal road • Low-motion, permanently active
Magadan-Chukotka road• Stage: active project, start 2011• 900 km
Ust-Srednekan GES • Kolyma Hydrapower station
mega project)• Stage: active project• Planned startup in 2012
Lena, Federal road • Low-motion, permanently active
KankunskayaPowerStation • mega project – 1 200 MW• Start in 2013• Project docs in process
BAM rail way • mega project• Stage: active (2009-2016)
Severo-Sibirskaya• Rail road (mega project)• 2 000km (Nizhnevartovsk to
Ust-Ilimsk)• Stage: start 2016 – US$4bn
Railways Hydro power stations Continual projects Other projects
Nerungry
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Bystrinskiy GOK• Gold reserves – 236 tonnes • Copper reserves – 2m tonnes • Silver reserves – 1.1k tonnes • Iron reserves – 68m tonnes
Chertandinskoye
Coal reserves – 123m tonnes
Green field mining projects
YakutskPetropavlovsk-Kamchatskiy
Magadan
Anadyr
Mirniy
Chita
AchinskOmsk
Kemerovo
Barnaul
Tomsk
Krasnoyarsk
Abakan
Novosibirsk
Region 1Western and
Eastern Siberia
Region 2Yakutia and
Russia Far East
Udokan/Metalloinvest
• Copper reserves – 20m tonnes• Silver reserves – 12k tonnes
Natalka
• Gold reserves – 1 450 tonnes
Ozernoye/Metropol• Plumbium – 1.6m tonnes • Zink – 8.3m tonnes • Silver – 4.5k tonnes • Gold – 25 tonnes
Amaamskoye
• Coal reserves – 120m tonnes
Pavlik
• Gold reserves – 108 tonnes
Nerungry
Elga
• Coal reserves – 2.2bn tonnes
Gross
• Gold reserves – 20 tonnes
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Novosibirsk CRC – opened in July 2011 Irkutsk – opened in December 2012
Magadan – opening in 2014 NorilskNerungry
Facilities
Project design underway
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VT Headquarters NewPower facility
Service and rebuild centre Rental premises
Parts warehouse New equipment inventory SEM and Agriculture
Novosibirsk – Total Planned Campus • Area 39 180m²
Novosibirsk facility expansion
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EMPR Russia
Equipment Russia will sell, service and support all the former Bucyrus mining products in Siberia and Russian Far East
Asset based transaction concluded at US$50m effective 1 December 2012 financed with a combination of cash and debt
100 employees and contractors employed by Barloworld, primarily in customer support and field service in Novokuznetsk
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0 50 100 150
Russia
Order book (US$m)
Dec 2012 Sep 2012 Sep 2011
Equipment – Russia
Outlook• Mining activity will remain the biggest driver due to the commodity rich territory• Gold, nickel and diamonds remain strong. Coal weakening • Continued branch infrastructure development throughout the territory remains key
to growing market share • Increased focus on recruitment and training to develop skills for growth
requirements
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Power Systems opportunities
Petroleum (Oil & Gas)• Global approach to the business – International sales & after sales
teams
• Major opportunities in Angola and Russia
Electric Power• Data centres - awarded contracts to provide critical power to the two
largest telecoms providers
• Delivered Nampower – complete EPC turnkey
Industrial/ Rail• International rail customers now utilising local Spanish
manufacturers
• Southern Africa Rail JV with EMD for locomotives and rail components
Marine• Marine order book has grown due to opportunities in passenger
vessels, offshore, tug & salvage, tuna vessels and patrol boats
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Power
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1 104
40
10
804
20
762410
8
4
73452533
19
15 3717
3
214
4453
ANGOLA
BOTSWANA
CAMEROON
COTE D`IVOIRE
GH
AN
A
KENYA
MALAWI
NAMIBIA
NIGERIA
TANZANIA
UGANDA
ZAMBIA
ZIMBABWE
ETHIOPIA
BURKINA FASO
BURUNDI
BE
NIN
DEMOCRATIC REPUBLIC
OF THE CONGO(ZAIRE)
CENTRAL AFRICAN REPUBLIC
DJUBOUTI
ALGERIAEGYPT
GABON
THE GAMBIA
GUINEA
EQUATORIAL GUINEA
GUINEA-BISSAU
LESOTHO
LIBYA
MALIMAURITANIA
MAURITIUS
NIGER
RWANDA
SUDAN
SIERRA LEONE
SENEGAL
SAO TOME AND PRINCIPE
SWAZILAND
CHAD
TO
GO
TUNISIA
SOUTH AFRICA
LIBERIA
WESTERN SAHARA
ERITREACAPE VERDE
SEYCHELLES
Rich history in Africa
Estimate of delivered locomotives in Africa
2 678 EMD locomotive population
31
Rail – EMD Africa joint venture
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Barloworld Automotive (Automotive Business model)
Automotive and Logistics Division overview
Aut
omot
ive
and
Logi
stic
s D
ivis
ion
Communication, HR, IT, Legal, Finance, Sustainable Development, Strategy, Empowerment and Transformation, Risk Management, Sales,
Governance, Ethics and Compliance
Customers
• Logistics and fleet services synergies • Leveraging Automotive infrastructure to achieve critical mass for growth
• Cost efficiencies • Retain strategic focus on each business unit
Car Rental
Fleet Services
Used Vehicles & Disposal Solutions
Motor Retail
Southern Africa
Motor Retail
Australia
Supply Chain Mgmt
Freight Mgmt and Services
Supply Chain
Software
Barloworld Logistics
Supply Chain
Software
Automotive and Logistics
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• Strong overall result in a competitive trading environment• Revenue: R29.5bn (FY’11: R26.4bn) – up 12%• Record operating profit R1 152m (FY’11: R911m) – up 26%• Operating margin for the year 3.9% (FY’11: 3.4%)
Automotive and Logistics Division overview
- 100 200 300 400 500 600
Logistics
Fleet Services
Motor Retail
Car Rental
Operating profit (Rm)
Sep 2012 Sep 2011
2.2%
15.2%
2.4%
7.1%
0.8%
16.0%
2.1%
6.6%
Margin
+14%
+26%
+23%
+170%
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General Information
Employees 10 626Countries 16
Automotive Principals Avis; BMW; Chrysler/Fiat; Daimler; Ford;General Motors; Mazda; Toyota; Volkswagen
Car Rental locations >190Wholly owned Motor Retail dealerships (SnA & Oz) 40
Key Indicators FY Sep 2011 FY Sep 2012Rental Days 5.14m 5.71mNew & Used retail units sold 85 092 88 467Total vehicles under management 195 788 227 019New vehicles sold per dealership per month 71 76DTS km’s travelled FY 12 44.3mSAT tons shipped FY 12 15.575t
Sense of Scale
Automotive and Logistics Division overview
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Overview: Automotive and Logistics
• Improved rental days despite prior year Census impact• Static revenue per day in a competitive environment impacted by
higher replacement volumes (hail storm)• Continued focus on operating costs• Fleet utilisation impacted by hail damage• Continued solid used vehicle profit contribution• Coach charter integration progressing slowly• Sustained customer satisfaction above 90%
Car Rental
-5
0
5
10
15
Rental Days Rate Per Day Fleet Utilisation Fleet Size
% G
row
th
Leading IndicatorsJan '13YTD Sep '12 YTD
37
Automotive and Logistics Division overview
• Enhance return on equity• Continued cash focus• Targeted capital allocation• Growing market share• Optimising vehicle fleets (utilisation)• Managing working capital levels• Improving asset turn• Expense management• Controlling interest costs• Implementing Logistics growth strategy• Exceeding customer expectations
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Overview: Automotive and Logistics
• Fewer, Bigger, Better” Strategy continues- 86 new vehicles sold per dealership per month (Sep’12: 76)- Appropriate dealership footprint
• Southern Africa- Focused brand strategy aligned to overall Automotive business model
- Improved operating margin through cost containment and margin expansion
- Continued strong finance and insurance contribution• Australia
- Portfolio performing well
Motor Retail
-
10
20
30
New Units Service Hours Parts Revenue F & I Net Profit
% G
row
th
Leading IndicatorsSA - Jan'13 YTD AUS - Jan'13 YTD
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Motor Retail
Source: Econometrix
0
100
200
300
400
500
600
700
800
900
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F
Total South African Vehicle Market
Passenger LCV M&HCV
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Logistics
Good turnaround and positioned for growth• Southern Africa
- Ellerines supply chain contract progressing well
- Higher volumes through Barloworld Equipment
- Recent corporate activity positions business for growth
• Europe, Middle East and Asia
- Rationalisation and cost control taking effect, stabilising volumes in sea-air market
- Appointed new local management in Spain and Far East, however difficult trading conditions persist
- Progressing supply chain management activities in Dubai
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Overview: Automotive and Logistics
• Pleasing performance in low interest rate environment• Strong finance fleet growth supported by Phakisaworld
acquisition – effective January 2012• Strong growth in fleets under maintenance• Good used vehicle profits despite lower margins• Intelligent Fuel Management enhances overall product
offering• Secured and renewed significant contracts
Fleet Services
0
10
20
30
Maintenance Fleet Finance Fleet Total Fleet
% G
row
th
Leading IndicatorsJan '13 YTD Sep '12 YTD
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Agriculture expansion project
• Excellent growth and expansion prospects• Growing in Africa• Growing in Siberia and Western Russia
- Severe drought impacted losses and stock levels at end Sept. This year sales a lot better• Further expansions planned
Handling
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Handling
Outlook• The Eurozone debt crisis continues to impact negatively on markets in
Belgium/Holland• Used equipment aside, pressure on margins to continue • Further growth in agricultural footprint being explored• Expect modest improvement over last year in lift trucks but higher growth
prospects in Agriculture
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SEM
• This business has continued to grow albeit slower than last year’s fast growth• Returns exceed Barloworld targets• New products being added to the product range,
- Motor graders launched in Siberia
- Southern Africa to follow
- More to come• Expanded the business to Russia • Synergistic with Agriculture
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Outlook
Automotiveand Logistics
• Car Rental: Expected growth despite competitive trading environment• Motor Retail: An improved performance in southern Africa and Australia• Fleet Services: Continued growth from new and existing customers• Logistics: Continue positive momentum and well positioned for growth
Equipment
• Anticipated reduction in traditional CAT mining deliveries expected to be more than offset by incremental Bucyrus revenues in Southern Africa
• Continued modest improvement in construction activity in southern Africa, particularly Angola • Iberian industry to remain depressed however forecast improvement in operating performance
on lower cost base• Despite weaker mining revenue in Russia, overall result expected to be stronger than 2012 with
increased spend in infrastructure sector to offset shortfall in mining
Handling• Lift truck profits expected to show modest improving trend• Expansion of agriculture footprint to yield medium term benefits• Further growth expected in SEM product line
BASTION GRAPHICS
For background information visit www.barloworld.com