Austin Engineering BBY Mining Conference. May 5, 2008 Sydney

Transcription

1 Austin Engineering BBY Mining Conference May 5, 2008 Sydney

2 About Austin Engineering Listed on ASX in 2004 at 20c; share price now approx. $2.30 National and international designer and manufacturer of mining products Serves global resources sector from manufacturing operations in Brisbane, Perth, Mackay, Wyoming USA and Oman Key market penetration in Australia, North America, Canada, South America, Indonesia and Middle East Employs people across the business Record financial performance in ; further growth and expansion on an international basis in 2008 World s largest non-oem designer and manufacturer of mining dump truck bodies

3 Austin Engineering Financial snapshot Key 2007 financial data EBIT Net profit $7.31m $4.97m EPS 12.45c Dividends per share 4c Payout ratio 25-40% Board and executive team Peter Fitch Michael Buckland Peter Pursey Eugene Fung Colin Anderson Chairman Managing Director Non-exec Director Non-exec Director CFO Top 5 shareholders Current trading data Share price $2.30 Shares on issue 46.9m Market capitalisation $108m Michael Buckland 5.25% Thorney Pty Ltd 5.17% S J Quinlivan Pty Ltd 4.57% RBC Dexia Investor Services 3.90% ANZ Nominees Ltd 3.58%

4 What we make Dump truck bodies up to 360 tonnes payload capacity Excavator buckets up to 35m³ capacity Field-proven across all applications Offer operational efficiencies for customers Used by major operators around the world Quality products, leading designs and branding Tyre handlers Service vehicles

5 Type Miners OEMs Contractors Others Austin s clients and revenue sources Client Rio Tinto, BHP, Xstrata, Macarthur Coal, Anglo Coal, Vale*, Codelco* Komatsu, Terex, Liebherr, Hitachi, Hastings Deering Leighton, Thiess, Macmahons, Golding Contractors, Downer EDI Mining John Holland, Barclay Mowlem, Aluminium Smelter Operators Good quality blue-chip, supportive clients Clients understand us and we understand them Motivated to work together to grow Favourable commercial terms negotiable *Through licencee relationship in South America

6 Serving the resources industry with a global presence

7 Locations and capabilities Location Area Serviced Products and Services Austin, Perth Austin, Brisbane Westech, Wyoming USA Pilbara, Kalgoorlie, Western Australia, Africa, Indonesia Central Queensland coal fields, North Queensland metalifferous ranges, NSW coal fields Powder River Coal Basin, North America resources regions, Canadian tar sands Dump truck bodies, buckets, service vehicles, tyre handler and materials handling equipment manufacture Dump truck bodies, buckets, service vehicles and structural steel manufacture Dump truck bodies, buckets, dragline buckets, deadline anchors and mining products manufacture Second workshop in Perth, WA opened in Q2 FY 2008, increasing capacity by 65% Robotic techniques employed in Perth and Brisbane workshops Austin Mackay expansion completed Q2 FY 2008, new $4m workshop up and running Austin, Mackay Oman, Middle East (joint venture) Cainsa, Chile (licencee) Central Queensland coal fields, Indonesian mines Middle East Chile, Brazil resources regions Dump truck body assembly, repair and overhaul of mining components and assemblies Aluminium smelter components Dump truck body manufacture

8 What our clients want and what we deliver Client needs Delivery on time to the highest standards of quality Product reliability Innovation and custom designs Operational efficiencies through maximum payloads Competitive prices, reduced costs Austin s solutions Design capability and advanced engineering services Market-leading, proven designs - JEC mining product attachments and Westech dump truck bodies National and international presence and reach Modern workshops with advanced manufacturing robotic processes Emphasis on R&D; more than $1.5m spent since 2004 Client confidence demonstrated by repeat orders Receiving larger series or runs of orders Proven track record of delivering quality products Client needs always a priority

9 Building a dump truck body Robotic welding of floor Assembly of all components Finished product Delivery to customer Operating on site

10 Track record of growth 9 Revenue and NPAT growth secured through higher sector activity and acquisitions

11 Track record of growth 9 Improved operational performance secured by increased productivity, automation and higher-margin work

12 Track record of growth 9 Improvement in key performance criteria flowing from improved underlying financial performance and business fundamentals

13 Austin s balance sheet Dec 07 $m June 07 $m Cash Receivables Inventories Property, plant & equipment Intangible assets Other assets Total assets Payables Interest-bearing liabilities (current) Interest-bearing liabilities (non-current) Current tax liabilities Provisions Net assets/total equity Strong, positive cash balances Relatively low ongoing capital expenditure requirements Debt mostly USD loan to fund Westech purchase Ability to secure further debt in USD Loan USD-denominated to secure low interest rate and provide natural hedge Westech debt funding at <4% with opportunity to lock in EBIT/Interest cover >20 at H Balance sheet capacity to accommodate further acquisitions and growth

14 Operating cashflow Investing cashflow Financing cashflow Austin s cashflow FY 2004 FY 2005 FY 2006 FY 2007 HY 06/07 HY 07/ (0.7) 6.3 (0.2) (14.0) 15.1 (18.5) (6.3) (25.5) (7.7) 9.2 (1.0) 17.5 Operational cashflow benefit from advance progress payments High emphasis on capital expenditure to expand capacity and improve productivity Active debt reduction programs funded as far as is possible from operational cashflow

15 Industry comparisons Source: ABN AMRO/ABN AMRO Morgans

16 Outlook - favourable industry conditions China, India and SE Asian economies to drive demand for commodities and energy World steel production to increase 42% and coal trade 25% by 2013 (ABARE) Increased production to lead mine development, brownfields expansion and repair and replace expenditure Peru, Chile, Brazil, Argentina and Mexico leading exploration spending in South America; Canada in North America Iron ore leading growth in Western Australia; infrastructure spending to drive growth in Queensland coal

17 Firm commodity prices Commodity prices expected to remain firm for medium term; recent coal contracts set at $US300 per tonne Budgeted global mineral exploration expenditure forecast up 25% at $US13.1bn in 2008 (Metals Economics Group)

18 Spotlight on Canadian Tar Sands Canada has one of the world s largest deposits of tar sands At least 1.7 trillion barrels in the Athabasca oil sands deposit Improved technology emerging to make extraction more economically viable Number of expansion projects under consideration or underway Westech well positioned geographically and has the capacity to serve the region Westech and JEC product range expansion possible in the region

19 Spotlight on Central Qld Coal Fields Coal companies positioning themselves for further export growth Qld government has reported 28 advanced coal projects in central Queensland, comprising 17 new mines and 11 expansions Estimated expenditure of $11.5bn on coal projects to 2013 $9bn earmarked for coal transport infrastructure Dalrymple Bay coal terminal expanded to 65m tonnes annual capacity, plans to expand to 85m tonnes by end of 2008 Government to expand Abbot Point coal terminal Austin well positioned to take advantage of demand for manufacture, assembly and repair of Westech, JEC and other products

20 Spotlight on Western Australia Iron Ore Region Vast expansion programs underway Sound economic fundamentals, more iron ore producers entering into the market Long-term outlook being adopted by OEMs, closely following long-term outlook by major miners High activity = high levels of demand for new and replacement mining equipment Product delivery, reliability and operational efficiency are key customer requirements Austin well-positioned to consolidate and expand its position in the region - ability to meet customer requirements well recognised and acknowledged through repeat business

21 Austin s strategy Operational Growth and diversification through acquisition, expanding manufacturing Target high-growth oil, iron ore and coal markets; Canada, South America and Australia Establish additional overseas operations in new markets, e.g. oil and gas Employ technology to further reduce costs, increase output Acquire new product lines Shareholder returns Consistent, reliable underlying profit growth Increasing dividends Capital appreciation

22 FY 2008 in review Perth and Brisbane workshops operating at full capacity Continuing to receive strong flow of orders, extending into 2H Westech performing to expectations, solid forward workload for manufacturing operations Effective and growing market penetration of Westech bodies in established and developing markets Westech licencee Cainsa (Chile) secured major order to build large series of dump truck bodies for major mining house Second phase of order to be signed in next few weeks Westech licence fees now a recurring source of revenue Record results for 1H 2008, EBIT up 110% to $7m and NPAT up 100% to $4.7m Queensland floods and associated transport restrictions resulted in three months of lost contribution for Kaldura workshop in Mackay; Austbore also affected but to a much lesser extent Transport restrictions now lifted; Kaldura back to full capacity for April to June 2008 in new expanded workshop 2H EBIT forecast to be stronger than 1H

23 Austin s outlook Record work in hand with orders into No sign US economic slow down having an impact on mining regions Resources sector to remain strong for both new projects and repair and replace Financial capacity to pursue further acquisitions To expand Westech product range in South America and Canada India and other emerging economies offer opportunities for product expansion Follow-on projects in Middle East Boost from expanded Kaldura operation, Mackay Forecasting strong increases in all key financial measures for FY Further business expansion opportunities being considered Share buy-back scheme to be considered

24 Thank you For more information please visit