Results presentation For the six months ending 30 June 2016

Transcription

1 Results presentation For the six months ending 30 June Results Presentation August 2016

2 1 1H16 Operating Review Chris Weston, CEO 2 Results Presentation August 2016

3 Agenda 1 1H16 Operating Review Chris Weston, CEO 2 1H16 Financial Review Carole Cran, CFO 3 Business Priorities and 2016 Outlook Chris Weston, CEO 3 Results Presentation August 2016

4 Group summary Difficult trading conditions, progress being made Implementation of business priorities continues to progress well Revenues of 685m, trading profit of 77m, driven by known headwinds Slow first half in North American petrochemical and refining sector Debtor provision increased, reflecting ongoing payment challenges in Venezuela Utility order intake to date of 875MW Balance sheet; gearing at 1.2 times Disciplined investment in new fleet Half year dividend maintained 4 Results Presentation August 2016

5 Operational summary Rental Solutions 42% Group revenue (ex pass through fuel) Revenues 8% lower, weak trading in North America North America down 20%; difficult conditions in oil and gas and petrochemicals and refining Reduced headcount and capex spend; reorganised North American business unit Good performance in Europe and Australia Pacific Temperature control revenues up 15% Revenue by sector 1H16 18% 14% 11% 10% 10% Petrochemical & Refining Oil & Gas Utilities Events Manufacturing 8% 7% 6% 5% 11% Contracting Services Construction Quarrying & Mining Other 5 Results Presentation August 2016

6 Operational summary Power Solutions Industrial 18% Group revenue (ex pass through fuel) Revenues 12% lower, declines in Latin America offset growth in other regions Excluding Baku Games revenues down 2% Strong performance in Eurasia and Africa Steady performance in Middle East Brazil and Chile challenging; removing costs Revenue by sector 1H16 31% 12% 10% 8% 7% Oil & Gas Construction Services Manufacturing Events 6% 6% 5% 5% 10% Quarrying & Mining Utilities Shipping Contracting Other 6 Results Presentation August 2016

7 Operational summary Power Solutions Utility 40% Group revenue (ex pass through fuel) Revenues down 16%, known headwinds during the first half Strong order intake of 875MW; (YTD 2015: 451MW) Prospect pipeline remains healthy, but competitive market place 20% offhired in H1, main offhire Mozambique Revenue by sector 1H16 84% 6% 5% 5% Utilities Quarrying & Mining Oil & Gas Other 7 Results Presentation August 2016

8 Extensions Key extension discussions in next few months 450MW Argentina New volume of around 2.5GW awarded to 5 and 10 year contracts 120MW extended until September 2016, subject to contract. Tender for extension to 2017 to be issued Remainder of contract due for renewal between October 2016 and June MW Yemen Out of contract Security a challenge Need for power in country; working to extend 380MW Bangladesh 180MW up for renewal this year 85MW in B.Baria expected to extend for 3 years 95MW in Ashungang extended until September 130MW Venezuela Extension due in second half Operated for more than 10 years Running at lower levels Continuing to support the country 8 Results Presentation August 2016

9 2 1H16 Financial & Operating Review Carole Cran, CFO 9 Results Presentation August 2016

10 Revenues decrease by 12% Trading margins of 11% m (pre-exceptional items) 1H16 1H15 Reported Change Underlying Change 1 Revenue (12)% (12)% Revenue excl. pass-through fuel (12)% (12)% Trading profit (32)% (27)% Operating profit (29)% Net interest expense (11) (13) 14% Profit before tax (31)% Tax (20) (27) 26% Profit after tax (33)% Diluted earnings per share 19.8p 29.6p (33)% Dividends per share (declared) 9.4p 9.4p -% Net Debt at period end (634) (467) m (post-exceptional items) 1H16 Trading profit 67 Profit before tax 61 Profit after tax 43 Diluted earnings per share 16.8p Exceptional charge of 10m in H1 Total cash cost of 35m against benefits of 80m Tax rate of 28% 2 reflects country mix 1 Underlying excludes pass-through fuel and currency translation 2 Tax rate pre-exceptional costs 10 Results Presentation August 2016

11 Rental Solutions Challenging first half m 1H16 1H15 Reported Change Underlying Change 1 Revenue (5)% (8)% Trading profit (70)% (71)% Trading margin 3% 11% ROCE 14% 20% 20% decline in North America Actions taken on cost base Seasonal business, H2 weighted Good performance in Europe and Australia Pacific 1 Underlying excludes currency translation 11 Results Presentation August 2016

12 Power Solutions: Industrial Trading margin decline driven by Baku m 1H16 1H15 Reported Change Underlying Change 1 Revenue (14)% (12)% Trading profit 9 15 (39)% (39)% Trading margin 8% 11% ROCE 9% 6% 3pp margin drop driven by Baku Games Pressure on rates in Latin America Margin accretion in Middle East 1 Underlying excludes currency translation 12 Results Presentation August 2016

13 Power Solutions: Utility Known headwinds impact revenues m (ex fuel) 1H16 1H15 Reported Change Underlying Change 1 Revenue (18)% (16)% Trading profit (15)% 2% Trading margin 22% 21% ROCE 16% 22% Margin improvement net of lower costs and increased debtor provision Debtor provision stands at $88m Currency impact and working capital affecting ROCE 1 Underlying excludes pass-through fuel and currency translation 13 Results Presentation August 2016

14 Gearing in line with strategic range m 1H16 1H15 Operating Profit Depreciation & Amortisation EBITDA Working Capital (101) (1) Cashflows relating to exceptional items (15) - Other (3) 1 Operating Cash Flow Tax (22) (37) Net Interest (11) (13) Purchase of Fixed Assets (98) (147) Proceeds from Fixed Asset Disposals 14 5 Free Cash Flow (17) 63 Dividends (45) (45) Return of Value & Changes in Equity (8) 1 Net Cash Flow (70) 19 Exchange (75) 8 Movement in Net Debt (145) 27 Activity levels drive higher working capital Trade debtors up by 33m Net debt was 634m and includes 75m of FX Headroom against facilities of 355m 14 Results Presentation August 2016

15 Capital allocation discipline maintained Power Solutions Industrial Power Solutions Utility Rental Solutions 1H16 1H15 1H16 1H15 1H16 1H15 Average utilisation 62% 63% 76% 77% 51% 55% Fleet Capex / Fleet Depreciation 83% 80% 55% 115% 90% 105% Fleet Capex 23m 22m 32m 76m 36m 40m Power Solutions (Utility) Fleet at 30 Jun (MW) Power Solutions (Industrial) Fleet at 30 Jun (MW) Rental Solutions Fleet at 30 Jun (MW) , , , , , ,266 Diesel Gas 15 Results Presentation August 2016

16 3 Business Priorities and 2016 Outlook Chris Weston, CEO 16 Results Presentation August 2016

17 Business priorities Rental Solutions Customer Interviews with around a thousand customers Streamlining customer experience from enquiry to payment Enabling service differentiation by customer needs Technology Remote monitoring operations centre now monitors 6 thousand assets Developing applications in temperature control 17 Results Presentation August 2016

18 Business priorities Power Solutions EFFICIENCY Removed duplication and right-sized organisation Improvements in project site delivery 15% of costs removed Upgrading site performance management system Optimising depot footprint 18 Results Presentation August 2016

19 Business priorities Power Solutions TECHNOLOGY New products Medium speed HFO engine: 15%* fuel saving Solar-diesel product: 5-10% fuel saving Efficiency New gas engine in build Adding 350 G3+ engines to fleet in 2016 Work continuing on G3++ MS HFO in assembly New Gas *based on $50 oil price 19 Results Presentation August 2016

20 Business priorities Power Solutions CUSTOMER Progress on assessing supply, demand dynamics Sales pipeline management tighter Conversion rates up, helped by lower oil price, costs out and G3+ fuel efficiency 20 Results Presentation August 2016

21 Group business priorities Efficiency REMOVING 80m FROM THE BUSINESS 700 roles removed from the organisation Significant number of projects underway to improve procurement 40m of savings in 2016, 80m benefit from the start of 2017 Cost savings are 80% opex, 20% capex Balance reinvestment for growth with margins and returns 21 Results Presentation August 2016

22 2016 Outlook Guidance held: PBT slightly lower than 2015 on an underlying basis Rental Solutions Seasonal business, weighted towards the second half Challenging conditions in North America Power Solutions Industrial Benefit from new work in Eurasia & Middle East flows into H2 Power Solutions Utility Strong order intake of 875MW Offhire rate expected to be around 30% Working to recover overdue debt in Venezuela Key extensions assumed Group Investing around 270m in fleet capex; increase from investment in medium speed HFO 22 Results Presentation August 2016

23 Appendix 23 Results Presentation August 2016

24 Business priorities Progressing well CUSTOMER TECHNOLOGY EFFICIENCY Priority Tailor sales and service channels Focus on key sectors Pursue adjacencies Evaluate bolt-on M&A opportunities Priority Work with our strategic partners to develop market leading products Strengthen and expand strategic partnerships Reduce the overall cost of power for our customers Priority Streamlining our cost base Optimising deployment of resources Improving processes and systems 24 Results Presentation August 2016

25 Revenue mix 1H16 m Revenue 1H15 m Underlying 1 % 1H16 m % of Revenue (ex fuel) 1H15 m Change pp Power (15)% 69% 70% (1) Temperature Control % 10% 7% 3 Oil-Free Air (12)% 2% 2% - Total Rental (12)% 81% 79% 2 Service Revenue (15)% 19% 21% (2) Revenue excl pass-through fuel (12)% 100% 100% - Pass-through fuel NA Total Revenue (12)% 1 Excluding revenue from pass through fuel and currency. 25 Results Presentation August 2016

26 Balance sheet m 1H16 1H15 Intangible assets / goodwill Tangible fixed assets 1,230 1,148 Working capital Retirement benefit obligation (11) (9) Derivative financial instruments (6) (4) Provisions for taxes (54) (68) Net borrowings (634) (467) Net assets 1,251 1, Results Presentation August 2016

27 Power fleet stable MW in fleet Power Solutions Rental Solutions 1H16 1H15 1H16 1H15 Diesel 5,814 6,194 2,061 2,011 Gas 1,508 1, Total 7,322 7,583 2,322 2, Results Presentation August 2016

28 Foreign exchange impact FY15 Average FX Rates July 2016 Average FY15 Actual Revenue ( m) FY15 Actual at July 2016 Average Rates Note: UAE Dirhams included within US Dollar as it is pegged to the US dollar; Argentinian Peso includes Power Solutions Utility contracts which are pegged to the US Dollar but paid and reported in Argentinian Pesos. Variance % Variance US Dollar , % Euro % Australian Dollar % Argentinian Peso (37) (30%) Brazilian Real % Canadian Dollar % Russian Rouble % Other % Total Revenue 1,561 1, % Total Trading Profit (3) (1%) 28 Results Presentation August 2016

29 Disclaimer The information contained in this presentation has largely been extracted from the Results Announcement for the half year ended 30 June This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of Aggreko speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. This presentation is published solely for information purposes. The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere. 29 Results Presentation August 2016